FOCUS: China-listed firms' 2000 earnings -- 2
Among companies which said their earnings were hit by weak pricing power and heavy competition are Guangdong Kelon Electrical Holdings Co Ltd, Konka Group Co Ltd, Wuxi Little Swan Co Ltd, Eastern Communications Co Ltd and Jinzhou Harbour (Group) Co Ltd. Among companies whose 2000 earnings were boosted by gains from asset sales, B-share Shanghai Sanmao Textile Co Ltd, which reported a 2000 net profit of 61.98 mln yuan under Chinese accounting standards, up from 35.19 mln yuan in 1999, said it earned only 4.9 mln yuan from its main woollen textile business last year. The company said 60.3 mln yuan of its net profit in 2000 came from extraordinary income, including a gain of 39.5 mln yuan from the sale of stakes in Shanghai Worldbest Co Ltd and Shanghai Pudong Development Bank, and a government subsidy of 20.2 mln yuan for the removal of a factory from urban Shanghai. Likewise, China Textile Machinery Co Ltd, which reported a 2000 net profit of 3.3 mln yuan, said it achieved an extraordinary gain of 25.5 mln yuan from the sale of a company stake to parent Pacific Electric Machinery Group and a gain of 20 mln yuan from the sale of a parcel of land. Even H-share China Eastern Airlines Co Ltd, which reported a net profit of 20.1 mln yuan under CAS, said it made an extraordinary gain of 246.71 mln yuan from government subsidies and the sale and leasing of aircraft, as well as forex gains worth 120 mln yuan. China Southern Airlines Co Ltd, which reported a net profit of 501.77 mln yuan under international accounting standards, booked an extraordinary gain of 372.6 mln yuan from the sale of fixed assets and forex gains of 318.5 mln yuan. While Hainan Airlines Co Ltd, which reported a CAS net profit of 163.5 mln yuan, up from 135.7 mln yuan in 1999, appeared to be less dependent on extraordinary gains, its earnings in recent years have been supported by the fact that the company has not made contributions to the Civil Airlines Infrastructure Construction Fund. All domestic airlines are required to contribute a proportion of their business income to the fund each year, and Hainan Airlines' outstanding debt to the fund amounted to 607.6 mln yuan at end-2000. The airline said it has not made any provisions on this amount. Among other companies whose earnings were supported by state subsidies, H-share Kunming Machine Tool Co Ltd said it returned to profit, after two consecutive years of net losses, as a result of 4.4 mln yuan in extraordinary income from local government subsidies for interest payments on bank loans. B-share Shenzhen Nanshan Power Station Co Ltd, whose CAS net profit rose to 145.3 mln yuan from 117.6 mln, said its operating profit dropped to 146.5 mln yuan from 161.9 mln, but this decline was offset by local government subsidies and tax rebates worth a combined 64.8 mln yuan. Among other companies whose earnings were boosted by government support, Heilongjiang Electric Power Co Ltd attributed an increase in power sales, despite a larger power surplus in Heilongjiang province, to preferential treatment from its parent company, Heilongjiang Power Development Corp, which operates the provincial power grid. Meanwhile, H-share Sinopec Shanghai Petrochemical Co Ltd, whose IAS net profit grew by 41 pct, attributed this growth largely to government moves to curb smuggling, while Maanshan Iron & Steel Co Ltd, whose IAS net profit rose to 102.3 mln yuan from 13.1 mln, said its sales were boosted by government moves to curb output from small-scale steel producers. Other results highlighted uncertainties faced by many listed companies as the government moves to standardise tax treatment for China-based firms. Zhejiang Southeast Electric Power Co Ltd saw its CAS net profit drop 24 pct, despite an increase in sales, after the central government ruled that the Zhejiang provincial government must reduce the corporate profit tax rebates given to the company and that the firm must repay part of the rebates received in previous years. H-share Tsingtao Brewery Co Ltd, which reported a CAS net profit of 95.2 mln yuan, up from 89.5 mln yuan in 1999, said it earned 53.3 mln yuan in extraordinary gains via tax rebates to subsidiary firms last year. Tsingtao said these rebates may soon be discontinued and the company itself may have its corporate profit tax rate raised to 33 pct from 15 pct. After exclusion of extraordinary gains, Tsingtao's return on net assets amounted to only 1.56 pct last year.
Related stock : (NIL)