(Yicai Global) March 24 -- As the first quarter draws to a close, Chinese listed companies have been steadily publishing their earnings reports. Over 60 percent of those issuing forecasts in the week to yesterday, especially those with a high proportion of overseas business, said they had been hit by the Covid-19 pandemic.
Seventy-eight firms listed in Shanghai had issued earnings forecasts for the current quarter as of yesterday, according to Wind data. Fifty-one felt the impact of the outbreak, accounting for 65 percent, up nearly 8 points from last week. In addition, 27 projected a performance drop, of which 25 were affected by the outbreak, accounting for 92.6 percent.
As an important part of the global industrial chain, China exports products and services to the world. This year may not turn out well for those with a large export business. Listed companies whose operating income and market share are more dependent on abroad are being tested by tight supply chains, falling consumer demand, and the impact of the global industrial chain.
Overseas revenue at about 20 mainland-traded companies account for over 90 percent of their total income. Among them, Yantai Xinchao Industry and China Sichuan International Cooperation fully depend on overseas revenue, according to Wind data.
More than 70 firms' foreign income accounted for more than 70 percent of their total revenue and 14 companies generated 20 percent of their revenue from Europe, including China Tianying, which depends on that region for 70 percent of its revenue.
In addition, Wind data show that firms in the three major sectors of biopharma, food and beverage and medical equipment had overseas revenues of CNY187.4 billion (USD26.5 billion) in 2018 and the figure in 2019 may reach CNY200 billion. Among them, drugmakers have the highest overseas income, more than CNY90 billion (USD12.7 billion), followed by the F&B sector, which exceeds CNY70 billion.
China's traditional and emerging manufacturing industries export quality products and services to the world, an unnamed private equity source told Yicai Global. The impact of the outbreak will be seen in two ways: the mechanical and electrical, textile and other labor-intensive, low-tech processing links may face the risk of industrial transfer to other regions.
Secondly, companies with a core competitiveness of technology and exporting to Europe and the US will, at the very least, face the risk of a decline in short-term performance while leading enterprises have relatively strong anti-risk capacity.
Editor: Peter Thomas