As of October 31, 2022, 1,669 listed companies on the main board of the Shanghai Stock Exchange (SSE) had completed the disclosure of their 2022 third quarter reports. In general, thanks to the strong support of the Party Central Committee and the State Council's package of measures to stabilize the economy, companies on SSE main board achieved stable growth in the first three quarters. Consumption and other industries that had suffered setbacks showed positive momentums of marginal repair. The foundations for recovery and development in all industries continued to solidify.

I. Stable growth in business performance

In the first three quarters of 2022, the companies on SSE main board achieved a total operating revenue of 37.23 trillion yuan, a net profit of 3.39 trillion yuan and a net profit after deducting non-recurring gains and losses at 3.27 trillion yuan, up by 8%, 5% and 6% year on year, respectively. Of this, the operating revenue, net profit and net profit after deducting non-recurring gains and losses in Q3 increased by 7%, 1% and 2% year on year, respectively. All key performance indicators maintained sustainable and stable growth.

Specifically, the operating revenue and net profit of state-owned enterprises (SOEs) in the first three quarters increased by 9% and 5% year on year, respectively. Listed companies controlled by central SOEs under the State-owned Assets Supervision and Administration Commission of the State Council showed even more remarkable growth, with increases in operating revenue and net profit up by 14% and 15% respectively; private enterprises achieved operating revenue of 6.26 trillion yuan and a net profit of 0.40 trillion yuan, which was basically stable. In the first three quarters, the companies of the real economy achieved operating revenue of 29.98 trillion yuan, a net profit of 1.62 trillion yuan and a net profit after deducting non-recurring gains and losses at 1.51 trillion yuan, up by 10%, 7% and 10% year on year, better than the whole for the operating indicator; financial companies achieved a total operating revenue of 7.25 trillion yuan and a net profit of 1.77 trillion yuan, nearly the same as that in the same period last year.

II. More balanced industry restoration

In the first three quarters of 2022, about 90% of the major industries on the SSE achieved profits, more than 30% of which registered growth in both operating revenue and net profit. With the reduction of imported price transmission pressure and the gradual implementation of the supply and price stabilization policy, the prices of raw materials fell, and the profit growth of some midstream and downstream manufacturing industries rebounded. Specifically, promoted by a series of pro-consumption policies, such as halving the vehicle purchase tax, the auto industry showed a significant recovery, with net profit jump of 30% year on year and 77% quarter on quarter respectively in Q3. The net profit of manufacturing industry of specialized equipment, such as construction machinery, medical care, environmental protection, energy and heavy equipment in Q3, increased by 18% year on year and 16% quarter on quarter respectively. The gross profit margin in the first three quarters increased by 0.4 percentage points from the first half of the year. The net profit of transportation equipment manufacturing industry increased by 27% year on year and 13% quarter on quarter respectively, bringing about positive year-on-year growth in the first three quarters. The electrical machinery and equipment manufacturing industry maintained its growth momentum, with net profit in the first three quarters extending the growth of more than 30% in the first half of the year.

On the consumption side, driven by the extensive outings during summer vacation, the accommodation and catering industry posted a profit of 300 million yuan in Q3, reversing losses in the first half of the year and promoting marginal repair in the consumer service industry. Transportation companies, mainly passenger transportation, improved significantly quarter on quarter in Q3. In Q3, the net profit of agricultural and sideline food processing and beverage manufacturing industries increased by 46% and 16% year on year, further accelerating from Q2. The wholesale and retail trade maintained a year-on-year growth in Q3, with narrowed declines in the first three quarters. Meanwhile, the productive service industry, represented by information transmission, software and information technology and logistics, had maintained stable growth as well, with net profit growth of 5% and 15% respectively in the first three quarters.

In addition, along with greater demand for electricity and lower structural cost brought about by the change and renewal of medium and long-term coal agreements and enhanced performance of guarantee, the thermal power industry continued its profitability improvement, with a profit of 2.6 billion yuan in Q3, a significant reversal of losses year on year. Regarding the upstream industries, in the first three quarters, the net profit of the three major raw material extractive industries, namely oil, coal and non-ferrous metals, increased by 55%, 73% and 43% year on year, and profit growth slowed by 5, 32 and 46 percentage points from the first half of the year.

III. Continued role in protecting people's livelihood

From clothing, food, housing and transportation to energy supply, the SSE main board brings together a large number of basic pillar industries that are related to China's national economy and people's livelihood. In the context of amid recurring pandemic and increased external challenges, these companies had striven to leverage their product strengths to overcome difficulties and provide strong support for meeting people's basic living needs and ensuring the national economy's sound operation. In terms of energy supply, many places of the country have been experiencing power shortages since the summer. As the main source of electricity supply, thermal power companies have made every effort to overcome the pressure of rising raw material prices and insisted on "generating as much power as possible". More than 10 thermal power companies on SSE main board generated a total 540 billion kWh of electricity, up by 4% year on year. Meanwhile, in the face of imported price and inflationary pressures, upstream coal companies, such as China Shenhua Energy Company Limited and China Coal Energy Company Limited, took the lead in signing adequate and solid medium- and long-term contracts. As the proportion of medium- and long-term contract sales continued to increase, their coal self-sufficiency was significantly enhanced and the prices were effectively stabilized.

In terms of food supply guarantee, condiment and supermarket companies on the SSE actively tapped internal potential to control costs and expenses while stabilizing product prices. In the first three quarters, they reported stable gross margins, with the proportion of administrative and selling expenses in revenue falling about 0.1 and 0.5 percentage points year on year. In terms of infrastructure and logistics, a number of large infrastructure companies, such as China Communications Construction Company Limited and China Railway Construction Corporation Limited, undertook the construction of major domestic public facilities. They actively coordinated pandemic prevention and control with production and operation, and pushed forward their work in an orderly manner; 22 railroad and road transport companies on SSE main board did their best to ensure the stable running of the country's main roads and hubs, thus consolidating the "backbone" for the smooth flow of goods; express logistics companies actively removed logistics blockages, with YTO Express Group Co., Ltd. and Deppon Logistics Co., Ltd. seeing a steady growth in express delivery volumes in the first three quarters year on year.

IV. Safe and solid industrial chains driven by leading companies

Giving full play to the agglomeration effect and spillover effect, leading companies on SSE main board led the growth of their industries while driving the collaborative upstream and downstream development of their industrial chains. In the first three quarters of 2022, the industry chains of photovoltaic, automotive and semiconductor on the SSE achieved considerable results under the guidance of the leading companies. For example, in the photovoltaic industry, in the first three quarters of 2022, due to the growing installation demands in the overseas and domestic markets, Tongwei Co., Ltd., an upstream silicon material leader, gained large long-term orders of over 300 billion yuan, with operating revenue and net profit up by 119% and 266% year on year; helped by growth in overseas export revenue and exchange gains, Longi Green Energy Technology Co., Ltd., an upstream and midstream monocrystalline silicon leader, saw its revenue and net profit growth of 55% and 45% year on year. Driven by the leading companies, companies related to the photovoltaic industry chain on SSE main board saw high growth in both their overall revenues and profits in the first three quarters. Also, in the auto industry, top car companies, such as Great Wall Motor Company Limited and Guangzhou Automobile Group Co., Ltd, reported year-on-year operating revenue growth of 10% and 45%, and net profit growth of 65% and 53% in the first three quarters. While boosting the development of vehicle industry, they contributed significantly to the upstream parts industry. Thanks to steady terminal demand, the net profit of Fuyao Glass Industry Group Co., Ltd. increased by 50%, and the profit of Ningbo Joyson Electronic Corp. increased more than six times.

Meanwhile, the spillover effect of photovoltaic and automotive industries activated some incremental markets, with semiconductor-related niche applications showing growth in both production and sales. In Q3, Nexperia Semiconductors (China) Ltd., a subsidiary of Wingtech Technology Co., Ltd, accounted for 50% of revenue in the automotive field, with outstanding competitiveness of products in automotive regulations and industrial areas. This drove the operating revenue and net profit of its semiconductor business in Q3 up by 8% and 16% quarter on quarter, and 17% and 35% year on year, respectively; as an IGBT leader, the main products of Starpower Semiconductor Ltd. in new energy vehicles, photovoltaic, energy storage, wind power generation and other fields saw a rapid rise in volume. The revenue from new energy business further rose to 51% from 47% in the first half of the year. In the first three quarters, the company recorded year-on-year operating revenue and net profit growth of 57% and 121% respectively, hitting a new high.

V. Promising momentum of green technologies

In accordance with the strategy guide of "carbon peaking and carbon neutrality", the layout of green industry on SSE main board has taken shape. From upstream raw materials, midstream equipment manufacturing to downstream application systems, the main board has built a "vanguard" to practice the "carbon peaking and carbon neutrality" goals and achieved fast growth in the performance of green emerging industries. On the one hand, the accelerated adjustment of energy structure led to a steady improvement in the installed capacity of downstream new energy power generation companies. In the first three quarters, major power companies on the SSE completed a total of 227.9 billion kWh, 113.1 billion kWh and 37 billion kWh of wind power, hydropower and photovoltaic power generation respectively, up by 10%, 55% and 71% year on year. Reflected in profit growth, the net profits of wind power, hydropower, photovoltaic and other clean power generation industries in the first three quarters increased by 25%, 9% and 22% year on year, respectively. On the other hand, the growth of downstream power generation demand drove a rapid rise in the performance of the upstream equipment manufacturing industry of the industry chain. The net profits of wind power equipment and photovoltaic equipment industries increased by 19% and 123% year on year in the first three quarters.

Continued investment in R&D is the driving force behind green technology innovation. In the first three quarters, companies in the real economy on SSE main board spent a total of about 463.4 billion yuan on R&D, up by 15% year on year, led by 33% growth in the wind power and photovoltaic equipment industries. Green finance also added vitality to the green and low-carbon transition. In the first three quarters of 2022, 64 new green corporate bonds were issued on the SSE bond market, raising a total of 67.1 billion yuan for investment in and business development of green industry projects. Thermal power and other traditional energy companies increased the use of new energy in production and actively embraced transformation and change. Shanghai Electric Power Co., Ltd built a large-scale clean energy base. By the end of Q3, the installed capacity of new energy projects had reached 7.93 million kW, up by 238% from five years ago; Baoshan Iron & Steel Co., Ltd. recently launched three ultra-low carbon auto plate parts, and was the first Chinese steel company to release a climate action report, in which the medium- and long-term goals and action path planning of carbon neutrality were detailed.

VI. Rapid growth of manufacturing investment

In the first three quarters of 2022, expenditure on the purchase and construction of long-term assets in the manufacturing industry on SSE main board maintained rapid growth, with a total spending of 554.5 billion yuan, up by 21% year on year, which was nearly 15 percentage points higher than the overall investment growth of companies in the real economy. Affected by the policy of complementing and strengthening industrial chain of the manufacturing industry, driven by industrial upgrading, there were excellent performances in automotive, electrical machinery, chemical, non-ferrous metal processing and paper making, with investment growth of 23%, 21%, 35%, 84% and 22% respectively. It should be noted that there was greater investment in infrastructure, which together with manufacturing industry drove faster growth in long-term assets investment. Investment spending in the construction materials sector increased by 74% year on year. A number of companies on SSE main board, such as China Energy Engineering Corporation Limited, Shanghai Tunnel Engineering Co., Ltd. and Shanghai Construction Group, took full advantage of their main business to accelerate the implementation of major infrastructure projects.

At the same time, there were growing financing demands with slightly decreasing financing cost, which substantially supported the investment activities of real economy. In the first three quarters, the financing cash inflow of companies in the real economy on SSE main board totaled 9.76 trillion yuan, up by 7% year on year; the cost of interest-bearing liabilities was about 3.7%, down by 1.1 percentage points year on year. Banks on SSE main board further increased their support to the real economy. The net interest margin of several banks narrowed significantly, with an industry average decrease of 0.1 percentage points; by the end of Q3, the industries' total outstanding loans stood at 137.59 trillion yuan, up by 12.41 trillion yuan from the beginning of the year. Of this, six top state-owned banks, namely Industrial and Commercial Bank of China Limited, Agricultural Bank of China Limited, Bank of China Limited, China Construction Bank Corporation, Bank of Communications Co., Ltd. and Postal Savings Bank of China Co., Ltd., played their role as "leading geese" to strengthen investments. The credit scale increased by 9.66 trillion yuan, up by 11%.

VII. Stable scale of foreign shareholdings

In the first three quarters of 2022, foreign holdings on SSE main board remained stable. The net purchase by foreign capital represented by Shanghai-Hong Kong Stock Connect, QFII and RQFII totaled about 47 billion yuan, up by about 33% year on year. During the period, 783 companies, nearly half of the total companies on SSE main board, saw shareholding increase by foreign capital, with 24 new entrants. By the end of Q3, the market value of foreign shareholders' holdings in the tradable shares of companies on SSE main board was about 1.57 trillion yuan, accounting for about 4.4%, roughly unchanged from the beginning of the year. At the same time, SSE companies further broadened their overseas financing channels. Since Q3, a number of new energy companies, such as Ming Yang Smart Energy Group Limited and Ningbo Shanshan Co., Ltd., have completed their issuance and listed on the stock exchange. Longi Green Energy Technology Co., Ltd. and Zhejiang Huayou Cobalt Co., Ltd have disclosed announcements on issuing GDRs overseas.

Meanwhile, foreign trade exports remained resilient. According to port data, the total container throughput of Shanghai International Port (Group) Co., Ltd., Ningbo Zhoushan Port Company Limited and Qingdao Port International Co., Ltd. in the first three quarters was 86.68 million TEUs, up by 6% year on year. In the first three quarters, export-oriented companies on SSE main board achieved a total operating revenue of 1.26 trillion yuan, up by 15% year on year; and a net profit of 106 billion yuan, up 4% year on year. The net profits of export-oriented companies such as automotive equipment, electrical machinery and general equipment increased by 16%, 26% and 19% respectively.

VIII. More than 100 billion yuan of shareholding increases and repurchases

In the first three quarters of 2022, 139 new companies on SSE main board disclosed their repurchase plans, with a total proposed repurchase amount upper limit at more than 56.5 billion yuan. A total of 257 companies implemented share repurchases, with repurchased amount of 54.6 billion yuan, including 28.5 billion yuan from previous stock repurchase plans. From the amount, Haier Smart Home Co., Ltd., China Petroleum & Chemical Corporation, Hengli Petrochemical Co., Ltd., etc. proposed to spend more than 1 billion yuan, of which Haier Smart Home Co., Ltd.'s expected repurchase upper limit is 3 billion yuan; from the frequency, Bethel Automotive Safety Systems Co., Ltd, Greattown Holdings Ltd., Vantone Neo Development Group Co., Ltd, etc. disclosed repurchase plans several times during the year, with a view to using real money to effectively maintain the investment value of listed companies and boost market confidence.

In terms of shareholding increase, 101 new companies on SSE main board disclosed major shareholders' plans to increase their shareholdings in the first three quarters, with the total amount to be increased up to 22.6 billion yuan, which increased by 8% compared with the same period last year, the scale of shareholding increase achieved a new high. Directors, supervisors and senior management members were the main force of shareholding increase, accounting for up to 69%, demonstrating the confidence and good expectations of the "critical few" on SSE main board for their companies' stable development. In the future, with the implementation of new policies of shareholding increase and repurchase, the amount of shareholding increase and repurchase on the SSE is expected to constantly increase.

IX. Remaining at high levels for proportion of performance meetings

At present, performance meetings have become a regular occurrence for companies on SSE main board and an increasingly important communication channel between listed companies and investors. Of these, a variety of innovative forms, such as live video recording, "cloud visits" and visual annual reports, have emerged one after another, hinting at listed companies' greater awareness of communicating with investors. Since this year, more than 1,600 companies on SSE main board have held annual report performance meetings, achieving a new breakthrough of basically full coverage. More than 1,100 companies held semi-annual report performance meetings, covering up to about 70%, which was watched by more than 20 million investors. Since the Q3 report disclosure season, nearly 200 companies on SSE main board have held or disclosed their upcoming Q3 report performance meeting. Among them, China Merchants Bank Co., Ltd., China Life Insurance Company Limited, Baoshan Iron & Steel Co., Ltd., China Communications Construction Company Limited, etc. have held a performance meeting. High-quality blue-chip weighted stock companies such as SSE 50 and SSE 180 are all expected to hold a performance meeting.

X. Recovery situation to be further solidified

In Q3, positive factors were increasing, the profit structures of upstream and downstream were improved, the consumer market recovered amidst volatility, and emerging industries maintained fast growth. Still, the cost pressure remained high despite a decline. Some companies at the end of the industry chain were still under profit pressure. There was still notable structural imbalance in development between industries and enterprises. In the first three quarters, 277 companies on SSE main board incurred losses, accounting for 17%, basically unchanged from the first half of the year and 108 more than the same period last year; the total loss amounted to 188.2 billion yuan, up by 95.7 billion yuan as that in the same period last year.

On the industry front, air transport remained in deep deficit range, with losses widening from a year earlier. Amid quarterly cyclical factors, weak downstream demand and high upstream material prices, some companies faced stage challenges. Real estate and steel & iron swung to losses in Q3. The net profit of chemical, food manufacturing, textile and computer fell by 40%, 22%, 32% and 23% respectively from the previous quarter. As can be seen, the overall recovery situation still needs to further solidify.