Changpeng Wan
A-Share Mid-Year Earnings Surge
– First mid-year reports announced from Zhongyan Chemical with more disclosures forthcoming
– Hardware equipment, chemicals and machinery sectors show strongest performance
– Huayin Power leads with 44x growth; Northern Rare Earth reports 2014% profit increase
– Investor focus shifting to earnings-driven opportunities amid price volatility
Kickoff of Mid-Year Reporting Season
China’s capital markets entered mid-year earnings season marked by unprecedented growth metrics. Zhongyan Chemical became the first A-share company to disclose its 2025 half-year results on July 15th, with subsequent disclosures scheduled from technology firm Shentong Technology on July 19th and Sci-Tech innovator Zhimingda on July 25th.
Early Performance Indicators
Preliminary disclosures revealed striking profit divergences across sectors:
– Energy giant China Shenhua projected 8.6-15.7% profit decline
– Limin Co reported over 700% profit surge driven by robust demand
– Blue lithium battery specialist Weilan Lithium announced 115% profit growth
Industry Performance Breakdown
Analysis of 510 preliminary disclosures shows 60% positive guidance across key sectors:
Sector Leaders
Hardware device manufacturers emerge as frontrunners with 41 companies posting positive guidance. Chemical producers follow closely with 32 firms anticipating growth, while machinery manufacturers complete the top three with 22 companies forecasting profit increases.
Secondary Growth Areas
Food and beverage producers, non-ferrous metal processors, biopharmaceutical firms, and automotive suppliers round out industries showing strongest growth potential according to Wind Economic Database.
Extraordinary Profit Growth Cases
Twelve companies demonstrated profit growth exceeding 1000% compared to previous interim periods:
Standout Performers
Huayin Power delivered the most dramatic performance, projecting 1.8-2.2 billion yuan net profit representing 4,400% year-over-year growth. Its shares surged 90% in July alone following the announcement.
Rare earth leader Northern Rare Earth reported 900-960 million yuan net profit, translating to 2,014% growth, triggering consecutive trading-day limit gains. Everbright Securities attributes this to both commodity price spikes and successful completion of Phase I eco-friendly extraction technology upgrades.
Additional High-Growth Firms
Other extraordinary performers include Sanhe Piles (+1000%), Xianda Chemical (+1000%), and turnaround specialist *ST Songfa which transitioned to profitability with 580-700 million yuan net profit after previous losses.
Market Outlook and Investment Implications
Second-half investment themes emerge as market momentum shifts toward earnings validation:
Broker Strategies
East China Securities identifies opportunities in:
– Industrial metal suppliers and specialty materials
– Export-focused motorcycle and inverter manufacturers
– Military contractors with order pipelines
– Subsidized consumer staples and biopharma
Prosperity Securities highlights commodity price momentum building as seasonal demand increases anticipate 9% Q3-Q4 growth across chemical, non-ferrous metal and steel resources.
Sector-Specific Insights
Kaiyuan Securities sees structural opportunities in pharmaceutical research outsourcing as global investment stabilizes. Tianfeng Securities maintains financial sector confidence citing stabilizing lending profitability and asset quality control among banks.
Navigating Volatility During Earnings Season
This earnings surge creates unprecedented hedging opportunities against cyclical fluctuations. Investors are urged to:
– Prioritize firms with transparent order pipelines
– Verify commodity-linked profits against global price benchmarks
– Monitor government subsidy programs affecting consumer sectors
– Balance high-growth positions with stabilizing financial holdings
While growth outliers capture attention, fundamentally sound performers in machinery and chemical sectors offer sustainable exposure. Market participants should consult certified advisors and verify disclosures through Shanghai and Shenzhen exchange filings before positioning decisions. Mid-year reports will be critical for identifying structural shifts beyond headline growth figures.
