In the first half of this year, China's economic development faced an extremely complex situation: the world's geopolitical situation evolved complexly, the growth rate of domestic main indicators such as GDP slowed down, and the downward pressure on the economy increased.

The A-share market was also in a volatile situation, with insufficient investor confidence.

However, overall, the fundamental basis for China's economy to be optimistic in the long term has not changed, the trend of continuous economic recovery has not changed, and the characteristics of great development potential, strong resilience, and broad space have not changed.

It is fully capable and has the conditions to overcome difficulties and challenges, and to achieve sustained and healthy economic development.

Listed companies, as the most active "cells" in the economy and society, are closely related to the macroeconomic environment, and their overall performance is also a reflection of China's economic development status and quality to a certain extent.

It is particularly worth mentioning that under the A-share market environment where policies are protected and supervision is getting stricter, the market is accelerating the elimination of a batch of "bad companies".

Advertisement

Those individuals and companies that have obtained benefits through improper means or even illegal and illegal actions, including securities firms, auditing firms and other intermediary agencies, are also being punished by supervision and law.

In this context, those "good companies" that adhere to long-termism and bring continuous returns to shareholders are even more worthy of the market's praise.

At present, the disclosure of the semi-annual reports of A-share listed companies has come to an end, and the mid-term answer of listed companies this year has also been unveiled.

Which industries "rely on the strength of the wind" to rise?

Which companies grow against the trend in the overall slowdown of the economy?

How to screen industries and companies with more hope?

"Investor Network" specially launched a series of special topics, and carried out in-depth research and discussion on the above topics, providing a reference for investors.

Overall, the growth is stable, and the differentiation of companies has intensified.

As of August 31, 5346 of the 5349 listed companies in the three cities of Shanghai, Shenzhen, and Beijing in the A-share market have disclosed the semi-annual performance report for 2024.

According to the data statistics of Wind, nearly half of them have achieved year-on-year growth in net profit, and 617 have a growth rate of more than 100%.

According to Wind data, in the first half of this year, the total operating income of A-share listed companies was 34.87 trillion yuan, a year-on-year decrease of 0.51%; the net profit attributable to the parent company was 2.9 trillion yuan, a year-on-year decrease of 3.09%.

However, looking at it on a quarterly basis, the performance in the second quarter has improved significantly.

In the second quarter of this year, the total operating income of A-share listed companies decreased by 1.21% year-on-year, and the net profit decreased by 1.40% year-on-year, and the growth rate increased by 3.35 percentage points compared to the first quarter.

Looking at the industry, the three major industries of optional consumption, information technology, and telecommunications services achieved positive growth in revenue, with growth rates of 5.8%, 5.8%, and 2.8%, respectively.

The three major industries of materials, finance, and information technology have significantly improved their revenue growth rate in the first half of the year compared to the first quarter, and they have increased by 2.74 percentage points, 2.11 percentage points, and 0.53 percentage points, respectively.

Looking at the listed companies in detail, the differentiation has intensified.

Among them, there are 3030 companies that have achieved revenue growth, accounting for more than half, but the net profit has increased for 2583 companies, which means that about 500 companies have actually increased revenue without increasing profits.

Looking at the growth rate of net profit, the top three are Fengshang Culture, Amway Shares, and Huichang Communications, with net profit growth rates of 23188%, 7655%, and 6161%, respectively, and the three companies with the largest decline are Gaile Electronics, Aisike, and Zhongnan Shares, with declines of 85342%, 71325%, and 14395%, respectively.

From this set of data, we can also see a microcosm of the intensification of the performance differentiation of listed companies.

Overall, in the first half of this year, under the adverse situation of complex and changeable external environment, continuous geopolitical conflicts, overall slowdown of domestic economic development, and some industries still in the pain of economic structural adjustment, A-share listed companies have still achieved stable operation and growth, and have made due contributions to the healthy development of the national economy.

Growth and capital return TOP50 usually measure the growth of listed companies, in addition to looking at a company's profitability, such as net profit and other indicators, it is more important to look at its growth rate, which can better reflect a company's growth ability.

It is worth noting that many of these companies have shown a growth rate of several times this year because their base last year was low or they were at a loss, in addition, some companies have completely got rid of the poor performance and achieved a significant increase in profits through strategic transformation or asset restructuring.

Therefore, investors also need to carefully identify whether these companies can continue to maintain a very high profit growth rate.

Another important indicator to measure the profitability of listed companies is the return on capital (ROIC), which refers to the ratio of invested or used funds to related returns (usually manifested as obtained interest and/or divided profits), and is used to measure the use effect of invested funds.

Looking at a longer period of time, if a listed company has maintained a high return on capital for many years, then it is more likely to become a white horse stock.

From the table below, it can be seen that many white horse stocks are among the top 50 companies with ROIC in this year's semi-annual report, such as many liquor companies such as Kweichow Moutai, and many pharmaceutical companies such as Mindray Medical, these sectors have always been relatively concentrated areas of high-quality companies in the A-share market.

High dividend rate companies have attracted much attention in the first half of this year, there is a very typical feature in the A-share market, that is, the bull market of the high dividend sector, and the representative is bank stocks.

This may also be a passive choice for many investors.

In the secondary market, as the major industry sectors continue to adjust and systemic risks emerge, the high dividend rate sector has become a haven for the market due to its overall stable operation, valuation advantages, and high dividend rates.

In other words, when the stock price has not much possibility of rising, long-term investors can at least obtain a certain investment return through dividends.

And improving the return to investors, especially increasing the dividend return, is also a major direction encouraged by regulatory policies recently.

In March this year, the China Securities Regulatory Commission issued the "Opinions on Strengthening the Supervision of Listed Companies (Trial)" and the "Several Opinions on Strengthening Supervision and Preventing Risks to Promote the High-Quality Development of the Capital Market" issued by the State Council in April and other policy documents have clearly proposed to enhance the stability, continuity, and predictability of dividends, and promote multiple dividends a year.

Against this background, the A-share companies have also set a historical high in many indicators of mid-term dividends this year.

According to Wind data, there are more than 660 companies that have paid dividends in the mid-term this year, exceeding the number of dividend-paying companies in the same period from 2021 to 2023 (a total of more than 510), and the total amount of dividends is more than 520 billion yuan, close to the sum of the dividends in the same period in the previous three years.

In addition, the proportion of dividend-paying companies and the proportion of dividends to net profits have also set a historical high in the same period.

Looking at the amount of dividends, the total amount of dividends in the banking industry in the mid-term is 214.412 billion yuan, accounting for more than 40% of the total dividends in the A-share market in the same period, and it is still the big dividend payer in the A-share market.

The dividends in the petroleum and petrochemical industry, communication, non-bank finance, transportation, and pharmaceutical and biological industries are all more than ten billion yuan.

Of course, after the high dividend sector has been popular for a long time, it may not have a large upward space in terms of valuation in the short term, which also requires investors to consider comprehensively based on the company's fundamentals and various factors.

Looking at the overall A-share market, the overall valuation of the market has entered a historical low range.

As of August 30, the average valuation (PE) of the A-share market is 15.36 times, which is lower than the median of 18.225 times and the opportunity value of 16.663 times in many years.

By taking stock of the overall performance of A-share listed companies, it can be seen that this group of Chinese enterprises with the most vitality still showed strong performance repair ability and growth resilience in the complex internal and external environment in the first half of this year.

Looking at the market side, if we extend the cycle, when the overall valuation of A-shares is below the opportunity value, the space to go down has not been big.

Of course, looking at the overall trading volume of the market, the recovery of investor confidence still needs time.