Hong Kong-Listed Companies Issue Profit Warnings At A Rate Close To 2008/09

For a long time, we are aware of the increased rate of companies listed in Hong Kong, particularly those Chinese companies, issuing profit warnings since early this year. 

Credit Suisse has done a few statistics for us, highlighting the difficult business conditions for Hong Kong/China companies.

Profit warnings has increased very markedly in the recent months.  In the past 2 weeks alone, 49 profit warnings were issued, an increase of 145% compared to the same period of a year ago.  The reason is that business situation went difficult towards the end of last year as economy slows, while the high base of the first half of 2011 makes the decline in profits look even worse:

Rising on the high base set in 1H11, before business went sour, many Chinese companies are heading into double-digit YoY profit falls in 1H12. The collective sell-side analyst is slow to cut what turned out to be optimistic forecasts…

Profit warnings in Hong Kong-listed companies since April 2012 have risen by 121% YoY to 225. There were already 49 profit warnings (+145% YoY) in the past two weeks, a tide we see waxing ahead of the results season in August. No surprise, positive alerts have dropped 11% YoY to only 34 from April 2012.


Source: Credit Suisse

Credit Suisse is still expecting more profit warnings as the macro environment remains very challenging.  On a positive note though, they suggest that it is probably time to look for signs that this hard time will come close to an end.


Read more:

Why corporate profits will disappoint even if China stimulate its way back to high growth?

This article originally appeared here: Hong Kong-listed companies issue profit warnings at a rate close to 2008/09
Also sprach Analyst – World & China Economy, Global Finance, Real Estate

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