China Shows Signs of Post-COVID-19 Recovery

China Shows Signs of Post-COVID-19 Recovery

China is already getting back on track after the economy shrank by 6.8% in the first quarter compared to the same period last year. While there is no doubt it will take a serious hit in 2020, from 6.1% last year to a projected 1.0% this year, that would make it only country on the list to still have positive growth in 2020.

If IMF projections turn out to be accurate for 2021, China will have the strongest economy in the world in at 8.2%. In the shorter term (6-12 months), we are all likely to be challenged, in the longer-term (1-3 years) things can be better than they ever have been, for some.

Two Chinese imaging supplies companies have shared their forecasts: Ninestar and HG Technologies Co Ltd (HG)

1. According to Ninestar’s announcement, net profit attributable to listed companies, from January 2020 to June.30 2020, is expected to be between RMB 280 million and 410 million (US$40.0 million to 58.6 million), a decline of 24.88% to 9.99% over the same period last year. The profits for the same period last year were RMB 372,755,100 (US$53.32 million).
   • As COVID-19 has been brought under control in the second quarter in China, Ninestar consumables and microelectronic chip business recovered quickly and the revenue and net profit increased significantly for both compared with the same period in 2019.
   • Due to the impact of the international outbreak of COVID-19 in the second quarter, Lexmark printer business revenue and net profit declined in the first two quarters.
   • Looking at business segments, some changes are as follows:
     • Consumables business asset package: in the first half of 2020, consumables business operating income increased 23% compared with the same period of the previous year. Due to the company’s implementation of the stock option incentive cost allocation in 2019, the cost and expenses increased, and the profit growth ratio for the current period was less than the revenue growth.
     • Apex Microelectronics business: in the first half of 2020, Apex’s microelectronics business revenue was affected by the decline in sales prices. In the first half of the year, revenue was basically the same as the same period of the previous year, but profits declined compared with the same period of the previous year.
     • Lexmark printer business: in the first half of 2020, due to the impact of COVID-19 epidemic, Lexmark printer business operating income decreased 13% compared with the same period of the previous year. In order to reduce the impact of the COVID-19 epidemic, the company strictly controlled Lexmark’s expenses and achieved good results. Lexmark’s profit in the first half of the year turned losses into profits compared with the same period last year.
2. China-based HG Technologies Co Ltd (HG) made adjustments to its half-year report forecast from January 2020 to June 30 2020.
   • The company announced on June 23, 2020, it had gone public the same day with the issuing of stock shares and its listing CN300847 on the Shenzhen Stock Exchange (SHE).
   • As previously revealed in its prospectus, HG expected net profits attributable to the parent company shareholders to be RMB 31.6-35.1 million (US$ 4.52-5.02 million), down 1.14%-11.00% compared with the same period in last year. The company now claims that amended net profit attributable to shareholders of the listed company increase 0% to 15.01% over the same period in last year, with a profit of RMB 35.5 million (US$5.1 million) to 40.83 million (US$5.84 million) (profit was RMB 35.5 million (US$5.1 million) in the same period last year).
   • The reasons for such amendment is as follows:
     • Due to the outbreak of COVID-19 in China and other countries from the first quarter to the second quarter, HG estimated the half-year operating conditions based on the principle of prudence. As the COVID-19 virus has been brought under control, the company’s operations were fully returned to normal, due to the quick and effective response to resume production with government guidance.
     • At the same time, the company’s orders rose steadily in the first half of the year, the sales of main products maintained growth, and the production and operation conditions were better than expected.

Related:

• Another Chinese Imaging Company Goes Public
• Snapshot of China’s Billion Dollar Ninestar Revealed

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