Business Performance Continues to Grow Stably and Key and Core Technology Shows New Strength in Serving the Real Economy - Overview of the Business Performance of the Companies on STAR Market in the First Three Quarters of 2022

31 Oct 2022

As of October 31, 2022, apart from the multi-listed red-chip companies Semiconductor Manufacturing International Corporation, BeiGene, Ltd., and InnoCare Pharma Limited, 480 listed companies on STAR Market have disclosed their business performance information for the first three quarters of 2022 in the form of third quarterly reports and listing announcements. In general, in the face of the complicated situations at home and abroad and multiple unexpected factors, the companies on STAR Market have efficiently coordinated the pandemic prevention and control and enterprise development, focused on the main business and innovative development, and realized stable growth in the overall performance of the first three quarters, achieving a substantial increase in operating revenue and net profit attributable to the parent company, which fully reflects the vitality and resilience of the "key and core technology" companies, and makes them a new force for the high-quality development of the real economy in the new era.

I. Stable growth in business performance. Facing many unstable and uncertain factors at home and abroad, the companies on STAR Market focused on their main businesses and innovative development to deal with the challenges actively and realized stable growth in business performance. In the first three quarters of 2022, the companies on STAR Market realized operating revenue of 782.214 billion yuan, an increase of 33% year on year, net profit attributable to the parent company of 89.124 billion yuan, an increase of 25% year on year, and net profit attributable to parent company after deducting non-recurring gains and losses of 76.068 billion yuan, an increase of 26% year on year, showing a stable growth momentum. Among them, in the third quarter, the companies on STAR Market realized operating revenue of 277.281 billion yuan, an increase of 31% year on year, net profit attributable to the parent company of 28.656 billion yuan, an increase of 15% year on year, and net profit attributable to parent company after deducting non-recurring gains and losses of 22.985 billion yuan, an increase of 13% year on year. In the first three quarters, 70% of the companies witnessed year-on-year growth in operating revenue. 85 companies saw growth by more than 50%, and 142 companies realized operating revenue of more than 1 billion yuan. 50% of the companies witnessed year-on-year growth in net profit attributable to the parent company. 109 companies saw growth by more than 50%, and 188 companies realized net profit attributable to the parent company of more than 100 million yuan. This year is the third anniversary of the launch of STAR Market. From 2019 to 2021, the companies on STAR Market saw compound growth rates growing by 29%, 86%, and 29% in operating revenue, net profit attributable to the parent company, and R&D investment respectively, injecting new momentum into China's economic development.

II. Stable business performance of leading companies and leading industries. The companies included in the STAR 50 Index played the leading role in stabilizing growth. Except for Semiconductor Manufacturing International Corporation, which hasn't disclosed the first three quarters’ performance, the rest of the companies realized operating revenue of 378.597 billion yuan in the first three quarters of 2022, up by 46% year on year, and net profit attributable to the parent company at 40.238 billion yuan, up by 44% year on year. The operating revenue and net profit attributable to the parent company account for 48% and 45% of the whole sector respectively. The leading industries on the STAR Market showed remarkable demonstration effect. The performance growth of the new energy industry represented by photovoltaic and power batteries is eye-catching. 13 photovoltaic industry chain companies saw the operating revenue and net profit attributable to the parent company increasing by 106% and 183% year on year respectively, and 16 power battery industry chain companies saw the operating revenue and net profit attributable to parent company increasing by 93% and 93% year on year respectively. The integrated circuit and biomedical industries showed more prominent agglomeration effect, with the number of listed companies reaching 79 and 107 respectively, and the growth rate of operating revenue in the first three quarters remained above 20%.

III. The booming of "SRDI (specialized, refinement, differential, innovation) enterprises". As a gathering place for scientific and technological innovation enterprises, 223 listed companies on STAR Market have been included in the national SRDI "little giants" enterprise list, accounting for 46% of the total number of listed companies on STAR Market, 22% of the total number of listed SRDI "little giant" enterprises, and 61% of the total number of listed SRDI "little giant" enterprises under the registration system. 23 companies on STAR Market were rated as "single-item champion" demonstration enterprises in the manufacturing industry, and 24 companies' main products were rated as "single-item champion" products of the same kind. In the first three quarters of 2022, the above companies achieved a total operating revenue of 426.359 billion yuan, an increase of 46% year on year, and realized a net profit attributable to the parent company of 47.183 billion yuan, an increase of 26% year on year. A number of sub-industry leaders and "hidden champions" have emerged on the STAR Market, which provided strong support for China's industrial chains to accelerate the efforts in improving weak links, forging advantages and filling in gaps, and promoting the deep integration of China's industrial chain and innovation chain.

IV. Sound development of special types of enterprises. The diversified and inclusive listing conditions of the STAR Market met the differentiated financing needs of enterprises of different types at different stages of development, and attracted a group of special types of enterprises to be listed. So far, there have been 45 unprofitable companies at the time of listing, 8 companies with weighted voting rights and 6 red-chip companies. These companies have continued to increase investment in R&D after being listed, and show a good momentum of development. In the first three quarters of 2022, 42 unprofitable enterprises at the time of listing achieved a total operating revenue of 48.007 billion yuan, an increase of 20% year on year, and a total R&D investment of 14.203 billion yuan, an increase of 19% year on year. Among them, five companies, including Shanghai Yizhong Pharmaceutical Co., Ltd. turned losses into profits in terms of net profit attributable to the parent company.

V. Hitting a new high on R&D investment. The companies on STAR Market have implemented innovation-driven development strategy and continued to increase investment in R&D. In the first three quarters of 2022, the total R&D investment reached 68.11 billion yuan, an increase of 33% year on year, and the R&D investment accounted for 16% of operating revenue in average. 30 companies, including Shanghai Junshi Biosciences Co., Ltd., have invested more than 500 million yuan in R&D, and 60 companies, including Cloudwalk Technology Co., Ltd., have invested more than 30% of their operating revenue in R&D. High-quality innovation leads high-quality development. The companies on STAR Market have made major scientific research breakthroughs in a number of emerging fields in the advanced technology, boosting China to achieve high-level scientific and technological self-reliance and self-improvement. BeiGene, Ltd. has completed the phase III global clinical trials for its Tislelizumab Injection for liver cancer. Jinko Solar Co., Ltd. created an industry record by making the conversion efficiency of its 182N high-efficiency single-crystal silicon battery reach 26.1%. Guangdong Leadyo IC Testing Co., Ltd. has completed the test scheme for the world's first Beidou short message SoC chip and entered the mass production stage.

VI. Boosting the stable economic growth by key and core technology. The companies on STAR Market have raised a total of 733.151 billion yuan in the IPO, which are mainly used for R&D upgrades and capacity expansion. As of now, about 60% of the funds raised have been used. A large number of projects have been put into operation, which strongly supports the stabilization of the economy. Since the beginning of this year, the companies on STAR Market have continued to focus on their main business and increased investment in the industries involving key and core technologies. In the first three quarters, the companies have invested a total of 113.469 billion yuan in new fixed assets and intangible assets, an increase of 42% year on year. 22 companies have disclosed investment plans for major industrial projects, which will invest 26.594 billion yuan in expanding production capacity in the future. Among them, Trina Solar Co., Ltd. plans to invest 6 billion yuan to build a project with an annual output of 15GW high-efficiency batteries and 15GW high-power modules in Huaian Economic Development Zone. In addition, a total of 65 STAR Market companies have disclosed refinancing plans in the first three quarters, with a proposed fund-raising amount of 115.425 billion yuan, which will be mainly used to expand production capacity, set up new R&D centers, and develop new production lines. The initial construction investment was launched, which further promoted the growth of production capacity and orders, and supported the company to improve its long-term competitiveness. Among them, Galaxycore Inc.'s fund-raising project BSI production line entered mass production in August, which effectively guaranteed the supply of 12-inch wafers and realized the integration of resources at the chip design end and the manufacturing end. Hainan Jinpan Smart Technology Co., Ltd.'s Guilin Energy Storage Series Product Digital Factory Project has been completed. After full production, it can achieve an annual output of 1.2GWh energy storage products. Zhuzhou CRRC Times Electric Co., Ltd.'s subsidiary has passed a series of reviews by Valeo and will be the official supplier of IGBT modules for an electrical drive system project of Valeo. Advanced rail transit companies such as China Railway Construction Heavy Industry Corporation Limited and China Railway Signal & Communication Corporation Limited have deeply participated in the "new infrastructure". The new orders signed by China Railway Construction Heavy Industry Corporation Limited in the first three quarters exceeded 11.7 billion yuan, a year-on-year increase of 27%.

VII. Continuously optimizing shareholder structure. As of the end of the third quarter, the number of institutional shareholders of the companies on STAR Market has increased significantly, the number of professional institutional accounts has reached 38,700, and the market value of tradable shares has reached 45%. The holders of tradable shares of the companies on STAR Market included fund shareholders. The proportion of tradable shares held and that of the market value were 23% and 32% respectively. There were 26 ETF fund products related to science and technology, with a total fund share of 9.0706 million, an increase of 48% over the beginning of the year. Fund positions of 164 companies accounted for more than 30%, and key and core technology companies represented by integrated circuits, new energy and high-end medical devices were most favored by funds. Long-term funds such as social security funds, insurance companies, and QFII also continued to increase the allocation of the shares of the companies on STAR Market, with the total market value of tradable shares exceeding 5%. At the same time, STAR Market continued to be attractive to foreign investors. As of the end of the third quarter, the market value of tradable shares held by foreign institutions reached 95.8 billion yuan, accounting for 4%. Twelve STAR50 ETF products have been listed in many places overseas, opening up new channels for overseas investors to invest in the STAR Market.

VIII. Continuous improvement of investors' sense of gain. The companies on STAR Market broadly used repurchase tools to maintain the company's value, and actively released dividend distribution plans to share growth gains. In the first three quarters of 2022, a total of 70 companies on STAR Market issued repurchase plans, with an estimated maximum repurchase of about 6.5 billion yuan. A total of 38 companies issued plans to increase shareholding, involving 69 shareholders, of which 54 were directors or managers of the companies. Among those cases, in the third quarter, there were 11 new repurchase plans, with the planned repurchase amount reaching up to 1.2 billion yuan, and 6 new shareholding increase plans, with the total planned amount reaching up to 360 million yuan. Since 2022, a total of 337 companies have issued profit distribution plans, of which 332 have chosen cash dividends, with the total amount of dividends reaching 28.933 billion yuan. At the same time, performance meetings will be held by all the companies on STAR Market for the third quarterly report, where the chairpersons, general managers and other key responsible persons will conduct "face-to-face" communication with investors through live webcasts and text interactions.

IX. Gradual appearance of performance differentiation. In the first three quarters, the performance of the six major industries on the STAR Market was structurally differentiated. The new energy, energy conservation and environmental protection industries took the lead in performance growth. The high-end equipment manufacturing and biomedical industries performed well overall. The new-generation information technology and new materials industries performed worse than the overall level of the STAR Market. Affected by the pandemic, periodic changes in the industry, business seasonality and other factors, some companies experienced pressure in business performance. Among them, 93 companies on STAR Market saw the net profit attributable to the parent company fall by more than 50% year-on-year. After excluding unprofitable listed companies, 57 companies suffered losses in the first three quarters. The SSE will continue to track the companies' business conditions and remind investors to pay attention to related risks.