Huatai Securities said in a research note that April industrial enterprise
profit growth accelerated to 24.7% from March's 15.8%, driven by improved price
indicators that supported profit repair, and that the rebound in inf showed
higher elasticity. It warned that mid- and downstream firms outside the AI chain
saw marginal profit weakening, signaling intensifying cost-side pressure. April
oil price gains continued to lift petroleum processing and chemical product
profits, while strong global AI investment demand kept the electronic computer
sector leading profit and revenue growth; other mid-/downstream sectors' profit
growth remained weak. Both volume and price contributed to the overall profit
recovery: revenue growth rose to 5.8% in April from 4.5% in March, and
seasonally adjusted profit margin edged up to 5.8% from 5.7% in March. Sector
divergence widened: upstream industries' contribution to aggregate profit growth
increased by 2.1 ppts from March's 3.8 ppts to 5.9 ppts. Within mid-/downstream,
computer and communications contributed 6.8 ppts, non-ferrous smelting 4.7 ppts
and chemical products 6.1 ppts; the three together contributed roughly 17.5
ppts. Other industries—especially domestic-demand-oriented downstream
manufacturers such as cement products, food & beverages, recreational goods and
furniture—continued to show weak profit growth.
