* Overall pft at mainland listed firms seen up 19 pct y/y
* Growth as Beijing tilts economy to consumption-led model
* Financial firms, utilities expected to post slower growth
By Lee Chyen Yee and Meg Shen
SINGAPORE/HONG KONG, May 21 China's companies
are forecast to turn in their biggest earnings increase in four
years in 2014 as strong growth in the consumer, energy and
industrial sectors propels overall profit at mainland-listed
firms 19 percent higher than a year earlier.
The expected improvement from an already solid 2013 showing
comes as Beijing seeks to steer the world's second-biggest
economy to a consumption-led model from reliance on trade. Just
completed earnings reports for January-December 2013 showed
overall income climbed 13.8 percent, boosted by consumer goods,
materials and information technology firms.
The consumer discretionary, energy and industrial sectors
together make up around a quarter of total earnings for mainland
Chinese firms. They are expected to see 2014 net profit grow by
an average of 42 percent, 5 percent and 44 percent respectively
in 2014, according to Thomson Reuters data based on analysts'
forecasts for more than 1,500 Shanghai and Shenzhen-listed
"Areas that we expect to do a little bit better obviously
are the consumer area. That's a big focus for the government to
try and re-balance the economy," said Steve Brice, chief
investment strategist at Standard Chartered Bank in Singapore.
The three sectors, which comprise big names like oil and gas
firm PetroChina Co Ltd and airline Air
China Ltd , as well as Peking duck
restaurant chain China Quanjude Group Co Ltd, are
expected to log the fastest profit rises since 2010.
BETTING ON CONSUMERS
Companies such as Air China and highway operator Shenzhen
Expressway Co Ltd, as well as Beijing Wangfujing
Department Store Group Co Ltd and home appliances
maker Midea Group Co Ltd are all expected to see
better profit growth this year, Thomson Reuters data showed.
"Consumers have been a long-term source of strength in the
economy and there are still some cheap parts of the consumer
market that we think you could find as an investor," said Stuart
Rae, chief investment officer at AllianceBernstein, a qualified
foreign institutional investor in China.
At financial and utilities companies, though, slower growth
is expected this year. China's easing economic growth is
bringing caps on lending at banks, while government policies
like electricity grid tariff cuts are weighing on power firms'
The financial sector, which contributes more than half of
overall earnings among mainland-listed companies, is expected to
post an average net profit growth of 10.3 percent in 2014,
according to Thomson Reuters data.
That growth in financials, which consists of names like
Industrial and Commercial Bank of China Ltd
and China Life Insurance Co Ltd
, will be the slowest in six years.
"The weaker economy is expected to sap demand for
fund-raising, which will cast a shadow on banks' earnings this
year," said Cao Xuefeng, head of research at Huaxi Securities in
Chengdu city, capital of Sichuan province.
(Reporting by Lee Chyen Yee in SINGAPORE and Meg Shen in HONG
KONG; Additional reporting by Patturaja Murugaboopathy in
BANGALORE in Andy Ho in SINGAPORE; Editing by Kenneth Maxwell)