China's Industrial Profits Rise in April, Driven by AI and Oil Sectors

According to Jin10, a report by Huatai Securities indicates that the profit growth rate of industrial enterprises in April increased to 24.7%, up from 15.8% in March. This improvement was driven by better price indicators and a rebound in inflation, although profits for midstream and downstream companies outside the AI sector weakened, highlighting increased cost pressures. Oil prices continued to rise in April, boosting profits in petroleum processing and chemical products. Additionally, strong global demand for AI investments supported ongoing profit and revenue growth in the electronic computer industry. However, other midstream and downstream sectors showed weaker profit growth. Overall, industrial enterprise profit growth rose to 24.7% in April, with both volume and price contributing to this increase. Revenue growth also improved from 4.5% in March to 5.8% in April, while the profit margin (seasonally adjusted) increased from 5.7% to 5.8%. The report highlights significant industry divergence, with upstream industries' contribution to overall profit growth rising from 3.8 percentage points in March to 5.9 percentage points. In the midstream and downstream sectors, computer communications contributed 6.8 percentage points to overall industrial profit growth, while non-ferrous smelting and chemical products contributed 4.7 and 6.1 percentage points, respectively, totaling approximately 17.5 percentage points. However, other industries, particularly downstream manufacturing related to domestic demand, such as cement products, food and beverages, entertainment products, and furniture, continued to show weak profit growth.