Huatai Securities: China’s May Industrial Profit Growth Slows to 21.1%, AI-Linked Sectors Lead

China’s industrial enterprises saw profit growth ease to 21.1% in May from 24.7% in April, while remaining above 15.5% in the first quarter, Huatai Securities said in a research note, according to 36Kr. The note said revenue growth continued to improve, indicating an overall positive profit trend. Huatai Securities said energy and AI supply-chain-related industries were the main supports for profit growth. It added that with the Strait of Hormuz blockade lasting more than three months, supply shocks have deepened and capacity utilization at some midstream and downstream companies has weakened further, worsening profit divergence across industries. The report said oil prices edged down in May, but profit growth in the upstream petrochemical chain remained high. Benefiting from strong global AI investment demand, the electronics and computer sector continued to lead profit and revenue growth, with its contribution to overall industrial profit rising to 9.6 percentage points from 6.7 percentage points. Nonferrous smelting and chemical products contributed 6.4 and 4.2 percentage points, respectively, with the three sectors contributing about 20.2 percentage points in total. Demand-driven downstream manufacturing remained weak, with declines widening further in autos and furniture manufacturing, the note said.