January marks the peak period for the disclosure of annual report forecasts and preliminary results, with A-share profits for the full year 2025 expected to shift from four consecutive years of declining growth rates to positive growth. In the financial sector, non-banking institutions are likely to continue benefiting from high market activity; in the non-financial sector, gold and technology remain structural highlights, while some mid- and upstream industries benefit from price improvements. However, reduced support for trade-in policies may impact downstream consumer performance. Within the midstream manufacturing sector, certain sub-sectors of new energy are experiencing continuous earnings recovery, and export/overseas-focused industries continue to show resilience. Overall consumer demand requires a boost, while the TMT sector maintains its high growth momentum. The main views of CICC are as follows.
The A-share market has experienced a one-sided rally since mid-to-late December, recently hitting a new decade-high, indicating a significant improvement in trading sentiment. As A-share listed companies intensively disclose their annual report forecasts in January, industries and individual stocks showing earnings improvement or exceeding expectations may become the main focus for investors. As of January 10th, the number of A-share companies that have disclosed annual report forecasts accounts for about 1.8% of the total. Based on bottom-up predictions from CICC industry analysts, the bank has compiled an annual report earnings preview for investor reference.
For the full year 2025, A-share profits are expected to end the four-year streak of declining growth rates and turn to positive growth. Considering the low base effect in the fourth quarter of 2024 for non-financial profits due to impairments, the bank anticipates a year-on-year improvement in quarterly profits for Q4 alone. The profit growth rates for all A-shares/financial/non-financial sectors in the first three quarters of 2025 were 5.4%/9.5%/1.7% respectively. Integrating the Q4 situation, the bank expects the full-year 2025 profit growth rate for A-share non-financial enterprises to further increase compared to the first three quarters. The financial sector, especially non-banking institutions, is expected to benefit from market activity, with full-year financial sector profit growth potentially approaching 10%, and overall A-share profit growth for 2025 around 6.5%.
In the financial sector, non-banking institutions are expected to continue benefiting from high market activity. In the non-financial sector, gold and technology remain structural highlights. Some mid- and upstream industries benefit from price improvements, while reduced support for trade-in policies may affect downstream consumer performance. Structurally, the performance outlook varies across sectors.
Anti-involution policies, combined with rising international non-ferrous metal prices, are expected to boost earnings in some mid- and upstream industries, with the gold sector continuing to outperform. The year-on-year decline in the PPI narrowed in the fourth quarter. Domestically, "anti-involution" measures have improved supply-demand dynamics and prices in some industries, while seasonal demand supported coal and gas prices. Internationally, global factors continue to push non-ferrous metal prices higher, suggesting further earnings improvement for related sectors. Gold prices continue to break records amid Federal Reserve rate cuts and frequent geopolitical friction, remaining a potential structural highlight.
Within midstream manufacturing, certain sub-sectors of the new energy sector are seeing continuous earnings recovery, while export/overseas-focused industries maintain resilience. The new energy sector continued its capacity reduction in the fourth quarter, gradually alleviating supply-demand imbalances. Specifically, photovoltaic equipment profits turned from loss to profit in the third quarter, and the battery sector's profit growth rate improved compared to Q2, indicating potential for further recovery. Regarding exports, although China's export growth in Q4 slowed marginally compared to Q3, the high base from 2024 was a major disruption; demand remains resilient, with exports to non-US regions maintaining steady growth.
Overall demand in the consumer sector needs a boost. With the phase-out of trade-in policies and a higher base from the same period last year, retail sales growth continued to decline in the fourth quarter, with October and November year-on-year growth rates at 2.9% and 1.3% respectively. The bank expects the consumer sector to continue its divergence, with new consumption areas potentially showing relatively strong performance, while other areas may remain relatively subdued.
The TMT sector continues its high growth trajectory. Continuous breakthroughs in the AI industry in the fourth quarter, coupled with supportive technology innovation policies, have led to increased capital expenditure in some tech areas. The positive impact of the AI industry trend is expected to spread further, with the bank anticipating that semiconductors and computing power-related fields will maintain high growth rates.
What are the highlights in specific sub-sectors? Based on bottom-up feedback from CICC industry analysts: In the energy and raw materials sector, within non-ferrous metals, continued Fed rate cuts and improved demand expectations are accelerating price recovery. Gold prices continue to rise due to geopolitical friction and de-dollarization, suggesting strong sector performance. Coal prices generally recovered in Q4, with profits expected to improve sequentially. Steel production cuts fell short of expectations. Weak demand combined with declines in real estate and infrastructure continues to drag on building materials profits, but some sub-sectors may outperform due to industry sentiment, existing demand, and capacity contraction.
In midstream manufacturing, for power and new energy, the grid entered a peak delivery period in Q4, with strong performance realization within the grid. Accelerated data center construction outside the grid is expected to contribute profit elasticity. Energy storage demand remains robust with smooth upstream cost pass-through. New energy vehicle demand is seasonal with high production activity; electrolyte materials like 6F and VC are seeing increases in both volume and price. Wind power component deliveries declined sequentially in Q4, while other areas may see sequential improvement. In the photovoltaic industry chain, demand recovered sequentially, and industry price increases benefit upstream silicon material segments. However, price pass-through for battery modules has been relatively unsuccessful, potentially putting pressure on earnings. Auxiliary materials like glass faced price declines and rising costs, squeezing profits. In transportation, shipping benefits from flexible freight rate realization during the oil shipping peak season. Airlines saw increased passenger volume in Q4 but lower ticket prices, with losses likely flat year-on-year. Highway and railway passenger transport is expected to be stable. The anti-involution effect in express delivery is becoming apparent. In machinery, profits for AI infrastructure-related companies are secure. Rail transit equipment, ships, liquid cooling, and lithium battery equipment largely met expectations. Areas with potential for exceeding expectations include: electrolyte 6F, VC, photovoltaic silicon materials, PCB consumables, semiconductor probes, coal mining/oilfield service equipment, etc.
In downstream consumption, for staples, weak demand, a later Chinese New Year, and a high base are expected to pressure food and beverage profits in Q4. In the agricultural breeding chain, anti-involution policies for pigs are being gradually implemented, while poultry and feed operations are improving. Pet food shows strong resilience; price pressure on kitchen foods is marginally improving; grain prices for planting are stabilizing marginally. For discretionary consumption, in a weak domestic demand environment, traditional retail, home appliance domestic sales, tourism, catering, and textile and apparel brands show relatively weak performance. Textile and apparel manufacturing benefits from eased tariff uncertainties and restored inventory replenishment momentum from overseas brands, suggesting potential sequential improvement in orders and shipments, with earnings possibly exceeding expectations. Freshly-made beverages and hotels may perform better than expected. The domestic healthcare sector still faces short-term adjustments, with potential pressures from impairments and inventory clearance in Q4, while external demand is relatively optimistic.
In TMT, within tech hardware, for semiconductor design, as inference demand expands and the supply chain for domestic cloud AI chips eases, related stocks' earnings are expected to be released quickly. In the medium to long term, end-side applications like SoCs and memory will benefit. For semiconductor manufacturing, automotive and industrial electronics' import substitution, along with consumer electronics inventory replenishment, support Q4 2025 orders. In consumer electronics, overall mobile phone demand is stable, with growth potential seen in the Apple supply chain. AI is expected to stimulate terminal innovation, focusing on innovations in AI phones for both hardware and software. Strong overseas AI computing demand, good new ASIC demand, and accelerated AI server cabinet shipments bring profit elasticity to ODMs. In software, continuous catalysts in the AI field suggest potential for exceeding expectations in artificial intelligence and smart driving. In telecom services, revenue growth is slowing, but reduced capital expenditure supports dividend capability. In media, Q4 2025 entertainment demand is good, with stable performance in marketing advertising, book publishing, and cable broadcasting. The digital media sector faces slight pressure from a high base, while gaming and film/theater performance may exceed expectations.
In financials and real estate, marginally declining fees, stock/bond volatility, and a high base may affect brokerage and investment income. However, normalized IPO resumption and marginal improvement in new fund issuance are expected to support investment banking and asset management income, allowing brokerage profits to maintain high growth for the full year. Insurance life sales perform well, asset-side expectations are stable, and property insurance profits are expected to grow steadily. Bank profits are basically stable with strong certainty. In real estate, gross margins remain under pressure, and concentrated year-end impairment provisions may drag on quarterly performance.
Combining annual report focus with the following investment themes: Current domestic economic data shows a marginal slowdown compared to Q3, but some areas show signs of stabilization and recovery. Grasping inflection points in fundamentals and recovery elasticity may be key investment strategies. During the earnings disclosure period, focus on: 1) Areas with bright spots in annual report performance, such as gold, the high-growth TMT sector benefiting from AI, and non-bank financials. 2) High-growth trends: After three years of rapid development, AI technology is expected to gradually enter the industrial application realization stage in 2026. Opportunities remain in computing power, optical modules, and cloud computing infrastructure, potentially leaning towards domestic alternatives. Application areas to watch include robotics, consumer electronics, smart driving, commercial aerospace, and software applications. Additionally, innovative drugs, energy storage, and solid-state batteries are entering their growth cycles. 3) Breaking through via external demand: Overseas expansion remains a relatively certain growth opportunity. Considering overseas trends and exposure to the US, focus on home appliances, construction machinery, commercial passenger vehicles, power grid equipment, gaming, and globally priced resources like non-ferrous metals. 4) Cyclical reversals: Based on the position in the capacity cycle, focus on sectors where supply-demand issues are nearing an improvement inflection point or that have policy support, such as chemicals, aquaculture, and new energy.
Chart: CICC Analysts' Profit Outlook for Various Sectors Chart: 2024 Annual Report Disclosure Progress Chart: 2025 Annual Report Forecast Disclosure Progress Chart: Proportion of 2025 Annual Report Profit Warnings Chart: Jan-Nov 2025 Industrial Enterprise Profits YoY +0.1% Chart: YoY Profit Growth by Industry for Jan-Nov Chart: List of Some Companies Pre-announcing Annual Report Profit Growth Chart: Changes in 2025 Industry Profit Expectations Since November Chart: Changes in 2025 Industry Profit Expectations Since Year-start Chart: Forecasted Net Profit Changes for CSI 300 Constituents Chart: Forecasted Net Profit Changes for CSI 300 Non-Financial Constituents
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