In 2023, the countdown begins.
Looking back on the past year, all localities are making every effort to fight for the economy, and the national economy has stabilized and improved. However, due to the impact of the global macro environment and industry cycles, the past year has not been easy for many industries, and has even suffered a greater impact.
However, there are some industries that have achieved impressive results even in a difficult environment and have become the benchmark for 2023.
The Economist has selected the top 10 strongest industries in 2023 by synthesizing authoritative data from all parties. Surprisingly, some of the hottest industries at the moment did not make the list.
So, what does it mean to be "strong"?
The definition criteria in this article are divided into two criteria: net profit margin and the percentage of the number of deregistered enterprises in the industry in 2023 to the number of enterprises in the overall industry.
In terms of calculating the net profit margin of the industry, this article calculates and screens out the top 10 industries (except for a special industry) with no less than 15 A-share listed companies in the first three quarters of 2023 in the financial reports of Shenwan A-shares, and the percentage of the number of enterprises cancelled in the industry in 2023 is calculated according to the data of Qichamao.
01
1st place Liquor
Liquor is still the strongest industry in 2023, with a net profit margin of 39.5%, an increase of 0.7 percentage points from last year.
What's even more amazing is that the liquor industry not only has a high net profit margin, but also a gross profit margin of 80.4%. Among them, Moutai's gross profit margin even exceeded 91%, which was unbeatable.
According to the statistics of Qichamao, the total number of enterprises in the liquor industry has reached 105,000, of which 114 will be cancelled in 2023, accounting for 0.1% of the overall enterprises. This number is at an extremely low level.
Why has the liquor industry been able to maintain such a strong position?
In fact, in the past year, the liquor industry has not seen explosive growth. One of the industry's outstanding performances is driven by high-end liquor.
Although the overall output of liquor has experienced "six consecutive declines", the sales of high-end liquor have been soaring. Under the leadership of high-end liquor brands led by Moutai and Wuliangye, the domestic high-end liquor market has come out of a wave of prosperity. "No high-end, no future" once became the "standard" for judging the future of wine companies, and it was also reflected in the performance of listed wine companies.
Data shows that from 2016 to 2022, Kweichow Moutai's revenue has increased from 40 billion yuan to 127.55 billion yuan, and Wuliangye has also achieved more than twofold revenue growth. Even in the first three quarters of this year, Moutai achieved revenue of 103.268 billion yuan, with a year-on-year increase of more than 18% in revenue and net profit.
At the same time, due to the gradual increase in the market concentration of the liquor industry, it continues to concentrate on the head enterprises, which enhances the anti-risk ability of the overall industry.
According to the report of the Prospective Industry Research Institute, the total share of the top 2 enterprises in the mainland liquor industry is 28.87%, the total share of the top 4 enterprises is 37.23%, and the total share of the top 8 enterprises is 45.82%, which belongs to the oligopoly V. type, indicating that the market concentration is high and the leading enterprises have a certain degree of control over the market.
In addition, with the gradual recovery of consumption in mainland China and the arrival of the Spring Festival, the liquor industry may usher in another wave of climax.
02
2nd place Banks
According to the financial reports of 42 A-share listed companies in the first three quarters, banks have become the second strongest industry in 2023 with a net profit margin of 38.3%.
In fact, compared with last year, the bank's overall operating income has declined, but its net profit has increased by 3% year-on-year. This means that the industry has achieved a significant improvement in profitability while facing revenue pressure.
According to the A-share financial report, the bank's income mainly comes from three aspects: deposit and loan difference (net interest income), channel business expenses (net fee and commission income), and investment income, and the deposit and loan difference accounts for a large part of the overall income.
The difference between deposits and loans is the difference between deposits and loan income, which is actually the essence of the bank, that is, through the conversion of capital scale, maturity and risk, to achieve a better allocation of funds, and to earn interest rate differences. Therefore, the cost of both the supply and demand of funds determines the difference between deposit and loan interest rates.
This year, with the gradual improvement of the economy, household consumption is steadily recovering, and residents' credit is picking up.
According to the financial statistics released by the central bank for the first three quarters of 2023, RMB loans increased by 19.75 trillion yuan in the first three quarters, an increase of 1.58 trillion yuan year-on-year.
Wen Bin, chief economist of China Minsheng Bank, said: "It can be seen from the financial data that the financial data is generally good under the stable and improving economy, the continuous effect of policy combinations, and the solid and strong financial support. The policy bottoming and economic accumulation will drive the subsequent stable expansion of credit and the optimization of credit structure, and the scale of social financing and credit growth will continue to remain stable in the fourth quarter, further consolidating the momentum of economic recovery. ”
03
3rd place Securities
As an important part of the mainland's financial industry, the net profit margin of the securities industry in 2023 is slightly lower than that of banks, but it still reaches 30.1%, an increase of 2 percentage points compared with the same period last year.
The securities industry is still one of the most "lucrative" industries.
According to the statistics of Qichamao, as of the end of 2023, among the 128,000 enterprises in the securities industry, 430 were cancelled that year, accounting for 0.33%.
The securities industry has been developing in mainland China for many years and is now gradually maturing, with 50 listed companies in the industry. Among listed companies, the company's securities business operating income accounts for more than 70%, and is generally concentrated in the range of 85%-100%. From the perspective of business layout area, small securities industry listed companies focus on their respective headquarters and regions, large securities industry listed companies for the national layout, CITIC Securities, China Securities Construction Investment, Huatai Securities, Haitong Securities and other leading companies have begun to go to overseas markets.
According to the report of the Prospective Industry Research Institute, from 2017 to 2021, the scale of the domestic securities market increased from 311.328 billion yuan to about 496.795 billion yuan, with an average annual compound growth rate of 12.4%, mainly benefiting from the expansion of the capital market brought about by the economic development of the mainland. In the first three quarters of 2022, the market size of the domestic securities industry was about 304.2 billion yuan, a year-on-year decrease of 16.95%, mainly due to the escalation of the epidemic in 2022, the conflict between Russia and Ukraine, and the Federal Reserve's interest rate hike.
In the first three quarters of this year, the industry began to pick up.
The performance of brokerages continues to maintain the pattern of the strong and strong, with the market concentration of the top 10 brokerages in revenue being 61% and the top 10 brokerages in net profit being 66%. The top net profit is dominated by leading brokerages, and many net profits have increased by more than 100%.
Behind this, the policy dividend has changed from expectation to landing.
Since July, the capital market has been supported by a number of blockbuster policies, and the impact of active capital market policies has continued.
04
4th Place: Diversified Finance
The financial sector has been really strong in 2023.
The second-ranked banks and the fourth-ranked securities, plus the fourth-ranked diversified finance, the financial industry occupies three of the top 10 strong industries this year.
Diversified finance refers to industries mainly engaged in quasi-financial activities and financial derivatives trading, including trusts, futures, pawnbroking, financial leasing, AMC, microloans, investment management, financial intermediation, third-party payment, financial holdings, etc.
In 2023, among the 30 A-share listed diversified financial companies, the industry's net profit margin will reach 28.7%. Similar to the banking industry, the net profit margin of the diversified financial sector increased by 5 percentage points, although the overall revenue fell by nearly 9% in the first three quarters of this year.
According to the statistics of Qichamao, among the 389,000 diversified financial enterprises, 1,372 companies have been cancelled this year, accounting for 0.35%.
As the global economy continues to evolve and financial markets become more complex, many factors will contribute to the development of a diversified financial industry, such as evolving technology, changing consumer behavior, increasing risk management and investment needs, and more.
At the same time, with the continuous integration of the global economy and the growing international trade, the diversified financial industry will continue to play an important role. International trade and investment require a large amount of financial support and protection, which provides a broad market space and development opportunities for diversified financial industries.
05
5th place Energy Metals
Although energy metals squeezed into the top 5, in terms of net profit margin, compared with the same period last year, it fell by 12 percentage points to 23.5%, which is the largest decline among the top ten strongest industries.
According to the statistics of Qichamao, among the 569,000 energy and metal enterprises, as many as 20,000 enterprises have been cancelled this year, accounting for 3.5%.
Energy metals refer to those metal elements that play an important role in the energy field, including copper, aluminum, zinc, nickel, tin, iron, cobalt, tungsten, molybdenum, etc.
Looking back on 2023, the energy metals sector has experienced a unilateral downward trend in prices under the pressure of slowing demand growth and destocking, and the pressure of industrial destocking is still large.
In particular, the mainland's new energy industry has gradually changed from the overheating period of explosive growth in the past to the transition period of rationality - after experiencing the rapid expansion of the market in the early stage, the oversupply and demand began to appear, the industry growth rate gradually fell back to a relatively stable level, and the marginal change in demand growth gradually fell or will become a future trend.
Taking lithium carbonate as an example, in 2022, the price of lithium carbonate will rise all the way, which will lead to a sharp rise in the price of lithium battery materials and lithium batteries, and almost all enterprises in the lithium battery industry chain have made a lot of money;
Affected by this, most enterprises in the lithium battery industry chain are facing performance pressure, and the net profit of leading enterprises in the industry, Tianqi Lithium and Ganfeng Lithium, plummeted by 49% and 59% respectively in the first three quarters of this year.
At present, lithium carbonate is in a state of oversupply, and the industry consensus has been formed, and the whole industry is still in the stage of destocking, because the industry expanded too quickly the year before last year and too many enterprises entered across borders, resulting in an oversupply of lithium carbonate. However, with the decline of lithium carbonate prices, some high-level or cross-border enterprises are gradually retreating, but the current clearance is not enough, only when the price of lithium carbonate falls to a low position, and some companies take the initiative to withdraw due to cost disadvantages, the industry will be close to the node of supply and demand balance.
06
6th place Railways and roads
Compared with last year, there has been an explosive growth in railways and highways. Among the 34 A-share listed companies, the net profit margin of the whole industry reached 22%, an increase of nearly 6 percentage points year-on-year.
The outstanding performance of the railway and road transport industry has benefited from the smooth flow of travel and the recovery of tourism since the beginning of this year.
According to the National Bureau of Statistics, in the first three quarters of 2023, the mainland's railways, highways, water transport, and civil aviation completed 6.968 billion passenger traffic, an increase of 56.1% over the same period last year, and completed a passenger turnover of 2.18 trillion person-kilometers, an increase of 106.9% over the same period last year.
During the same period, the mainland's railways, highways, water transport, and civil aviation completed 40.283 billion tons of freight traffic, an increase of 7.1 percent over the same period last year, and completed a cargo turnover of 17.69 trillion ton-kilometers, an increase of 6.6 percent over the same period last year.
As far as listed companies are concerned, the Beijing-Shanghai Railway has shown an amazing ability to attract gold.
According to the performance report for the first three quarters of 2023 released by the Beijing-Shanghai high-speed railway, the net profit is expected to reach up to 9.662 billion, a year-on-year increase of 6256.58%, which is really eye-catching.
In the same period last year, the net profit of the Beijing-Shanghai high-speed railway in the first three quarters was only 152 million, of which the loss in the second quarter was more than 1 billion.
The Beijing-Shanghai high-speed railway is not only one of the busiest high-speed rail lines in China, but also the first listed high-speed rail company, and its soaring performance has also become a microcosm of the recovery of the railway and highway industry.
07
7th Shipping Port
Although it is on the list, the performance of the shipping port industry this year is not ideal, with the net profit margin of the whole industry only 21.1%, down nearly 9 percentage points from the same period last year.
Since the epidemic, sea freight has been soaring, and the price has increased 10 times at its peak. Especially at the beginning of last year, there was even a situation where containers were "hard to find".
This is mainly due to port congestion and insufficient capacity due to the epidemic. The growth of demand for container transportation has driven the price of container transportation to increase exponentially. Container shipping eats meat, and container ports naturally drink soup. Finally, the net profit margin of the entire shipping port industry soared last year, exceeding 30%, comparable to the financial industry.
However, this year, the relationship between supply and demand in the shipping market has reversed, supply exceeds demand, and the price of Haiyun has plummeted.
At present, the downward pressure on the global economy and the overall weak demand are expected to keep ocean freight rates low in the future. Overcapacity may also lead to continued low ocean freight rates over the next five years.
But emaciated camels are bigger than horses.
The high demand of shipping ports, combined with their low costs, bulk shipping advantages, and price stability, makes the industry still profitable.
08
No. 8 Medical Devices
Medical devices ranked eighth, but the overall performance was not as good as it could be.
Data show that in the first three quarters of this year, 124 A-share medical device listed companies achieved a total operating income of 176 billion yuan, a decrease of 28.3% compared with 245.5 billion yuan in the same period last year. Similarly, there was also a decline in net profit that could not be ignored, from 76.6 billion yuan in the first three quarters of 2022 to 33.4 billion yuan, a decrease of 56.4%.
As a result, the industry's net profit margin fell from 31.2% last year to 19% this year.
According to the statistics of Qichamao, among the 104,000 medical device companies, 9,825 companies have been cancelled this year, accounting for 9.4%.
Specifically, there is a clear differentiation in the performance of listed companies in the sector. The performance growth in the field of medical equipment is relatively stable, and high-end equipment has frequently made breakthroughs. However, the in vitro diagnostic industry has been affected by the subsidence of the epidemic, and its performance has declined sharply, and there has been a rush to accrue asset impairment losses.
For example, nucleic acid testing companies such as Da'an Gene, Shengxiang Biotechnology, Mingde Biotechnology, and Zhijiang Biology have exploded in performance during the epidemic, often increasing by several times, or even dozens of times.
In the future, these companies can successfully open up the second growth curve, which will have a great impact on the performance of the medical device industry.
09
9th place Medical services
The ninth and strongest industry is still from the medical sector.
The medical service industry takes medical and health institutions as the core carrier to provide people with special commodities related to life and health - medical services. Its segments include diagnostic services, medical R&D outsourcing, hospitals, and other medical services.
Among the 50 A-share listed medical service companies, the net profit margin recorded 16.9%, which was slightly lower than the same period last year, but did not decline significantly.
This also shows that in the post-epidemic era, the public's attention to health is increasing. In addition, with the aging of the population, the public demand for medical services is also increasing.
For example, Meinian Health, a leading enterprise in the field of health examination, has four major health examination brands: "Meinian Health", "Ciming", "Aoya" and "MJ". In the first three quarters of this year, Meinian Health achieved operating income of 7.217 billion yuan, a year-on-year increase of 24.81%, and net profit attributable to the parent company of 226 million yuan, a year-on-year increase of 158.10%.
10
10th place Coal
The tenth place, which may come as a little surprise, is actually coal from the traditional energy industry. The industry's net profit margin recorded 16.4%, but it fell nearly 4 percentage points from the same period last year.
According to the statistics of Qichamao, among the 21,000 coal enterprises, 718 enterprises have been cancelled this year, accounting for 3.4%.
In 2022, various factors such as geopolitics and abnormal weather will disrupt the traditional energy market, and the rigid demand characteristics of traditional energy will become more and more prominent, and the coal industry will come out of a wave of upward market.
Although the coal market has experienced significant fluctuations this year, and prices have shown a rollercoaster trend, they have generally maintained a high level throughout the year, exceeding market expectations to a certain extent.
According to the "2023 China Coal Industry Development Report", from the demand side, the total coal consumption in the mainland will increase slightly in the coming period, and the peak national coal demand is expected to be about 4.5 billion tons, and the national coal demand will be about 4 billion tons by 2030. From the supply side, the total coal production of the mainland will increase slightly in the coming period, and will show a downward trend after reaching a high level in 2027. On the whole, the future coal output of the mainland will show a trend of 'steady increase-peak-decline'.
In other words, in the next few years, the coal industry will still maintain a certain amount of room for growth.
The Economist APP Industry Observation Group
For more industry research and analysis, please see:
[1] "2023-2028 China Liquor Industry Market Demand and Investment Strategic Planning Analysis Report", Qianzhan Industry Research Institute
[2] "2023-2028 China Lithium Carbonate Industry Development Prospect Forecast and Investment Strategic Planning Analysis Report", Qianzhan Industry Research Institute
[3] "2023-2028 China Coal Industry Development Trend and Investment Decision Analysis Report", Qianzhan Industry Research Institute
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Resources:
[1] "Comparison of Leading Enterprises in China's Lithium Carbonate Industry in 2022: Ganfeng Lithium PK Tianqi Lithium Who is the Lithium Carbonate Leader in China?", Prospective Industry Research Institute
[2] "Long Slope and Heavy Snow on the Liquor Track, Waiting for the Value to Return to the "New Spring"", Securities Daily