I. Achieving positive growth in key business indicators

In the first half of 2022, the companies on SSE main board achieved a total operating revenue of 24.77 trillion yuan, net profit of 2.33 trillion yuan and net profit after deducting non-recurring gains and losses at 2.24 trillion yuan, up by 9%, 6% and 8% year on year. All key business indicators maintained the momentum of steady growth. By quarter, operating revenue, net profit and net profit after deducting non-recurring gains and losses increased by 12%, 7% and 6% year on year in Q1; 6%, 6% and 5% year on year in Q2, and 6%, 5% and 2% quarter on quarter. Affected by the pandemic, in April and May of Q2, some areas experienced periodic shutdowns. As the pandemic prevention and control progressed, the production and operation gradually returned to normal.

By industrial structure, companies in the real economy achieved operating revenue of 19.75 trillion yuan, net profit of 1.13 trillion yuan and net profit after deducting non-recurring gains and losses at 1.05 trillion yuan, up by 11%, 12% and 15% year on year, including 7%, 6% and 6% respectively year-on-year growth in Q2. Financial companies achieved operating revenue of 5.02 trillion yuan and net profit of 1.19 trillion yuan, both basically flat year on year. By corporate attributes, the state-owned companies under the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council achieved a total operating revenue of 10.81 trillion yuan and net profit of 0.64 trillion yuan, up by 17% and 19% year on year respectively. The momentum of high-quality development is obvious. Private companies also maintained strong operating resilience. They achieved operating revenue of 4.07 trillion yuan and net profit of 0.28 trillion yuan in the first half of the year, with both year-on-year growth rates of 3%.

II. Playing an obvious role in protecting people's livelihood and stabilizing employment

The SSE main board brought together a number of pillar industries that are related to China's national economy and people's livelihood. In the first half of the year, amid recurring pandemic and price hikes of raw materials, this was expected to make efforts to stabilize supply and prices to protect the foundation of people's livelihood. In terms of energy supply, the five leading power companies generated a combined total of over 450 billion kWh of electricity in the first half of the year, up by 8% year on year; Shenzhen Gas Corporation Ltd., Guizhou Gas Group Corporation Ltd., Chengdu Gas Group Corporation Ltd. and other companies with urban gas as their main business reported gas sales of about 19 billion cubic meters in the first half of the year, up by 4% year on year; China Shenhua Energy Company Limited, Shaanxi Coal Industry Company Limited, Yankuang Energy Group Company Limited and other coal companies reported coal production of 280 million tons in the first half of the year, up by 2.3% year on year. In terms of logistics and transportation, Daqin Railway Co., Ltd. mainly for coal transportation delivered 350 million tons of cargo in the first half of the year, up by 2.4% year on year; both YTO Express Group Co.,Ltd. and Deppon Logistics Co., Ltd. achieved year-on-year growth of the express business in the first half of the year; Xiamen C&D Inc., Xiamen ITG Group Corp.,Ltd and other supply chain companies handled 280 million tons of goods in the first half of the year, up by 11% year on year.

In terms of stabilizing employment, the overall number of employees of companies on SSE main board reached 16.67 million people in the first half of the year, and these companies provided estimated jobs indirectly to 217 million people; they paid a total of 2.01 trillion yuan in employee compensation, up by 6% year on year. In terms of material security, the food and drug industry and wholesale and retail businesses maintained a stable supply. Breeding companies completed 3.9 million head of slaughter in the first half of the year, up by 91% year on year; Bright Dairy & Food Co.,Ltd. guaranteed a total daily production of about 800 tons of dairy products in Shanghai during the pandemic, and Yonghui Superstores Co., Ltd. produced more than 200,000 guaranteed packages per day; Pharmacies of Shanghai Pharmaceuticals Holding Co.,Ltd, Jointown Pharmaceutical Group Co., Ltd, and Lbx Pharmacy Chain Joint Stock Company were "opened as many as possible" during the pandemic and took the initiative to deliver pandemic prevention materials.

III. Widening differentiation among upstream, midstream and downstream industries

In the first half of 2022, about 90% of the major industries on SSE main board achieved profits, more than 30% of the industries registered growth in both operating revenue and net profit, and the performance differentiation among upstream, midstream and downstream continued. The upstream industries maintained a high level of prosperity. Commodity prices remained high in the first half of the year. The extractive industries of the three major raw materials, namely oil, coal and non-ferrous metals, saw revenue growth of 34%, 26% and 14%, and profit growth of 60%, 105% and 89%, maintaining high growth rates from the high base of the same period last year. Since Q2, oil and coal prices have remained high, while prices of non-ferrous metals such as copper and aluminum have fallen significantly. In Q2, the non-ferrous metal extractive industry's revenue and profit growth slowed by 12 percentage points and 19 percentage points respectively from Q1. In addition, as the supply and price stabilization policy of thermal coal continued to be rolled out, the thermal power industry gradually resumed its profits. It reported a profit of 3.5 billion yuan in the first half of the year, reversing the loss in the second half of 2021.

The midstream and downstream industries suffered from pressure on the business performance front. Squeezed by high upstream raw material prices and slowing downstream demand, the midstream industries saw a significant increase in operating pressure. In the steel sector, for example, its first-half net profit fell sharply by 61%, and the decline in Q2 was steeper than that in Q1. Net profit in the chemical industry rose 15% year on year, but that was a sharp slowdown from last year. Among the downstream industries, the performance of some basic must-have consumption industries maintained the stable growth, such as food, agricultural and sideline products, and beverage industries, whose profits increased by 19%, 152%, and 20% respectively. Due to the high base last year, the growth of pharmaceutical manufacturing industry slowed down, but it still maintained a 3% profit growth; some alternative consumer industries were hit hard by local pandemic. Profits in the automobile, real estate, and cultural, sports and entertainment industries fell by 30%, 34% and 17% respectively, while the accommodation and catering industries posted losses.

IV. Maintaining growth in investment and exports

With the continued rollout of the policy of stabilizing investment, the investment expenditures of companies on SSE main board grew steadily. In the first half of 2022, the long-term asset purchase and construction expenditure of companies on SSE main board totaled 1.26 trillion yuan, up by 6% year on year. Among them, the long-term asset purchase and construction expenditure of manufacturing industry totaled 360.2 billion yuan, up by 23% year on year. Infrastructure-related industries such as cement, glass fiber and decoration showed significant growth, up by 130%, 103% and 76% year on year; the rapid development of new energy industries drove investments in non-ferrous metal smelting and processing, wind power equipment and photovoltaic equipment to expand by 79%, 72% and 56% year on year; general equipment manufacturing, automobile manufacturing and pharmaceutical manufacturing grew by 38%, 18% and 16% year on year.

Moreover, thanks to China's vast industrial hinterland and fast-repairing industrial and supply chains, the performance of export-oriented companies maintained faster growth in the first half of the year. The net profit of more than 110 export-oriented companies on SSE main board increased by 6% year on year, among which the net profit of chemical and pharmaceutical related companies increased by 84% and 30% year on year; manufacturers of electrical machinery and equipment related to production materials and equipment also performed well, with net profits up by 15% and 24% year on year. Based on broader port data, the three major port companies, namely Shanghai International Port (Group) Co., Ltd., Ningbo Zhoushan Port Company Limited and Qingdao Port International Co., Ltd., handled about 1.1 billion tons of cargo and 56.99 million TEUs of containers, up by 10% year on year, which provided a strong support for the resilience of exports.

V. Good growth momentum in advanced manufacturing

With the implementation of the new development concept, the growth of China's new drivers industries has accelerated and the industrial structure has been further optimized. On SSE main board, the advanced manufacturing industries represented by photovoltaic equipment, wind power equipment, power grid equipment, aerospace equipment and semiconductors reported a revenue growth of 31% and a net profit growth of 51% in the first half of the year, respectively higher than the overall growth of the entity industries by 20 percentage points and 39 percentage points. More than half of the companies saw both revenue and profit growth, with excellent overall business performance.

Meanwhile, the advanced manufacturing industry continued to increase investment in R&D. In the first half of 2022, companies in the real economy on SSE main board spent a combined total of about 285.1 billion yuan on R&D, up by 14% year on year. Among them, photovoltaic equipment R&D expenditure increased by 47%, and semiconductor industry R&D expenditure accounted for more than 7% of the revenue, significantly outperforming the entity industries as a whole. With the deep plowing on the R&D end, new technological achievements were emerging. For example, Longi Green Energy Technology Co., Ltd. continued to improve energy efficiency on its M6 full-size monocrystalline silicon wafers, breaking several world records for battery efficiency; the world's largest typhoon-resistant semi-direct drive offshore unit developed by Ming Yang Smart Energy Group Limited officially rolled off the production line during the reporting period, significantly improving wind capture efficiency while resisting super typhoons.

VI. Stable financing costs with decreases

While the amount of financing continued to grow, the cost of financing was stable with decreases. In terms of financing scale, in the first half of 2022, the companies in the real economy on SSE main board obtained financing of 6.81 trillion yuan, up by 9% year on year, including direct financing of 522.1 billion yuan and indirect financing of 6.28 trillion yuan. Manufacturing, construction and mining accounted for 64% of total financing, up by 17% year on year. In terms of financing costs, the cash interest expense of companies in the real economy on SSE main board accounted for 2.17% of their interest-bearing liabilities in the first half of the year, down by 0.53 percentage points from a year earlier. The annual interest rate was expected to be about 4.34%, and the financing costs fell significantly, with sectors such as information technology services and transportation seeing a big year-on-year decline.

In addition, the financial industry actively promoted the improvement of quality and increase in efficiency of financial supply in accordance with policy requirements. As of the end of June 2022, major banking companies reported a combined balance of corporate loans and advances of about 70 trillion yuan, an increase of about 9% from the beginning of the year. Further expansion of the scale supported the effective financing needs of the real economy; the overall average net interest margin of the banking industry was 2.02% and net interest margin was 1.93%, down by 0.08 percentage points and 0.09 percentage points respectively year on year. The further reduced financing costs for companies in the real economy was a sign that finance was benefiting the real sector.

VII. Frequent repurchase to increase shareholding

In the face of short-term market fluctuations in the first half of the year, companies on SSE main board sent positive signals to the market through share repurchases, that is, their intrinsic value was improving. According to the data, nearly 100 companies newly disclosed their new repurchase plans in the first half of the year, with the total proposed repurchase amount capped at about 23 billion yuan, of which Haier Smart Home Co., Ltd., Hengli Petrochemical Co.,Ltd. and Yonyou Network Technology Co., Ltd. have implemented repurchases totaling about 1.4 billion yuan, 1 billion yuan and 800 million yuan respectively; companies that early disclosed their repurchase plans have implemented repurchases exceeding 7 billion yuan in the first half of the year, of which 360 Security Technology Inc., Foxconn Industrial Internet Co.,Ltd. and SAIC Motor Corporation Limited all implemented repurchases exceeding 800 million yuan in the first half of the year.

In terms of shareholding increase, companies on SSE main board disclosed 72 new major shareholders' plans to increase their shareholdings in the first half of the year, with the total amount to be increased up to 18.8 billion yuan. Compared with the half year of 2021, 30 new plans of shareholding increase were disclosed and the amount of proposed increase also increased significantly. Among them, the major shareholders of industry leaders such as China Mobile Limited, SAIC Motor Corporation Limited, COSCO Shipping Holdings Co., Ltd. and Shandong Linglong Tire Co., Ltd. increased their shareholdings in large amounts, demonstrating their confidence in the future development of listed companies.

VIII. Continuous net inflow of foreign capital

According to the semi-annual data, foreign capital maintained a steady inflow and the shareholding ratio of foreign shareholders was stable. In the first half of the year, the net purchase by foreign capital on SSE main board represented by Shanghai-Hong Kong Stock Connect, QFII and RQFII totaled about 63.4 billion yuan, up about 48% year on year. As of June 30 of 2022, the market value of foreign shareholders' holdings in the tradable shares of companies on SSE main board was about 1.83 trillion yuan, accounting for about 3.7%, roughly unchanged from the beginning of the year. Among them, 212 companies had positions with a market value of over 1 billion yuan, and 106 companies had positions of over 5%. Besides, data showed that the times and number of companies on SSE main board surveyed by foreign institutions in the first half of the year both increased significantly. Apart from this, driven by policies, listed companies embraced a wider range of overseas financing channels, along with accelerated internationalization. So far, 14 companies on SSE main board have made announcements on overseas GDR issuance, of which 7 have completed issuance and listing, raising a total of about 7 billion dollars.

Meanwhile, professional institutions on SSE main board have maintained stable shareholdings and the trading volume steadily increased. As of the end of June 2022, the market value of professional institutional investors' holdings in the tradable shares of companies on SSE main board was about 7.68 trillion yuan, accounting for about 15%, basically unchanged from the previous year; the average daily trading volume in the first half of the year was 257.6 billion yuan, an increase of 12.8 billion yuan, or 5%, over the previous year. Among them, fund investors held 4.41 trillion yuan in market value, or about 8%, up by 0.27 percentage points from the same period previous year; the average daily trading volume in the first half of the year was 188.8 billion yuan, up by 6.3 billion yuan, or 3%, from the previous year.

IX. Impact of the pandemic to be fixed

In the first half of 2022, the overall performance of companies on SSE main board was stable and positive. However, due to the continuous impact of internal and external adverse factors, such as the pandemic, some companies suffered greater operational difficulties. In the first half of the year, 276 companies on SSE main board lost money, accounting for 17%, with a total loss of 119.5 billion yuan. Compared to the first half of 2021, there were 115 additional loss-making companies and the loss amount increased by 56.4 billion yuan. By industry, about 60% of industries were in decline or loss. Due to the prolonged impact of the pandemic, some industries were facing significantly increased operating pressure. Tourism, film, television, theaters and airports posted a total loss of 68.4 billion yuan in the first half of the year, up 50.5 billion yuan. By region, affected by the pandemic, the operating revenue and net profit of relevant companies in Shanghai and Jilin decreased by 7% and 24%; 16% and 44% respectively year on year.

In terms of operating quality, the differentiation among companies increased, with about 60% experiencing greater operating risks. In the first half of the year, the cash flow from overall operating activities of companies in the real economy increased by 13% year on year, the receivable turnover ratio increased by 0.12 percentage points year on year, but the overall gross profit margin decreased by 0.03 percentage points. In terms of the specific distribution of companies, more than 60% of the companies' gross profit margin declined year on year, nearly 50% of the companies' cash flow decreased year on year, about 60% of the companies' accounts receivable turnover ratio decreased, and 40% of the companies' bad debt provision ratio increased. Also, the slowdown in payback led to a 0.67-percentage-point increase in the asset-liability ratio of companies in the real economy compared with the end of last year, and about half of the companies' in the real economy asset-liability ratio increased.

Since the end of Q2, with the favorable pandemic prevention and control situation, the offline consumer scene has gradually recovered and there have been some positive factors. According to the monthly production and sales express of SAIC Motor Corporation Limited, Guangzhou Automobile Group Co., Ltd, BAIC BluePark New Energy Technology Co.,Ltd. and Great Wall Motor Company Limited, the total auto production and sales increased by 40% and 38% year on year respectively in June. In July and August, relevant data maintained growth, hinting at improved downstream demand. Equipment, automobile and other manufacturing industries also showed a slight recovery in gross profit margin quarter-on-quarter in Q2. On the whole, however, there are still many external instabilities and uncertainties, especially since August when some regions encountered multiple challenges such as power rationing, extreme heat and the pandemic. The subsequent recovery remains to be seen.