INDUSTRIAL SECURITIES: All A-shares achieved revenue and net profit growth exceeding expectations in the first three quarters

According to the Zhitong Finance APP, Industrial Securities released a research report stating that the overall revenue and net profit of all A-shares in the first three quarters achieved year-on-year growth, with the overall ROE (TTM) of all A-shares rebounding, while non-financial changes remained relatively stable. The willingness of non-financial listed companies in all A-shares to replenish inventory and expand production remains weak, while TMT and non-bank sectors continue to show high prosperity, and the performance growth rate of the anti-involution sector has improved. Among the listed sectors, the net profit of the ChiNext Board continued to grow significantly year-on-year in Q3; in terms of indices, the revenue and net profit of large and mid-cap stocks increased year-on-year.

The bank believes that overall, the revenue and net profit of all A-shares are expected to achieve better-than-expected growth in the first three quarters of 2025, partly due to the relatively low base in the third quarter of last year; on the other hand, the three main lines in the third quarter are capital market investment returns, high-quality technological development, and "anti-involution," with related sectors further accelerating performance growth based on high growth in the first half of the year. Looking ahead, positive results from Sino-U.S. economic and trade consultations and the gradual implementation of a new round of domestic stable growth policies are expected to further establish the trend of improving profitability for listed companies.

The main views of Industrial Securities are as follows:

1. Overall revenue and net profit of all A-shares achieved year-on-year growth in the first three quarters

1.1. The trend of improving net profit growth rate of A-share listed companies is further confirmed

In terms of all A-shares: The "anti-involution" policy has taken effect, and new productive forces have further released performance, coupled with the impact of a low base in the same period last year, the year-on-year growth rate of revenue and net profit of non-financial companies in all A-shares has significantly improved compared to the first half of the year.

From the perspective of cumulative year-on-year growth rate of operating revenue, the growth rate of non-financial A-shares has turned positive:

The cumulative year-on-year growth rate of revenue for all A-shares in Q3 2025 is 1.35%, an increase of 1.23 percentage points compared to H1 2025; the cumulative year-on-year growth rate of revenue for non-financial A-shares in Q3 2025 is 0.70%, an increase of 0.95 percentage points compared to H1 2025. The cumulative year-on-year growth rate of revenue for non-financial petroleum and petrochemical companies in Q3 2025 is 1.91%, an increase of 0.89 percentage points compared to H1 2025.

From the perspective of cumulative year-on-year growth rate of net profit attributable to the parent company, the non-bank sector drives the overall A-share growth rate to surpass that of non-financial A-shares:

The cumulative year-on-year growth rate of net profit attributable to the parent company for all A-shares in Q3 2025 is 5.54%, a significant rebound of 2.95 percentage points compared to H1 2025; the cumulative year-on-year growth rate of net profit attributable to the parent company for non-financial A-shares in Q3 2025 is 1.92%, a rebound of 0.70 percentage points compared to H1 2025; the cumulative year-on-year growth rate of net profit attributable to the parent company for non-financial petroleum and petrochemical companies in Q3 2025 is 3.94%, a rebound of 0.15 percentage points compared to H1 2025.

From the perspective of cumulative year-on-year growth rate of net profit excluding non-recurring items:

The cumulative year-on-year growth rate of net profit excluding non-recurring items for all A-shares in Q3 2025 is 5.70%, an increase of 3.62 percentage points compared to H1 2025; the cumulative year-on-year growth rate of net profit excluding non-recurring items for all non-financial A-shares in Q3 2025 is 0.94%, an increase of 0.73 percentage points compared to H1 2025; the cumulative year-on-year growth rate of net profit excluding non-recurring items for non-financial A-shares in the petroleum and petrochemical sector in Q3 2025 is 3.13%, an increase of 0.05 percentage points compared to H1 2025.

From the perspective of year-on-year growth rate in a single quarter, both revenue and net profit attributable to the parent company for all A-shares in Q3 2025 increased year-on-year:

The year-on-year growth rates for operating revenue/net profit attributable to the parent company for all A-shares in Q3 2025 are 3.85%/11.52%, an increase of 3.43/10.06 percentage points compared to Q2 2025; the year-on-year growth rates for operating revenue/net profit attributable to the parent company for all non-financial A-shares in Q3 2025 are 2.70%/4.07%, an increase of 2.95/5.96 percentage points compared to Q2 2025. The year-on-year growth rates for operating revenue/net profit attributable to the parent company for non-financial A-shares in the petroleum and petrochemical sector in Q3 2025 are 3.77%/5.05%, an increase of 2.59/3.73 percentage points compared to Q2 2025.

From the perspective of quarter-on-quarter growth rate, in Q3 2025, non-financial A-shares saw revenue growth while net profit slightly declined, with growth rates at a moderately high level since 2008. The quarter-on-quarter growth rate of revenue for non-financial A-shares in Q3 2025 is 0.77%, while the quarter-on-quarter growth rate of net profit attributable to the parent company is -0.86%, ranking at the 70.5% and 76.4% percentiles since 2008, respectively.

This institution selects operating revenue as a comprehensive reflection of quantity and price, and gross profit margin as a price indicator, to analyze the volume and price of each sector. Although the overall gross profit margin TTM for non-financial A-shares in Q3 is still declining, the analysis shows that the gross profit margins of cyclical resource products represented by steel, non-ferrous metals, and chemicals have significantly improved, indicating the effectiveness of a series of "anti-involution" policies and key industry stable growth work plans since July; the consumer sector's prices have exerted a certain drag on the overall performance, which is generally consistent with the conclusions drawn from macro inflation data

Overall, the total A-share market achieved unexpected growth in revenue and net profit in the first three quarters of 2025. This is partly due to the relatively low base in the third quarter of last year; on the other hand, the investment returns from the capital market, high-quality development of technology, and "anti-involution" constitute the three main lines in the third quarter, with the performance of related sectors further accelerating on the basis of high growth in the first half of the year. Looking ahead, positive results from Sino-U.S. economic and trade consultations and a new round of domestic stable growth policies are expected to gradually take effect, further establishing the trend of improving profitability for listed companies.

Listed Boards: Net profit of the ChiNext continued to grow significantly year-on-year in Q3 2025

From the perspective of cumulative year-on-year growth rate of operating revenue:

The cumulative year-on-year growth rate of operating revenue for the main board in Q3 2025 is 0.71%, an increase of 1.18 percentage points compared to H1 2025; the cumulative year-on-year growth rate of operating revenue for the ChiNext in Q3 2025 is 10.49%, an increase of 1.74 percentage points compared to H1 2025; the cumulative year-on-year growth rate of operating revenue for the Sci-Tech Innovation Board in Q3 2025 is 6.02%, an increase of 1.52 percentage points compared to H1 2025.

From the perspective of cumulative year-on-year growth rate of net profit attributable to shareholders:

The cumulative year-on-year growth rate of net profit attributable to shareholders for the main board in Q3 2025 is 5.02%, an increase of 2.63 percentage points compared to H1 2025; the cumulative year-on-year growth rate of net profit attributable to shareholders for the ChiNext in Q3 2025 is 19.23%, an increase of 7.60 percentage points compared to H1 2025; the cumulative year-on-year growth rate of net profit attributable to shareholders for the Sci-Tech Innovation Board in Q3 2025 is -5.01%, with the decline narrowing by 10.06 percentage points compared to H1 2025.

Broad Market Index: Revenue and Net Profit Growth of Large and Mid-Cap Stocks in Q3 2025

In terms of cumulative year-on-year revenue growth, the order is: CSI 1000 Index > CSI 2000 Index > CSI 300 Index > CSI 500 Index:

The cumulative year-on-year revenue growth rate for large-cap stocks represented by the CSI 300 Index in Q3 2025 is 1.75%, an increase of 1.49 percentage points compared to H1 2025; the cumulative year-on-year revenue growth rate for mid-cap stocks represented by the CSI 500 Index in Q3 2025 is 0.85%, an increase of 0.70 percentage points compared to H1 2025; the cumulative year-on-year revenue growth rate for small-cap stocks represented by the CSI 1000 Index in Q3 2025 is 2.58%, an increase of 1.01 percentage points compared to H1 2025; the cumulative year-on-year revenue growth rate for micro-cap stocks represented by the CSI 2000 Index in Q3 2025 is 2.29%, an increase of 0.79 percentage points compared to H1 2025.

In terms of cumulative year-on-year net profit growth attributable to the parent company, the order is: CSI 500 Index > CSI 300 Index > CSI 2000 Index > CSI 1000 Index:

The cumulative year-on-year net profit growth rate attributable to the parent company for the CSI 300 Index in Q3 2025 is 5.33%, an increase of 2.88 percentage points compared to H1 2025; the year-on-year net profit growth rate attributable to the parent company for the CSI 500 Index in Q3 2025 is 9.65%, an increase of 2.27 percentage points compared to H1 2025; the year-on-year net profit growth rate attributable to the parent company for the CSI 1000 Index in Q3 2025 is -0.74%, an increase of 1.43 percentage points compared to H1 2025; the year-on-year net profit growth rate attributable to the parent company for the CSI 2000 Index in Q3 2025 is -0.20%, an increase of 4.02 percentage points compared to H1 2025.

1.2 Overall ROE (TTM) of All A-shares Rebounds, Non-Financial Sector Changes Little

In terms of ROE (TTM):

The overall ROE (TTM) for all A-shares in Q3 2025 is 7.73%, an increase of 0.13 percentage points compared to Q2 2025; the ROE (TTM) for all A-shares excluding financials and excluding financials and oil & petrochemicals in Q3 2025 are 6.55% and 6.27%, respectively, showing little difference from Q2 2025.

The DuPont analysis of ROE for all A-shares excluding finance shows that asset turnover continues to drag down performance, indicating that the supply-demand structure still needs improvement. The ROE (TTM) for all A-shares excluding finance in Q3 2025 is 6.54%, basically flat compared to Q2 2025; the net profit margin (TTM) is 4.59%, a slight increase of 0.04 percentage points compared to Q2 2025; the asset turnover (TTM) is 57.84%, a decrease of 0.12 percentage points compared to Q2 2025; the debt-to-asset ratio is 57.96%, down 0.13 percentage points from Q2 2025.

1.3, The willingness to replenish inventory and expand production among all A-shares excluding finance remains weak.

The net cash flow of all A-shares excluding finance has turned positive as a proportion of operating revenue (TTM). In Q3 2025, the net operating cash flow as a proportion of operating revenue (i.e., operating cash ratio, TTM) for all A-shares excluding finance is 10.54%, a slight decrease of 0.03 percentage points compared to Q2 2025; the absolute value of net investment cash flow/operating revenue (TTM) is 8.12%, down 0.31 percentage points from Q2 2025; the absolute value of net financing cash flow/operating revenue (TTM) is 2.27%, up 0.01 percentage points from Q2 2025; the overall proportion of the three net cash flows to operating revenue is 0.15%, turning positive from negative compared to Q2 2025.

The expense ratio for all A-shares excluding finance continues to decline. In Q3 2025, the sales expense ratio/management expense ratio/R&D expense ratio/financial expense ratio (all TTM) for all A-shares excluding finance are 3.06%/3.32%/2.59%/0.83%, changing by -0.03/-0.02/-0.02/-0.01 percentage points compared to Q2 2025; the total of the four expense ratios is 9.79%, down 0.08 percentage points from Q2 2025.

The overall willingness of listed companies to replenish inventory and expand production remains weak, with significant differentiation within industries. In terms of inventory, the cash growth rate for purchasing goods and accepting labor services for all A-shares excluding finance in Q3 2025 has turned positive at 1.10% year-on-year, but there is significant internal differentiation, with industries such as defense, electronics, and computer technology manufacturing further increasing cash expenditures for inventory replenishment, while traditional industries such as real estate and coal continue to show significant negative growth year-on-year; the year-on-year growth rate of inventory for all A-shares excluding finance in Q3 2025 is -2.47%, an increase of 1.97 percentage points compared to Q2 In terms of capacity, the year-on-year growth rates for total A-share non-financial capital expenditure, construction in progress, and fixed assets in Q3 2025 are -2.43%/-0.08%/+7.73%.

II. TMT and non-bank sectors continue to show high prosperity, with performance growth in anti-involution sectors improving

From the perspective of major sectors:

In terms of year-on-year net profit growth in Q3 2025: Midstream materials (36.43%) > TMT (21.66%) > financial real estate (7.58%) > midstream manufacturing (6.57%) > discretionary consumption (-0.37%) > other services (-1.27%) > essential consumption (-3.72%) > upstream resources (-4.86%).

From the marginal changes in year-on-year net profit growth in Q3 2025 compared to H1 2025: Midstream materials (+17.51pct) > financial real estate (+5.37pct) > TMT (+4.42pct) > upstream resources (+3.97pct) > midstream manufacturing (+2.39pct) > discretionary consumption (-0.86pct) > other services (-2.69pct) > essential consumption (-7.98pct).

Upstream resources: oil and petrochemicals, coal, non-ferrous metals, all belong to the first-level industry of Shenwan. Midstream materials: steel, basic chemicals, construction materials. Midstream manufacturing: construction decoration, machinery equipment, power equipment, national defense and military industry. Discretionary consumption: automobiles, home appliances, light manufacturing, retail trade, social services, beauty care. Essential consumption: food and beverages, textiles and apparel, pharmaceuticals and biotechnology, agriculture, forestry, animal husbandry, and fishery. TMT: electronics, computers, media, communication. Financial real estate: banking, non-bank financial, real estate. Other services: public utilities, transportation, environmental protection.

From the profit structure perspective (excluding comprehensive industries): In Q3 2025, the net profit TTM share of the financial real estate sector remains the highest at 48.94%, an increase of 0.80 percentage points from Q2 2025; the net profit TTM share of midstream materials/TMT sectors increased by 0.38/0.31 percentage points to 2.86%/8.15% compared to Q2 2025, while the shares of essential consumption/other services/upstream resources/discretionary consumption/midstream manufacturing sectors decreased by 0.60/0.38/0.26/0.23/0.01 percentage points to 7.65%/7.37%/11.65%/5.89%/7.49% compared to Q2 2025 From the contribution of year-on-year growth rate of net profit for all A-shares in Q3 2025: Financial real estate (3.58 pct) > TMT (1.58 pct) > Midstream materials (0.87 pct) > Midstream manufacturing (0.52 pct) > Consumer discretionary (-0.02 pct) > Other services (-0.11 pct) > Consumer staples (-0.32 pct) > Upstream resources (-0.59 pct).

At the primary industry level:

From the year-on-year growth rate of net profit in Q3 2025: Steel (747.63%), Non-ferrous metals (42.03%), Non-bank financials (38.97%), Electronics (38.19%), and Media (36.80%) rank in the top five.

From the marginal changes in year-on-year growth rate of net profit in Q3 2025 compared to H1 2025: Steel (+589.97 pct), Real estate (+45.01 pct), Non-bank financials (+20.30 pct), Power equipment (+14.87 pct), and Building materials (+10.16 pct) show the most improvement; Power equipment, Defense and military industry, Communication, and Banking have positive net profit growth rates for two consecutive periods with continuous improvement; Other primary industries with marginal improvement in net profit growth for two consecutive periods also include Beauty care and Real estate.

At the secondary industry level:

From the year-on-year growth rate of net profit in Q3 2025: Energy metals (385.53%), General steel (179.56%), Cement (164.25%), Marine equipment (150.10%), Film and television box office (108.52%), Animal health (96.38%), Gaming (88.61%), Software development (86.02%), Optical optoelectronics (76.41%), and Precious metals (62.31%) rank in the top ten.

From the marginal changes in year-on-year growth rate of net profit in Q3 2025 compared to H1 2025: Photovoltaic equipment (+4240.18 pct), Television broadcasting (+73.00 pct), Sports (+57.26 pct), Real estate development (+48.30 pct), Ground weaponry (+40.82 pct), Software development (+39.06 pct), Military electronics (+37.19 pct), Automotive services (+33.02 pct), Film and television box office (+32.41 pct), and Insurance (+29.82 pct) show the most improvement in the top ten; In the secondary industries where the net profit growth rate for both H1 2025 and Q1 2025 is positive and continuously improving, there are agricultural chemical products, electrical equipment (batteries, grid equipment, motors), military electronics, automotive parts, black household appliances, personal care products, non-baijiu, agricultural product processing, animal health, TMT (consumer electronics, components, other electronics, software development, communication services, communication equipment, gaming, film and television), insurance, etc.

Risk Warning

Deviations caused by differences in data statistics or calculation methods, changes in domestic and foreign policies, etc