China's tax, fee cuts boost performance of listed firms: report

China's tax cuts and fee reductions have boosted the performance of public firms while continuously injecting impetus, a report from China Securities Journal said Monday.

Companies in traditional cyclical industries such as power and nonferrous metals, manufacturing and consumer sectors saw more benefits from the cuts, said the report.

For example, the Yunnan Aluminium Co., Ltd., a leading enterprise in the aluminum business, expected its net profit attributable to shareholders of the parent company for the first three quarters to hike 163.25 percent to 291 million yuan (about US$41.1 million).

Underpinned by a raft of tax and fee cuts, the company has seized the opportunity from the stabilized domestic and international aluminum markets to up the production and sales and effectively lowered the purchasing costs of bulk raw materials including the alumina and petroleum coke, the report said.

"The boons for public firms brought about by tax and fee reductions are universal," said Fu Lichun, a senior analyst with Northeast Securities.
The tax and fee cuts can improve the profit margin of listed firms on the one hand while expanding the demand on the other as consumers' tax burdens are lessened, Fu said.

Specifically, listed firms in the consumer industry will share more dividends partly due to the fact that its demand side is more sensitive to tax and fee rollback and traditional cyclical companies will directly benefit from lower costs, according to Fu.

In addition, the tax breaks have also promoted listed firms' R&D investment, transformation and upgrade and structural adjustment, the report said.

"With our tax burdens eased, we can strengthen our investment in R&D and productivity, which are of great significance to the company's sustainability," said the secretary of the board of Wuhan Raycus Fiber Laser Technologies Co., Ltd., Lu Kunzhong.

The company's R&D investment in the first six months of this year reached 45.21 million yuan, up more than 10 million yuan from the same period last year, according to its semiannual report.

Editor: John Li