As the first quarter draws to a close, the first quarter reports of listed companies are about to surface, and the impact on stock prices is becoming increasingly obvious. Yesterday, the market reacted: Rongxin shares fell 7.09% due to the forecast of a 70%-100% drop in the first quarter report, becoming the stock with the largest decline in the Shenzhen Stock Exchange, while Asia Pacific shares quickly rose to the daily limit due to a large increase in the first quarter.

According to statistics, as of yesterday's close, a total of 205 companies in the two markets released first quarter performance forecasts. Among them, 117 companies expected to increase, accounting for 57%, 12 companies expected to make a profit, 1 company expected to reduce losses; 25 companies expected losses and 38 companies expected to reduce, accounting for 31% of the total. Since the Shenzhen Stock Exchange has stricter requirements for the performance disclosure of small and medium-sized board and GEM companies, these 205 companies are mainly GEM and small and medium-sized board companies.

The 117 companies with expected profit increases are in distinct industries: 23 companies are selected as mechanical equipment and instrumentation as a major industry, 25 companies are selected in the information technology and electronics industry, 15 companies are selected in the pharmaceutical and biological industry, and 15 companies are selected in the petrochemical and plastics industry. Other industries include social services, communication and cultural industries, metal and non-metal industries, etc.

Specifically, Shirong Zhaoye had the largest performance increase in the first quarter. The company's net profit in 2012 was 170 million yuan, more than doubled year-on-year. It is expected that the net profit in the first quarter of 2013 will increase by 35 times and 46 times compared with the same period last year. Shirong Zhaoye said that this is mainly due to the sales in the first quarter that far exceeded the same period last year. Chengfei Integration expects its net profit in the first quarter of 2013 to be 11.26 million yuan to 11.64 million yuan, an increase of 1380% to 1430% over the same period last year, mainly due to a significant increase in operating income year-on-year and the reversal of asset impairment losses. In addition, Huayi Brothers, Enlight Media, Goldwind Technology, BYD, Kangdexin, Guanghui Energy and other companies all saw performance increases of more than 100% in the first quarter.

Some of these companies with expected increases are those that continue to grow steadily. For example, based on the 145-fold increase in performance in 2012, OFILM expects to continue to increase its net profit by 190% to 240% in the first quarter of this year. Dahua Technology expects to increase its net profit by 80% to 120% again in the first quarter of 2013, following the growth of 122.11%, 45.21% and 85.23% from 2010 to 2012. After an average annual growth of 50% in the first three years, Jerry Technology expects its performance in the first quarter to increase by 135% to 165%.

It is worth noting that although the performance of some companies in 2012 was not satisfactory, they have made a good start this year and have obvious signs of improvement. For example, Goldwind Technology's net profit fell by 75% last year, but it is expected that its net profit in January-March 2013 will increase by 400% to 450% year-on-year. Affected by the slowdown in highway construction investment, Dagang Road Machinery's net profit fell by 18.7% year-on-year last year, while its revenue grew by 3.43%. However, as the Sri Lanka project began to contribute revenue in the fourth quarter of last year, the company's performance in the first quarter increased significantly by 30% to 60%. In addition, BYD achieved a net profit of approximately 81 million yuan in 2012, a sharp drop of 94.12% year-on-year, but the company announced that its net profit in the first quarter of this year will increase by 269.83% to 417.76%.

In the secondary market, the stock prices of these companies with expected growth have generally tended to rise this year, with only 15 companies reporting declines, of which 80 companies have seen a stage increase of more than 10%. Sanju Environmental Protection, Wangsu Technology, and O-Film ranked the top three, rising by 75.48%, 73.71%, and 68.45%, respectively.

Therefore, for these companies with expected growth, Yu Zhaojun of Hengtai Securities believes that investors can focus on two major opportunities: one is companies with sustained growth but whose current price-to-earnings ratio is still relatively low compared to their peers or growth rate; the other is companies with a high static price-to-earnings ratio but a clear trend of improving performance. A typical example is the glyphosate sector. Due to poor performance in the past, these companies had a high price-to-earnings ratio. However, since last year, the price of glyphosate has continued to rise, and related stocks have continued to soar. In Yu Zhaojun's view, these companies or sectors with inflection points in their fundamentals have a greater chance of a short-term explosion.

Some stocks with low P/E ratios that have announced first quarter results

Code abbreviation First quarter results forecast 2012 net profit year-on-year (%) Latest P/E ratio (times) Industry year-to-date increase (%)

002628 Chengdu Road and Bridge Net profit growth 50%-80% 35.86 12.57 Construction industry 4.70

002565 Shanghai Lvxin Net profit growth 80%-110% 20.55 19.24 Papermaking, printing 16.00

002035 Vatti shares Net profit growth 88.52%-137.94% 14.66 20.24 Machinery, equipment, instruments 41.24

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002588 Stanley net profit change 40%-60% 18.83 20.94 Petroleum, chemicals, plastics, plastics 16.16

002501 Liyuan Aluminum net profit growth 40%-60% 42.58 21.31 Metals, non-metals 20.48

002701 Oregan net profit growth 20%-60% 27.65 21.87 Metals, non-metals 15.25

002381 Shuangjian shares net profit increased 50%-80% 169.77 22.00 Petroleum, chemicals, plastics, plastics 32.12

002605 Yaoji Poker net profit increased 20 %-50% 32.09 25.76 Papermaking, printing 27.54 002443 Jinzhou Pipeline Net profit growth 20%-50% 63.40 27.48 Metal, non-metal 13.05 002276 Wanma Cable Net profit growth 80%-100% 25.64 27.61 Machinery, equipment, instrumentation 2.52 300019 Sibao Technology Net profit growth 30%-50% 22.23 27.90 Petroleum, chemicals, plastics, plastics 42.46 300141 Heshun Electric Net profit growth 40%-60% 35.63 28.58 Machinery, equipment, instrumentation 41 го85

300210 Senyuan shares net profit growth 20%-30% 30.48 32.28 Machinery, equipment, instruments 28.77

300039 Shanghai Kaibao net profit growth: 30%-40% 44.54 34.97 Medicine, biological products 38.32

300339 Runhe Software net profit growth 30%-45% 41.31 35.56 Information technology industry 13.36

002224 Sanlishi net profit growth 40%-70% 52.20 35.67 Petroleum, chemicals, plastics, plastics 34.51

Data source: This newspaper's network data department

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