Industry Multiples in China Report – December 2024

The Industry Multiples in China 2024 report provides a comprehensive analysis of the trading indices across various key industrial sectors in China as of September 30, 2024. This timely report offers valuable insights into the Chinese economy's performance, highlighting its growth trajectory amidst global economic fluctuations.

While the Chinese economy has encountered strong economic headwinds – an unsettled real estate market, weak domestic demand and international trade friction – throughout the course of the year, the rate of growth nonetheless compares positively against other major global economic markets with a 2.8% increase forecast for the U.S., and anemic rises of 0.9% and 0.8% predicted for Japan and the eurozone respectively.

Key Highlights

• The capital markets responded positively to a late September stimulus, with the Shanghai Composite Index rising over 8% in one day. The energy sector has rebounded notably, with trading multiples increasing from 6.1% in 2022 to 10.5% in 2024, driven by strong demand and government support for clean energy. However, the real estate market continues to face significant issues, including a sharp decline in net income.
• The technology sector shows signs of stabilization, with modest revenue growth in Information Technology and Communications Services, though this has not yet improved profitability. The health care sector is positioned for growth, bolstered by government initiatives. Meanwhile, the financial services sector struggles with around USD 1 trillion in bad property loans. Consumer sentiment is mixed, with retail sales growing by 3.7% in the first half of the year, but broader economic uncertainties may dampen confidence moving forward. Overall, the economic landscape is complex, with both opportunities and challenges across various sectors.