Statistics

China's central SOEs' profits to hit 1t yuan

(Xinhua)
Updated: 2010-12-28 16:42

BEIJING - Profits of China's centrally-administered State-owned enterprises (SOEs) will hit 1 trillion yuan ($150.94 billion) this year, a government official said Tuesday.

Economic value added (EVA) of central SOEs will exceed 300 billion yuan this year, said Huang Shuhe, vice chairman of the State-owned Assets Supervision and Administration Commission (SASAC), the SOE watchdog, while addressing a work conference on performance evaluation for SOEs executives.

The SASAC announced in January to use the EVA measure to assess the performance of SOEs affiliated to the central government this year.

The EVA, widely used among top-tier transnational firms such as Coca-Cola, refers to the residual income of enterprises after taking the cost of capital out of their net operating profits after tax.

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Developed by the US- based consultancy firm Stern Stewart & Co, the EVA measure is used to assess how efficiently the capital is utilized and to what extent it creates value.

The SASAC figures show that profits of the central SOEs rose 50.1 percent year-on-year to 802.26 billion yuan in the Jan-Nov period, while combined business revenue grew 34.7 percent to 14.9 trillion yuan in the period.

Huang said that return on equity (ROE) and return on cost of the central SOEs are expected to rise 0.5 percentage points year-on-year as central CEOs are more efficient in using the capital.

The central SOEs will work to be more value-driven during China's 12th Five-year Program (2011-2015) period, contribute more to emissions cuts and green development, and tackle historical problems to lay a solid foundation for further development, Huang said.

Huang also urged to restructure and merge small, uncompetitive SOEs to improve asset quality and solve important debt disputes caused during reorganization process.