Huatai Securities: Overall improvement in industrial enterprise profits in May, industry differentiation intensifies.

Huatai Securities research report stated that in May, the profit growth rate of industrial enterprises slightly fell from 24.7% in April to 21.1%, but still higher than the 15.5% in the first quarter. Revenue growth continued to rebound, indicating overall improvement in corporate profits. The energy and AI-related industries were the main support for profit growth, and with the blockade of the Strait of Hormuz lasting for more than three months, the deepening impact of supply shocks further weakened the capacity utilization of some downstream enterprises, leading to intensified differentiation in industry profit performance. In May, oil prices marginally fell but the overall profit growth rate of the upstream petrochemical chain remained high. Benefiting from strong global AI investment demand, the electronics and computer industry continued to lead in profit and revenue growth, contributing from 6.7 percentage points to 9.6 percentage points to the overall industrial enterprise profit. Non-ferrous smelting and chemical products contributed 6.4 and 4.2 percentage points respectively, totaling approximately 20.2 percentage points. However, profits in downstream manufacturing related to domestic demand remained weak, particularly in the automotive and furniture manufacturing industries where profit growth rates continued to decline.