Industry Multiples in China Report—November 2023

The Industry Multiples in China 2023 report provides a comprehensive analysis of the trading indices across various key industrial sectors in China as of September 30, 2023. This timely report offers valuable insights into the Chinese economy's performance, highlighting its growth trajectory amidst global economic fluctuations.

Despite facing challenges such as the lingering effects of the COVID-19 pandemic and a slowdown in momentum throughout the year, China's economy displayed remarkable resilience, expanding by 5.2% in the first nine months of 2023. This growth rate outperformed major global economies such as the United States, Japan, and the Euro area, reinforcing China's position as a significant player on the world stage.

The report unveils intriguing patterns and trends within different sectors of economic activity. In the Consumer Discretionary sector, trading multiples surged as the sector experienced a post-pandemic upswing. Profits more than doubled, and revenue and market capitalization recovered to pre-pandemic levels, indicating a robust recovery. Similarly, the Consumer Staples sector witnessed a resurgence in net income, although trading multiples decreased year-on-year.

The Information Technology vertical saw an increase in trading multiples due to a fall in net earnings. However, total revenues in the industry experienced a slight recovery, fostering optimism for a more competitive IT sector. The Financial Services sector demonstrated resilience despite distress in the property market, with trading multiples indicating confidence in its future prospects.

While the Real Estate sector faced challenges, the data suggests a slight recovery in net revenue. However, trading multiples reflected a decline in net earnings, influenced by high inflation and interest rates. Other sectors, such as Materials, Energy, and Utilities, presented mixed signals, with varying performances and prospects.

The report concludes with a call for readers to leverage this valuable resource to gain a broad understanding of trading multiples in major industries in China and stay ahead with Kroll on valuations. It emphasizes the need for professional assistance and detailed valuation analysis when applying multiples to specific valuation subjects.

With Kroll's global resources and local expertise, the report highlights their ability to assist clients in various areas, including pre-IPO ESOP pricing, fair-value measurement of equity investments, potential impairment indicators, and corporate transactions of Hong Kong-listed companies.

This Industry Multiples in China 2023 report is an indispensable tool for investors, analysts, and business professionals seeking to navigate the dynamic Chinese market. Its valuable insights and data-driven analysis offer a comprehensive overview of key sectors, shedding light on investment opportunities and market trends. By staying informed and leveraging this report's findings, readers can make informed decisions to capitalize on China's evolving economic landscape.