China Musings:Deep dive into the NBS industrial data:Profits grew 32%yoy in Jan-Feb,but how should investors use the data?

What to do now?

The latest Jan-Feb 17 combined statistics show a significant acceleration in profitgrowth at 32% yoy, indicating the potential for upward earnings revisions as wellas improving asset quality for banks.

The pick-up was mainly led by materials related sectors. By mapping sectorearnings onto the listed universe, we see positive earnings momentum for Oil,Gas & Coal, and negative momentum for Utilities, Airlines and Shipping in theupcoming 1Q earnings season.

This supports our recent China upgrade call that is partly based on earningsimprovement, especially for banks. And we screen for companies with potentialfor upward earnings revisions.