September 3, 2026 (InvestinChina.asia) – China’s A-share market delivered a decisively stronger set of interim results for 2026, with profit growth dramatically outpacing revenue gains and profitability indicators continuing to mend. In its latest interim report analysis, the strategy team at TF Securities (Tianfeng) finds that the 26Q2 earnings season was defined by a sharp rebound in net profits, a gradual recovery in return on equity driven primarily by margin repair, and an inventory cycle that is quietly turning upward across upstream resources and midstream manufacturing.
26Q2 Snapshot: Profits Rebound Far More Sharply Than Revenue
For the 26Q2 reporting period, Wind All A-shares posted cumulative and single-quarter revenue growth of 6.7% and 8.5% year-on-year respectively, both improving from 26Q1. Net profit attributable to parents climbed 16.0% on a cumulative basis and a striking 25.0% in the single quarter — the pace of profit repair markedly outstripping that of revenue.
By broad sector, upstream raw materials, midstream manufacturing and the finance-property complex led on profit growth. Downstream discretionary consumption saw its decline narrow, while staples and support services remained under pressure. At the industry level, non-bank finance, electronics, coal, non-ferrous metals, basic chemicals and oil & petrochemicals topped the growth leaderboard. Computers, national defense and power equipment sustained rapid growth, whereas the real estate chain and selected consumer-service industries stayed soft. At the secondary-industry tier, the most visible improvements clustered in finance, electronics, resource products and certain low-base comparisons.
Across the full first half, the A-share market’s revenue and earnings trajectory tells the same story of accelerating profit momentum. Of the 5,550 listed companies that had reported by end-August, aggregate revenue reached RMB 37.74 trillion, up 7.09% year-on-year, while total net profit hit RMB 3.58 trillion, up 18.57%.
ROE: Net Margin Repair Carries the Load, Turnover Still Lags
All A-share ROE on a trailing-twelve-month basis rose to 8.1% in 26Q2, up 0.43 percentage points from 26Q1. Excluding financials, ROE reached 6.9%, a 0.35 percentage-point improvement. A DuPont decomposition shows that the uplift in net profit margin was the dominant driver, with asset turnover edging slightly higher and the equity multiplier broadly stable.
The gross margin of non-financial A-shares recovered to 18.2%, though that figure still sits only at the 24.6th percentile relative to the 2010-present distribution. Turnover efficiency remains lackluster: the receivables turnover ratio has slipped further to historic lows, underscoring that cash collection pressure on corporates is still palpable despite the headline earnings recovery.
Inventory and Capex: Restocking Spreads, Capacity Expansion Stays Cautious
The inventory cycle is unambiguously healing. Inventory of non-financial A-shares grew -0.3% year-on-year in 26Q2, a 2.0 percentage-point improvement from 26Q1. Cash outflows related to replenishment rose 9.1% year-on-year, 2.1 percentage points faster than in 26Q1. Active restocking is progressively diffusing into upstream resource products, midstream manufacturing and parts of the support-service sector — with basic chemicals, steel, non-ferrous metals, electronics, power equipment, machinery, computers, communications, coal and environmental protection among the most active directions.
Capital expenditure, meanwhile, is recovering at a measured pace. Fixed assets plus projects under construction grew 6.2% year-on-year, essentially flat with 26Q1. Cash spending tied to capex increased 4.0% year-on-year, 1.0 percentage point better than 26Q1. Corporate willingness to expand capacity continues to repair at the margin, with midstream manufacturing and support services showing the most visible improvement, while consumption and the property chain still exhibit insufficient momentum.
Sector Heatmap: Electronics, Non-Bank Finance and Metals Shine
On the sentiment front, industries enjoying both rapid revenue growth and sequential ROE improvement include electronics, non-ferrous metals, non-bank finance, national defense, power equipment and basic chemicals. After the interim reports, upward earnings-estimate revisions coupled with valuation pullbacks were most evident in electronics, non-bank finance, computers, non-ferrous metals and communications.
On the export chain, electronics, power equipment, automobiles and machinery all carry relatively high proportions of overseas revenue, with electronics and power equipment standing out for the strength of their revenue growth. This aligns with the broader market narrative that AI-driven demand, resource-price recovery and a more vibrant capital market have been the three pillars of the 2026 earnings rebound.
Earnings Surprises: Non-Bank Finance and Coal Lead Estimate Upgrades
Looking at the numbers through the lens of surprise, non-bank finance, coal and banking dominated the estimate-revision leaderboard. Between June 30 and August 30, 2026, the median 2026 consensus net-profit forecast was upgraded for 40.26% of non-bank finance names, 30.30% of coal names, 26.19% of banks, 21.28% of oil & petrochemical firms and 20.44% of non-ferrous metal companies.
In terms of price action on the first trading day after the results announcement, the probability of a “profit gap” — where the stock gaps higher on earnings — was highest in oil & petrochemicals (8.51%), beauty care (6.67%), coal (6.06%), non-bank finance (5.19%) and transportation (4.80%).
TF Securities’ updated “earnings surprise” portfolio screens the 30 companies that best combine a post-announcement profit gap, a first-day share-price gain exceeding 5%, and a substantial upward revision to their 2026 consensus earnings over the past two months.
Risks and Caveats
The strategy team cautions that individual data points may introduce statistical noise, that financial reports inherently lag shifts in industry fundamentals and market expectations, and that financial statements do not capture off-balance-sheet information, limiting their explanatory power.
Taken as a whole, the 2026 interim season paints a picture of an A-share market where profit growth is decisively outrunning revenue, margins — not volumes — are doing the heavy lifting, and the inventory cycle is quietly turning upward. Whether this earnings-led recovery can broaden beyond electronics, non-bank finance and resource products into consumption and the property chain will be the defining question for the remainder of 2026.