Listed firms see increase in subsidies

The number of mainland-listed companies announcing receipt of government subsidies has grown quickly in recent months, the Securities Daily reported Monday.

From the beginning of November to December 9, listed companies on the Chinese mainland stated that they have been given a combined total of 1.5 billion yuan ($240.6 million) in government money. Considered separately, the subsidies ranged in value from 100,000 yuan to 370 million yuan and were aimed at covering a variety of expenses, including technical upgrading, relocation, environmental protection projects and tax rebates, the Securities Daily reported.

Specifically, Shanghai-listed Qingdao Yellow Sea Rubber Co stated in a filing to the Shanghai Stock Exchange on December 5 that it had received a 370-million-yuan relocation subsidy, which would be added to its accounts for 2012. As a result of the subsidy, the company, which now bears a delisting risk warning mark (*ST) after suffering two consecutive years of losses, is expected to achieve a profit this year and is thus likely to avoid having its listing revoked under new delisting rules.

After word of its subsidy hit the market, the share price of Yellow Sea climbed for four straight trading days by a total of 10.37 percent to close at 4.79 yuan Monday.

Yet, Yellow Sea may be one of the few companies to notice any change in its actual performance thanks to government subsidies, said one expert contacted by the Global Times.

"Given the number of companies receiving subsidies, [actual] amounts seem to be not very big and are probably not enough to boost annual results for most companies," said Li Bo, an analyst from GF Securities. "Usually, such subsidies only alleviate companies' financing pressures, instead of… having any real impact on their business operation."

Data from Wind, a financial information provider, show that 52 listed companies released subsidy notifications in November, up from 49 in October; and the number jumped again in December, with more than 20 similar announcements seen so far this month.

Local protectionism is one major reason behind the increased figure, as many governments tend to give surplus subsidy money to listed enterprises based in their areas before the year-end in an effort to make their financial results look better, Li explained.

For example, Dongfeng Automobile Co announced Saturday that it had received 64.02 million yuan from the Xiangyang government to promote the development of the local auto industry; while Chongqing Changan Automobile Co also declared on the same day that the Chongqing municipal government had appropriated 59 million yuan to the company to help it maintain production and sales growth in 2012.