China's non-financial firms will see modest revenue increases and improved profitability in 2017 due to robust economic growth and stabilizing commodity prices, global rating agency Moody's said in a report Tuesday.
Corporate revenue will grow modestly next year from a low base in 2016, with a varied impact on different sectors, according to the report.
Companies in oil and gas will be able to generate free cash flow and see earnings stabilize, thanks to an oil price recovery, proactive cost savings and capital expenditure cuts, the report said.
Metals and mining companies should also see earnings rise from low levels, supported by cost cuts and rising commodity prices. However, debt will stay high, keeping leverage elevated.
Construction and engineering service companies will benefit from moderate demand growth, driven by domestic and overseas infrastructure projects and domestic residential projects, according to the rating agency.
The report also predicts a continued rise in revenues for Internet firms, but expects an earnings decline for steel and cement companies, citing low production volumes and rising raw material costs.
Meanwhile, the deleveraging process for Chinese companies will remain slow in 2017, especially for sectors with excessive capacity, the report said.
China's economy grew 6.7 percent in the third quarter, holding steady with the first two quarters of the year, reinforcing hopes that the country will realize its growth target of 6.5 to 7 percent this year.