Industry Multiples in China Report 2021 - Fourth Edition

We are pleased to launch the third edition of our report, Industry Multiples in China. This report provides an overview of the market multiples of companies in 11 major industries in the Morgan Stanley Capital International (MSCI) China index based on the latest financial metrics available as of September 30, 2021.

Highlights

• China’s GDP grew by 7.9% year on year according to China’s National Bureau of Statistics from June 2020 to June 2021, compared to a growth rate of 2.3% for the calendar year 2020.
• China’s ongoing recovery from the pandemic has driven the higher rate of growth but, like many economies across the world, it continues to face economic headwinds from the ongoing impact of Covid-19, strained international supply chains and geopolitical tensions. Domestic economic considerations also come into play.
• Our report provides a detailed overview of the P/B, P/E, EV/EBITDA and EV/Sales multiples of companies in the MSCI China Index covering non-financial industries and P/B, P/E, P/TBV and Market Cap/Revenue multiples covering financial industries for which such data is available. We also provide a two-year comparison of multiples for most of the industries covered.
• Looking at some of the trends across this year’s data, the energy, materials and industrial sectors are all trending upwards in most multiples. As economic growth jolted back to life after the initial shock of the global pandemic, it triggered a surge in demand. As operations ramped back up, demand rubbed up against the limits of capacity to drive up the prices of raw materials and energy.
• Uncertainty in the real estate market is having a knock-on effect in the financial services sector. Falling multiples there reflect concerns that businesses in the sector could need to restructure debts. Lenders are also likely to be more cautious about financing for other sectors, which could act as a brake on growth.