A worker tests a Haier television set at a factory in Qingdao, Shandong province. On Feb 11, shares of Qingdao Haier Co rallied to their highest in a month after Guotai Junan Securities Co said the January earnings of household appliance producers will beat market expectations. [Photo / China Daily]

Companies with strong earnings outlooks lead advance on markets

SHANGHAI - Stocks on the Chinese mainland rose, capping a third straight weekly gain for the benchmark index.

The advance came as investors sought companies with stronger earnings outlooks given the backdrop of rising borrowing costs and faster inflation.

Anhui Conch Cement Co rose 3.83 percent, driving gains by cement makers, after the government said it will build more roads in rural areas. Tianjin FAW Xiali Automobile Co gained 3.47 percent as it followed rivals in boosting vehicle sales last month. Qingdao Haier Co rallied to the highest in a month after Guotai Junan Securities Co said January earnings of household appliance producers will beat market predictions.

"Consumer-related stocks such as appliance makers and automakers are attractive because of valuations and solid growth prospects," said Wu Kan, a fund manager at Dazhong Insurance Co, which oversees $285 million. "We are still in the midst of tightening, however, and that'll hold back stock valuations and cause worries about earnings growth."

The Shanghai Composite Index gained 0.33 percent to 2827.33 at the 3 pm close on Friday. The CSI 300 Index added 0.54 percent to 3120.96.

Stocks on the Shanghai gauge trade at 13.2 times estimated earnings, compared with a multiple of 16 at the end of last year, according to weekly data compiled by Bloomberg.

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A gauge of consumer discretionary stocks rose 1.5 percent, the most among the CSI 300's 10 industry groups. FAW Xiali gained 3.47 percent to 8.36 yuan ($1.27) after the automaker said it sold 37,460 vehicles in January, up 19.3 percent from a year earlier.

Jiangling Motors Corp, the Chinese commercial vehicle partner of Ford Motor Co, climbed 2.75 percent to 29.52 yuan. The stock jumped by the 10 percent daily limit on Thursday after boosting last month's sales by 40 percent.

SAIC Motor Corp added 0.44 percent to 18.45 yuan, a three-month high and extending Thursday's 10 percent surge. The company said on Wednesday sales at its passenger-car making venture with General Motors Co increased 46 percent last month.

Companies manufacturing household appliances may post earnings growth of more than 30 percent in January, Fang Xin, a Shanghai-based analyst at Guotai Junan Securities, wrote in a report.

Haier added 1.5 percent to 27.81 yuan, the highest close since Jan 5. Joyoung Co, which makes soybean milk machines for use in homes, jumped 4.46 percent to 16.39 yuan.

Gree Electric Appliances Inc added 0.22 percent to 18.39 yuan in Shenzhen. Gree's first-quarter profit may increase more than 40 percent, according to Guotai Junan Securities. GD Midea Holding Co gained 0.77 percent to 18.25 yuan in Shenzhen, extending Thursday's 10 percent advance.

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