New year, same problems

There are also signs of a moderate pickup in cement prices, which some stock-pickers see as a barometer of economic activity in China.

Bank of America Merrill Lynch economist Ting Lu said in a note on April 24 that reported increases of 10 to 15 percent in cement prices were "beyond what seasonality could explain" and in some regions of central China, cement prices were close to the peak recorded in the fourth quarter last year.

Analysts have tended to favor Anhui Conch Cement Co Ltd over its fast-expanding rival China National Building Material, whose quarterly earnings have raised more questions about the success of its aggressive acquisition strategy.

Anhui reported a 22 percent decline in quarterly profit from a year earlier, but Macquarie analysts said China's largest cement maker paid lower production costs. CNBM posted a worse-than-expected 48 percent decline in quarterly net profit, largely due to interest payments on its debt.

Analyst sentiment is shifting on Chinese companies but remains particularly slow on the materials sector. Only 39 percent of the 148 companies in the materials sector recorded an increase last week in their Analyst Revision Model, a StarMine measure of analyst sentiment.

Corporate earnings have largely been flat for the past two years, and investors are concerned that the shrinking margins and high inventories that were the major problems for China Inc last year are dragging into 2013.

Almost three-quarters of China-listed companies and 54 percent of all Hong Kong-listed companies that have posted their earnings for last year missed market expectations, according to StarMine.

67 percent of the 138 China-listed companies that reported first quarter earnings missed expectations, according to StarMine.

"We are expecting a sequential recovery in the second quarter, but bear in the mind the first quarter is a historical low season," said William Fong, who helps manage about $4 billion worth of assets in a set of Barings China funds.