Company Performance - The company ranked 38th among the top 100 wholesale enterprises in China by main business revenue in 2017[2]. - The sales scale ranked 7th among pharmaceutical distribution companies in Guangdong Province and 2nd among private enterprises[2]. - The company's operating revenue decreased from RMB 3,935.25 million in 2018 to RMB 3,492.78 million in 2019, a decline of 11.24%[18]. - Gross profit fell from RMB 237.76 million in 2018 to RMB 223.67 million in 2019, a decrease of 5.93%[18]. - Net profit attributable to shareholders decreased by 11.62% from RMB 45.43 million in 2018 to RMB 40.15 million in 2019[18]. - The company's total revenue for 2019 was RMB 3,492.78 million, a decrease of 11.24% compared to the previous year, while the gross profit margin increased by 0.36 percentage points to 6.40%[35]. - The net profit for 2019 was RMB 40.15 million, a decrease of 10.30% year-on-year, with a net profit margin of 1.15%, up 0.01 percentage points[35]. - The company's gross profit decreased to RMB 223.67 million in 2019 from RMB 237.76 million in 2018, with a gross margin improvement from 6.04% to 6.40% due to a reduction in VAT rate from 16% to 13%[45]. Distribution and Logistics - The company has established a highly efficient distribution mechanism with deliveries three times a day within a 10 km radius and once a day within a 250 km radius[2]. - The company has logistics centers in Shantou, Foshan, Zhuhai, and Guangzhou to support its distribution strategy[2]. - The company has a professional transportation service team to ensure efficient delivery of pharmaceutical products[2]. - The distribution network covered 8,301 customers, with an increase of 525 customers compared to the previous year, including 387 more retail pharmacies[31]. - The number of products distributed reached 11,640, an increase of 147 products from the previous year[31]. - The logistics center is expected to be operational by June 2020, integrating advanced logistics solutions to enhance supply chain efficiency[36]. E-commerce and Market Presence - The company operates a self-built B2B e-commerce platform, "Chuangmei e-Pharmacy," for online ordering, inquiries, and payments[2]. - The number of active trading customers on the B2B e-commerce platform reached 6,249, an increase of 611 from the previous year, generating approximately RMB 239.48 million in revenue, up RMB 21.68 million year-on-year[34]. - The company is committed to expanding its market presence in Southern China, focusing on Guangdong Province[2]. - The company is positioned to benefit from policies promoting the development of "Internet + healthcare" and the expansion of primary healthcare markets[14]. Financial Management and Strategy - The company aims to strengthen risk management and improve operational quality while expanding its retail network in Guangdong and surrounding areas[15]. - The company has maintained a prudent financial management strategy to ensure a healthy liquidity position throughout the review period[56]. - The financial management team is committed to maintaining a strong balance sheet, targeting a debt-to-equity ratio of below 0.5 by the end of the fiscal year[76]. - The company has collateralized assets worth approximately RMB 749.45 million to secure bank financing[170]. Governance and Compliance - The company has maintained compliance with the corporate governance code as per the Stock Exchange Listing Rules for the year ending December 31, 2019[96]. - The board consists of seven members, including three executive directors, one non-executive director, and three independent non-executive directors[100]. - The company has a comprehensive governance framework ensuring adherence to applicable rules and regulations[105]. - The company has adopted the standard code for securities transactions by directors and supervisors, confirming compliance by all members[96]. - The company has complied with the listing rules regarding the independence of its non-executive directors[111]. Risk Management - The company has established a risk management mechanism that includes a framework for risk management, business objectives, and regular assessment processes[138]. - The company conducts regular risk assessments, categorizing risks into strategic environmental risks, operational risks, financial risks, and information technology risks[139]. - The risk management committee reviewed the company's risk management strategies and internal control systems on March 25, 2019[129]. Employee and Training - The total employee cost for the year was RMB 66.96 million, down 2.01% from RMB 68.34 million in 2018, with a total of 796 employees as of December 31, 2019[62]. - The company emphasizes employee training and development to enhance market competitiveness[165]. - The company’s secretary, Lin Zhixiong, has participated in no less than 15 hours of relevant professional training as of December 31, 2019[134]. Shareholder Engagement - Shareholders holding more than 3% of shares can propose temporary motions at shareholder meetings, enhancing shareholder engagement[144]. - The company proposed a final dividend of RMB 0.20 per share for the year ended December 31, 2019, subject to shareholder approval[153]. - The company maintains a dividend policy that allows for distribution in cash or stock, contingent on various factors including operational performance and cash flow[154].

Financial Performance - For the six months ended June 30, 2019, the company's revenue was RMB 1,708,088 thousand, a decrease of 15.52% compared to RMB 2,021,988 thousand in 2018[5] - The total profit for the same period was RMB 57,618 thousand, down 10.41% from RMB 64,315 thousand in 2018[5] - Net profit attributable to shareholders was RMB 42,305 thousand, a decline of 7.31% from RMB 45,640 thousand in 2018[5] - Basic and diluted earnings per share were RMB 0.3917, down 7.31% from RMB 0.4226 in 2018[5] - The company's operating costs for the six months ended June 30, 2019, were RMB 1,571.37 million, a decrease of 16.07% from RMB 1,872.27 million in the same period of 2018[37] - Gross profit for the six months ended June 30, 2019, was RMB 136.72 million, down 8.68% from RMB 149.72 million in the previous year, with a gross margin of 8.00%, an increase of 0.60 percentage points[37] - Net profit for the six months ended June 30, 2019, was RMB 42.30 million, a decrease of 6.66% from RMB 45.32 million in the same period of 2018[45] - The effective tax rate for the six months ended June 30, 2019, was 26.58%, down 2.95 percentage points from 29.53% in the same period of 2018[43] Assets and Liabilities - Total assets as of June 30, 2019, were RMB 2,372,623 thousand, an increase of 0.79% from RMB 2,353,980 thousand at the end of 2018[6] - Total liabilities were RMB 1,885,981 thousand, up 0.47% from RMB 1,877,242 thousand at the end of 2018[6] - The total equity amounted to RMB 486,642 thousand, reflecting a growth of 2.08% from RMB 476,737 thousand at the end of 2018[6] - The company's cash and bank deposits as of June 30, 2019, were RMB 34.88 million, down from RMB 55.74 million as of December 31, 2018[46] - Accounts receivable and notes receivable amounted to RMB 802.85 million as of June 30, 2019, a decrease of RMB 25.12 million from December 31, 2018, due to improved management and collection efforts[47] - As of June 30, 2019, the company's capital debt ratio was 50.41%, an increase from 46.96% as of December 31, 2018[57] - The company's capital liabilities amounted to RMB 786 million as of June 30, 2019, compared to RMB 602.9 million as of December 31, 2018[56] Market and Sales Performance - The sales growth rate for public grassroots medical terminals was 9% in the first half of 2019, with a market share increase of 0.2 percentage points compared to the full year of 2018[11] - The retail pharmacy terminal sales growth rate was 7.4%, also with a market share increase of 0.2 percentage points compared to 2018[11] - The company is exploring opportunities in the grassroots medical market expansion driven by new policies promoting integrated healthcare systems[14] - As of June 30, 2019, the company distributed 10,331 products, an increase from 10,145 products as of June 30, 2018, representing a growth of approximately 1.84%[25] - The distribution network covered 7,100 customers, including 577 distributors, 4,761 retail pharmacies, and 1,762 hospitals and clinics, showing a slight decrease in total customers from 7,124 in the previous year[25] - Revenue from the B2B e-commerce platform "Chuangmei e-Medicine" reached approximately RMB 136.85 million, contributing to the company's overall sales performance[26] Operational Developments - The company is constructing a pharmaceutical sorting and distribution center in Nansha, Guangzhou, expected to be completed by the end of 2019, aimed at enhancing supply chain efficiency[29] - The logistics system integration for the distribution center is projected to be completed by March 2020, incorporating advanced solutions like AS/RS systems[29] - The company aims to strengthen risk management and improve operational quality, transitioning from a traditional distribution business to a smart pharmaceutical service provider[32] - The company plans to leverage opportunities in the Guangdong-Hong Kong-Macao Greater Bay Area and expand its retail network in Guangdong and surrounding regions[32] Shareholder Information - As of June 30, 2019, Mr. Yao Chuanglong holds 59,000,000 shares of domestic stock, representing approximately 73.75% of the relevant class and 54.63% of the total issued share capital[73] - Mr. Lin Zhixiong has a controlled entity interest in 3,200,000 shares of domestic stock, accounting for approximately 4.00% of the relevant class and 2.96% of the total issued share capital[73] - Major shareholders include Ms. You Zeyan, who holds 59,000,000 shares, representing 73.75% of the relevant class and 54.63% of the total issued share capital[77] - Guangzhou Baiyunshan Pharmaceutical Group Co., Ltd. holds 7,906,500 H shares, representing approximately 28.24% of the relevant class and 7.32% of the total issued share capital[77] - Asian Equity Special Opportunities Portfolio Limited holds 5,130,000 H shares, accounting for approximately 18.32% of the relevant class and 4.75% of the total issued share capital[79] - RAYS Capital Partners Limited has an interest in 5,534,000 H shares, representing approximately 19.76% of the relevant class and 5.12% of the total issued share capital[79] - The total number of issued domestic shares as of June 30, 2019, is 80,000,000, while the total number of issued shares is 108,000,000[79] Financial Management and Strategy - The company has maintained a prudent financial management strategy to ensure healthy liquidity throughout the review period[52] - The company did not recommend any interim dividend for the six months ended June 30, 2019, compared to no interim dividend in the previous year[67] - There were no significant investments, acquisitions, or disposals during the six months ended June 30, 2019[60][62] - The company has no foreign exchange risk as most transactions and liabilities are denominated in RMB[53] - There were no significant contingent liabilities as of June 30, 2019[65] Employee and Compensation - The total employee cost for the six months ended June 30, 2019, was approximately RMB 329.1 million, a decrease from RMB 337.8 million for the same period in 2018[59] - Employee compensation includes various forms of remuneration for services provided, including short-term salaries, post-employment benefits, and termination benefits[195] - The group classifies post-employment benefit plans into defined contribution plans and defined benefit plans, with liabilities recognized based on the calculated amounts[198] - Termination benefits are recognized as liabilities when the group cannot withdraw the termination plan or when costs related to the restructuring are confirmed[200]

Financial Performance - The group's operating revenue decreased from RMB 4,095.84 million in 2017 to RMB 3,935.25 million in 2018, a decline of 3.92%[11] - Gross profit increased from RMB 209.86 million in 2017 to RMB 237.76 million in 2018, representing a growth of 13.30%[11] - The gross profit margin improved from 5.12% in 2017 to 6.04% in 2018[11] - Net profit attributable to the parent company rose from RMB 44.76 million in 2017 to RMB 45.43 million in 2018, an increase of 1.50%[11] - The total profit for 2018 was RMB 63,655, an increase from RMB 59,857 in 2017, representing a growth of about 1.3%[19] - Net profit attributable to shareholders of the parent company was RMB 45,433, slightly up from RMB 44,760 in 2017, indicating a growth of approximately 1.5%[19] - The company's total assets as of December 31, 2018, were RMB 2,353,980, a decrease from RMB 2,471,830 in 2017, showing a decline of about 4.8%[19] - Total liabilities were RMB 1,877,242, down from RMB 2,008,423 in 2017, reflecting a decrease of approximately 6.5%[19] - Shareholders' equity increased to RMB 476,737 in 2018 from RMB 463,407 in 2017, marking a growth of about 2.8%[19] Market Strategy and Expansion - The company aims to expand its market presence by focusing on non-tender markets and enhancing its logistics capabilities[11] - The company plans to implement a market strategy of "deep cultivation in Guangdong, radiating to surrounding areas" to build a comprehensive retail network[16] - The company plans to enhance its retail network in Guangdong and surrounding areas to increase market share and revenue[44] - The company recognizes significant development opportunities in the non-bid pharmaceutical market amid ongoing healthcare reforms and policies[25] - The company is expanding its market presence in Southeast Asia, targeting a 10% market share within the next two years[106] Operational Efficiency - The company aims to enhance operational efficiency in the pharmaceutical supply chain and reduce distribution costs, focusing on the non-bid market growth potential[16] - The logistics integration project using SAP EWM and SAP TM was successfully launched, marking a significant operational improvement[41] - Operating costs reduced by 4.85% from RMB 3,885.97 million in 2017 to RMB 3,697.48 million in 2018, aligning with the change in product sales revenue[52] - The company has implemented strict supplier and product quality control measures to mitigate risks associated with product quality[176] Corporate Governance - The company emphasized its commitment to corporate governance, adhering to all regulatory requirements and standards[106] - The board consists of seven members, including three executive directors, one non-executive director, and three independent non-executive directors[110] - The board held ten meetings during the year ending December 31, 2018, with all directors attending all meetings[114] - The company has established various committees, including the Risk Management Committee and the Remuneration Committee, to handle different aspects of corporate affairs[126] - The independent non-executive directors' terms are set for three years and are subject to re-election[129] Risk Management - The risk management committee reviewed the company's risk management strategies and internal control systems during a meeting held on March 21, 2018[141] - The company established a risk management mechanism that includes risk identification, analysis, and response processes, regularly assessing potential risks[151] - The risk assessment process categorizes risks into strategic environmental risks, operational risks, financial risks, and information technology risks[152] Shareholder Relations - The board proposed a final dividend of RMB 0.30 per share for the year ended December 31, 2018, subject to approval at the annual general meeting on June 3, 2019[170] - The board emphasized the importance of maintaining high transparency to enhance investor relations[159] - The company has a dividend policy that allows for distribution in cash or stock, subject to board and shareholder approval[171] Employee Development - Total employee costs increased by 8.17% from RMB 63.18 million in 2017 to RMB 68.34 million in 2018[69] - The company emphasizes employee training and development to maintain competitive advantage in the market[178] Acquisitions and Investments - The company completed the acquisition of 100% equity in Zhuhai Chuangmei and Guangzhou Chuangmei in 2018[42] - The company is exploring potential acquisitions to strengthen its market position, with a budget of $100 million allocated for this purpose[106] Financial Stability - The company utilized RMB 47.67 million for repaying bank loans, indicating a commitment to financial stability[166] - The company has pledged assets valued at approximately RMB 654.83 million as collateral for bank financing as of December 31, 2018, compared to RMB 552.59 million in 2017[185]