2021 年半年度报告 公告公司代码：600518 公司简称：*ST 康美 康美药业股份有限公司 2021 年半年度报告 1 / 262 2021 年半年度报告 重要提示 一、 本公司董事会、监事会及董事、监事、高级管理人员保证半年度报告内容的真实、准确、完 整，不存在虚假记载、误导性陈述或重大遗漏，并承担个别和连带的法律责任。 二、 公司全体董事出席董事会会议。 三、 本半年度报告未经审计。 四、 公司负责人马兴谷、主管会计工作负责人宫贵博及会计机构负责人（会计主管人员）宫贵博 声明：保证半年度报告中财务报告的真实、准确、完整。 五、 董事会决议通过的本报告期利润分配预案或公积金转增股本预案 无 六、 前瞻性陈述的风险声明 √适用 □不适用 本报告所涉及的公司未来计划、发展战略等前瞻性陈述，不构成公司对投资者的实质承诺， 请投资者注意投资风险。 七、 是否存在被控股股东及其关联方非经营性占用资金情况 是 八、 是否存在违反规定决策程序对外提供担保的情况？ 否 九、 是否存在半数以上董事无法保证公司所披露半年度报告的真实性、准确性和完整性 否 十、 重大风险提示 公司已在本报告中详细描述可能存在的风险，敬请查 ...

[Important Notice](index=2&type=section&id=Important%20Notice) [Audit Report Opinion](index=2&type=section&id=Audit%20Report%20Opinion) The auditor issued a disclaimer of opinion on the 2020 financial report due to major internal control deficiencies - Lixin Certified Public Accountants (Special General Partnership) issued a disclaimer of opinion on the company's 2020 annual financial report[3](index=3&type=chunk) - The basis for the disclaimer of opinion primarily includes six aspects[4](index=4&type=chunk)[5](index=5&type=chunk)[6](index=6&type=chunk): - **Major deficiencies in internal control over financial reporting**: Inability to obtain complete, accurate, and reliable financial data - **Going concern**: Significant doubts about the company's ability to continue as a going concern due to huge losses in 2020, negative net assets, and a large amount of overdue debt - **Related-party fund appropriation**: The recoverability of **8.481 billion yuan** appropriated by the former actual controller could not be confirmed - **Construction in progress**: Lack of complete financial data for **2.858 billion yuan** in construction projects, preventing confirmation of their accuracy and completeness - **Inventory impairment and revenue recognition for medical devices**: Inability to obtain sufficient evidence regarding the adequacy of inventory write-downs and the accuracy of related accounts receivable and operating revenue - **Pending litigation**: Multiple pending lawsuits whose completeness of disclosure and impact on the financial statements could not be determined [Section 1 Definitions](index=7&type=section&id=Section%201%20Definitions) [Section 2 Company Profile and Key Financial Indicators](index=7&type=section&id=Section%202%20Company%20Profile%20and%20Key%20Financial%20Indicators) [Company Information](index=7&type=section&id=Company%20Information) This section provides basic corporate information, including name, stock code, legal representative, and contact details | Item | Information | | :--- | :--- | | **Company Name (Chinese)** | 康美药业股份有限公司 | | **Company Abbreviation (Chinese)** | ST 康美 | | **Stock Exchange** | Shanghai Stock Exchange | | **Stock Code** | 600518 | | **Legal Representative** | Ma Xinggu | [Key Accounting Data and Financial Indicators for the Last Three Years](index=9&type=section&id=Key%20Accounting%20Data%20and%20Financial%20Indicators%20for%20the%20Last%20Three%20Years) The company's financial condition deteriorated sharply in 2020, with significant declines in revenue and net assets 2020 Key Accounting Data | Key Accounting Data | 2020 | 2019 | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | **Operating Revenue (Yuan)** | 5,412,007,961.66 | 11,445,545,810.05 | -52.72% | | **Net Profit Attributable to Shareholders (Yuan)** | -27,735,943,422.59 | -4,660,675,038.43 | -495.11% | | **Net Cash Flow from Operating Activities (Yuan)** | 1,031,392,101.60 | 2,882,044,986.08 | -64.21% | | **Net Assets Attributable to Shareholders (Yuan)** | -7,185,809,518.69 | 20,515,274,013.61 | -135.03% | | **Total Assets (Yuan)** | 36,212,979,977.45 | 64,586,228,755.01 | -43.93% | 2020 Key Financial Indicators | Key Financial Indicators | 2020 | 2019 | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | **Basic Earnings Per Share (Yuan/Share)** | -5.6158 | -0.9896 | -467.48% | | **Weighted Average Return on Equity (%)** | -416.16% | -21.20% | Decrease of 394.96 percentage points | - The net profit attributable to shareholders in the fourth quarter of 2020 was **-25.364 billion yuan**, which was the main source of the full-year loss[24](index=24&type=chunk) [Section 3 Business Overview](index=12&type=section&id=Section%203%20Business%20Overview) [Main Business, Operating Model, and Industry Overview](index=12&type=section&id=Main%20Business,%20Operating%20Model,%20and%20Industry%20Overview) The company operates an integrated Traditional Chinese Medicine (TCM) industry chain centered on decoction pieces - The company's core business is TCM decoction pieces, implementing an integrated industry chain model covering upstream cultivation, midstream production and logistics, and downstream multi-channel marketing networks[29](index=29&type=chunk) - Sales models are diversified, including direct sales to hospitals, commercial wholesale, smart pharmacies, chain pharmacy distribution, e-commerce, and direct selling[30](index=30&type=chunk)[31](index=31&type=chunk) - The company is a leader in the TCM decoction piece industry, with 11 production bases capable of producing over 1,000 types and 20,000 specifications of products, and participates in setting multiple national and provincial standards[33](index=33&type=chunk) [Core Competitiveness Analysis](index=15&type=section&id=Core%20Competitiveness%20Analysis) Core competitiveness stems from its integrated industry chain, extensive network, and technological advantages - **Full industry chain advantage**: The business system covers upstream cultivation, midstream production and market operations, and downstream multi-channel marketing networks, providing a prominent resource advantage[37](index=37&type=chunk) - **Network advantage**: Deep cooperation with over 2,000 medical institutions and approximately 200,000 chain pharmacies nationwide, complemented by the Kangmei TCM bulk trading platform and multiple offline TCM markets, forming a comprehensive sales system[38](index=38&type=chunk) - **Technological advantage**: Supported by over 20 national and provincial R&D platforms, the company holds more than 610 intellectual property rights and participates in setting multiple national and provincial standards, recognized as a National Technology Innovation Demonstration Enterprise[39](index=39&type=chunk)[40](index=40&type=chunk) [Section 4 Management Discussion and Analysis](index=18&type=section&id=Section%204%20Management%20Discussion%20and%20Analysis) [Management Discussion and Analysis](index=18&type=section&id=Management%20Discussion%20and%20Analysis) The company faced declining sales and debt risks in 2020, leading to a trusteeship arrangement - The company continued its strategy of "focusing on core business, developing industry, streamlining operations, and strengthening fundamentals," but sales revenue declined sharply due to multiple adverse factors[41](index=41&type=chunk) - Based on the principle of prudence, the company made **large impairment provisions** for goodwill, accounts receivable, fixed assets, construction in progress, and inventories, which was a primary reason for the huge loss[41](index=41&type=chunk) - To mitigate debt risks, Jieyang Yilin Pharmaceutical Investment Co, Ltd was introduced as a trustee to advance risk resolution and maintain stable production and operations[41](index=41&type=chunk) - The company plans to accelerate the resolution of legacy issues in its medical device business and recover funds by clearing inventory through various channels, while gradually adjusting and streamlining its health food business[55](index=55&type=chunk)[56](index=56&type=chunk) [Key Operating Activities During the Reporting Period](index=23&type=section&id=Key%20Operating%20Activities%20During%20the%20Reporting%20Period) Operating performance severely declined in 2020, driven by massive asset impairments and resulting in insolvency Key Changes in Income Statement and Cash Flow Statement | Item | Current Period (Yuan) | Prior Period (Yuan) | Change (%) | | :--- | :--- | :--- | :--- | | **Operating Revenue** | 5,412,007,961.66 | 11,445,545,810.05 | -52.72% | | **Operating Cost** | 5,198,273,863.90 | 9,935,094,405.05 | -47.68% | | **Net Cash Flow from Operating Activities** | 1,031,392,101.60 | 2,882,044,986.08 | -64.21% | Explanation of Significant Profit Changes from Non-Core Business | Item | Current Period (Yuan) | Prior Period (Yuan) | Change (%) | Explanation | | :--- | :--- | :--- | :--- | :--- | | **Credit Impairment Loss** | -1,058,088,831.85 | -180,861,935.00 | 485.03% | Increase in impairment provisions for receivables | | **Asset Impairment Loss** | -21,948,546,728.16 | -1,126,038,320.40 | 1,849.18% | Y-o-Y increase in asset impairment provisions | Key Changes in Assets and Liabilities | Item | Current Period-End (Yuan) | Prior Period-End (Yuan) | Change (%) | Explanation | | :--- | :--- | :--- | :--- | :--- | | **Inventories** | 9,040,162,905.83 | 31,408,236,688.25 | -71.22% | Provision for inventory write-downs | | **Goodwill** | 36,909,405.61 | 81,196,574.37 | -54.54% | Provision for goodwill impairment | | **Short-term Borrowings** | 2,314,766,721.42 | 12,811,329,365.98 | -81.93% | Reclassification of extended short-term borrowings to long-term borrowings | | **Long-term Borrowings** | 10,043,909,260.71 | 2,088,752,629.63 | 380.86% | Reclassification of extended short-term borrowings to long-term borrowings | [Discussion and Analysis of Future Development](index=51&type=section&id=Discussion%20and%20Analysis%20of%20Future%20Development) The company plans to focus on core businesses while facing significant risks, including a delisting warning - The company's development strategy is to "focus on advantageous industries, strengthen large-scale commerce, revitalize potential industries, and clear out marginal businesses," concentrating resources on core TCM operations while divesting non-core assets[107](index=107&type=chunk) - The 2021 operating plan focuses on the upstream TCM industry chain to enhance the competitiveness of key products, strengthen midstream and downstream commercial distribution, revitalize the TCM trading market, and vigorously clear out non-core businesses[109](index=109&type=chunk) - The company faces significant risks, including[115](index=115&type=chunk)[116](index=116&type=chunk): - **Policy risks**: Ongoing impacts from healthcare reform, volume-based procurement, and medical insurance cost controls - **Market competition risks**: Intensifying competition in the TCM decoction piece industry - **Litigation risks**: Facing a special representative action for securities misrepresentation, which could lead to substantial compensation - **Delisting risks**: A delisting risk warning (*ST) will be implemented due to negative net assets at the end of 2020; the company's stock faces termination of listing if the bankruptcy reorganization application fails [Section 5 Significant Events](index=56&type=section&id=Section%205%20Significant%20Events) [Profit Distribution and Commitment Fulfillment](index=56&type=section&id=Profit%20Distribution%20and%20Commitment%20Fulfillment) No profit distribution is planned due to significant losses, and the former controller's repayment commitment is at risk - Due to a net profit attributable to shareholders of **-27.736 billion yuan** in 2020, the company proposes no profit distribution and no capitalization of capital reserves[120](index=120&type=chunk) - The former actual controller, Ma Xingtian, committed to repaying the entire **8.481 billion yuan** of non-operating appropriated funds and interest by the end of 2022, but fulfillment is highly uncertain as he has been subjected to compulsory measures and has transferred control[125](index=125&type=chunk) [Fund Misappropriation and Non-Standard Audit Opinion](index=61&type=section&id=Fund%20Misappropriation%20and%20Non-Standard%20Audit%20Opinion) The controlling shareholder misappropriated funds, and the board accepted the auditor's disclaimer of opinion - At the beginning of the reporting period, the balance of non-operating funds appropriated by the controlling shareholder and its affiliates was **9.481 billion yuan**; after a repayment of 1 billion yuan during the period, the ending balance was **8.481 billion yuan**, with full repayment uncertain[126](index=126&type=chunk)[127](index=127&type=chunk) - The company's Board of Directors accepted the "disclaimer of opinion" audit report issued by the auditor and will take measures to protect shareholder interests[128](index=128&type=chunk) [Delisting Risk, Bankruptcy Reorganization, and Major Litigation](index=63&type=section&id=Delisting%20Risk,%20Bankruptcy%20Reorganization,%20and%20Major%20Litigation) The company faces severe delisting risk due to negative net assets, a bankruptcy petition, and major litigation - The company's stock will be subject to a delisting risk warning (*ST) after the annual report disclosure due to negative net assets at the end of 2020[116](index=116&type=chunk) - A creditor has applied to the court for the company's bankruptcy reorganization; if the reorganization fails and the company is declared bankrupt, its stock will face termination of listing[133](index=133&type=chunk)[134](index=134&type=chunk) - In May 2020, the company received an "Administrative Penalty Decision" and a "Market Ban Decision" from the China Securities Regulatory Commission for alleged violations of information disclosure laws and regulations[137](index=137&type=chunk) [Section 6 Changes in Common Stock and Shareholder Information](index=74&type=section&id=Section%206%20Changes%20in%20Common%20Stock%20and%20Shareholder%20Information) [Shareholders and Actual Controller](index=76&type=section&id=Shareholders%20and%20Actual%20Controller) During the period, the company's controlling shareholder changed, resulting in no actual controller - As of the end of the reporting period, the total number of common shareholders was **154,066**[171](index=171&type=chunk) - During the reporting period, the company's controlling shareholder changed from Kangmei Industrial Investment Holding Co, Ltd to Jieyang Yilin Pharmaceutical Investment Co, Ltd, and the company now has **no actual controller**[177](index=177&type=chunk)[178](index=178&type=chunk) - The change of control was achieved by Kangmei Industrial unconditionally and irrevocably delegating the voting rights corresponding to its **29.90%** shareholding to Yilin Investment[259](index=259&type=chunk) [Section 7 Preferred Stock Information](index=81&type=section&id=Section%207%20Preferred%20Stock%20Information) [Preferred Stock Dividend Distribution](index=82&type=section&id=Preferred%20Stock%20Dividend%20Distribution) No preferred stock dividends were distributed for two consecutive years, restoring voting rights to preferred shareholders - Due to the huge loss in 2020, the Board of Directors proposed not to distribute preferred stock dividends; dividends have not been paid for two consecutive years (2019 and 2020)[185](index=185&type=chunk)[186](index=186&type=chunk) - According to the Articles of Association, the voting rights of preferred shareholders will be restored as dividends have not been paid for two consecutive fiscal years[188](index=188&type=chunk) [Section 8 Directors, Supervisors, Senior Management, and Employees](index=85&type=section&id=Section%208%20Directors,%20Supervisors,%20Senior%20Management,%20and%20Employees) [Changes and Penalties of Directors, Supervisors, and Senior Management](index=85&type=section&id=Changes%20and%20Penalties%20of%20Directors,%20Supervisors,%20and%20Senior%20Management) The period saw significant management changes and regulatory penalties, including lifetime market bans for former executives - The company's directors, supervisors, and senior management underwent significant changes, with several key executives including former Chairman Ma Xingtian and former Vice Chairman Xu Dongjin resigning, and a new management team being elected[214](index=214&type=chunk)[215](index=215&type=chunk) - In May 2020, the company and several then-serving directors, supervisors, and senior managers received administrative penalties from the CSRC, with **lifetime securities market bans** imposed on Ma Xingtian, Xu Dongjin, and Qiu Xiwei, and **10-year bans** on Zhuang Yiqing, Wen Shaosheng, and Ma Huanzhou[216](index=216&type=chunk)[218](index=218&type=chunk) [Section 9 Corporate Governance](index=107&type=section&id=Section%209%20Corporate%20Governance) [Internal Control](index=111&type=section&id=Internal%20Control) The company acknowledged major deficiencies in its financial reporting internal controls, confirmed by an adverse audit opinion - The company acknowledged that there are **major deficiencies** in its internal control over financial reporting[234](index=234&type=chunk) - The accounting firm issued an **adverse opinion** on the company's internal control for the year 2020[235](index=235&type=chunk) [Section 10 Corporate Bonds](index=111&type=section&id=Section%2010%20Corporate%20Bonds) [Corporate Bond Basics and Risks](index=111&type=section&id=Corporate%20Bond%20Basics%20and%20Risks) The company's credit rating was severely downgraded to C, reflecting extreme challenges in debt repayment capabilities - In 2020, China Chengxin Securities Rating downgraded the company's corporate credit rating from BBB all the way down to **C**, and the ratings for "15 Kangmei Bond," "18 Kangmei 01," and "18 Kangmei 04" were downgraded to **C** or **CC**[241](index=241&type=chunk) Key Financial Indicators for the Last 2 Years | Key Indicator | 2020 | 2019 | Reason for Change | | :--- | :--- | :--- | :--- | | **EBITDA (Yuan)** | -24,754,454,293.78 | 3,320,604,837.01 | Significant decrease in profit | | **Asset-Liability Ratio (%)** | 119.49% | 68.03% | Large impairment provisions | | **Interest Coverage Ratio** | -11.75 | 1.12 | Decrease in profit | | **Interest Payment Ratio (%)** | 56.26% | 93.33% | Tight cash flow pressure | [Section 11 Financial Report](index=116&type=section&id=Section%2011%20Financial%20Report) [Audit Report](index=116&type=section&id=Audit%20Report) The auditor issued a disclaimer of opinion due to six major issues preventing the acquisition of sufficient audit evidence - The auditor was unable to express an opinion on the financial statements because they could not obtain sufficient and appropriate audit evidence to serve as a basis for an opinion[251](index=251&type=chunk) - The basis for the disclaimer of opinion included: major deficiencies in internal control, going concern issues, related-party fund appropriation, matters related to construction projects, issues with medical device inventory impairment and revenue recognition, and pending litigation[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk)[258](index=258&type=chunk) [Financial Statements](index=120&type=section&id=Financial%20Statements) Financial statements reveal severe insolvency, with liabilities far exceeding assets and massive net losses for 2020 Consolidated Balance Sheet Summary (As of December 31, 2020) | Item | Amount (Yuan) | | :--- | :--- | | **Total Assets** | 36,212,979,977.45 | | **Total Liabilities** | 43,272,140,531.45 | | **Equity Attributable to Parent Company Owners** | -7,185,809,518.69 | Consolidated Income Statement Summary (For the Year 2020) | Item | Amount (Yuan) | | :--- | :--- | | **Total Operating Revenue** | 5,412,007,961.66 | | **Operating Profit** | -27,141,841,720.45 | | **Net Profit Attributable to Parent Company Shareholders** | -27,735,943,422.59 | | **Asset Impairment Loss** | -21,948,546,728.16 | | **Credit Impairment Loss** | -1,058,088,831.85 | [Notes to the Financial Statements](index=143&type=section&id=Notes%20to%20the%20Financial%20Statements) Notes detail significant uncertainties in going concern, massive inventory write-downs, and extensive litigation risks - At the end of 2020, the company's net profit attributable to the parent was **-27.736 billion yuan**, net assets were **-7.186 billion yuan**, total interest-bearing debt was **33.03 billion yuan** (including **4.539 billion yuan** in overdue debt), indicating significant uncertainty about its ability to continue as a going concern[297](index=297&type=chunk) - The carrying amount of inventories at year-end was 30.111 billion yuan, with a write-down provision of **21.071 billion yuan**, resulting in a net book value of 9.04 billion yuan; this included **19.65 billion yuan** in impairment for TCM materials and **0.67 billion yuan** for medical devices[453](index=453&type=chunk)[456](index=456&type=chunk)[458](index=458&type=chunk)[459](index=459&type=chunk) - The original book value of goodwill was 0.276 billion yuan, with accumulated impairment provisions of 0.239 billion yuan, including **44.287 million yuan** newly provisioned in the current period[497](index=497&type=chunk)[498](index=498&type=chunk)[502](index=502&type=chunk) - As of year-end, the total book value of assets with restricted ownership or use was **6.321 billion yuan**, primarily consisting of inventories, fixed assets, intangible assets, and investment properties used as collateral[611](index=611&type=chunk) - The company disclosed significant contingent liabilities, including lawsuits related to medium-term notes and corporate bonds, as well as 272 pending lawsuits as of March 30, 2021, with a total amount involved of **2.368 billion yuan**[673](index=673&type=chunk)[674](index=674&type=chunk)[675](index=675&type=chunk) [Section 12 List of Documents for Inspection](index=340&type=section&id=Section%2012%20List%20of%20Documents%20for%20Inspection)

Financial Performance - Operating revenue for the first nine months decreased by 61.62% to CNY 3.97 billion compared to the same period last year[5] - Net profit attributable to shareholders was a loss of CNY 2.37 billion, a decrease of 7,248.78% compared to the previous year[5] - Basic and diluted earnings per share were both CNY -0.481, a decrease of 6,971.43% compared to the previous year[6] - The weighted average return on equity was -12.18%, a decrease of 12.31 percentage points compared to the previous year[6] - Net profit for the first three quarters of 2020 was ¥519,876,141.85, down 77.8% from ¥2,345,454,899.34 in the same period of 2019[22] - The net profit attributable to shareholders was reported as -¥2,529,304,688.03, compared to -¥157,770,843.74 in the previous year, indicating a significant increase in losses[20] - The company's operating revenue for Q3 2020 was approximately ¥424.09 million, a significant decrease of 76.7% compared to ¥1.82 billion in Q3 2019[27] - The net profit for Q3 2020 was a loss of approximately ¥686.64 million, compared to a loss of ¥45.76 million in Q3 2019, indicating a substantial decline in profitability[28] Assets and Liabilities - Total assets decreased by 4.78% to CNY 61.50 billion compared to the end of the previous year[5] - The company's intangible assets decreased to RMB 1,309,634,875.44, down 35.25% from RMB 2,022,461,560.26 due to the sale of intangible assets[14] - Current liabilities totaled ¥20,149,818,486.94, down from ¥27,823,065,439.44, indicating a reduction of about 27.2%[19] - Long-term borrowings increased significantly to ¥12,558,661,890.34 from ¥2,088,752,629.63, marking a rise of 501.25%[19] - The total liabilities stood at ¥43,200,629,799.67, slightly down from ¥43,935,237,255.88, showing a decrease of about 1.7%[20] - The total number of shareholders at the end of the reporting period was 159,100[9] Cash Flow - Net cash flow from operating activities decreased by 73.14% to CNY 884.69 million compared to the same period last year[5] - The net cash flow from operating activities was RMB 884,689,062.10, a significant decline of 73.14% from RMB 3,293,151,636.86 in the same period last year[14] - Cash inflow from operating activities for Q3 2020 was ¥4.91 billion, a decrease of 56.0% from ¥11.17 billion in Q3 2019[32] - Cash outflow from operating activities for Q3 2020 was ¥4.03 billion, down from ¥7.88 billion in Q3 2019[32] - The net cash flow from financing activities was negative at ¥1.95 billion, an improvement from a negative cash flow of ¥4.53 billion in the same period of 2019[33] Expenses - Operating costs decreased to RMB 3,403,041,526.19, down 47.57% from RMB 6,490,614,926.42 year-on-year, primarily due to the decline in operating revenue[14] - Research and development expenses were RMB 47,833,541.00, a reduction of 30.75% compared to RMB 69,070,659.69 in the previous year[14] - Financial expenses for Q3 2020 amounted to ¥551,463,568.52, a slight decrease from ¥579,960,892.22 in Q3 2019[24] - The company's R&D expenses for Q3 2020 were approximately ¥13.62 million, slightly down from ¥13.98 million in Q3 2019[27] Shareholder Information - The largest shareholder, Kangmei Industrial Investment Holdings Co., Ltd., held 1,618,442,461 shares, with 209,424,083 shares pledged[9] - The total number of preferred shareholders at the end of the reporting period was 8, with the largest shareholder holding 9,000,000 shares, representing 30.00%[11]

Financial Performance - The company's operating revenue for the first half of 2020 was ¥2,516,815,229.20, a decrease of 69.05% compared to the same period last year[15]. - The net profit attributable to shareholders of the listed company was -¥1,423,842,311.97, a decline of 1,765.31% year-on-year[15]. - The net cash flow from operating activities was ¥371,391,310.50, down 83.09% from the previous year[15]. - The total assets at the end of the reporting period were ¥62,424,749,076.40, a decrease of 3.35% compared to the end of the previous year[15]. - The net assets attributable to shareholders of the listed company were ¥19,109,016,781.69, down 6.85% from the previous year[15]. - Basic earnings per share for the reporting period were -¥0.289, a decrease of 1,800.00% compared to the same period last year[16]. - The weighted average return on net assets was -7.14%, a decrease of 7.48 percentage points year-on-year[16]. - The company reported a significant decline in both revenue and profit, indicating challenges in the current market environment[15]. Operational Strategy - The company operates a comprehensive TCM (Traditional Chinese Medicine) industry chain, including cultivation, production, and sales of TCM products, Western medicine, health foods, and medical devices[20]. - The procurement model includes direct sourcing from production areas and market-based purchasing, ensuring stable supply and quality of raw materials[21]. - The production strategy follows a sales-driven model, with production plans based on market demand and inventory levels[22]. - The sales model encompasses multiple channels, including direct sales to hospitals, commercial wholesale, smart pharmacies, and e-commerce partnerships with platforms like Tmall and JD[22]. - The company has established a strategic collaboration with health product retail platforms to enhance its market reach[22]. - The company aims to leverage "Internet+" strategies to integrate direct sales, e-commerce, and retail operations for enhanced business synergy[22]. Industry Context - The pharmaceutical manufacturing industry is experiencing growth due to favorable policies and ongoing healthcare reforms in China[24]. - The pharmaceutical manufacturing industry experienced a revenue decline of 3.8% and a profit drop of 5.9% from January to May 2020 due to the impact of COVID-19[25]. - The company holds a leading position in the Chinese herbal medicine market, with over 1,000 varieties and more than 20,000 specifications of traditional Chinese medicine products[25]. Research and Development - The company has established over 20 national and provincial-level R&D platforms for traditional Chinese medicine research and transformation[32]. - The company has applied for 83 technology patents and 4 software copyrights related to its smart pharmacy initiative[35]. - The company has initiated two major national R&D projects focused on the modernization of traditional Chinese medicine and the development of key technologies[36]. - The company has formed a joint venture with Shenzhen BGI Genomics Co., Ltd. to leverage modern genomic technology for traditional Chinese medicine research[36]. Financial Management - The company has established a financial dual reporting mechanism to enhance financial control capabilities[37]. - The company has strengthened its information technology infrastructure to unify business, data, and cash flows[37]. - The company has implemented a comprehensive evaluation system for suppliers to ensure quality and reliability in its procurement processes[21]. Asset Management - The company plans to sell assets worth up to 1.13 billion yuan to further focus on its core business[26]. - The company has reduced its research and development expenses by 38.14% to approximately ¥29.66 million from ¥47.95 million year-on-year[40]. - The company has accumulated nearly 700 intellectual property rights, with around 650 effective patents in various fields[32]. Shareholder and Governance - The company will not distribute profits or increase capital reserves during the reporting period, indicating a focus on strengthening its financial position[52]. - The actual controller of the company has committed to repay non-operational fund occupation, with a minimum repayment of 10% (approximately RMB 948.11 million) by December 31, 2020, and 40% (approximately RMB 3.79 billion) by December 31, 2021[55]. - The company has held two extraordinary shareholder meetings in 2020, on January 2 and June 19[51]. Social Responsibility - The company has invested 345.85 million in six poverty alleviation projects, focusing on agricultural and technological poverty alleviation[69]. - A total of 6,300 individuals have been lifted out of poverty through the company's initiatives, with 855.84 million allocated for funding[71]. - The company has actively participated in COVID-19 relief efforts, providing 30,000 traditional Chinese medicine packages to residents in Wuhan[73]. Legal and Compliance - The company faces litigation risks following the administrative penalty and market entry decision issued by the China Securities Regulatory Commission on May 14, 2020[49]. - The company has received administrative penalties from the China Securities Regulatory Commission (CSRC) for information disclosure violations, with fines paid within the stipulated time[58]. Financial Ratios - The current ratio increased to 2.29 from 2.08, reflecting a 10.10% improvement[102]. - The quick ratio improved to 0.71 from 0.69, showing a 3.29% increase[102]. - The debt-to-asset ratio rose to 69.16% from 68.03%, indicating a 1.14% increase[102]. Credit and Liquidity - The company's credit rating was downgraded from BBB to B, and subsequently to C, indicating increased credit risk[98]. - The company plans to use funds raised from bonds to repay various financial institution loans and supplement working capital[97]. - As of June 30, 2020, the total credit limit obtained from banks was CNY 20.013 billion, with CNY 15.341 billion utilized[104]. Accounting Policies - The financial statements are prepared in accordance with the relevant accounting standards and reflect the company's financial position accurately[133]. - The company recognizes revenue from the sale of its share of joint venture outputs, as well as expenses incurred individually and in joint ventures[141]. - The company measures financial liabilities at amortized cost, including short-term borrowings and long-term borrowings, with interest calculated using the effective interest method recognized in profit or loss[148].

Financial Performance - Operating revenue dropped by 76.13% to CNY 1.17 billion year-on-year[4] - Net profit attributable to shareholders was a loss of CNY 296.63 million, a decrease of 552.28% compared to the same period last year[4] - Basic earnings per share were -CNY 0.060, a decline of 561.54% year-on-year[4] - The company's operating revenue decreased due to adjustments in the pharmaceutical industry policies, leading to a focus on core business and a decline in business volume[12] - The company reported a net profit loss of CNY 494,540,858 in Q1 2020, compared to a net profit of CNY 126,182,140 in Q1 2019, representing a significant decline[23] - The total comprehensive income for Q1 2020 was a loss of ¥297,270,145.80, compared to a profit of ¥61,012,226.88 in Q1 2019[21] Cash Flow - Net cash flow from operating activities decreased by 69.91% to CNY 202.82 million[4] - The net cash flow from operating activities was 202,816,854.80, a decrease of 69.91% compared to the previous year[12] - Cash flow from operating activities generated a net amount of CNY 202,816,854.80 in Q1 2020, down from CNY 673,948,510.00 in Q1 2019, a decrease of about 70%[24] - Total cash inflow from operating activities in Q1 2020 was 871,909,209.54 RMB, down from 4,689,143,140.31 RMB in the same period last year, representing a decrease of approximately 81.4%[26] - Cash outflow from operating activities in Q1 2020 was 936,106,455.51 RMB, compared to 3,686,412,471.29 RMB in Q1 2019, indicating a reduction of about 74.7%[26] Assets and Liabilities - Total assets decreased by 1.53% to CNY 63.60 billion compared to the end of the previous year[4] - The company's intangible assets decreased from 2,022,461,560.26 to 1,338,644,803.48, reflecting a reduction in asset value[16] - Total liabilities amounted to ¥43,245,665,264.13, a decrease from ¥43,935,237,255.88 in the previous period, reflecting a reduction of approximately 1.57%[17] - The company's total equity decreased to ¥22,611,658,505.49 from ¥23,106,199,363.49, a decline of about 2.14%[19] - The total non-current liabilities increased to ¥25,072,484,123.27 from ¥15,018,015,567.44, marking an increase of approximately 66.8%[19] Shareholder Information - The total number of shareholders at the end of the reporting period was 181,588[6] - The largest shareholder, Kangmei Industrial Investment Holdings Co., Ltd., held 32.75% of the shares[6] - The total number of preferred shareholders at the end of the reporting period was 8[8] - The top ten preferred shareholders held a total of 30% of the shares, with the largest shareholder holding 9,000,000 shares[8] Expenses - The operating cost for Q1 2020 was ¥835,387,976.74, reflecting a 76.64% decrease from ¥3,575,908,591.88 in the previous period[10] - The company experienced a significant decrease in sales expenses, which fell by 71.49% from ¥369,254,611.00 to ¥105,262,715.34[10] - Research and development expenses decreased due to reduced investment in R&D projects compared to the previous year[12] - Research and development expenses decreased to ¥14,436,906.09 in Q1 2020 from ¥21,522,150.98 in Q1 2019, a reduction of 33%[20] Government Support - The company received government subsidies amounting to CNY 36.45 million during the period[5] Other Financial Metrics - The weighted average return on equity decreased by 1.99 percentage points to -1.73%[4] - The company reported a significant increase in non-recurring losses, with a total of CNY 323.38 million attributed to non-recurring gains and losses[4] - The company reported a significant increase in financial expenses, totaling ¥513,206,606.74 in Q1 2020, compared to ¥497,913,387.85 in Q1 2019[20] - The company recorded an investment loss of ¥1,026,122.21 in Q1 2020, contrasting with an investment income of ¥38,835,826.96 in Q1 2019[20]

Financial Performance - The company reported a net profit of -4,660,675,038.43 CNY for 2019, representing a decrease of 1,344.53% compared to the previous year[4]. - Total revenue for 2019 was 11,445,545,810.05 CNY, down 32.93% from 2018[15]. - The company's undistributed profits as of December 31, 2019, were -157,770,843.74 CNY, while the parent company's undistributed profits were 2,345,454,899.34 CNY[4]. - The company plans not to distribute profits or increase capital reserves for the 2019 fiscal year[4]. - The total assets of the company decreased by 11.70% to 64,586,228,755.01 CNY compared to the previous year[16]. - The net assets attributable to shareholders of the listed company decreased by 21.05% to 20,515,274,013.61 CNY[16]. - The basic earnings per share (EPS) for 2019 was -0.9896 CNY, a decrease of 3,376.82% compared to the previous year[17]. - The diluted EPS for 2019 was also -0.9896 CNY, reflecting a decrease of 3,398.67% year-over-year[17]. - The weighted average return on equity (ROE) was -21.20% in 2019, down 24.64 percentage points from the previous year[17]. - The company reported a total profit of RMB 948,112,620.07 for the year 2019[121]. - The company reported a net profit of -4,655,207,167.83 CNY for the year 2019, with a net profit attributable to shareholders of -4,660,675,038.43 CNY[178]. - The company’s cash flow is expected to support normal operations and long-term development, which is a prerequisite for implementing its profit distribution policy[108]. Operational Highlights - The company experienced a significant cash flow from operating activities of 2,882,044,986.08 CNY, an increase of 843.03% compared to the previous year[16]. - The company has acknowledged the existence of non-operating fund occupation by controlling shareholders and related parties[5]. - The company received a qualified audit opinion from its accounting firm, which has been detailed in the report[3]. - The company has outlined potential risks in its future development plans, urging investors to maintain sufficient risk awareness[5]. - The company has established a complete health industry layout and basic structure of the industry system, focusing on traditional Chinese medicine and related products[24]. - The company has established a comprehensive quality control system for suppliers, ensuring that procurement meets strict quality standards[25]. - The company has developed a comprehensive sales network with over 2,000 medical institutions and approximately 200,000 chain pharmacies across the country, enhancing its market presence[35]. - The company has launched the "Kangmei e-Medicine Valley" online platform for bulk trading of medicinal materials and introduced the "Kangmei China Medicinal Material Price Index" to strengthen its market position[31]. Industry Context - In 2019, the pharmaceutical manufacturing industry achieved revenue of CNY 239.09 billion, a year-on-year growth of 7.4%, surpassing the national average industrial growth rate by 3.6 percentage points[28]. - The total profit of the pharmaceutical manufacturing industry reached CNY 31.20 billion, with a year-on-year increase of 5.9%, although the growth rate decreased by 3.6 percentage points compared to the previous year[28]. - The gross profit margin for the pharmaceutical manufacturing industry was 13.04%, an increase of 0.29 percentage points from the previous year, outperforming the national average of 7.15%[28]. Strategic Initiatives - The company has implemented a flexible and scientific procurement strategy, ensuring stable supply and quality of raw materials through direct sourcing and market procurement[25]. - The company has adopted a sales model that includes direct sales to hospitals, commercial wholesale, smart pharmacies, and e-commerce partnerships with platforms like Tmall and JD[27]. - The company has established long-term cooperative relationships with top research institutions, including the Chinese Academy of Traditional Chinese Medicine and several universities, forming a strong technical support organization[37]. - The company has established a joint venture with BGI Genomics to advance research in traditional Chinese medicine and genomics[44]. - The company has initiated two key projects under the National Key R&D Program focusing on the modernization of traditional Chinese medicine[44]. Research and Development - Total R&D investment amounted to 128.27 million yuan, representing 1.12% of operating revenue, with 581 R&D personnel, making up 6.31% of total staff[60]. - The company has established a doctoral workstation in Guangdong Province for talent cultivation and R&D platform development[71]. - The company has completed clinical trials for a new anti-constipation drug, achieving bioequivalence with reference formulations and submitted registration applications[76]. - The company has developed a lean production platform for TCM raw materials based on big data, with ongoing studies on the production line for red ginseng[75]. Corporate Governance - The company has appointed Lixin Certified Public Accountants as its auditing firm for the 2019 fiscal year, with an audit fee of RMB 620,000[126]. - The company has faced administrative penalties from the China Securities Regulatory Commission, including fines related to information disclosure violations[129]. - The company plans to enhance its internal control system to ensure effective operation and compliance with regulations[121]. - The company has committed to repaying all occupied funds and related interest by December 31, 2022[121]. Social Responsibility - The company has actively engaged in poverty alleviation efforts since 2008, establishing the Kangmei Poverty Alleviation Welfare Association[139]. - The company invested a total of 89.53 million RMB in poverty alleviation efforts, helping 8,652 registered impoverished individuals to escape poverty[141]. - The company has been recognized for its contributions to poverty alleviation, receiving multiple awards including the "Outstanding Contribution Collective" title in Guangdong Province[143]. - The company emphasizes social responsibility and has actively engaged in charitable activities for over 12 years, donating 400,000 RMB to impoverished households and elderly individuals[140]. Environmental Compliance - The company has not experienced any environmental pollution incidents during the reporting period and has implemented green production practices[146]. - The company’s wastewater treatment facility is compliant with the GB21905-2008 standards for pharmaceutical industry wastewater discharge[148]. - The company has implemented a self-monitoring plan for environmental compliance, including regular technical testing of wastewater and emissions[152]. Shareholder Information - The total number of ordinary shares was 4,973,861,675, with 88.53% being unrestricted circulating shares[156]. - The largest shareholder, Kangmei Industrial Investment Holdings, held 1,628,702,199 shares, representing 32.75% of the total shares[164]. - The company has issued 30,000,000 preferred shares at a price of 100.00 yuan each, with a dividend rate of 7.50%[174]. - The preferred shares have been fully utilized for fundraising purposes[174].

Financial Performance - Operating revenue for the period was CNY 10.35 billion, representing a decline of 28.61% year-on-year[5] - Net profit attributable to shareholders was CNY 33.17 million, down 95.19% from the previous year[5] - Basic earnings per share were CNY 0.007, a decrease of 95.00% year-on-year[5] - The company reported a net profit attributable to shareholders after deducting non-recurring gains and losses of CNY -50.81 million, a decrease of 107.84% year-on-year[5] - The net profit for Q3 2019 was a loss of ¥41,494,486.62, compared to a profit of ¥217,302,348.31 in Q3 2018[24] - The company reported a net loss of ¥51,368,872.04 for the current period, compared to a net profit of ¥196,251,219.17 in the same period last year, indicating a significant decline in profitability[25] - Total revenue for Q3 2019 was ¥1,818,736,358.82, down 47.0% from ¥3,433,934,810.66 in Q3 2018[27] - Operating profit for the current period was a loss of ¥48,196,374.73, contrasting with a profit of ¥251,773,259.79 in the previous year, reflecting a substantial operational downturn[27] Cash Flow - Net cash flow from operating activities was CNY 3.29 billion, an increase of 171.00% compared to the same period last year[5] - The net cash flow from operating activities for the first three quarters of 2019 was ¥3,293,151,636.86, a significant improvement compared to -¥4,638,255,546.90 in the same period of 2018[30] - Total cash inflow from operating activities was ¥11,168,159,230.97, down from ¥15,864,133,360.57 in the previous year, indicating a decrease of approximately 29.5%[29] - The cash outflow for purchasing goods and services was ¥6,008,392,090.24, compared to ¥13,915,337,362.59 in the same period last year, reflecting a reduction of about 56.8%[29] - The net cash flow from investing activities was -¥93,199,375.24, a notable decrease from -¥4,352,329,952.13 in the previous year[30] - Cash inflow from financing activities totaled ¥7,811,785,000.00, down from ¥30,362,929,790.34 in the same period of 2018, representing a decline of approximately 74.3%[30] - The net cash flow from financing activities was -¥4,530,080,134.51, contrasting with a positive net flow of ¥6,998,498,918.07 in the previous year[30] Assets and Liabilities - Total assets at the end of the reporting period were CNY 71.78 billion, a decrease of 3.81% compared to the end of the previous year[5] - Current assets totaled CNY 51.54 billion, down from CNY 54.24 billion year-over-year[19] - Total liabilities were CNY 43.76 billion, down from CNY 46.33 billion at the end of 2018[20] - The company's equity attributable to shareholders was CNY 27.92 billion, a decrease from CNY 28.19 billion year-over-year[20] - Accounts receivable decreased to CNY 5.28 billion from CNY 6.32 billion year-over-year, reflecting a decline of approximately 16%[19] - Cash and cash equivalents decreased by 73.72% to ¥1,839,201,190.32, primarily due to debt repayment[14] - Short-term borrowings increased significantly to CNY 15.85 billion from CNY 11.58 billion, representing a rise of approximately 37%[20] Shareholder Information - The total number of shareholders at the end of the reporting period was 213,227[8] - The largest shareholder, Kangmei Industrial Investment Holdings Co., Ltd., held 32.75% of the shares[8] - The second largest shareholder is WISCO International Trust Co., Ltd. with 231,901,482 shares, representing a notable stake in the company[9] - The total number of preferred shareholders is 8, with the largest being Bosera Fund with 9,000,000 shares, which constitutes 30% of the preferred shares[10] - The company has identified several related parties among its shareholders, including connections between Kangmei Industrial and Xu Dongjin[9] - The report indicates that the company is actively monitoring shareholder relationships to ensure compliance with regulations[9] Operating Costs and Expenses - Operating costs decreased by 36.96% to ¥10,295,822,793.83, reflecting a decline in operating revenue[15] - Research and development expenses for Q3 2019 were ¥21,119,989.91, down 45.4% from ¥38,670,395.91 in Q3 2018[24] - The company's R&D expenses decreased to ¥13,975,319.72 in Q3 2019 from ¥36,995,560.68 in Q3 2018, a reduction of 62.3%[27] - The company reported a significant increase in financial expenses, totaling ¥579,960,892.22 in Q3 2019 compared to ¥500,998,358.82 in Q3 2018[24] - Financial expenses increased to ¥576,989,710.13 in Q3 2019, compared to ¥497,082,938.19 in Q3 2018, representing a rise of 16.0%[27] Other Income and Adjustments - Non-operating income included government subsidies amounting to CNY 114.36 million for the year-to-date[6] - Other income surged by 195.34% to ¥36,617,411.96, resulting from increased government subsidies recognized in the current period[14] - The company received a notice of administrative penalty from the China Securities Regulatory Commission on August 16, 2019, which may lead to financial data adjustments[16] - The company anticipates potential adjustments to financial data based on the final administrative penalty decision from the regulatory authority[16]