证券代码：300158 证券简称：振东制药 公告编号：2019-035 山西振东制药股份有限公司 关于召开 2018 年度业绩说明会暨投资者网上集体 接待日活动的公告 本公司及董事会全体成员保证信息披露内容的真实、准确、完整， 没有虚假记载、误导性陈述或重大遗漏。 重要内容提示： ●会议召开时间：2019 年 5 月 23 日（星期四）下午 14:30 至 16:30 ●会议召开方式：网络方式 一、说明会类型 本次说明会为山西振东制药股份有限公司（以下简称"公司"） 2018 年度业绩网上说明会。公司已于 2018 年 4 月 25 日在《中国 证券报》、《上海证券报》、《证券时报》及上海证券交易所网站 (www.sse.com.cn)刊登了 2018 年年度报告。为使广大投资者能更全 面深入地了解公司经营业绩等具体情况，公司根据山西省证监局《关 于举办山西辖区上市公司 2019年度投资者网上集体接待日暨上市公 司专题培训的通知》，公司决定通过网络平台交流方式举行"2018 年 度业绩说明会暨投资者网上集体接待日活动"。 二、说明会召开的时间 公司 2018 年度业绩网上说明会将于 2019 年 5 月 23 ...

Financial Performance - Total operating revenue for Q1 2019 was ¥898,702,801.66, representing a 16.32% increase compared to ¥772,622,450.52 in the same period last year[8]. - Net profit attributable to shareholders was ¥51,454,763.17, a 1.59% increase from ¥50,647,976.74 in the previous year[8]. - Basic earnings per share for Q1 2019 was ¥0.0501, slightly up by 1.62% from ¥0.0493 in the previous year[8]. - The company achieved operating revenue of 898.70 million yuan, representing a year-on-year growth of 16.32%[25]. - The net profit attributable to shareholders was 51.45 million yuan, an increase of 1.59% compared to the same period last year[25]. - The company reported a gross margin of 45% for Q1 2019, indicating strong operational efficiency[34]. - The company reported a significant increase in revenue for Q1 2019, with a year-over-year growth of 15%[49]. - The company provided a positive outlook for the next quarter, projecting a revenue increase of 10% to 12%[53]. Cash Flow and Liquidity - Net cash flow from operating activities improved significantly to ¥9,428,578.15, compared to a negative cash flow of ¥-179,362,851.21 in the same period last year, marking a 105.26% increase[8]. - Cash flow from operating activities for Q1 2019 was CNY 9,428,578.15, a significant improvement from a negative cash flow of CNY -179,362,851.21 in the previous year[116]. - Cash inflow from operating activities totaled CNY 996,928,630.61, up from CNY 954,503,531.37 in Q1 2018, representing an increase of 4.46%[116]. - Cash outflow from operating activities decreased to CNY 987,500,052.46 from CNY 1,133,866,382.58, a reduction of 12.91%[116]. - The company reported a cash and cash equivalents balance of $235,474,091.45 at the end of the period, up from $204,224,997.72 at the beginning[122]. Assets and Liabilities - Total assets at the end of the reporting period were ¥7,349,002,483.41, reflecting a 1.89% increase from ¥7,212,538,342.16 at the end of the previous year[8]. - The company's total liabilities increased to ¥1,937,074,938.75 from ¥1,850,124,230.17, reflecting a growth of approximately 4.7%[95]. - Current liabilities rose to CNY 1,526,923,130.08 from CNY 1,440,431,003.27, an increase of about 6.1%[95]. - The total equity of the company reached ¥4,959,919,937.25, a slight increase from ¥4,948,871,937.01 year-on-year[104]. - The company's accounts receivable totaled $1,384,385,374.23, indicating a significant amount of outstanding payments[124]. Research and Development - Research and development expenses for the first quarter amounted to 17.59 million yuan, up 34.60% year-on-year, primarily due to increased costs for generic drug consistency evaluation and clinical trials[23]. - The company has invested a total of 4,742,000 CNY in R&D for various drugs, including 3,742,000 CNY for Lapatinib raw materials and formulations[28]. - Research and development investments increased by 30% in Q1 2019, focusing on innovative drug formulations[59]. Strategic Initiatives - The company is focusing on the "big health industry" and optimizing its business strategy to achieve steady growth[26]. - The company is actively promoting OTC channel marketing and advertising, enhancing brand awareness, and advancing consistency evaluations[28]. - A strategic acquisition of a local pharmaceutical company is in progress, expected to enhance the company's product portfolio and distribution network[34]. - The company is exploring potential acquisitions to enhance its product portfolio, with a budget of $50 million allocated for this purpose[61]. Risks and Challenges - The company faces risks from national policy changes, including drug price regulation and centralized procurement, which could impact future development[30]. - The concentration of revenue from key products like Longdi Calcium and compound injections poses a risk to the company's financial performance[30]. - The company is committed to improving R&D capabilities and project management to mitigate risks associated with new drug development[30]. Government Support and Compliance - The company received government subsidies amounting to ¥5,160,230.35 during the reporting period[8]. - The company is committed to maintaining compliance with regulatory standards, ensuring transparency in all financial disclosures[49]. - The company has not reported any violations regarding external guarantees during the reporting period, indicating a stable financial position[87].

Economic Environment and Industry Challenges - The pharmaceutical industry is facing significant pressure due to a slowdown in national economic growth, with increased scrutiny and regulatory requirements impacting production costs and operational risks [7]. - The company acknowledges the risk of goodwill impairment following acquisitions if the expected operational performance of acquired entities is not met [8]. - The company recognizes the potential for significant changes in the market for approved products, which could impact future profitability [7]. - The company faces risks related to national policy changes, including stricter regulations on drug pricing and procurement processes, which could impact future growth [111]. - The demand for traditional Chinese medicine raw materials is rising, leading to potential price increases due to supply chain challenges [111]. Financial Performance - The company's operating revenue for 2018 was ¥3,419,750,405.17, a decrease of 8.36% compared to ¥3,731,602,626.26 in 2017 [23]. - The net profit attributable to shareholders was -¥147,444,710.73, representing a decline of 148.90% from ¥301,535,942.99 in the previous year [23]. - The net profit attributable to shareholders after deducting non-recurring gains and losses was -¥178,929,496.00, down 166.28% from ¥269,940,615.62 in 2017 [23]. - The net cash flow from operating activities increased significantly to ¥154,477,419.28, a rise of 242.63% compared to ¥45,086,167.34 in 2017 [23]. - The total assets at the end of 2018 were ¥7,212,538,342.16, a decrease of 5.27% from ¥7,613,476,577.30 at the end of 2017 [23]. - The net assets attributable to shareholders decreased by 3.33% to ¥5,356,787,666.09 from ¥5,541,235,754.94 in 2017 [23]. Product Quality and Compliance - The company has experienced product quality issues, leading to product recalls and a commitment to enhance quality control measures to ensure patient safety [8]. - The company is committed to improving its product quality monitoring systems to prevent adverse reactions and ensure compliance with enhanced regulatory standards [8]. - The company has established a production traceability monitoring system for traditional Chinese medicine pieces [45]. - The company has implemented corrective measures to improve quality standards and production processes following regulatory scrutiny [180]. Research and Development - The company emphasizes the importance of selecting the right research and development projects to maintain core competitiveness and profitability amidst long approval cycles [7]. - The company is focusing on three major pipelines: "tumor," "urinary," and "tonic," while continuing to promote research and product internationalization [36]. - The company’s research and development continue to focus on generic drug consistency evaluation and deep research of existing varieties, with an emphasis on international certification and overseas cooperation [36]. - The company is committed to enhancing its research and development capabilities by attracting top talent and optimizing its R&D system [40]. - The company completed 125 R&D projects, focusing on consistency evaluation and deep research of existing products [72]. Marketing and Sales Strategy - The company has established a comprehensive marketing network, including prescription drug promotion, OTC brand operation, and exploring outpatient prescription sales [36]. - The marketing strategy will focus on building a clinical terminal network covering 5,000 hospitals and 50,000 experts and doctors, enhancing service-oriented marketing and collaboration with top pharmacy chains [107]. - The company intends to transform its sales approach from product-focused to culture, brand, quality, and service-oriented strategies, moving towards higher-level strategic competition [107]. - The company plans to enhance its project management and quality management systems to support the development of innovative drugs and consistent evaluation [107]. Investment and Financial Management - The company plans to continue expanding its production capabilities and product offerings, with ongoing projects in various stages of completion [90]. - The company has allocated RMB 310,887,900.00 to supplement working capital, indicating a focus on liquidity management [86]. - The company has made commitments regarding cash compensation for any penalties or losses incurred due to environmental compliance issues, with a 15-day response time for compensation after losses occur [129]. - The company is committed to using raised funds to supplement working capital without engaging in high-risk investments or providing financial assistance to others for 12 months [165]. Shareholder Relations and Profit Distribution - There will be no cash dividends or stock bonuses distributed to shareholders for the year [9]. - The company has a complete decision-making process for profit distribution, ensuring the protection of minority shareholders' rights [115]. - The company’s profit distribution plan for 2018 includes no cash dividends, no bonus shares, and no capital reserve conversion [118]. - The independent directors fulfilled their responsibilities and provided independent opinions on the profit distribution plan [115]. Legal and Compliance Issues - The company is involved in a legal dispute with a claimed amount of CNY 31.67 million, which has been recognized as a contingent liability [174]. - The company has established a commitment to provide accurate information and documentation related to major asset restructuring to relevant intermediary institutions [133]. - The company has been actively involved in legal proceedings, including a civil case that has reached the Supreme People's Court for review [178]. - The company reported a potential loss of CNY 13.2 million and another compensation of CNY 17.97 million due to a court ruling related to a contract dispute, which may adversely affect current or future profits [163]. Corporate Social Responsibility - The company has a long-standing commitment to poverty alleviation, integrating social responsibility into its corporate culture and operations [109]. - The company is enhancing its human resources management to attract and retain high-quality talent amid increasing competition in the pharmaceutical industry [111].

Financial Performance - Operating revenue increased by 1.04% to CNY 762,105,172.52 for the current period[7] - Net profit attributable to shareholders was a loss of CNY 30,773,631.40, a decrease of 137.68% year-on-year[7] - Basic earnings per share decreased by 118.96% to CNY -0.0298[7] - The company's total assets decreased to CNY 6,285,671,105.26 from CNY 6,539,515,178.11, a reduction of approximately 3.9%[58] - The net profit for the current period is a loss of CNY 57,701,430.96, compared to a profit of CNY 34,078,149.87 in the previous period, reflecting a negative shift in profitability[74] - The total comprehensive income for the current period is CNY 56,618,776.94, down from CNY 238,558,449.87 in the previous period[71] Cash Flow - Net cash flow from operating activities improved by 61.22% to CNY -57,790,876.40 year-to-date[7] - The total cash flow from operating activities shows a net outflow of CNY 57,790,876.40, an improvement from the previous period's outflow of CNY 149,032,135.74[75] - Cash inflow from operating activities totaled CNY 3,018,310,883.77, up from CNY 2,151,942,961.61 in the previous period[75] - The financing activities resulted in a net cash inflow of CNY 17,127,398.20, down from CNY 121,439,016.20 in the previous period[77] Shareholder Information - The total number of shareholders at the end of the reporting period was 23,325[11] - The largest shareholder, Shanxi Zhendong Health Industry Group Co., Ltd., holds 41.86% of the shares[11] - The company did not conduct any repurchase transactions among the top 10 shareholders during the reporting period[12] - Shareholders are restricted from transferring more than 25% of their total shares annually during their tenure, and no transfers are allowed within six months after leaving the company[40] Asset Management - Total assets decreased by 2.76% to CNY 7,403,128,792.36 compared to the end of the previous year[7] - Financial assets measured at fair value decreased by 91.60% to CNY 4,300,000 due to an increase in repurchased trading financial assets[19] - The company reported a significant risk of penalties due to the invalidity of land leasing agreements and potential construction violations[28] Investment and Expenses - Sales expenses for the first nine months of 2018 increased by 62.70% to CNY 1,175,436,009.07, driven by higher office, conference, training, service, consulting, and market operation costs[21] - Research and development expenses for the quarter were CNY 14,150,380.08, down from CNY 18,829,508.44, a decrease of about 25.3%[60] - The company incurred research and development expenses of CNY 18,771,420.75, slightly higher than CNY 17,968,574.41 in the previous period, reflecting ongoing investment in innovation[73] Compliance and Commitments - The company is committed to ensuring the accuracy and completeness of all financial documents and disclosures[30] - The company has committed to not engaging in high-risk investments or provide financial assistance to others within 12 months after using raised funds for working capital[45] - The company has established a commitment to not repurchase shares that were publicly issued prior to the IPO[41] - The company will ensure timely and lawful information disclosure as per regulatory requirements[37] Legal and Regulatory Issues - The company has not faced any criminal penalties or significant civil litigation in the past five years, indicating a stable legal standing[32] - There is a risk of administrative penalties from regulatory authorities due to potential non-compliance with environmental regulations[28] - Compensation responsibilities were outlined, with the company and its executives agreeing to cover 50% of actual losses incurred before December 31, 2017, and full compensation for losses occurring from January 1, 2018[29]

Financial Performance - Total revenue for the first half of 2018 was CNY 1,620,119,627.85, a slight increase of 0.40% compared to CNY 1,613,667,612.06 in the same period last year[19]. - Net profit attributable to shareholders decreased by 42.73% to CNY 92,331,898.02 from CNY 161,224,997.05 year-on-year[19]. - Basic earnings per share dropped by 71.28% to CNY 0.0891 from CNY 0.3102 in the same period last year[19]. - The company achieved operating revenue of 1,620.12 million CNY, a year-on-year increase of 0.40%, while net profit attributable to shareholders decreased by 42.73% to 92.33 million CNY[42]. - The company reported a net cash decrease of 158.70% in cash and cash equivalents, totaling CNY -45,017,388.60, compared to an increase of CNY 76,693,086.57 in the previous period[55]. - The company reported a significant increase of 103.34% in net cash flow from investing activities, totaling CNY 66,604,282.00, up from CNY 32,754,663.48[54]. Assets and Liabilities - Total assets at the end of the reporting period were CNY 7,563,864,853.80, a decrease of 0.65% from CNY 7,613,476,577.30 at the end of the previous year[19]. - Net assets attributable to shareholders increased by 1.40% to CNY 5,618,992,574.28 from CNY 5,541,235,754.94 at the end of the previous year[19]. - Accounts receivable increased to CNY 1,528,403,310.00, representing 20.21% of total assets, up from 19.19% in the previous year[61]. - The company’s inventory rose to CNY 546,694,142.30, accounting for 7.23% of total assets, compared to 6.53% in the previous year[61]. - The company’s financial expenses increased by 26.48% to CNY 11,834,577.48, primarily due to a decrease in interest income[54]. Operational Strategies - The company plans to strengthen integration with newly acquired enterprises to enhance operational management and achieve expected synergies[5]. - The company is considering disposing of certain commercial segments to improve liquidity and reduce losses due to long accounts receivable cycles[5]. - The company aims to enhance operational efficiency through a strategy of cost reduction and efficiency improvement amid economic challenges[29]. - The company is actively pursuing international certifications and expanding overseas collaborations to enhance its market reach[28]. - The company has established a robust marketing team with strong academic promotion capabilities and has built good relationships with over 4,000 hospitals[45]. Research and Development - The company focuses on R&D for anti-tumor drugs, emphasizing deep development and innovation of existing products[28]. - The R&D investment includes multiple projects, with a total cumulative investment of 382.45 million CNY in Enzalutamide raw materials and formulations, which has been approved for clinical trials[51]. - The company has completed 25 varieties of consistency evaluations, with 12 varieties undergoing pilot studies and 6 varieties in pre-BE studies[36]. - The company is actively developing new products, with a focus on the oncology, urology, and nutritional supplement pipelines, aiming for innovative drug development[46][47]. Market Position and Competition - The market share of the company's main product, "Yanshu牌复方苦参注射液," reached 6.12% in the first half of 2018, ranking 7th in the Chinese herbal anti-tumor injection market[34]. - The company has 601 product specifications across 11 dosage forms, with 256 products included in the 2017 National Medical Insurance Directory[26]. - The company has 13 exclusive products or dosage forms, enhancing its competitive edge in the pharmaceutical market[26]. Corporate Governance and Compliance - The company emphasizes its commitment to corporate governance and transparency, ensuring all financial disclosures are accurate and timely[115]. - The company has adhered to regulatory requirements to protect the interests of its public shareholders throughout its operations[125]. - The company is committed to rectifying issues related to the use of raised funds and has developed a corrective plan that was approved by the shareholders[78]. Environmental Responsibility - Shanxi Zhendong Pharmaceutical Co., Ltd. has a wastewater treatment capacity of 500 m³/day, utilizing biochemical treatment methods, complying with the GB21904-2008 standard for chemical synthesis pharmaceutical wastewater discharge[161]. - The company operates a wastewater treatment facility with a capacity of 1100 m³/day, employing anaerobic and aerobic biological treatment, adhering to the GB21908-2008 standard for mixed preparation pharmaceutical wastewater discharge[161]. - The company has installed an online monitoring system for real-time monitoring of wastewater discharge, with data uploaded to local environmental protection authorities[161]. Shareholder Information - The total number of shares increased from 519,494,330 to 1,038,988,660 after the capital reserve conversion, resulting in a 100% increase in total shares[176]. - The company distributed dividends based on a plan that allocated 10 additional shares for every 10 shares held, effectively doubling the share count[176]. - The total number of common shareholders at the end of the reporting period is 23,080[183]. Legal and Regulatory Issues - The company is currently involved in a legal dispute that may negatively impact its profits, with potential compensation claims amounting to 13.2 million yuan and 17.97 million yuan[126]. - The company faced penalties related to the production of substandard products, resulting in a total fine of 591,203 yuan, including the confiscation of illegal gains of 121,889.6 yuan and a fine of 469,313.4 yuan[135]. - The company has established a dedicated team to address the issues related to the substandard product and is working on improving quality standards[135].

Industry Challenges - The pharmaceutical industry is facing significant pressure due to a slowdown in national macroeconomic growth, with increased regulatory scrutiny and cost control measures impacting drug sales[5] - The company is facing rising operational costs and risks due to the increasing complexity of its management systems amid rapid expansion[6] - The company acknowledges the risk of goodwill impairment if the future operating income of acquired companies does not meet expectations[6] - The company faces risks from national policy changes, product concentration, new drug development challenges, and human resource shortages, necessitating strategic adjustments[111] Acquisitions and Structural Changes - The company has acquired Kangshengyuan to optimize its industrial structure and actively develop the traditional Chinese medicine industry, establishing several related companies[5] - The company is focusing on enhancing the integration of newly acquired enterprises to maximize synergy and achieve expected revenue levels[6] - The company added 6 subsidiaries and 1 new subsidiary through mergers and acquisitions during the reporting period[60] - The company acquired a 70% stake in Hubei Kangshengyuan Pharmaceutical Co., Ltd. for ¥4,851,566.67, funded through self-raised capital[82] Financial Performance - The company's operating revenue for 2017 was ¥3,731,602,626.26, representing a year-over-year increase of 13.66%[19] - The net profit attributable to shareholders for 2017 was ¥301,535,942.99, an increase of 48.49% compared to the previous year[19] - The net profit after deducting non-recurring gains and losses was ¥269,940,615.62, reflecting a growth of 50.77% year-over-year[19] - The total assets at the end of 2017 reached ¥7,613,476,577.30, marking a 10.75% increase from the end of 2016[19] Research and Development - The company emphasizes the importance of selecting the right research and development projects to maintain core competitiveness and sustainable profitability[5] - The company initiated 120 research projects in 2017, with 1 new drug application completed and 5 raw material drug production applications approved[37] - The company’s development expenditure grew by 157.23% year-on-year, reflecting increased capitalized R&D efforts[33] - The company has established international collaborations, including FDA certification efforts and partnerships with companies in the USA and Australia[45] Marketing and Sales - The company is focusing on expanding its OTC product sales and optimizing its product structure for sustainable growth[32] - The company has established a comprehensive marketing network, utilizing various sales models including prescription drug promotion and OTC brand operation[30] - The company aims to enhance its international collaboration and push for international certification in its R&D efforts[29] - The OTC and grassroots markets are identified as new revenue pillars, with a focus on expanding marketing networks and exploring innovative sales models[106] Profit Distribution - The profit distribution plan approved by the board proposes a cash dividend of 0.40 CNY per 10 shares, with a capital reserve conversion of 10 shares for every 10 shares held[7] - The total distributable profit for the period is RMB 221,322,981.08, indicating a healthy profit margin for dividend distribution[119] - The cash dividend distribution complies with the company's articles of association and has been approved by the board and shareholders[118] - The company has maintained a minimum cash dividend ratio of 20% during profit distribution, ensuring shareholder returns are prioritized[122] Social Responsibility and Community Engagement - The company is committed to social responsibility, continuing its poverty alleviation efforts in key regions while integrating political and cultural leadership within its operations[110] - The company has provided 843,000 yuan in funds and 30,000 yuan in material assistance to help 2,954 registered impoverished individuals escape poverty[198] - The company has organized 1,200 employees to support 78 impoverished villages, involving 6,490 households and 16,848 impoverished individuals[196] - The average annual income from traditional Chinese medicine for farmers increased from 1,546 yuan in 2016 to 1,760 yuan in 2017[195] Compliance and Governance - The company is actively monitoring compliance with regulatory guidelines to avoid potential penalties related to operational activities[132] - The company has executed relevant commitments regarding share transfer restrictions and performance guarantees as per regulatory requirements[131] - The company guarantees strict compliance with relevant regulations and will not engage in related transactions with its subsidiaries[140] - The company has established a framework to monitor compliance with these commitments and ensure necessary corrective measures are taken if violated[139]

Financial Performance - Total revenue for Q1 2018 was CNY 772,622,450.52, an increase of 7.60% compared to CNY 718,046,609.59 in the same period last year[7]. - Net profit attributable to shareholders was CNY 50,647,976.74, a decrease of 11.83% from CNY 57,441,457.28 year-on-year[7]. - Basic earnings per share decreased by 11.31% to CNY 0.0980 from CNY 0.1105 in the same period last year[7]. - The company achieved operating revenue of 772.62 million RMB, representing a year-on-year increase of 7.60%[20]. - The net profit attributable to shareholders was 50.64 million RMB, a decrease of 11.83% compared to the same period last year[20]. - The total comprehensive income for Q1 2018 was CNY 48,093,579.87, compared to CNY 55,987,036.61 in the previous year, a decline of 14.1%[68]. Cash Flow - Net cash flow from operating activities was negative CNY 179,362,851.21, worsening by 184.98% compared to negative CNY 62,939,736.44 in the previous year[7]. - Operating cash inflow totaled CNY 954,503,531.37, up from CNY 634,315,871.23 in the previous period, representing a 50.5% increase[74]. - Cash outflow from operating activities reached CNY 1,133,866,382.58, compared to CNY 697,255,607.67 in the prior period, reflecting a 62.5% increase[74]. - Net cash flow from investment activities increased by 201.13% to 57.62 million RMB, mainly due to increased cash received from investment recoveries[19]. - Net cash flow from financing activities was negative CNY 31,499,379.05, compared to a positive CNY 43,328,480.62 in the prior period[75]. Assets and Liabilities - Total assets at the end of the reporting period were CNY 7,437,687,679.39, down 2.31% from CNY 7,613,476,577.30 at the end of the previous year[7]. - Total liabilities decreased from CNY 2,055,716,720.38 to CNY 1,831,834,242.58, a reduction of approximately 10.93%[60]. - Total current assets decreased from CNY 3,439,784,440.57 to CNY 3,269,122,627.33, a decline of approximately 4.94%[58]. - Cash and cash equivalents decreased from CNY 606,803,795.44 to CNY 445,853,426.03, a decrease of about 26.49%[58]. - Total equity increased to CNY 5,121,613,974.35 from CNY 5,111,124,351.90, reflecting a slight increase of 0.2%[67]. Investment and R&D - The company has achieved production approval for multiple new drug projects, including 12 key products, which are currently in various stages of clinical research and production[21]. - Total investment in key drug research and development projects amounts to approximately ¥4,000 million, with significant investments in drugs like Ma Huang Suan and Enzalutamide[22]. - R&D investment for new technologies is projected to reach 100 million yuan, focusing on innovative drug formulations[36]. - The company is actively expanding its product portfolio, with ongoing clinical trials for drugs such as Dasatinib and Lapatinib, aimed at enhancing its core competitiveness[21]. Risks and Compliance - The company faces risks from macroeconomic slowdown, regulatory pressures, and long R&D cycles impacting profitability[10]. - The company faces risks related to national policy changes, which could impact the pharmaceutical industry, and is implementing measures to adapt to these changes[23]. - The company is managing accounts receivable risks by improving credit management policies and reducing collection periods to enhance cash flow efficiency[25]. - The company is committed to fulfilling its equity incentive commitments and ensuring compliance with regulatory requirements related to share transfers[26]. Shareholder Information - The total number of ordinary shareholders at the end of the reporting period was 23,409[12]. - The largest shareholder, Shanxi Zhendong Health Industry Group Co., Ltd., holds 41.86% of the shares, with 57,431,739 shares pledged[13]. - The actual controller, Li Anping, committed to not transferring or entrusting the management of shares for 36 months post-listing, ensuring stability in shareholding[41]. - The company has reported a commitment from major shareholders to not transfer or delegate their shares for one year from the date of listing, and to limit annual transfers to no more than 25% of their total shares held[43]. Future Outlook - The company plans to launch two new products in the next quarter, aiming for a market share increase of 10% in the pharmaceutical sector[36]. - Future outlook includes an expansion strategy targeting a 30% increase in market presence across three new provinces by the end of 2018[37]. - Shanxi Zhendong Pharmaceutical Co., Ltd. anticipates a revenue guidance of 5 billion yuan for the full year 2018, reflecting a growth target of 20%[33].

Economic Environment and Industry Challenges - The pharmaceutical industry is facing significant pressure due to a slowdown in national macroeconomic growth, with increased regulatory scrutiny and cost control measures impacting drug sales[5] - The company is facing rising operational costs and risks due to increased production standards and quality requirements in the pharmaceutical industry[5] - The company acknowledges the risk of goodwill impairment if the future operating income of acquired companies does not meet expectations[6] - The company faces risks from national policy changes, product concentration, new drug development challenges, and human resource shortages, necessitating strategic adjustments[111] Company Acquisitions and Structural Changes - The company has acquired Kangshengyuan to optimize its industrial structure and actively develop the traditional Chinese medicine industry, establishing several related companies[5] - The company is focusing on enhancing the integration of newly acquired enterprises to maximize synergy and achieve expected revenue levels[6] - The company has added 6 subsidiaries and 1 subsidiary through mergers and acquisitions during the reporting period[60] - The company acquired a 70% stake in Hubei Kangsheng Pharmaceutical Co., Ltd. for 4,851,566.67 CNY, focusing on traditional Chinese medicine and chemical preparations[82] Financial Performance and Profitability - The company's operating revenue for 2017 was ¥3,731,602,626.26, representing a 13.66% increase compared to ¥3,282,999,975.86 in 2016[19] - The net profit attributable to shareholders for 2017 was ¥301,535,942.99, a significant increase of 48.49% from ¥203,063,920.51 in 2016[19] - The net profit after deducting non-recurring gains and losses was ¥269,940,615.62, up 50.77% from ¥179,041,579.29 in 2016[19] - The total distributable profit for the period is RMB 221,322,981.08, indicating a healthy profit margin for the company[119] Research and Development Initiatives - The company emphasizes the importance of selecting the right research and development projects to maintain core competitiveness and sustainable profitability[5] - The company has initiated 120 research projects in 2017, with 1 new drug application completed and 5 raw material drug production approvals obtained[37] - The company’s R&D investment increased, with a focus on consistency evaluation of generic drugs and deep research on existing products[63] - The company plans to continue promoting research and development innovation and internationalization of products to ensure sustainable growth[32] Marketing and Product Development - The company has adopted a comprehensive marketing strategy across various channels, including prescription drug promotion and OTC brand operations[30] - The company is expanding its OTC and grassroots market presence, focusing on key products like Langdi Calcium and Dafeixin, while also exploring internet B2C sales channels[106] - The company achieved a 12.33% year-on-year growth in the market share of "Bicalutamide Capsules," reaching 15.41% in 2017[35] - The company has 117 OTC products, with 80 included in the medical insurance directory, enhancing market presence[36] Financial Management and Investments - The company has received government subsidies amounting to ¥36,603,365.63 in 2017, compared to ¥22,451,674.55 in 2016[25] - The company has a credit line of 7,000 million RMB with Industrial and Commercial Bank of China, which remains unexecuted[191] - The company is actively managing its idle funds through various financial products[183] - The company has a financial management agreement with a total of 9,000 million, yielding an interest rate of 5.20% for the year 2018[186] Shareholder Returns and Dividend Policy - The profit distribution plan approved by the board proposes a cash dividend of 0.40 CNY per 10 shares, with a capital reserve conversion of 10 shares for every 10 shares held[7] - The company has maintained a minimum cash dividend ratio of 20% during profit distributions, ensuring shareholder returns[122] - The cash dividend for the previous year was RMB 0.500240 per 10 shares, totaling RMB 25,598,900, reflecting a consistent dividend policy[125] - The cash dividend distribution plan complies with the company's articles of association and has been approved by the board and shareholders[118] Social Responsibility and Community Engagement - The company has invested nearly 70 million yuan to establish a traditional Chinese medicine planting and storage logistics base, promoting industrial poverty alleviation[197] - In 2017, 22 villages, 1,210 households, and 2,954 individuals achieved poverty alleviation through the company's targeted poverty alleviation efforts[197] - The company has created a full-chain integration of planting, research, processing, storage, logistics, and sales in the traditional Chinese medicine industry, generating significant employment opportunities for local impoverished families[194] - The company has established a "Poverty Alleviation and Relief Committee" to provide targeted assistance to impoverished students, families, and individuals[195]

Financial Performance - Net profit attributable to shareholders rose by 20.05% to CNY 81,668,583.24 for the current period[7] - Operating revenue decreased by 8.97% to CNY 754,268,367.12 for the current period[7] - Basic earnings per share decreased by 19.92% to CNY 0.1572 for the current period[7] - The weighted average return on net assets was 1.50%, down by 1.88% compared to the previous year[7] - The company reported a net profit of CNY 242,893,580.29 for the year-to-date, reflecting a significant increase of 136.89%[7] - The company reported a significant increase in net profit for Q3 2017, reaching CNY 79.99 million, an increase of 22.66% from CNY 65.07 million in Q3 2016[56] - The net profit for the current period is CNY 238,558,449.87, compared to CNY 94,254,379.33 in the previous period, indicating a significant increase of approximately 153%[65] - The total comprehensive income for the current period is CNY 238,558,449.87, compared to CNY 94,254,379.33 in the previous period, reflecting a growth of approximately 153%[65] Assets and Liabilities - Total assets increased by 4.28% to CNY 7,169,254,688.82 compared to the end of the previous year[7] - The company's total assets amounted to CNY 6.20 billion, up from CNY 6.01 billion at the beginning of the year, indicating a growth of 3.29%[52] - The total liabilities increased to CNY 1.65 billion, compared to CNY 1.60 billion in the previous year, marking a rise of 3.06%[50] - The equity attributable to shareholders of the parent company was CNY 5.49 billion, an increase of 4.71% from CNY 5.25 billion year-over-year[50] - Cash and cash equivalents decreased to CNY 479,864,790.01 from CNY 586,864,699.65, representing a decline of about 18.2%[47] - Accounts receivable increased to CNY 1,367,504,121.22 from CNY 1,200,850,739.78, marking an increase of approximately 13.9%[47] - Inventory rose to CNY 533,936,749.43 from CNY 406,557,901.05, indicating a growth of around 31.2%[47] Cash Flow - Net cash flow from operating activities showed a decline of 71.09%, amounting to CNY -149,032,135.74[7] - Operating cash flow net amount decreased by 71.09% to CNY -149,032,135.74, primarily due to increased cash payments for purchases and taxes[20] - Cash flow from investment activities decreased by 118.42% to CNY -24,191,840.84, mainly due to increased cash outflows for investments[20] - Cash flow from financing activities decreased by 72.03% to CNY 121,439,016.20, attributed to reduced cash inflows from investments and borrowings[20] - The total cash inflow from operating activities is $2.15 billion, an increase from $1.95 billion in the previous period[71] - The net cash flow from operating activities is -$149.03 million, worsening from -$87.11 million year-over-year[71] - Cash and cash equivalents at the end of the period amount to $443.87 million, down from $645.93 million in the previous period[72] Expenses and Investments - Sales expenses for the first nine months of 2017 increased by 46.15% to CNY 722,439,053, driven by higher market operation and service fees[19] - The total operating costs for the current period are CNY 2,113,911,407.90, up from CNY 1,851,423,997.43 in the previous period, which is an increase of approximately 14.2%[62] - The sales expenses for the current period are CNY 722,439,053.83, compared to CNY 494,324,733.60 in the previous period, representing an increase of approximately 46.2%[62] - The financial expenses for the current period decreased to CNY 14,756,220.89 from CNY 26,362,856.19 in the previous period, a reduction of approximately 44%[62] - Research and development investments increased by 30% in 2017, focusing on innovative drug formulations[36] Shareholder Information - The number of ordinary shareholders at the end of the reporting period was 13,462[11] - The largest shareholder, Shanxi Zhendong Health Industry Group Co., Ltd., held 43.81% of the shares[11] - The company declared a cash dividend of CNY 0.500240 per 10 shares, totaling CNY 25,988,935.20, based on a total share capital of 519,529,330 shares[42] - The company has not made any adjustments to its cash dividend policy during the reporting period[42] Regulatory and Legal Matters - The company is currently involved in a legal dispute regarding a compensation claim amounting to CNY 13,170,000, which may adversely affect its profits[40] - The company has committed to compensating for any losses incurred due to the invalidity of land leasing actions or construction without proper permits[26] - The commitment to performance and compensation arrangements is aimed at ensuring compliance with regulatory requirements and protecting shareholder interests[24] - The company is focused on maintaining its operational activities while addressing any potential regulatory risks associated with its land use[25] Future Outlook and Strategy - The company provided a positive outlook for Q4 2017, projecting a revenue increase of 10% to 1.32 billion RMB[30] - New product development initiatives are underway, with an investment of 200 million RMB allocated for R&D in innovative drug formulations[31] - The company plans to expand its market presence by entering two new provinces, aiming for a 25% increase in market share by the end of 2018[32] - A strategic acquisition of a smaller pharmaceutical firm is in progress, expected to enhance the company's product portfolio and increase annual revenue by 300 million RMB[29] - The company is focusing on enhancing its digital marketing strategies, with a budget increase of 50% for online advertising campaigns[30] - A commitment to sustainability has been made, with plans to reduce production waste by 30% over the next two years[32] - The management emphasized the importance of sustainable practices in its operations, aiming for a 15% reduction in carbon footprint by 2020[38]

Financial Performance - Total revenue for the first half of 2017 reached ¥1,613,667,612.06, an increase of 44.08% compared to ¥1,119,997,612.24 in the same period last year[18]. - Net profit attributable to shareholders was ¥161,224,997.05, representing a significant increase of 367.25% from ¥34,505,001.62 year-on-year[18]. - The net profit after deducting non-recurring gains and losses was ¥143,486,321.57, up 415.69% from ¥27,824,219.29 in the previous year[18]. - Basic earnings per share rose to ¥0.3102, a 161.55% increase compared to ¥0.1186 in the same period last year[18]. - The company reported a significant increase in income tax expenses, which surged by 654.75% to ¥34,096,980.65 due to a rise in total profit[59]. - The company reported a total profit of ¥192,668,827.87, compared to ¥33,706,870.75 in the previous year, an increase of approximately 471%[197]. - Operating profit for the first half of 2017 was ¥175,796,554.32, up from ¥26,299,813.28 in the same period last year, showing a growth of over 570%[197]. Assets and Liabilities - The company's total assets at the end of the reporting period were ¥7,152,146,013.64, reflecting a 4.04% increase from ¥6,874,715,664.74 at the end of the previous year[18]. - The net assets attributable to shareholders increased by 2.83% to ¥5,394,673,457.27 from ¥5,246,122,343.43 at the end of the previous year[18]. - Current liabilities rose to ¥1,412,410,606.20, compared to ¥1,273,408,393.97, indicating an increase of about 10.95%[189]. - The total liabilities increased to ¥1,734,564,303.67 from ¥1,603,031,918.78, reflecting an increase of about 8.19%[189]. Cash Flow - The company reported a negative net cash flow from operating activities of ¥109,748,249.94, a decline of 494.22% compared to a positive cash flow of ¥27,839,261.75 in the same period last year[18]. - The net cash flow from investment activities increased by 200.79% to ¥32,754,663.48, compared to a negative cash flow of ¥32,497,294.04 in the previous period, indicating improved cash recovery from investments[59]. Operational Strategies - The company faces increased operational risks due to stricter regulations and rising production costs in the pharmaceutical industry[4]. - The company plans to enhance credit management policies to mitigate accounts receivable risks associated with longer collection periods[5]. - The company employs a centralized procurement model to reduce costs, with monthly production plans based on sales reports[27]. - The company emphasizes research and development, particularly in anti-tumor drugs, and is focused on deepening existing product development and innovation[27]. - The company has implemented a new marketing strategy that emphasizes a multi-channel approach, enhancing brand recognition and loyalty among customers[55]. Market Position and Product Development - The company operates in the pharmaceutical industry, focusing on eight major therapeutic areas, including anti-tumor and cardiovascular drugs, with a total of 600 product specifications[25]. - The company has 257 products included in the 2017 National Medical Insurance Directory, with 156 products listed in the National Essential Medicines List[25]. - The company has initiated 161 research projects in 2017, with 31 potential products undergoing consistency evaluation, and 18 products having completed raw material and formulation process research[36]. - The company has established a comprehensive expert network across national, provincial, and municipal levels to support clinical research and product development[35]. Shareholder and Governance - The total number of shareholders at the end of the reporting period is 13,026[169]. - The largest shareholder, Shanxi Zhendong Health Industry Group Co., Ltd., holds 43.81% of shares, totaling 227,590,963 shares[169]. - The company has made commitments regarding the non-public issuance of shares, with a lock-up period of 36 months[102]. - The company guarantees compliance with legal and regulatory requirements in all related transactions, ensuring fairness and transparency[112]. Social Responsibility - The company actively participates in targeted poverty alleviation efforts, aligning with national strategies and policies[150]. - A total of 9,800 acres of Chinese medicinal herbs were planted across 78 villages, helping 6,490 registered impoverished households[152]. - The company provided 433.12 million yuan in funds and 155.56 million yuan in material assistance, resulting in 1,112 impoverished individuals lifted out of poverty[153].