佐力药业(300181) - 2025 Q2 - 季度财报

Important Notice, Table of Contents, and Definitions This section provides essential disclaimers, outlines the report's structure, and defines key terms used throughout the document Important Notice The Board of Directors, Supervisory Board, and senior management guarantee the report's authenticity, accuracy, and completeness, assuming legal responsibility - The company's Board of Directors, Supervisory Board, and senior management guarantee the report's authenticity, accuracy, and completeness, and assume legal responsibility[4] - The company's principal, chief financial officer, and head of the accounting department declare the financial report is true, accurate, and complete[4] - The company plans not to distribute cash dividends, bonus shares, or convert capital reserves into share capital[5] Table of Contents The report's table of contents clearly lists eight main chapters covering company overview, financial performance, governance, and significant matters - The report comprises eight main chapters, covering key information on company operations, finance, and governance[7] - Reference documents include the legal representative's signed report, financial statements, and publicly disclosed documents[9][10] Definitions This section defines key terms, abbreviations for company entities, and the reporting period used throughout the report - Defines "Company/Our Company" as Zhejiang Zuoli Pharmaceutical Co., Ltd[11] - Lists major holding subsidiaries (e.g., Zhufeng Pharmaceutical, Zuoli Health Industry) and associate companies (e.g., Chongqing Pharmaceutical Huzhou Company, Top Pharmaceutical) as well as related parties[11] - Specifies the reporting period as January 1, 2025, to June 30, 2025[11] Company Profile and Key Financial Indicators This section provides an overview of the company's basic information and presents its key financial performance metrics for the reporting period Company Profile This section details the company's fundamental information, including stock details, legal representative, and contact information, confirming no changes during the period - Stock Abbreviation: Zuoli Pharmaceutical, Stock Code: 300181, Listing Exchange: Shenzhen Stock Exchange[13] - The company's legal representative is Wang Tao[13] Contact Persons and Information This section provides comprehensive contact details for the company's Board Secretary and Securities Affairs Representative - Board Secretary: Wu Ying, Contact Number: 0572-8281383, Email: wuy2@zuoli.com[14] - Securities Affairs Representative: Yao Lanbo, Contact Number: 0572-8281383, Email: yaolb@zuoli.com[14] Other Information This section confirms that the company's contact details, information disclosure, and registration status remained unchanged during the reporting period - The company's registered address, office address, website, and email remained unchanged during the reporting period[15] - Information disclosure and document storage locations remained unchanged during the reporting period[16] - The company's registration status remained unchanged during the reporting period[17] Key Accounting Data and Financial Indicators The company achieved significant growth in operating revenue and net profit, with steady increases in total assets and net assets attributable to shareholders, indicating a strong operational performance 2025 Semi-Annual Key Accounting Data and Financial Indicators | Indicator | Current Reporting Period (Yuan) | Prior Period (Yuan) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 1,599,453,446.18 | 1,428,254,689.36 | 11.99% | | Net Profit Attributable to Shareholders of Listed Company | 373,500,159.82 | 296,054,107.17 | 26.16% | | Net Profit Attributable to Shareholders of Listed Company After Deducting Non-Recurring Gains and Losses | 371,685,120.24 | 292,102,892.52 | 27.24% | | Net Cash Flow from Operating Activities | 289,584,012.03 | 215,347,293.72 | 34.47% | | Basic Earnings Per Share (Yuan/share) | 0.5325 | 0.4221 | 26.15% | | Diluted Earnings Per Share (Yuan/share) | 0.5325 | 0.4221 | 26.15% | | Weighted Average Return on Net Assets (%) | 12.85% | 10.48% | 2.37% | | Period-End Indicators | End of Current Reporting Period (Yuan) | End of Previous Year (Yuan) | Period-End vs. Previous Year-End Change | | Total Assets | 4,599,395,633.76 | 3,991,955,854.40 | 15.22% | | Net Assets Attributable to Shareholders of Listed Company | 3,038,206,441.68 | 2,768,884,681.97 | 9.73% | Differences in Accounting Data Under Domestic and Overseas Accounting Standards The company reported no differences in net profit and net assets between international or overseas accounting standards and Chinese accounting standards for the period - The company reported no differences in net profit and net assets between financial reports disclosed under International Accounting Standards and Chinese Accounting Standards for the period[19] - The company reported no differences in net profit and net assets between financial reports disclosed under overseas accounting standards and Chinese Accounting Standards for the period[20] Non-Recurring Gains and Losses and Amounts This section details non-recurring gains and losses for the period, totaling 1.815 million Yuan, confirming no other items meet this definition 2025 Semi-Annual Non-Recurring Gains and Losses and Amounts | Item | Amount (Yuan) | | :--- | :--- | | Gains and Losses from Disposal of Non-Current Assets | 1,800,814.42 | | Government Subsidies Recognized in Current Profit or Loss | 4,958,310.17 | | Fair Value Changes and Disposal Gains/Losses from Financial Assets and Liabilities Held by Non-Financial Enterprises | -898,225.60 | | Other Non-Operating Income and Expenses Excluding the Above | -3,664,776.50 | | Less: Income Tax Impact | 234,544.23 | | Impact on Minority Interests (After Tax) | 146,538.68 | | Total | 1,815,039.58 | - The company has no other profit or loss items that meet the definition of non-recurring gains and losses[23] Management Discussion and Analysis This section provides an in-depth analysis of the company's operational performance, financial condition, and future outlook, including industry trends and risk factors Principal Business Activities During the Reporting Period In the first half of 2025, the company maintained stable operations and expanded its market influence by focusing on marketing and R&D within a policy-driven, adjusting pharmaceutical industry - In the first half of 2025, the pharmaceutical manufacturing industry's operating revenue decreased by 1.2% year-on-year, and total profit decreased by 2.8% year-on-year[25] - The Traditional Chinese Medicine (TCM) industry benefits from national policy support, emphasizing inheritance, innovation, digital empowerment, and high-quality development[26] - The company's core products, Wuling Capsule and Lingze Tablet, hold leading market shares and were included in the national list of patent-intensive products[31][32] - The company's main business products include Wuling series, Bailing series, Traditional Chinese Medicine (TCM) decoction pieces and formula granules, Polycarbophil Calcium Tablets, and others[33] Industry Development Overview In H1 2025, China's pharmaceutical industry faced revenue and profit pressure amid strict regulation and digital transformation, while the TCM sector saw growth driven by national support - From January to June 2025, China's pharmaceutical manufacturing industry above designated size achieved operating revenue of 1,227.52 billion Yuan, a year-on-year decrease of 1.2%[25] - Total profit for the same period reached 176.69 billion Yuan, a year-on-year decrease of 2.8%[25] - The TCM industry plays a unique role in "preventive treatment of disease," chronic disease management, and rehabilitation, with national policies supporting its inheritance, innovation, and high-quality development[26] Industry Policy Landscape In H1 2025, China issued numerous policies to enhance TCM quality, promote digital transformation in pharmaceuticals, and support innovative drug development for high-quality industry growth - Zhejiang Province issued the "Zhejiang Province Full-Chain Traceability System Application and Promotion Pilot Work Plan" for TCM, promoting tiered management and premium pricing for TCM decoction pieces[27] - The General Office of the State Council issued "Opinions on Improving the Quality of Traditional Chinese Medicine and Promoting High-Quality Development of the TCM Industry," proposing 21 recommendations across eight aspects to guide TCM quality improvement[28] - The Ministry of Industry and Information Technology and six other departments issued the "Implementation Plan for Digital and Intelligent Transformation of the Pharmaceutical Industry (2025-2030)," promoting deep integration of new-generation information technology with the pharmaceutical industry chain[28][29] - The National Healthcare Security Administration and the National Health Commission issued "Several Measures to Support High-Quality Development of Innovative Drugs," proposing 16 measures to improve support for innovative drug development[29] Market Position The company aims to be a leader in medicinal fungi pharmaceuticals, with core products Wuling Capsule and Lingze Tablet holding leading positions in neurological and urological markets, supported by national honors and patents - The company's core product, Wuling Capsule, was selected as one of Zhejiang Province's first batch of "Zhejiang Famous Medicines" and "Zhejiang TCM" industry brands, and is among the first 100 TCM varieties nationwide based on evaluation evidence[31] Wuling Capsule Market Share Ranking (2023-2024) | Type | 2023 Ranking | Market Share (%) | 2024 Ranking | Market Share (%) | | :--- | :--- | :--- | :--- | :--- | | China Urban Public Hospitals | 1 | 14.69 | 1 | 15.31 | | China County-Level Public Hospitals | 1 | 9.96 | 1 | 10.01 | | Urban Community Health Centers (Stations) | 4 | 6.94 | 4 | 8.01 | | Township Health Centers | 5 | 5.25 | 2 | 8.12 | - Lingze Tablet ranked second in sales value among proprietary Chinese medicines for prostate diseases in urban public hospitals[31] - Wuling Capsule and Lingze Tablet were included in the national list of patent-intensive products in February 2025[32] Main Business Operations The company is a national high-tech pharmaceutical enterprise integrating R&D, production, and sales, specializing in products like Wuling series, Bailing series, TCM decoction pieces, and Polycarbophil Calcium Tablets - The company's main business products include Wuling Capsule, Lingze Tablet, Linglianhua Granule, Bailing Tablet, Bailing Capsule, TCM decoction pieces, TCM formula granules, and Polycarbophil Calcium Tablets[33] Main Product List | No. | Category | Product Name | Dosage Form | Medical Insurance Category | OTC/Prescription Drug | Exclusive Product | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | 1 | TCM | Wuling Capsule | Capsule | Class A | OTC | Yes | | 2 | TCM | Lingze Tablet | Tablet | Class B | Prescription Drug | Yes | | 3 | TCM | Linglianhua Granule | Granule | - | OTC | Yes | | 4 | TCM | Bailing Tablet | Tablet | Class B | Dual-category product | Exclusive Specification | | 5 | TCM | Bailing Capsule | Capsule | Class B | Dual-category product | No | | 6 | TCM | TCM Decoction Pieces | - | Class A/B | - | No | | 7 | TCM | TCM Formula Granules | - | Class A/B | - | No | | 8 | Chemical Generic Drug | Polycarbophil Calcium Tablet | Tablet | Class B | Prescription Drug | No | Main Products and Their Uses The company's key products include Wuling Capsule for insomnia, Lingze Tablet for benign prostatic hyperplasia, Linglianhua Granule for perimenopausal syndrome, Bailing series for lung and kidney deficiency, Polycarbophil Calcium Tablets for IBS-C, and a wide range of TCM decoction pieces and formula granules - Wuling Capsule is the company's exclusive product, a national Class I new TCM drug, widely used in psychiatry, neurology, and other departments, with effects of nourishing the kidney, strengthening the brain, and calming the mind, and is undergoing secondary development for Alzheimer's disease[34] - Lingze Tablet is a national Class II protected TCM variety, used for mild to moderate benign prostatic hyperplasia with kidney deficiency, blood stasis, and dampness obstruction, treating from the perspective of kidney tonification[35] - Linglianhua Granule has the effects of nourishing yin, calming the mind, and harmonizing the heart and kidney, used for perimenopausal syndrome due to disharmony between the heart and kidney, and is listed as a strongly recommended product[35] - Bailing Tablet/Capsule is a fermented Cordyceps sinensis powder preparation, used for cough, asthma, and lower back pain caused by lung and kidney deficiency, as well as an adjuvant treatment for chronic bronchitis and chronic renal insufficiency[36][37] - Polycarbophil Calcium Tablet is the first generic drug in China deemed to have passed consistency evaluation, primarily used to relieve constipation symptoms in patients with irritable bowel syndrome (constipation-predominant)[38] - The company's wholly-owned subsidiary, Zuoli Baicao TCM, possesses over 1,000 specifications of TCM decoction pieces and has completed national and provincial standard filings for over 460 TCM formula granules[39] Key Business Models The company operates with independent production lines, strict quality control, centralized procurement, and diverse sales channels including self-operated, distribution, OTC, and e-commerce for finished drugs, while TCM products target hospitals and medical institutions - Production Model: Production departments organize manufacturing based on sales plans, strictly adhering to GMP standards, with quality technical departments overseeing critical quality control points[39] - Procurement Model: The materials management department coordinates procurement, formulating purchasing plans based on production schedules, inventory, and sales, and maintaining a list of qualified suppliers[40] - Sales Model: Finished drugs utilize a combination of self-operation, distribution, and OTC, expanding into "Internet + healthcare" and e-commerce platforms; TCM formula granules and decoction pieces are sold through sales teams engaging with hospital tenders, outpatient channels, and medical institutions[40][41] Key Performance Drivers The company's performance growth was primarily driven by the advantages of core products in the National Essential Drug List, market expansion of Wuling and Bailing series, and significant sales growth from increased TCM formula granule filings 2025 Semi-Annual Key Performance Drivers | Indicator | Amount (million Yuan) | Year-on-Year Growth | | :--- | :--- | :--- | | Operating Revenue | 1,599.4534 | 11.99% | | Total Profit | 447.8948 | 30.10% | | Net Profit Attributable to Shareholders of Listed Company | 373.5002 | 26.16% | | Net Profit Attributable to Shareholders of Listed Company After Deducting Share-Based Payment Impact | 387.3230 | 30.83% | - Wuling series sales revenue increased by 7.23% year-on-year[41] - Bailing series sales revenue increased by 38.51% year-on-year[41] - TCM formula granules sales revenue increased by 56.60% year-on-year[41] Business Operations Analysis In H1 2025, the company achieved stable performance by enhancing channel layout, strengthening brand influence, deepening expertise, leveraging technology for innovation, fostering sustainable development, optimizing talent, and expanding industrial布局 - The company deepened its "One Body, Two Wings" strategy, enhancing the clinical value recognition of Wuling Capsule through departmental benchmarking and chronic disease combination therapy solutions, accelerating penetration into county-level and grassroots markets[41] - Established a strategic partnership with Baidu Health to explore innovative models such as digital marketing, patient education, online consultations, and prescription circulation[41] - Completed AD animal pharmacodynamics research for the improved new drug Wuling Capsule, and Polycarbophil Calcium Granules have submitted a drug registration and marketing application[42] - Established an ESG management system, upgrading the Strategy Committee to the Strategy and ESG Committee[43] - Invested 20 million Yuan of its own funds to increase capital in Lingyi Bio, acquiring a 3.15% equity stake, and gaining priority for distribution or sales agency rights for the Parkinson's disease pipeline LY-N001 in mainland China[44] - Wuling Capsule, Bailing Capsule, and Bailing Tablet have been pre-selected or have begun implementation in centralized procurement of proprietary Chinese medicines in multiple provinces[45] Core Competitiveness Analysis The company's core strengths lie in its R&D advantages in medicinal fungi bio-fermentation, exclusive national new drugs and protected varieties, and robust marketing and brand influence - R&D Technology Advantage: The company possesses core advantages in medicinal fungi bio-fermentation technology, achieving industrial production of Wuling ginseng and Cordyceps sinensis, and holding "National Secret Technology" certification[47] - Exclusive Product Advantage: Wuling Capsule is a national Class I new TCM drug, while Lingze Tablet and Linglianhua Granule hold national invention patents and TCM protected variety titles, and all are included in the National Essential Drug List and medical insurance catalog[48] - Marketing and Brand Advantage: The company enhances brand recognition and reputation through its "One Body, Two Wings" strategy, digital marketing, professional academic exchanges, and public welfare activities, holding multiple honors such as "China Well-known Trademark" and "Zhejiang Famous Medicine"[49][51] Main Business Analysis During the reporting period, the company's main business revenue increased by 11.99%, with operating costs up 10.82% and sales expenses up 2.31%, driven by growth in both pharmaceutical manufacturing and distribution, especially TCM formula granules Year-on-Year Changes in Key Financial Data | Indicator | Current Reporting Period (Yuan) | Prior Period (Yuan) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 1,599,453,446.18 | 1,428,254,689.36 | 11.99% | | Operating Cost | 591,633,075.58 | 533,860,844.03 | 10.82% | | Selling Expenses | 499,570,202.69 | 488,276,831.43 | 2.31% | Products or Services Accounting for Over 10% of Revenue | By Product or Service | Operating Revenue | Operating Cost | Gross Margin | Operating Revenue Year-on-Year Change | Operating Cost Year-on-Year Change | Gross Margin Year-on-Year Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Pharmaceutical Manufacturing | 1,253,843,588.89 | 300,454,225.42 | 76.04% | 10.28% | 4.60% | 1.30% | | Pharmaceutical Distribution | 341,406,644.15 | 289,902,042.43 | 15.09% | 19.32% | 18.13% | 0.86% | | Wuling Series | 896,859,760.21 | 119,652,499.38 | 86.66% | 7.23% | 8.09% | -0.11% | | Bailing Series | 113,262,893.20 | 40,826,484.33 | 63.95% | 38.51% | 29.26% | 2.58% | | TCM Decoction Pieces Series | 349,467,371.41 | 250,735,573.21 | 28.25% | -10.10% | -17.99% | 6.91% | | TCM Formula Granules | 73,972,811.81 | 27,692,721.87 | 62.56% | 56.60% | 45.01% | 2.99% | Non-Core Business Analysis Non-core business activities had a minor impact on total profit, primarily involving negative investment income and non-operating expenses from donations, indicating a non-sustainable nature 2025 Semi-Annual Non-Core Business Analysis | Item | Amount (Yuan) | % of Total Profit | Sustainability | | :--- | :--- | :--- | :--- | | Investment Income | -1,339,602.32 | -0.30% | No | | Asset Impairment | 11,119,072.67 | 2.48% | No | | Non-Operating Income | 102,740.03 | 0.02% | No | | Non-Operating Expenses | 3,790,700.61 | 0.85% | No | - Investment income primarily stemmed from the disposal of accounts receivable financing and investment income accounted for using the equity method[56] - Non-operating expenses primarily consisted of external donations[56] Assets and Liabilities Analysis At period-end, total assets increased by 15.22% and net assets attributable to shareholders by 9.73%, with notable increases in accounts receivable, construction in progress, and short-term borrowings, alongside significant financial assets measured at fair value Significant Changes in Asset Composition for 2025 Semi-Annual Period | Item | Amount at End of Current Reporting Period (Yuan) | % of Total Assets | Amount at End of Previous Year (Yuan) | % of Total Assets | % Change | Explanation of Significant Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 731,330,239.00 | 15.90% | 804,667,919.10 | 20.16% | -4.26% | | | Accounts Receivable | 823,891,885.89 | 17.91% | 591,711,846.99 | 14.82% | 3.09% | Increased with sales revenue growth | | Inventories | 480,656,263.42 | 10.45% | 523,748,971.61 | 13.12% | -2.67% | | | Construction in Progress | 245,686,680.23 | 5.34% | 161,428,276.28 | 4.04% | 1.30% | Increased investment in intelligent TCM production base construction and upgrade projects | | Short-Term Borrowings | 570,195,018.75 | 12.40% | 377,308,635.37 | 9.45% | 2.95% | Increased working capital borrowings | - Subsidiary Zuoli Innovation Medical holds equity in Carsgen Therapeutics, with an asset size of 597.960 million Yuan, accounting for 19.68% of the company's net assets[60] - Total financial assets measured at fair value at period-end amounted to 840.817 million Yuan, of which fair value change gains/losses from other equity instrument investments were 355.869 million Yuan[62][63] - Restricted cash and bank balances totaled 8.423 million Yuan at period-end, primarily consisting of acceptance bill deposits, electricity deposits, and ETC deposits[65] Investment Analysis The company's investment increased by 76.34% year-on-year, primarily for fundraising projects, with several key projects experiencing completion delays due to optimization and external factors - Investment amount for the reporting period was 172.353 million Yuan, a year-on-year increase of 76.34%[66] - The "Intelligent TCM Production Base Construction and Upgrade Project" had a cumulative investment of 353.616 million Yuan, with project progress at 98.50%, and the expected completion date extended to December 31, 2025[69][78] - The "Digital Operation Decision System Upgrade Project" had its expected completion date extended to December 31, 2025[78] - The "Enterprise R&D Center Upgrade Project" had its expected completion date extended to June 30, 2027[78] - The net amount of raised funds was 898.1407 million Yuan; as of June 30, 2025, a cumulative 552.3887 million Yuan had been used, with a remaining balance of 373.5960 million Yuan[75][76] Overall Investment Situation The company's investment amount for the reporting period was 172.353 million Yuan, representing a significant 76.34% increase compared to the prior year Investment Amount for the Reporting Period | Indicator | Amount (Yuan) | | :--- | :--- | | Investment Amount for the Reporting Period | 172,353,433.32 | | Investment Amount for the Prior Period | 97,738,757.61 | | Change Rate | 76.34% | Significant Non-Equity Investments in Progress During the Reporting Period The company's major non-equity investment is the "Intelligent TCM Production Base Construction and Upgrade Project," with a budget of 620 million Yuan, cumulative investment of 353 million Yuan, and 98.50% completion, currently under construction with no expected revenue yet Major Non-Equity Investment Projects | Project Name | Investment Method | Budget Amount (Yuan) | Cumulative Investment Amount at Period-End (Yuan) | Cumulative Investment as % of Budget | Project Progress | Estimated Return | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Intelligent TCM Production Base Construction and Upgrade Project | Self-built | 620,000,000.00 | 353,616,417.34 | 56.52% | 98.50% | 0.00 | - The project is still under construction and has not yet reached its planned progress or estimated returns[69][78] Financial Assets Measured at Fair Value At period-end, the company's financial assets measured at fair value primarily comprised stock investments totaling 597.960 million Yuan, with fair value changes of 355.869 million Yuan for the period, funded by own capital Financial Assets Measured at Fair Value | Asset Category | Initial Investment Cost (Yuan) | Fair Value Change Gains/Losses for the Period (Yuan) | Amount at Period-End (Yuan) | Source of Funds | | :--- | :--- | :--- | :--- | :--- | | Stocks | 102,100,000.00 | 355,869,043.64 | 597,959,940.12 | Own Capital | Use of Raised Funds The company's net raised funds totaled 898.1407 million Yuan, with 552.3887 million Yuan utilized and 373.5960 million Yuan remaining as of June 30, 2025, while several fundraising projects had their completion dates extended - The net amount of raised funds was 898.1407 million Yuan[75] - As of June 30, 2025, a cumulative 552.3887 million Yuan of raised funds had been used, with a remaining balance of 373.5960 million Yuan[76] - The expected completion date for the fundraising projects "Intelligent TCM Production Base Construction and Upgrade Project" and "Digital Operation Decision System Upgrade Project" was extended to December 31, 2025[78][79] - The expected completion date for the "Enterprise R&D Center Upgrade Project" was extended to June 30, 2027[78][79] Entrusted Wealth Management, Derivative Investments, and Entrusted Loans The company did not engage in entrusted wealth management, derivative investments, or entrusted loans during the reporting period - The company had no entrusted wealth management during the reporting period[82] - The company had no derivative investments during the reporting period[83] - The company had no entrusted loans during the reporting period[84] Significant Asset and Equity Disposals The company did not dispose of any significant assets or equity during the reporting period - The company did not dispose of any significant assets during the reporting period[85] - The company did not dispose of any significant equity during the reporting period[86] Analysis of Major Holding and Associate Companies The company's major subsidiaries, Zhufeng Pharmaceutical and Zuoli Baicao TCM, performed well, positively impacting net profit, with Zhufeng focusing on drug production and retail, and Zuoli Baicao on TCM decoction pieces Financial Information of Major Subsidiaries | Company Name | Company Type | Main Business | Registered Capital (Yuan) | Total Assets (Yuan) | Net Assets (Yuan) | Operating Revenue (Yuan) | Net Profit (Yuan) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Qinghai Zhufeng Cordyceps Pharmaceutical Co., Ltd. | Subsidiary | Drug Production, Drug Retail | 50,000,000 | 262,821,317.58 | 173,448,417.13 | 102,296,132.05 | 29,967,361.10 | | Zhejiang Zuoli Baicao TCM Decoction Pieces Co., Ltd. | Subsidiary | Drug Production, Food Production, Food Sales | 50,000,000 | 277,056,014.44 | 161,864,563.36 | 130,749,076.34 | 14,763,579.54 | - The company neither acquired nor disposed of any subsidiaries during the reporting period[88] Structured Entities Controlled by the Company The company did not control any structured entities during the reporting period - The company had no controlled structured entities during the reporting period[88] Risks Faced by the Company and Countermeasures The company faces risks from industry policy changes, drug R&D, and goodwill impairment, which it addresses by monitoring policies, adjusting strategies, increasing R&D, and enhancing subsidiary management - Industry Policy Change Risk: The pharmaceutical industry is highly influenced by national policies, such as adjustments to the medical insurance catalog and centralized procurement[88] - Countermeasures: Closely monitor policies, strengthen compliance management, adjust marketing strategies, expand online and offline channels, strategically enter the big health consumer sector, and reduce costs while increasing efficiency[89] - Drug R&D Risk: New drug R&D involves high investment, long cycles, high risks, and uncertain market prospects[89] - Countermeasures: Continuously increase R&D investment, optimize innovation mechanisms, prudently select R&D projects, strengthen industry-academia-research cooperation, enrich the product pipeline, and attract and cultivate scientific research talent[90][91] - Goodwill Impairment Risk: Significant goodwill was formed from the acquisitions of Zhufeng Pharmaceutical and Zuoli Baicao TCM; if future operations are poor, impairment may occur[91] - Countermeasures: Comprehensively enhance business planning, management structure, and financial management capabilities, strengthen resource sharing and synergistic efficiency between parent and subsidiaries, and improve the operating quality and performance of subsidiaries[91] Registration Form for Investor Relations Activities During the Reporting Period During the reporting period, the company actively engaged with institutional investors through various channels, discussing main business developments without providing additional materials - From January to May 2025, the company hosted multiple institutional investors through online meetings, phone calls, and on-site visits[92][93][94][95] - The main topics discussed were the company's principal business development and responses to investor questions[92][93][94][95] - No additional materials were provided during the investor relations activities[92][93][94][95] Formulation and Implementation of Market Value Management System and Valuation Enhancement Plan The company approved its "Market Value Management System" on April 23, 2025, to regulate market value management and protect investor rights, but did not disclose a valuation enhancement plan - The company formulated the "Market Value Management System," which was reviewed and approved at the Fifth Meeting of the Eighth Board of Directors on April 23, 2025[97] - The market value management system aims to strengthen market value management, standardize behavior, and protect the legitimate rights and interests of investors[97] - The company did not disclose a valuation enhancement plan[96] Implementation of "Dual Enhancement of Quality and Returns" Action Plan The company actively implements its "Dual Enhancement of Quality and Returns" action plan by focusing on core business, consistent cash dividends, robust governance, improved disclosure, and enhanced investor communication - The company has disclosed its "Dual Enhancement of Quality and Returns" action plan announcement[98] - The company focuses on its main business, continuously promotes channel expansion and brand building, and increases investment in innovative R&D[99] - The company implemented its 2024 annual profit distribution plan, distributing a cash dividend of 6 Yuan (tax inclusive) for every 10 shares[99] - The company improves its governance structure, enhances the quality of information disclosure, and strengthens investor communication through performance briefings and interactive platforms[99] Corporate Governance, Environment, and Society This section covers the company's governance structure, environmental performance, and social responsibility initiatives, including changes in personnel, profit distribution, and incentive plans Changes in Directors, Supervisors, and Senior Management There were no changes in the company's directors, supervisors, or senior management during the reporting period - There were no changes in the company's directors, supervisors, or senior management during the reporting period[101] Profit Distribution and Capital Reserve Conversion to Share Capital for the Current Period The company plans not to distribute cash dividends, bonus shares, or convert capital reserves into share capital for the semi-annual period - The company plans not to distribute cash dividends for the semi-annual period[102] - The company plans not to distribute bonus shares or convert capital reserves into share capital[102] Implementation of Equity Incentive Plans, Employee Stock Ownership Plans, or Other Employee Incentive Measures The company implemented its 2024 restricted stock incentive plan and employee stock ownership plan, granting restricted shares and adjusting prices to motivate its core team - Equity Incentive: On January 10, 2025, the company initially granted 5.855 million restricted shares to 110 incentive recipients at a grant price of 8.07 Yuan/share[104] - Equity Incentive: On July 7, 2025, the grant price was adjusted to 7.48 Yuan/share, 50,000 shares of three resigned employees were forfeited, and 750,000 reserved restricted shares were granted to eight incentive recipients[105] - Employee Stock Ownership Plan: During the reporting period, the total number of employees in the employee stock ownership plan was adjusted to 113, holding a total of 5,975,000 shares, accounting for 0.85% of the total share capital[106] - Employee Stock Ownership Plan: On May 26, 2025, the employee stock ownership plan's special account received 3.585 million Yuan in 2024 annual cash dividends[107] - Employee Stock Ownership Plan: On July 7, 2025, the purchase price for reserved shares was adjusted to 7.48 Yuan/share, 50,000 equity shares of three resigned employees were recovered and granted to other core employees, and the reserved 750,000 shares were subscribed by no more than six participants[107][108] Environmental Information Disclosure The company and its main subsidiary are listed as legally required environmental information disclosure enterprises, with reports accessible via Zhejiang Provincial Ecological Environment Department and national platforms - The company and its main subsidiaries are included in the list of enterprises legally required to disclose environmental information[110] - Environmental information disclosure reports are available on the Zhejiang Provincial Department of Ecology and Environment and the National Pollutant Discharge Permit Management Information Platform[110] Social Responsibility The company actively fulfills its social responsibilities by protecting stakeholder rights, promoting environmental sustainability, and engaging in public welfare initiatives, guided by its mission to enhance human health and TCM development - Shareholder Rights Protection: Improved corporate governance structure, convened shareholder meetings in accordance with the law, combined on-site and online voting to protect the rights of small and medium investors, and implemented the 2024 annual profit distribution plan[111][112] - Employee Rights Protection: Established and improved mechanisms for employee rights protection and fair development, refined the compensation and incentive system, career advancement channels, and comprehensive training system, implemented equity incentive plans, and convened employee (member) representative meetings to review collective contracts[112][113][114] - Supplier, Customer, and Consumer Rights Protection: Built a stable, efficient, and transparent supply chain system, provided high-quality products and services, emphasized post-sales quality service and quality tracking for pharmaceuticals, and strictly adhered to laws and regulations for compliant marketing[114] - Environmental Protection and Sustainable Development: Actively responded to green development, optimized production processes, implemented the ISO14001 environmental management system, and deeply participated in drafting the "Guidelines for Waste-Free Factory Construction in Pharmaceutical Enterprises" and "Guidelines for Zero-Carbon Factory Construction in Pharmaceutical Enterprises"[114] - Giving Back to Society: Actively engaged in social welfare and charitable endeavors, continuously carried out public welfare activities such as "Donating Winter Clothes for Yushu," participated in Disability Day events, and focused on health-inclusive actions like early screening for Alzheimer's disease[115] Significant Matters This section details significant events and issues, including commitments, related party transactions, litigation, and other material developments affecting the company Commitments Fulfilled and Overdue Unfulfilled by Controlling Shareholder, Shareholders, Related Parties, Acquirers, and the Company During and as of the End of the Reporting Period The company reported no fulfilled or overdue unfulfilled commitments by its controlling shareholder, shareholders, related parties, acquirers, or the company itself during or as of the end of the reporting period - The company reported no fulfilled or overdue unfulfilled commitments by related parties during the reporting period[117] Non-Operating Funds Occupied by Controlling Shareholder and Other Related Parties from the Listed Company The company reported no non-operating funds occupied by its controlling shareholder or other related parties from the listed company during the reporting period - The company reported no non-operating funds occupied by its controlling shareholder or other related parties during the reporting period[118] Irregular External Guarantees The company had no irregular external guarantees during the reporting period - The company had no irregular external guarantees during the reporting period[119] Appointment and Dismissal of Accounting Firms The company's semi-annual report was not audited - The company's semi-annual report was not audited[120] Board of Directors, Supervisory Board, and Audit Committee's Explanation of "Non-Standard Audit Report" for the Current Period The company did not have a non-standard audit report during the reporting period - The company did not have a non-standard audit report during the reporting period[121] Board of Directors' Explanation of "Non-Standard Audit Report" for the Previous Year The company did not have a non-standard audit report during the reporting period - The company did not have a non-standard audit report during the reporting period[121] Bankruptcy and Reorganization Matters The company had no bankruptcy or reorganization matters during the reporting period - The company had no bankruptcy or reorganization matters during the reporting period[121] Litigation Matters The company is involved in significant litigation, including a patent dispute with Hangzhou Sino-American Huadong Pharmaceutical Co., Ltd. involving 111 million Yuan, and one new lawsuit for 3.78 million Yuan - Significant Litigation and Arbitration: Involving an invention patent dispute between Hangzhou Sino-American Huadong Pharmaceutical Co., Ltd. and Qinghai Zhufeng Cordyceps Pharmaceutical Co., Ltd[122][123] - Significant Litigation and Arbitration: The case involves an amount of 111.3758 million Yuan, is currently under trial, and remains unsettled[122] - Other Litigation Matters: The company added one new lawsuit during the reporting period, involving an amount of 3.7799 million Yuan, which is currently under trial[123] Penalties and Rectification The company had no penalties or rectification situations during the reporting period - The company had no penalties or rectification situations during the reporting period[124] Integrity Status of the Company, its Controlling Shareholder, and Actual Controller The company, its controlling shareholder, and actual controller maintained good integrity status during the reporting period - The company, its controlling shareholder, and actual controller had no integrity issues during the reporting period[125] Significant Related Party Transactions The company reported no significant related party transactions during the period, including those related to daily operations, asset/equity acquisitions or disposals, joint investments, or intercompany debt - The company had no related party transactions related to daily operations during the reporting period[125] - The company had no related party transactions involving asset or equity acquisitions or disposals during the reporting period[126] - The company had no related party transactions involving joint external investments during the reporting period[127] - The company had no related party creditor-debtor relationships during the reporting period[128] - There were no deposits, loans, credit lines, or other financial transactions between the company and related financial companies, or between the company's controlled financial companies and related parties[129][130] - The company had no other significant related party transactions during the reporting period[131] Significant Contracts and Their Performance The company has a long-term property lease with Zuoli Group and provided bank credit guarantees totaling 14.446 million Yuan for its subsidiary Zhufeng Pharmaceutical, with no other significant contracts - Lease Matters: The company signed multiple property lease contracts with Zuoli Group, leasing portions of the Zuoli Building office floors, with lease terms extending to June 30, 2037, and added several new lease contracts[134][135] - Lease Matters: The company has paid 1.68 million Yuan (tax inclusive) and 0.26 million Yuan (tax inclusive) in lease fees for the current year, and added 0.30 million Yuan (tax inclusive) in new lease fees[134][135] - Significant Guarantees: The company provided bank credit guarantees for its controlling subsidiary Zhufeng Pharmaceutical; during the reporting period, approved guarantee limits for subsidiaries totaled 30 million Yuan, with actual amounts totaling 14.4461 million Yuan[138] - Significant Guarantees: At the end of the reporting period, the actual guarantee balance for subsidiaries totaled 14.4461 million Yuan, accounting for 0.48% of the company's net assets[138][139] - The company had no lease projects generating profit or loss exceeding 10% of total profit during the reporting period[136] - The company had no other significant contracts during the reporting period[141] Explanation of Other Significant Matters During the period, the controlling shareholder, Mr. Yu Youqiang, pledged and released some shares, with 49.66% of his holdings currently pledged. The company invested in Lingyi Bio, co-established an R&D center with Zhejiang University, and extended the completion dates for several fundraising projects - Controlling shareholder and actual controller Mr. Yu Youqiang's cumulative pledged shares totaled 64.5 million shares, accounting for 49.66% of his holdings and 9.20% of the company's total share capital[142][149][152] - The company invested 20 million Yuan of its own funds to increase capital in Lingyi Bio, acquiring a 3.1496% equity stake[142] - The expected completion dates for the fundraising projects "Intelligent TCM Production Base Construction and Upgrade Project" and "Digital Operation Decision System Upgrade Project" were adjusted[143] - The company signed a joint R&D center co-construction agreement and a technology development (entrustment) contract with Zhejiang University, planning an investment of 20 million Yuan[143] Significant Matters of Company Subsidiaries During the reporting period, the company provided joint liability guarantees for its controlling subsidiary Zhufeng Pharmaceutical's bank credit lines, which are currently in normal use - The company provided a joint liability guarantee for its controlling subsidiary Zhufeng Pharmaceutical's application for a 30 million Yuan credit line from CITIC Bank Xining Branch[144] - The company provided a joint liability guarantee for its controlling subsidiary Zhufeng Pharmaceutical's application for a 20 million Yuan credit line from China Merchants Bank Xining Branch[145] - As of the end of the reporting period, Zhufeng Pharmaceutical's loans from both banks were in normal use[144][145] Share Changes and Shareholder Information This section details changes in the company's share capital, shareholder structure, and holdings of directors, supervisors, and senior management Share Change Status The company's total share capital remained unchanged at 701,387,335 shares during the reporting period, with consistent proportions of restricted and unrestricted shares Share Change Status | Item | Quantity Before This Change (shares) | Proportion | Increase/Decrease in This Change (shares) | Quantity After This Change (shares) | Proportion | | :--- | :--- | :--- | :--- | :--- | :--- | | I. Restricted Shares | 98,476,416 | 14.04% | 0 | 98,476,416 | 14.04% | | II. Unrestricted Shares | 602,910,919 | 85.96% | 0 | 602,910,919 | 85.96% | | III. Total Shares | 701,387,335 | 100.00% | 0 | 701,387,335 | 100.00% | - Reasons for share changes, approval status, transfer status, and progress of share repurchase implementation were not applicable during the reporting period[149] Securities Issuance and Listing The company had no securities issuance or listing activities during the reporting period - The company had no securities issuance or listing activities during the reporting period[149] Number of Shareholders and Shareholding Status At period-end, the company had 38,581 common shareholders. Controlling shareholder Yu Youqiang held 18.52% of shares, with 49.90% pledged. The company's repurchase account held 1.27% of total shares - The total number of common shareholders at the end of the reporting period was 38,581[150] Shareholding Status of Shareholders Holding 5% or More or Top 10 Shareholders | Shareholder Name | Shareholder Nature | Shareholding Proportion | Number of Shares Held at Period-End (shares) | Number of Restricted Shares Held (shares) | Number of Unrestricted Shares Held (shares) | Share Status | Number of Pledged Shares (shares) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Yu Youqiang | Domestic Natural Person | 18.52% | 129,890,463 | 97,417,847 | 32,472,616 | Pledged | 64,814,000 | | Wang Kefang | Domestic Natural Person | 2.91% | 20,400,000 | 0 | 20,400,000 | Not Applicable | 0 | | Zhang Zengrong | Domestic Natural Person | 2.26% | 15,850,000 | 0 | 15,850,000 | Not Applicable | 0 | | Peng Tao | Domestic Natural Person | 1.92% | 13,441,996 | 0 | 13,441,996 | Not Applicable | 0 | | National Social Security Fund 403 Portfolio | Other | 1.58% | 11,090,450 | 0 | 11,090,450 | Not Applicable | 0 | | Zhong Ou Fund - China Life Insurance Co., Ltd. - Participating Insurance - Zhong Ou Fund China Life Equity Balanced Stock Portfolio Single Asset Management Plan (Available for Sale) | Other | 1.37% | 9,614,700 | 0 | 9,614,700 | Not Applicable | 0 | | Zhong Ou Fund - China Life Insurance Co., Ltd. - Traditional Insurance - Zhong Ou Fund China Life Equity Balanced Stock Traditional Available for Sale Single Asset Management Plan | Other | 1.34% | 9,404,315 | 0 | 9,404,315 | Not Applicable | 0 | | Bank of Communications Co., Ltd. - Zhong Ou Socially Responsible Investment Mixed Securities Investment Fund | Other | 0.94% | 6,578,000 | 0 | 6,578,000 | Not Applicable | 0 | | Bank of Shanghai Co., Ltd. - Yinhua CSI Innovative Drug Industry Exchange Traded Fund | Other | 0.94% | 6,574,246 | 0 | 6,574,246 | Not Applicable | 0 | | China Merchants Bank Co., Ltd. - Southern CSI 1000 Exchange Traded Fund | Other | 0.92% | 6,476,039 | 0 | 6,476,039 | Not Applicable | 0 | - The company's special share repurchase securities account held 8,920,074 shares, accounting for 1.27% of the company's total share capital[152] Changes in Shareholdings of Directors, Supervisors, and Senior Management There were no changes in the shareholdings of the company's directors, supervisors, or senior management during the reporting period - There were no changes in the shareholdings of the company's directors, supervisors, or senior management during the reporting period[154] Changes in Controlling Shareholder or Actual Controller The company's controlling shareholder and actual controller remained unchanged during the reporting period - The company's controlling shareholder remained unchanged during the reporting period[155] - The company's actual controller remained unchanged during the reporting period[155] Preferred Share Information The company had no preferred shares during the reporting period - The company had no preferred shares during the reporting period[156] Bond-Related Information The company had no bond-related information during the reporting period - The company had no bond-related information during the reporting period[158] Financial Report This section presents the company's unaudited semi-annual financial statements, including balance sheets, income statements, cash flow statements, and statements of changes in equity Audit Report The company's semi-annual financial report was not audited - The company's semi-annual financial report was not audited[160] Financial Statements This section provides the company's 2025 semi-annual consolidated and parent company balance sheets, income statements, cash flow statements, and statements of changes in owners' equity, offering a comprehensive view of its financial position, operating results, and cash flows - Consolidated Balance Sheet: Total assets at period-end were 4.599 billion Yuan, and total liabilities were 1.493 billion Yuan[50][51][164] - Consolidated Balance Sheet: Total owners' equity attributable to the parent company at period-end was 3.038 billion Yuan[51][164] - Consolidated Income Statement: Total operating revenue for the current period was 1.599 billion Yuan, and net profit attributable to parent company shareholders was 373.500 million Yuan[54][55][172] - Consolidated Income Statement: Basic earnings per share were 0.5325 Yuan/share[55][172] - Consolidated Cash Flow Statement: Net cash flow from operating activities was 289.584 million Yuan[57][58](index=58&type=ch