福瑞达(600223) - 2025 Q2 - 季度财报

Section I Definitions This section defines common terms used in the report, including regulatory bodies, exchanges, the company itself, and its main subsidiaries and associates, ensuring clear understanding of the report content Definitions of Common Terms This chapter defines common terms used in the report, including regulatory bodies, exchanges, the company itself, and its main subsidiaries and associates, ensuring clear understanding of the report content - The reporting period refers to January 1, 2025, to June 30, 2025[12] - The company's largest shareholder and controlling shareholder is Shandong Commercial Group Co., Ltd[12] - Freda Bio-stock, Focus Freda, and Mingren Freda are among the company's controlling subsidiaries[12] Section II Company Profile and Key Financial Indicators This section provides an overview of the company's fundamental information, including its registration details, contact methods, stock profile, and key financial performance indicators for the reporting period, along with non-recurring gains and losses I. Company Information This section provides the company's basic registration information, including its Chinese name, abbreviation, foreign name, and legal representative - The company's Chinese name is LUSHANG FREDA Pharmaceutical Co., Ltd., abbreviated as Freda[14] - The legal representative is Jia Qingwen[14] II. Contact Person and Information This section lists the contact information for the company's Board Secretary and Securities Affairs Representative, including name, address, phone, fax, and email - The Board Secretary is Dou Xixi, and the Securities Affairs Representative is Dai Weiyu[15] - The company's contact phone number is 0531-66699999, and the email address is lsfrd600223@163.com[15] III. Brief Introduction to Changes in Basic Information This section introduces historical changes in the company's registered and office addresses, and provides the company's website and email - The company's registered address is Boshan Economic Development Zone, Shandong Province, and its office address is No. 888 Xinluo Street, High-tech Zone, Jinan City, Shandong Province[16] - The company's website is **www.lshfreda.com**[16](index=16&type=chunk) IV. Brief Introduction to Changes in Information Disclosure and Document Custody Locations This section specifies the designated newspapers and website for the company's information disclosure, as well as the custody location for the semi-annual report - The company's designated information disclosure newspapers are "China Securities Journal" and "Shanghai Securities News", and the website is **www.sse.com.cn**[17](index=17&type=chunk) - The semi-annual report is kept at the company's Board Secretary's Office[17] V. Company Stock Overview This section provides information on the company's stock, including the listing exchange, abbreviation, code, and previous abbreviation - The company's A-shares are listed on the Shanghai Stock Exchange, with stock abbreviation "Freda", stock code "600223", and previous abbreviation "Lushang Development"[18] VII. Key Accounting Data and Financial Indicators This section discloses the company's key accounting data and financial indicators for the first half of 2025, showing a year-on-year decrease in both operating revenue and net profit, and a significant reduction in net cash flow from operating activities 2025 H1 Key Accounting Data | Indicator | Current Period (Jan-Jun) Amount (CNY) | Prior Period Amount (CNY) | Current Period vs. Prior Period Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 1,789,541,668.33 | 1,925,374,405.82 | -7.05 | | Total Profit | 153,143,384.43 | 185,198,599.49 | -17.31 | | Net Profit Attributable to Listed Company Shareholders | 107,962,780.31 | 127,248,290.77 | -15.16 | | Net Profit Attributable to Listed Company Shareholders After Deducting Non-recurring Gains and Losses | 104,581,625.63 | 111,552,114.09 | -6.25 | | Net Cash Flow from Operating Activities | 18,677,417.87 | 135,939,772.35 | -86.26 | | Net Assets Attributable to Listed Company Shareholders (Period-end) | 4,151,867,714.66 | 4,104,899,060.85 | 1.14 | | Total Assets (Period-end) | 6,037,060,817.19 | 6,000,330,923.23 | 0.61 | 2025 H1 Key Financial Indicators | Indicator | Current Period (Jan-Jun) | Prior Period | Current Period vs. Prior Period Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (CNY/share) | 0.11 | 0.13 | -15.38 | | Diluted Earnings Per Share (CNY/share) | 0.11 | 0.13 | -15.38 | | Basic Earnings Per Share After Deducting Non-recurring Gains and Losses (CNY/share) | 0.10 | 0.11 | -9.09 | | Weighted Average Return on Net Assets (%) | 2.60 | 3.12 | Decrease of 0.52 percentage points | | Weighted Average Return on Net Assets After Deducting Non-recurring Gains and Losses (%) | 2.51 | 2.74 | Decrease of 0.23 percentage points | - Operating revenue, total profit, and net profit attributable to shareholders decreased mainly due to reduced income from cosmetics business (Aier Doctor brand iteration, declining online traffic dividends) and pharmaceutical business (expanded centralized procurement, lower winning bid prices, ineffective new products)[20] - Net cash flow from operating activities decreased by 86.26% year-on-year, primarily due to reduced sales receipts from lower operating revenue[21] IX. Non-recurring Gains and Losses Items and Amounts This section lists the company's non-recurring gains and losses items and their amounts for the first half of 2025, totaling CNY 3,381,154.68 2025 H1 Non-recurring Gains and Losses Items | Non-recurring Gains and Losses Item | Amount (CNY) | | :--- | :--- | | Gains and losses from disposal of non-current assets | 11,585.47 | | Government grants recognized in current profit or loss | 7,679,959.67 | | Other non-operating income and expenses apart from the above | -1,679,784.06 | | Less: Income tax impact | 521,021.85 | | Minority interest impact (after tax) | 2,109,584.55 | | Total | 3,381,154.68 | Section III Management Discussion and Analysis This section provides a comprehensive analysis of the company's industry landscape, business operations, and financial performance during the reporting period, highlighting core competencies, strategic plans, and potential risks I. Explanation of the Company's Industry and Main Business Operations during the Reporting Period This section details the industry development and business models of the company's main segments, including cosmetics, pharmaceuticals, and raw materials/additives, highlighting market trends, regulatory policies, and the company's strategies in R&D, production, and sales (I) Industry Development This part outlines the market status and regulatory policies in the cosmetics, pharmaceutical, and synthetic biology raw materials/additives sectors, noting slower growth in cosmetics but a trend towards refinement, impact on pharmaceuticals from centralized procurement and medical insurance policies, and rapid growth in the synthetic biology industry - From January to June 2025, retail sales of cosmetics above designated size increased by 2.9% year-on-year, lower than the 5.0% growth in total retail sales of consumer goods, indicating a slowdown in market growth[26] - The pharmaceutical manufacturing industry's total profit decreased by 2.8% year-on-year, affected by policies such as the new medical insurance catalog, expanded centralized procurement, and price reductions[27] - The global synthetic biology industry market size grew from $5.3 billion in 2018 to over $17 billion in 2023, and is expected to maintain rapid development momentum in the future[28] (II) Business Operations This part details the main businesses and operating models of the company's three core segments: cosmetics, pharmaceuticals, and raw materials/additives, including brand strategy, product categories, sales channels, production capacity, and key technological advantages - The cosmetics segment is guided by a "5+N" brand development strategy, building a "beauty salon + medical aesthetics" dual-beauty new ecosystem, with well-known brands such as Yilian and Aier Doctor; its production model is primarily self-produced, and its sales network covers all online and offline channels[31][34] - The pharmaceutical segment covers the production and sales of traditional Chinese and chemical medicine preparations, with well-known brands such as Jingtong Granules and Xiao'er Jieggan Granules; Mingren Freda Analysis and Testing Center has obtained CNAS laboratory certification; its sales system is diversified, combining online and offline approaches[35][36][37][38] - The raw materials and additives segment is centered on hyaluronic acid (HA); Focus Freda is one of the world's leading HA raw material production bases, with a fermentation yield reaching 12-14g/L, which is at an internationally advanced level; its products are exported to over 70 countries and regions[39][40][41] II. Discussion and Analysis of Operations This section deeply analyzes the company's operating performance in the first half of 2025, including revenue performance of each business segment, brand marketing, channel development, technological innovation achievements, and progress in digital transformation, and outlines operating plans for the second half of the year (I) H1 Operating Performance In the first half of 2025, the company achieved operating revenue of CNY 1.79 billion and net profit attributable to shareholders of CNY 108 million. Cosmetics segment revenue decreased by 7.73% year-on-year, with Yilian growing by 23.78% and Aier Doctor decreasing by 29.97%. Pharmaceutical segment revenue decreased by 13.87%. Raw materials and additives segment revenue increased by 4.15% year-on-year, with medical-grade hyaluronic acid sales revenue increasing by 287.3%. The company made significant progress in technological innovation and digital transformation 2025 H1 Operating Revenue and YoY Change by Business Segment | Business Segment | Operating Revenue (CNY) | YoY Change (%) | | :--- | :--- | :--- | | Cosmetics | 1,094,000,000 | -7.73 | | Yilian Brand | 554,000,000 | +23.78 | | Aier Doctor Brand | 451,000,000 | -29.97 | | Pharmaceuticals | 207,000,000 | -13.87 | | Raw Materials and Derivatives, Additives | 179,000,000 | +4.15 | | Medical-grade Hyaluronic Acid | 16,088,100 | +287.3 | - Online channels accounted for 84.20% of cosmetics segment revenue, while offline channels accounted for 15.80%[44] - The cosmetics segment launched over 80 new products and obtained 23 new authorized patents; the pharmaceutical segment received production approval for Lidocaine-Prilocaine Cream and completed registration submission for Crisaborole Ointment; the raw materials and additives segment completed main document registration for SH-MDN and SH-MDI, two Class III medical device sodium hyaluronate raw materials[48][50][51] - The company accelerated its digital transformation, with Freda Bio-stock being selected for the Shandong Province Advanced (Provincial) Smart Factory list, and Mingren Freda achieving breakthroughs in energy consumption and efficiency through intelligent transformation[52] (II) H2 Operating Plan The company plans to continue deepening its operating strategies in the cosmetics, pharmaceutical, and raw materials/additives segments in the second half of the year. The cosmetics segment will restructure its marketing organization and focus on new product incubation; the pharmaceutical segment will expand channels, enhance product strength, and develop medicated food businesses; the raw materials segment will accelerate registration and market promotion of medical-grade products and target key accounts - The cosmetics segment will promote a product-line-led marketing organization restructuring, focusing on new products such as high-moisturizing repair spray, 287 mask, and royal jelly acid refined gold series, and strive to obtain 2 Class II medical device registration certificates[54][55] - The pharmaceutical segment will build regional access strategies, focus on graded hospitals and chain pharmacies, promote core medicines into medical insurance and essential drug catalogs, and deeply develop medicated food products like Huangjing, Ginseng, and Cistanche[56] - The raw materials and additives segment will accelerate the registration and market promotion of medical-grade hyaluronic acid products, cultivate core beauty customers, develop functional food products, and stabilize the market size of natamycin[57] III. Analysis of Core Competitiveness during the Reporting Period This section elaborates on the company's five core competencies: technological strength, brand power, organizational capability, full industry chain advantage, and omni-channel advantage, which collectively support its market position and sustainable development - The company possesses 4 national-level and 17 provincial-level scientific research platforms, has established cooperative relationships with numerous renowned universities and research institutes, holds nearly 400 authorized patents, and its hyaluronic acid application technology has reached an internationally leading level[58] - The company owns 3 China Well-known Trademarks and 6 Shandong Province Famous Trademarks, with multiple pharmaceutical and beauty brands selected for "Quality Luyao" and "Good Products Shandong"[59] - The company has established a clear organizational structure, strengthened talent pipeline development, boasts 18 high-level talents, and implements diversified performance management[59] - The company has 7 industrial production bases located in Jinan, Linyi, Jining, and Yili, Xinjiang, forming a healthy industry chain cluster covering pharmaceuticals, cosmetics, raw materials, and additives[60][61] - The company has built a "domestic + international" and "online + offline" omni-channel sales network; the number of cosmetics offline direct and franchised stores has exceeded 500, and raw material products are exported to over 70 countries and regions[62] IV. Main Operating Performance during the Reporting Period This section details the company's financial performance in the first half of 2025, including operating revenue, total profit, net profit, and asset-liability situation, and provides a detailed analysis of main business revenue and costs by industry, product, region, and sales model 2025 H1 Key Financial Data | Indicator | Amount (CNY) | YoY Change (%) | | :--- | :--- | :--- | | Operating Revenue | 1,790,000,000 | -7.05 | | Total Profit | 153,000,000 | -17.31 | | Net Profit Attributable to Listed Company Shareholders | 108,000,000 | -15.16 | | Net Profit Attributable to Listed Company Shareholders After Deducting Non-recurring Gains and Losses | 105,000,000 | -6.25 | | Total Assets (Period-end) | 6,037,000,000 | +0.61 | | Net Assets Attributable to Listed Company Shareholders (Period-end) | 4,152,000,000 | +1.14 | 2025 H1 Operating Revenue and Gross Margin by Business Segment | Business Segment | Operating Revenue (CNY) | Gross Margin (%) | | :--- | :--- | :--- | | Cosmetics | 1,094,000,000 | 61.99 | | Pharmaceuticals | 207,000,000 | 51.80 | | Raw Materials and Derivatives, Additives | 179,000,000 | 40.93 | | Property Management and Other | 293,000,000 | 21.80 | 2025 H1 Financial Statement Related Item Changes | Item | Current Period Amount (CNY) | Prior Period Amount (CNY) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 1,789,541,668.33 | 1,925,374,405.82 | -7.05 | | Operating Cost | 852,782,976.05 | 926,705,517.96 | -7.98 | | Selling Expenses | 644,163,222.10 | 700,155,381.20 | -8.00 | | Administrative Expenses | 86,472,288.48 | 78,943,499.68 | 9.54 | | R&D Expenses | 79,167,753.34 | 65,646,381.71 | 20.60 | | Financial Expenses | -19,246,530.02 | -8,718,191.15 | Not applicable | | Net Cash Flow from Operating Activities | 18,677,417.87 | 135,939,772.35 | -86.26 | | Net Cash Flow from Investing Activities | 7,431,661.24 | 2,992,937,416.21 | -99.75 | | Net Cash Flow from Financing Activities | -29,792,992.69 | -1,714,715,756.30 | Not applicable | | Income Tax Expense | 18,877,518.48 | 29,014,460.08 | -34.94 | - Administrative expenses increased by 9.54% mainly due to employee compensation adjustments and increased depreciation and amortization; R&D expenses increased by 20.60% mainly due to the company's increased R&D investment[68] - Net cash flow from investing activities significantly decreased by 99.75% mainly due to the receipt of remaining proceeds from the real estate business divestiture in the prior period[69] (I) Main Business Analysis This part analyzes the financial performance of the company's main businesses, including changes in financial items, revenue and cost structure, and gross margin, segmented by industry, product, region, and sales model, revealing growth drivers and challenges for each business segment 2025 H1 Main Business by Industry | By Industry | Operating Revenue (CNY) | Operating Cost (CNY) | Gross Margin (%) | Operating Revenue YoY Change (%) | Gross Margin YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Cosmetics | 1,094,017,376.76 | 415,868,448.03 | 61.99 | -7.73 | 0.61 | | Property Management and Other | 292,870,553.14 | 229,029,992.02 | 21.80 | -4.96 | 2.07 | | Pharmaceuticals | 207,088,132.10 | 99,811,467.61 | 51.80 | -13.87 | -0.32 | | Raw Materials and Derivatives, Additives | 178,623,051.90 | 105,513,630.20 | 40.93 | 4.15 | 1.66 | - Cosmetics revenue decreased mainly due to Aier Doctor brand iteration, strict control of price chaos, declining online traffic dividends, and loss of OEM customers[73][74] - Pharmaceutical revenue decreased mainly due to expanded centralized procurement, lower winning bid prices, and ineffective new product launches[74] 2025 H1 Main Business by Sales Model | By Sales Model | Operating Revenue (CNY) | Operating Revenue YoY Change (%) | | :--- | :--- | :--- | | Cosmetics Distribution | 227,429,811.42 | -25.26 | | Cosmetics Direct Sales | 866,587,565.34 | -1.68 | | Pharmaceutical Distribution | 207,088,132.10 | -13.87 | | Raw Materials and Derivatives, Additives Distribution | 99,652,456.01 | 2.49 | | Raw Materials and Derivatives, Additives Direct Sales | 78,970,595.89 | 6.32 | (III) Analysis of Assets and Liabilities This part analyzes the composition and changes in the company's assets and liabilities at the end of the period, focusing on significant changes and their reasons for items such as financing receivables, prepayments, other receivables, construction in progress, other non-current assets, other payables, and long-term borrowings 2025 H1 Asset and Liability Status Changes | Item Name | Period-end Amount (CNY) | Period-end % of Total Assets | Prior Year-end Amount (CNY) | Prior Year-end % of Total Assets | Period-end vs. Prior Year-end Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Financing Receivables | 46,636,301.87 | 0.77 | 18,560,937.05 | 0.31 | 151.26 | | Prepayments | 140,579,022.20 | 2.33 | 88,501,829.53 | 1.47 | 58.84 | | Other Receivables | 32,440,941.21 | 0.54 | 19,248,155.43 | 0.32 | 68.54 | | Construction in Progress | 28,705,830.49 | 0.48 | 16,121,145.74 | 0.27 | 78.06 | | Other Non-current Assets | 18,714,594.92 | 0.31 | 8,987,603.08 | 0.15 | 108.23 | | Other Payables | 266,707,873.47 | 4.42 | 204,362,950.71 | 3.41 | 30.51 | | Long-term Borrowings | 0 | 0 | 44,552,937.50 | 0.74 | -100.00 | - Financing receivables increased by 151.26% mainly due to an increase in bank acceptance bills held during the current period[75] - Prepayments increased by 58.84% mainly due to payments for endorsement fees, prepaid promotion fees, and live streaming service fees during the current period[75] - Long-term borrowings decreased by 100% mainly due to the repayment of bank loans[77] Restricted Assets at Period End | Item | Period-end Book Value (CNY) | Reason for Restriction | | :--- | :--- | :--- | | Monetary Funds | 148,162,485.43 | Mainly various deposits, fixed deposits, and government special subsidies that cannot be used in the short term | | Total | 148,162,485.43 | | (VI) Analysis of Major Holding and Associate Companies This part lists the financial information of the company's major holding subsidiaries and associate companies with a significant impact (over 10%) on net profit, and describes the acquisition and disposal of subsidiaries during the reporting period Major Subsidiaries and Associate Companies | Company Name | Company Type | Main Business | Registered Capital (million CNY) | Total Assets (million CNY) | Net Assets (million CNY) | Operating Revenue (million CNY) | Operating Profit (million CNY) | Net Profit (million CNY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Shandong Freda Pharmaceutical Group Co., Ltd. | Subsidiary | Pharmaceutical product sales | 200.00 | 1,108.51 | 526.21 | 173.85 | 15.22 | 15.11 | | Shandong Freda Bio-stock Co., Ltd. | Subsidiary | Cosmetics production and sales | 91.00 | 1,694.89 | 1,371.98 | 938.91 | 77.89 | 69.70 | | Lushang Life Service Co., Ltd. | Subsidiary | Property management | 133.34 | 733.19 | 485.54 | 234.58 | 19.05 | 13.98 | | Shandong Bausch & Lomb Freda Pharmaceutical Co., Ltd. | Associate | Pharmaceutical production and sales | 90.00 | 604.38 | 270.61 | 381.78 | 108.43 | 90.14 | - The company holds 30% equity in associate company Shandong Bausch & Lomb Freda Pharmaceutical Co., Ltd., which impacts the net profit attributable to the listed company by CNY 29.8498 million[81] - During the reporting period, the company liquidated and deregistered Shandong Congfeng Information Technology Co., Ltd., and absorbed and merged Shandong Baifu Freda Pharmaceutical Co., Ltd., aiming to streamline equity structure and improve operational management efficiency, with no significant impact on the company's overall production, operations, and performance[83] V. Other Disclosures This section discloses potential policy, industry, operational, and safety/environmental risks faced by the company, and details the measures taken and progress made in response to the "Quality Improvement, Efficiency Enhancement, and Return" action plan, covering main business, technological innovation, investor returns, information disclosure, and corporate governance (I) Potential Risks The company faces multiple risks including policy, industry, operational, and safety/environmental. Policy risks mainly stem from strengthening regulations in cosmetics and pharmaceuticals and expanded centralized procurement; industry risks include fierce competition in the cosmetics market, high R&D investment for new pharmaceuticals, raw material price fluctuations, and exchange rate risks; operational risks involve challenges in online/offline channels, dealer management, supply chain efficiency, and changes in expense ratios; safety and environmental risks relate to pollutant treatment in production processes - Cosmetics industry regulation continues to strengthen, and the pharmaceutical industry is affected by centralized procurement and medical insurance payment reforms, which may lead to changes in industry operating models and product competitive landscape[83] - The cosmetics market faces fierce competition and rapid trend changes, posing a risk of market share decline for the company; new drug development in pharmaceuticals is difficult, and returns may not meet expectations[84] - Competition in the hyaluronic acid raw material market is intensifying, with price fluctuation risks, and the company's raw material business is affected by foreign exchange rate fluctuations[86] - Operational risks include changes in e-commerce platform policies, rising traffic costs, high offline channel rents, declining customer traffic, dealer management, and supply chain efficiency[87] (II) Other Disclosures The company actively implemented the "Quality Improvement, Efficiency Enhancement, and Return" action plan, making progress in main business, technological innovation, investor returns, information disclosure, and corporate governance in the first half of the year. Cosmetics segment's Yilian brand sales increased by 23.78% year-on-year, and medical-grade hyaluronic acid sales increased by 287.3%. The company added a national-level postdoctoral workstation, and Freda Bio-stock and Mingren Freda laboratories obtained CNAS certification. The 2024 annual cash dividend totaled 45.92% of net profit attributable to shareholders. The company continuously strengthened investor communication, improved its ESG rating to A-level, and optimized its corporate governance structure - In the first half of 2025, the cosmetics segment's Yilian brand sales increased by 23.78% year-on-year; medical-grade hyaluronic acid sales increased by 287.3%, driving an 8.5 percentage point increase in hyaluronic acid raw material gross margin[90] - The company added 1 national-level postdoctoral workstation; Freda Bio-stock and Mingren Freda laboratories obtained CNAS certification; medical recombinant collagen dressing (Class II) obtained its product registration certificate[92] - The company's 2024 annual cash dividend totaled CNY 111,822,565.25 (tax inclusive), accounting for 45.92% of the net profit attributable to listed company shareholders in 2024. No interim dividend will be distributed for the first half of 2025[94] - The company's ESG rating improved to A-level, and it strengthened investor communication through various channels, responding to 41 interactive questions on the SSE e-interaction platform and answering over 100 investor phone inquiries in the first half of the year[96] - The company plans to abolish the supervisory board, with its functions to be exercised by the board's audit committee, and will revise the "Articles of Association" and some governance systems to comply with the new "Company Law" and regulatory requirements[99] Section IV Corporate Governance, Environment, and Society This section details changes in the company's governance structure, outlines profit distribution plans, and provides environmental information for its key subsidiaries, reflecting its commitment to corporate responsibility I. Changes in Directors, Supervisors, and Senior Management This section discloses changes in the company's directors, supervisors, and senior management during the reporting period, including the appointment and resignation of the Deputy General Manager and Board Secretary - Xu Chuanbin was appointed as the company's Deputy General Manager[102] - Dou Xixi was appointed as the company's Board Secretary, having previously acted as the Board Secretary[102][103] - Zhang Hongyang no longer serves as the company's Deputy General Manager and Board Secretary due to work changes[102] II. Profit Distribution or Capital Reserve Conversion Plan This section states that the company will not carry out profit distribution or capital reserve conversion into share capital for the semi-annual period - The company will not carry out profit distribution or capital reserve conversion into share capital for the semi-annual period[104] IV. Environmental Information of Listed Companies and Their Major Subsidiaries Included in the List of Enterprises Required to Disclose Environmental Information by Law This section discloses that two of the company's subsidiaries (Shandong Focus Freda Bio-stock Co., Ltd. and Shandong Freda Biotechnology Co., Ltd.) are included in the list of enterprises required to disclose environmental information by law, and details Freda Bio-stock and Mingren Freda's environmental measures and compliance status for waste gas, wastewater, and solid waste treatment - Shandong Focus Freda Bio-stock Co., Ltd. and Shandong Freda Biotechnology Co., Ltd. have been included in the list of enterprises required to disclose environmental information by law[106] - Freda Bio-stock's waste gas, wastewater, and solid waste treatment all meet discharge standards; waste gas is treated by activated carbon adsorption, wastewater is treated by a sewage treatment plant before discharge into the municipal pipeline, and solid waste is handled compliantly[106][107] - Mingren Freda's waste gas, wastewater, and solid waste treatment also all meet discharge standards; waste gas is treated by water spray and activated carbon adsorption, boilers are equipped with low-nitrogen combustion devices, and sewage treatment plant waste gas is treated through three-stage spraying and biological deodorization, among other methods[108] Section V Significant Matters This section addresses significant corporate matters, including the fulfillment of commitments, integrity status of the company and its controlling shareholder, and details of major related-party transactions and guarantees I. Fulfillment of Commitments This section discloses the fulfillment of commitments made by the company's actual controller, controlling shareholder, the company itself, and its directors, supervisors, and senior management during or continuing into the reporting period, mainly concerning business independence, avoidance of horizontal competition, reduction and standardization of related-party transactions, and measures to enhance returns; all commitments were strictly fulfilled - The controlling shareholder, Shandong Commercial Group Co., Ltd., committed to ensuring the company's business independence, asset integrity, personnel independence, institutional independence, financial independence, avoiding horizontal competition, and reducing and standardizing related-party transactions[112][113] - The company and its directors and senior management committed not to transfer benefits to other units or individuals without compensation or under unfair conditions, not to harm the interests of the listed company, and to constrain job-related consumption[113] - All commitment matters were strictly fulfilled, with no unfulfilled commitments[112][113][114] IX. Explanation of the Integrity Status of the Company, its Controlling Shareholder, and Actual Controller during the Reporting Period This section explains the integrity status of the company and its controlling shareholder, confirming that they have not failed to comply with effective court judgments or defaulted on large outstanding debts - The controlling shareholder, Shandong Commercial Group Co., Ltd., maintained an AA+ long-term credit rating, with a stable outlook[116] - Neither the company nor its controlling shareholder has failed to comply with effective court judgments or defaulted on large outstanding debts[116][117] X. Significant Related-Party Transactions This section details various significant related-party transactions entered into by the company during the reporting period, including daily operating related-party transactions, asset acquisition/disposal related-party transactions, and financial services with affiliated financial companies, explaining the necessity and fairness of these transactions 2025 H1 Daily Related-Party Transactions | Related-Party Transaction Category | 2025 Estimated Amount (million CNY) | 2025 Jan-Jun Actual Amount (million CNY) | | :--- | :--- | :--- | | Purchase of Goods | 50.00 | 1.96 | | Acceptance of Services | 50.00 | 13.83 | | Sale of Goods | 50.00 | 4.05 | | Provision of Services | 200.00 | 51.05 | | Lease (Property Rental) | 15.00 | 6.13 | | Total | 365.00 | 77.03 | - The company's controlling subsidiary, Shandong Lan'an Garden Engineering Co., Ltd., underwent a capital increase and share expansion; the company waived its preemptive right, reducing its equity stake from 100% to 49%; payment and industrial and commercial registration changes have been completed[122][123] 2025 H1 Financial Business with Affiliated Financial Company | Business Type | Related Party | Beginning Balance (CNY) | Current Period Total Deposit/Loan Amount (CNY) | Current Period Total Withdrawal/Repayment Amount (CNY) | Ending Balance (CNY) | | :--- | :--- | :--- | :--- | :--- | :--- | | Deposit Business | Shandong Commercial Group Finance Co., Ltd. | 1,765,608,401.20 | 1,900,558,439.32 | 2,161,479,157.22 | 1,504,687,683.30 | | Loan Business | Shandong Commercial Group Finance Co., Ltd. | 45,000,000.00 | 0.00 | 30,000,000.00 | 15,000,000.00 | | Credit Line Business | Shandong Commercial Group Finance Co., Ltd. | | 0.00 | | | - The company's deposit interest income from Shandong Commercial Group Finance Co., Ltd. was CNY 13,893,930.84, and loan interest expense was CNY 552,812.52[132] XI. Significant Contracts and Their Fulfillment This section discloses significant guarantees executed and outstanding during the reporting period, primarily related to associated guarantees arising from major asset disposals, and specifies the guarantee amounts and counter-guarantee measures Company's Total Guarantees (Including Guarantees to Subsidiaries) | Indicator | Amount (million CNY) | | :--- | :--- | | Total Guarantee Balance at Period-end (A) | 215.00 | | Total Guarantees (A+B) | 215.00 | | Total Guarantees as % of Company's Net Assets | 5.24 | | Amount of Guarantees Provided for Shareholders, Actual Controllers, and Their Related Parties (C) | 215.00 | | Amount of Debt Guarantees Provided Directly or Indirectly for Guaranteed Parties with Asset-Liability Ratio Exceeding 70% (D) | 215.00 | | Total of the Above Three Guarantee Amounts (C+D+E) | 215.00 | - The company and its holding companies' external guarantee balance is CNY 215 million, all of which are associated guarantees arising from major asset disposals and are counter-guaranteed by the controlling shareholder, Shandong Commercial Group Co., Ltd[138][186] - The company has no overdue guarantees[138] Section VI Share Changes and Shareholder Information This section provides an overview of the company's share capital stability and detailed information on its shareholder structure, including the top ten shareholders and their holdings I. Share Capital Changes During the reporting period, the company's total share capital and share structure remained unchanged - During the reporting period, the company's total share capital and share structure remained unchanged[142] II. Shareholder Information This section discloses the total number of shareholders, the top ten shareholders, and the top ten shareholders with unrestricted shares as of the end of the reporting period, and explains the controlling shareholder's shareholding structure and related-party relationships - As of the end of the reporting period, the total number of common shareholders was 47,512[143] Top Ten Shareholders' Shareholding as of the End of the Reporting Period | Shareholder Name | Period-end Shareholding (shares) | Percentage (%) | Share Status | Number (shares) | | :--- | :--- | :--- | :--- | :--- | | Shandong Commercial Group Co., Ltd. | 524,739,200 | 51.62 | Pledged | 140,000,000 | | Lushang Group Co., Ltd. | 17,210,000 | 1.69 | Unrestricted | 0 | | National Social Security Fund 114 Portfolio | 11,880,160 | 1.17 | Unrestricted | 0 | | Shandong World Trade Center | 9,836,000 | 0.97 | Unrestricted | 0 | | Tao Dan | 7,884,698 | 0.78 | Unrestricted | 0 | - The controlling shareholder, Shandong Commercial Group Co., Ltd., holds 384,739,200 shares (37.85%) through its own ordinary securities account, and 140,000,000 shares (13.77%) through the "Lushang Group - Orient Securities - 24 Lushang EB Guarantee and Trust Property Special Account" securities account[145] - Shandong Commercial Group Co., Ltd., Shandong World Trade Center, and Lushang Group Co., Ltd. have related-party relationships[145] Section VII Bond-Related Information This section states that the company had no corporate bonds (including enterprise bonds) or non-financial enterprise debt financing instruments, nor convertible corporate bonds during the reporting period - The company had no corporate bonds (including enterprise bonds) or non-financial enterprise debt financing instruments during the reporting period[148] - The company had no convertible corporate bonds during the reporting period[148] Section VIII Financial Report This section presents the company's comprehensive financial statements, outlines significant accounting policies, tax information, and provides detailed notes on various financial items, related-party transactions, and other material financial disclosures II. Financial Statements This section provides the company's consolidated and parent company balance sheets, income statements, cash flow statements, and statements of changes in owners' equity for the first half of 2025, comprehensively presenting the company's financial position, operating results, and cash flow - The consolidated balance sheet shows that as of June 30, 2025, the company's total assets were CNY 6,037,060,817.19, total liabilities CNY 1,167,586,021.65, and total owners' equity CNY 4,869,474,795.54[152] - The consolidated income statement shows that for the first half of 2025, total operating revenue was CNY 1,789,541,668.33, net profit CNY 134,265,865.95, and net profit attributable to parent company shareholders CNY 107,962,780.31[159][161] - The consolidated cash flow statement shows that for the first half of 2025, net cash flow from operating activities was CNY 18,677,417.87, net cash flow from investing activities CNY 7,431,661.24, and net cash flow from financing activities -CNY 29,792,992.69[167][168] III. Company Basic Information This section outlines the company's history, main business transformation, stock listing information, organizational structure, and ultimate controlling party, clarifying that the company's current main businesses include cosmetics, pharmaceuticals, and raw materials/additives - The company, formerly known as Shandong Wanjie High-tech Co., Ltd., completed the divestiture of its real estate business in February 2023, and its main business transformed to pharmaceutical products and cosmetics production and sales[183] - The company's stock abbreviation is "Freda", stock code "600223", and it is listed on the Shanghai Stock Exchange[184] - The company's ultimate controlling party is the Shandong Provincial State-owned Assets Supervision and Administration Commission (SASAC)[184] V. Significant Accounting Policies and Estimates This section elaborates on the significant accounting policies and estimates followed by the company in preparing its financial statements, covering business combinations, financial instruments, inventories, long-term equity investments, fixed assets, intangible assets, revenue recognition, government grants, and explains the significant judgments and estimates made by management in applying these policies - The company prepares its financial statements on a going concern basis, adhering to the "Accounting Standards for Business Enterprises" and relevant regulations[185][189] - Financial assets are classified as measured at amortized cost, fair value through other comprehensive income, or fair value through profit or loss, based on the management business model and contractual cash flow characteristics[212] - Revenue is recognized when the customer obtains control of the related goods, and is recognized over time or at a point in time based on the nature of the performance obligations[299][300] - The company makes significant judgments and estimates for financial instrument impairment, inventory write-downs, fair value of financial instruments, impairment provisions for long-term assets, and goodwill impairment provisions[321][322][323][324] VI. Taxation This section lists the company's main tax categories and rates, and discloses the subsidiaries enjoying high-tech enterprise tax incentives Main Tax Categories and Rates | Tax Category | Tax Rate | | :--- | :--- | | Value-Added Tax | 1%, 3%, 5%, 6%, 9%, 13% | | Consumption Tax | 15% | | Corporate Income Tax | 15%, 20%, 25% | | Urban Maintenance and Construction Tax | Paid according to the policy of the company's location | | Education Surcharge | Paid according to the policy of the company's location | - Shandong Mingren Freda Pharmaceutical Co., Ltd., Shandong Freda Bio-stock Co., Ltd., Shandong Freda Biotechnology Co., Ltd., Shandong Focus Freda Bio-stock Co., Ltd., Shandong Lushang Architectural Design Co., Ltd., Shandong Baifu Freda Pharmaceutical Co., Ltd., and other subsidiaries enjoy a 15% corporate income tax preferential rate[329][330] VII. Notes to Consolidated Financial Statement Items This section provides detailed notes for each major item in the consolidated financial statements, including monetary funds, notes receivable, accounts receivable, inventories, long-term equity investments, fixed assets, intangible assets, goodwill, short-term borrowings, employee benefits payable, operating revenue and costs, various expenses, investment income, and cash flows, explaining period-end balances, changes, and related accounting treatments - The period-end monetary funds balance was CNY 2,947,226,863.09, of which CNY 148,162,485.43 was restricted, mainly for various deposits, fixed deposits, and government special subsidies[332][334] - The accounts receivable period-end book balance was CNY 554,429,518.94, with a bad debt provision of CNY 98,204,673.82, mainly accrued by aging portfolio[346][348] - The inventories period-end book value was CNY 501,811,076.96, with an inventory impairment provision of CNY 6,071,375.53[383] - The long-term equity investments period-end book value was CNY 97,533,772.30, mainly investment income from associates[391] - Goodwill's book original value was CNY 164,311,642.90, with an impairment provision of CNY 10,569,002.01, mainly originating from Shandong Focus Freda Bio-stock Co., Ltd[418][420] - For the first half of 2025, operating revenue was CNY 1,789,541,668.33, operating cost CNY 852,782,976.05, and gross margin 52.35%[471] - Selling expenses amounted to CNY 644,163,222.10, primarily including advertising, service fees, and employee compensation[480] - R&D expenses amounted to CNY 79,167,753.34, mainly comprising employee compensation and other personnel expenses, outsourced R&D and testing fees, and material costs[482] - Financial expenses were -CNY 19,246,530.02, primarily due to interest income offsetting interest expenses[484] VIII. Research and Development Expenses This section details the company's R&D expenses during the reporting period, including expensed and capitalized R&D expenditures classified by nature of expense, and changes in R&D projects meeting capitalization criteria 2025 H1 R&D Expenses by Nature of Expense | Item | Current Period Amount (CNY) | Prior Period Amount (CNY) | | :--- | :--- | :--- | | Employee Compensation | 33,370,651.84 | 28,909,725.05 | | Material Costs | 12,600,053.79 | 9,888,717.75 | | Outsourced R&D Fees | 16,692,998.55 | 10,894,125.83 | | Depreciation, Amortization, Lease Fees | 9,500,277.27 | 10,179,509.72 | | Technical Service Fees | 8,981,034.49 | 2,993,514.57 | | Inspection Fees | 2,149,988.26 | 1,650,935.14 | | Equipment and Energy Costs | 1,436,155.77 | 1,547,796.20 | | Intellectual Property Fees | 935,272.34 | 950,332.09 | | Expert Service Fees | 718,113.22 | 360,568.29 | | Routine Administrative Expenses | 1,330,189.96 | 1,936,727.60 | | Other | 1,195,233.86 | 905,693.60 | | Total | 88,909,969.35 | 70,217,645.84 | | Of which: Expensed R&D Expenditure | 79,167,753.34 | 65,646,381.71 | | Capitalized R&D Expenditure | 9,742,216.01 | 4,571,264.13 | - Current period capitalized R&D expenses amounted to CNY 9,742,216.01, an increase of 113.12% compared to the prior period[513] - The KMC API project ceased subsequent R&D due to rising material prices, increased process costs, and lack of product competitive advantage, with R&D expenses transferred to current profit or loss[516] - The patch research and development project's phased results were repurchased by the cooperative partner due to a company strategic adjustment[517] IX. Changes in Consolidation Scope This section explains changes in the company's consolidation scope during the reporting period, mainly involving liquidation and deregistration of a subsidiary and absorption merger, aimed at streamlining equity structure and improving operational efficiency - The company liquidated and deregistered its controlling subsidiary, Shandong Congfeng Information Technology Co., Ltd[518] - The company's controlling subsidiary, Shandong Focus Freda Bio-stock Co., Ltd., absorbed and merged its controlling subsidiary, Shandong Baifu Freda Pharmaceutical Co., Ltd[518] - The aforementioned changes aim to streamline the equity structure and improve operational management efficiency, and relevant industrial and commercial registration procedures have been completed[518] X. Interests in Other Entities This section details the company's interests in subsidiaries, joint ventures, and associates, including the composition of the enterprise group, key financial information of important non-wholly-owned subsidiaries, and important associates - The company owns multiple controlling subsidiaries, including Shandong Freda Pharmaceutical Group Co., Ltd., Shandong Freda Bio-stock Co., Ltd., and Shandong Focus Freda Bio-stock Co., Ltd[520] - The company holds 41% equity in Shandong Lushang Tang'an Property Co., Ltd., but due to another shareholder's entrusted voting rights, the company has actual control over it and includes it in the consolidation scope[521] Key Financial Information of Important Non-wholly-owned Subsidiaries (Current Period) | Subsidiary Name | Minority Shareholding Percentage (%) | Current Period Profit/Loss Attributable to Minority Shareholders (CNY) | Current Period Dividends Declared to Minority Shareholders (CNY) | Period-end Minority Interest Balance (CNY) | | :--- | :--- | :--- | :--- | :--- | | Shandong Freda Bio-stock Co., Ltd. | 17.58 | 13,711,513.64 | | 253,081,822.79 | | Lushang Life Service Co., Ltd. | 28.68 | 5,357,338.17 | 4,129,920.00 | 153,015,733.86 | Key Financial Information of Important Associate Shandong Bausch & Lomb Freda Pharmaceutical Co., Ltd. | Item | Period-end Balance/Current Period Amount (CNY) | | :--- | :--- | | Total Assets | 604,380,414.63 | | Total Liabilities | 333,774,170.06 | | Equity Attributable to Parent Company Shareholders | 270,606,244.57 | | Operating Revenue | 381,776,164.54 | | Net Profit | 90,142,207.71 | | Total Comprehensive Income | 90,142,207.71 | | Dividends Received in Current Year | 59,995,080.80 | XI. Government Grants This section discloses the company's government grant-related liability items and the amounts of government grants recognized in current profit or loss during the reporting period, including income-related and asset-related grants 2025 H1 Government Grant-Related Liability Items | Financial Statement Item | Beginning Balance (CNY) | Current Period New Grants (CNY) | Current Period Recognized in Other Income (CNY) | Ending Balance (CNY) | Related to Asset/Income | | :--- | :--- | :--- | :--- | :--- | :--- | | Deferred Income | 35,845,879.15 | | 796,999.99 | 34,898,879.16 | Income-related | | Deferred Income | 15,379,865.94 | 4,808,800.00 | 430,595.11 | 19,758,070.83 | Asset-related | | Total | 51,225,745.09 | 4,808,800.00 | 1,227,595.10 | 54,656,949.99 | | 2025 H1 Government Grants Recognized in Current Profit or Loss | Type | Current Period Amount (CNY) | | :--- | :--- | | Income-related | 11,497,079.93 | | Asset-related | 430,595.11 | | Total | 11,927,675.04 | XII. Risks Related to Financial Instruments This section analyzes the financial instrument risks faced by the company, including interest rate risk, credit risk, liquidity risk, and exchange rate risk, and explains the strategies adopted by the company to manage these risks and the results of sensitivity analysis - The company's interest rate risk primarily arises from financial institution borrowings, which are controlled by reasonably allocating the proportion of fixed-rate and floating-rate borrowings[533] - The company's credit risk mainly stems from monetary funds, notes receivable, accounts receivable, and financing receivables, managed by assessing customer creditworthiness and regularly monitoring credit records[534] - As of June 30, 2025, the top five accounts receivable and contract assets totaled CNY 69,662,216.28, accounting for 11.36% of the total[535] - The company manages liquidity risk through comprehensive budget management, maintaining sufficient monetary fund reserves, and credit cooperation with financial institutions[536] - The company is exposed to exchange rate risk, primarily from foreign currency-denominated monetary funds and accounts receivable; if the RMB appreciates or depreciates by 10% against the USD, it would affect total profit by approximately CNY 1,433,115.35[537] 2025 H1 Financial Asset Transfer | Transfer Method | Nature of Transferred Financial Assets | Amount of Transferred Financial Assets (CNY) | Derecognition Status (CNY) | | :--- | :--- | :--- | :--- | | Endorsement | Bank Acceptance Bill | 13,794,969.73 | 13,794,969.73 | | Endorsement | Commercial Acceptance Bill | 6,303,755.79 | 0 | | Total | | 20,098,725.52 | 13,794,969.73 | XIII. Disclosure of Fair Value This section discloses the fair value of the company's assets and liabilities measured at fair value at the end of the period, and explains the valuation methods for recurring Level 3 fair value measurement items 2025 H1 Total Assets Continuously Measured at Fair Value | Item | Level 3 Fair Value Measurement (CNY) | Total (CNY) | | :--- | :--- | :--- | | Other Equity Instrument Investments | 40,000,000.00 | 40,000,000.00 | | Financing Receivables | 46,636,301.87 | 46,636,301.87 | | Total Assets Continuously Measured at Fair Value | 86,636,301.87 | 86,636,301.87 | - The company's equity investments that do not confer control, joint control, or significant influence and lack an active market, as well as bank acceptance bills classified as financing receivables, are measured using Level 3 fair value[545][546] XIV. Related Parties and Related-Party Transactions This section details the company's parent company, subsidiaries, joint ventures, associates, and other related parties, and lists the specifics of purchases and sales of goods, provision and acceptance of services, related-party leases, related-party guarantees, related-party fund transfers, related-party asset transfers, key management personnel compensation, and other related-party transactions, as well as unsettled items during the reporting period - The company's parent company is Shandong Commercial Group Co., Ltd., and its ultimate controlling party is the Shandong Provincial State-owned Assets Supervision and Administration Commission (SASAC)[548] - The company engaged in multiple related-party transactions for purchases and sales of goods, and provision and acceptance of services; current period purchases of goods/acceptance of services totaled CNY 17,763,658.75, and sales of goods/provision of services totaled CNY 64,640,569.82[555][558] - As a lessor, the company recognized related-party lease income of CNY 7,528,515.39 in the current period[562] - As a guaranteed party, the company received multiple guarantees from related party Shandong Commercial Group Co., Ltd.; some guarantees remain unfulfilled at the period end[564][565] - Key management personnel compensation for the current period was CNY 1,363,469.40[569] XVI. Commitments and Contingencies This section states that as of the financial statement date, the company has no significant commitments or important contingencies requiring disclosure - As of the financial statement date, the company has no significant commitments requiring disclosure[581] - The company has no important contingencies requiring disclosure[582] XVII. Events After the Balance Sheet Date This section discloses profit distribution after the balance sheet date; the company completed dividend distribution on July 24 - The company plans to distribute profit or dividends of CNY 60,994,126.50[583] - The company completed dividend distribution on July 24[584] XVIII. Other Significant Matters This section explains that the company has identified two reporting segments, the pharmaceutical and chemical industry and the property management industry, based on internal organizational structure and management requirements, and discloses the financial information for each segment - The company identified two reporting segments: the pharmaceutical and chemical industry and the property management industry[585] 2025 H1 Financial Information by Reporting Segment | Item | Pharmaceutical and Chemical Industry (CNY) | Property Management and Other Industries (CNY) | Inter-segment Eliminations (CNY) | Total (CNY) | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 1,496,247,181.72 | 297,510,370.31 | -4,215,883.70 | 1,789,541,668.33 | | Operating Cost | 623,853,401.26 | 232,818,871.99 | -3,889,297.20 | 852,782,976.05 | | Total Profit | 190,540,750.27 | 22,873,434.16 | -60,270,800.00 | 153,143,384.43 | | Net Profit | 177,060,045.90 | 17,476,620.05 | -60,270,800.00 | 134,265,865.95 | | Total Assets | 5,621,943,366.85 | 1,165,758,177.57 | -750,640,727.23 | 6,037,060,817.19 | | Total Liabilities | 1,134,593,685.17 | 341,173,075.10 | -308,180,738.62 | 1,167,586,021.65 | XIX. Notes to Parent Company Financial Statement Items This section provides detailed notes for major items in the parent company's financial statements, including other receivables and long-term equity investments, reflecting the parent company's financial position and investment income - The parent company's other receivables period-end balance was CNY 226,802,681.25, mainly including dividends receivable of CNY 20,484,540.00 and other receivables of CNY 206,318,141.25[592] - The parent company's long-term equity investments period-end book value was CNY 1,180,633,197.64, primarily investments in subsidiaries[607][608] - The parent company's 2025 H1 investment income was CNY 60,270,800.00, mainly from long-term equity investments accounted for using the cost method[610] XX. Supplementary Information This section provides supplementary financial information, including a detailed statement of non-recurring gains and losses for the current period, return on net assets, and earnings per share, to further complete the financial report disclosure 2025 H1 Detailed Statement of Non-recurring Gains and Losses | Item | Amount (CNY) | | :--- | :--- | | Gains and losses from disposal of non-current assets | 11,585.47 | | Government grants recognized in current profit or loss | 7,679,959.67 | | Other non-operating income and expenses apart from the above | -1,679,784.06 | | Less: Income tax impact | 521,021.85 | | Minority interest impact (after tax) | 2,109,584.55 | | Total | 3,381,154.68 | 2025 H1 Return on Net Assets and Earnings Per Share | Profit for the Reporting Period | Weighted Average Return on Net Assets (%) | Basic Earnings Per Share (CNY/share) | Diluted Earnings Per Share (CNY/share) | | :--- | :--- | :--- | :--- | | Net profit attributable to common shareholders of the company | 2.60 | 0.11 | 0.11 | | Net profit attributable to common shareholders of the company after deducting non-recurring gains and losses | 2.51 | 0.10 | 0.10 |