灵康药业(603669) - 2025 Q2 - 季度财报

Important Notice This section provides a general overview of the report's integrity, audit status, profit distribution policy, forward-looking statements, and risk disclosures Report Statement and Risk Warning The board, supervisory board, and senior management guarantee the report's truthfulness, accuracy, and completeness, noting it is unaudited and no profit distribution will occur - Company's board, supervisory board, and senior management guarantee the report's truthfulness, accuracy, and completeness, and assume legal responsibility[3] - This semi-annual report is unaudited[5] - The company will not distribute profits or convert capital reserves into share capital for the semi-annual period[6] - Forward-looking statements do not constitute substantive commitments, and investors are advised to be aware of investment risks[7] - There are no non-operating funds occupied by controlling shareholders or other related parties, nor any external guarantees provided in violation of decision-making procedures[8] - Significant risk warnings are detailed in "Section III Management Discussion and Analysis" under "V. Other Disclosure Matters" and "(I) Potential Risks"[8] Section I Definitions This section defines common terms used throughout the report, including company, subsidiaries, associates, regulatory bodies, laws, and the reporting period Definitions of Common Terms This section provides definitions for key terms such as "Company," "Subsidiaries," "Associates," and "Reporting Period" to ensure clear understanding of the report's content - Defines "Company," "the Company," and "Lingkang Pharmaceutical" refer to Lingkang Pharmaceutical Group Co, Ltd[13] - Lists several wholly-owned subsidiaries, such as Hainan Lingkang Pharmaceutical Co, Ltd and Zhejiang Lingkang Pharmaceutical Co, Ltd[13] - Lists associate companies, such as Hainan Provincial Cancer Hospital Chengmei International Medical Center Co, Ltd and Zhejiang Hemukang Pharmaceutical Technology Co, Ltd[13] - Defines "Reporting Period" as January to June 2025[13] Section II Company Profile and Key Financial Indicators This section provides an overview of the company's basic information, contact details, stock profile, and key financial performance metrics for the reporting period I. Company Information This section discloses the company's official Chinese name, abbreviation, foreign name, abbreviation, and legal representative - Company's Chinese name: 灵康药业集团股份有限公司 (Lingkang Pharmaceutical Group Co, Ltd)[15] - Company's Chinese abbreviation: 灵康药业 (Lingkang Pharmaceutical)[15] - Legal Representative: Tao Lingping[15] II. Contact Person and Contact Information This section provides the names, addresses, phone numbers, fax numbers, and email addresses of the company's Board Secretary and Securities Affairs Representative - Board Secretary: Sui Guoping[16] - Securities Affairs Representative: Liao Baoyu[16] - Contact Address: No 20, G349 (Jieba Township Section), Nedong District, Shannan City, Tibet Autonomous Region[16] - Email: ir@lingkang.com.cn[16] III. Brief Introduction to Changes in Basic Information This section outlines the historical changes in the company's registered address, with the latest being No 20, G349 (Jieba Township Section), Nedong District, Shannan City, Tibet Autonomous Region - Company's registered address: No 20, G349 (Jieba Township Section), Nedong District, Shannan City, Tibet Autonomous Region[17] - In June 2023, the registered address changed from No 68, Nedong Road, Zedang Town to No 20, G349 (Jieba Township Section), Nedong District[17] IV. Brief Introduction to Changes in Information Disclosure and Document Storage Locations This section specifies the company's designated newspapers for information disclosure, the website for semi-annual reports, and the location where reports are kept - Information disclosure newspapers: Securities Times, Securities Daily, Shanghai Securities News, China Securities Journal[18] - Website address for semi-annual reports: www.sse.com.cn[18](index=18&type=chunk) - Location for company's semi-annual report: Company Securities Department[18] V. Company Stock Overview This section provides details on the company's stock type, listing exchange, stock abbreviation, and stock code - Stock Type: A-share[19] - Stock Exchange: Shanghai Stock Exchange[19] - Stock Abbreviation: Lingkang Pharmaceutical, Stock Code: 603669[19] VII. Key Accounting Data and Financial Indicators During the reporting period, the company's operating revenue increased by 21.30%, while total profit and net profit attributable to shareholders remained negative, though losses narrowed by 12.68% and 11.55% respectively 2025 Semi-Annual Key Accounting Data | Indicator | Current Period (Jan-Jun) | Prior Year Period | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 171,607,603.84 RMB | 141,477,918.59 RMB | 21.30 | | Total Profit | -35,966,219.43 RMB | -41,190,447.32 RMB | 12.68 | | Net Profit Attributable to Shareholders of Listed Company | -35,733,685.77 RMB | -40,400,188.91 RMB | 11.55 | | Net Profit Attributable to Shareholders of Listed Company (Excluding Non-Recurring Gains/Losses) | -45,544,900.33 RMB | -54,418,620.81 RMB | 16.31 | | Net Cash Flow from Operating Activities | -38,959,908.90 RMB | -38,201,983.95 RMB | -1.98 | | Net Assets Attributable to Shareholders of Listed Company (Period-end) | 734,073,280.35 RMB | 769,759,810.94 RMB | -4.64 | | Total Assets (Period-end) | 1,210,091,479.70 RMB | 1,255,333,587.55 RMB | -3.60 | | Share Capital (Period-end) | 721,244,755.00 RMB | 721,244,005.00 RMB | 0.0001 | 2025 Semi-Annual Key Financial Indicators | Indicator | Current Period (Jan-Jun) | Prior Year Period | Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (RMB/share) | -0.05 | -0.06 | 16.67 | | Diluted Earnings Per Share (RMB/share) | -0.05 | -0.06 | 16.67 | | Basic Earnings Per Share (Excluding Non-Recurring Gains/Losses) (RMB/share) | -0.06 | -0.08 | 25.00 | | Weighted Average Return on Net Assets (%) | -4.75 | -4.44 | Decrease of 0.31 percentage points | | Weighted Average Return on Net Assets (Excluding Non-Recurring Gains/Losses) (%) | -6.06 | -5.98 | Decrease of 0.08 percentage points | IX. Non-Recurring Gains and Losses Items and Amounts Total non-recurring gains and losses for the current period amounted to RMB 9.81 million, primarily from government grants recognized in profit or loss 2025 Semi-Annual Non-Recurring Gains and Losses Items | Non-Recurring Gains and Losses Item | Amount (RMB) | | :--- | :--- | | Gains or losses on disposal of non-current assets | -255,350.35 | | Government grants recognized in profit or loss for the current period | 10,309,829.00 | | Gains or losses from changes in fair value of financial assets and liabilities held by non-financial enterprises, and gains or losses from disposal of financial assets and liabilities | 758,282.11 | | Gains or losses from entrusted investments or asset management | -108,144.41 | | Other non-operating income and expenses apart from the above | -893,401.79 | | Total | 9,811,214.56 | Section III Management Discussion and Analysis This section provides an in-depth analysis of the company's industry, main business, operational performance, core competencies, and potential risks during the reporting period I. Description of the Company's Industry and Main Business During the Reporting Period The company primarily researches, develops, produces, and sells chemical prescription drugs, focusing on cardiovascular, anti-infective, parenteral nutrition, and digestive system drugs, utilizing a distributor model within a transforming and policy-driven pharmaceutical industry - The company's main business is the R&D, production, and sales of chemical prescription drugs, covering cardiovascular, anti-infective, parenteral nutrition, and digestive system drugs[29] - The company primarily uses a distributor model for product sales and actively participates in national centralized procurement and alliance procurement[29] - The pharmaceutical industry is undergoing rapid adjustments due to intensive policy releases, including centralized volume-based procurement and deepening medical service price reforms[31] - The pharmaceutical industry's transformation and upgrading are accelerating, with full-chain support for innovative drug development and increased R&D investment[31] - The company has become a well-known enterprise in the domestic chemical pharmaceutical preparation industry, holding a leading position in several segmented product markets, with 115 varieties and 228 drug production approval documents[32] - The company's product strategy is shifting from generic drugs to high-difficulty generic drugs, actively developing improved new drug varieties, with the Class 2.2 new drug Esomeprazole Magnesium Sodium Bicarbonate Dry Suspension (I) having received clinical trial approval[32] II. Discussion and Analysis of Operations During the reporting period, the company focused on its core business, enhanced innovation, expanded its product line, accelerated new product launches, increased volume for centralized procurement products, and pursued international market expansion - Strengthened innovation-driven development, further enriched the company's product line, deeply promoted the expansion of product lines in four major therapeutic areas, and accelerated the pace of new product launches[33] - Promoted increased volume for centralized procurement products, seized opportunities in new rounds of national procurement and contract renewals, ensuring the volume of selected product Cefoxitin Sodium for Injection[34] - Actively promoted the national medical insurance negotiation for the company's core flagship product Huperzine A for Injection[34] - Actively implemented international strategic cooperation, exploring potential markets in countries along the "Belt and Road"[34] - Accelerated digital and intelligent construction, strengthened production process control, and promoted R&D and production technology innovation and upgrading[34] - Continuously improved the internal control system, optimized governance structure, implemented internal control policies, and strengthened management team building[35] III. Analysis of Core Competitiveness During the Reporting Period The company's core competitiveness stems from its extensive product portfolio, strong market position, advanced R&D capabilities, effective marketing network, experienced management team, and synergistic industrial layout - Product Advantage: Possesses 115 varieties and 228 drug production approval documents, with leading products in cardiovascular and anti-infective fields, and multiple key products passing consistency evaluations[36][37] - Technology and R&D Advantage: Has a well-staffed R&D team, adheres to market demand orientation, increases R&D investment, shifts product strategy towards high-difficulty generic drugs and innovative drugs, with the Class 2.2 new drug Esomeprazole Magnesium Sodium Bicarbonate Dry Suspension (I) having received clinical trial approval[37][38] - Marketing Advantage: Adopts a regional distributor sales model, building a marketing network covering major national markets, which has essentially reached secondary and above hospitals[38][39] - Team Advantage: Key management team members possess over twenty years of experience in pharmaceutical industry operations and management, forming an efficient management model[39] - Synergistic Effect of Industrial Layout: Indirectly invested in Boao Super Hospital, enjoying "pilot" policies, becoming a platform for connecting with international advanced medical technologies, and integrating global pharmaceutical resources[40] - Expanded industrial layout and enhanced profitability by investing in a large health industry fund, creating new profit growth points[40] IV. Key Operating Performance During the Reporting Period This section analyzes changes in key financial statement items, asset and liability structure, investment status, and the operating performance of major subsidiaries and associates (I) Analysis of Main Business Operating revenue increased by 21.30% due to expanded pharmaceutical distribution, leading to an 81.33% rise in operating costs, while sales expenses significantly decreased by 64.32%, and financial expenses surged by 1106.72% due to the termination of a fundraising project Analysis of Major Accounting Data Changes | Item | Current Period (RMB) | Prior Year Period (RMB) | Change (%) | Explanation of Change | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 171,607,603.84 | 141,477,918.59 | 21.30 | Primarily due to the company leveraging its sales system advantages to further expand its pharmaceutical distribution business and grow its scale | | Operating Cost | 140,924,941.42 | 77,719,392.58 | 81.33 | Primarily due to the company further expanding its pharmaceutical distribution segment and adjusting its product structure | | Selling Expenses | 15,787,866.50 | 44,248,597.92 | -64.32 | Primarily due to changes in the company's product structure, leading to a decrease in selling expenses | | Administrative Expenses | 35,884,284.09 | 38,899,006.75 | -7.75 | | | Financial Expenses | 10,124,327.25 | 838,998.37 | 1,106.72 | Primarily due to the termination of the fundraising project in the current period, leading to the capitalization of interest expenses | | R&D Expenses | 5,029,204.50 | 10,639,383.76 | -52.73 | Primarily due to a decrease in entrusted development expenses in the current period | | Net Cash Flow from Operating Activities | -38,959,908.90 | -38,201,983.95 | -1.98 | | | Net Cash Flow from Investing Activities | 27,501,952.40 | 130,099,645.54 | -78.86 | Primarily due to a decrease in matured and redeemed wealth management products in the current period | | Net Cash Flow from Financing Activities | 2,007,396.14 | -90,371,251.66 | 102.22 | Primarily due to a decrease in loan repayments in the current period | (III) Analysis of Assets and Liabilities At the end of the reporting period, both total assets and net assets attributable to shareholders decreased, with significant reductions in financial assets held for trading and prepayments, while inventories and accounts payable increased Changes in Assets and Liabilities | Item Name | Current Period End (RMB) | % of Total Assets (Current Period End) | Prior Year End (RMB) | % of Total Assets (Prior Year End) | % Change from Prior Year End | Explanation | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Financial Assets Held for Trading | 13,425,928.28 | 1.10 | 31,222,077.59 | 2.49 | -57.00 | Due to maturity and redemption of wealth management products | | Prepayments | 1,442,382.57 | 0.12 | 17,939,111.32 | 1.43 | -91.96 | Primarily due to a decrease in prepaid goods in the current period | | Other Receivables | 3,169,380.91 | 0.26 | 4,692,354.82 | 0.37 | -32.46 | Primarily due to the receipt of refunded R&D expenses in the current period | | Inventories | 48,813,538.06 | 4.03 | 27,879,613.88 | 2.22 | 75.09 | Primarily due to increased purchases in the current period | | Other Non-Current Assets | 587,500.00 | 0.05 | 1,224,500.00 | 0.10 | -52.02 | Primarily due to the capitalization of some fixed assets in the current period | | Notes Payable | 0.00 | 0.00 | 16,031,280.10 | 1.28 | -100.00 | Primarily due to the maturity of acceptance bills at period-end | | Accounts Payable | 157,453,873.07 | 13.01 | 93,530,265.44 | 7.45 | 68.35 | Primarily due to increased accounts payable for purchases at period-end | | Employee Benefits Payable | 2,426,791.82 | 0.20 | 8,205,429.32 | 0.65 | -70.42 | Primarily due to the payment of year-end bonuses accrued at the end of last year | | Taxes Payable | 4,721,476.46 | 0.39 | 12,727,406.13 | 1.01 | -62.90 | Primarily due to a decrease in VAT payable at period-end | | Other Payables | 23,368,324.19 | 1.93 | 77,202,160.99 | 6.15 | -69.73 | Primarily due to a decrease in accrued but unpaid expenses at period-end | Major Asset Restrictions as of the End of the Reporting Period | Item Name | Carrying Amount (RMB) | Book Value (RMB) | Type of Restriction | Restriction Status | | :--- | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 6,817,788.42 | 6,817,788.42 | Other | Restricted | | Fixed Assets | 58,114,658.80 | 58,114,658.80 | Mortgage | Restricted | | Intangible Assets | 7,543,706.00 | 7,543,706.00 | Mortgage | Restricted | | Total | 65,658,364.80 | 65,658,364.80 | / | / | (IV) Analysis of Investment Status The "Mei'an Production Base Construction Project" has a budget of RMB 800 million, with RMB 235.47 million invested to date, reaching 36% completion, while financial assets measured at fair value decreased to RMB 61.47 million Significant Non-Equity Investment Status | Project Name | Budget (RMB 10,000) | Period-end Amount (RMB 10,000) | Cumulative Investment as % of Budget | Project Progress (%) | Funding Source | | :--- | :--- | :--- | :--- | :--- | :--- | | Mei'an Production Base Construction Project | 80,000.00 | 23,546.65 | 29.43 | 36.00 | Raised Funds + Own Funds | Financial Assets Measured at Fair Value | Asset Category | Beginning Balance (RMB) | Amount Sold/Redeemed in Current Period (RMB) | Period-end Balance (RMB) | | :--- | :--- | :--- | :--- | | Other | 28,871,793.32 | 16,800,000.00 | 11,075,644.01 | | Trust Products | 2,350,284.27 | 0.00 | 2,350,284.27 | | Private Equity Funds | 57,731,807.71 | 9,689,834.21 | 48,041,973.50 | | Total | 88,953,885.30 | 26,489,834.21 | 61,467,901.78 | (VI) Analysis of Major Holding and Participating Companies Major subsidiaries Hainan Lingkang Pharmaceutical and Zhejiang Lingkang Pharmaceutical reported revenues of RMB 39.27 million and RMB 108.77 million respectively, both incurring losses, while associate Zhejiang Hemukang Pharmaceutical Technology Co, Ltd recorded a profit of RMB 12.96 million Major Subsidiaries and Associates Financial Performance (Jan-Jun 2025) | Company Name | Company Type | Main Business | Registered Capital (RMB 10,000) | Total Assets (RMB 10,000) | Net Assets (RMB 10,000) | Operating Revenue (RMB 10,000) | Operating Profit (RMB 10,000) | Net Profit (RMB 10,000) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Hainan Lingkang Pharmaceutical Co, Ltd | Subsidiary | R&D, production, and sales of chemical prescription drugs | 20,000 | 76,322.11 | 51,224.94 | 3,927.41 | -619.20 | -632.34 | | Zhejiang Lingkang Pharmaceutical Co, Ltd | Subsidiary | Sales of chemical prescription drugs | 10,000 | 27,068.81 | 18,166.75 | 10,876.94 | -689.45 | -666.20 | | Tibet Huaxin Pharmaceutical Co, Ltd | Subsidiary | Pharmaceutical distribution, hospital delivery, and sales | 1,000 | 1,262.77 | 530.70 | 1,851.43 | 0.28 | -0.72 | | Tibet Xingzhan Marketing Co, Ltd | Subsidiary | Market promotion services | 1,000 | 769.82 | -1,245.57 | 0 | -115.79 | -115.79 | | Hainan Provincial Cancer Hospital Chengmei International Medical Center Co, Ltd | Associate | Medical services | 20,000 | 70,383.08 | -15,474.39 | 0 | -2,654.23 | -2,654.26 | | Zhejiang Hemukang Pharmaceutical Technology Co, Ltd | Associate | Research and experimental development | 2,000 | 11,427.22 | 7,409.27 | 3,594.49 | 1,152.92 | 1,295.89 | V. Other Disclosure Matters The company faces multiple risks, including market competition, pharmaceutical policy changes, new product development failures, drug quality control, environmental protection, and management challenges, which could significantly impact its performance (I) Potential Risks The company faces risks from market competition (e.g., centralized procurement failures), evolving pharmaceutical policies, high-risk new product development, stringent drug quality control, increasing environmental protection costs, and management challenges - Risk of revenue fluctuations due to market competition: If the company's products fail in centralized procurement bidding or winning prices significantly decrease, sales and revenue will be affected[54] - Risk of pharmaceutical policy changes: Adjustments in national medical reform policies pose uncertain impacts on the company's operations[54] - Risk of new product development and promotion: R&D cycles for new pharmaceutical products are long, investments are large, failure rates are high, and there are risks regarding rapid market adoption after launch[54] - Drug quality control risk: Negligence in quality management or improper operations could lead to medical accidents, compensation, reputational damage, affected sales, or even penalties and recalls[55] - Environmental protection risk: Rising national environmental standards may increase operating costs, and non-compliance with pollutant emission standards could result in penalties or production halts[56][57] - Management risk: Business development increases management complexity, and if management and technical personnel cannot keep up with development requirements, operational efficiency may decrease, affecting profit targets[57] Section IV Corporate Governance, Environment and Society This section covers changes in the company's governance structure, profit distribution plans, environmental information disclosure, and efforts in poverty alleviation and rural revitalization I. Changes in Directors, Supervisors, and Senior Management Mr. Li Shuangxi, the company's Deputy General Manager, resigned due to reaching the statutory retirement age and no longer holds any positions within the company - Deputy General Manager Mr Li Shuangxi resigned due to reaching the statutory retirement age[60] II. Profit Distribution or Capital Reserve Conversion Plan The company will not implement any profit distribution or capital reserve conversion into share capital for the semi-annual period - The company will not distribute profits or convert capital reserves into share capital for the semi-annual period[61] IV. Environmental Information of Listed Companies and Their Major Subsidiaries Included in the List of Enterprises Required to Disclose Environmental Information by Law One subsidiary, Hainan Lingkang Pharmaceutical Co, Ltd, is on the list of enterprises required to disclose environmental information by law, with a public inquiry index provided - Number of enterprises included in the list of environmental information disclosure: 1[62] - Enterprise Name: Hainan Lingkang Pharmaceutical Co, Ltd[62] - Inquiry index for environmental information disclosure report: https://hnsthb.hainan.gov.cn/yfpl//gkwz/jcym[62](index=62&type=chunk) V. Specific Progress in Consolidating and Expanding Poverty Alleviation Achievements, Rural Revitalization, etc. The company continues to provide training and employment for Tibetan employees and has invested over RMB 4 million in a white Ganoderma lucidum industry rural revitalization project, establishing 50 smart container mushroom houses - The company continuously provides training services to Tibetan employees to enhance their work skills[63] - The company and its subsidiaries help address employment and development issues for poverty-stricken individuals in their localities[63] - Invested over RMB 4 million in the construction of 50 smart container mushroom houses in Jilin Village, Zhatang Town, which have been completed and put into production, assisting local farmers and herders with employment and income generation[63] Section V Significant Matters This section details the fulfillment of commitments, significant litigation, related party transactions, major contracts, and the progress of raised funds utilization I. Fulfillment of Commitments The company, its controlling shareholder, and actual controller have timely and strictly fulfilled all commitments regarding profit distribution, resolution of horizontal competition, and dilution of immediate returns from convertible bonds - The company commits to annual cash dividends of no less than 20% of the distributable profit for the year[65] - The controlling shareholder and actual controller commit not to engage in or participate in businesses or activities that are the same as or similar to the company's main business, resolving horizontal competition[65][66] - The controlling shareholder, actual controller, directors, supervisors, and senior management commit to diligently implement the company's return-filling measures, not to overstep authority in interfering with company operations, and not to infringe upon company interests[66][67][68][69] - All commitments were "Yes" (timely and strictly fulfilled)[65] VII. Significant Litigation and Arbitration Matters The company had no significant litigation or arbitration matters during the reporting period - There were no significant litigation or arbitration matters for the company in this reporting period[71] X. Significant Related Party Transactions During the reporting period, the company engaged in related party transactions related to daily operations, such as its wholly-owned subsidiary Zhejiang Lingkang leasing office space from the actual controller, which was previously disclosed - Wholly-owned subsidiary Zhejiang Lingkang leased office space from the actual controller Ms Tao Lingping, which was disclosed in a temporary announcement with no subsequent progress or changes in implementation[71] XI. Significant Contracts and Their Fulfillment The company and its subsidiaries are fulfilling a construction engineering contract worth RMB 150 million and have secured a RMB 100 million comprehensive credit line from Everbright Bank, collateralized by land use rights and factory buildings - The company and its subsidiaries are fulfilling a construction engineering contract, with Lingkang Pharmaceutical as the client and Jinpan Group Co, Ltd as the contractor, for a contract amount of RMB 150 million[76] - The company and its subsidiaries obtained a RMB 100 million comprehensive credit line from Everbright Bank Haikou Branch, valid from January 26, 2024, to January 25, 2027[77] - The company provided a RMB 100 million joint and several liability guarantee for Lingkang Pharmaceutical[78] - Lingkang Pharmaceutical provided a RMB 100 million land use right and factory building mortgage guarantee for itself[78] XII. Explanation of Progress in Use of Raised Funds The initial public offering (IPO) raised funds are almost fully utilized at 99.91% completion, while convertible bond funds are at 13.78% completion, with the "Hainan Lingkang Pharmaceutical Mei'an Production Base Project (Phase I)" terminated in May 2024 (I) Overall Use of Raised Funds The net proceeds from the initial public offering (IPO) of RMB 702.95 million are 99.91% utilized, while the net proceeds from convertible bonds of RMB 517.78 million are 13.78% utilized Overall Use of Raised Funds (As of the End of the Reporting Period) | Source of Raised Funds | Net Amount of Raised Funds (RMB 10,000) | Total Committed Investment of Raised Funds (RMB 10,000) | Cumulative Investment of Raised Funds as of Period-end (RMB 10,000) | Cumulative Investment Progress (%) | | :--- | :--- | :--- | :--- | :--- | | Initial Public Offering | 70,294.97 | 70,294.97 | 70,229.56 | 99.91 | | Issuance of Convertible Bonds | 51,778.16 | 51,778.16 | 7,133.52 | 13.78 | | Total | 122,073.13 | 122,073.13 | 77,363.08 | / | (II) Details of Raised Fund Investment Projects IPO projects, including lyophilized powder injection, powder injection, logistics center, marketing network, and ERP system, are completed or terminated, with remaining funds used for working capital, while the convertible bond project "Hainan Lingkang Pharmaceutical Mei'an Production Base Project (Phase I)" has been terminated - The lyophilized powder injection production line project and powder injection production line project were terminated in December 2017[84] - The R&D center construction project was terminated, and the pharmaceutical logistics center project, marketing network construction project, and ERP system construction project have been completed, with remaining raised funds of RMB 81.49 million permanently used to supplement working capital[85] - The convertible corporate bond investment project "Hainan Lingkang Pharmaceutical Mei'an Production Base Project (Phase I)" was terminated in May 2024[86] (III) Changes or Termination of Raised Fund Investment Projects During the Reporting Period During the reporting period, the company terminated the "Hainan Lingkang Pharmaceutical Mei'an Production Base Project (Phase I)," with remaining raised funds to be held in a special account pending further deliberation and disclosure - The "Hainan Lingkang Pharmaceutical Mei'an Production Base Project (Phase I)" was canceled on May 17, 2024[87] - The termination reason was the company's "Announcement on the Termination of Convertible Corporate Bond Raised Fund Investment Projects" disclosed on May 17, 2024[87] - The remaining raised funds will continue to be held in the special fund account, and their subsequent use will follow relevant procedures[87] (IV) Other Circumstances Regarding the Use of Raised Funds During the Reporting Period On June 17, 2025, the company's board resolved to use idle raised funds not exceeding RMB 400 million to temporarily supplement working capital for a period of up to 12 months - The company on June 17, 2025, resolved to use idle raised funds not exceeding RMB 400 million to temporarily supplement working capital[88] - The usage period is no more than 12 months from the date of board approval[88] Section VI Share Changes and Shareholder Information This section details changes in the company's share capital due to convertible bond conversions and provides an overview of its shareholder structure, including major shareholders and their relationships I. Share Capital Changes During the reporting period, the company's total share capital increased by 750 shares due to convertible bond conversions, changing from 721,244,005 shares to 721,244,755 shares Share Capital Change Table | Share Class | Quantity Before Change (shares) | Increase/Decrease in This Change (shares) | Quantity After Change (shares) | | :--- | :--- | :--- | :--- | | Listed Tradable Shares | 721,244,005 | 750 | 721,244,755 | | RMB Ordinary Shares | 721,244,005 | 750 | 721,244,755 | | Total Shares | 721,244,005 | 750 | 721,244,755 | - From January 1, 2025, to June 30, 2025, a cumulative total of RMB 6,000 of Lingkang Convertible Bonds were converted into 750 A-shares of the company[93] - The company's total share capital changed from 721,244,005 shares to 721,244,755 shares[93] II. Shareholder Information As of the end of the reporting period, the company had 19,013 ordinary shareholders, with Lingkang Holding Group Co, Ltd holding 47.09% of shares, some of which are pledged, and the actual controller Tao Lingping is related to other major shareholders - Total number of ordinary shareholders as of the end of the reporting period: 19,013[95] Top Ten Shareholders as of the End of the Reporting Period | Shareholder Name | Period-end Shareholding (shares) | Percentage (%) | Share Status | Quantity (shares) | Shareholder Nature | | :--- | :--- | :--- | :--- | :--- | :--- | | Lingkang Holding Group Co, Ltd | 339,652,800 | 47.09 | Pledged | 49,659,600 | Domestic Non-State-Owned Legal Person | | Tao Lingping | 48,157,200 | 6.68 | Unpledged | | Domestic Natural Person | | Wang Wennan | 21,058,592 | 2.92 | Unpledged | | Domestic Natural Person | | Tao Xiaogang | 16,128,840 | 2.24 | Unpledged | | Domestic Natural Person | | Yang Junmin | 5,484,500 | 0.76 | Unpledged | | Domestic Natural Person | | Yang Zhongyi | 4,671,900 | 0.65 | Unpledged | | Domestic Natural Person | | Zhu Chong | 4,588,600 | 0.64 | Unpledged | | Domestic Natural Person | | Cui Fenghua | 4,151,065 | 0.58 | Unpledged | | Domestic Natural Person | | Chai Yuanjun | 3,726,783 | 0.52 | Unpledged | | Domestic Natural Person | | Tao Linggang | 3,469,991 | 0.48 | Unpledged | | Domestic Natural Person | - Tao Lingping, Tao Linggang, and Tao Xiaogang are siblings, and Tao Lingping holds 100% of Lingkang Holding Group Co, Ltd[96] Section VII Bond-Related Information This section provides details on the company's convertible corporate bonds, including issuance, conversion status, and credit ratings II. Convertible Corporate Bonds The company issued RMB 525 million in "Lingkang Convertible Bonds" on December 1, 2020, convertible since June 7, 2021, with 750 shares converted to date, and the conversion price adjusted to RMB 8.00/share - The company publicly issued RMB 525 million in convertible corporate bonds, "Lingkang Convertible Bonds" (bond code "113610"), on December 1, 2020[99] - "Lingkang Convertible Bonds" became convertible into the company's A-shares from June 7, 2021[99] - Number of convertible bondholders at period-end: 3,935[100] - Guarantor of the company's convertible bonds: Lingkang Holding Group Co, Ltd[100] Convertible Bond Changes During the Reporting Period | Convertible Corporate Bond Name | Amount Before Change (RMB) | Converted (RMB) | Redeemed (RMB) | Put Back (RMB) | Amount After Change (RMB) | | :--- | :--- | :--- | :--- | :--- | :--- | | Lingkang Convertible Bonds | 252,984,000 | 6,000 | 0 | 1,000 | 252,977,000 | - Amount converted during the reporting period: RMB 6,000, number of shares converted: 750 shares[103] - Cumulative number of shares converted as a percentage of total shares issued before conversion: 0.0001%[103] - Unconverted amount: RMB 252,977,000, percentage of unconverted convertible bonds to total issued amount: 48.1861%[103] History of Conversion Price Adjustments | Conversion Price Adjustment Date | Adjusted Conversion Price (RMB) | Disclosure Date | Explanation of Conversion Price Adjustment | | :--- | :--- | :--- | :--- | | May 31, 2021 | 8.61 | May 25, 2021 | The company implemented its 2020 equity distribution, distributing a cash dividend of RMB 2.00 per 10 shares, adjusting the conversion price from RMB 8.81/share to RMB 8.61/share | | July 5, 2022 | 8.51 | June 29, 2022 | The company implemented its 2021 equity distribution, distributing a cash dividend of RMB 1.00 per 10 shares, adjusting the conversion price from RMB 8.61/share to RMB 8.51/share | | July 16, 2024 | 8.00 | July 15, 2024 | Due to triggering the "Lingkang Convertible Bonds" conversion price adjustment clause, the conversion price was adjusted from RMB 8.51/share to RMB 8.00/share starting July 16, 2024 | - Latest conversion price as of the end of this reporting period: RMB 8.00[105] - The company's long-term credit rating is A-, and its convertible bond credit rating is A-, with a stable outlook[106] Section VIII Financial Report This section presents the company's consolidated and parent company financial statements, including balance sheets, income statements, cash flow statements, and statements of changes in owners' equity, along with detailed notes on accounting policies, taxes, and financial items II. Financial Statements This section provides the company's 2025 semi-annual consolidated and parent company financial statements, including the balance sheet, income statement, cash flow statement, and statement of changes in owners' equity, offering a comprehensive view of its financial position, operating results, and cash flows Consolidated Balance Sheet As of June 30, 2025, the company's consolidated total assets were RMB 1.21 billion, a 3.60% decrease from year-end, with consolidated total liabilities at RMB 476 million, and total owners' equity attributable to the parent company at RMB 734 million Consolidated Balance Sheet Key Data (As of June 30, 2025) | Item | June 30, 2025 (RMB) | December 31, 2024 (RMB) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 1,210,091,479.70 | 1,255,333,587.55 | -3.60 | | Total Current Assets | 572,539,648.01 | 586,610,563.80 | -2.40 | | Total Non-Current Assets | 637,551,831.69 | 668,723,023.75 | -4.66 | | Total Liabilities | 476,018,199.35 | 485,573,776.61 | -1.97 | | Total Current Liabilities | 200,017,956.51 | 219,314,211.55 | -8.80 | | Total Non-Current Liabilities | 276,000,242.84 | 266,259,565.06 | 3.66 | | Total Owners' Equity Attributable to Parent Company | 734,073,280.35 | 769,759,810.94 | -4.64 | Parent Company Balance Sheet As of June 30, 2025, the parent company's total assets were RMB 1.46 billion, a 4.14% decrease from year-end; total liabilities were RMB 693 million, and total owners' equity was RMB 766 million Parent Company Balance Sheet Key Data (As of June 30, 2025) | Item | June 30, 2025 (RMB) | December 31, 2024 (RMB) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 1,458,588,454.48 | 1,521,642,927.05 | -4.14 | | Total Current Assets | 596,661,034.44 | 644,251,492.14 | -7.39 | | Total Non-Current Assets | 861,927,420.04 | 877,391,434.91 | -1.76 | | Total Liabilities | 692,987,132.63 | 736,326,483.47 | -5.89 | | Total Current Liabilities | 424,887,285.37 | 478,335,076.16 | -11.20 | | Total Non-Current Liabilities | 268,099,847.26 | 257,991,407.31 | 3.92 | | Total Owners' Equity | 765,601,321.85 | 785,316,443.58 | -2.52 | Consolidated Income Statement For the first half of 2025, the company's consolidated total operating revenue was RMB 172 million, a 21.30% increase year-on-year, while total profit was -RMB 35.97 million, narrowing losses by 12.68%, and net profit attributable to parent company shareholders was -RMB 35.73 million, narrowing losses by 11.55% Consolidated Income Statement Key Data (Jan-Jun 2025) | Item | 2025 Semi-Annual (RMB) | 2024 Semi-Annual (RMB) | Change (%) | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 171,607,603.84 | 141,477,918.59 | 21.30 | | Total Operating Costs | 209,257,335.21 | 173,780,539.60 | 20.41 | | Total Profit | -35,966,219.43 | -41,190,447.32 | 12.68 | | Net Profit | -35,733,685.77 | -40,400,188.91 | 11.55 | | Net Profit Attributable to Parent Company Shareholders | -35,733,685.77 | -40,400,188.91 | 11.55 | | Basic Earnings Per Share (RMB/share) | -0.05 | -0.06 | 16.67 | Parent Company Income Statement For the first half of 2025, the parent company's operating revenue was RMB 33.94 million, a 70.34% decrease year-on-year, while net profit was -RMB 19.76 million, narrowing losses by 25.65% Parent Company Income Statement Key Data (Jan-Jun 2025) | Item | 2025 Semi-Annual (RMB) | 2024 Semi-Annual (RMB) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 33,943,396.66 | 114,448,965.49 | -70.34 | | Operating Cost | 21,707,238.02 | 71,023,840.05 | -69.44 | | Total Profit | -19,762,276.91 | -26,579,223.15 | 25.65 | | Net Profit | -19,762,276.91 | -26,579,223.15 | 25.65 | Consolidated Cash Flow Statement For the first half of 2025, consolidated net cash flow from operating activities was -RMB 38.96 million, a slight decrease of 1.98%, while net cash flow from investing activities was RMB 27.50 million, a significant decrease of 78.86%, and net cash flow from financing activities was RMB 2.01 million, a substantial increase of 102.22% Consolidated Cash Flow Statement Key Data (Jan-Jun 2025) | Item | 2025 Semi-Annual (RMB) | 2024 Semi-Annual (RMB) | Change (%) | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -38,959,908.90 | -38,201,983.95 | -1.98 | | Net Cash Flow from Investing Activities | 27,501,952.40 | 130,099,645.54 | -78.86 | | Net Cash Flow from Financing Activities | 2,007,396.14 | -90,371,251.66 | 102.22 | | Net Increase in Cash and Cash Equivalents | -9,450,560.36 | 1,526,409.93 | -718.00 | Parent Company Cash Flow Statement For the first half of 2025, parent company net cash flow from operating activities was -RMB 9.75 million, a 141.57% decrease, net cash flow from investing activities was -RMB 18.38 million, a 120.88% decrease, and net cash flow from financing activities was RMB 2.01 million, a 102.23% increase Parent Company Cash Flow Statement Key Data (Jan-Jun 2025) | Item | 2025 Semi-Annual (RMB) | 2024 Semi-Annual (RMB) | Change (%) | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -9,746,049.48 | 23,443,347.45 | -141.57 | | Net Cash Flow from Investing Activities | -18,384,820.80 | 88,046,905.65 | -120.88 | | Net Cash Flow from Financing Activities | 2,007,396.14 | -89,843,354.08 | 102.23 | | Net Increase in Cash and Cash Equivalents | -26,123,474.14 | 21,646,899.02 | -220.73 | Consolidated Statement of Changes in Owners' Equity As of June 30, 2025, the company's consolidated owners' equity totaled RMB 734 million, a 4.64% decrease from the beginning of the period, primarily due to a negative comprehensive income for the current period - Total owners' equity attributable to the parent company at period-end was RMB 734,073,280.35, a 4.64% decrease from the beginning balance of RMB 769,759,810.94[132] - The change in amount for the current period was primarily influenced by a total comprehensive income of -RMB 35,733,685.77[131] Parent Company Statement of Changes in Owners' Equity As of June 30, 2025, the parent company's owners' equity totaled RMB 766 million, a 2.52% decrease from the beginning of the period, primarily due to a negative comprehensive income for the current period - Total owners' equity at period-end was RMB 765,601,321.85, a 2.52% decrease from the beginning balance of RMB 785,316,443.58[136] - The change in amount for the current period was primarily influenced by a total comprehensive income of -RMB 19,762,276.91[135] III. Company Basic Information Lingkang Pharmaceutical Group Co, Ltd was established in October 2012, relocated to Shannan City, Tibet, in December 2013, and primarily engages in the R&D, production, and sales of chemical prescription drugs, including anti-infectives, parenteral nutrition, digestive, and cardiovascular medications - The company was established through overall restructuring on October 16, 2012, and relocated to Shannan City, Tibet, in December 2013[138] - Main business is the R&D, production, and sales of chemical prescription drugs, primarily including anti-infective, parenteral nutrition, digestive, and cardiovascular drugs[138] - The company's shares were listed and traded on the Shanghai Stock Exchange on May 28, 2015[138] IV. Basis for Preparation of Financial Statements The group's financial statements are prepared on a going concern basis, adhering to the Accounting Standards for Business Enterprises and relevant CSRC regulations, using the accrual basis of accounting and historical cost measurement - Financial statements are prepared on a going concern basis, in accordance with the Accounting Standards for Business Enterprises and relevant CSRC regulations[139] - Accounting is based on the accrual method, and except for certain financial instruments, all items are measured at historical cost[139] - There are no matters or circumstances that would cause significant doubt about the group's ability to continue as a going concern for the 12 months from the end of the reporting period[140] V. Significant Accounting Policies and Estimates This section details the company's specific accounting policies and estimates for financial instruments, fixed asset depreciation, and revenue recognition, affirming compliance with accounting standards, with the reporting period from January 1 to June 30, 2025 - The company has formulated specific accounting policies and estimates for bad debt provisions for receivables, fixed asset depreciation, and revenue recognition, based on its production and operating characteristics[141] - The financial statements prepared by the company comply with the requirements of the Accounting Standards for Business Enterprises, truthfully and completely reflecting its financial position, operating results, and cash flows[142] - The reporting period is from January 1, 2025, to June 30, 2025[143] - The company defines a business cycle as 12 months and uses it as the standard for classifying assets and liabilities as current or non-current[144] - Detailed explanations are provided for the accounting treatment methods for business combinations under common control and non-common control[147][149][150] - Detailed explanations are provided for the principles and methods of determining the scope of consolidated financial statements and their preparation[152][153][154][156] - Detailed explanations are provided for the classification, recognition, measurement, transfer, and derecognition methods of financial instruments, as well as the recognition of impairment provisions for financial assets and the determination of credit losses[165][166][167][168][170][171][173][174][175][176][177] - Detailed explanations are provided for the classification, valuation methods, recognition of net realizable value, and provision for inventory write-downs[180][181] - Detailed explanations are provided for the recognition criteria for fixed assets, depreciation methods, and capitalization standards for construction in progress[200][201][202] - Detailed explanations are provided for the useful life of intangible assets, amortization methods, and capitalization conditions for R&D expenditures[206][207][208] - Detailed explanations are provided for the accounting policies used for revenue recognition and measurement, with the main sales of pharmaceuticals considered as performance obligations satisfied at a point in time[224][225][226] VI. Taxation This section discloses the company's main tax categories and rates, including VAT, urban maintenance and construction tax, and corporate income tax. Company and some subsidiaries enjoy tax incentives, such as reduced corporate income tax rates in Tibet and for high-tech enterprises, and VAT exemption for technology transfer Major Tax Categories and Rates | Tax Category | Tax Basis | Tax Rate | | :--- | :--- | :--- | | Value-Added Tax (VAT) | Revenue from sales of goods and taxable services | 13%, 6% | | Urban Maintenance and Construction Tax | Actual amount of turnover tax paid | 7% | | Corporate Income Tax | Taxable income | 9%, 15%, 25% | | Education Surcharge | Actual amount of turnover tax paid | 3% | | Local Education Surcharge | Actual amount of turnover tax paid | 2% | - The company pays corporate income tax at a 9% rate, while Lingkang Pharmaceutical Co, Huaxin Pharmaceutical Co, and Tibetan Medicine Research Institute Co pay at a 15% rate[241][242][243] - Yongtian Research Institute Co's income from technology transfer, technology development, and related technical consulting and services is exempt from VAT[243] VII. Notes to Consolidated Financial Statement Items This section provides detailed notes for various consolidated financial statement items, including cash, financial assets, receivables, inventories, fixed assets, construction in progress, intangible assets, payables, equity, revenues, expenses, and cash flow supplementary information - Cash and bank balances at period-end were RMB 237,818,860.16, including restricted cash of RMB 7,815.38[246][244] - Accounts receivable at period-end had a book balance of RMB 313,412,031.44, with a bad debt provision of RMB 52,770,315.55[249][250] - Inventories at period-end had a book value of RMB 48,813,538.06, with an inventory impairment provision of RMB 5,078,189.85[274][276] - Fixed assets at period-end had a book value of RMB 223,357,667.90, of which buildings and structures accounted for RMB 195,209,641.85[291] - Construction in progress at period-end had a book value of RMB 228,223,631.76, primarily for the Mei'an Production Base Construction Project[297] - Bonds payable at period-end were RMB 268,099,847.26, primarily convertible corporate bonds[341] - Operating revenue was RMB 171,607,603.84, and operating cost was RMB 140,924,941.42[363] - Selling expenses were RMB 15,787,866.50, administrative expenses were RMB 35,884,284.09, R&D expenses were RMB 5,029,204.50, and financial expenses were RMB 10,124,327.25[367][368][369] VIII. Research and Development Expenses Total R&D expenses for the reporting period amounted to RMB 5.03 million, all expensed, representing a 52.73% decrease from the prior year, mainly due to reduced entrusted development fees R&D Expenses by Nature of Expense | Item | Amount for Current Period (RMB) | Amount for Prior Period (RMB) | | :--- | :--- | :--- | | R&D Personnel Compensation | 1,397,754.15 | 1,748,077.58 | | R&D Material Consumption | 608,247.92 | 972,414.75 | | Depreciation and Amortization | 124,139.93 | 231,765.89 | | Entrusted Development Fees | 2,697,169.81 | 7,021,181.32 | | Other | 201,892.69 | 665,944.22 | | Total | 5,029,204.50 | 10,639,383.76 | | Of which: Expensed R&D Expenditures | 5,029,204.50 | 10,639,383.76 | - All R&D expenditures for the current period were expensed[398] IX. Changes in Consolidation Scope During the reporting period, the company did not experience any business combinations under non-common control, common control, reverse acquisitions, or disposals of subsidiaries leading to loss of control - There were no business combinations under non-common control, common control, or reverse acquisitions during the reporting period[399] - There were no transactions or events resulting in the loss of control over subsidiaries in the current period[399] X. Interests in Other Entities This section discloses the company's equity interests in subsidiaries, joint ventures, and associates, including 9 wholly-owned subsidiaries primarily engaged in pharmaceutical manufacturing, commercial activities, and R&D, and investments in two associates 1. Interests in Subsidiaries The company holds interests in 9 wholly-owned subsidiaries, including Hainan Lingkang Pharmaceutical, Zhejiang Lingkang Pharmaceutical, and Tibet Huaxin Pharmaceutical, primarily involved in pharmaceutical manufacturing, commercial operations, and drug R&D Composition of the Enterprise Group | Subsidiary Name | Main Operating Location | Registered Capital (RMB 10,000) | Business Nature | Shareholding Ratio (%) (Direct) | Acquisition Method | | :--- | :--- | :--- | :--- | :--- | :--- | | Lingkang Pharmaceutical Co | Hainan | 20,000 | Manufacturing | 100 | Establishment | | Zhejiang Lingkang Co | Zhejiang | 10,000 | Commercial | 100 | Business Combination under Non-Common Control | | Huaxin Pharmaceutical Co | Tibet | 1,000 | Commercial | 100 | Business Combination under Non-Common Control | | Meida Pharmaceutical Co | Hainan | 2,000 | Manufacturing | 100 | Business Combination under Non-Common Control | | Meilan Shike Pharmaceutical Co | Hainan | 1,000 | Manufacturing | 100 | Business Combination under Non-Common Control | | Yongtian Research Institute Co | Hainan | 500 | Drug R&D | 100 | Business Combination under Non-Common Control | | Shandong Lingkang Co | Shandong | 1,000 | Drug R&D | 100 | Establishment | | Tibetan Medicine Research Institute Co | Tibet | 600 | Drug R&D | 100 | Establishment | | Xingzhan Marketing Co | Tibet | 1,000 | Commercial | 100 | Establishment | 3. Interests in Joint Ventures or Associates The company holds a 25% stake in Hainan Provincial Cancer Hospital Chengmei International Medical Center Co, Ltd and a 20% stake in Zhejiang Hemukang Pharmaceutical Technology Co, Ltd, both accounted for using the equity method Significant Joint Ventures or Associates | Joint Venture or Associate Name | Main Operating Location | Registered Location | Business Nature | Shareholding Ratio (%) (Direct) | Accounting Method | | :--- | :--- | :--- | :--- | :--- | :--- | | Hainan Provincial Cancer Hospital Chengmei International Medical Center Co, Ltd | Hainan | Hainan | Medical Services | 25 | Equity Method | | Zhejiang Hemukang Pharmaceutical Technology Co, Ltd | Zhejiang | Zhejiang | Research and Experimental Development | 20 | Equity Method | Key Financial Information of Significant Associates (Period-end Balance/Current Period Amount) | Item | Hainan Provincial Cancer Hospital Chengmei International Medical Center Co, Ltd | Zhejiang Hemukang Pharmaceutical Technology Co, Ltd | | :--- | :--- | :--- | | Total Assets (RMB) | 703,830,823.25 | 114,272,239.29 | | Total Liabilities (RMB) | 858,574,685.28 | 40,179,570.59 | | Owners' Equity Attributable to Parent Company (RMB) | -154,743,862.03 | 74,092,668.70 | | Net Profit (RMB) | -26,542,564.40 | 12,958,858.82 | XI. Government Grants During the reporting period, government grants recognized in profit or loss totaled RMB 10.31 million, comprising both asset-related and income-related grants Liability Items Involving Government Grants | Financial Statement Item | Beginning Balance (RMB) | New Grants in Current Period (RMB) | Transferred to Other Income in Current Period (RMB) | Period-end Balance (RMB) | Asset/Income Related | | :--- | :--- | :--- | :--- | :--- | :--- | | Deferred Income | 1,877,587.17 | 0 | 135,228.51 | 1,742,358.66 | Asset-related | | Deferred Income | 533,096.33 | 0 | 0 | 533,096.33 | Income-related | | Total | 2,410,683.50 | 0 | 135,228.51 | 2,275,454.99 | / | Government Grants Recognized in Profit or Loss for the Current Period | Type | Amount for Current Period (RMB) | Amount for Prior Period (RMB) | | :--- | :--- | :--- | | Asset-related | 135,228.51 | 253,540.15 | | Income-related | 10,052,442.29 | 13,211,939.00 | | VAT input tax deduction | 122,158.20 | 490,643.74 | | Total | 10,309,829.00 | 13,956,122.89 | XII. Risks Related to Financial Instruments The company aims to balance risk and return, managing market risk (insignificant exchange rate risk, interest rate risk through fixed/floating rate combinations), credit risk (from cash and receivables, managed by credit assessment and monitoring), and liquidity risk (through diverse financing and credit lines) - The company's risk management objective is to achieve an appropriate balance between risk and return, minimizing negative impacts[406] - Market Risk: Exchange rate risk is not significant; interest rate risk is managed through an appropriate combination of fixed and floating rate financial instruments[407][408][409] - Credit Risk: Primarily arises from cash and bank balances and receivables, managed through credit assessment, monitoring of receivable balances, and risk diversification[410][411][416] - Liquidity Risk: Managed by comprehensively utilizing various financing methods such as bill settlement and bank loans, and adopting a suitable combination of long-term and short-term financing to optimize the financing structure[419] - As of June 30, 2025, 46.81% of the company's accounts receivable originated from the top five customers, indicating no significant credit concentration risk[417] XIII. Disclosure of Fair Value This section discloses the fair value of assets and liabilities measured at fair value at period-end, primarily including financial assets held for trading (equity instrument investments, wealth management products) and other equity instrument investments (unlisted equity investments), detailing valuation methods Period-end Fair Value of Assets and Liabilities Measured at Fair Value | Item | Level 1 Fair Value Measurement (RMB) | Level 2 Fair Value Measurement (RMB) | Level 3 Fair Value Measurement (RMB) | Total (RMB) | | :--- | :--- | :--- | :--- | :--- | | Financial Assets Held for Trading | 11,067,895.28 | 2,358,033.00 | 0 | 13,425,928.28 | | Of which: Equity Instrument Investments | 11,067,895.28 | 0 | 0 | 11,067,895.28 | | Of which: