康美药业(600518) - 2025 Q2 - 季度财报

Item I Definitions This section defines common terms, ensuring clarity on professional terminology and company-specific designations Definitions of Common Terms This chapter defines common terms, ensuring clear understanding of professional terminology and company-specific designations Common Term Definitions | Common Term | Definition | | :--- | :--- | | China Securities Regulatory Commission | China Securities Regulatory Commission | | Guangdong Regulatory Bureau | Guangdong Regulatory Bureau of China Securities Regulatory Commission | | Shanghai Stock Exchange | Shanghai Stock Exchange | | The Company, Company, or Kangmei Pharmaceutical | Kangmei Pharmaceutical Co., Ltd | | Kangmei Industrial | Kangmei Industrial Investment Holding Co., Ltd | | Reporting Period | January-June 2025 | | Yuan, Ten Thousand Yuan, Hundred Million Yuan | RMB Yuan, Ten Thousand Yuan, Hundred Million Yuan | | Jieyang Intermediate People's Court | Jieyang Intermediate People's Court of Guangdong Province | | Guangzhou Intermediate People's Court | Guangzhou Intermediate People's Court of Guangdong Province | | Shennongshi | Guangdong Shennongshi Enterprise Management Partnership (Limited Partnership) | | Xiangying Company | Foshan Xiangying Furniture Manufacturing Co., Ltd | | Kangmei Chinese Herbal Medicine City | Kangmei (BoZhou) Huatuo International Chinese Herbal Medicine City Co., Ltd | | New World Commerce | Bozhou New World Commerce Co., Ltd | | Century Guoyao Chinese Herbal Medicine | Kangmei (BoZhou) Century Guoyao Chinese Herbal Medicine Co., Ltd | | Puning Chinese Herbal Medicine City | Kangmei Chinese Herbal Medicine City (Puning) Co., Ltd | | ZhongShen ZhongHuan | ZhongShen ZhongHuan Certified Public Accountants (Special General Partnership) | | GPHL | Guangzhou Pharmaceutical Group Co., Ltd | | Chengdu Kangmei | Chengdu Kangmei Pharmaceutical Production Co., Ltd | | Guangzhou Asset | Guangzhou Asset Management Co., Ltd | Item II Company Profile and Key Financial Indicators This section provides an overview of the company's basic information and key financial performance for the reporting period I. Company Information This section outlines Kangmei Pharmaceutical's basic registration details, including its full Chinese and English names, abbreviations, and legal representative Company Basic Information | Indicator | Content | | :--- | :--- | | Company's Chinese Name | 康美药业股份有限公司 | | Company's Chinese Abbreviation | 康美药业 | | Company's English Name | KangmeiPharmaceuticalCo.,Ltd | | Company's English Abbreviation | KMYY | | Company's Legal Representative | Lai Zhijian | II. Contact Person and Information This section provides detailed contact information for the company's Board Secretary and Securities Affairs Representative for investor and stakeholder communication Contact Information | Position | Board Secretary | Securities Affairs Representative | | :--- | :--- | :--- | | Name | Zhou Yunfeng | Li Min | | Contact Address | Taike Road, Xiameilin, Futian District, Shenzhen | Taike Road, Xiameilin, Futian District, Shenzhen | | Phone | 0755-33187777 | 0755-33187777 | | Fax | 0755-86275777 | 0755-86275777 | | Email | kangmei@kangmei.com.cn | kangmei@kangmei.com.cn | III. Brief Introduction to Changes in Basic Information During the reporting period, there were no changes in the company's registered address, office address, website, or email address - During the reporting period, the company's registered address, office address, company website, and email address did not change[15][16] IV. Brief Introduction to Changes in Information Disclosure and Document Custody Locations During the reporting period, there were no changes in the company's designated information disclosure newspaper, website for semi-annual reports, or report custody locations - During the reporting period, the company's information disclosure newspaper, website address, and report custody locations did not change[17] V. Brief Introduction to Company Shares This section lists the basic information of the company's shares, including share type, listing exchange, stock abbreviation, and stock code Company Share Overview | Share Type | Listing Exchange | Stock Abbreviation | Stock Code | Former Stock Abbreviation | | :--- | :--- | :--- | :--- | :--- | | A-share | Shanghai Stock Exchange | Kangmei Pharmaceutical | 600518 | - | VII. Company's 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 4.17% increase in operating revenue and a 7.24% increase in net profit attributable to shareholders, despite negative net cash flow from operating activities Key Accounting Data for H1 2025 | Key Accounting Data | Current Reporting Period (Jan-Jun) | Prior Year Period | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 2,577,397,097.25 | 2,474,338,981.11 | 4.17 | | Total Profit | 28,521,909.88 | 24,817,299.82 | 14.93 | | Net Profit Attributable to Shareholders of Listed Company | 16,901,389.86 | 15,760,325.84 | 7.24 | | Net Profit Attributable to Shareholders of Listed Company After Deducting Non-Recurring Gains and Losses | -3,618,595.24 | -108,134,615.87 | Not Applicable | | Net Cash Flow from Operating Activities | -82,116,847.68 | -318,860,533.80 | Not Applicable | | End of Current Reporting Period | | | | | Net Assets Attributable to Shareholders of Listed Company | 7,190,565,290.49 | 7,174,204,458.89 | 0.23 | | Total Assets | 13,644,738,870.61 | 13,797,690,315.26 | -1.11 | Key Financial Indicators for H1 2025 | Key Financial Indicators | Current Reporting Period (Jan-Jun) | Prior Year Period | YoY Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (Yuan/share) | 0.001 | 0.001 | 0.00 | | Diluted Earnings Per Share (Yuan/share) | 0.001 | 0.001 | 0.00 | | Basic Earnings Per Share After Deducting Non-Recurring Gains and Losses (Yuan/share) | -0.001 | -0.008 | Not Applicable | | Weighted Average Return on Net Assets (%) | 0.24 | 0.22 | Increased by 0.02 percentage points | | Weighted Average Return on Net Assets After Deducting Non-Recurring Gains and Losses (%) | -0.05 | -1.53 | Increased by 1.48 percentage points | IX. Non-Recurring Gains and Losses Items and Amounts This section details the company's non-recurring gains and losses for the first half of 2025, totaling 20,519,985.10 Yuan, primarily from the reversal of impairment provisions for receivables and debt restructuring gains H1 2025 Non-Recurring Gains and Losses Items and Amounts | Non-Recurring Gains and Losses Item | Amount (Yuan) | | :--- | :--- | | Gains and Losses from Disposal of Non-Current Assets | -400,491.38 | | Government Subsidies Included in Current Profit and Loss | 1,399,108.89 | | Gains and Losses from Changes in Fair Value | -919.26 | | Reversal of Impairment Provisions for Receivables Subject to Separate Impairment Testing | 16,878,897.72 | | Gains and Losses from Debt Restructuring | 3,769,528.22 | | Gains and Losses from Contingent Events Unrelated to the Company's Normal Business Operations | -214,137.78 | | Other Non-Operating Income and Expenses | -182,134.40 | | Less: Income Tax Impact | 716,496.90 | | Impact on Minority Interests (After Tax) | 13,370.01 | | Total | 20,519,985.10 | Item III Management Discussion and Analysis This section provides management's discussion and analysis of the company's operations, financial performance, and future outlook I. Explanation of the Company's Industry and Main Business Operations During the Reporting Period Kangmei Pharmaceutical, a leading enterprise in the pharmaceutical manufacturing industry, maintained its core business of Chinese herbal medicine production and sales, implementing an integrated whole-industry-chain operation model for traditional Chinese medicine (I) Development of the Pharmaceutical Industry and the Company's Market Position The pharmaceutical industry continues to grow, driven by an aging population and increased health awareness, with Kangmei Pharmaceutical holding a leading position in the integrated operation of the entire Chinese herbal medicine industry chain - The pharmaceutical industry benefits from economic growth, an aging population, and increased health awareness, leading to continuous market expansion[25] - The National Medical Products Administration implemented the "Special Provisions for the Management of Traditional Chinese Medicine Standards," and the General Office of the State Council issued "Opinions on Improving the Quality of Traditional Chinese Medicine and Promoting the High-Quality Development of the Traditional Chinese Medicine Industry," driving high-quality development of the traditional Chinese medicine industry[25][26] - Kangmei Pharmaceutical, as a leading enterprise in the traditional Chinese medicine industry, has built an integrated whole-industry-chain operation system covering Chinese herbal medicine cultivation, R&D, production, sales, and medical services, holding a leading market position in Chinese herbal medicine business[27] (II) Company's Main Business The company's core business is the production and sale of Chinese herbal medicine, establishing an integrated whole-industry-chain operation model covering upstream cultivation, midstream market operations, and downstream marketing networks - The company's core business is the production and sale of Chinese herbal medicine, implementing an integrated whole-industry-chain operation model for traditional Chinese medicine[29] - The business system covers upstream (cultivation of authentic Chinese herbal medicines, fresh processing at origin, and resource integration), midstream (operation of specialized Chinese herbal medicine markets, production and sales of Chinese herbal medicine, proprietary Chinese medicines, health foods, chemical drugs, and medical devices, and a modern pharmaceutical logistics system), and downstream (medical institution resources, smart pharmacies, OTC retail, chain pharmacies, direct sales, pharmaceutical e-commerce, mobile medical care, and other comprehensive multi-level marketing networks)[29] (III) Company's Main Products and Their Uses The company offers a diverse product line including Chinese herbal medicine, proprietary Chinese medicines, chemical drugs, health foods, and food products, with Chinese herbal medicine being a core competitive product - The company's main products include Chinese herbal medicine, proprietary Chinese medicines, chemical drugs, health foods, and food products[31] - Chinese herbal medicine is one of the company's most competitive products, with over 1,000 varieties and more than 20,000 specifications, including 36 national patented products and 13 Guangdong Province famous high-tech products[31] - Key proprietary Chinese medicines include Baoning Banxia Granules (nationally exclusive), Lemai Pills, Xinnaoxin Pills; main chemical drugs include Akafensan, Norfloxacin Capsules; health foods include Xinkaihe Ultra-fine Ginseng Powder Capsules; and food products include Juhuang Tea, Ginseng Slices[31][32] (IV) Company's Business Model The company's business model encompasses procurement, production, and diversified sales channels, including direct hospital sales, smart pharmacies, wholesale, and online/offline retail - Procurement model: Chinese herbal medicines are sourced directly from production areas and through market procurement; pharmaceutical trade and medical devices are managed by budget and planning; raw materials for Western medicine production undergo supplier qualification review and tender procurement[33][34][35] - Production model: Implements a production-to-order planning management model, where the sales department prepares demand plans based on market conditions, and the production department organizes execution according to the plans[35][36] - Sales model: Primarily includes direct hospital sales, smart pharmacies, commercial wholesale, chain pharmacy distribution, terminal sales (online and offline platforms such as Sam's Club, Hema, JD.com, Tmall, Douyin), and direct sales[36][37][38] II. Discussion and Analysis of Operations In the first half of 2025, the company implemented an 'One Body, Two Wings' strategy to address market challenges, achieving progress across five business segments and enhancing brand influence, R&D, and operational efficiency - The company proposed an "One Body, Two Wings" business strategy, with building a strong supply chain system as the "body" and hospital business and terminal consumption as the "two wings," to address centralized procurement of Chinese herbal medicine and intensified market competition[38] - On the supply side, the company achieves cost reduction and efficiency improvement across the entire chain through strategic cooperation with authentic herbal medicine cultivation bases, digital and intelligent transformation of production, and establishment of regional logistics centers or smart pharmacies[39] - In the medical institution channel, the company actively participates in centralized procurement of Chinese herbal medicine and deepens "smart pharmacy" services; in the terminal consumer market, it strengthens C-end product innovation and R&D, and improves the layout of its omni-channel marketing network[39] - During the reporting period, the company's brand influence continued to grow, and scientific research and innovation achieved breakthroughs, with several subsidiaries receiving high-tech enterprise certifications, CMA qualification certifications, and "specialized, refined, unique, and new" small and medium-sized enterprise titles, and new products obtaining national invention patents[40] (I) Development of Five Major Business Segments The company's five major business segments—Chinese Medicine, Medical Care and Wellness, Chinese Herbal Medicine City, Health Products and Food, and Pharmaceutical Commercial—all achieved steady development, driven by strategic initiatives and market expansion 1. Chinese Medicine Segment The Chinese Medicine segment, a core pillar, focuses on Chinese herbal medicine and smart pharmacies, expanding into cultivation and formula granules, serving over 5 million patients in the first half of the year - Chinese herbal medicine is one of the company's core businesses, with eight modern production bases for Chinese herbal medicine and pharmaceuticals, capable of producing over 1,000 varieties and more than 20,000 specifications[41] - The smart pharmacy model deeply integrates internet and IoT technologies, operating centers in Guangzhou, Shenzhen, Beijing, Shanghai, Chengdu, Zhuhai, and other cities, with cumulative cooperation with over 1,200 medical institutions, serving over 5 million patients in the first half of the year[42][43][44] - The formula granule business continues to advance, with 414 registered varieties completed as of June 30, 2025, including 224 national standard varieties and 190 Guangdong provincial standard varieties[45] - Chinese herbal medicine cultivation involves co-built and self-built planting bases across 21 provinces, with self-built bases primarily focused on ginseng cultivation, such as Jilin Ji'an Dadi Ginseng Industry Co., Ltd., with a total transferred area of approximately 51,900 mu[46][47] 2. Medical Care and Wellness Segment The company is building a medical care and wellness platform through hospitals, Chinese medicine clinics, and wellness hotels, focusing on high-quality hospital development and integrated online/offline services - The company builds the Kangmei Pharmaceutical medical care and wellness platform with hospitals, Chinese medicine clinics, and wellness hotels as carriers, promoting synergistic development of wellness and medical institutions[50] - During the reporting period, the company vigorously promoted the optimization of Kangmei Hospital's talent system and the construction of oncology diagnosis and treatment projects, and established three Kangmei Chinese Medicine Clinics in Puning to carry out differentiated management of Chinese herbal medicine and development of medicine-food homology products[50] 3. Chinese Herbal Medicine City Segment The Chinese Herbal Medicine City segment is transforming into a large health and wellness product exhibition center, strengthening resource integration and digital smart park platforms across its national market layout - The company has established and acquired Chinese herbal medicine markets in major national markets, including Anhui Bozhou Chinese Herbal Medicine City, Puning Chinese Herbal Medicine City, Gansu Western Chinese Herbal Medicine City, and Xining Kangmei New City, achieving a national layout of major Chinese herbal medicine markets[51] - The Chinese Herbal Medicine City segment focuses on "specialization, digitalization, industrialization, and internationalization" as its four key initiatives, and actively responds to market changes by building a second main line as a large health and wellness product exhibition center[51][52] - The Chinese Herbal Medicine City digital smart park platform has implemented functions such as property management, enterprise service management, fee management, energy management, customer management, investment promotion and leasing management, and asset management, with plans to expand BI visualization systems and online shop inventory management systems[53][54] 4. Health Products and Food Segment The Health Products and Food segment focuses on the ginseng industry and 'medicine-food homology' market, with 83 products approved and successful entry into mainstream retail channels like Sam's Club - The ginseng industry is one of the company's core main businesses in the traditional Chinese medicine whole industry chain, with its subsidiaries successfully cultivating superior ginseng varieties such as "Xinkaihe No. 1" and "Kangmei No. 1," and developing characteristic product Xinkaihe Red Ginseng[55] - Kangmei Xinkaihe® Ultra-fine Ginseng Powder Capsules have immune-regulating health functions, and the Kangmei Xinkaihe Red Ginseng Extract's taste optimization process significantly improves product palatability[55] - The health products segment has 83 products approved through food standard备案, and has successfully introduced ginseng products into modern mainstream consumer channels such as Sam's Club, and established cooperation with leading chain pharmacies like Beijing Tongrentang and Huqingyutang[55][56] 5. Pharmaceutical Commercial Segment The Pharmaceutical Commercial segment serves as a business cornerstone, deepening its presence in public medical systems and provincial commercial clients through optimized supply chain management and resource synergy - The pharmaceutical commercial segment deeply cultivates public medical systems and provincial commercial clients, steadily improving business quality through upstream and downstream resource synergy and supply chain management optimization[57] (II) Adhering to Party Building Leadership and Promoting Discipline Inspection and Supervision The company's Party Committee drives enterprise development through high-quality Party building, integrating Party leadership with corporate governance and strengthening anti-corruption efforts through supervision and training - The company's Party Committee promotes "two-way entry and cross-appointment" between the Party Committee leadership and the corporate governance team, achieving "one person holding both Party Secretary and Chairman positions"[58] - It conducted in-depth study and education on implementing the spirit of the Central Eight Provisions, and organized Party and Youth League tree-planting activities, a union-led integrity training, and joint free clinic public welfare activities[59] - The company's Discipline Inspection Commission formulated and promoted the "Implementation Plan for the 'Clean Kangmei Construction Action'," optimized the supervision joint meeting, and formulated the "Notice on Strengthening Rotation Supervision and Management of Key Positions"[60] (III) Brand and Culture Building During the reporting period, the company significantly enhanced its brand recognition and reputation through executive awards, subsidiary certifications, product accolades, and active industry engagement - The company's Party Secretary and Chairman, Lai Zhijian, was awarded "Enterprise Management Talent," and R&D Center General Manager, Han Lijuan, was awarded "Scientific and Technological Innovation (Entrepreneurship) Talent"[61] - Subsidiary Chengdu Kangmei Pharmaceutical Production Co., Ltd.'s central laboratory received CNAS accreditation, Kangmei (BoZhou) Chinese Herbal Medicine City Quality Inspection Co., Ltd. passed CMA qualification re-accreditation, and Beijing Kangmei Pharmaceutical Co., Ltd. and Kangmei Huada Gene Technology Co., Ltd. were recognized as high-tech enterprises[61][62] - Kangmei Pharmaceutical's full lifecycle traceability system for Chinese herbal medicine won the "Second Prize for Science and Technology in Guangdong Pharmaceutical Industry," Kangmei Sharen won "Guangdong Pharmaceutical Industry Famous Brand Product," Kangmei won the TOP1 Chinese herbal medicine brand in the 2025 Tmall New Year's Festival, and received the "2024 JD Health Pharmaceutical Growth Pioneer Award"[61][62][63] - The company successfully hosted the Guangdong Chinese Herbal Medicine Industry High-Quality Development Conference and was elected as the Vice President Unit of the Sixth Council of the Guangdong Pharmaceutical Industry Association[64][65] (IV) Scientific Research and Development The company's R&D platform integrates traditional Chinese medicine with multi-omics and AI technologies, securing 6 new patents and publishing significant research in top academic journals through collaborations with leading institutions - Kangmei Huada Gene Technology Co., Ltd. has built a Chinese medicine R&D platform integrating traditional Chinese medicine with multi-omics, AI, and other cutting-edge technologies, and has passed national high-tech enterprise certification and Shenzhen "specialized, refined, unique, and new" small and medium-sized enterprise certification[68] - The company has established in-depth cooperation with scientific research and clinical institutions such as Guangdong Provincial Hospital of Traditional Chinese Medicine, Hong Kong Baptist University, and University of Macau, conducting scientific research on Chinese herbal medicine germplasm resources, quality standards, and functional activities[68] - During the reporting period, the company obtained 6 new invention patents, including "A processing method for red ginseng to increase rare ginsenoside content and reduce pesticide residues," and published important scientific research results in the international high-level journal "iMeta"[68] (V) Information Digitalization Construction In the first half of 2025, the company advanced its 'Smart Digital Operations' system, deploying a Chinese medicine pharmaceutical service traceability system, enhancing financial and HR digitalization, and exploring AI applications while strengthening information security - The company's independently developed Chinese medicine pharmaceutical service traceability system has been implemented in smart pharmacy operation centers in Shenzhen, Chongqing, Guangzhou, and other cities, achieving full process information traceability for Chinese medicine pharmaceutical services[69] - The company is accelerating its financial digitalization transformation, initiating the construction of a financial middle-office project; upgrading the group's human resource management system; and strengthening IT infrastructure assurance capabilities[69] - Actively embracing artificial intelligence technology, exploring the application of RPA technology in various scenarios such as intelligent contract review, order processing, knowledge Q&A, and price forecasting, and deploying IOA zero-trust network to enhance information security[69] (VI) Human Resource Management System The company optimized its human resource management system by attracting talent, refining organizational structures, building a comprehensive training system, implementing performance appraisals, and promoting professional skill certifications - The company, guided by its "12355" strategy, attracts talent through various means and optimizes its organizational structure and job grade system to activate organizational vitality[70][71] - It has built a "selection, cultivation, management, and utilization" full-chain training system, establishing a multi-level, diversified training system relying on the Liu Maogui Traditional Chinese Medicine Skills Inheritance Studio and the Lai Zhijian Skills Master Studio[71] - Continuously optimizes the performance management indicator system, implements company-wide performance appraisals, and strengthens cadre management, improving the assessment and supervision mechanism[71][72] - Actively conducted the first phase of professional skill level assessment in 2025, with 341 participants and 317 passing, achieving a pass rate of 92.96%[72] (VII) Safety Production System Construction The company prioritizes compliance and safety, continuously improving its safety management system through multi-level assessments, proactive risk control, standardized construction, and regular training and inspections - The company consistently places compliant operations and safety production at a strategic height, strictly adhering to national and local laws and regulations, and continuously advancing the construction of its safety production system[73] - It improves the safety management system framework, implements multi-level, all-dimensional safety system construction assessments, evaluations, and supervision, focusing on proactive risk control and closed-loop management of hazards[73] - Through online and offline training activities and "Safety Production Month" theme activities, the company comprehensively enhances employee safety awareness and emergency response skills[73] - Safety inspection work is regular and refined, conducting comprehensive checks in key areas such as production sites, equipment facilities, and warehousing logistics, achieving closed-loop management of safety hazard investigation and rectification[74] (VIII) Improving Operations Management and Internal Control System During the reporting period, the company strengthened its internal control and subsidiary supervision systems, completing the 2024 internal control evaluation, addressing deficiencies, and enhancing audit oversight - The company successfully completed the 2024 internal control evaluation, with results indicating no significant or material deficiencies[75] - It promptly implemented defect rectification, strengthened the company's institutional framework, optimized the company's process system design, and steadily advanced the subsidiary classification management system[75] - Audit supervision is strengthened through special audits, multi-department joint audit surveys, and external supervisor oversight, promoting standardized operations and healthy development of subsidiaries[75] III. Analysis of Core Competitiveness During the Reporting Period Kangmei Pharmaceutical's core competitiveness stems from its integrated whole-industry-chain operation, extensive sales network, leading technological innovation, and stringent quality management system, ensuring product quality and market leadership (I) Whole Industry Chain Advantage The company's integrated whole-industry-chain operation model, spanning from cultivation to marketing, provides significant industrial resource advantages - The company implements an integrated whole-industry-chain operation model for traditional Chinese medicine, with a business system covering upstream cultivation, midstream market operations and production sales, and downstream multi-level marketing networks, demonstrating prominent industrial resource advantages[76] (II) Network Advantage The company has established an extensive business network, collaborating with over 1,200 medical institutions and 40,000 pharmacies, supported by e-commerce platforms and a national logistics network, forming a comprehensive modern pharmaceutical distribution system - The company has established deep business cooperation with over 1,200 medical institutions and 40,000 chain pharmacies nationwide, with a national market marketing layout[77] - Vigorously promotes e-commerce development, launching the Kangmei Pharmaceutical Chinese Herbal Medicine Bulk Trading Platform and publishing the "Kangmei • China Chinese Herbal Medicine Price Index"[77] - The company has established branches and subsidiaries in multiple cities nationwide, forming a multi-faceted sales system integrating hospital sales, OTC, Western medicine wholesale and distribution, retail, and chain pharmacies, and owns multiple Chinese herbal medicine markets[77] (III) Technological Advantage Driven by technological innovation, the company leverages national and provincial innovation platforms for R&D in Chinese herbal medicine, holding over 600 intellectual property rights and playing a key role in industry standardization - The company relies on national and provincial innovation platforms such as the National and Local Joint Engineering Research Center for Chinese Herbal Medicine Decoction Pieces to conduct in-depth R&D work on Chinese herbal medicine cultivation, decoction processing, intelligent production systems, formula granules, and pharmaceutical services[79] - The company holds over 600 intellectual property rights, including valid invention patents, utility model patents, design patents, and software copyrights, with 6 new invention patents authorized during the reporting period[80] - The company can produce over 1,000 varieties of Chinese herbal medicine, exceeding 20,000 specifications, possessing 36 national patented products and 13 Guangdong Province famous high-tech products, and ranked first in Tmall's Chinese herbal medicine brand list during the 2025 618 Mid-Year Shopping Festival[81][82] - The company participated in drafting and formulating 207 standards, including 3 international standards, 47 national standards, 5 industry standards, 60 local standards, and 92 group standards, with 6 individuals selected into the "Jieyang City Standardization Expert Database"[83] (IV) Quality Advantage Adhering to a 'quality first, brand supreme' principle, the company implements a whole-industry-chain quality control model, ensuring product quality from sourcing to sales through strict standards, comprehensive testing, and innovative packaging - The company pioneered and implemented a whole-industry-chain quality control model for traditional Chinese medicine, achieving full-process quality control from the source of Chinese herbal medicine cultivation to production and sales[84] - Strictly implements the "Chinese Pharmacopoeia" and national/local processing norms, rejects illegal practices, and invests in intelligent production equipment to ensure precise specifications and full efficacy of decoction pieces[84] - The company's testing center covers over 3,100 square meters, equipped with internationally leading equipment, and its testing reports are internationally recognized in approximately seventy countries and regions worldwide[85][86] - The company pioneered and implemented small packaging and color-coded management for Chinese herbal medicine, effectively solving problems such as "mixed batches" and "mixed flavors," and this practice has been promoted and applied nationwide by the National Administration of Traditional Chinese Medicine[86] IV. Key Operating Performance During the Reporting Period This section analyzes the company's financial statement changes, non-core business impact on profit, asset-liability status, and investment activities for the first half of 2025, noting a 4.17% increase in operating revenue and stable subsidiary operations (I) Analysis of Main Business In the first half of 2025, the company's operating revenue increased by 4.17%, total profit by 14.93%, and net profit attributable to shareholders by 7.24%, with significant improvement in net cash flow from operating activities Major Accounting Data Change Analysis | Item | Current Reporting Period (Jan-Jun) | Prior Year Period | Change Ratio (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 2,577,397,097.25 | 2,474,338,981.11 | 4.17 | | Total Profit | 28,521,909.88 | 24,817,299.82 | 14.93 | | Net Profit Attributable to Shareholders of Listed Company | 16,901,389.86 | 15,760,325.84 | 7.24 | | Selling Expenses | 241,966,448.24 | 191,811,754.35 | 26.15 | | R&D Expenses | 17,912,407.27 | 22,786,036.19 | -21.39 | | Financial Expenses | 450,119.96 | -1,274,927.10 | Not Applicable | | Net Cash Flow from Operating Activities | -82,116,847.68 | -318,860,533.80 | Not Applicable | | Net Cash Flow from Investing Activities | -17,285,151.16 | 27,906,912.32 | -161.94 | | Net Cash Flow from Financing Activities | 54,532,817.94 | -21,895,238.91 | Not Applicable | - The change in financial expenses is mainly due to a decrease in deposit interest income and a reduction in interest expenses resulting from changes in lease contracts[88] - The change in net cash flow from operating activities is mainly due to an increase in cash inflows driven by operating revenue growth and a significant year-on-year decrease in taxes and fees paid[89][90] - The change in net cash flow from investing activities is mainly due to an increase in cash inflows from the disposal of idle assets of subsidiaries in the prior year[90] (II) Explanation of Significant Profit Changes Caused by Non-Core Businesses Non-core businesses significantly impacted profit, with investment income decreasing by 99.45% due to high debt restructuring gains in the prior year, and asset disposal gains also sharply declining Impact of Non-Core Business on Profit | Item | Current Period Amount | Prior Year Period Amount | Change Ratio (%) | Explanation of Change | | :--- | :--- | :--- | :--- | :--- | | Other Income | 22,800,164.59 | 19,781,209.49 | 15.26 | | | Investment Income | 231,879.41 | 41,797,752.78 | -99.45 | Prior year had higher debt restructuring gains, decreased in current period | | Gains and Losses from Changes in Fair Value | -919.26 | -10,042.73 | Not Applicable | Fair value changes of trading financial assets | | Gains from Asset Disposal | 286,015.92 | 28,362,807.90 | -98.99 | Prior year had increased gains from disposal of idle assets of subsidiaries | | Non-Operating Income | 606,841.51 | 9,095,908.95 | -93.33 | Prior year adjusted book value of estimated liabilities for litigated cases | | Income Tax Expense | 10,206,256.00 | 6,697,106.52 | 52.40 | Increase in deferred income tax expense in current period | (III) Analysis of Assets and Liabilities At the end of the period, receivables financing increased by 119.87% due to more high-credit bank acceptance bills, while prepayments decreased by 45.01% as goods were received, and other non-current assets rose by 56.43% from increased advance payments for projects and equipment Changes in Assets and Liabilities | Item Name | Current Period End Amount | Current Period End % of Total Assets | Prior Year End Amount | Prior Year End % of Total Assets | Change Ratio from Prior Year End (%) | Explanation | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Receivables Financing | 32,220,986.97 | 0.24 | 14,654,666.96 | 0.11 | 119.87 | Increase in bank acceptance bills with higher credit ratings | | Prepayments | 96,544,656.32 | 0.71 | 175,562,999.48 | 1.27 | -45.01 | Goods corresponding to prepayments at prior year end were received in current period | | Other Non-Current Assets | 16,933,612.28 | 0.12 | 10,825,040.15 | 0.08 | 56.43 | Increase in advance payments for engineering and equipment in current period | - Overseas assets totaled 510,587.86 Yuan, accounting for 0.00% of total assets[94] - Details of restricted major assets at the end of the reporting period are provided in "Section VIII Financial Report VII, 31 Assets with Restricted Ownership or Use Rights"[95] (IV) Analysis of Investment Status The company's financial assets measured at fair value totaled 33,382,714.17 Yuan at period-end, an increase from the beginning of the period, primarily comprising trading financial assets, other equity instrument investments, and receivables financing Financial Assets Measured at Fair Value | Asset Category | Beginning of Period Amount | Current Period Fair Value Change Gains/Losses | Cumulative Fair Value Changes Included in Equity | End of Period Amount | | :--- | :--- | :--- | :--- | :--- | | Trading Financial Assets | 80,964.53 | -919.26 | | 80,045.27 | | Other Equity Instrument Investments | 1,111,586.01 | | -38,318.07 | 1,081,681.93 | | Receivables Financing | 14,654,666.96 | | | 32,220,986.97 | | Total | 15,847,217.50 | -919.26 | -38,318.07 | 33,382,714.17 | (VI) Analysis of Major Holding and Participating Companies This section presents the financial data for the company's major holding subsidiaries, highlighting significant net profit contributions from Kangmei (BoZhou) Huatuo International Chinese Herbal Medicine City Co., Ltd. and Chengdu Kangmei Pharmaceutical Co., Ltd. Major Holding and Participating Companies (Unit: Ten Thousand Yuan) | Company Name | Company Type | Main Business | Registered Capital | Total Assets | Net Assets | Operating Revenue | Operating Profit | Net Profit | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Shanghai Meifeng Food Co., Ltd | Subsidiary | Wholesale of food, beverages, and tobacco products | 2,500.00 | 18,880.02 | 2,910.52 | 9,204.26 | 14.17 | 36.41 | | Shanghai Jinxiang Food Co., Ltd | Subsidiary | Processing of agricultural and sideline food products | 6,500.00 | 15,690.00 | 7,737.09 | 5,482.46 | 130.78 | 129.16 | | Guangdong Kangmei Xinao Pharmaceutical Co., Ltd | Subsidiary | Wholesale of pharmaceuticals and medical devices | 5,000.00 | 39,574.07 | 13,261.86 | 21,441.45 | 770.91 | 582.67 | | Kangmei Chinese Herbal Medicine City (Puning) Co., Ltd | Subsidiary | Real estate development and operation | 50,000.00 | 128,506.39 | 71,048.46 | 498.76 | -236.35 | -236.35 | | Kangmei Times (Guangdong) Development Co., Ltd | Subsidiary | Wholesale of food, beverages, and tobacco products | 1,000.00 | 3,088.06 | -10,838.14 | 5,085.37 | 60.62 | 59.38 | | Kangmei (BoZhou) Huatuo International Chinese Herbal Medicine City Co., Ltd | Subsidiary | Real estate development and operation | 36,046.18 | 179,487.03 | -231,848.66 | 8,548.43 | 3,155.73 | 3,155.69 | | Chengdu Kangmei Pharmaceutical Co., Ltd | Subsidiary | Processing of Chinese herbal medicine | 10,000.00 | 56,187.06 | 16,646.24 | 25,517.57 | 1,146.19 | 1,021.50 | | Guangdong Kangmei Pharmaceutical Co., Ltd | Subsidiary | Wholesale of pharmaceuticals and medical devices | 5,000.00 | 26,198.56 | 16,070.07 | 13,151.72 | 757.55 | 582.00 | V. Other Disclosures The company faces policy risks, intensified market competition, and the impact of centralized procurement for Chinese herbal medicine, necessitating proactive policy tracking, internal control strengthening, and supply chain optimization (I) Potential Risks The company faces policy risks from healthcare reform, intensified market competition in the fragmented Chinese herbal medicine industry, and potential price pressure and market share shifts from centralized procurement policies - Policy risks: The deepening of healthcare system reform, including centralized procurement and adjustments to the medical insurance catalog, impacts pharmaceutical companies' existing business models, intensifying industry competition[101] - Intensified market competition risk: The Chinese herbal medicine industry has low concentration, and as regulation tightens, industry changes will lead to intensified market competition[101] - Impact of centralized procurement of Chinese herbal medicine: The deepening of this policy may lead to key varieties facing dual challenges of downward pressure on中标 prices and market share restructuring[102] Item IV Corporate Governance, Environment, and Society This section covers changes in the company's governance structure, environmental performance, and social responsibility initiatives, including board and management appointments, and efforts in poverty alleviation and rural revitalization I. Changes in Directors, Supervisors, and Senior Management In February 2025, the company elected new members to its tenth Board of Directors and Supervisory Board, and appointed new senior management, including Mr. Lai Zhijian as Chairman and Mr. Ou Guoxiong as General Manager - On February 10, 2025, the company elected Lai Zhijian, Ou Guoxiong, Zhou Yunfeng, Xia Huayue, Liang Jun, and Huang Weizhong as non-independent directors, and Luo Tao, Lai Xiaoping, and Lin Hui as independent directors[106] - On February 17, 2025, Mr. Lai Zhijian was elected Chairman, Mr. Ou Guoxiong was appointed General Manager, and Mr. Zhou Yunfeng was appointed Board Secretary[107] - Former directors Liu Guowei, Mi Qi, Fang Miaoshuang, former independent director Zeng Qing, former Supervisory Board Chairman Gao Yanzhu, former employee representative supervisor Huang Longtao, and former deputy general manager He Zezheng resigned[106] II. Profit Distribution or Capital Reserve Conversion Plan The company has no profit distribution or capital reserve conversion plan for this semi-annual period - The company's proposed profit distribution plan or capital reserve conversion plan for this semi-annual period is "none"[108] III. Status and Impact of Company's Equity Incentive Plans, Employee Stock Ownership Plans, or Other Employee Incentive Measures The company completed the repurchase and cancellation of 34,970,000 restricted shares related to its first and second equity incentive plans on July 9, 2025 - The company completed the repurchase and cancellation of 34,970,000 restricted shares related to its first and second equity incentive plans on July 9, 2025[109] IV. Environmental Information of Listed Companies and Their Major Subsidiaries Included in the List of Enterprises Required to Disclose Environmental Information by Law Kangmei Baoning (Sichuan) Pharmaceutical Co., Ltd., a subsidiary, was listed as a key water pollutant in Nanchong City for 2025, but the company reported no environmental pollution incidents or administrative penalties during the period - The company's subsidiary, Kangmei Baoning (Sichuan) Pharmaceutical Co., Ltd., was listed as a key water pollutant in Nanchong City for 2025[111] - During the reporting period, the company did not experience any environmental pollution incidents and did not receive any environmental protection administrative penalties[111] V. Specifics of Consolidating and Expanding Poverty Alleviation Achievements, Rural Revitalization, and Other Work The company actively contributes to rural revitalization through industrial, health, and education-focused poverty alleviation efforts, expanding herbal medicine procurement, donating medical equipment, and supporting rural children's education - The company actively carries out rural revitalization work through industrial poverty alleviation, health poverty alleviation, and education poverty alleviation[112] - In terms of industrial poverty alleviation, its subsidiaries expanded the scale of herbal medicine procurement, broadened farmers' income channels, and are preparing to establish GAP bases to promote standardized cultivation of Chinese herbal medicines[113] - In terms of health poverty alleviation, it donated medical equipment to grassroots medical institutions in Longjiang Town, Huilai County, Jieyang City, and organized four public free clinic activities[114] - In terms of education poverty alleviation, it participated in the "Xixian Youth" public welfare action to care for rural children's growth, sending loving wishes to rural children[115] Item V Significant Matters This section details significant matters including the fulfillment of commitments, absence of illegal guarantees, major litigation and arbitration, and significant related party transactions I. Fulfillment of Commitments During the reporting period, controlling shareholder Shennongshi strictly fulfilled commitments to avoid horizontal competition, reduce related party transactions, and maintain the company's independence, ensuring its autonomous operation and shareholder interests - Shennongshi committed to avoiding horizontal competition or potential horizontal competition with the listed company and its controlled subsidiaries[118] - Shennongshi committed to minimizing and reducing related party transactions with the listed company and its subsidiaries, and for unavoidable related party transactions, procedures will be followed based on fair and equitable principles[118] - Shennongshi issued the "Commitment on Maintaining the Independence of the Listed Company," ensuring the listed company's independence from Shennongshi and its controlled enterprises in terms of assets, personnel, finance, governance, and business[119][120] III. Illegal Guarantees During the reporting period, the company did not provide any external guarantees in violation of prescribed decision-making procedures - During the reporting period, the company did not provide any external guarantees in violation of prescribed decision-making procedures[8] VII. Major Litigation and Arbitration Matters The company is involved in multiple major lawsuits and arbitration cases, with the parent company facing 18 pending lawsuits totaling 3.161 billion Yuan, primarily related to securities misrepresentation, and subsidiaries involved in 13 cases totaling 147 million Yuan - The company received a case acceptance notice from the Jieyang Intermediate People's Court of Guangdong Province, stating that China Cinda Asset Management Co., Ltd. Anhui Branch applied to be changed to the executor of case (2024) Yue 52 Zhi 62, and the change has been ruled[122] - The Guangdong Provincial High People's Court ruled to reject the appeal filed by Foshan Xiangying Furniture Manufacturing Co., Ltd. for the bankruptcy liquidation of Kangmei Chinese Herbal Medicine City (Puning) Co., Ltd., upholding the original ruling[122] - The company filed a lawsuit with the Yuexiu District People's Court of Guangzhou City, requesting a judgment ordering Guangdong Zhengzhong Zhujiang Accounting Firm to pay the company's assumed compensation and interest totaling 341 million Yuan, and the case was heard on July 4, 2025[124][125] - The company filed a lawsuit with the Guangzhou Intermediate People's Court, requesting a judgment ordering Ma Xingtian, Xu Dongjin, and Qiu Xiwei to pay the company's assumed compensation and interest totaling 2.608 billion Yuan, and the case was heard on May 23, 2025[125] - In the financial loan contract dispute case of Bohai Trust vs. Kangmei Industrial, the second instance final judgment ruled that Kangmei Industrial must bear the principal of 2.8198947 billion Yuan and part of the interest and penalty interest, with priority for repayment from the subsidiary's mortgaged assets; China Cinda Asset Management Co., Ltd. Anhui Branch has been changed to the executor and submitted an application for resumption of execution in July 2025[133][187] X. Significant Related Party Transactions The company engaged in daily operational related party transactions, including procurement, sales, and debt settlements with entities controlled by Guangzhou Pharmaceutical Group Co., Ltd., with a historical debt settlement passively forming a related party transaction - The company's 2024 daily related party transaction execution and 2025 daily related party transaction forecast have been disclosed in temporary announcements[126] - The company had historical debt disputes with Guangzhou Asset, and the company's related party, GPHL, acquired this debt and its subordinate mortgage rights through public bidding, passively forming a related party transaction[128][188] - To orderly advance the case settlement, Chengdu Kangmei plans to sign a settlement agreement with GPHL, agreeing to clear the aforementioned debt, which constitutes a related party transaction[128][188] XI. Major Contracts and Their Performance The company has significant guarantees for Kangmei Industrial Investment Holding Co., Ltd. and other related parties, totaling 2.8198947 billion Yuan, representing 39.22% of its net assets, with the underlying debt overdue and collateral assets subject to court-ordered auction or sale Company External Guarantees (Excluding Guarantees to Subsidiaries) | Guarantor | Relationship with Listed Company | Guaranteed Party | Guarantee Amount (Ten Thousand Yuan) | Guarantee Start Date | Guarantee End Date | Guarantee Type | Main Debt Status | Collateral (if any) | Guarantee Fulfilled | Overdue | Overdue Guarantee Amount | Counter-Guarantee Status | Related Party Guarantee | Related Party Relationship | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Kangmei Chinese Herbal Medicine City, New World Commerce, Century Guoyao Chinese Herbal Medicine | Wholly-owned subsidiary | Kangmei Industrial | 281,989.47 | April 12, 2019, April 26, 2019 | 3 years from main debt maturity | Joint and several liability guarantee | Kangmei Industrial is obligated to pay principal of 2,819,894,700 Yuan and interest, penalty interest | Mortgaged real estate of Kangmei Chinese Herbal Medicine City, New World Commerce, Century Guoyao Chinese Herbal Medicine | No | No | | | Yes | Other | - The total guarantee balance at the end of the reporting period was 2.8198947 billion Yuan, accounting for 39.22% of the company's net assets[132] - Kangmei Industrial's failure to repay Bohai Trust as agreed led to the court ruling for the auction or sale of the subsidiaries' mortgaged real estate[133] Item VI Share Changes and Shareholder Information This section details changes in the company's share capital and shareholder structure, including the reduction of restricted shares and the status of major shareholders I. Changes in Share Capital During the reporting period, the company's total share capital remained unchanged, but restricted shares decreased by 209,424,083 shares, with a corresponding increase in unrestricted tradable shares, primarily due to the listing of shares held by China Construction Bank Corporation Guangdong Branch Share Capital Changes | | Quantity Before Change | Percentage Before Change (%) | Net Increase/Decrease in Current Change | Quantity After Change | Percentage After Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | I. Restricted Shares | 250,938,585 | 1.81 | -209,424,083 | 41,514,502 | 0.30 | | II. Unrestricted Tradable Shares | 13,612,928,105 | 98.19 | 209,424,083 | 13,822,352,188 | 99.70 | | III. Total Shares | 13,863,866,690 | 100.00 | 0 | 13,863,866,690 | 100.00 | - On May 8, 2025, 209,424,083 restricted shares held by China Construction Bank Corporation Guangdong Branch became tradable[138] - On July 9, 2025, the company completed the repurchase and cancellation of 34,970,000 restricted shares from the first and second equity incentive plans, reducing the total share capital to 13,828,896,690 shares[138] II. Shareholder Information As of the end of the reporting period, the company had 305,336 common shareholders, with Guangdong Shennongshi Enterprise Management Partnership (Limited Partnership) as the largest shareholder at 25.31%, and 98,167,539 shares held by Tianjin Kunpeng Rongchuang Enterprise Management Consulting Co., Ltd. frozen - As of the end of the reporting period, the total number of common shareholders was 305,336[141] Top Ten Shareholders' Shareholding | Shareholder Name | Shares Held at Period End | Percentage (%) | Restricted Shares Held | Share Status | Quantity | | :--- | :--- | :--- | :--- | :--- | :--- | | Guangdong Shennongshi Enterprise Management Partnership (Limited Partnership) | 3,509,413,788 | 25.31 | 0 | None | 0 | | China Construction Bank Corporation Guangdong Branch | 515,252,009 | 3.72 | 0 | None | 0 | | Kangmei Pharmaceutical Co., Ltd. Bankruptcy Enterprise Property Disposal Special Account | 182,392,180 | 1.32 | 0 | None | 0 | | China Everbright Bank Co., Ltd. Shenzhen Branch | 106,276,248 | 0.77 | 0 | None | 0 | | Shanghai Pudong Development Bank Co., Ltd. Shenzhen Branch | 103,541,540 | 0.75 | 0 | None | 0 | | Tianjin Kunpeng Rongchuang Enterprise Management Consulting Co., Ltd | 98,167,539 | 0.71 | 0 | Frozen | 98,167,539 | | Chang'an International Trust Co., Ltd. - Chang'an Ning - Kangmei Pharmaceutical Equity Income Rights Repurchase Collective Fund Trust Plan | 94,982,700 | 0.69 | 0 | None | 0 | | Agricultural Bank of China Limited Shenzhen Branch | 93,377,648 | 0.67 | 0 | None | 0 | | Boshi Fund - Industrial and Commercial Bank of China - Boshi - ICBC - Flexible Allocation No. 5 Specific Multiple Client Asset Management Plan | 79,416,855 | 0.57 | 0 | None | 0 | | Guangdong Yuetai Trust Co., Ltd. - Yuetai Trust · Guangfa Xingcai Kang No. 1 Single Fund Trust | 53,818,111 | 0.39 | 0 | None | 0 | Top Ten Restricted Shareholders' Shareholding and Restrictions | No. | Restricted Shareholder Name | Restricted Shares Held | Tradable Date | Newly Tradable Shares | Restriction Conditions | | :--- | :--- | :--- | :--- | :--- | :--- | | 1 | Kangmei Pharmaceutical Co., Ltd. - Phase 1 Employee Stock Ownership Plan | 6,544,502 | To be determined based on company announcements | 0 | Not transferable within 36 months from the end of issuance | | 2 | Wang Shengping | 250,000 | The company completed the cancellation of restricted shares from this equity incentive plan on July 9, 2025 | 0 | / | | 3 | Qiu Xiwei | 220,000 | The company completed the cancellation of restricted shares from this equity incentive plan on July 9, 2025 | 0 | / | | 4 | Lin Guoxiong | 220,000 | The company completed the cancellation of restricted shares from this equity incentive plan on July 9, 2025 | 0 | / | | 5 | Li Jianhua | 220,000 | The company completed the cancellation of restricted shares from this equity incentive plan on July 9, 2025 | 0 | / | | 6 | Han Zhongwei | 220,000 | The company completed the cancellation of restricted shares from this equity incentive plan on July 9, 2025 | 0 | / | | 7 | Li Wenxin | 180,000 | The company completed the cancellation of restricted shares from this equity incentive plan on July 9, 2025 | 0 | / | | 8 | Li Shi | 160,000 | The company completed the cancellation of restricted shares from this equity incentive plan on July 9, 2025 | 0 | / | | 9 | Zhuang Yiqing | 140,000 | The company completed the cancellation of restricted shares from this equity incentive plan on July 9, 2025 | 0 | / | | 10 | Luo Aijun | 123,000 | The company completed the cancellation of restricted shares from this equity incentive plan on July 9, 2025 | 0 | / | III. Information on Directors, Supervisors, and Senior Management Due to the company's repurchase and cancellation of restricted shares from equity incentive plans, the number of restricted shares held by Supervisor Zhong Shaozhu and former employee Supervisor Huang Longtao decreased - Due to the company's repurchase and cancellation of 34,970,000 restricted shares related to the first and second equity incentive plans on July 9, 2025, Supervisor Zhong Shaozhu's holdings of first-phase restricted shares decreased by 60,000 shares, and former employee supervisor Huang Longtao's holdings of first-phase restricted shares decreased by 48,000 shares[146] Item VII Bond-Related Information This section provides information on the company's bonds, including corporate bonds, enterprise bonds, non-financial enterprise debt financing instruments, and convertible corporate bonds I. Corporate Bonds (Including Enterprise Bonds) and Non-Financial Enterprise Debt Financing Instruments During the reporting period, the company had no corporate bonds (including enterprise bonds) or non-financial enterprise debt financing instruments II. Convertible Corporate Bonds During the reporting period, the company had no convertible corporate bonds [Item VIII Financial Report](index=48&type=section&id=Item%20VIII%2