GUANGJI PHARMA.(SZ:000952) Quan Jing Wang·2025-08-05 09:48Core Viewpoint - Guangji Pharmaceutical (000952.SZ) has been penalized for significant financial misreporting, revealing deeper operational issues and a decline in financial health over recent years [1][2][4]. Financial Misreporting - Guangji Pharmaceutical's subsidiary, Jikang Pharmaceutical, inflated revenue by 321 million yuan through improper accounting practices, using gross method instead of net method for revenue recognition [2]. - The inflated revenue figures for 2022 included 45.6 million yuan in Q1, 137 million yuan in Q2, and 138 million yuan in Q3, representing 25.49%, 26.68%, and 20.49% of respective quarterly revenues [2]. - The company faced a fine of 1.5 million yuan from the China Securities Regulatory Commission (CSRC) and warnings issued to key executives for their roles in the misreporting [2][3]. Financial Performance Decline - Guangji Pharmaceutical reported a revenue decline to 738 million yuan in 2023, with a net loss of 140 million yuan and a gross margin drop of nearly 10 percentage points to 27.4% [5][7]. - The company has accumulated losses of 435 million yuan over two years, marking the worst performance in its 25-year history [8]. - The gross margin for the main product, high-content vitamin B2, has fallen to a historical low of 17.66% due to market oversupply and increased competition [8]. Operational Challenges - The company has been heavily reliant on its vitamin B2 products, which accounted for 82.83% of revenue in 2024, while the high-margin formulation products saw a significant revenue drop of 65.26% [8]. - Guangji Pharmaceutical's debt ratio increased from 39.58% at the end of 2022 to 64.19% by Q1 2025, indicating rising financial strain [8]. - The company is projected to incur further losses of 67 million to 83.5 million yuan in the first half of 2025, suggesting ongoing downward trends [8]. Strategic Outlook - The company aims to pursue a dual strategy of internal expansion and external acquisitions to revitalize its business model, focusing on vitamin B products and new product lines [9]. - There are concerns regarding the impact of past governance issues and financial misreporting on future operations, including potential investor claims and reputational damage [10].