CHINARES PHARMA(HK:03320) Ge Long Hui·2025-09-19 03:27Core Viewpoint - The company reported a slight increase in revenue for H1 2025, but a significant decline in net profit primarily due to impairment losses from equity investments [1][2]. Financial Performance - In H1 2025, the company achieved operating revenue of 131.87 billion yuan, a year-on-year increase of 2.5% [1]. - The net profit attributable to shareholders was 2.08 billion yuan, down 20.3% year-on-year, mainly impacted by impairment losses from equity investments [1]. - The non-recurring net profit was 2.47 billion yuan, a decrease of 4.7% year-on-year [1]. - Operating cash flow improved significantly to 1.53 billion yuan compared to H1 2024, with a mid-term dividend payout ratio of 22% [1]. Business Segment Performance - Pharmaceutical Business: Revenue reached 24.81 billion yuan, up 4.3% year-on-year, with stable growth across traditional Chinese medicine, biopharmaceuticals, and health products. The gross margin was 59.3%, down 0.8 percentage points [1]. - Pharmaceutical Distribution: Revenue from distribution was 108.33 billion yuan, an increase of 2.3% year-on-year, with a gross margin of 5.9% [1]. - Retail Business: Retail revenue was 5.52 billion yuan, up 11.4% year-on-year, with a gross margin of 6.1% [1]. Growth Strategies - The company is focusing on external growth and innovative R&D in its pharmaceutical business. It completed acquisitions to enhance its blood product supply chain and improve traditional Chinese medicine innovation capabilities [1]. - In H1 2025, the company successfully launched 21 new products and has 476 projects under research, including 178 new drug projects and over 50 classic traditional Chinese medicine formulas, indicating potential for future growth [1]. Commercial Business Development - The company is actively developing its medical device business, achieving revenue of 18 billion yuan, an 8% year-on-year increase, and introduced 7 new products [2]. - The professional pharmacy segment, particularly DTP pharmacies, generated revenue of 3.76 billion yuan, a 14% increase year-on-year, with 279 stores established [2]. Profit Forecast and Valuation - The company expects stable revenue performance across its three main business segments, with net profit adjustments due to impairment impacts anticipated in 2025, followed by a gradual recovery in 2026-2027 [2]. - The forecast for net profit attributable to shareholders has been revised down from 4.54/4.98/5.38 billion yuan to 3.75/4.66/5.04 billion yuan for 2025-2027 [2]. - The rating has been adjusted to "Accumulate" [2].