YUNNAN BAIYAO(SZ:000538) Hua Xia Shi Bao·2025-10-13 09:55Core Viewpoint - The recent financial report of Yunnan Baiyao reveals a contradiction where net profit growth significantly outpaces revenue growth, raising concerns among investors about the sustainability of this trend [2][3]. Financial Performance - Yunnan Baiyao reported a slight revenue increase of 3.92%, while net profit grew by 13.93% [2]. - The company's non-recurring net profit growth was 10.40%, lagging behind the net profit growth by 3.53 percentage points, primarily due to non-operating gains of 172 million yuan [4]. - Government subsidies of 202 million yuan and financial asset income of 149 million yuan contributed to 5% of the net profit, indicating a reliance on external support for profit growth [4][5]. Profitability Concerns - The decline in the growth rate of non-recurring net profit by 4 percentage points compared to the same period in 2024 suggests a weakening in the company's core business profitability [5]. - The company’s strategy of relying on external financial gains rather than core business performance raises sustainability concerns, especially in light of past investment losses [5]. Business Model Critique - Yunnan Baiyao's business structure is criticized for its heavy reliance on commercial sales, which accounted for 59.78% of total revenue, but with a low gross margin of only 6% [6][8]. - Experts suggest that the company should focus on improving high-margin business segments and not just on increasing sales volume [8]. Health Products Growth Challenges - The health products segment, particularly toothpaste, remains a key growth driver, generating 3.442 billion yuan in revenue, but is overly dependent on this single product [10]. - New product lines, such as the anti-hair loss shampoo brand Yangyuanqing, have shown disappointing growth, with revenue growth dropping from 30.3% to 11% [10][11]. - The competitive landscape in the anti-hair loss market is intensifying, posing challenges for sustaining growth in this segment [10]. Future Outlook - The company faces the urgent need to find new growth avenues as traditional business lines show signs of stagnation [11]. - Potential areas for growth, such as medical aesthetics and innovative traditional Chinese medicine, present uncertainties and require significant investment in branding, technology, and talent [11].