JZYY(SH:600750) 2 1 Shi Ji Jing Ji Bao Dao·2025-10-20 10:34Core Viewpoint - China Resources' integration in the pharmaceutical sector is accelerating, with Jiangzhong Pharmaceutical acquiring 70% of Anhui Jingcheng Huyao for 70.78 million yuan, gaining actual control and consolidating financial statements [1][12] Group 1: Acquisition Details - Jiangzhong Pharmaceutical's acquisition of Anhui Jingcheng Huyao is notable for its high premium, with the assessed value of the target company at 101.12 million yuan, reflecting a 140.86% increase over its net assets of 41.98 million yuan [1] - Anhui Jingcheng Huyao, established in 2013, focuses on traditional Chinese medicine (TCM) health products, including popular OTC items like Liuwei Dihuang Oral Liquid and Brain Power Syrup [1][8] - The acquisition is part of a broader strategy by China Resources to expand its TCM portfolio and enhance market presence [1][12] Group 2: Financial Performance - Jiangzhong Pharmaceutical reported a revenue of 2.141 billion yuan in the first half of 2025, a decrease of 5.79% year-on-year, while net profit increased by 5.80% to 522 million yuan [4] - The OTC business, which is a major revenue driver, saw a revenue drop of 10.14% to 1.55 billion yuan, indicating greater pressure compared to overall revenue decline [6] - The company has faced declining revenue trends over the past two years, with a 3.78% drop in mid-2024 compared to the previous year [4] Group 3: Market Context and Strategy - The health consumer goods sector is becoming increasingly important, with Jiangzhong Pharmaceutical focusing on developing health products that convert low-frequency medications into high-frequency consumer goods [13][16] - The retail market for health supplements is expanding, with the retail sales of health products reaching 12.394 billion yuan in the first half of 2025, surpassing other medication categories [14] - Jiangzhong Pharmaceutical aims to enhance its product matrix in the health consumer goods sector, with a reported revenue growth of 17.35% in this segment [16] Group 4: Challenges and Future Outlook - The acquisition of Anhui Jingcheng Huyao is influenced by the financial difficulties of its previous owner, which is undergoing bankruptcy restructuring [9][10] - The transfer agreement includes conditions to ensure that key product licenses remain within the local jurisdiction, which may pose operational challenges [17] - Future success will depend on Jiangzhong Pharmaceutical's ability to manage debt risks and optimize production under the constraints of the acquisition [18]