Youcare Pharmaceutical (SH:688658) Xin Lang Cai Jing·2026-01-16 07:43Core Viewpoint - Yuyuan Pharmaceutical plans to issue H-shares and list on the Hong Kong Stock Exchange to enhance its competitiveness and international brand image, but faces significant challenges including declining financial performance and cash flow issues [1][5]. Financial Performance - Yuyuan Pharmaceutical's revenue and net profit have been declining annually from 2022 to 2024, with revenues of 45.21 billion, 41.83 billion, and 37.67 billion respectively, representing year-on-year declines of 8.53%, 7.61%, and 9.9% [2][8]. - The net profit for the same period was 3.35 billion, 1.85 billion, and 1.24 billion, with declines of 38.56%, 44.87%, and 33.05% respectively [2][8]. Core Product Challenges - The decline in performance is primarily due to issues with the core product, Ginkgo Biloba Extract Injection, which has faced compliance crises and industry downturns [2][9]. - The price of the core product was significantly reduced from 24.1 yuan to 11.2 yuan per unit, a drop of over 53%, impacting revenue and gross profit [2][9]. Market Trends - The market for traditional Chinese medicine injections has shrunk from nearly 900 billion in 2016 to approximately 443 billion in 2024, indicating a significant and ongoing decline [3][9]. Strategic Shift - In response to traditional business challenges, Yuyuan Pharmaceutical is shifting its focus to innovative drug development, particularly in nucleic acid drugs like siRNA and mRNA [3][10]. - The company's lead drug candidate, YKYY015, is still in Phase I clinical trials in China and has not yet started in the U.S., indicating a long path to commercialization [4][10]. Cash Flow and Debt - The company reported a 60.9% year-on-year decrease in net cash flow from operating activities for the first three quarters of 2025, with ongoing cash outflows from investment activities [4][10]. - As of the end of Q3 2025, the company's cash balance was approximately 1 billion, down from 1.33 billion at the end of 2024, while interest-bearing debt reached 662 million, with short-term repayment pressures increasing significantly [4][10]. Financing and Dividend Issues - Yuyuan Pharmaceutical is planning to raise up to 300 million through a private placement and is also pursuing H-share listing amid tight cash flow [5][11]. - Despite financial pressures, the company distributed dividends of 3.06 billion, 4.95 billion, and 889 million in 2022, 2023, and 2024, respectively, raising questions about the rationale behind such payouts during a critical transition period [6][11]. Project Delays - Several investment projects have been delayed, including the completion of the R&D center and various production lines, with new completion dates pushed to late 2025 and 2026 [11][12]. - The planned investment of 80 million in a smart coding system was terminated, with funds redirected to new drug development projects, highlighting uncertainties in project execution [12].