Zhejiang Wecome Pharmaceutical Company Limited(SZ:300878)2024-07-31 11:00Investment Rating - The report indicates a negative outlook for the company, with a significant decline in profits and a recent loss in 2023 [1][5][41]. Core Insights - The company's net profit has decreased for three consecutive years since 2021, with a reported net profit of less than 50 million in 2022 and a loss of over 8 million in 2023 [1][5]. - The decline in high-margin prescription drug revenue and the underperformance of the health industry park project are major contributors to the financial downturn [2][79]. - The company has faced regulatory scrutiny due to issues with revenue recognition and accounting practices, leading to inaccurate financial disclosures [8][84]. Financial Performance - The company’s revenue has been on a downward trend since 2019, with a reported revenue of 520 million in 2023, down from 640 million in 2019 [78]. - The prescription drug revenue dropped significantly, with only 120 million reported in 2023, a 64% decrease compared to 2020 [79]. - The adjusted net profit forecast for 2023 is between 43 million and 53 million, reflecting a substantial decline from previous estimates [6]. Investment Projects - The company plans to invest approximately 70.3 million in various projects, including the second phase of the health industry park and research and development projects [4]. - The first phase of the health industry park has not met expected benefits, with only 8 million realized by the end of 2023, far below initial projections [13]. Market Position - The company’s market share remains low, with its leading product, Yinhuang Diban, capturing only 2.8% of the throat disease market [26]. - The company has been criticized for its heavy reliance on marketing over research and development, leading to a lack of innovative products [17][24]. Management and Governance - The company has faced allegations of misappropriating funds and has received multiple warnings from regulatory bodies regarding its internal controls and financial practices [105][94]. - The controlling shareholders have maintained a significant stake in the company, with the primary shareholder holding 60.89% [51].