Core Viewpoint - The stock price of Yong'an Pharmaceutical (002365.SZ) surged over 200% in just two and a half months, reaching a peak of 29.19 yuan per share, despite facing significant challenges in its core business and new ventures [1][3][7]. Stock Price Surge - Since April, Yong'an Pharmaceutical's stock price increased from under 9 yuan to a maximum of 29.19 yuan, with a peak increase of 224% [3]. - The surge was driven by speculation around a supply-demand gap for taurine, especially after the FDA mandated its inclusion in infant formula and pet food [3][4]. - Yong'an Pharmaceutical holds a 50% market share in taurine production, with an annual capacity of 58,000 tons, and exports 60.23% of its revenue [3][4]. Business Challenges - The company has faced a significant decline in revenue, with a cumulative drop of 42.6% from 2022 to 2024, and a net loss of over 4 million yuan in Q1 2025 [1][7][8]. - The taurine segment, which constitutes 75.67% of total revenue, saw a revenue decline of 4.14% in 2024, despite a 16.32% increase in sales volume [8]. - The average selling price of taurine has decreased, leading to a drop in gross margin from 29.4% to 24.02% [8]. Management and Market Reactions - The company experienced management turmoil with the investigation of its actual controller and chairman, Chen Yong, leading to a market reaction that included a stock price drop [9]. - Despite the management issues, the stock price saw a brief recovery due to interest in new health products, such as the "Yijianeng" solid functional beverage, which achieved significant sales on various e-commerce platforms [4][8]. Future Outlook - The sustainability of the taurine price increase remains uncertain, as it has recently dropped from a peak of 25,000 yuan per ton to 16,000 yuan per ton [8]. - Yong'an Pharmaceutical is attempting to diversify its revenue through health products, but these currently represent a small portion of overall revenue [8].

Core Viewpoint - Yong'an Pharmaceutical's stock price surged over 200% in just two and a half months, driven by speculation around taurine supply shortages, despite facing significant operational challenges and declining revenues [1][2][6]. Stock Performance - The stock price rose from under 9 yuan to a peak of 29.19 yuan, marking a maximum increase of 224% [2]. - As of June 19, the stock closed at 25.44 yuan after experiencing a trading halt [2]. - The company's price-to-earnings ratio (TTM) reached 261, significantly higher than the industry average of 32 [1]. Taurine Market Dynamics - The speculation around taurine was fueled by a projected supply gap due to regulatory changes in the U.S. requiring taurine in infant formula and pet food by April 2025 [2]. - Yong'an Pharmaceutical holds approximately 50% of the taurine market share with a production capacity of 58,000 tons per year, primarily exporting 60.23% of its revenue overseas [2][7]. - Despite rumors of taurine prices skyrocketing, actual prices peaked at 25,000 yuan per ton in early May before dropping to 16,000 yuan per ton [7]. Financial Performance - Yong'an Pharmaceutical's revenue is projected to decline by 42.6% from 2022 to 2024, with a drop from 1.462 billion yuan to 839 million yuan [7]. - The company reported a net loss of over 4 million yuan in the first quarter of 2025, a 115.23% year-on-year decline [7]. - The taurine segment, which constitutes 75.67% of total revenue, saw a 4.14% decline in revenue for 2024, despite a 16.32% increase in sales volume [7]. Management and Operational Challenges - The company is facing dual challenges of declining core business and uncertainty regarding new ventures [1][6]. - The chairman, Chen Yong, was placed under investigation, leading to a temporary stock price drop [4][9]. - Despite the turmoil, the company is attempting to pivot towards health products, with its subsidiary launching a solid functional beverage that gained traction in online sales [8][9]. Market Sentiment and Speculation - The stock's dramatic rise was largely driven by speculative trading, with significant participation from retail investors and various trading firms [4]. - The market's reaction to management changes and operational challenges indicates a potential disconnect between stock performance and underlying business fundamentals [6][9].