Core Viewpoint - The resignation of Jiang Yi and Jiang Qian from their positions at Kang En Bei is attributed to "work adjustments," raising concerns about the company's leadership stability and governance structure [2][3][7]. Group 1: Resignation Details - Jiang Yi, the chairman and legal representative, and Jiang Qian, a board member, submitted their resignation reports, effective immediately, and will no longer hold any positions within the company [2][3]. - The board has approved the nomination of Xu Jie and Jin Junli as candidates for non-independent directors, to be voted on at the upcoming shareholder meeting on December 22 [2][4]. Group 2: Company Performance - Kang En Bei reported a revenue of 4.976 billion yuan for the first three quarters of the year, reflecting a year-on-year growth of 1.27%, while net profit attributable to shareholders reached 584 million yuan, up 12.65% [3]. - The increase in net profit outpaced revenue growth due to improved performance in core business operations and an increase in the market value of shares held in Jiahe Biological [3]. Group 3: Leadership Changes - The company has experienced frequent changes in its leadership over the past two years, with Jiang Yi's tenure as chairman lasting just over a year [5][6]. - Jiang Yi succeeded Hu Jiqiang, who had been a pivotal figure in the company for nearly 40 years, guiding its strategic direction and growth [6][7]. Group 4: Governance Structure - The governance structure of Kang En Bei has undergone significant changes since the Zhejiang Provincial Foreign Trade Group took control in 2020, leading to a transition of management from Hu Jiqiang to Jiang Yi [7].

Core Viewpoint - The report from Zheshang Securities indicates that Kang En Bei's revenue growth rates for Q1-Q3 2025 are projected to be -7.64%, +3.04%, and +10.42% year-on-year, showing continuous improvement quarter-on-quarter [1] Group 1: Revenue Performance - The significant drag on the company's performance in the first half of 2025 is primarily due to the high base effect from the flu season in the first half of 2024, particularly affecting the "Jin Di" brand of compound Houttuynia cordata syrup and other respiratory medications [1] - In contrast, digestive and metabolic medications such as Chang Yan Ning achieved a year-on-year growth of 16.51% in the first half of 2025 [1] Group 2: Future Outlook - Looking ahead to Q4 2025 and 2026, it is expected that with the normalization of flu data and the ongoing deepening of the mixed reform process, along with the steady advancement of the brand focus strategy, brand products are likely to see stable growth [1] - National sentinel hospital data indicates an increase in flu-like cases in both northern and southern provinces since late October 2025, surpassing the levels of the same period in 2024, which is expected to benefit the company's core business [1] Group 3: Product Impact and Strategy - The company's core products, including the "Kang En Bei" Chang Yan Ning series and "Jin Di" compound Houttuynia cordata series, are OTC products that are less affected by centralized procurement price reductions [1] - As the proportion of specialty health consumer products continues to rise, the impact of centralized procurement is expected to diminish [1] - The company maintains an "Overweight" rating [1]

Investment Rating - The investment rating for the company is "Accumulate" (maintained) [3] Core Views - The company is expected to see a performance turnaround, with a promising start to the "14th Five-Year Plan" [1] - Revenue growth is anticipated to recover gradually, with brand products expected to show stable growth [6] - The company has a good channel inventory, and its core products are less affected by price reductions from centralized procurement [6] Financial Summary - Projected revenue for 2024 is 6,515.16 million, with a slight decrease of 3.23% compared to the previous year, followed by a growth of 2.11% in 2025 and 10.40% in 2026 [2] - The net profit attributable to the parent company is expected to be 622.42 million in 2024, increasing by 5.21% year-on-year, with further growth of 15.39% in 2025 and 14.65% in 2026 [2] - Earnings per share (EPS) is projected to rise from 0.25 in 2024 to 0.37 in 2027 [2] Performance Indicators - The weighted ROE is expected to improve, reaching 8.05% by the end of Q3 2025, up by 0.52 percentage points year-on-year [6] - The company’s gross margin is projected to increase from 53.14% in 2024 to 56.24% in 2027 [7] - The net profit margin is expected to rise from 10.10% in 2024 to 11.88% in 2027 [7] Valuation Metrics - The projected P/E ratios are 18.84 for 2024, decreasing to 12.47 by 2027 [2] - The projected P/B ratios are expected to decline from 1.76 in 2024 to 1.51 in 2027 [7] - The EV/EBITDA ratio is projected to decrease from 10.10 in 2024 to 7.22 in 2027 [7]

Core Insights - The company reported a revenue of 3.358 billion and a net profit of 354 million for the first half of 2025, with a 31% year-on-year increase in operating cash flow [1] - The company maintains a "Traditional Chinese Medicine Health" core strategy and continues to optimize its "one body, two wings" business layout [1] - The company emphasizes shareholder returns, completing a cash dividend for 2024 with a payout ratio of 60.76% and repurchasing 63.579 million shares [2] Financial Performance - Total revenue reached 3.358 billion, with a net profit of 354 million [1] - Operating cash flow increased by 31%, reaching 400 million [1] - Sales expense ratio and debt-to-asset ratio both decreased year-on-year, indicating improved operational quality [1] Business Segments - The traditional Chinese medicine segment generated 583 million in revenue, a 4.6% increase year-on-year [1] - The specialty health consumer products segment saw revenue of 321 million, growing over 10% [1] - Major brand products achieved sales of 2.006 billion, with the "Kang En Bei" intestinal health series exceeding 500 million in sales, a growth of over 15% [1] R&D and Innovation - The company received one approval for a modified traditional Chinese medicine and five approvals for generic drugs, including FDA approval for Entecavir tablets and Acetylcysteine solution [2] - A total of 74 new R&D projects were initiated, focusing on product lifecycle enhancement through formulation improvements and evidence-based research [2] ESG and Governance - The company received an "A" rating and a "AA-" rating from Zhong Chengxin Green Finance, indicating steady improvement in governance [3] - The company plans to continue focusing on its pharmaceutical core business while enhancing innovation and transformation [3]