Core Viewpoint - Jilin Aodong Pharmaceutical Group Co., Ltd. reported a significant increase in net profit despite a decline in revenue, demonstrating strong operational capabilities and strategic execution [1][4]. Financial Performance - In the first half of 2025, the company achieved operating revenue of 1.126 billion yuan, a year-on-year decrease of 20.21% - The net profit attributable to shareholders reached 1.282 billion yuan, a year-on-year increase of 138.44% [1]. Business Structure - The traditional Chinese medicine segment remains the core business, generating sales revenue of 686 million yuan, accounting for 60.90% of total revenue - The chemical drugs, chain pharmacy wholesale and retail, and health industry segments contributed sales revenues of 143 million yuan, 187 million yuan, and 83 million yuan, representing 12.73%, 16.59%, and 7.39% of total revenue, respectively [1]. Strategic Initiatives - The company is actively reforming its marketing system in the traditional Chinese medicine segment, having completed the marketing restructuring of 22 products and adjusted pricing policies for over 50 products - The company has made significant progress in its Chinese medicine formula granule business, obtaining 525 registration certificates for market access [2]. - A plan to issue convertible bonds to raise 134 million yuan for capital increase in its subsidiary, aimed at constructing a project for Chinese medicine formula granules with an annual production capacity of 2,000 tons [2]. Market Trends - The recovery of the consumer market is expected to accelerate the sales of consumer-oriented traditional Chinese medicine - Long-term growth is supported by an aging population and increasing health awareness among residents, providing a solid foundation for the industry [3]. Operational Efficiency - The company has optimized operational efficiency and adjusted regional layouts by closing some chain pharmacy stores, while enhancing brand management and deepening industry chain collaboration - The chain pharmacy business added 73,000 new members during the reporting period [3]. Asset Management - As of June 30, 2025, the company reported total assets of 34.151 billion yuan, a 3.48% increase from the beginning of the year, and net assets of 29.960 billion yuan, a 3.21% increase - The asset-liability ratio stands at 11.54%, indicating a low level within the industry [4].

Business Performance - In 2024, the company's main business segments generated a total revenue of CNY 2,273.76 million, accounting for 87.10% of total revenue, a decrease of 23.79% year-on-year [1] - The breakdown of revenue by segment is as follows: - Traditional Chinese Medicine (TCM): CNY 1,605.54 million (61.50%) - Chemical drugs: CNY 276.85 million (10.61%) - Chain pharmacy wholesale and retail: CNY 391.37 million (14.99%) - Health business: CNY 212.13 million (8.13%) [1] Product Development - The "Xuefu Zhuyu Oral Liquid" is a key product derived from a classic formula, recognized with multiple awards, including the National Science and Technology Progress Award [1] - In 2024, this product was selected for centralized procurement, which is expected to enhance its market share [2] Cost Control Measures - The company is addressing rising costs of herbal materials through several strategies: - Establishing GAP bases for stable supply of key herbs - Utilizing data analysis for demand forecasting and optimizing procurement [3] - Enhancing supply chain management and internal efficiency to reduce costs [3] Chemical Drug Segment - The chemical drug segment achieved a revenue of CNY 276.85 million in 2024, representing 10.61% of total revenue [4] - Key products include anti-tumor and immune-regulating drugs, with significant sales growth in specific items like injection RNA [4][6] - The company is focusing on deep market penetration and academic promotion to expand its market share [6] Retail and Wholesale Business - The chain pharmacy segment generated CNY 391.37 million in revenue, accounting for 14.99% of total revenue [8] - Membership increased by 18,300, totaling 1,189,000 members, with a net addition of 6 stores [8] - The company is enhancing online sales through major e-commerce platforms and implementing O2O strategies [9] Investment and Shareholder Returns - The company holds 20.05% of Guangfa Securities, its largest investment, enhancing its capital position [10] - A cash dividend of CNY 591 million is planned for 2024, reflecting a commitment to shareholder returns while balancing operational needs [12][13]