Core Viewpoint - The company Pianzaihuang, known as the "King of Traditional Chinese Medicine," has experienced a significant decline in stock price and financial performance due to disappointing quarterly results and ongoing challenges in its core business [1][2]. Financial Performance - In Q3, the company reported revenue of 20.6 billion, a year-on-year decrease of 26.3%, and a net profit of 6.87 billion, down 28.8% year-on-year [2]. - The company has faced three consecutive quarters of revenue decline and two quarters of net profit decline, marking the first time in 20 years that both revenue and net profit have decreased in the first three quarters [2][3]. - The gross profit margin has dropped from 45% in Q1 to 38.93%, indicating a significant decline in profitability [2][3]. Cash Flow and Sales Issues - The net cash flow from operating activities was 4.87 billion, a decrease of 62.53% year-on-year, highlighting cash flow challenges [3]. - The decline in net profit is attributed to reduced sales in the pharmaceutical manufacturing sector and a decrease in gross margin [3]. Pricing and Market Dynamics - The company has raised prices 18 times since its A-share listing in 2003, with prices increasing from 115 yuan per pill to 760 yuan, a rise of 561% [3]. - Despite price increases, the market has seen diminishing returns, leading to unsold inventory and a significant drop in demand [3][4]. - Current market prices for Pianzaihuang products are lower than the official price, creating a pricing discrepancy that complicates sales [4]. Business Segments and Growth Challenges - The company primarily operates in three segments: liver disease medication (Pianzaihuang), pharmaceutical commerce, and skincare products [5]. - Pianzaihuang accounts for over 81% of net profit, while the pharmaceutical commerce segment contributes only 8.6% [6]. - The skincare segment has seen a decline in net profit contribution from 20% in Q3 2020 to 8.53% currently, indicating a lack of growth in this area [6]. Overall Assessment - The current situation for Pianzaihuang is characterized by stagnant sales of its main product and a lack of new business growth points [8]. - The company's historical narrative and market position are overshadowed by the need for tangible profitability and cash flow, emphasizing the risks associated with individual stock investments [8].