Summary of Yunnan Baiyao Conference Call Company Overview - **Company**: Yunnan Baiyao - **Industry**: Pharmaceutical and Healthcare Key Financial Performance - **2024 Revenue**: Exceeded 40 billion CNY, a year-on-year increase of 2.36% [2] - **2024 Net Profit**: 4.749 billion CNY, a year-on-year increase of 16% [2] - **2024 Non-recurring Net Profit**: Increased by 20.18% [2] - **Q1 2025 Revenue**: 10.841 billion CNY, a year-on-year increase of 0.62% [2] - **Q1 2025 Net Profit**: Increased by 13.67% [2] - **Q1 2025 Non-recurring Net Profit**: Increased by 11.65% [2] Business Segment Performance - **Pharmaceutical Division**: Revenue of 6.924 billion CNY in 2024, up 11.8%, with aerosol sales exceeding 2.1 billion CNY, a growth of 26% [2][10] - **Health Products Division**: Revenue of 6.526 billion CNY, up 1.6%, maintaining a leading position in oral care and hair loss prevention [2][10] - **Traditional Chinese Medicine Resources**: Revenue of 1.751 billion CNY, up 3.13%, with a cost reduction of 30 million CNY [2][10] - **Medical Devices and Health Supplements**: Revenue growth of 61% and 101% respectively [2][11] Research and Development - **Current Projects**: Four transdermal patch products under development, with four patents obtained [2][12] - **Innovative Drug Development**: Focus on nuclear medicine, with INR101 (prostate cancer diagnosis) and INR102 (prostate cancer treatment) progressing through clinical trials [2][13] Future Projections - **Revenue Forecast (2025-2027)**: Expected to be 41.7 billion, 43.5 billion, and 45.2 billion CNY, with a growth rate of approximately 4% [4][8] - **Net Profit Forecast**: Expected to be 5.1 billion, 5.6 billion, and 6.0 billion CNY, with growth rates of 8%, 9.6%, and 6% respectively [4][8] - **Earnings Per Share (EPS)**: Projected at 2.8 CNY, 3.16 CNY, and 3.36 CNY for the respective years [8] Shareholder Returns - **Cumulative Net Profit**: 49.545 billion CNY since listing, with cumulative dividends of 28.735 billion CNY [7] - **Dividend Payout Ratio**: Average over 90% in the last three years, with a cash dividend of 4.279 billion CNY in 2024 [7] Valuation Comparison - **Valuation Relative to Peers**: Yunnan Baiyao's expected PE ratio is around 20, compared to an average of 25 for peers like Pian Zai Huang and Tong Ren Tang, indicating potential for valuation recovery [4][9][15] Strategic Insights - **Core Business Segments**: Includes pharmaceutical, health products, traditional Chinese medicine resources, and medical devices [3] - **R&D Strategy**: Short-term focus on major traditional Chinese medicine products, mid-term on transdermal patches, and long-term on nuclear medicine [5][14] Conclusion Yunnan Baiyao demonstrates steady growth across its business segments, with a strong focus on R&D and innovation. The company is well-positioned for future growth, with a favorable valuation compared to industry peers, making it an attractive investment opportunity.

Core Viewpoint - The company demonstrated steady growth in Q1 2025, with revenue and net profit increasing, while maintaining a focus on core products and optimizing its industrial structure [1][3]. Financial Performance - In Q1 2025, the company achieved operating revenue of 10.841 billion yuan, a year-on-year increase of 0.62% [1] - The net profit attributable to shareholders was 1.935 billion yuan, up 13.67% year-on-year [1] - The net profit after deducting non-recurring items was 1.887 billion yuan, reflecting an 11.65% year-on-year growth [1] - Industrial revenue reached 4.470 billion yuan, with a year-on-year growth of 7.63% and an industrial gross margin of 68.34%, up 1.76 percentage points [1] Operational Efficiency - The net cash flow from operating activities was 714 million yuan, a significant increase of 35.39% year-on-year, driven by strong cash receipts from sales [1] - The sales expense ratio decreased by 1.6 percentage points to 9.9%, while the management expense ratio fell by 0.3 percentage points to 1.4% [1] - Inventory decreased by 5% year-on-year, indicating improved inventory management efficiency [1] Product Development Strategy - The company is focusing on short, medium, and long-term product development, particularly in traditional Chinese medicine and innovative drugs [2] - Currently, there are 11 major traditional Chinese medicine products undergoing secondary development, with 25 projects in progress [2] - The company is advancing innovative traditional Chinese medicine products, including the Yunnan Baiyao transdermal preparation, with various clinical trials underway [2] Investment Outlook - The company is recognized as a leading player in the traditional Chinese medicine sector, with a clear strategic layout for the short, medium, and long term [3] - Revenue projections for 2025-2027 are 42.7 billion, 45.4 billion, and 48.1 billion yuan, with year-on-year growth rates of 7%, 6%, and 6% respectively [3] - Expected net profits for the same period are 5.2 billion, 5.7 billion, and 6.2 billion yuan, with corresponding growth rates of 9.9%, 9.4%, and 8.5% [3]