XIAO FANG ORD A (SHH) EQSW Exp:

Xiaofang Pharmaceutical disclosed its 2026 semi-annual report on August 27. In the first half, it achieved total operating revenue of 282 million yuan, up 4.50 percent year on year. Net profit attributable to the parent company was 106 million yuan, down 12.64 percent year on year. Net profit after deducting non-recurring items was 106 million yuan, down 12.87 percent year on year. Net cash flow from operating activities was 97.7353 million yuan, up 8.28 percent year on year. The company plans to distribute a cash dividend of 3.9 yuan per 10 shares, tax included, to all shareholders. As of the end of the first half of 2026, the company's basic earnings per share were 0.66 yuan, and the weighted average return on equity was 9.29 percent.

Xiaofang Pharmaceutical released its 2026 semi-annual report on the evening of August 26. In the first half, it achieved attributable net profit of about 106 million yuan, down 12.64% year-on-year. In the same period, the company achieved operating revenue of about 282 million yuan, up 4.5% year-on-year. Xiaofang Pharmaceutical mainly focuses on the field of topical drugs, with products primarily over-the-counter medicines. The company said the fluctuation in net profit was mainly affected by factors such as rising raw material costs, strengthening the sales team, and brand promotion through online channels.

Xiaofang Pharmaceutical received a regulatory inquiry letter regarding its annual report information disclosure after paying large dividends while planning to raise additional funds. In 2024 and 2025, the company distributed dividends of 241 million yuan and 172 million yuan respectively, accounting for 117.33% and 82.85% of the net profit attributable to the parent company for those years. On June 10 this year, it disclosed plans to raise no more than 219 million yuan for the new construction project of an external-use drug production base, which was a core investment project from its IPO. The company stated that the previously raised funds have been basically used up, but the project still has a funding gap of over 380 million yuan, including a gap of over 270 million yuan for equipment purchases. Xiaofang Pharmaceutical's products are mainly non-exclusive, common over-the-counter drugs such as glycerin enemas and calamine lotion. Its overall gross margin in 2025 was 64.96%, and its return on equity has remained above 20% for many years, though it has been on a declining trend.

The Shanghai Stock Exchange issued a regulatory inquiry regarding Xiaofang Pharmaceutical's 2025 annual report, focusing on the reasonableness of selling expense growth far outpacing revenue growth. The company's revenue last year was 525 million yuan, up 10.68%, with net profit attributable to the parent at 207 million yuan, up 1.08%, but selling expenses reached 59 million yuan, a sharp increase of 42.14%. Xiaofang Pharmaceutical responded that it has no self-operated e-commerce stores; brand flagship stores on Tmall, JD.com, and others are all operated by chain pharmacies. In 2025, online channel revenue was 20.0943 million yuan, a year-on-year surge of 217.69%, with a gross margin of 60.88%, slightly lower than offline. Online marketing and promotion expenses reached 10.1565 million yuan, mainly due to increased traffic investment on platforms such as Meituan, JD.com, and Xiaohongshu, while offline expenses were pushed up by sales staff expansion, equity incentives, and industry exhibition participation. The company disclosed that its market share for glycerin enema and calamine lotion has ranked first in the industry for two consecutive years. Leveraging automated production and brand premium, its gross margin is higher than that of similar product lines at Fuyuan Pharmaceutical, and it has tiered procurement rebates, with cash rebates offsetting revenue and in-kind rebates recorded as contract liabilities.