Guizhou Sanli Pharmaceutical Co Ltd

Sanli Pharmaceutical released its 2026 interim report. Total operating revenue was 559 million yuan, down 20.31% from the same period last year. Net profit attributable to the parent company was 37.181 million yuan, down 55.24% year-on-year. Net cash inflow from operating activities was 111 million yuan. The asset-liability ratio was 40.21%, gross margin was 71.24%, return on equity was 2.53%, and diluted earnings per share was 0.09 yuan. The company had 18,700 shareholders, and the top ten shareholders held 61.52% of total share capital.

Sanli Pharmaceutical disclosed a cliff-like decline in its 2025 performance. Operating revenue fell 21 percent year-on-year to 1.703 billion yuan, net profit attributable to the parent company dropped 83 percent to just 46 million yuan, and recurring net profit plunged 90 percent to 26 million yuan. The company's core product, the Kaihoujian spray, falls under respiratory system medications. The average selling price of respiratory drugs rose 5.21 percent year-on-year to 23.47 yuan per box, while tonic drugs saw a 16.21 percent price increase to 37.47 yuan per box. However, sales volume of respiratory drugs fell 28.84 percent from 60.4995 million boxes to 43.0512 million boxes, and tonic drug volume dropped 37.56 percent from 10.3822 million boxes to 6.4829 million boxes. These two categories together account for over 90 percent of main business revenue, and the decline in their sales volumes directly led to the sharp drop in full-year performance. The company admitted that the roughly 400 million yuan decline in main product revenue and the 273 million yuan drop in gross profit were mainly due to lower sales volumes, with price changes having a relatively small impact. In addition, post-merger problems erupted. Subsidiary Hanfang Pharmaceutical saw its 2025 revenue fall 31.3 percent year-on-year and net profit drop 51.31 percent. Sanli Pharmaceutical recorded a goodwill impairment loss of 122 million yuan for the subsidiary, accounting for 253.31 percent of the period's net profit. As of year-end, the carrying value of goodwill remained as high as 433 million yuan, representing 28.61 percent of net assets. The company's short-term debt repayment pressure is prominent. At the end of the first quarter of 2026, short-term interest-bearing debt totaled approximately 558 million yuan, while cash on hand was only 200 million yuan. The company has disclosed a private placement plan to raise up to 700 million yuan from Cenli Technology, wholly owned by the actual controller, to replenish working capital and repay loans. The company expects net profit attributable to the parent company in the first half of 2026 to decline by 45.82 percent to 61.47 percent year-on-year, citing continued pressure on the traditional Chinese medicine segment due to factors such as deepening medical insurance payment reforms.

The Shanghai Stock Exchange recently issued an inquiry letter to Guizhou Sanli Pharmaceutical regarding its 2025 annual report, focusing on the company's significant performance decline. In 2025, the company's revenue was 1.703 billion yuan, down 21% year-on-year; net profit attributable to the parent was 46 million yuan, down 83% year-on-year. Among these, respiratory medication revenue fell 25% and sales volume dropped 29% year-on-year; tonic medication revenue fell 22% year-on-year. Overall gynecology category revenue rose 19% year-on-year, with the gynecology medication sub-segment sales volume up 62% and segment revenue up 50% year-on-year. The company responded that the respiratory decline was mainly due to hospital cost controls under DRG/DIP payment reforms, a shrinking base of pediatric drug use, channel destocking, and the company's proactive reduction in promotion in 2025 against a high base in 2024. The tonic category was dragged down by pressure on prescription channels and intensified competition for non-exclusive products. For gynecology medications, the company switched to medium and large packaging sizes starting in 2023, experienced channel adjustment pains in 2024, and saw new customers ramp up volumes in 2025, driving segment revenue growth. Over the past three years, the top ten customers together accounted for approximately 18% to 20% of revenue, mostly leading provincial distributors. In 2025, the company's channels continued to concentrate toward large national pharmaceutical distributors, and the list of top ten customers was updated accordingly. The top ten suppliers were mainly herbal medicine and packaging material vendors from places like Bozhou and Chongqing, with the top ten suppliers' procurement share ranging from 69% to 88% over the three years. Only one Guizhou-based pharmaceutical company appeared on both the top ten customer and supplier lists. The subsidiary Sankang Herbal Medicines sold decoction-piece-grade herbs to that company, while the company's pharmaceutical segment purchased raw herbs for formulation from it. The quality standards and pricing for the two were independent of each other, and the arrangement was commercially reasonable.

Sanli Pharmaceutical disclosed its earnings forecast, expecting net profit attributable to the parent for the first half of 2026 to be between 32 million yuan and 45 million yuan, a year-on-year decline of 45.82% to 61.47%. Deducted non-recurring net profit is expected to be between 26 million yuan and 37 million yuan, a year-on-year decline of 47.87% to 63.37%. The company's main business is the research, development, production, and sale of pharmaceuticals. During the reporting period, affected by factors such as the deepening of DRG/DIP medical insurance payment reforms and changes in market conditions, the overall performance of the traditional Chinese medicine segment continued to face pressure, and the company's product sales fell short of expectations, leading to a decline in profits.

Sanli Pharmaceutical issued a preliminary earnings decline announcement for the first half of 2026, expecting attributable net profit of 32 million to 45 million yuan, a year-on-year decrease of 45.82% to 61.47%. The company stated that, affected by the deepening of DRG/DIP medical insurance payment reforms and changes in market conditions, the traditional Chinese medicine segment continues to face overall performance pressure, and the prosperity of industries related to its main business fell short of expectations, leading to lower-than-expected product sales and a decline in profit.