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.
XIAO FANG ORD A (SHH) EQSW Exp:Company plans to raise 219M yuan after paying large dividends, drawing regulatory inquiry; high dividend payout ratio and declining ROE raise concerns about capital allocation.