Key takeaway

Overall, facing external environmental impacts such as a year-on-year decrease in the incidence of respiratory diseases like influenza and medical insurance cost controls, the company's endogenous operations demonstrated strong resilience. Coupled with the performance boost from the consolidation of Tasly, the full-year results exceeded our previous expectations. In terms of external expansion, the company successfully completed the acquisition and first-year integration of Tasly, formally establishing a synergistic business structure of "One Body, Two Wings". In terms of shareholder returns, the company's total cash dividend ratio in 2025 reached 50.59% of net profit attributable to the parent. Looking ahead to 2026, as the inaugural year of the "15th Five-Year Plan", the company's operating revenue is expected to exceed the industry's average growth rate, with profits matching the revenue growth level. As a rare platform in the self-care field with successful multi-brand operations and a centrally-owned enterprise with excellent management and incentive mechanisms, the company has consistently increased its cash dividend amount, places high importance on shareholder returns, and should be accorded a certain valuation premium.

Event

The company releases 2025 financial results

On the evening of March 21, the company released its 2025 annual report, achieving total operating revenue of 31.603 billion yuan, a year-on-year increase of 14.43%; achieving net profit attributable to the parent of 3.421 billion yuan, a year-on-year increase of 1.58%; and achieving net profit attributable to the parent after deducting non-recurring gains and losses of 3. billion yuan, a year-on-year increase of 0.52%. The performance exceeded our previous expectations. Based on the total share capital in 2025, the company's total annual cash dividend distribution amounted to 1.731 billion yuan (including tax), accounting for 50.59% of the net profit attributable to the shareholders of the listed company achieved in 2025.

Risks: 1. Product promotion falling short of expectations: The company has increased its sales investment; if product promotion falls short of expectations, it will affect sales revenue and consequently the company's profit. 2. Drug price reduction risk: Intensified competition in the markets for the company's core products may lead to price reductions, thereby affecting the company's profit expectations. 3. Raw material price volatility risk: The prices of traditional Chinese medicinal materials are susceptible to various factors such as the macro environment, natural disasters, and cultivation conditions, making them prone to significant fluctuations. If the prices of TCM raw materials rise, the company's production costs may increase substantially, impacting its profits. 4. Hospital patient volume recovery falling short of expectations: Post-pandemic, home-based diagnosis and treatment are gradually gaining popularity, which may affect hospital patient volumes, thereby impacting prescription drug sales and the company's overall profit.