China Traditional Chinese Medicine (570) H1 2024 earnings summary

Executive summary

• Revenue for the six months ended 30 June 2024 was RMB8,385.5 million, down 9.9% year-over-year, mainly due to a sharp decline in concentrated TCM granules sales after centralized procurement and increased competition.

• Gross profit fell 14.6% to RMB4,061.3 million, with gross margin dropping 2.7 percentage points to 48.4% due to lower selling prices and higher raw material costs.

• Net profit decreased 65.3% to RMB214.1 million, with net margin at 2.6%, impacted by lower sales, higher credit impairment losses, and remedial tax expenses.

• Basic earnings per share dropped 63.5% to RMB4.19 cents.

• The company completed a mid-term adjustment of its strategic plan, focusing on five business sectors and strengthening its industry chain and compliance governance.

Financial highlights

• Revenue: RMB8,385.5 million (down 9.9% year-over-year).

• Gross profit: RMB4,061.3 million (down 14.6% year-over-year); gross margin 48.4%.

• Net profit: RMB214.1 million (down 65.3% year-over-year); net margin 2.6%.

• Basic EPS: RMB4.19 cents (down 63.5% year-over-year).

• Net current assets: RMB10,664.2 million; current ratio: 2.1.

Outlook and guidance

• Focus on improving efficiency in Chinese medicinal herbs integration, expanding TCM decoction pieces, and transforming the concentrated TCM granules business model.

• Plans to enhance brand effect, develop new health business models, and accelerate digital transformation.

• Continued emphasis on compliance, risk management, scientific innovation, and international expansion to drive future growth.

• No interim dividend proposed for the period.