Since the start of 2026, the Hong Kong stock healthcare sector has continued to experience a volatile consolidation phase, with assets offering reliable earnings and dividend capacity increasingly gaining favor among investors. As a leading enterprise in China's nephrology field, CONSUN PHARMA (01681) stands out with its double-digit business growth and notably undervalued valuation, while actively signaling long-term positive developments to the market through a combination of high dividends and share buybacks. The interim financial report shows that CONSUN PHARMA generated revenue of RMB 1.785 billion in the first half of the year, a 13.8% increase year-on-year, alongside a 19.5% rise in net profit attributable to shareholders, reaching RMB 595 million. Operating cash flow surged 58.6% to RMB 781 million, underscoring the solid quality of its earnings. Notably, the company's profit growth outpaced revenue expansion during the period, a remarkable achievement amidst a challenging industry backdrop. Gross profit climbed 20.1% to RMB 1.452 billion, with the gross margin jumping from 77.1% to 81.4% year-on-year. This margin enhancement is attributed to optimized supply chain management, improved operational efficiency, and lower procurement costs for core raw materials. As revenue grows, the company's cost control capabilities are strengthening concurrently, with scale effects increasingly evident.
Compared with major listed companies in the traditional Chinese medicine sector on both the Hong Kong and A-share markets, CONSUN PHARMA's growth performance stands out prominently. While the Hong Kong-listed TCM segment has faced pressure, with several leading players seeing declines in both revenue and profit, CONSUN PHARMA distinguishes itself as a rare "dual growth" entity with a 13.8% revenue increase and a 19.5% profit rise. Furthermore, its gross and net profit margins significantly exceed the industry average, further solidifying its profitability leadership. Backed by robust fundamentals and ample cash flow, the company continues its high dividend policy, declaring an interim dividend of HKD 0.38 per share, demonstrating its confidence in future prospects. Additionally, on May 27, the company issued a voluntary announcement outlining plans to repurchase up to HKD 200 million in shares before December 31, 2026. Following the interim results release, the buyback program has resumed, with 1.255 million shares repurchased as of September 17, underscoring management's strong recognition of intrinsic value and confidence in future growth.
By business segment, renal series products generated sales of RMB 1.335 billion in the first half, up 18.1% year-on-year, continuing to cement market leadership. The core product, Niaoduqing Granules, stands as China's first modern TCM for kidney disease validated through evidence-based medical research, ranking first in the nephrology TCM market for consecutive years with confirmed clinical efficacy. In terms of market potential, with over 20 million patients with stage 3-4 chronic kidney disease in China, Niaoduqing Granules still holds significant room for market penetration. Company management noted during the results briefing that since the centralized procurement implementation in 2023, Niaoduqing Granules has continued to gain volume.
Beyond the core renal business, diversified segments are also contributing incremental growth. Women's and children's pharmaceutical revenue reached RMB 187 million in the first half, up 9.1%, with the flagship product Yuanlikang Iron Dextran Oral Solution, the only oral iron supplement included in both the National Essential Drug List and Medical Insurance Catalog, steadily expanding its market share. Meanwhile, the hepatobiliary series products have shown explosive growth, with first-half revenue surging 233.7% year-on-year. In the medical imaging contrast agents domain, Gadoteric Acid Meglumine Injection received market approval in August, while Octafluoropropane Lipid Microspheres and Gadoxetic Acid Disodium Injection are expected to launch within the next six months.
If the first-half performance reflects current operational strength, the company's strategic initiatives point toward longer-term development. This year, CONSUN PHARMA has advanced simultaneously in three dimensions—industry chain extension, overseas expansion, and innovative R&D—building a competitive moat. On the industrial chain front, the company strategically invested RMB 191 million in June to acquire a 30% stake in Shanghai Huamao Pharmaceutical. This partner possesses deep expertise in synthetic biology, precision fermentation, and dialysis API development, aligning closely with its core renal and women's/children's businesses. This approach will help lower supply chain costs and secure stability of core raw materials. Such forward-looking upstream integration carries significant strategic foresight amid rising supply chain volatility in the pharmaceutical industry.
In international markets, the company is steadily advancing product expansion strategies to lay the groundwork for future global scaling. Notably, Niaoduqing Granules has initiated modern botanical drug registrations in Indonesia, Vietnam, and Thailand, having successfully entered the Indonesian market and gained academic recognition there, while also completing its first-round submission for traditional Chinese medicine in Canada. Yulin Pharmaceutical's products continue to focus on key Southeast Asian markets with tailored "one-country-one-strategy" promotional approaches.
On the innovation front, the company is making decisive progress, shifting its R&D model toward "source innovation." In the first half, research and development investment reached approximately RMB 90.823 million, reflecting substantial year-on-year growth. In the pipeline, Qijian Granules, a Class 1.1 innovative TCM for diabetic nephropathy, received clinical trial approval from the National Medical Products Administration in August. Another candidate, Baihua Zijie Granules, targeting lupus nephritis, is slated for IND submission in the second quarter of 2027.
At the capital markets level, CONSUN PHARMA has been included in the Stock Connect eligible list since March 9, with multiple brokers issuing positive ratings. Following the results, China Merchants Securities International's research report noted that the interim performance validates the steady growth of the renal business foundation and the execution capability for transformation into an innovative drug platform. With valuation still at low levels, it initiated an "Overweight" rating with a target price of HKD 22.6. Guoyuan International also published a report stating that the company boasts strong product strength, with Niaoduqing Granules presenting high technical and market barriers that are extremely difficult to replicate, and that performance is poised for sustained rapid growth. It gave a "Buy" rating with a target price of HKD 19.16.
In summary, CONSUN PHARMA has outlined a clear development blueprint: the core renal business provides a stable earnings foundation and ample cash flow, diversified segments contribute incremental flexibility, and the three-pronged strategic approach of industrial chain extension, overseas expansion, and innovative R&D positions its long-term value proposition in line with current trends in Hong Kong healthcare investment. As market sentiment warms and sector momentum reverses upward, the company's stock may be poised for a "Davis Double Play," demonstrating considerable upside potential to the market.
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