Hong Kong-listed TRAD CHI MED announced on the evening of the 27th that it expects its net profit for last year to shift from profit to loss, with the estimated net loss ranging from approximately 350 million to 500 million yuan, compared to a profit of 20.77 million yuan the previous year. The adjusted net profit also saw a year-on-year decline of 45% to 55%, from about 635.5 million yuan in the same period last year. Impacted by this negative news, TRAD CHI MED's stock price fell by over 4% on the 28th. The stock has performed poorly in recent years, with its current price representing only about 30% of its 2018 historical high.
Regarding the anticipated loss, TRAD CHI MED explained that the primary reasons for the shift from profit to loss are: the revenue scale and profitability of its Chinese medicine formula granules business declined due to factors including an increased proportion of centralized procurement business and intensified market competition; impairments for goodwill, intangible assets, and credit increased during the period. The adjusted net profit figure represents the net profit after excluding the impact of the following items: impairments related to goodwill and associated asset groups, and back taxes paid by certain subsidiaries.
The company stated that the aforementioned matters will not adversely affect its capacity for continued operations and emphasized that the mentioned adjusted net profit is not a defined measure under Hong Kong Financial Reporting Standards.
Signs of TRAD CHI MED's loss last year were already apparent. Its interim report showed that for the first half of last year, the company achieved operating income of 7.463 billion yuan, a decrease of 11% year-on-year, and reported a net loss attributable to owners of 108 million yuan.
It is noteworthy that two years ago, TRAD CHI MED attempted but failed to privatize and delist. On October 18, 2024, TRAD CHI MED announced that the plan by its controlling shareholder, China National Pharmaceutical Group (Sinopharm), to take the company private at HK$4.60 per share had officially fallen through because the preconditions were not met. In February 2024, TRAD CHI MED had announced that Sinopharm planned to privatize it; prior to the announcement, TRAD CHI MED's market capitalization was approximately HK$16 billion, and Sinopharm's privatization offer represented a premium of 34.11%. Based on the equity ratio, the funds required for the privatization were estimated to be around HK$15.45 billion.
Following the failed privatization attempt, TRAD CHI MED's stock price fell sharply, and it has shown weak performance in recent years, plunging over 40% in 2024 and declining over 6% in 2025.
As a significant listed company within Sinopharm's modern Chinese medicine segment, TRAD CHI MED's business spans multiple areas including the production of Chinese medicinal materials, Chinese herbal decoction pieces, and Chinese medicine formula granules. Particularly in the field of Chinese medicine formula granules, TRAD CHI MED has accumulated a substantial leading advantage. The company has already established several national leading positions: it ranks first nationally in the layout of its Chinese medicinal material bases and primary processing capacity at production sites; its business model of "Shared Chinese Medicine · Intelligent Distribution Centers" for decoction pieces is number one in the country; it leads nationally in the scientific research technology, production capacity, and market scale for Chinese medicine formula granules; and it holds the top national position in the number of essential drugs among its proprietary Chinese medicines, product portfolio, and production capacity.
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