Taiji Group 2025 Annual Report Analysis: Revenue decreased by 15.23% to 10.5 billion yuan; net profit attributable to parent increased by 352.38% to 121 million yuan

Core Profitability Indicator Interpretation

Operating Revenue: Contracting in scale, diverging in structure

In 2025, the company achieved operating revenue of 10.50 billion yuan, a year-on-year decrease of 15.23%. By business segment:

• Pharmaceutical Manufacturing: Revenue was 5.20 billion yuan, down significantly by 26.11% year over year. The gross margin was 46.04%, down 12.68 percentage points year over year. The main drag factors include the impact of the centralized procurement (VBP) policy, homogeneous competition in the market, and changes in the sales settlement model.
• Pharmaceutical Distribution: Revenue was 6.21 billion yuan, down 7.86% year over year. The gross margin was 8.70%, basically flat versus the prior year. Against the backdrop of industry consolidation, the business scale contracted somewhat, but profitability stability remains relatively strong.
• Traditional Chinese Medicine (TCM) Material Resources: Revenue was 1.18 billion yuan, up 12.39% year over year, becoming the only core segment showing growth. The company’s planned layout of authentic medicinal material bases and its “harvest-at-freshness processing” model are gradually releasing benefits.
• Healthy Aging and International Business: Revenue was 154 million yuan, a dramatic plunge of 66.68% year over year. It was significantly affected by weak overseas market demand and adjustments to the product mix.

Net Profit: Low base, surge in growth; non-recurring gains make a big contribution

In 2025, net profit attributable to shareholders of listed companies was 121 million yuan, up sharply by 352.38% year over year. The high growth rate in net profit was mainly due to a low base in the same period of 2024 (only 27 million yuan). At the same time, non-recurring items contributed significantly: total non-recurring gains and losses for the year were 76.90 million yuan, mainly including gains and losses from disposal of non-current assets of 28.21 million yuan and government grants of 96.25 million yuan, with their contribution to net profit accounting for more than 63%.

Net profit excluding non-recurring items: Weak main business profitability; lack of ongoing growth

Net profit after deducting non-recurring gains and losses was 43.67 million yuan, up only 13.32% year over year, far lower than the net profit growth rate. This indicates that the company’s main business profitability is still relatively weak, and profit growth mainly relies on non-recurring income, lacking sustainability.

Earnings per Share: Following the high growth of net profit; excluding non-recurring metrics are unimpressive

• Basic earnings per share: 0.22 yuan/share, up 340.00% year over year, matching the net profit growth rate.
• Basic earnings per share excluding non-recurring items: 0.08 yuan/share, up 14.29% year over year, highlighting the characteristic of weak growth in main business profitability.

Expense Control: Sales expenses drop sharply; administrative and financial expenses rise slightly

Total expense scale: Down sharply year over year; structural optimization

In 2025, total period expenses were 2.80 billion yuan, down 2.00 billion yuan year over year, a decline of 41.73%. The contraction in expenses far exceeded the decline in operating revenue, becoming an important support for profit growth.

Selling expenses: Change in settlement model; scale cut in half

Selling expenses were 1.65 billion yuan, down 49.88% year over year. This was mainly because the company’s sales settlement model changed, and the decline in operating revenue scale reduced related expenses. In terms of structure, employee compensation, advertising and promotional expenses still account for the major portions, at 0.66 billion yuan and 0.66 billion yuan respectively, totaling 79.65% of selling expenses.

Administrative expenses: More labor and depreciation; rigid increase

Administrative expenses were 0.76 billion yuan, up 10.99% year over year. This was mainly due to increases in labor costs and depreciation expenses, reflecting that rigid costs rose during the company’s adjustments to its organizational structure and digital transformation process.

Financial expenses: Borrowings increase; interest expense rises

Financial expenses were 0.15 billion yuan, up 5.59% year over year. This was mainly due to an increase in the scale of bank borrowings leading to higher interest expense; interest expenses in the year were 0.14 billion yuan, up 4.12%.

R&D expenses: Direct materials decrease; R&D spending dips slightly

R&D expenses were 0.26 billion yuan, down 7.88% year over year, mainly due to a reduction in direct materials input. However, total R&D spending for the full year was 0.28 billion yuan, accounting for 2.63% of operating revenue. Of this, capitalized R&D spending was 18.72 million yuan, with a capitalization rate of 6.78%. R&D intensity remained stable.

R&D personnel: Stable team; optimized structure

At the end of 2025, the number of R&D personnel was 905, accounting for 8.33% of the company’s total headcount. Based on educational background:

• 18 doctoral candidates and 142 master’s graduates, totaling 17.68% of R&D personnel, with an increased share of high-education talent;
• Employees with undergraduate and above degrees account for 90.61%, indicating that the overall quality of the R&D team is high;
• In terms of age distribution, there were 389 R&D personnel aged 30–40, accounting for 42.98%, becoming the core force for R&D. The team’s age structure is relatively balanced.

Cash Flow: Turnaround from negative to positive on operations; fundraising side contracts significantly

Net cash flow from operating activities: Turns positive; quality improves

In 2025, the net cash flow generated from operating activities was 0.58 billion yuan. The figure for the same period last year was -0.63 billion yuan, achieving a turnaround to positive. This was mainly because while the decline in sales scale reduced cash inflows from sales of goods, cash outflow items—including purchases of goods, payments of employees’ compensation, tax and fee payments, and daily expense outlays—were all significantly reduced, and the effects of cash flow management were evident.

Net cash flow from investing activities: Reduced spending; pressure eased

The net cash flow from investing activities was -0.38 billion yuan, compared with -0.81 billion yuan in the same period last year. The scale of spending decreased by 0.43 billion yuan year over year. This was mainly because capital expenditures such as purchasing fixed assets and other long-term assets during the current period fell significantly compared with the same period, reflecting the company’s temporary slowdown in its pace of capacity expansion.

Net cash flow from financing activities: High debt repayment pressure; net amount drops sharply

The net cash flow from financing activities was 0.05 billion yuan, down 88.88% year over year. This was mainly because debt repayment outflows in the current period increased significantly compared with the same period, while the scale of newly added borrowings was limited, highlighting pressure on the financing side.

Risk Factor Alerts

Market and policy risks

The pharmaceutical industry faces frequent policy adjustments. Risks include the dynamic removal from the National Reimbursement Drug List, and centralized procurement price pressure continues to exist. If core products are removed from the reimbursement list or centralized procurement winning prices fall significantly, it will directly affect product sales and profitability levels. At the same time, industry regulation is becoming stricter, and compliance costs across R&D, manufacturing, and distribution continue to rise.

Quality risks

After the 2025 edition of the “Chinese Pharmacopoeia” is implemented, standards for quality of TCM medicinal materials and requirements for pesticide-residue control are significantly improved. The company needs to continuously upgrade its testing capabilities and optimize planting and production processes. If quality management has oversights, it may face risks such as product recalls and regulatory penalties.

Cost risks

The cost structure of TCM medicinal material raw materials fluctuates in a structural way. The building of GAP certification and a traceability system raises raw material costs. At the same time, centralized procurement for proprietary Chinese medicines and decoction pieces puts pressure on terminal prices. This obstructs cost pass-through. Combined with investments in environmental protection and process upgrades, the company’s profit space faces compression.

R&D risks

Drug R&D involves a long cycle, high investment, and uncertainty. If in-process projects fail to progress as planned, fail clinical trials, or face registration obstacles, it will adversely affect the layout of future product pipelines and growth in performance.

Compensation for executives and board members: Core executive compensation stable; compensation for newly hired personnel is relatively low

• Chairman Yu Min: Total pre-tax remuneration during the reporting period was 0.97 million yuan, which is basically in line with the company’s operating performance and the industry level.
• General Manager Yu Zongbin: Total pre-tax remuneration was 0.96 million yuan, close to the chairman’s compensation, reflecting consistency in executive compensation at the management level.
• Vice General Manager: Executive Vice General Manager Yuan Yonghong’s compensation was 0.89 million yuan; Cui Hainyan 0.61 million yuan; Chen Kang 0.54 million yuan; Jiang Xi 0.53 million yuan; Zheng Hongtao 0.26 million yuan. Compensation levels are related to management responsibilities and time in office.
• Chief Financial Officer Yu Jian: Since he took office in October 2025, the pre-tax remuneration during the reporting period was only 0.07 million yuan.

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Responsible editor: Xiao Lang Express