Tencent: PURAPHARM (01498) will turn losses into profit in 2020, net profit will reach 31.7 million Hong Kong dollars

5 June 2021


Zhitong Finance APP learned that on March 25, 2021, PURAPHARM (01498) announced its annual results for the year ended December 31, 2020.

In 2020, PURAPHARM’s net profit reached 31.7 million Hong Kong dollars, compared with a net loss of 227.3 million Hong Kong dollars last year. The increase in net profit was mainly due to the fact that there was no significant impairment loss in 2020 compared to the previous year, and the group recorded a significant non-recurring government grant of HK$65.8 million, which was included in other income and gains, an increase from last year’s HK$12 million 53.8 million Hong Kong dollars. Government subsidies mainly include payments from relevant Chinese authorities to reward the group’s industrial investment in Guizhou Province, subsidies for financing costs, tax rebates and subsidies for certain research and development projects.

Concentrated Chinese medicine formula granule products

The Group’s sales of concentrated Chinese medicine formula granules in the Chinese mainland market reached 278.4 million Hong Kong dollars, a decrease of 6.7 million Hong Kong dollars or 2.4% from last year’s 285.2 million Hong Kong dollars. Among them, due to proper control of the epidemic, concentrated Chinese medicines in the Chinese mainland market in the second half of 2020 Sales of formulated pellets increased by 29.2% compared with the first half of the year. In the Hong Kong market, sales of concentrated Chinese medicine granular products were HK$146.4 million, a decrease of HK$15.1 million or 9.4% compared to last year. This was mainly due to the impact of the epidemic on the overall business environment and consumer sentiment in Hong Kong. Several Chinese medicine hospitals and clinics have The incomplete operation has led to a decrease in the demand for the group’s Chinese medicine.

It is reported that China’s National Medical Products Administration recently announced that it will end the pilot production of concentrated Chinese medicine formula granules. For the Group, this signifies that the market for concentrated Chinese medicine formula granules in China will gradually open after the national standard for concentrated Chinese medicine formula granules is fully released. Due to the Group’s solid position in market knowledge and technological advancement, the Group intends to once again become one of the first pioneers in the industry to take advantage of this market expansion opportunity. The Group will continue to cooperate with well-known research institutions at home and abroad to improve product quality and enhance product positioning, so as to become a high-end brand in the industry.

Chinese clinic

The total revenue of the Group’s Nongs Chinese Medicine Clinics selling concentrated Chinese medicine formula granular products and providing Chinese medicine diagnostic services was HK$49.9 million, a decrease of HK$46.5 million or 48.2% from last year’s HK$96.4 million. The decrease in revenue was mainly due to the closure of loss-making clinics, which led to the shrinking of the clinic network. The number of clinics operating in Hong Kong decreased from 57 clinics on December 31, 2019 to 30 clinics on December 31, 2020.

The group is optimistic about the economic development and demographic structure of the Greater Bay Area, and will take the lead in setting up a model clinic in Shenzhen to test the market, further preparing for the commercialization of the clinic in the future.

Chinese medicine health products

In terms of Chinese medicine health products, the total sales revenue of Chinese medicine health products in the US, Japan and Hong Kong markets was 85.8 million Hong Kong dollars, a decrease of 4.7 million Hong Kong dollars or 5.2% from last year’s 90.4 million Hong Kong dollars. Sales in overseas markets have increased due to rising consumer demand, while sales in Hong Kong have declined due to the impact of the traditional retail market in the new economy market and the restricted consumer behavior due to the impact of the epidemic, which has led to pharmacies and major chain stores. The passenger flow is generally declining, and the Group will also accelerate the progress of the consumer goods sector in the new economic environment.

The group has achieved an international layout through the acquisition of two mature brands, Kan Herbs in the United States and SODX in Japan. The acquired brands have mature production lines and stable sales channels. The Group will promote products through the establishment and deployment of Internet e-commerce platforms and a complete multi-layer supply chain system.

Chinese herbal medicine planting

The upstream planting division contributed HK$41.2 million to the overall revenue of the group, a decrease of HK$21 million or 33.8% from last year’s HK$62.2 million. Planting revenue is mainly derived from the planting and trading of Chinese medicinal materials. The decrease in the trading business of Chinese medicinal materials and the intensified market competition have led to a decrease in the income of the planting segment.

With favorable policies, the group will continue to increase marketing and operations in this business segment. At the same time, the Group will also deepen cooperation with local governments, plant and cultivate diversified local seeds and seedlings, accelerate the development of local characteristic agriculture, and assist local governments in poverty alleviation programs.

Abraham Chan, chairman of PURAPHARM, said: Looking forward to the future, the Chinese market will be the growth engine of the group. The Group’s business development department will strive to continuously find strategic partners in various industries in order to establish long-term mutually beneficial relationships and achieve positive additions to the business collaboration between the two parties. The Group believes that looking for strategic partners and new opportunities in China will help the company better integrate resources and improve the profitability of various business segments. The solid foundation built in China can continue to create considerable value for investors and shareholders. Value and return.