Pharmesis International (BFK) H2 2023 earnings summary

Executive summary

• FY2023 revenue fell 9.4% to RMB45.6m; attributable net loss widened to RMB5.0m from RMB3.6m, amid lower drug sales and a flood-related production shutdown.

• Flood damage at Longlife Plant disrupted production for more than two months; insurance income partly offset RMB4.8m in flood losses.

Financial highlights

• Revenue was RMB45.636m versus RMB50.369m in FY2022; prescribed and non-prescribed drug revenue each declined RMB2.4m.

• Gross profit was RMB20.815m versus RMB24.011m; gross margin decreased to 45.6% from 47.7%, reflecting a larger contribution from lower-margin non-prescribed drugs.

• Other income rose to RMB3.570m from RMB0.293m, including RMB3.3m of flood insurance proceeds; other costs were RMB4.752m, including RMB3.5m inventory write-offs and RMB1.3m repairs.

• Loss before tax was RMB4.858m versus RMB3.158m; attributable net loss was RMB4.958m versus RMB3.560m, and basic/diluted loss per share was RMB18.8 cents versus RMB15.5 cents.

• Selling and distribution costs fell 18.4% to RMB12.326m; administrative costs decreased 1.2% to RMB11.285m.

Outlook and guidance

• Infinity Wolfberry products passed U.S. FDA certification; March 2024 exhibition participation generated business contacts with more than 100 potential customers.

• R&D will target improvements to existing products and new product development; ATT selling prices may be adjusted in response to market demand and production costs.

• Management expects a challenging year amid competition, inflation and pricing pressure, and plans cautious operations focused on sales, costs and cash-flow management.