Sihuan Pharmaceutical Holdings Group (460) H1 2024 earnings summary

Executive summary

• Revenue declined 10.0% year-over-year to RMB949.7 million for the first half of 2024, mainly due to a sharp drop in generic medicine sales, partially offset by strong growth in medical aesthetics and innovative drugs.

• Medical aesthetics revenue surged 66.4% year-over-year to RMB323 million, now accounting for 34% of total revenue, driven by expanded partnerships and product launches.

• Loss for the period narrowed by 42.8% year-over-year to RMB68 million, with loss attributable to owners decreasing 32.7% to RMB33.4 million, reflecting improved cost control and higher-margin business mix.

• R&D expenses declined 33.5% year-over-year to RMB195.6 million as several phase III clinical trials concluded.

• Interim cash dividend of RMB1.9 cents per share declared for the period.

Financial highlights

• Medical aesthetics revenue: RMB322.8 million (+66.4% YoY); segment profit: RMB98 million (+56.1% YoY).

• Generic medicine revenue: RMB597.3 million (–29.4% YoY); segment profit: RMB166 million (–53.4% YoY).

• Innovative and other medicine revenue: RMB29.6 million (+85.0% YoY); segment loss: RMB258 million.

• Gross profit: RMB608.5 million (–18.6% YoY); gross margin: 64.1% (down 6.7pp YoY).

• Total cash and equivalents: RMB4,971.3 million as of June 30, 2024.

Outlook and guidance

• Management will continue the dual-wheel strategy of medical aesthetics and innovative pharmaceuticals, focusing on high-growth and high-margin segments.

• Medical aesthetics expected to be a new cash flow engine, with ongoing expansion of product and sales network and deeper strategic cooperation.

• Generic medicine revenue is expected to rebound as new products are commercialized and sales volumes recover.

• Ongoing optimization and divestment of non-core generic, healthcare, and CDMO businesses to improve efficiency and cash flow.