Highlights

Pien Tze Huang, known as the 'Moutai of Traditional Chinese Medicine,' reported a nearly 30% drop in net profit for Q3 2025. The company's growth and profitability have noticeably declined, leading to a significant decrease in its financial performance. Revenue and net profit have substantially decreased, impacting the overall performance throughout the year.

Sentiment Analysis

• The article conveys a negative sentiment as it highlights the financial struggles of Pien Tze Huang.
• The significant decline in net profit and cash flow has raised concerns about the company's future.
• The divestment by major shareholders adds to the negative outlook, despite some long-term investors holding onto their shares.

Article Text

On October 17, Pien Tze Huang, often dubbed as the 'Moutai of Traditional Chinese Medicine,' released its Q3 2025 financial report. The figures paint a concerning picture with the company's growth and profitability both taking hits. The quarterly revenue, net profit, and non-net profit after adjustments reported sharp decreases of 26.28%, 28.82%, and 54.6%, respectively. These declines worsened the year-to-date financial performance, with the first three quarters seeing revenues of 74.72 billion yuan and net profits of 21.29 billion yuan, reflecting year-on-year declines of 11.93% and 20.74% respectively. Notably, operating cash flow dropped by a drastic 62.53%.

Pien Tze Huang attributed its declining net profit primarily to reduced sales in the pharmaceutical manufacturing sector and lower gross margins. It further explained that the declining operational net cash flow was due to decreased cash receipts from sales and services. Inventory levels have surged past 60 billion yuan as of the end of Q3, reflecting diminished sales.

The shareholder analysis shows strategic shifts. Aside from passive index funds, significant changes arose from the Hong Kong Central Clearing, representing northbound funds, which reduced its holdings by nearly 900 million shares, marking a 45.43% cut. This contrasts with the previous quarter when they significantly increased their stakes. Additionally, the controlling shareholder, Zhangzhou State-owned Assets, slightly reduced its shares by 750,000.

Pien Tze Huang has a well-documented history, evolving from the Zhangzhou Pharmaceutical Factory established in 1956, then restructuring in 1999, and listing on the Shanghai Stock Exchange in 2003. As a prestigious brand, it produces over 20 types of traditional Chinese medicine, including its flagship product, Pien Tze Huang, a first-class protected variety recognized as national intangible cultural heritage.

By the market close on October 17, Pien Tze Huang's valuation stood at 118.5 billion yuan, considerably below its peak, underlining the financial challenges it currently faces in the competitive market.

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