Exchange: HKSE | Sector: Healthcare | Industry: Drug Manufacturers General
Q1 2025
Published: Mar 31, 2025
Earnings Highlights
Revenue of $32.38M down 15.5% year-over-year
EPS of $0.00 increased by 135.1% from previous year
Gross margin of 25.0%
Net income of 1.23M
"N/A" - N/A
Modern Chinese Medicine Group Co Ltd (1643.HK) QQ1 2025 Results – Revenue Decline Amid Margin Resilience in China's Proprietary Chinese Medicines Segment
Executive Summary
Modern Chinese Medicine Group reported QQ1 2025 revenue of 32,378,999 CNY, down 15.49% year over year and 52.88% quarter over quarter, reflecting a challenging start to the year after a small base in the prior year. Gross profit was 8,095,000 CNY with a gross margin of 25.0%, indicating margin resilience despite weaker top-line performance. Operating income reached 1,013,499 CNY (operating margin 3.13%), and net income was 1,226,500 CNY, translating to a net margin of 3.79%. EBITDA stood at 3,275,500 CNY (EBITDA margin 10.12%), underscoring cash-flow positivity at the operating level even as revenue declines persist. Selling, general and administrative expenses totaled 7,081,500 CNY, with depreciation and amortization of 2,262,000 CNY; R&D expenses are not disclosed in the reported figures, creating a partial view of the company’s investment in future product development. There is no formal forward guidance provided in the available data. In the near term, the key drivers for performance will likely be demand for proprietary Chinese medicines in China, the regulatory environment, and the company’s ability to sustain cost discipline while expanding its distribution footprint. Investors should monitor seasonality, regulatory changes, and any announced product launches or partnerships in subsequent quarters. Based on the QQ1 results, the company demonstrates margin flexibility but faces meaningful topline headwinds; a longer runway for growth will depend on product pipeline execution and geographic or channel expansion within China.
Net Income: 1,226,500 CNY; Net Margin 3.79%; YoY +135.80%; QoQ -85.15%.
Financial Highlights
Key quarterly metrics (QQ1 2025 vs prior periods):
- Revenue: 32,378,999 CNY; YoY -15.49%; QoQ -52.88%.
- Gross Profit: 8,095,000 CNY; Gross Margin 25.00%; YoY -25.40%; QoQ -51.66%.
- EBITDA: 3,275,500 CNY; EBITDA Margin 10.12%.
- Operating Income: 1,013,499 CNY; Operating Margin 3.13%; YoY -50.38%; QoQ -88.89%.
- Net Income: 1,226,500 CNY; Net Margin 3.79%; YoY +135.80%; QoQ -85.15%.
- EPS (diluted): 0.0020 CNY; YoY +135.09%; QoQ -85.51%.
- Key ratios: EBITDARatio 0.1012; IncomeBeforeTaxRatio 0.05297; NetIncomeRatio 0.03788.
- Weighted Average Shs (basic): 600,048,923; Weighted Average Shs (diluted): 600,000,000.
Notes: All figures are in CNY unless otherwise stated. The YoY and QoQ deltas reflect the quarter’s limited base effects and seasonality; gross margin remains around 25% in the quarter, supporting a degree of operating leverage should revenue stabilize.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
32.38M
-15.49%
-52.88%
Gross Profit
8.10M
-25.40%
-51.66%
Operating Income
1.01M
-50.38%
-88.89%
Net Income
1.23M
135.80%
-85.15%
EPS
0.00
135.09%
-85.51%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript-based quotes and management commentary were not provided in the dataset. As a result, no direct quotes can be cited from the QQ1 2025 earnings call. The analysis relies on reported results, including revenue contraction and margin resilience, and highlights the absence of disclosed forward guidance. Once the earnings call transcript becomes available, quotes can be categorized by themes (strategy, operations, market conditions) with context and significance attached.
N/A
— N/A
N/A
— N/A
Forward Guidance
No formal forward guidance was published in the provided data for QQ2–QQ4 2025. Given the revenue decline and modest profitability, the near-term outlook will hinge on demand for proprietary Chinese medicines, any regulatory changes affecting pricing or reimbursement, and the company’s ability to sustain or improve cost efficiency. Potential catalysts include expansion of distribution channels within China, product line extensions in the elderly/geriatric care segment, or partnerships that could broaden reach. Investors should monitor quarterly performance for signs of seasonality normalization, any disclosed product launches, and changes in regulatory policy that could impact pricing or access.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
1643.HK Focus
25.00%
N/A
N/A
N/A
1692.HK
37.40%
24.70%
12.10%
6.84%
1601.HK
1.00%
44.00%
2.72%
3.12%
1671.HK
0.00%
0.00%
0.00%
0.00%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
QQ1 2025 results show a lean revenue base with margin stability; EBITDA remains positive, indicating operating discipline. However, a pronounced QoQ revenue decline and the absence of forward guidance introduce near-term execution risk. Relative to peers in the broader Chinese drug manufacturing space, margins appear modest; the company would benefit from elevated top-line growth and clearer visibility on capital allocation and product development. Given the long-run demographic thesis for elder-care therapeutics and the potential regulatory tailwinds for TCM, a cautious to neutral stance is warranted. Investors should await improved revenue consistency, disclosed guidance, and a clearer product development pipeline before favoring expansion. Favorable scenarios require revenue stabilization in subsequent quarters and evidence of margin expansion through scale or mix shift.
Key Investment Factors
Growth Potential
Long-term growth potential stems from China’s aging population and demand for proprietary Chinese medicines. Potential growth drivers include expansion of distribution networks, enhanced product portfolio in elder care, and possible licensing or partnerships to accelerate market reach.
Profitability Risk
Key risks include regulatory risk related to drug approvals and traditional Chinese medicine pricing reforms, competitive intensity among Chinese drug manufacturers, reliance on a niche elderly-focused portfolio, potential volatility in quarterly results due to seasonality, and lack of explicit capital expenditure or R&D guidance.
Financial Position
Limited public details on the balance sheet, cash flow, or debt levels for QQ1 2025. Reported EBITDA and net income indicate operating profitability on a small scale, but the absence of cash flow, liquidity, and leverage metrics inhibits a full assessment of financial resilience.
SWOT Analysis
Strengths
Specializes in proprietary Chinese medicines with an elderly/aged population focus, a defensible niche within the PRC healthcare market
Established manufacturing and distribution capabilities since 1986, with a localized market footprint
Positive operating cash-on-EBITDA signal through EBITDA generation in QQ1 2025 (3.28m) despite top-line weakness
Weaknesses
Small scale with QQ1 2025 revenue of 32.38m CNY, leading to high quarterly volatility and limited economies of scale
Lack of disclosed R&D investment and forward guidance limits visibility into product pipeline and long-term growth
Limited disclosure of balance sheet, liquidity, and leverage metrics inhibits a full financial health assessment
Opportunities
Demographic tailwinds from China’s aging population may expand demand for elder-oriented proprietary medicines
Regulatory and policy grid in PRC that supports traditional Chinese medicine could unlock pricing or reimbursement opportunities
Potential channel expansion, partnerships, or product line extensions to broaden market reach
Threats
Regulatory uncertainty and potential pricing reforms in the PRC pharmaceutical sector
Competitive intensity from other Chinese drug manufacturers and TCM players
Macro headwinds and seasonality impacting quarterly top-line performance
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