Modern Chinese Medicine (1643.HK) Q4 2024 Earnings Report

Modern Chinese Medicine Group Co Ltd reported a modest Q4 2024 topline of 68.72 million CNY, with gross profit of 16.75 million CNY and net income of 8.26 million CNY, delivering a net margin of 12.02% and an EPS of 0.0138. While top-line performance deteriorated materially on a YoY basis, the quarter remains positive on a bottom-line basis, supported by a relatively lean cost base and controlled operating expenses. The company continues to exhibit strong liquidity with a cash balance of approximately 229.7 million CNY and a net cash position against negligible debt, contributing to a favorable balance sheet stance despite a negative operating cash flow for the period. The Q4 results sit in the context of a sharp YoY revenue decline (YoY revenue down 57.16%), underscoring the challenge of sustaining scale in a small, niche segment of proprietary Chinese medicines. Gross margins remained resilient around 24.37%, and EBITDA margin stood about 16.55%, signaling that profitability is being supported by cost discipline even as revenue contracted. The cash-generative quality of the business is mixed: operating cash flow was negative at -7.69 million CNY primarily due to working capital movements (notably a working capital increase of 15.22 million CNY and sizable non-cash items), while the balance sheet shows total assets of 540.31 million CNY and total stockholders’ equity of 484.23 million CNY. Management commentary is not included in the provided transcript, limiting forward-looking guidance from the call. Investors should monitor revenue stabilization, working capital cadence, and potential strategic actions enabled by the strong liquidity position.