EPS of $-0.10 decreased by 184.1% from previous year
Gross margin of 43.8%
Net income of -75.92M
"N/A" - N/A
Fusen Pharmaceutical Company Limited (1652.HK) QQ4 2024 Financial Results Analysis
Executive Summary
Fusen Pharmaceutical reported QQ4 2024 revenue of 64.85 million CNY with a gross profit of 28.38 million CNY and a gross margin of 43.76%. Despite a stable quarter on a QoQ basis, annual comparisons show a material decline: revenue fell by 43.4% year over year, gross profit dropped 52.9%, operating income declined 64.9%, and net income deteriorated by 187.9%. The quarter produced a net loss of 75.92 million CNY and an EPS of -0.10 CNY, pressured by a substantial charge to total other income/expenses (net) of -57.07 million CNY and elevated operating expenses. On the positive side, operating cash flow was healthy at 69.99 million CNY and free cash flow reached 62.51 million CNY, underscoring a cash-generative core despite the bottom-line weakness.
The balance sheet shows meaningful liquidity stress, with a current ratio of 0.60 and a cash ratio of 0.0273, indicating near-term liquidity risk unless working capital dynamics improve. Total debt stood at 383.69 million CNY (net debt 362.64 million CNY), while cash and cash equivalents were 21.06 million CNY. The company carries a sizable accumulated other comprehensive income balance (363.49 million CNY), which cushions equity but does not substitute for operating profitability. Relative to peers, Fusen trails in profitability metrics, which compounds equity risk in a market that emphasizes scalable margins and cash generation.
Looking ahead, management did not publish explicit QQ5 guidance in the materials. The near-term path hinges on restructuring the expense base, optimizing working capital, and pursuing revenue growth in core product lines and potential new proprietary/integrated medicine offerings. The stock’s investment case remains tethered to improvement in operating leverage and a return to positive net income, supported by stronger cash flow generation and disciplined balance-sheet management.
Asset and cash flow overview (CNY):
- Operating cash flow: 69,996,500; Free cash flow: 62,513,000
- Cash and cash equivalents: 21,056,000; Total debt: 383,694,000; Net debt: 362,638,000
- Current assets: 459,612,000; Total current liabilities: 772,445,000; Current ratio: 0.595; Quick ratio: 0.418; Cash ratio: 0.0273
- Inventory days: 338.28; DSO: 158.03; DPO: 304.68; Cash Conversion Cycle: 191.63 days
Balance sheet health (summary):
- Total assets: 1,238,161,000; Total liabilities: 869,799,000; Total stockholders’ equity: 369,671,000
- Equity cushion via accumulated other comprehensive income: 363,492,000
Valuation and efficiency indicators (as available):
- Price-to-book approx 1.50x; Price-to-sales approx 8.57x; Enterprise value multiple negative due to negative earnings; Asset turnover: 0.0524; Inventory turnover: 0.266; Receivables turnover: 0.570
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
64.85M
-43.40%
0.00%
Gross Profit
28.38M
-52.85%
0.00%
Operating Income
-15.49M
-64.88%
0.00%
Net Income
-75.92M
-187.94%
0.00%
EPS
-0.10
-184.09%
0.00%
Key Financial Ratios
currentRatio
0.6
grossProfitMargin
43.8%
operatingProfitMargin
-23.9%
netProfitMargin
-117.1%
returnOnAssets
-6.13%
returnOnEquity
-20.5%
debtEquityRatio
1.04
priceToBookRatio
1.5
priceEarningsRatio
-1.83
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Notes on management commentary: No QQ4 2024 earnings call transcript was provided in the data set. Consequently, direct management quotes or themes from the call cannot be cited. Investors should look for: (1) commentary on drivers behind the YoY revenue decline and whether it reflects product mix or demand dynamics; (2) plans to reduce non-cash charges and total other income/expenses; (3) trajectory for R&D spend relative to topline recovery; (4) any balance-sheet optimization plans (working capital, debt maturity profile, potential refinancing); (5) updates on key product launches or line extensions that could re-accelerate growth.
N/A
— N/A
N/A
— N/A
Forward Guidance
No explicit QQ4 2024 forward guidance was disclosed. Given the results, the near-term outlook will likely depend on: (a) achieving operating leverage through cost containment and product mix optimization; (b) resuming revenue growth in core portfolios (including Shuanghuanglian-based offerings and proprietary Chinese medicines) or scaling Western medicine products; (c) reducing the drag from total other income/expenses and non-core items; (d) stabilization of liquidity via better working capital management and a prudent debt plan. Industry trends in the Chinese pharma space suggest continued pricing competition in generics and strong demand for OTC/heathcare products; any favorable regulatory developments or new product approvals could serve as upside catalysts. Key factors investors should monitor include quarterly gross margin progression, fixed-cost absorption, changes in inventories and receivables, debt maturities, and the trajectory of free cash flow generation.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
1652.HK Focus
43.76%
-23.90%
-20.50%
-1.83%
1763.HK
46.60%
14.20%
5.04%
3.23%
1713.HK
19.80%
11.60%
7.25%
2.04%
1723.HK
24.10%
2.80%
3.21%
8.87%
1671.HK
7.72%
4.12%
0.87%
5.49%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
From a quantitative perspective, QQ4 2024 shows a significant YoY deterioration in revenue and profitability, with a net loss and negative earnings trajectory. However, the firm generated positive operating cash flow and solid free cash flow, suggesting the core business remains cash-generative when working-capital dynamics are favorable. The near-term investment thesis hinges on achieving operating leverage and restoring profitability while preserving liquidity. Key catalysts include: (1) reduction of the negative drag from other income/expenses and optimization of the expense base; (2) improved working-capital cycle leading to stronger cash conversion; (3) selective product portfolio optimization and potential strategic partnerships to enhance top-line growth; (4) progress on product launches or licensing deals that could uplift margins. Compared to peers such as 1713.HK and 1763.HK, which show higher net margins and more efficient capital use, Fusen must exhibit meaningful operating-margin expansion and a more robust liquidity profile to justify a higher multiple. Given the current metrics, the stock presents higher risk with potential upside tied to successful margin recovery and balance-sheet strengthening as the Chinese pharma market continues to consolidate.
Key Investment Factors
Growth Potential
Potential growth from expanding the portfolio of generic and OTC products in the Chinese market, plus opportunities to monetize proprietary Chinese medicine (PCM) and Western medicine lines. Leverage R&D to introduce incremental products and optimize the mix toward higher-margin offerings; potential partnerships or licensing deals could accelerate revenue recovery and reduce cost of capital.
Profitability Risk
Key risks include continued profitability erosion due to high operating expenses and the negative net income trajectory, liquidity pressure given a current ratio near 0.60, and a relatively high debt burden with limited cash on hand. Other risks involve regulatory changes in China’s pharmaceutical sector, pricing pressure in generics, supply-chain disruptions, and reliance on legacy products with potential volume/price declines.
Financial Position
Financial position shows cash generation from operations (CF from ops ~69.99M) and positive free cash flow (~62.51M) amid a net loss, suggesting non-cash or working-capital dynamics are supporting cash. However, liquidity metrics are tight (current ratio 0.595, cash ratio 0.0273) with substantial short-term debt (304.46M) and total debt (383.69M). Accumulated OCI provides equity headroom, but the company needs sustained profitability and improved working-capital efficiency to strengthen balance-sheet resilience.
SWOT Analysis
Strengths
Established product portfolio with legacy brands (e.g., Shuanghuanglian-based offerings) and a diversified mix of traditional Chinese medicines and Western medicines.
Positive operating cash flow in QQ4 2024: 69.9965 million CNY and free cash flow of 62.513 million CNY, indicating underlying cash generation despite net losses.
Significant accumulated other comprehensive income (OCI) of 363.492 million CNY provides equity headroom and some protective cushion against near-term earnings volatility.
Weaknesses
Material net loss for QQ4 2024 (-75.92 million CNY) and weak net margins (-1.17%), undermining shareholder value.
Liquidity stress: current ratio 0.595, cash ratio 0.0273, and only 21.06 million CNY in cash, making near-term liquidity management critical.
High leverage: total debt 383.69 million CNY with short-term borrowings of 304.46 million CNY and a sizable working-capital burden (DSO 158 days, DIO 338 days).
High total operating expenses and a sizable non-cash/other expense drag (total other income/expenses net -57.07 million CNY).
Opportunities
Growth in the Chinese generic and OTC healthcare market, with potential price/volume recovery as demand normalizes post-pandemic.
Opportunity to optimize cost structure, rationalize portfolio, and improve working capital efficiency to enhance cash flow visibility.
Potential product line extensions or partnerships to accelerate revenue growth and potentially reduce R&D burden per incremental sale.
Threats
Intense competition in generics and pricing pressure in the Chinese market.
Regulatory changes and reimbursement dynamics could impact margins and product mix.
Liquidity constraints and debt burden increase sensitivity to macroeconomic shifts and interest rate movements.