Yunnan Baiyao (000538) 2025 Annual Report Summary: Revenue and net profit both increase year-over-year, with improved profitability

According to public data compiled by Securities Star, Yunnan Baiyao (000538) released its 2025 annual report recently. As of the end of this reporting period, the company’s total operating revenue was RMB 41.187 billion, up 2.88% year over year; attributable net profit to shareholders was RMB 5.153 billion, up 8.51% year over year. Looking at single-quarter data, in the fourth quarter total operating revenue was RMB 10.533 billion, up 4.1% year over year; and attributable net profit to shareholders was RMB 0.376 billion, down 10.96% year over year. In this reporting period, Yunnan Baiyao’s profitability improved, with gross margin increasing by 5.78% year over year and net profit margin increasing by 5.82% year over year.

These figures are below most analysts’ expectations. Previously, analysts generally expected that the company’s 2025 net profit would be around RMB 5.207 billion.

All the key data indicators disclosed in this financial report show solid performance. Among them: gross margin was 29.51%, up 5.78% year over year; net profit margin was 12.6%, up 5.82% year over year. Selling expenses, administrative expenses, and finance expenses totaled RMB 6.593 billion; the three-fee-to-revenue ratio was 16.01%, up 11.22% year over year. Net assets per share were RMB 22.44, up 3.12% year over year. Net operating cash flow per share was RMB 2.58, up 7.04% year over year. Earnings per share (EPS) was RMB 2.89, up 8.65%

Explanations in the financial statements for financial items with significant changes are as follows:

1. The change in selling expenses was 15.16%. Reason: Online selling expenses increased, and the share of online revenue increased.
2. The change in administrative expenses was -1.68%. Reason: During this period, the company continued to promote cost reduction and efficiency improvement.
3. The change in finance expenses was 69.86%. Reason: During this period, interest income decreased compared with the same period last year.
4. The change in R&D expenses was 3.89%. Reason: R&D investment increased during this period.
5. The change in net cash flow from operating activities was 7.04%. Reason: Cash received from selling goods and providing services increased by RMB 2.201 billion compared with the same period last year; taxes and other tax payments increased by RMB 0.515 billion compared with the same period last year; and other cash payments related to operating activities increased by RMB 1.321 billion compared with the same period last year.
6. The change in net cash flow from investing activities was -65.58%. Reason: During this period, cash paid for investments increased by RMB 4.720 billion compared with the same period last year, mainly because, to improve returns and the efficiency of capital use, while ensuring daily operations and capital safety, the company purchased bank wealth-management products and broker wealth-management products with high safety and good liquidity; the net amount of cash paid for the acquisition of subsidiaries and other operating units increased by RMB 0.500 billion compared with the same period last year; and cash paid for other investing activities decreased by RMB 4.316 billion compared with the same period last year, mainly because payments were made for time deposits.
7. The change in net cash flow from financing activities was 37.67%. Reason: During this period, cash received from borrowing decreased by RMB 1.706 billion compared with the same period last year; cash paid for debt repayment decreased by RMB 2.401 billion compared with the same period last year; and cash paid for dividend distribution, profit distribution, or interest payment decreased by RMB 1.909 billion compared with the same period last year.
8. The change in cash and cash equivalents was -16.35%. Reason: During the reporting period, the company implemented its 2024 annual profit distribution and a 2025 special profit distribution; the cumulative cash dividends paid totaled RMB 3.933 billion.
9. The change in inventories was -1.0%. Reason: Improved inventory management efficiency and faster turnover.
10. The change in long-term equity investments was 5.3%. Reason: Shanghai Pharmaceuticals has continued to generate investment returns.
11. The change in short-term borrowings was -56.83%. Reason: Short-term credit borrowings decreased during the period.
12. The change in contract liabilities was -21.41%. Reason: Advance customer payments decreased.
13. The change in long-term borrowings was 4022.35%. Reason: Juyaotang’s collateralized borrowings increased.
14. The change in financial assets held for trading was 64.58%. Reason: The company has exited all secondary market stock investments. To improve returns and the efficiency of capital use, while ensuring daily operations and capital safety, during this period it used idle own funds to carry out wealth-management investments, purchasing bank wealth-management products and broker wealth-management products with high safety and good liquidity.
15. The change in notes receivable was -37.03%. Reason: Domestic letters of credit and bank accepted bills held at period end decreased.
16. The change in advance payments was 43.11%. Reason: Advances paid to suppliers increased at period end.
17. The change in other receivables was 274.92%. Reason: Other receivables and related balances changed.
18. The change in non-current assets due within one year was -100.0%. Reason: Time deposits decreased.
19. The change in other current assets was 56.69%. Reason: Time deposits and settlement funds pending conversion increased.
20. The change in other non-current financial assets was -45.61%. Reason: The company sold the investments it held at the beginning of the period.
21. The change in development expenditures was 286.32%. Reason: New capitalized projects were added.
22. The change in goodwill was 210.23%. Reason: Goodwill recognized from business combinations increased.
23. The change in other non-current assets was 38.83%. Reason: Prepayments for the purchase of fixed assets, etc., increased at the end of this period.
24. The change in advance receipts was -57.28%. Reason: Advance rent received decreased at period end.
25. The change in taxes payable was -40.41%. Reason: Income taxes that were payable but not yet paid at the end of this period decreased.
26. The change in long-term employee benefits payable was 32.6%. Reason: Long-term employee benefits payable that were payable but not yet paid increased at the end of this period.
27. The change in provisions was 76.91%. Reason: Provisions for payable return payments increased during this period.
28. The change in deferred income tax liabilities was 58.11%. Reason: The income tax rate of the subsidiaries changed.
29. The change in non-controlling interests was 203.01%. Reason: Non-wholly-owned subsidiaries issued shares to non-controlling shareholders, and non-wholly-owned subsidiaries achieved profitability.

The Securities Star price-investment circle financial report analysis tool shows:

• Business evaluation: Last year’s ROIC of the company was 12.78%, indicating strong capital returns. Last year’s net profit margin was 12.6%; after taking all costs into account, the company’s products or services have high added value. Based on statistics from historical annual report data, the company’s median ROIC over the past 10 years was 10.9%, with median investment returns being generally average; the worst year was 2021, when ROIC was 6.14%, with investment returns being generally average. The company’s financial reports throughout history have been relatively good.

• Business model: The company’s performance mainly relies on marketing-driven momentum. It is necessary to carefully study the actual situation behind these driving forces.

• Business breakdown: Over the past three years (2023/2024/2025), the return on net operating assets of the company was 28.6%/39.2%/39.3% respectively; net operating profit was RMB 4.123 billion/4.767 billion/5.19 billion respectively; and net operating assets were RMB 14.413 billion/12.159 billion/13.195 billion respectively.

  Over the past three years (2023/2024/2025), the company’s working capital/revenue (i.e., the capital that the enterprise needs to put in to generate $1 of revenue during production and operation) was 0.23/0.22/0.21 respectively. Among them, working capital (the money the company itself invests during production and operations) was RMB 8.997 billion/8.862 billion/8.535 billion respectively, and revenue was RMB 39.111 billion/40.033 billion/41.187 billion respectively.

The Financial Report Health Check tool shows:

1. We recommend paying attention to the company’s accounts receivable situation (accounts receivable/profit has reached 197.15%)

The fund holding the most Yunnan Baiyao is the medical ETF (E Fund), currently with a size of RMB 16.974 billion. Its latest net asset value is 0.3766 (as of April 1), up 3.6% from the previous trading day. Over the past year, it is up 0.17%. The current fund manager of this fund is Yu Haiting.

Recently, several well-known institutions have raised the following questions about the company:

Q: What progress has been made in AI enabling the company’s operations?

A: The company continues to implement the “Digital Development Plan of Yunnan Baiyao Group 2022–2026.” It leverages data plus cutting-edge technologies to empower key links across all industry chains, driving industrial transformation and upgrading as well as business innovation and development. The company focuses on channel-operations transformation and independently develops the “Marketing Business Operations Platform.” It has been piloted and applied within the pharmaceutical business group, enabling distributors to place orders independently, to precisely calculate and manage expenses, and to timely trace product flows, significantly improving channel business operational efficiency. The company’s independently developed “One Product One Code Traceability Platform” is applied to the traceability-from-origin scenario for Chinese medicinal materials, providing digital identity markings for “genuine medicinal materials.” It has accelerated the rollout of excellent supply-chain operations and achieved phased results. By keeping tightly aligned with the goals of “reducing costs, improving quality, and increasing efficiency,” the company reconstructs end-to-end processes and completes the construction of an end-to-end digital foundation covering order management, warehousing, transportation, and settlement. First, business is comprehensively moved online, reducing the work volume of front-line employees handling tasks manually by 30%, reducing 60,000 sheets of paper documents per year, and practicing green office management. Second, settlement automation reaches a rate of 100%, compressing the cycle from 30 days to real time. Third, data is made “real-time with full penetration” across the entire value chain; by establishing 90 standard processes and 60 management indicators, it strongly supports business decision-making. Phase-by-phase results have been achieved in AI-enabled business application scenarios. Currently, more than 70 digital employees are already live, enabling savings of 7,000 person-days of labor per year. In the digitalization of the Chinese medicinal materials industry, by building the “Digital Intelligence Yun Yao” platform and the origin warehouse digital management system of “1 Product 1 Chain,” the company has established a closed-loop end-to-end business system covering resources, cultivation, procurement, processing, warehousing, payment, and more. This enables origin harvesting-to-settlement to be shortened from one day to a few minutes, significantly improving supply-chain coordination efficiency and the level of refined management, and integrating the entire process from cultivation to distribution. The company continues to advance full-domain data governance, enabling data-driven operations and management. It has enabled the first “Chinese medicinal materials traceability query” data product of the Yunnan Baiyao Group to be listed on the Shanghai Data Exchange. In R&D, research results from the tumor organoid library and molecular marker research projects were published in CancerCell and the Chinese Journal of Clinical Oncology. For health products, it further deepens cooperation with Zhejiang Tsinghua University’s Yangtze River Delta Research Institute. Leveraging the jointly built Aging Science Innovation and R&D Center with Tsinghua’s Yangtze River Delta Research Institute, and by excavating molecules with key innovation effects and the traditional classic active ingredients of Baiyao, the company uses AI computing to focus on discovering exclusive active molecules that target oral inflammation or injury and have soothing and repair-promoting effects.

The above content is compiled by Securities Star based on publicly available information and generated by an AI algorithm (Internet information filing no. 310104345710301240019). It does not constitute investment advice.