China Medical System Holdings Limited (CMS) Interim Results Analysis: H1 2025

China Medical System Holdings Limited (CMS), a Cayman Islands-incorporated pharmaceutical group, released its unaudited interim results for the six months ended 30 June 2025. The Group is listed on both the Hong Kong Stock Exchange (HKEX: 867) and the Singapore Exchange (SGX: 8A8). Below, we present a detailed financial and business analysis tailored for investors, based strictly on the disclosed report.

Key Financial Metrics and Performance

Historical Performance Trends

• Turnover growth has resumed, up 10.8% YoY, driven by the diminishing negative impact from National Volume-based Procurement (VBP) and strong sales from major exclusive/branded and innovative products.
• Gross profit increased 7.2% YoY, though gross profit margin declined from 74.7% to 72.3% due to lower selling prices for certain products affected by VBP.
• Net profit rose by 3.1% YoY, indicating stable bottom-line expansion despite margin pressure.
• Balance sheet remains robust, with RMB3,454.1 million in cash and a low gearing ratio of 3.8%.

Dividends

• Interim dividend per share was declared at RMB0.1555, up 3.2% from RMB0.1507 in H1 2024.
• Dividend payout remains consistent, with payments in both Hong Kong and Singapore dollars available to shareholders in respective jurisdictions.

Business Highlights & Exceptional Items

• CMS achieved a significant milestone with a secondary listing on the SGX-ST in July 2025, aiming to enhance its international profile and tap into Southeast Asian growth markets.
• Dermavon, the Group’s skin health subsidiary, is proposed to be spun off and listed separately on the HKEX via introduction and distribution in specie.
• R&D pipeline remains strong with about 40 differentiated innovative products, five of which are already commercialized in China.
• Research and development expenses jumped 91.8% YoY, reflecting investment in self-developed products.
• Capital payments for product rights and equity investments fell 28.6% YoY, indicating less acquisitive activity in H1 2025.
• No significant asset revaluations, delays, or exceptional earnings/expenses were reported. No material contingent liabilities identified.

Chairman’s Statement

“CMS will stay unwaveringly committed to the ‘New CMS, New Ascent’ strategic resolve, focusing on the three core strategies of product innovation, commercial model reform, and international expansion, to further broaden and deepen the Group’s development path and accelerate the formation of a sustainable new growth engine.
We will rely on the three-dimensional innovation system—overseas licensing, domestic collaboration, and in-house R&D—to continuously expand our product pipeline. We will focus on addressing unmet clinical needs, align with the support of reimbursement policies for high-value innovations, and build a more competitive and accessible product portfolio. The power of innovative products will serve as a long-term driver that enables the Group to grow sustainably across market cycles.
We remain committed to a specialty-focused strategy, with deep cultivation in our advantageous therapeutic areas including cardio-cerebrovascular, central nervous system, gastroenterology, skin health, and ophthalmology. Meanwhile, we continue to empower the independent development of specialty businesses such as skin health and ophthalmology, aiming to build leading players in their respective segments and unlock further value creation potentials. In addition, the Group proactively anticipates evolving trends in healthcare payment mechanisms and consumer behavior, and is actively expanding into diversified models such as new retail, new media, and consumer healthcare. We are building an integrated commercial ecosystem that connects in-hospital and out-of-hospital channels, and enables interaction between online and offline promotion. By accelerating our presence in the consumer healthcare market, we are enhancing terminal reach and market penetration, and unlocking incremental growth potential from the integration of pharmaceuticals and consumer markets.
In terms of international expansion, we are accelerating innovation through a dual-hub model centered on China and Singapore, leveraging dual-track cycles to unlock global growth opportunities. This reflects a strategic elevation toward global allocation of industrial resources, positioning CMS to lead a new paradigm for Chinese pharmaceutical companies expanding overseas, and to build a replicable, scalable, and sustainable development model for internationalized pharmaceutical operations.
CMS will stay true to its original aspiration for innovation and maintain its spirit of progress, working hand-in-hand with global partners to co-create a sustainable pharmaceutical ecosystem and jointly embark on an advanced journey toward healthy and sustainable development.”

Tone: Highly positive, emphasizing innovation, expansion, and sustainable growth.

Strategic Developments and Corporate Actions

• Successful secondary listing in Singapore, anticipated to increase international capital and brand recognition.
• Dermavon spin-off proposed, targeting further value unlocking in the skin health segment.
• No share buybacks, treasury share activities, or significant acquisitions/disposals during the period.
• Directors’ remuneration and pay structure were not disclosed in the interim report.

Macroeconomic and Policy Environment

• The Chinese pharmaceutical sector is benefiting from policy reforms (NRDL and National VBP), refocusing on quality, clinical efficacy, and therapeutic options.
• CMS is adapting well, with diminishing impact from VBP and a shift towards high-value, innovative products.

Outlook & Forecasted Events

• CMS expects solid growth momentum as the impact from National VBP fades and innovative products gain traction.
• Internationalization through the Singapore hub is set to unlock new market opportunities in Southeast Asia and the Middle East.
• Dermavon’s spin-off could realize standalone value and high growth potential in skin health.

Conclusion & Investment Recommendations

Overall Financial Performance & Outlook: The Group’s financials reflect a strong recovery in turnover and profit, underpinned by successful execution of its innovation-driven and internationalization strategies. Cash reserves and low gearing ratios support ongoing investments and R&D. Margins and cost control remain solid despite sector headwinds.

Recommendations

• If you are currently holding CMS stock:
  • Maintain your position. The Group demonstrates resilience, sector leadership, and sustainable long-term growth prospects. The upcoming Dermavon spin-off and secondary listing should further enhance shareholder value and liquidity.
• If you are not currently holding CMS stock:
  • Consider initiating a position. CMS offers exposure to China’s pharmaceutical innovation, international expansion, and specialty healthcare segments. The stable dividend, solid cash position, and ongoing R&D investments make it attractive for long-term growth-oriented investors.

Disclaimer: This analysis and recommendation are based strictly on the company’s published interim financial report and do not constitute investment advice. Investors should conduct their own due diligence and consult with their financial advisors before making investment decisions.

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