Modern Chinese Medicine Group Co., Ltd. Issues Profit Warning for FY2025

Key Highlights from the Profit Warning Announcement

• Expected Net Loss for FY2025: The Group anticipates recording a net loss of not less than RMB13 million for the year ended 31 December 2025.
• Contrast with Previous Year: This projected loss follows a net profit of approximately RMB9.7 million reported for the year ended 31 December 2024, indicating a significant deterioration in financial performance.
• Key Factors Behind the Loss:
  • Loss of Key Distributors: The Group lost several distributors during the year, negatively impacting sales channels and revenue.
  • Exclusion of Best-Selling Products from National Medical Insurance List: Some top-selling products, such as the Cardiotonic Enhancement Capsule (山玫膠囊), were removed from the national medical insurance list due to insurance reforms. This regulatory change led to a considerable decline in sales.
  • Reduced Purchase Orders: The Group faced a decrease in purchase orders, which resulted in persistently high unit fixed costs due to lower production volumes.
  • Pressure on Gross Profit Margin: The overall gross profit margin declined due to price reductions on other products that remain included in the medical insurance catalog.
• Preliminary and Unaudited Figures: The figures are based on preliminary assessments of unaudited and unreviewed management accounts. The final results are subject to further audit and potential changes.
• Timing of Final Results Release: The Group expects to publish its annual results announcement for FY2025 at or before the end of March 2026.

Important Information for Shareholders and Investors

• Potentially Price-Sensitive Disclosure: The transition from a net profit to a significant net loss is a material development that could affect investor sentiment and share price.
• Regulatory Warning: Shareholders and potential investors are strongly advised to exercise caution when dealing in the securities of Modern Chinese Medicine Group Co., Ltd., as the financial results and outlook have materially weakened.
• Pending Further Information: Investors should await the audited annual results and further announcements from the Group for more comprehensive and verified information.

Corporate Governance Update

As of the date of the announcement, the Board comprises three executive Directors: Ms. Zhang Hongli, Ms. Sun Xinlei, and Ms. Jia Yanru; and three independent non-executive Directors: Ms. Liu Ling, Mr. Leung Tsz Wing, and Mr. Wong Chi Kin.

Conclusion

The profit warning issued by Modern Chinese Medicine Group Co., Ltd. represents a significant reversal in financial performance, primarily due to regulatory changes affecting product eligibility for medical insurance, loss of key distributors, reduced sales, and margin pressure. This development is likely to be highly relevant for shareholders and could influence the Group’s share price in the near term. Investors are urged to monitor further announcements and exercise caution when trading in the company’s securities.

Disclaimer: This article is for informational purposes only and should not be construed as investment advice. The financial figures presented are based on preliminary, unaudited management accounts and are subject to change. Investors should refer to the official audited results and seek professional advice before making investment decisions.

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