YSB Inc. Annual Report 2025: Key Highlights and Investor Insights

Financial Performance Overview

• Revenue Surge: YSB Inc. reported a revenue of RMB 20.97 billion for the year ended 31 December 2025, marking a robust 17.1% year-on-year growth. The self-operation business segment was the primary driver, contributing RMB 20.07 billion (up 18.2%). The online marketplace segment saw a slight decline (down 1.7%), while other businesses contracted by 23.3%.
• Gross Profit: Gross profit jumped to RMB 2.31 billion, up 27.2% from RMB 1.81 billion last year, indicating improved margins and operational efficiency.
• Net Profit: Profit attributable to owners soared to RMB 152.97 million, a remarkable 409.7% increase from RMB 30.01 million in 2024. Adjusted Net Profit (non-IFRS) was RMB 237.06 million, up 51.2%.
• Earnings Per Share: Basic earnings per share rose to RMB 0.224 (up 376.6%), while diluted EPS was RMB 0.220 (up 378.3%).
• Dividend: The Board has recommended a final dividend of RMB 0.110 per share (HK\$0.125), an increase of 46.7% over last year, signaling confidence in sustained profitability.

Balance Sheet and Capital Management

• Cash Flow: Net cash used in investing activities was RMB 896.3 million, primarily due to increased placements of restricted bank deposits and time deposits. Net cash used in financing activities was RMB 71.0 million, largely from share repurchases and dividend payments.
• Share Repurchase: The company repurchased a total of 7,435,000 shares for HK\$59.69 million during the reporting period, demonstrating management’s commitment to enhancing shareholder value.
• Gearing Ratio: Gearing ratio increased to 6.4% (from 0.9% last year) due to bank borrowings arising from discounted notes. This may indicate a shift towards more leveraged growth.
• Pledge of Assets: Interest-bearing deposits totaling RMB 2.23 billion were pledged for bank acceptance notes.
• Distributable Reserves: As of year-end, distributable reserves stood at RMB 3.49 billion, providing ample capacity for future dividends and expansion.

Corporate Governance and Shareholder Matters

• Shareholder Structure: MIYT Holdings Limited, through several layers of controlled corporations and with Mr. Buzhen Zhang (founder, CEO, Chairman) as a substantial shareholder, holds approx. 18.40% of the issued shares. Other notable shareholders include Million Surplus Developments Limited (9.3%).
• Share Incentive Plans: Two share incentive plans are in effect, with the 2023 Share Incentive Plan governing new awards. Notably, on 10 February 2026, 2,533,700 award shares were granted to employee participants, representing 0.37% of the total issued shares.
• Dividend Policy: The company intends to maintain a stable cash dividend policy, subject to sustained profitability. The final dividend for 2025 is pending shareholder approval at the AGM scheduled for 21 May 2026.
• Public Float Compliance: YSB Inc. has maintained the prescribed public float under Hong Kong listing rules.

Risk Factors and Regulatory Environment

• Principal Risks: Risks include the ability to adapt to changing preferences in the pharmaceutical value chain, brand protection, compliance with evolving PRC data privacy and security regulations, competition from B2B platforms and traditional distributors, and industry-specific uncertainties. Any adverse regulatory changes or competitive developments could be price sensitive.
• Contractual Arrangements: The company relies on contractual arrangements with consolidated affiliated PRC entities, which may be less effective than direct ownership and could expose the company to regulatory scrutiny and tax risks. Any change in the PRC government’s stance could have a significant impact on operations and share value.
• Litigation and Compliance: No material litigation or regulatory breach was reported in 2025. The company asserts full compliance with relevant laws and regulations.

Significant Events and Future Outlook

• No Material Acquisitions or Disposals: The Group did not make or hold any significant investments or material acquisitions/disposals in 2025.
• Future Plans: No detailed future plans for material investments or capital assets as of year-end, but the company retains flexibility given its strong reserves.
• Post-Reporting Period Events: Award and consideration shares were granted/allotted in early 2026, potentially affecting dilution and share supply.

Corporate Governance Practices

• Board Committees: YSB Inc. maintains Audit, Remuneration, Nomination, and ESG Committees, all with defined terms of reference. Continuous professional development is mandated for directors.
• Risk Management and Internal Control: The Board conducts annual reviews and considers the risk management system effective and adequate. The audit committee and internal audit department play key roles in oversight.
• Shareholder Rights: Shareholders can requisition general meetings and propose resolutions. Communication is facilitated via electronic means and annual meetings.
• Disclosure and Transparency: YSB Inc. commits to timely, fair, and accurate disclosure of material information, with all corporate communications available online.
• Insurance and Indemnity: Directors and officers are covered by liability insurance, and indemnity provisions are in place.

Price Sensitive and Shareholder-Impacting Highlights

• Substantial Increase in Net Profit and Dividend: The sharp rise in net profit and dividend payout is likely to positively impact share price, reflecting strong underlying business performance.
• Share Repurchases: Aggressive repurchase of shares could signal management’s confidence and may boost share value through reduced supply and enhanced EPS.
• Risks from Regulatory Changes: Ongoing dependence on contractual arrangements with PRC entities remains a material risk. Any regulatory shift could be highly price sensitive.
• Future Share Grants: Share grants to employees and for acquisitions may have a dilutive effect, which is relevant for current shareholders.
• Gearing Ratio Increase: Rising leverage, while still low, could affect future risk perceptions and capital structure.

Conclusion

YSB Inc.’s 2025 annual report demonstrates significant financial improvement, robust dividend policy, and ongoing commitment to shareholder value through buybacks and incentives. However, investors should monitor regulatory developments in the PRC, potential dilution from share grants, and leverage trends. The company’s strong reserves and governance framework provide a foundation for future growth, but risks tied to its operational structure in China remain critical.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell securities. Investors should conduct their own due diligence and consult with professional advisors before making any investment decision. The author is not responsible for any losses or damages arising from reliance on this information.

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