Sanai Health Industry Group Company Limited Annual Report 2025: Key Financial and Strategic Highlights

Executive Summary

Sanai Health Industry Group Company Limited (“Sanai Health”) has released its annual report for the year ended 31 December 2025, providing a comprehensive overview of its business operations, financial performance, governance, and outlook. The Group is principally engaged in two main businesses: pharmaceutical products and finance leasing. This report contains critical information that investors and shareholders should be aware of, including operational challenges, financial results, strategic acquisitions and disposals, ongoing litigation, and corporate governance practices.

Business Review & Strategic Developments

• Pharmaceutical Products Business:
  • Fujian Rui Chuang Health Industry Company Limited remains the core production center and exclusive sales channel for the Group’s pharmaceutical products.
  • Since 2023, the business suffered from rising costs and supply shortages of traditional Chinese herbal materials, negatively impacting gross profit margin and sales volume. These challenges persisted into 2025.
  • Despite these headwinds, the Group is focusing on cost control, digital transformation, and operational efficiencies to drive productivity and reduce costs.
  • The acquisition of Beijing Hangyang contributed to sales revenue growth in 2025, with expectations of stable growth in 2026.
• Finance Leasing Business:
  • No new finance leasing agreements were entered into during the reporting period.
  • The Group continues to monitor the finance leasing market and adopts a prudent approach due to unattractive returns relative to inherent risks.
  • Strict internal controls and risk management procedures are in place for lease approvals and post-lease monitoring.

Financial Highlights

• Revenue:
  • Total revenue from continuing operations was RMB85.90 million, up 0.80% from RMB85.22 million in 2024.
• Distribution Costs:
  • Distribution costs increased to RMB8.60 million (2024: RMB6.25 million), mainly due to the costs associated with Beijing Hangyang.
• Loss for the Year:
  • Loss attributable to owners was RMB22.04 million, compared to a profit of RMB4.89 million in 2024. Key reasons include:
  • Net loss on disposals of subsidiaries (RMB0.8 million) versus a one-time net gain in 2024 (RMB17.1 million).
  • Decrease in gross profit by RMB2.5 million due to increased costs of herbal materials.
  • Increase in distribution and administrative expenses by RMB5.0 million, mainly attributable to Beijing Hangyang and its subsidiaries.
• Capital Commitments & Contingencies:
  • No significant capital commitments or contingent liabilities beyond those disclosed.
• Significant Acquisition & Disposal:
  • Disposal of 99% equity interests in Luannan Hangyang Health Industry Co., Ltd. for RMB18.69 million, completed in November 2025.
  • This disposal enables Sanai Health to streamline operations and reallocate resources to areas of stronger competitive advantage.

Corporate Governance & Risk Management

• Governance:
  • Sanai Health maintains high standards of corporate governance with compliance to the Corporate Governance Code (CG Code), except for minor deviations.
  • Board and committees (Audit, Remuneration, Nomination) oversee respective areas of governance, risk, and remuneration.
• Risk Management:
  • Risk management and internal controls are reviewed annually, with an independent internal auditor engaged to facilitate the process.
  • Annual risk assessments identify strategic, operational, financial, and compliance risks.
• Employee & Stakeholder Relations:
  • Staff numbers decreased slightly to 160 (2024: 164). Staff costs increased to RMB23.20 million (2024: RMB16.82 million).
  • No significant capital expenditure for property, plant, and equipment in 2024 or 2025.

Key Shareholder Information

• Share Capital:
  • Share consolidation and capital reduction executed in 2024-2025.
  • No pre-emptive rights exist under the Company’s articles or Cayman Islands law.
• Dividends:
  • No final dividend recommended for 2025 (2024: Nil).
• Major Shareholders:
  • Ms. Yang Youju (via Cyber Success) holds 21.89% of shares, followed by Mr. Jiang Hengguang (6.89%) and Mr. Zhi Shaohuan (5.75%).
• Share Option Scheme:
  • 5,308,890 options available for grant, representing 3.5% of issued share capital. No options granted in 2025.

Litigation and Audit Qualification

• Ongoing Litigation:
  • Sanai Health is involved in a civil litigation related to a Finance Lease Agreement, with the Company as one of the joint guarantors.
  • Uncertainties remain regarding the financial impact and timing of the litigation, as the retrial in Beijing courts is still pending.
  • The auditor issued a qualified opinion due to lack of conclusive evidence regarding the provision for litigation. The qualification will remain until final judgment is delivered.
  • This ongoing litigation and the audit qualification are potentially price-sensitive and may affect investor confidence and share value.

Risks & Outlook

• Industry Risks:
  • Pharmaceutical business faces intense competition and risks related to product acceptance, efficacy, quality, and pricing.
  • Regulatory risks, especially in the PRC, where laws and policies are frequently updated.
  • Environmental compliance is a key focus, with potential for substantial fines or shutdowns if regulations are breached.
• 2026 Outlook:
  • Sanai Health aims to consolidate its competitive advantages, seek new investment opportunities in the PRC, and enhance its market position through technology and innovation.
  • Emphasis on sustainability and social responsibility, aligning operations with evolving consumer expectations.
  • Continued focus on cost control, resource allocation, and prudent risk management in finance leasing.

Financial Summary (2021-2025)

• Earnings per Share (Basic):
  • 2025: RMB(14.41) cent (loss)
  • 2024: RMB3.37 cent (profit)
  • 2023: RMB14.52 cent (profit)
  • 2022: RMB0.95 cent (profit)
  • 2021: RMB0.3 cent (profit)
• Net Assets:
  • 2025: RMB324,100,000
  • 2024: RMB351,606,000
  • 2023: RMB269,671,000
  • 2022: RMB256,077,000
  • 2021: RMB219,551,000

Price Sensitive Points for Investors

• Significant net loss in 2025, reversal from the previous year’s profit.
• Ongoing litigation and audit qualification, creating uncertainty about future financial statements and potential liabilities.
• Disposal of major subsidiary (Luannan Hangyang), realigning business focus and freeing up capital.
• No dividends for 2025, indicating continued caution and focus on capital retention.
• Stable revenue but increased operating costs, pressure on margins.
• Share consolidation and capital reduction, impacting share structure.
• Potential regulatory and environmental risks in the pharmaceutical sector.

Disclaimer

This article is prepared for informational purposes only and does not constitute investment advice. Readers should conduct their own due diligence and consult with professional advisors before making investment decisions. The information herein is derived from the annual report of Sanai Health Industry Group Company Limited for the year ended 31 December 2025 and is subject to change without notice. The author assumes no responsibility or liability for any errors or omissions or for any actions taken based on this article.

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