Fujian Haixi Pharmaceuticals Co., Ltd. 2025 Annual Report – Investor Highlights

Key Financial Highlights

• Revenue Growth: The company reported revenue of RMB582.4 million for 2025, up 24.8% from RMB466.7 million in 2024. This marks a strong upward trajectory over five years, with revenue almost fivefold from RMB122.0 million in 2021.
• Profit Expansion: Net profit surged to RMB177.0 million in 2025, up 30% from RMB136.1 million in 2024. Gross profit also increased to RMB485.6 million (2024: RMB387.2 million).
• Asset Base: Total assets jumped dramatically to RMB1,846.7 million in 2025 from RMB755.8 million in 2024, reflecting the successful Global Offering and capital inflows.
• Equity: The company’s equity soared to RMB1,593.7 million in 2025 from RMB541.3 million in 2024.
• Expenses: Sales and distribution expenses rose 19.3% to RMB197.7 million. Research and development (R&D) expenses increased by RMB6.0 million to RMB73.5 million, as key projects advanced to clinical trials.

Capital Market Events & Use of Proceeds

• Global Offering: The company completed its IPO on the Main Board of the Hong Kong Stock Exchange on October 20, 2025, raising net proceeds of HK\$940.13 million.
• Capital Allocation: As of December 31, 2025, only HK\$74.66 million had been deployed, with HK\$865.47 million still unutilised. The bulk of proceeds are earmarked for R&D, capacity expansion, and collaboration:
• R&D (Innovative & Generic Drugs): 52% (HK\$488.87 million), with 40% for innovative drugs. Only HK\$16.85 million spent so far.
• R&D Capacity & Collaboration: 23% (HK\$216.23 million), with minimal expenditure to date.
• Manufacturing Systems Optimization: 7% (HK\$65.81 million), mostly unspent.
• Timeline for full utilisation: by December 31, 2027.

Dividend Policy & Shareholder Returns

• No Dividend for 2025: The Board opted not to declare a dividend, citing the company’s early growth stage and the need to retain funds for business expansion and long-term shareholder value. This could impact short-term investor sentiment but signals commitment to reinvestment for future growth.
• Dividend Policy Review: The Board will continue to review the policy as financial performance and cash flows improve.

Strategic Initiatives & Risk Factors

• R&D Focus: Continuous investment in research and clinical trials to drive innovation, build a global product pipeline, and accelerate international product listings.
• Global Expansion: Plans to establish infrastructure for international clinical studies and enhance domestic and global commercial footprint.
• Production & Quality Control: Intention to expand production capacity and strengthen quality control to support global supply capability.
• Talent Recruitment: Ongoing efforts to attract and retain top industry talent.

Risk Management

• Market Risk: Exposure to market price movements, monitored closely.
• Operational & Investment Risk: Robust internal controls and approval procedures in place.
• Manpower Risk: Company faces risks in talent retention; attractive remuneration offered.
• Financial Risks: Includes interest rate, currency, credit, and liquidity risks. Notably, the company has significant foreign currency assets (US\$ and HK\$ denominated), but management expects FX movements to have limited impact.
• No Hedging: As of end-2025, the company had not entered into any hedging transactions.

Environmental, Social & Governance (ESG)

• Environmental Compliance: No material breaches of PRC environmental laws. The company actively promotes green practices and has published its ESG Report online.
• Corporate Governance: Full compliance with HKEX Corporate Governance Code. Audit, Remuneration/Appraisal, Nomination, and Strategy Committees established to ensure sound governance.
• Shareholder Rights: Clear procedures for convening meetings, submitting proposals, and making enquiries are in place.

Major Customers & Suppliers

• Customer Concentration: Top five customers accounted for 69.4% of sales in 2025, with the largest customer representing 41.1%. This concentration could pose both revenue risks and opportunities.
• Supplier Concentration: Top five suppliers accounted for 45.7% of purchases.
• No Director or Major Shareholder Interests: None of the board or major shareholders (>5% stake) had interests in the largest customers or suppliers.

Corporate Actions & Shareholder Information

• Share Capital: Increased by 11.5 million shares upon listing, raising RMB907.92 million.
• No Share Schemes or Convertible Securities: The company had not adopted share schemes or issued convertible securities, options, or warrants during the year.
• No Connected Transactions: No connected transactions required disclosure.
• Permitted Indemnity & Insurance: No indemnity provisions; appropriate insurance for directors is in place.
• Sufficiency of Public Float: Maintained >25% public float as required by HKEX.

Audit Opinion

• Unqualified Opinion: Deloitte Touche Tohmatsu issued a clean audit opinion, confirming compliance with IFRS and Hong Kong Companies Ordinance.
• Key Audit Matter: Fair value measurement of a RMB23.38 million convertible note investment in a private therapeutics entity. This involved significant judgement and independent valuation; auditors found no issues.

Potential Price-Sensitive Information

• Strong Revenue and Profit Growth: The company’s rapid scaling of revenue and net profit, combined with substantial increases in assets and equity, may positively affect share values.
• Large Unutilised IPO Proceeds: The company has a significant war chest (~HK\$865.47 million unutilised), providing flexibility for future investments, expansion, and potential value-creating activities.
• Customer Concentration Risks: Reliance on a few key customers could affect future revenues; any changes in these relationships may impact share prices.
• No Dividend: While the rationale is future growth, the lack of dividends may affect investor sentiment, especially among income-focused shareholders.
• R&D Pipeline Progress: Increased R&D expenses and projects reaching clinical trials are positive signals for future product launches, but may also imply near-term cash burn.

Conclusion

Fujian Haixi Pharmaceuticals delivered robust financial performance in 2025, with strong revenue and profit growth, successful completion of its Hong Kong IPO, and a substantial capital base to fund future expansion. The company prioritises reinvestment over dividends, focusing on R&D, global expansion, and talent recruitment. Shareholders should monitor the utilisation of IPO proceeds, customer concentration risks, and the progression of clinical trials, as these factors could materially impact future share values.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell securities. Investors should conduct their own due diligence and consult professional advisors before making any investment decisions.

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