Movement Alert|HENGRUI PHARMA Declines 3.18% in Regular Trading, Extending Sell-Off on Weak H1 Earnings Quality

Market Focus
Aug 21

On August 21, HENGRUI PHARMA declined 3.18% in regular trading, trading at 47.66 HKD/share with turnover of approximately 109 million HKD, extending the prior session's 8.55% selloff.

The decline continues to reflect market reaction to the company's H1 earnings released on August 19. While headline net profit of 4.465 billion yuan rose 0.34% year-over-year, core profitability deteriorated significantly: non-GAAP net profit fell 12.71% to 3.73 billion yuan, and operating cash flow plunged 53.8% to 1.987 billion yuan. Revenue declined 1.94% to 15.456 billion yuan, dragged by a 16.07% drop in generic drug sales and a 28.6% decline in licensing income, despite innovative drug revenue growing 16.4% to 8.809 billion yuan. The company simultaneously announced a 1-2 billion yuan share buyback plan for employee stock ownership purposes and received marketing approval for its PNH drug Licancopan Fumarate Capsules, but these developments were insufficient to offset concerns over deteriorating earnings quality.

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