Domestic viagra, the net profit realized is less than half of the consolidated net profit!

Starry Sky Jun encountered a very interesting problem:

Why do you see an annual report, saying that the consolidated net profit is 4.056 billion, the net profit is 1.684 billion, and the undistributed profit is 8.389 billion. What kind of profit is this?

According to the data in the question, Xingkong Jun checked it, this is the annual report of Baiyun Mountain.

In the annual report, among the 9 drugs in four categories, including internal medicine, antimicrobials, male medicine, analgesia and antipyretic, the sales of domestic "Viagra" sildenafil citrate tablets (trade name Jinge) are as high as 1.2895 billion yuan, which is the only drug with an income of more than 1 billion yuan among the 9 drugs.

So the question is, what's going on with all this bunch of clouds of profits? Why can't it be right? Could it be that the audit of the firm has gone wrong?

Under normal circumstances, the CPA of the firm is professional, and the probability of error is very low (not impossible), and in Baiyunshan's annual reports over the years, the consolidated net profit is more than double the net profit, and the possibility of fraud not being detected for consecutive years is very small.

1. The connection and difference between the consolidated statements and the parent company's statements

The reason why the consolidated net profit is far greater than the net profit is that there are actually two sets of calibers in the statements of listed companies.

The first set of calibers is the caliber of the parent company, and the second set of calibers is the consolidated caliber.

The so-called parent company is the "ontology" of the listed company, excluding its wholly-owned subsidiaries, holding subsidiaries and other subsidiaries, while the parent company's financial statements only reflect the financial statements of the listed company, while the consolidated financial statements include the financial statements of the subsidiaries after consolidation and offset.    

According to the requirements of the China Securities Regulatory Commission, listed companies must disclose both the parent company's statements and consolidated statements in their annual reports.

However, when the vast majority of listed companies introduce their performance, they often only introduce the merger calibre, and rarely introduce the parent company separately.

For example, the introduction of the dividend plan of Zhongzhi shares:

Baiyun Mountain is a special case.

The consolidated net profit realized by the Group is the net profit of the consolidated caliber;

The net profit realized by the company is the net profit of the parent company.

In addition, the net profit of the annual balance after the profit distribution will be carried forward and reflected in the "undistributed profit" of the balance sheet. If the listed company's dividend exceeds the net profit of the current year, it is using the "undistributed profit" of the previous year.

So, is this data of the parent company significant?

For small and medium-sized investors, the data of the parent company is of little significance, but some listed companies suspected of beautifying financial data can find clues from the current payments of the parent company.    

Second, the performance has entered a bottleneck period

Since 2019, the company's performance has fallen into a cycle of stagnancy.

Source: Straight Flush iFind, Graphics: Poetry and the Starry Sky

In 2023, the company's revenue will increase by 6.68% over the same period of the previous year, net profit will only increase by 2.25%, and non-net profit will perform better, increasing by 9.53%.

In terms of product lines, Xingkong Jun found that in addition to big business, almost all of the company's product lines have fallen into a period of "standing still".

Source: Straight Flush iFind, Graphics: Poetry and the Starry Sky

1. Big business

Big business is mainly the pharmacy business, which belongs to the field with low technology content and lack of barriers.

2. Great health

The core of big health is Wanglaoji, after the grievances and disputes with JDB, Wanglaoji has entered a stable period, although the offline catering consumption will recover better in 2023, but the growth rate of Wanglaoji is obviously not as good as that of beer.

Source: Straight Flush iFind, Graphics: Poetry and the Starry Sky

This is also related to the concept of healthy consumption, and the recognition of such high-sugar beverages by consumers is gradually declining. Perhaps, in the future, we will be able to launch products with zero sugar to achieve a new breakthrough (but it is more difficult, and the taste of sugar substitutes is generally too poor now).

3. Great Southern Medicine

Da Nan medicine mainly includes Qingkailing series, Angong Niuhuang Pill, Honey Refining Chuanbei Loquat Ointment, Waist Strengthening and Kidney Strengthening Pills, Xiao Chai Hu Granules, Jin Ge, and Thirst Quenching Pills.

With the expiration of Pfizer's Viagra patent, Baiyunshan even invited the inventor of Viagra to participate in the research and development of Jinge.

Jin Ge, as the main force of Da Nan Yao, once led this plate Jin Ge Iron Horse.

Jin Ge almost halved the price of Pfizer, about 2 or 30 yuan a pill. Just when it was on sale, but the good times did not last long, Qilu Pharmaceutical won the bid for sildenafil called "Qianwei", and the price was reduced to 2 yuan in one go.

Source: Straight Flush iFind, Graphics: Poetry and the Starry Sky

In recent years, the treatment of male ED drugs has been continuously enriched, in addition to sildenafil, tadalafil, avanafil and other similar drugs have emerged in an endless stream. Not to mention sildenafil generic Jinge, the original sildenafil drug Viagra is facing huge competitive pressure. And Jin Ge's response can only be to reduce prices.

3. Cash flow is not as good as in 2019

2019 is a very good year when comparing consumer product indicators.

The vast majority of consumer goods have far exceeded 2019, and in terms of revenue scale, Baiyunshan's revenue in 2023 has exceeded that of 2019.

Especially big health, which is the "cash cow" sector.

However, the company's net operating cash flow in 2023 is not optimistic.

Source: Straight Flush iFind, Graphics: Poetry and the Starry Sky

It is even lower than in 2019, which indicates that the quality of the company's payment in 2023 is relatively poor.

Fourth, the world is a grass platform

Although Jingo's gross profit is declining, it is still a golden signboard. In 2023, it sold for nearly 1.3 billion.

Driven by interests, disputes will inevitably arise.

In December 2001, Baiyunshan declared a new drug of sildenafil (the main ingredient of Jinge). In 2003, Baiyunshan Pharmaceutical General Factory,

Baiyunshan Science and Technology Co., Ltd. obtained the new drug certificate, but due to the impact of the patent protection period of the original drug (Pfizer Viagra), Baiyunshan Pharmaceutical General Factory failed to obtain the production approval and did not actually put it into production.

In 2012, Baiyunshan restarted the application process (Viagra's patent in China expired in 2014), and Baiyunshan Pharmaceutical General Factory and Guangzhou Baiyunshan Pharmaceutical Group Co., Ltd. Baiyunshan Chemical Pharmaceutical Factory ("Baiyunshan Chemical Pharmaceutical Factory") obtained the approval for the production of sildenafil citrate tablets and the production of API in July 2014 and August 2014, respectively.

On December 30, 2021, Baiyunshan Pharmaceutical General Factory sued Baiyunshan Technology Co., Ltd., requesting a judgment to confirm Jinge Pharmaceutical    

Gross profit distribution ratio of sales.

According to the company's investigation, Baiyunshan Group holds 51% of the shares of Baiyunshan Technology and is a holding company, while Baiyunshan Pharmaceutical General Factory is a wholly-owned subsidiary of Baiyunshan Group.

The infighting drama begins.

However, the lawsuit was later withdrawn.

The company stated in the annual report that in terms of relevant income distribution, Baiyunshan Pharmaceutical General Factory had reasonably estimated the company's due income based on the contribution of Baiyunshan Technology Company to Jinge, and made corresponding provisions, but because the shareholders of the two parties had not yet reached an agreement on the income distribution, the Group was temporarily unable to calculate the specific impact on the Group's profit for the current year or the future.