High dividends in the left hand, new tracks in the right hand, Jiuzhitang reconstructs shareholder value growth poles

As a time-honored Chinese pharmaceutical company with over 300 years of history, Jiuzi Tang (Rights Protection) (000989) has delivered a comprehensive annual report balancing short-term shareholder returns and long-term growth strategies during its first full fiscal year after state capital took over. The 2025 annual report shows that the company, under the dual pressures of industry adjustment and internal transformation, has stabilized its profit base while launching a high cash dividend plan to reward shareholders, and accelerated its entry into innovative fields such as peptides and stem cells, which is expected to reconstruct a new engine for shareholder value growth.

First, looking at shareholder returns, Jiuzi Tang has presented a highly sincere high dividend plan. According to the distribution plan approved by the board of directors, the company intends to distribute a cash dividend of 3 yuan (including tax) for every 10 shares based on the total share capital minus repurchased shares on the equity registration date. There will be no stock dividends or capital increases, with an expected total cash distribution exceeding 254 million yuan. From the financial data, the company achieved a net profit attributable to shareholders of 223 million yuan in 2025, a slight year-on-year increase of 2.96%, and this total dividend amount covers the annual net profit. Looking back, the company has maintained a dividend rate of over 40% for more than ten consecutive years, with a dividend rate exceeding 110% each year over the past three years, fully highlighting the company’s strong cash flow and high regard for small and medium shareholders.

The continued high dividends from Jiuzi Tang rely on the solid cash flow support of the company, with positive net cash flow from operating activities every year since its listing. In 2025, the net cash flow from operating activities reached 426 million yuan, soaring by 114.25% year-on-year. The substantial improvement in operating cash flow confirms the steady enhancement of the company’s ability to collect payments from its main business and operational efficiency. Even in a period of deep adjustment in the pharmaceutical industry and short-term revenue pressures, the company maintains a sound financial structure, with a reasonable debt-to-asset ratio and ample liquidity, ensuring daily operations and R&D investments while balancing shareholder cash returns, achieving a balance between business operations and shareholder interests.

In terms of performance, Jiuzi Tang has managed to achieve a slight increase in profits against industry pressure in 2025, showcasing the operational resilience of time-honored pharmaceutical companies. For the year, the company generated operating revenue of 2.229 billion yuan, a year-on-year decrease of 5.99% due to industry channel reforms and short-term adjustments in the OTC sector; however, through lean cost management and optimization of product structure, it achieved a net profit attributable to shareholders of 223 million yuan and a net profit of 191 million yuan after deducting non-recurring gains and losses, representing a year-on-year increase of 4.06%, with continuous improvement in profit quality.

If the high dividends are the “current benefits” that Jiuzi Tang provides to shareholders, then the new track layout is the “future strength” for the company to leverage long-term growth and unlock valuation space. In the face of homogeneous competition and slowdown in the traditional Chinese medicine industry, the company is no longer limited to traditional Chinese patent medicine business and has initiated diversified innovation layouts, precisely entering high-potential sub-tracks to improve the overall health industry ecosystem.

The most noteworthy move for the market is the company’s strategic acquisition of Jixianglong, officially entering the blue ocean market for peptide drugs. In 2025, Jiuzi Tang invested 310 million yuan to acquire a 51.67% stake in Jixianglong, bringing this national-level specialized “little giant” company under its umbrella. Jixianglong has been deeply engaged in the peptide field for over ten years, mastering the core technology for the large-scale production of peptide raw materials, holding multiple approvals for peptide raw materials such as Exenatide and Somatostatin, while also participating in the formulation of several national pharmacopoeia standards, possessing strong R&D and production capabilities. This acquisition not only fills Jiuzi Tang’s business gap in the chemical raw materials and peptide formulations but also achieves industrial synergy between traditional Chinese medicine and innovative peptide drugs, assisting the company in transforming from a traditional Chinese medicine enterprise into a modern comprehensive pharmaceutical group, opening up new performance growth space.

In addition to the peptide track, the company’s layouts in innovative fields such as stem cell medicine and health are also steadily implemented, continuously nurturing a second growth curve. In the field of stem cell R&D, several stem cell drugs under Jiuzi Tang Meike are progressing smoothly through clinical trials, with projects on treating ischemic stroke and autoimmune alveolar protein deposition syndrome using human bone marrow mesenchymal stem cells achieving phased clinical goals, and clinical trials for treating autism smoothly launched, with R&D results gradually materializing. In the health sector, the company relies on the concept of food and medicine being of the same origin, laying out products derived from donkey-hide gelatin, high-quality herbal slices, and herbal health products, aligning with the trend of health consumption upgrades among the public and exploring the consumer value of traditional Chinese medicine.

At the same time, Jiuzi Tang continues to solidify its R&D foundation to fuel the development of new tracks. In 2025, the company’s R&D investment remained stable, with its proportion of revenue rising to 6.63%, reaching a record high; research on the re-evaluation of core varieties of traditional Chinese medicine has resulted in the real-world research outcomes of Xuebiao Tong injection being presented at international academic conferences; innovative R&D projects such as YB209 and YB211 are progressing as planned, and research on classic Chinese medicine formulas is being conducted in an orderly manner, forming a diverse R&D system of “traditional Chinese medicine upgrading + innovative drug R&D + cutting-edge biomedical technology,” laying a solid technological barrier for long-term development.

From an industry perspective, Jiuzi Tang’s current strategy of “high dividends + new tracks” coincides with the policy windfall for high-quality development in the traditional Chinese medicine industry. In 2025, multiple supportive policies for traditional Chinese medicine were implemented, providing a favorable policy environment for time-honored pharmaceutical companies to transform, from improving Chinese medicine quality, supporting innovative R&D, to optimizing the medical insurance catalog. After the state capital took over, the company’s governance structure continues to improve, and its resource integration capability is further enhanced, which can rely on the credibility of state capital to solidify operational stability while accelerating the implementation of innovative business and broadening industrial cooperation channels, achieving a dual empowerment of state-owned enterprise resources and the vitality of private enterprises.

In the short term, the high dividend ratio provides investors with tangible cash returns, enhancing shareholders’ sense of holding, and demonstrating the company’s confidence in its operational stability; in the long term, the layouts in new tracks such as peptides and stem cells break through the growth ceiling of traditional Chinese medicine enterprises, helping the company achieve business structure diversification and upgrade its profit model. For this time-honored pharmaceutical company with over 300 years of history, holding steady dividends in one hand and seizing opportunities in new tracks with the other is not only a commitment to shareholder value but also a breakthrough for the company’s transformation and upgrade.

In the future, as the marketing reform of the traditional Chinese medicine business takes effect and the innovative tracks gradually release performance, Jiuzi Tang is expected to achieve a two-way balance between short-term returns and long-term growth, continuously creating long-term and stable value returns for shareholders.