How to interpret Jing Tai Holdings' "turning losses into profits" financial report?

In capital markets, “turning a loss into a profit” is often seen as a key turning point in a company’s development. Behind it typically lies a profound transformation of the company’s underlying fundamentals, as well as an important signal to the market to reassess the company’s value.

On March 25, China’s AI pharma “first listed company,” Jing Tai Holdings, disclosed its 2025 full-year performance announcement, delivering an impressive “turnaround” outcome. The financial statements show that in 2025, the company achieved operating revenue of 803 million yuan, a sharp year-on-year increase of 201.2%. Worth noting is that, against the backdrop of R&D spending rising year-on-year to 569 million yuan and the company continuing to intensify its core technology investments, it still managed to achieve net profit of 1.52B yuan and successfully deliver a breakthrough into profitability.

From a net loss of 1.515 billion yuan in 2024 to a net profit of 135 million yuan in 2025, Jing Tai Holdings’ performance achieved a staggering turnaround. As a profitability report with landmark significance for the development of China’s AI pharma industry, this achievement deserves close attention.

However, in this dazzling “turnaround” performance, is it solid evidence that the “ecosystem flywheel” model the company is proud of has indeed already begun to spin, or is there something else going on behind the scenes? What financial logic is hidden beneath it? Today, we will break it down step by step purely from a financial perspective to restore the true picture of Jing Tai Holdings’ “turning a loss into a profit.”

01 The truth about “turning a loss into a profit”

First, let’s draw a conclusion: Jing Tai Holdings has indeed achieved accounting profitability, but there is still a considerable gap from the truly “spinning” of the “ecosystem flywheel” it claims.

The company’s net profit of 135 million yuan in 2025 was not driven entirely by its core business operations; it depended heavily on two large non-recurring income items: one is a $51 million upfront payment from DoveTree (approximately 365 million yuan), and the other is a whopping 514 million yuan in net other gains. If these two non-recurring items are excluded, the magnitude of the company’s operating loss for the period—actually—would be even larger than in 2024.

Chart: Breakdown of Jing Tai Holdings’ financial data, source: Jinsi Research Institute

First, let’s look at the cooperation between Jing Tai Holdings and DoveTree. On June 23, 2025, the two parties reached a drug development collaboration agreement. Jing Tai Holdings will leverage its AI + robotics integrated drug discovery platform to develop small-molecule and antibody candidate drugs for multiple targets designated by DoveTree.

According to the agreement, DoveTree makes an initial upfront payment of $51 million. There is also a $49 million milestone payment scheduled to be paid within 180 days. In addition, subsequent potential milestone payments of up to $5.89 billion may be received. This $51 million upfront payment became an important support for Jing Tai Holdings’ achievement of “turning losses into profits,” while the $49 million milestone payment was not included in this period’s financial report.

Second is the 514 million yuan in net other gains, mainly coming from fair value changes of financial assets measured at fair value through profit or loss. In 2024, this line item was only 25 million yuan; in 2025, it surged to 514 million yuan.

Although the financial report does not disclose details of this gain, based on common industry practices, it is likely mainly due to an increase in the valuations of the companies the firm has invested in. During the reporting period, investees such as Xige Shengk, Laming Bio, Mudea Bio, and Jitai Pharmaceutical all completed a new round of financing, directly driving up the fair value of the related financial assets.

Chart: Investee information of Jing Tai Holdings, source: Jinsi Research Institute

In summary, Jing Tai Holdings’ “turning losses into profits” in this round is not driven by improvements in its core business’s ongoing operating capability. Instead, it relies more on one-time, non-recurring gains.

02 Core main business continues to improve

Although Jing Tai Holdings’ turnaround in this round is not driven by ongoing operations, the fundamentals of its core business do indeed show a clear trend of continuous improvement. Because Hong Kong stock exchange reports disclose on a semiannual basis, we split the results using a semiannual perspective, which allows us to observe the company’s real operating changes over the past two years more clearly.

Chart: Analysis of Jing Tai Holdings’ performance over the past two years, source: Jinsi Research Institute

First, look at operating revenue after removing one-off milestone payments: from 103 million yuan in the first half of 2024, it steadily increased to 286 million yuan in the second half of 2025. Although the current revenue scale is still not sufficient to cover high R&D expenditures, the growth trend is unmistakable—the business is in a stage of rapid volume expansion. At the same time, the company manages sales costs and administrative expenses appropriately; there has not been a significant spike, reflecting a continued improvement in operating efficiency.

However, investors also need to pay attention: while revenue expands quickly, Jing Tai Holdings’ gross margin has declined noticeably—from the previous long-term level of 46% down to 43.5%. Whether the gross margin will continue to fall afterward will be a key metric that needs ongoing tracking.

From the perspective of business structure, both of the company’s two main operating businesses have accelerated significantly. In particular, the smart solutions business—which represents the scale of its ecosystem business—saw a substantial increase in the second half of 2025, to some extent reflecting that customer stickiness is continuing to strengthen.

Chart: Revenue breakdown by business segment for Jing Tai Holdings, source: Jinsi Research Institute

Based on the above data, it can be judged that although Jing Tai Holdings has not achieved a true turnaround relying on its main business, the trend of ongoing improvement in its operating fundamentals is already fairly certain. If investors downplay the short-term expectations of “turning a loss into a profit,” the company’s overall performance actually already meets many investors’ expectations.

03 Profitability isn’t that important

For most industries, profit data is crucial; but for an emerging track like AI pharma, whether it is profitable at this stage is, in fact, the least important indicator.

From the perspective of a company’s long-term development, one-off gains and losses are only temporary fluctuations. A turnaround achieved on the balance sheet through non-recurring gains may temporarily boost market expectations, but it cannot truly change the company’s long-term value base. The essence of the “flywheel effect” is built on continuous deep efforts in the core business. Only when the main business accumulates qualitative change from quantitative changes can it genuinely drive the ongoing amplification of ecosystem value.

Even if we look at the $51 million upfront payment made by DoveTree, which appears to be driven by core technology and would normally constitute part of core operating income, given the occasional nature of such one-time payments, investors should not treat it as sustainable, conventional income.

Of course, all of this assumes that Jing Tai Holdings is positioned as an AI pharma company. If we change the perspective and regard it as a pure holding company, the conclusion would be entirely different. For platforms of this kind, the AI main business is not the core; investment returns are its true logic for profitability.

In other words: if Jing Tai Holdings is an AI pharma company, this “turnaround” is really nothing major. If it is a holding company, perhaps it is truly entering a turning point. There is no absolute right or wrong between the two perspectives, but the key is: a holding-company-type company should not enjoy valuation premium like an AI technology enterprise.