Former Hunan's richest man Shuai Fangwen family once again announces a share reduction plan, with the stock price dropping by as much as 90%!

Kangfang Pharmaceutical recently released the controlling shareholder’s share sale (reduction) plan. This is already the second time in the past half-year that the controlling shareholder has issued a share sale plan, and the shares pledged by the controlling shareholder account for as much as 97.94% of his holdings. A reporter from the Economic Daily News found that the reason behind Kangfang Pharmaceutical’s controlling shareholder’s announcement of a share sale plan is the company’s net profit that has continued to be loss-making over the past three years, as well as the fact that the revenue from the company’s traditional pharmaceutical main business has also been shrinking for five consecutive years. However, due to a surge in the company’s new energy business, it reversed the trend of continuously declining revenue in 2025.

The controlling shareholder issued a share sale plan for the second time within half a year; the company has posted ongoing losses in net profit over the past three years

On March 31, 2026, the ChiNext-listed company Kangfang Pharmaceutical issued an announcement stating that the company’s controlling shareholder and actual controller, Mr. Shu Fangwen, plans to reduce his holdings of no more than 42 million shares of the company’s stock within 3 months after 15 trading days from the date of publication of this announcement (i.e., from April 23, 2026 to July 22, 2026), accounting for 2.04% of the company’s total share capital. Based on the closing price of 3.93 yuan on March 31, the market value of 42 million shares is 165 million yuan.

According to the announcement, Mr. Shu Fangwen currently holds 854 million shares of Kangfang Pharmaceutical, accounting for 41.38% of the company’s total share capital. However, Mr. Shu Fangwen’s pledged equity ratio is relatively high. Wind Information (Eastsun) data shows that the shares pledged by Mr. Shu Fangwen account for as much as 97.94% of his shareholding.

This share reduction is the second time within half a year that Mr. Shu Fangwen has issued a reduction plan of the same quantity. In September 2025, Kangfang Pharmaceutical had disclosed a share reduction announcement by the controlling shareholder. Mr. Shu Fangwen planned to reduce his holdings of no more than 42 million shares between October 29, 2025 and January 28, 2026. However, in the end, after the term of that round of share reduction plan expired, no share reduction operations were carried out.

Alongside the actual controller’s share reduction plan is the company’s pressured performance. The company’s performance forecast shows that it expects net profit attributable to shareholders of listed companies for the full year of 2025 to be a loss of between 325 million yuan and 385 million yuan.

The company explained that the main reasons for the expected losses in 2025 are, under the principle of prudence, that based on the current insufficient utilization rate of production capacity, and after considering the current market environment and the company’s own operating plans, the company conducted impairment tests and accrued corresponding asset impairment losses for assets and certain inventories that it judged would be difficult to restore to a reasonable level in the short term.

In fact, this is not Kangfang Pharmaceutical’s first time posting losses. The company’s net profits in 2021 through 2024 were -791 million yuan, 46 million yuan, -195 million yuan, and -373 million yuan, respectively. Except for profits of 46 million yuan in 2022, other years since 2021 have shown significant losses.

In the “2014 Hurun Rich List,” Kangfang Pharmaceutical’s chairman, Shu Fangwen, and his family rose to become Hunan’s richest person with wealth of 9.5 billion yuan, ranking 177th on the rich list. As Kangfang Pharmaceutical’s performance has been poor, the wealth of the company’s actual controller, Shu Fangwen, has also shrunk significantly. According to data from the Hurun Rich List, from 2015 to 2021, the wealth of Mr. Shu Fangwen and his spouse was, in sequence, 21 billion yuan, 14.5 billion yuan, 13.5 billion yuan, 5.7 billion yuan, 6.7 billion yuan, 6.5 billion yuan, and 5.5 billion yuan, showing an overall downward trend.

Traditional main business has contracted for five consecutive years; in 2025, new energy business revenue growth turns positive

Accompanying the losses is the continuous decline in operating revenue from 2019 to 2024. Operating revenue fell year by year from 2.74B yuan in 2019 to 1.14B yuan in 2024. However, in 2025 the company reversed the previously continuous revenue decline trend. In the first three quarters of 2025, the company achieved operating revenue of 1.01B yuan, up 17.81% year over year.

In its performance forecast, the company said that its principal business grew compared with the same period of 2024 and showed a steady, improving trend. This is mainly because, benefiting from the commissioning and operation of the lithium ore beneficiation plant project in Nigeria, the company’s lithium concentrate powder business has been producing stably during the reporting period and achieved operating revenue of more than 200 million yuan. As a core raw material for producing lithium carbonate, the lithium concentrate powder product benefited from the overall favorable market conditions for lithium carbonate during the reporting period. Production and sales proceeded smoothly, and it became a new profit growth point for the company. At the same time, cash flow from the company’s operating activities has remained sufficient, and net cash flow generated from operating activities increased significantly compared with the same period of 2024.

A reporter from the Economic Daily News found that in the first half of 2025, Kangfang Pharmaceutical’s operating revenue in the new energy industry was 127 million yuan, accounting for 18.57%; while in 2024 it was only 9.9916 million yuan, accounting for 0.88%. However, the company’s revenue in the pharmaceutical industry still showed a contraction trend in the first half of 2025, at 541 million yuan, down 11% from 608 million yuan in the first half of 2024.

So, against the backdrop of the company’s continued losses in recent years and the controlling shareholder’s share reduction, can the company’s traditional pharmaceutical business reverse the prior trend of continued decline? Going forward, can the development of the company’s new energy business offset the negative impact caused by the decline in the pharmaceutical business? What is the risk of margin call and forced liquidation for the controlling shareholder’s pledged shares? In this regard, the Economic Daily News reporter sent an interview email to the company, but as of the time of publication, no response has been received.

Public information shows that Kangfang Pharmaceutical’s main businesses are: the production and sales of excipients, APIs, finished pharmaceuticals, and new energy materials.

Judging from the stock price trend, as of April 2, Kangfang Pharmaceutical’s stock price closed at 4.02 yuan per share, with a total market value of about 8.29B yuan. Since the historical peak in 2015, the company’s maximum decline in stock price has reached 90%.

In May 2017, some self-media published posts online questioning whether Kangfang Pharmaceutical was suspected of financial fraud. After the news of fabricated finances was exposed, Kangfang Pharmaceutical’s share price hit five consecutive daily trading limits downward, after which the stock price never recovered.

In June 2018, Kangfang Pharmaceutical received an administrative penalty decision from the Hunan Securities Regulatory Bureau. After investigation, it was found that in 2015 and 2016, Kangfang Pharmaceutical had artificially inflated revenue by 273 million yuan over the two years, and inflated net profit by 248 million yuan. In response, the Hunan Securities Regulatory Bureau imposed a fine of 600k yuan on Kangfang Pharmaceutical. It issued warnings to the supervisors directly responsible, Shu Fangwen and Liu Aijun, and each was fined 300k yuan. Other responsible personnel were also fined.

Economic Daily News