Profit Turns to Loss: Mingde Biology Reverses Course After Corrected Performance Guidance

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Reprinted from: Securities Daily

By: Gui Xiaosun and Li Haoyue

On the evening of March 22, Wuhan Mingde Biotechnology Co., Ltd. (hereinafter referred to as “Mingde Biotechnology”) issued a revised earnings forecast for 2025. After the revision, the net profit attributable to shareholders of the listed company changed from profit to loss, showing a “turnaround.”

The announcement shows that in January this year, the company released an earnings forecast estimating that the net profit attributable to shareholders of the listed company for 2025 would be approximately 12 million to 18 million yuan. The original forecast mentioned that the decline in net profit attributable to shareholders was mainly due to a significant decrease in investment income and other income, as well as an increase in credit impairment losses. During the reporting period, the company received over 40 million yuan less in government subsidies compared to the same period last year; affected by the continuous decline in domestic financial market interest rates and lower yields on the company’s wealth management products, investment income decreased by over 30 million yuan year-on-year; the amount recovered from overdue accounts receivable was lower than last year, and the impairment provision for receivables tested separately decreased by over 30 million yuan compared to last year, leading to increased credit impairment losses. The company’s main business operations are normal, and it will continue to optimize product and customer structures, strengthen cost and expense control, and steadily improve operational quality and profitability.

However, the latest announcement shows that the company expects a net loss of 15 million to 25 million yuan attributable to shareholders of the listed company for last year.

Regarding the reasons for the earnings revision, the announcement explains from two aspects: First, a comprehensive review and cautious analysis of operating income was conducted. Based on prudence, some transactions were not recognized as revenue in 2025 due to significant uncertainty in receivables collection, leading to a corresponding decrease in operating income and net profit attributable to shareholders. Second, the company further communicated with its annual auditors to conduct impairment tests on assets with signs of impairment. Based on prudence, adjustments were made to impairment losses for assets such as inventories and fixed assets, resulting in a corresponding decrease in net profit attributable to shareholders.

Wang Zhibin, a lawyer at Shanghai Minglun Law Firm, told Securities Daily that the revision of a listed company’s earnings forecast must be based on objective operational changes, adjustments in accounting estimates, and other genuine reasons. Investors should focus on the specific reasons provided in the correction announcement, the compliance of related accounting treatments, whether the correction procedures were performed in a timely manner, the type of audit opinion on the annual report, and the progress of delisting risk warnings, while also monitoring regulatory inquiries or investigation conclusions.

“If the company’s previous earnings forecast lacked a reasonable accounting basis or failed to disclose known major risk factors at the time, the forecast could be considered ‘misleading’ or ‘false statement.’ Investors misled by such forecasts can legally file claims to seek compensation for damages,” Wang Zhibin said.

It is worth noting that on the evening of March 22, the company also issued an announcement stating that the audited total profit, net profit, and net profit after deducting non-recurring gains and losses for 2025 are expected to be negative, and the revenue after deduction is below 300 million yuan. According to relevant regulations, the company’s stock trading may be subject to delisting risk warning by the Shenzhen Stock Exchange after the disclosure of the 2025 annual report.

Chen Jingjing, General Manager of Hebei Huanbo Technology Co., Ltd., told Securities Daily that the earnings forecast of a listed company also has its “seriousness.” If there is a “turnaround” after correction, it reflects that the company is not cautious enough in operational forecasting, financial accounting, and information disclosure, and also exposes uneven governance levels. Such serious revisions can severely damage market trust and impose additional risks on small and medium investors facing information asymmetry.

From other publicly available information, Mingde Biotechnology is currently planning a major asset restructuring, intending to acquire 100% equity of Wuhan Bikai’er Rescue Supplies Co., Ltd., held by Lanfeng Medical Co., Ltd., in cash. The latest progress announcement indicates that the related work is actively progressing, but no formal agreement has been signed yet.

(Editor: Shangguan Menglu)