ST Renfu's first annual report after change of ownership: profit soars, accounts receivable collection period longer than peers

On the evening of March 30, 2026, leading anesthetic drug company ST Renfu (600079.SH, i.e., “Renfu Pharmaceutical”) released its annual report. After shedding burdens such as “funds being occupied by the Contemporary Group” and inflated profits, the company’s performance stabilized and improved. The new actual controller, China Merchants Group Co., Ltd. (hereinafter “China Merchants Group”), also continued to support the company’s development through measures such as open-market share purchases and rights issues to replenish capital.

However, ST Renfu still has issues such as its core subsidiaries being suspended from military procurement, relatively high outstanding loan balances, and the need to optimize the accounts receivable aging period.

Overall performance is improving, and a subsidiary has been suspended from military procurement

The financial report shows that in 2025, ST Renfu achieved operating revenue of RMB 23.96B, down 5.79% year over year; it achieved non-recurring profit after deductions (扣非净利润) of RMB 1.76B, up 54.75% year over year.

ST Renfu’s trend in non-recurring profit after deductions. (Chart source: Eastmoney)

ST Renfu is an absolute leader in the anesthetic drug sector. Its subsidiary Yichang Renfu Pharmaceutical Co., Ltd. (hereinafter “Yichang Renfu”) has a domestic market share of anesthetic drugs exceeding 60%. Its market shares in multiple anesthetic and mental health-related core products rank among the top. It is also the most comprehensive commercial producer of fentanyl series products. Another subsidiary, Hubei Gedian Renfu Pharmaceutical Co., Ltd. (hereinafter “Gedian Renfu”), is a domestic leader in two-gender health hormone-type drugs. It has the largest global market share for progesterone raw material drugs, and leading market shares for raw material drugs such as finasteride and budesonide.

According to the Army Procurement website, on March 3, 2026, Yichang Renfu was suspended from participating in the procurement qualification for the Army’s material engineering services activities due to “other, other violations.”

(The screenshot above is from the Army Procurement website)

However, this is likely a legacy issue. The person under handling, “Li Jie,” was the former legal representative of Yichang Renfu. As ST Renfu’s actual controller changed to China Merchants Group, the legal representative of Yichang Renfu has been changed to “Yin Qiang.” In addition, ST Renfu’s main customers are hospitals at all levels, clinics, and retail pharmacies. This matter has limited impact on the company’s overall performance.

The annual report shows that revenue declined mainly due to the structural reforms affecting the payment side of the pharmaceutical industry, as well as the company implementing “core focus” to continuously optimize its business structure.

As for the sharp increase in profit, reporters with Nandu noticed that, on the one hand, the company’s consolidated gross margin from its main business rose to 48.21%, up 3.69 percentage points from the same period last year; on the other hand, expenses fell across the board. During the reporting period, the company’s selling expenses, administrative expenses, and finance costs decreased year over year by 3.49%, 10.66%, and 13.42%, respectively. Just these three items together released RMB 415 million in profit. The company’s R&D expenses increased by 2.04% year over year.

Accounts receivable aging period is relatively long, and outstanding loan balances are high

Investors’ another area of concern about ST Renfu is accounts receivable. This is also one of the key data used to measure a pharmaceutical company’s management capabilities.

With operating revenue down year over year, as of the end of 2025, the company’s accounts receivable balance was RMB 9.39B, up 2.14%. In 2023, 2024, and 2025, the company’s accounts receivable turnover days were 114.8, 122.5, and 139.7, respectively, increasing year by year.

In a horizontal comparison, another leading anesthetic drug company, Enhua Pharmaceutical (002262.SZ), had accounts receivable turnover days of 66.25 and 79.77 in 2023 and 2024, respectively, and 90.99 in the first three quarters of 2025; Shanghai Pharmaceuticals (601607.SH) had this figure at 102.5 in 2025, all of which were lower than ST Renfu.

In addition, in the first three quarters of 2025, Enhua Pharmaceutical had operating revenue of RMB 4.47B, and accounts receivable at the end of the reporting period of RMB 1.52B, representing approximately 34.06%. Shanghai Pharmaceuticals had operating revenue of RMB 283.6 billion in 2025, and accounts receivable at the end of the reporting period of RMB 82.31 billion, representing 29.02%. China Medicine (600056.SH) had operating revenue of RMB 25.89 billion in the first three quarters of 2025, and accounts receivable at the end of the reporting period of RMB 15.51 billion, representing 59.91%. Nanjing Pharmaceuticals (600713.SH) had operating revenue of RMB 41.14 billion in the first three quarters of 2025, accounts receivable of RMB 16.5 billion, representing 40.11%.

STRenfu2025the proportion corresponding to the two39.19%****, seems to be in the middle. But in fact, considering year-end concentrated payment and remittances, in recent years, the year-end accounts receivable balances of China Medicine and Nanjing Pharmaceuticals have generally been lower than their balances at the end of the third quarter. For example, at the end of 2024, with full-year operating revenue of RMB 34.15 billion, China Medicine’s accounts receivable balance was only RMB 13.02 billion, causing the ratio to drop sharply to 38.12%.

Regarding this phenomenon, ST Renfu explained to Nandu reporters that its level of accounts receivable is a natural reflection of the company’s strategy of coordinated development across multiple product varieties and channel deepening. The company’s customer structure shows a good pattern of “stable core customers and a scattered long-tail.” Although the accounts receivable share of the top five customers exceeds 20%, all are stable customers with good credit standing, and the company maintains long-term and stable strategic cooperation with them. The group of smaller customers is widely distributed and highly dispersed; each single customer has a relatively small receivable exposure, effectively avoiding concentration risk. The company has built a full-process, multi-dimensional system for assessing and managing commercial credit risk, and conducts dynamic monitoring of credit risk.

Meanwhile, as of the end of 2025, STRenfu’s on-balance-sheet cash and cash equivalents totaled RMB2.44B, yet it has 1.97B in short-term borrowings, and it also has RMB2.16B in long-term borrowings.

In response, ST Renfu explained that in recent years, the company has strictly controlled its debt size and optimized its asset structure, significantly reducing interest expense and continuously lowering its asset-liability ratio. The net cash flow from operating activities has remained at a high level. Over the past three years (from 2022 to 2024), the net cash flow from operating activities was RMB 2.52B, RMB 12.79B, and RMB 2.164 billion, demonstrating strong internal “cash generation” capability and a steady cash flow position. At the same time, the company has maintained long-term good cooperation with major banks and other financial institutions, has sufficient credit额度, and has formed a dual funding safety cushion of “operating cash inflows + standby financing channels.” Going forward, the company will adhere to the “improve quality and efficiency” and “strategic focus” dual-engine approach. On the one hand, it will actively advance the “core focus” work to concentrate resources on consolidating and developing core businesses. On the other hand, it will deepen refined management, strengthen accounts receivable turnover and working capital management across the entire chain, and continue to improve operating quality and cash flow levels.

In 2025, the company’s net cash flow generated from operating activities was RMB 2.518 billion, continuing to grow year over year. Finance costs have also, as described in the first part, declined from RMB 351 million in 2024 to RMB 303 million, already showing a downward trend.

China Merchants Group takes over, plans to issue shares to “replenish capital”

ST Renfu’s former controlling party was Wuhan Contemporary Technology Industry Group Co., Ltd. (hereinafter “Contemporary Technology”), and its actual controller was Ai Luming, the former No. 1 richest man in Hubei province. Ai Luming’s portfolio once includedSTRenfu, Sansite Cable (002159.SZ), Everbright Securities (601162.SH**),STMingcheng (600136.SH****), fourA-share listed companies; all have now been transferred.**

On December 13, 2025, an “Notice of Pre-Informed Administrative Penalty” released by ST Renfu showed that from 2020 to March 2022, the cumulative amount of non-operating funds占用 between Contemporary Technology and Renfu Medical reached RMB 12.785 billion. At the same time, there were also illegal and non-compliant situations such as inflated profits and concealing related-party relationships. Renfu Medical was therefore subjected to other risk warnings, becoming ST Renfu. Of course, the “Announcement on the Situation of Capital Occupation by the Controlling Shareholders and Rectification” disclosed in 2024 shows that the corresponding occupied funds have already been returned.

And with China Merchants Group taking over, the company further shakes off the above burdens.

(The screenshot above is from the announcement of the change of ST Renfu’s actual controller)

In mid-2025, China Merchants Group’s China Merchants Life Science and Technology (Wuhan) Co., Ltd. (hereinafter “China Merchants Life Science”) invested RMB 11.8 billion to participate in the restructuring of Contemporary Technology. Specifically, through China Merchants Life Science, China Merchants Life Science Investment and Development (Wuhan) Partnership Enterprise (hereinafter “Life Science Investment and Development”), and ChinaCITIC Trust—Chunni No. 1 Bankruptcy Restructuring Service Trust (hereinafter “Chunni No. 1”), the parties collectively obtained voting rights corresponding to 24.7% of ST Renfu’s shares. In September of that year, Wuhan Gaoke State-Owned Holding Group Co., Ltd. (hereinafter “Wuhan Gaoke”), which held 1.6% shares, became the new consistent action party of China Merchants Group.

In the secondary market, China Merchants Life Science continued to spend RMB 654 million to increase its holdings by purchasing 2% of the company’s shares. As of the end of 2025, China Merchants Life Science and its consistent action parties together controlled a 28.3% share of the listed company.

On February 25, 2026, ST Renfu also released a pre-plan for a rights issue. It planned to raise funds of no more than RMB 3.5 billion from China Merchants Life Science for projects such as innovative drug R&D, capacity construction, and upgrading digital and intelligent capabilities, as well as replenishing working capital. Because the rights issue price was RMB 14.95 per share, lower than the company’s current share price of around RMB 19 per share, the plan sparked discussion among many investors.

(The screenshot above is from ST Renfu’s rights issue pre-plan)

ST Renfu told Nandu reporters that this (rights issue) is a refinancing behavior at the listed-company level. The proceeds will be used for developing main businesses such as innovative drug R&D, capacity construction, digital and intelligent upgrading, and replenishing working capital, among others. The investment will go toward the company’s business development, directly enhancing the company’s core competitiveness and its capability for sustained operation. In addition, this refinancing can further strengthen the controlling rights of major shareholders, which is beneficial for the listed company to obtain resources.

At the end of 2025, in the “Announcement on Implementing Other Risk Warnings and Suspending Trading,” ST Renfu also emphasized that the illegal matters involved occurred in 2022 and earlier and have already been fully rectified. They will not have any impact on the company’s future production and operation. The company’s related work has been completed; after the conditions are met, it will strive to apply to remove the risk warning as soon as possible.

Written by: Nandu N Video reporter Miao Lingyun