Huashen Technology (stock code: 000790) is an enterprise focusing on the medical and health industry. It is committed to technological innovation and international development in the pharmaceutical industry. In 2023, despite the pharmaceutical industry facing multiple challenges such as the expansion of the procurement scope of national and local alliances, intense market competition, drug price reduction, and rising raw material prices, Huashen Technology excelled in the field of proprietary Chinese medicines and Chinese medicine tablets. Revenue and profits from these sub-sectors all increased year over year, showing the company's competitive advantage in specific areas. At the policy level, the country has issued a series of policy documents to support the development of the medical and health industry, including the “14th Five-Year Plan” for Pharmaceutical Industry Development and the “Implementation Plan for Major Projects to Revitalize and Develop Traditional Chinese Medicine”. These policies provide a favorable development environment and policy support for Huashen Technology. The company responds positively to national policies, focuses on the quality management of the entire traditional Chinese medicine industry chain and the development of new traditional Chinese medicines, and is committed to enhancing the clinical treatment value of traditional Chinese medicine and corporate compliance awareness. Overall, in a complex and changing market environment, Huashen Technology has maintained a steady development trend through policy guidance and its own efforts, and has achieved remarkable results in the field of proprietary Chinese medicines and Chinese herbal medicines.

Judging from the balance and liability data, Huashen Technology's total assets at the end of the period were 2.112 billion yuan, a slight decrease from 2,133 billion yuan at the beginning of the period, a decrease of 0.08%. Total liabilities at the end of the period were $1,051 million, down 0.57% from $1,057 million at the beginning of the period. The balance ratio fell from 49.55% at the beginning of the period to 49.31% at the end of the period, showing that the company was effective in controlling liabilities. In terms of goodwill, the balance at the end of the period was 107 million yuan, which is basically the same as at the beginning of the period, indicating that the company has maintained stability in mergers and acquisitions.

In terms of profit data, Huashen Technology's revenue was 179 million yuan, a year-on-year decrease of 18.62%. Despite the decline in revenue, the company reduced operating costs by 38.83% by optimizing sales structures and controlling costs, from 163 million yuan in the same period last year to 99.69 million yuan in the reporting period. Gross margin increased significantly, from 26.02% in the same period last year to 44.39% in the reporting period. Net profit also increased, from 3.1 million yuan in the same period last year to 4.12 million yuan in the reporting period, and the net interest rate increased from 1.41% to 2.3%. However, net profit attributable to shareholders of listed companies was 2.28 million yuan, a year-on-year decrease of 28.96%, mainly due to a decrease in non-recurring profit and loss. Both basic earnings per share and diluted earnings per share were 0.0036 yuan, down 29.41% year over year.

In terms of cash flow data, net cash flow from operating activities was -25.04 million yuan, a significant increase of 79.13% over -120 million yuan in the same period last year. Cash received from the sale of goods and services increased by 54.93%, mainly due to the increase in sales repayments from the acquisition of Tibet Kangyu. Cash received from other operating activities increased by 562.67%, mainly due to an increase in the amount of special funds received to support the industry during the reporting period. Cash payments for goods and services decreased by 31.52%, mainly due to a decrease in steel structure payments for engineering materials during the reporting period. Other cash payments relating to operating activities increased by 46.07%, mainly due to an increase in the payment of operating expenses in Tibet Kangyu during the reporting period. In terms of financing activities, cash received from borrowing decreased by 37.24 per cent, and cash payments to repay debts increased by 235.56 per cent, mainly due to increased repayment of bank loans.

Overall, Huashen Technology faced a complex market environment in the first quarter of 2024 and maintained a steady development trend through policy guidance and its own efforts. Despite a decline in operating income, the company achieved an increase in gross margin and net profit by optimizing the sales structure and controlling costs. The decline in the balance ratio and the improvement in cash flow also showed the company's effectiveness in financial management. In the future, Huashen Technology will continue to focus on the quality management of the entire traditional Chinese medicine industry chain and the development of new traditional Chinese medicines, and is committed to improving the clinical treatment value of traditional Chinese medicine and corporate compliance awareness to meet market challenges and achieve sustainable development.