Executive Summary
Fusen Pharmaceutical reported QQ3 2024 revenue of 64.85 million CNY, still maintaining a robust gross margin of 43.76%, but the quarter delivered a significant bottom-line loss driven by high operating expenses and substantial non-operating costs. Operating income registered a loss of 15.49 million CNY and EBITDA was negative at 6.82 million CNY, while net income collapsed to a loss of 75.92 million CNY. Net income deleveraged despite positive operating cash flow, underscoring a heavy expense load and potential one-time or non-operational headwinds affecting the quarter.
On the balance sheet, Fusen carries meaningful leverage with total debt of 383.69 million CNY and net debt of 362.64 million CNY. Liquidity is tight, with a current ratio of 0.60 and a cash balance of 21.06 million CNY, indicating limited cushion for near-term financing needs. Yet, the company generated positive operating cash flow of 69.9965 million CNY and free cash flow of 62.513 million CNY in QQ3 2024, driven by working capital dynamics (notably improvements in accounts receivable and other working capital items) and non-cash items that offset the net income decline.
The current results signal a near-term profitability challenge, but the strong ongoing operating cash generation suggests that management’s focus on working capital efficiency and cost discipline could yield a turning point if the company can stabilize non-operating costs and optimize the expense base. Absent a formal forward guidance in the disclosed materials, the investment thesis hinges on execution in cost control, portfolio optimization, and potential portfolio expansion in the PRC’s healthcare market amid pricing and competitive dynamics in generics and traditional Chinese medicines.
Key Performance Indicators
QoQ: -33.93% | YoY:-43.40%
QoQ: -46.38% | YoY:-52.85%
QoQ: 15.24% | YoY:-78.52%
QoQ: -311.04% | YoY:-187.94%
QoQ: -300.00% | YoY:-184.09%
Key Insights
Revenue: 64,853,500 CNY; YoY: -43.40%, QoQ: -33.93%
Gross Profit: 28,382,500 CNY; Gross Margin: 43.76%; YoY gross profit change: -52.85%; QoQ: -46.38%
Operating Income: -15,486,000 CNY; Operating Margin: -23.88%; YoY: -78.52%; QoQ: +15.24%
Net Income: -75,921,000 CNY; Net Margin: -117.07% (negative); YoY: -187.94%; QoQ: -311.04%
EPS (diluted): -0.10 CNY; YoY: -184.09%; QoQ: -300.00%
EBITDA: -6,817,000 CNY; EBITDA Margin: -10.51%
Cash Flow: Operating cash flow 69,996,500 CNY; Free cash flow 62,51...
Financial Highlights
Revenue: 64,853,500 CNY; YoY: -43.40%, QoQ: -33.93%
Gross Profit: 28,382,500 CNY; Gross Margin: 43.76%; YoY gross profit change: -52.85%; QoQ: -46.38%
Operating Income: -15,486,000 CNY; Operating Margin: -23.88%; YoY: -78.52%; QoQ: +15.24%
Net Income: -75,921,000 CNY; Net Margin: -117.07% (negative); YoY: -187.94%; QoQ: -311.04%
EPS (diluted): -0.10 CNY; YoY: -184.09%; QoQ: -300.00%
EBITDA: -6,817,000 CNY; EBITDA Margin: -10.51%
Cash Flow: Operating cash flow 69,996,500 CNY; Free cash flow 62,513,000 CNY
Balance Sheet Highlights: Total assets 1,238,161,000 CNY; Total liabilities 869,799,000 CNY; Total equity 369,671,000 CNY
liquidity: Current ratio 0.60; Quick ratio 0.42; Cash ratio 0.0273
Debt Position: Total debt 383,694,000 CNY; Net debt 362,638,000 CNY; Debt to equity 1.038; Debt to capitalization 0.509
Capital Structure: Cash and cash equivalents 21,056,000 CNY; Short-term debt 304,464,000 CNY; Long-term debt 79,230,000 CNY
Valuation Signals: Price-to-book ~1.73x; Price-to-sales ~9.88x; Negative enterprise value due to negative earnings and cash flow dynamics
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
64.85M |
-43.40% |
-33.93% |
| Gross Profit |
28.38M |
-52.85% |
-46.38% |
| Operating Income |
-15.49M |
-78.52% |
15.24% |
| Net Income |
-75.92M |
-187.94% |
-311.04% |
| EPS |
-0.10 |
-184.09% |
-300.00% |
Key Financial Ratios
operatingProfitMargin
-23.9%
Management Commentary
Earnings Transcript: Not available in the provided data. No management call quotes or transcript excerpts were supplied for QQ3 2024. As a result, thematic highlights and quote-based insights could not be drawn from the transcript.
Note: In absence of transcript content, the analysis relies on disclosed financial results and the Company’s operational narrative embedded in the filing. If a transcript becomes available, we will extract quotes on strategy, operations, and market conditions and synthesize them by theme with context and significance.
Forward Guidance
No formal forward guidance was disclosed in the QQ3 2024 materials. Given the current results, the near-term trajectory will likely depend on: 1) operating expense optimization and potential-scale efficiency measures to lift operating margins, 2) portfolio optimization and potential expansion into high-margin proprietary Chinese medicines and Western medicine products, and 3) resilience to PRC pricing pressures and competitive dynamics in the generics space. Industry trends suggest continued price competition in the Chinese generics segment and regulatory considerations that may impact margins. Management should provide visibility on cost containment milestones, potential product mix shifts, and any planned capex or R&D pacing to enable a more precise forecast. Investors should monitor: (a) changes in COGS and SG&A as a percentage of revenue, (b) utilization of cash flow for M&A or R&D, (c) leverage trajectory and any debt refinancings, and (d) the pace of receivables collection and inventory management.