Yunnan Baiyao Group Co., Ltd (000538.SZ) has released its interim report for the first half of 2026, revealing that revenue reached RMB 21.884 billion, marking a year-on-year increase of 2.95%. Net profit attributable to shareholders amounted to RMB 3.701 billion, up 1.88% from the previous year, maintaining a trend of growth across both key financial metrics. Concurrently, the company announced a proposed special dividend distribution totaling RMB 1.852 billion.

Steady financial performance highlighted by H1 cash dividend of RMB 1.852 billion

The company noted that revenue, non-recurring-item-adjusted net profit, net operating cash flow, and basic earnings per share for the first half all reached record highs for the corresponding period. During H1, investment income from Shanghai Pharmaceuticals Holding Co., Ltd. was affected by one-off special gains or losses at that entity, declining by RMB 169 million year-on-year. Excluding this impact, net profit attributable to shareholders rose by 8.33% in H1, and by 13.18% in the second quarter alone.

By segment, Yunnan Baiyao's revenue in H1 was overwhelmingly driven by industrial sales and commercial sales, which together accounted for over 99% of total revenue. Industrial sales generated RMB 8.772 billion, a 3.15% increase and representing 40.08% of total revenue, with its share of total revenue having grown consistently since 2023. Commercial sales contributed RMB 13.064 billion, up 2.80% and representing 59.70% of total revenue. Further analysis of the report indicates that industrial sales were primarily derived from the pharmaceutical sales and health & personal care divisions, posting revenues of RMB 4.530 billion and RMB 3.469 billion respectively, while commercial sales were mainly generated from the Chinese medicine distribution segment, which recorded RMB 11.971 billion.

Examining business performance by operating group, Yunnan Baiyao relies on four core pillars: Pharmaceuticals, Health Products, Chinese Medicine Resources, and Yunnan Provincial Pharmaceutical Co., Ltd. The Pharmaceuticals division achieved revenue of RMB 4.930 billion in H1, with steady growth in flagship product lines. Notably, sales of Yunnan Baiyao aerosol exceeded RMB 1.5 billion, and sales of Yunnan Baiyao plaster surpassed RMB 700 million. The Health Products division posted revenue of RMB 3.454 billion. According to Nielsen retail tracking data, Yunnan Baiyao牙膏 maintained the leading market share in China across all retail channels during the first half of 2026. Within this segment, sales of sensitive-teeth toothpaste and whitening toothpaste reached RMB 242 million and RMB 208 million respectively, with both new categories already exceeding their full-year sales figures from the previous year. The Chinese Medicine Resources division generated external sales revenue of RMB 744 million. Yunnan Provincial Pharmaceutical Co., Ltd. reported revenue of RMB 12.289 billion, with non-drug distribution sales growing 23.6% year-on-year and specialty pharmacy operations under the hospital-adjacent model, which actively capture prescriptions shifting out of hospitals, increasing sales by 36.1%.

Building on this solid financial performance, Yunnan Baiyao continues to enhance shareholder returns. In H1, the company completed its FY2025 profit distribution, paying a cash dividend of RMB 15.84 per 10 shares (pre-tax), totaling RMB 2.824 billion. Combined with the special dividend already implemented for FY2025, cumulative cash dividends for that fiscal year reached RMB 4.643 billion, representing 90.09% of FY2025 net profit attributable to shareholders. According to an announcement dated August 28, 2026, the board has approved a special dividend plan for 2026, proposing a distribution of RMB 10.38 per 10 shares (pre-tax), with a total payout of RMB 1.852 billion, equivalent to 50.04% of H1 2026 net profit attributable to shareholders.

First-time disclosure of Jutang's performance since acquisition

In August 2025, Yunnan Baiyao announced that its wholly-owned subsidiary, Yunnan Baiyao Group Chinese Medicine Resources Co., Ltd. (Chinese Medicine Resources), had acquired a 100% equity stake in Anguo Juyang Pharmaceutical Co., Ltd. (Juyang) for RMB 660 million in cash. Under the performance commitment period covering 2025 to 2027, Juyang committed to net profits of RMB 66 million, RMB 59.7 million, and RMB 63.9 million for each year respectively, alongside committed main business revenues of RMB 624 million, RMB 616 million, and RMB 666 million. The H1 2026 interim report marks the first time Yunnan Baiyao has disclosed Juyang's performance. In H1, Juyang generated main business revenue of RMB 318 million, achieving 51.68% of its annual target, and recorded net profit of RMB 22.3671 million, hitting 37.47% of its target.

The company explained that Juyang was not disclosed in the previous financial report because the acquisition was completed in October 2025 through a business combination not under common control. According to the agreement, upon the completion of the performance commitment period: if Juyang meets its performance targets, Chinese Medicine Resources will pay the original shareholders the remaining 20% of the equity consideration, amounting to RMB 132 million. Conversely, if Juyang fails to meet the targets, the original shareholders will be required to compensate Chinese Medicine Resources. The verification of Juyang's 2026 performance commitment achievement is scheduled to be audited and confirmed by April 30, 2027.

According to the acquisition announcement, Juyang, established in 2013 and headquartered in Anguo City, Hebei Province—a region renowned as the "Capital of Traditional Chinese Medicine"—specializes in the production and sale of Chinese herbal decoction pieces, toxic herbal decoction pieces, directly oral herbal pieces, and formula granules. Its core business includes processing herbal pieces and R&D for formula granules. The acquisition was intended to help Yunnan Baiyao expand into markets outside Yunnan province, build a national presence, and enrich its product pipeline. Additionally, the company aims to leverage Juyang's online sales channels and B-end customer resources to enhance synergies across the Chinese medicinal materials supply chain, ultimately driving revenue and profit growth for Yunnan Baiyao. Prior to the acquisition, Juyang reported revenue of RMB 632 million and net profit of RMB 69.3283 million for the full year 2024.