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(Original title: Lingrui Pharmaceutical’s performance and stock price both hit new highs, but the actual controller sold off its shares in large quantities!)

Known as the "King of Plasters" by the industryLingrui Pharmaceutical(600285.SH) recently released its 2024 semi-annual report, showing that the company achieved operating income of 1.906 billion yuan in the first half of the year, a year-on-year increase of 12.07%;Public CompanyThe net profit attributable to shareholders was RMB 413 million, a year-on-year increase of 30.30%; the non-net profit was RMB 394 million, a year-on-year increase of 30.82%. Both revenue and profit reached record highs for the same period in history.

It is worth mentioning that from this year to August 13, Lingrui Pharmaceuticalshare priceThe cumulative increase was 44.70%, and it hit a record high during the trading session on May 7. However, against the backdrop of both performance and stock price growth, Lingrui Pharmaceuticals was massively sold off by its actual controller. In addition, some directors and supervisors of Lingrui Pharmaceuticals also sold off their company shares in the second quarter.

Revenue and net profit both increased in the second quarter

Lingrui Pharmaceutical was established on April 18, 1999 and listed on the Shanghai Stock Exchange on October 18, 2000. Its main business is the research and development, production and sales of Chinese patent medicine preparations and chemical preparations. The 2024 semi-annual report shows that Lingrui Pharmaceutical achieved operating income of 1.906 billion yuan in the first half of the year, a year-on-year increase of 12.07%; net profit attributable to shareholders of listed companies was 413 million yuan, a year-on-year increase of 30.30%; and non-net profit of 394 million yuan, a year-on-year increase of 30.82%. Regarding the reasons for the rapid growth of the company's net profit attributable to shareholders of listed companies and non-net profit in the first half of the year, Lingrui Pharmaceutical stated that it was mainly due to the increase in sales scale and the decline in period rates.

In terms of a single quarter, Lingrui Pharmaceutical's performance was relatively good, with both revenue and net profit increasing. In the second quarter of this year, Lingrui Pharmaceutical achieved operating income of 997 million yuan, a year-on-year increase of 9.31%; net profit attributable to shareholders of listed companies was 223 million yuan, a year-on-year increase of 28.90%; and non-net profit was 213 million yuan, a year-on-year increase of 30.20%.

While the performance of the pharmaceutical industry has been lower than expected in recent years, Lingrui Pharmaceutical's performance has maintained a steady growth trend.FlushiFinD data shows that from 2010 to 2023, Lingrui Pharmaceutical's operating income increased year by year from 381 million yuan to 3.311 billion yuan, and its non-net profit increased continuously from 9 million yuan to 534 million yuan. Its revenue and non-net profit have increased for 13 consecutive years.

However, with the growth of business scale, Lingrui Pharmaceutical's sales expenses are also rising. According to iFinD data from Tonghuashun, from 2010 to 2023, Lingrui Pharmaceutical's sales expenses increased year by year from 118 million yuan to 1.504 billion yuan, and have increased year-on-year for 13 consecutive years; in addition, from 2016 to 2023, Lingrui Pharmaceutical's sales expense ratio was 42.78%, 48.00%, 51.46%, 50.85%, 50.68%, 48.29%, 48.09%, and 45.41%, respectively, and has been maintained above 40% for 8 consecutive years.

Against the backdrop of rising sales expenses year by year, Lingrui Pharmaceuticals continued to grow in the first half of this year, with sales expenses of 855 million yuan, up 8.02% year-on-year, and a sales expense rate of 44.85%. It is reported that Lingrui Pharmaceuticals' sales expenses are mainly composed of marketing expenses and advertising expenses. In the first half of this year, the company's marketing expenses were 525 million yuan, up 1.33% year-on-year; advertising expenses were 124 million yuan, up 7.37% year-on-year.

The cumulative cash dividends since listing have exceeded 2 billion yuan

In terms of stock price, Lingrui Pharmaceuticals rose against the trend amid the continued downturn in pharmaceutical stocks, with its stock price hitting new highs. According to data from Tonghuashun, Lingrui Pharmaceuticals' stock price rose by 40.12% in 2023; from the beginning of this year to August 13, Lingrui Pharmaceuticals' stock price rose by 44.70% and hit a record high of 26.09 yuan per share during the intraday trading on May 7, while the market fell by 3.60% and the industry fell by 18.18% during this period.

Behind the continuous rise in stock prices, Lingrui Pharmaceuticals has also been favored by many institutions. According to iFinD data from Tonghuashun, as of December 31, 2023, a total of 334 institutions held positions in Lingrui Pharmaceuticals, an increase of 135 from the previous reporting period;ShareholdingThe number is 296 million shares, an increase of 129 million shares compared with the previous reporting period; the shareholding ratio is 52.50%, an increase of 22.70% compared with the previous reporting period; the shareholding value is 5.059 billion yuan, an increase of 2.885 billion yuan compared with the previous reporting period.

At the same time, many well-known institutions also increased their holdings in Lingrui Pharmaceuticals in the second quarter of this year. According to data from Tonghuashun, GF Steady Return Hybrid A increased its holdings in the company by 1.8666 million shares, ranking as the second largest shareholder of the company with 14.9203 million shares at the end of the second quarter; Beijing Yuanfeng Private Equity Fund Management Partnership (Limited Partnership)-Yuanfeng Value Private Securities Investment Fund increased its holdings in the company by 1.4891 million shares, ranking as the seventh largest shareholder of the company with 7.9276 million shares at the end of the second quarter; Qianhai Kaiyuan China Rare Asset Hybrid A increased its holdings in the company by 801,100 shares, ranking as the eighth largest shareholder of the company with 7.6175 million shares at the end of the second quarter; in addition, Sino-European Healthcare Hybrid A, managed by well-known fund manager Ge Lan, entered the top ten shareholders of the company with 8.1232 million shares at the end of the second quarter.

However, some institutions also reduced their holdings. According to Tonghuashun data, after reducing their holdings of Lingrui Pharmaceutical by 800,000 shares and 2.8 million shares in the fourth quarter of 2023 and the first quarter of 2024,GF Steady Growth Mixed FundA continued to reduce its holdings by 200,000 shares in the second quarter of 2024, and ranked as the fourth largest shareholder of the company with 9.8 million shares as of the end of the second quarter of 2024; the Basic Pension Insurance Fund 805 Portfolio continued to reduce its holdings by 428,700 shares in the second quarter of 2024, after reducing its holdings by 477,800 shares and 827,000 shares in the fourth quarter of 2023 and the first quarter of 2024, respectively, and ranked as the tenth largest shareholder of the company with 7,066,500 shares as of the end of the second quarter of 2024; in addition, the National Social Security Fund 115 Portfolio also reduced its holdings of the company by 200,000 shares in the second quarter of 2024, and ranked as the fifth largest shareholder of the company with 8.8 million shares as of the end of the second quarter.

Lingrui Pharmaceutical has maintained a habit of paying cash dividends all year round. According to iFinD data from Tonghuashun, since its listing in 2000, Lingrui Pharmaceutical has paid cash dividends 22 times, with a total cash dividend amount of 2.033 billion yuan and a dividend rate of 52.13%. Among them, the cumulative cash dividends (including repurchased shares) in the past three years were 1.256 billion yuan, and the cumulative dividend ratio (including repurchased shares) in the past three years reached 270.15%.

The actual controller has massively reduced its holdings

However, despite the company's steady growth in performance and continued rise in stock prices, Lingrui Pharmaceutical has been massively sold off by its actual controller.

Lingrui Pharmaceuticals announced on May 7 that Xinyang Xinrui Investment Development Co., Ltd. (hereinafter referred to as "Xinrui Investment") intends to use the Shanghai Stock Exchange trading system to conduct centralized bidding,Block TradesXinrui Investment holds exactly 1.92% of Lingrui Pharmaceutical's total share capital. Xinrui Investment is controlled by Xiong Wei, the actual controller and chairman of Lingrui Pharmaceutical. Xinrui Investment and its persons acting in concert hold a total of 139 million shares of Lingrui Pharmaceutical, accounting for 24.45% of the company's total share capital.

It is reported that the aforementioned reduction has been completed. According to the "Announcement on the Results of Share Reduction by Shareholders of Henan Lingrui Pharmaceutical Co., Ltd." disclosed by Lingrui Pharmaceutical on May 14, Xinrui Investment reduced its holdings of 10.8675 million shares of the company through block transactions from May 13 to May 14, with a reduction ratio of 1.92%, that is, all its shares in Lingrui Pharmaceutical have been sold out, with a reduction price of 24.57 yuan per share, and a total cash out of about 267 million yuan.

Lingrui Pharmaceuticals also suffered a large-scale reduction in holdings by the actual controller's shareholding companies in 2023. Lingrui Pharmaceuticals issued an announcement in November 2023 that Xinxian Xinyuan Trading Co., Ltd. (hereinafter referred to as "Xinyuan Trading") previously held 7.5383 million shares of the company, accounting for 1.33% of the company's total share capital. The company reduced its holdings of 350,000 shares of the company through block trading on May 5, 2023, and reduced its holdings of 7.1883 million shares of the company through centralized bidding transactions from May 23 to November 21, 2023, with a total reduction of 7.5383 million shares, and the cumulative cash-out amount was approximately 125 million yuan. Xinyuan Trading is also a company held by Xiong Wei.

In addition, some directors and supervisors of Lingrui Pharmaceuticals are also selling company shares. Juchao Information Network shows that Lingrui Pharmaceuticals director Wu Xizhen sold 138,500 shares of the company through the secondary market on May 24, 2024, with an average transaction price of 24.94 yuan per share, which is estimated to be about 3.4542 million yuan; Supervisor Li Jin sold 47,600 shares of the company through the secondary market on May 24, 2024, with an average transaction price of 25.1 yuan per share, which is estimated to be about 1.1948 million yuan.

The Economic Information Daily reporter noticed that the two people mentioned above have been reducing their holdings in Lingrui Pharmaceuticals in the previous years, except in the second quarter of this year. Wu Xizhen reduced his holdings in the company by 246,100 shares and 184,600 shares through the secondary market in 2022 and 2023 respectively; Li Jin reduced his holdings in the company by 84,600 shares and 63,400 shares through the secondary market in 2022 and 2023 respectively.