Distant water cannot quench immediate thirst, and the pace of business structure rotation is lagging behind market expectations.

Joincare Pharmaceutical Group Industry Co.,Ltd. (ASX: 600380) released its 2026 interim report on the evening of August 25, showing revenue down 16.66% year-on-year and net profit attributable to shareholders down 17.49%.

Ten days later, on September 5, an interim dividend proposal reshaped the market's perception of the company's shareholder return intensity 鈥?a payout of 7.10 yuan per 10 shares (including tax), with a total proposed distribution of 1.299 billion yuan, roughly twice the interim net profit attributable to shareholders.

Based on recent share prices, the single-period dividend yield works out to approximately 7.5%, but clearly, distributing more than was earned is not sustainable.

On the evening of September 11, Joincare Pharmaceutical Group Industry Co.,Ltd. (ASX: 600380) and Livzon Pharmaceutical Group simultaneously announced that 64-year-old founder Zhu Baoguo would resign from the roles of chairman, director, chairman of the board's strategy and risk management committee, legal representative, and all positions at controlled subsidiaries due to retirement, completely exiting the company's operational management system.

With revenue and profit both declining on one side, an unexpectedly large dividend on the other, and the founder's formal retirement layered on top, this interim report during a critical transition period deserves a layer-by-layer examination.

Revenue and profit both decline, with pressure stemming from Livzon

In the first half of 2026, Joincare Pharmaceutical Group Industry Co.,Ltd. (ASX: 600380) recorded revenue of 6.583 billion yuan, down 16.66% year-on-year; net profit attributable to shareholders of 648 million yuan, down 17.49% year-on-year; non-GAAP net profit attributable to shareholders of 604 million yuan, down 21.55% year-on-year; and weighted average ROE of 4.21%, falling 1.17 percentage points year-on-year.

The company's overall operating indicators retreated on a stage-by-stage basis, mainly affected by multiple factors including deepening medical insurance cost controls, the normalization of national centralized procurement, and the cyclical bottom of the API industry, compounded by a year-on-year decline in domestic influenza and respiratory disease clinic visits in the first quarter, which dragged on overall operating performance.

Breaking down the revenue structure, this round of performance decline mainly stems from controlled subsidiary Livzon Pharmaceutical Group (which contributes about 76% of Joincare's consolidated revenue). In the first half, Livzon Pharmaceutical Group achieved revenue of 5.000 billion yuan, down 20.28% year-on-year, and net profit attributable to shareholders of 932 million yuan, down 27.23% year-on-year.

Business segments came under across-the-board pressure: chemical formulations revenue fell 21.56% year-on-year, traditional Chinese medicine formulations fell 33.08% year-on-year, and diagnostic reagents and equipment fell 27.78% year-on-year.

Specific affected products include: (1) the ilaprazole sodium series and menotropin for injection saw revenue declines due to medical insurance price cuts; (2) leuprorelin for injection saw sharp sales declines in the Guangdong alliance region; (3) the psychiatric product fluvoxamine maleate tablets began implementing the eleventh batch of national centralized procurement this year; (4) traditional Chinese medicines such as antiviral granules and diagnostic products were dragged down by the decline in respiratory clinic visits in the first quarter.

Respiratory innovation accounts for 35%, high-margin health supplements gain volume

Excluding Livzon, the net profit of Joincare Pharmaceutical Group Industry Co.,Ltd. (ASX: 600380)'s parent company business achieved slight growth, with both growth mainlines making substantive progress.

First, the innovation transformation of the respiratory segment is delivering results. In the first half, innovative drug revenue as a proportion of respiratory formulation sales approached 35%, a clear increase from approximately 27% in the same period of 2025. The first Class 1 chemical innovative drug in the respiratory field, mapazoxavir capsules (Yilikang), has completed online listing across all provinces nationwide and formally applied for national medical insurance catalog adjustment in June 鈥?medical insurance access is the top priority for the year, and if year-end negotiations succeed, 2027 could see a volume ramp-up; tobramycin inhalation solution continued to grow over 10% on a high base from the prior year.

Second, the health food segment performed remarkably well, with revenue of 304 million yuan, up 25% year-on-year, and a gross margin as high as 80.80%, up 2.38 percentage points year-on-year. Among these, Eagle Brand American ginseng achieved its best interim performance in nearly a decade, with Spring Festival gift boxes selling nearly 300,000 boxes across all channels, up approximately 87% year-on-year. Behind the old brand blooming anew is the expansion of DTC channels and youth-oriented scenarios, and the marginal contribution of this high-margin business to the income statement should not be underestimated.

At present, Joincare Pharmaceutical Group Industry Co.,Ltd. (ASX: 600380)'s R&D pipeline echelon structure has taken shape: more than 20 Class 1 innovative drugs in development, of which more than 10 are in the respiratory and anti-infection fields: (1) the Phase III trial of the TSLP monoclonal antibody for COPD has completed first patient enrollment in March, and given an observation period of at least one year, data readout will not come until 2028 at the earliest; (2) the Nav1.8 inhibitor for pain relief has completed Phase II enrollment and will launch Phase III by year-end; (3) the pediatric formulation mapazoxavir dry suspension has entered the late stage of Phase III enrollment, striving for filing within the year.

The company has built an end-to-end AI pharmaceutical platform, shortening the lead compound discovery cycle to about 6 months 鈥?the pipeline reserve is ample, but widespread commercialization is still two to three years away, which determines that Joincare remains in a transition period of "old businesses clearing out, new businesses building momentum."

Going global narrative evolves from product exports to system-level overseas expansion

Internationalization is the second curve given the most attention in the interim report. The milestone event is Livzon Pharmaceutical Group's completion of a public tender offer for Vietnamese listed company IMP (Imexpharm), acquiring a 67.87% stake with transfer completed in May, making Joincare Pharmaceutical Group Industry Co.,Ltd. (ASX: 600380) the first Chinese pharmaceutical company to acquire a Vietnamese listed company.

In our view, the value of the acquisition lies not in existing products themselves, but in the registration system and verification capabilities. IMP has the most EU-GMP certified production lines in all of Vietnam, with products covering over 80% of medical institutions in Vietnam. The first batch has initiated technology transfer for three major injectable varieties including ilaprazole sodium for injection and import registration for four key varieties, with plans to use Vietnam as a fulcrum to radiate into ASEAN.

In terms of formulation exports, multiple overseas registration and commercialization achievements are being realized: (1) 29 varieties are advancing registration in 53 countries/regions, with more than 40 overseas distributors; (2) reproductive products hold the number one market share in Pakistan, and Livzon's rHCG accounts for approximately 44% of sales volume in Indonesia; (3) semaglutide injection completed Brazil's ANVISA GMP inspection and is expected to complete registration approval in the second half, potentially becoming the first biosimilar listed in Brazil.

Overseas revenue in the first half was 1.580 billion yuan, up 6.74% year-on-year, accounting for 24.2% of total revenue. Against the backdrop of domestic revenue falling 22.16% year-on-year, overseas business has become an important hedge for the company's performance.

Nearly 1.3 billion yuan dividend, but sustainability uncertain

Joincare Pharmaceutical Group Industry Co.,Ltd. (ASX: 600380)'s large dividend of nearly 1.3 billion yuan, combined with cumulative buybacks of 2.7 billion yuan over the past five years, places shareholder returns at the top tier of A-share pharmaceutical companies, signaling to the market that there is a floor beneath the performance decline, but high dividends are not necessarily sustainable.

This founder handover occurs during a cycle of consecutive declines in revenue, profit, and R&D investment. The two new chairmen have no complete track record of listed company governance, and operational stability is the core indicator to watch going forward.

The current situation of Joincare Pharmaceutical Group Industry Co.,Ltd. (ASX: 600380) can be summarized as follows: traditional businesses are impacted by centralized procurement and medical insurance price cuts, the negative clearing process is not yet complete, and the interim report also indicates that medical insurance and procurement pressures will persist in the second half; the innovation pipeline is still in the cultivation stage, the incremental realization cycle is relatively long, and the pace of business structure rotation is slower than market expectations.

Additionally, it is worth noting that R&D expenses of 511 million yuan fell 16.43% year-on-year, with total R&D investment including capitalization at 540 million yuan, accounting for 8.20% of revenue: during a period of profit pressure, R&D investment contracted in tandem, protecting profits in the short term, but whether it affects the pace of pipeline advancement in the long term remains to be verified in the future.