To judge whether a company is truly improving, there is one statement more honest than the income statement: the cash flow statement. CF PharmTech (02652) delivered a clear signal in its 2026 interim report: the company is redefining "earnings resilience" through the quality of its cash flow. According to Zhitong Finance APP, on August 31, CF PharmTech released its first interim results since listing. The key word within is "quality improvement": revenue maintained growth, gross profit growth outpaced revenue growth, and operating cash flow turned from negative to positive.

The key point: operating cash flow turned from negative to positive

During the reporting period, CF PharmTech achieved revenue of RMB 210 million, a year-on-year increase of 2.10%; however, the company's net operating cash flow flipped from a net outflow of RMB 59.212 million in the same period last year to a net inflow of RMB 43.653 million, an improvement of approximately RMB 103 million year-on-year. The value of this figure lies not in "how much more money was earned," but in the fact that this pharmaceutical company, still in a stage of high-intensity R&D investment, has successfully switched its cash cycle pillar from financing cash flow to net operating cash flow. It is also worth noting that the company's inventory grew 38.6% compared with the beginning of the year, and trade receivables and bills receivable grew 9.7% compared with the beginning of the year. Achieving positive operating cash flow while working capital was being occupied shows that the above improvement did not come from delaying payments or compressing stockpiling, making its quality even higher. In fact, CF PharmTech's significant cash flow improvement despite only slight revenue growth is inseparable from its higher gross profit level and substantial reduction on the expense side.

Gross profit improvement driven by cost optimization

On the gross profit side, with revenue growing 2.1% year-on-year in the current period, the company's corresponding gross profit reached RMB 161 million, a year-on-year increase of 3.2%. While gross profit growth exceeded revenue growth, its gross profit margin also rose from 76.0% in the same period last year to 76.8%, an increase of 0.8 percentage points. In its results announcement, CF PharmTech stated that the increase in gross profit level in the current period was mainly due to two improvements on the cost side: lower procurement prices for major raw materials; and higher capacity utilization, which diluted the unit fixed manufacturing costs of major products. Correspondingly, the company's cost of sales as a proportion of revenue fell from 24.0% in the same period last year to 23.2%. CF PharmTech also noted in the announcement that "after the renewal of centralized procurement prices, the decline in average selling prices may put pressure on the Group's subsequent gross profit margin." This indicates that the company's gross margin increase in this period was mainly a phased improvement brought about by cost-side optimization. The company is proactively installing a "safety valve" against external disruptions such as centralized procurement through active cost optimization.

Refined management drives a significant jump in operating efficiency

Behind the positive net operating cash flow that has led CF PharmTech into a positive cycle of pharmaceutical value creation, comprehensive refined management is indispensable. For example, the scale advantage brought by domestic centralized procurement's "volume-for-price" approach is being translated into tangible cost advantages in the financial statements through CF PharmTech's refined management. The financial report shows that the company's selling and distribution expenses fell 29.30% year-on-year in the current period, with the corresponding selling expense ratio down 8 percentage points year-on-year to 17%. This was mainly due to lower in-hospital promotion investment needs after CF017 was selected in centralized procurement, as well as the company's reallocation of resources toward non-centralized procurement channels. It is worth mentioning that while the selling expense ratio trended downward, CF PharmTech also increased investment on the R&D side: R&D expenses in the current period were RMB 60.671 million, basically flat year-on-year, accounting for 28.9% of revenue. During the reporting period, the company achieved five drug regulatory milestones, and its innovative inhalation powder aerosol ICF001 further obtained two clinical implied approvals in August this year, which also indirectly shows that it is accelerating the commercialization transformation of innovative clinical R&D. The refined management model also enables CF PharmTech to continue ramping up capital investment while keeping expenses under stable control—during the reporting period, the company's capital expenditure reached RMB 85.116 million, a year-on-year increase of 102.7%, mainly directed toward capacity building and internationalization-related areas. The effectiveness of the above model is also reflected in the company's leverage level. At present, the company's asset-liability ratio is only 22.76%, its capital annual liability ratio is 15.82%, and interest-bearing liabilities are equivalent to only about one-sixth of shareholders' equity. Generating cash through operations while keeping liabilities at a low level is also a key signal that CF PharmTech demonstrated in these results: its financial flexibility is genuinely improving.

Conclusion

Although CF PharmTech's net loss in the current period widened to RMB 10.506 million due to non-operating foreign exchange, fair value changes, and R&D and capacity expansion, key financial data such as operating cash flow, gross profit margin, selling expense ratio, R&D investment, and capital expenditure all point in the same direction: the company's operating efficiency is steadily improving, its financial structure remains asset-light, and its input-output ratio is significantly optimized. In other words, when positive cash flow and a sharp decline in the expense ratio appear at the same time, what this company is undergoing is a change in operating quality, not just a change in revenue scale.