[中报]云南白药(000538):2024年半年度报告（英文版）
原标题:云南白药:2024年半年度报告（英文版） Yunnan Baiyao Group Co., Ltd. Interim Report 2024 August 2024 Section I Important Notes, Contents, and Definitions The Board of Directors (the “Board”), the Supervisory Committee and the directors, supervisors and senior management of the Company confirm the truthfulness, accuracy and completeness of the contents of this Interim Report and there are no misrepresentation, misleading statement or material omission from this Interim Report, and they accept joint and several responsibilities for the truthfulness, accuracy and completeness of the contents herein. Mr. Dong Ming, the person in charge of the Company, Mr. Ma Jia, the accounting officer, and Ms. Xu Jing, the head of accounting center (accounting supervisor), hereby declare that they warrant the truthfulness, accuracy, and completeness of the financial statements in this Interim Report. All directors of the Company attended the Board meeting in respect of considering and approving this Interim Report. The Company kindly requests investors to read through this Interim Report and pay special attention to “X. Risks and Countermeasures” in the “Section III Management Discussion and Analysis.” Investors are advised to pay attention to investment risks. The Company has no plan to distribute cash dividends and bonus shares or convert capital reserves into share capital during the reporting period. This report has been prepared in Chinese and translated into English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese version shall prevail. Contents Section I Important Notes, Contents, and Definitions ............................................. 1 Section II Company Profile and Key Financial Indicators ..................................... 5 Section III Management Discussion and Analysis.................................................... 8 Section IV Corporate Governance ........................................................................... 38 Section V Environmental and Social Responsibilities ........................................... 40 Section VI Significant Events ................................................................................... 49 Section VII Changes in Shareholdings and Particulars about Shareholders ...... 73 Section VIII Preference Shares ................................................................................ 81 Section IX Bonds ....................................................................................................... 82 Section X Financial Statements ................................................................................ 84 Documents Available for Inspection (I) Financial statements affixed with the signatures and stamps of the person in charge of the Company, the accounting officer, the general manager of accounting center; (II) Originals of all the Company’s documents and announcements publicly disclosed on the Securities Times, Shanghai Securities News, China Securities Journal, and http://www.cninfo.com.cn during the reporting period; (III) Other related materials. Definitions
Section II Company Profile and Key Financial Indicators I. Company Profile
1. Contact information of the Company Whether the Company’s registered address, office address, postal code, website, and e-mail address have changed during the reporting period □ Applicable ? Not applicable There was no change in the Company’s registered address, office address, postal code, website, or e-mail address during the reporting period. For more information, please refer to the 2023 Annual Report. 2. Information disclosure and location Whether the information disclosure and location have changed during the reporting period □ Applicable ? Not applicable There was no change in the stock exchange website, media outlets, and their websites where the Company disclosed the Interim Report, or the location where the Interim Report was prepared and placed during the reporting period. For more information, please refer to the 2023 Annual Report. 3. Other information Whether other information has changed during the reporting period IV. Key Accounting Data and Financial Indicators Whether the Company needed retroactive adjustment or restatement of accounting data in prior years or not ?Yes ?No
1. Differences in the net profits and net assets in financial statements disclosed respectively under International Financial Reporting Standards (IFRS) and CAS □ Applicable ? Not applicable During the reporting period, there was no difference in net profits and net assets in financial statements disclosed respectively under IFRS and CAS. 2. Differences in the net profits and net assets in financial statements disclosed respectively under overseas accounting standards and CAS □ Applicable ? Not applicable During the reporting period, there was no difference in the net profits and net assets in financial statements disclosed respectively under overseas accounting standards and CAS. VI. Non-recurring Profits and Losses ? Applicable □ Not applicable Unit: RMB
Other non-recurring profits and losses that meet the definition of non-recurring profits and losses mainly include other non-recurring profits and losses such as interest on fixed deposits and value added tax credit. Note for the definition of non-recurring profits and losses set out in the No.1 Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the Public - Non-recurring Profits and Losses, as recurring profits and losses □Applicable ?Not applicable The Company does not define any non-recurring profits and losses set out in the No.1 Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the Public - Non-recurring Profits and Losses as recurring profits and losses. Section III Management Discussion and Analysis I. Principal Businesses of the Company during the Reporting Period (I) Overview 1. Industry landscape and development trends The Central Committee of the Chinese Communist Party (“CPC”) and the State Council attach great importance to the development of TCM, positioning the inheritance and innovation of TCM as an important aspect of the socialist cause with Chinese characteristics in the new era. The report to the 20th CPC National Congress has explicitly stated that we should “promote the inheritance and innovation of TCM.” The Third Plenary Session of the 20th Central Committee of the Communist Party of China highlighted key strategies for the high-quality development in pharmaceutical and health sectors, outlined new deployments, tasks, and requirements for comprehensively deepening TCM reforms, and proposed to “perfect the mechanism for the inheritance and innovation of TCM,” marking the start of comprehensively deepening TCM reforms. In the first half of 2024, numerous policies were introduced to support the TCM industry in China. Regarding the development of the TCM industry, the government work report requires “promoting the inheritance and innovation of TCM and strengthening the construction of TCM advantageous specialties,” which gives the industry a new mission in the new era to carry forward the inheritance and advance innovation. The 2024 Key Tasks for Deepening the Reform of Pharmaceutical Health Systems issued by the General Office of the State Council proposed that we should “advance the construction of national TCM inheritance and innovation center and other institutions, support the presence of leading TCM enterprises across the entire industry chain and accelerate the establishment of the traceability system across the entire TCM industry chain,” which provides guidelines and institutional guarantees for the construction of the entire industry chain in the TCM industry. The Special Regulations on the Management of Traditional Chinese Medicine Standards issued by the National Medical Products Administration (NMPA) marked a crucial step forward for this industry towards standardized and normalized management. This series of top-level policies, issued consecutively, clarifies the pathways for the healthy, sustainable, and high-quality development of the TCM industry, thus leading to increased confidence in its future prospects. Meanwhile, China has increasingly supported the innovative drug industry through various policies. The State Council of China has recently approved the Implementation Plan for Supporting the Development of Innovative Drugs Across the Entire Value Chain. This plan aims to bolster innovative drug development in areas such as R&D, transformation, approval, production, usage, and reimbursement, heralding new development opportunities for the industry. From a market perspective, with the acceleration of population aging, TCM offers unique advantages such as disease prevention, early intervention, and natural ingredients, effectively supporting the demand for chronic disease management. The market prospects are broad and promising. Supported by national policies, the value of efficient integration and integrated construction across the entire industry chain in the TCM industry is further highlighted, which is increasingly becoming the key for enterprises in this industry to build core competitiveness in the future. As social demands shift from “disease treatment” to “health- focused” products and services, the TCM industry is becoming more innovative and consumer-oriented. The integration of the entire industry chain—including TCM materials, branded TCM products, TCM consumer goods, and retail pharmacy terminals—is set to create a new business model, propelling the industry into a new era of development. In the first half of 2024, the consumer goods industry experienced low-level growth, with consumer confidence still needs to be restored. Relevant data shows that in terms of consumption behaviors and preferences, on one hand, consumers became more rational and cautious with their purchasing decisions due to the slowdown in the growth of residents’ disposable income. On the other hand, consumption trends continued to rise. Consumers sought cost- effective products and product experience and were willing to pay a premium for high quality. In terms of the consumer market, consumers’ reliance on online shopping has further increased, and online retail markets continued to exhibit strong growth momentum. Benefited from the presence of e-commerce business into lower-tier markets and improved infrastructure, the lower-tier consumer markets also showed a substantial growth potential. In the context of a slow recovery in the overall consumer goods sector, the market increasingly demands that businesses maintain sharp insights and innovation, and implement more refined management and empowerment strategies for channels and endpoints. 2. Industry position Yunnan Baiyao has 567 drug approvals and 316 varieties, including 222 Chinese patent drugs, including 43 exclusive varieties. The Company has consistently focused on integrating TCM into modern life, explored the endogenous potential of traditional medical products, responded to the needs of modern life with product innovation and infused traditional brands and TCM products with renewed vitality, being highly consistent with the national strategic positioning of “attaching importance to the inheritance and innovation of TCM.” In the pharmaceutical products domain, the Company’s roots lie in Yunnan Baiyao Powder with a century-long legacy. Through persistent exploration and innovation, Yunnan Baiyao has progressively developed a series of core pharmaceutical products encompassing diverse forms like aerosol, plaster, tincture, and woundplast. In terms of personal care products, the Company has successfully combined core ingredients of Yunnan Baiyao with oral care items and created a group of oral care products, notably exemplified by Yunnan Baiyao Toothpaste. This achievement stands as a prominent case for TCM enterprises venturing into cross-border innovation and reshaping consumer preferences. Leveraging its successful development strategies in pharmaceutical and health product sectors, the Company has expanded its business footprint into various domains, including natural medicine, TCM decoction pieces, special medicines, medical devices, personal care products, and healthcare food. This move enables the Company’s evolution from a TCM manufacturing enterprise to a modern, Big Health-oriented entity. In June 2024, BrandFinance2024 - Ranking of Global Most Valuable and Strongest Pharma, Medical Device, and Healthcare Services Brands in Value released by Brand Finance, an authoritative international brand valuation agency, showed that Yunnan Baiyao was shortlisted into the List of Global Top 25 Most Valuable Pharmaceutical Brands. In July 2024, Yunnan Baiyao was shortlisted into the 2024 Fortune Top 500 Chinese Enterprises List th released by Fortune China for the 15th consecutive year and ranked 385 . In July 2024, Yunnan Baiyao was th shortlisted into 2024 Pharm Exec 50 released by Pharm Exec, an American magazine and ranked 33 . In June 2024, the list of Top 100 Chinese Pharmaceutical Companies for 2023 was released, with Yunnan Baiyao once again th ranked among the top 100 Chinese TCM companies, securing the 5 position. In June 2024, Yunnan Baiyao was included in the “China’s Top 100 ESG Pioneer Listed Companies” list. 3. Product and business The Company has four business groups, namely Pharmaceutical Business Group, Health Products Business Group, Traditional Chinese Medicine (TCM) Resources Business Group and Yunnan Pharmaceutical Co., Ltd (“Yunnan Pharma”). These business groups serve as the foundation for the Company’s production and operations. Pharmaceutical Business Group focuses on the products of Yunnan Baiyao series, (for example, Yunnan Baiyao Aerosol, Yunnan Baiyao Plaster, Yunnan Baiyao Woundplast, etc), which are mainly used in the pain management of traumatology such as hemostasis, pain relief, swelling reduction, and blood stasis elimination. The branded TCMs with natural characteristics focus on areas such as tonifying Qi and blood, treating colds and flu, cardiovascular health, gynecology, and pediatrics. The BG is also actively involved in the development of Panax notoginseng botanical supplements, aiming to identify new avenues for growth. Health Products Business Group, with its core focus on the toothpaste category, relies on its robust brand infrastructure encompassing people, products, and consumer scenarios. Embracing a user-centric approach, the BG actively explores new consumer scenarios and introduces innovative product categories, and actively expands the realms of oral care and Yangyuanqing anti-hair loss solutions. TCM Resources Business Group capitalizes on Yunnan Province’s unique medicinal plant resources. While ensuring the high-quality, efficient, and cost-effective supply of TCM raw materials across the Group, the BG strives to develop both B-end (including Panax notoginseng series, branded medicinal materials, raw material extracts) and C-end (including TCM decoction pieces and healthcare food) products. Moreover, the BG continues to advance the digitalization, platform-based operation, and integrated management of TCM resource cultivation, while constantly enhancing the development. Yunnan Pharma remains steadfast in pursuit of maintaining its leading market share among pharmaceutical distribution companies in Yunnan Province. It has achieved full coverage in all 16 prefectures and cities of Yunnan Province, with its channels radiating across major retail chain pharmacies. It also assists governments and medical institutions in building better management and service systems, providing high-quality and modern pharmaceutical supply chain service solutions for upstream and downstream customers. 4. Overview of business data In the first half of 2024, the Company focused on its core businesses, continuously optimizing its business structure, with contribution to profit from the industrial revenue steadily increasing. During the reporting period, the Company achieved operating revenue of RMB 20.455 billion, a 0.72% increase compared to the same period last year. Among this, the proportion of industrial revenue in total operating revenue further rose to 37.41%, an increase of 0.49 percentage points compared to the previous year; industrial revenue growth rate reached 2.05%; and the industrial gross profit margin was 67.37%, up 3.10 percentage points year-on-year. While maintaining steady growth in operating performance, the Company focused on unleashing potential and enhancing efficiency across the entire value chain, with operational quality and efficiency continuing to improve. During the reporting period, the Company achieved a net profit attributable to the parent company of RMB 3.189 billion, a 12.76% increase from RMB 2.828 billion in the same period last year, setting a new historical high for the period; the weighted average return on net assets was 7.93%, up 0.76 percentage points from the previous year; basic earnings per share were RMB 1.79, a 13.29% increase year-on-year; net cash flow from operating activities was RMB 3.262 billion, up 44.84% year-on-year; and management expenses decreased by 4.95% year-on-year. At the end of the reporting period, the Company’s total assets were RMB 54.368 billion, an increase of 1.08% from the beginning of the period; and the cash and bank balance were RMB 14.720 billion, up 3.53% from the beginning of the period. (II) Review of main tasks and prospects 1. Leading in Party building, strategic orientation, and enhanced management efficiency (1) Strengthening the leadership in Party building and enhancing the quality and efficiency of Party building During the reporting period, the Company deepened its learning and implementation of General Secretary Xi Jinping’s important expositions on Party building, and promote the development of the Company to a new stage by strengthening the Party building, gathering strength, increasing momentum, and improving the effectiveness, with the goal of “leading and ensuring the high-quality development of Yunnan Baiyao by high-quality Party building.” We will constantly deepen the construction of modern enterprise system with Chinese characteristics, promote the integration of the Party’s leadership into the entire process and all aspects of corporate governance, focus on “integration and inclusion,” identify the key areas and focus points of Party building efforts, and lead reform and development to a higher level of quality through high-quality Party building. (2) Completed compilation of 2024-2028 Strategic Planning Outline for Yunnan Baiyao Group to clarify the Company’s strategies During the reporting period, the Company’s Board of Directors considered and approved 2024-2028 Strategic Planning Outline for Yunnan Baiyao Group, which establishes a clear, well-defined, and actionable development strategy for the Company, and continues to refine the specific implementation pathways and methods for the strategic plan, effectively ensuring and supporting the successful execution of the strategy. The Company will set the strategic goal of “driving Yunnan Baiyao, a century-old pharmaceutical brand, to become a leading Chinese and world-class modern pharmaceutical industry group, achieving reasonable growth in scale, steady improvement in efficiency, and continuous optimization of industrial and product structures for high- quality development,” steadfastly deepen its roots in the “pharmaceutical” industry, and drive its each business to focus on its advantageous fields in Big Health industry to constantly enhance its leading industry position. While continuously enhancing core competencies, the Company is also advancing the development of new business growth drivers in a scientific, prudent, and effective manner. In the short term, leveraging a “dual-wheel drive” strategy of internal growth and external expansion, the Company will strengthen and expand the quality influence of “Big TCM” products along the comprehensive TCM industry chain; enhance and refine the health and wellness offerings through a focus on efficacious products and services in personal healthcare; stabilize and improve the new regional distribution channels via market-specific commercial circulation, and make up for the insufficiency in internal growth by centering on industrial strategic orientation 1+1>2, to rapidly build a health industry system. In the mid-to-long term, the Company will focus on developing Yunnan authentic medicinal resources, produce excellent TCM products from excellent medicinal materials in Yunnan, and position itself as a “chain leader” in the high-quality development of Yunnan TCM resources. Focusing on the core products of Baiyao, and leveraging high-quality Yunnan medicinal materials, the Company aims to become a model for TCM inheritance, innovation, and development, and the “leading” brand in the comprehensive pain management of traumatology. Benefited from the functional advantages of Baiyao and authentic regional medicinal resources, the Company will build itself into the benchmark for new Chinese-style health life philosophy and the “best” partner for quality life and comprehensive ecological services. The Company will focus on meeting the treatment needs of key disease areas and establish itself as a new model pharmaceutical enterprise in high-potential, high-value, high-success-rate, and sustainably premium sectors. Focusing on customers’ health needs, the Company will offer value-driven pharmaceutical commercial services and strive to become the “leading” enterprise in value-based life and health services. The Company will also further build a healthy and sustainable industry portfolio system to promote the achievement of its strategic goals. (3) Advancement to improve organizational structure and control capabilities In the first half of 2024, the Company steadily implemented its organizational reforms centered on “strengthening the front-end, empowering the middle-end, and optimizing the back-end,” driving control model shifting from financial control to strategical control, and constructing a more focused, streamlined and efficient organizational structure, with strengthened internal correlation and synergy within the Company, offering a stronger organizational support for the Company to focus on its principal business, integrate advantageous resources, strengthen vertical control, and empower control. Looking ahead, the Company will continue to enhance the Group’s control capabilities. By building a group control system for “hierarchical classification,” especially the research, production, and sales control system that supports business development, the Company constantly promotes the core capability building throughout the group. Moreover, the Company will refine and improve the performance indicator structure system, establish an effective medium- to long-term incentive system and improve its overall salary incentive mechanism. The Company will also perform new corporate culture construction to support overall strategic development goals, thus maximizing the overall value of the Company. The Company will strive to further improve its organization capabilities, and in response to the latest strategic planning, control positioning, and functional division, the Company will enhance its organizational system in a scientific and orderly manner to support the implementation of its own strategic goals. (4) Improvement in both quality and efficiency by focusing on operation excellence across the entire value chain In the first half of 2024, the Company further strengthened its budget management, risk control and cost awareness, and by digital and intelligent empowerment, systematically brought its level of operation across the entire value chain to a new height, achieving improvement in both quality and efficiency. The Company also adhered to practically implementing comprehensive budget management to give full play to the value creation ability of management accounting in enterprise management. By creating a comprehensive strategy-guided budget management system, the Company aimed to promote the linkage between strategic management and comprehensive budget, thus achieving strategic organic growth and orderly performance growth. Furthermore, the Company continued to perfect its “all-in-one” compliance monitoring system, and further improved its internal control in systematicity and precision at the institutional level. In addition, the Company further returned to the “essence of manufacturing”, focusing on the three elements of “quality, cost and efficiency,” and promoting cost reduction and efficiency improvement to be a long-term systematic work for the Company. From the perspective of the entire process, the Company cultivated its capabilities to reduce the cost and improve the efficiency across the entire value chain based on end-to-end process. Also, the Company made efforts to advance the digitalization for each business segment by mainly focusing on platform operation and management, and from the perspectives of supply chain, quality management, legal affair management and human resource management, promote the realization of digital and intelligent management, operation and innovation. In the future, the Company will continue to focus on the “entire industry chain management synergy and entire value chain efficiency improvement,” further unleash potential and enhance efficiency, and build up the culture and philosophy of “maximizing the value of the entire industry chain,” so as to stably and scientifically bring its operation excellence system and capability to a new height in an orderly manner, and constantly improve its internal growth quality. 2. Focusing on the principal businesses, optimizing the structure, and achieving high-quality development (1) Pharmaceutical Business Group During the reporting period, the principal business income of the Pharmaceutical Business Group reached RMB 4.069 billion, up 9.6% year on year. The core products of Baiyao series maintained robust growth. The sales revenue of Yunnan Baiyao Aerosol exceeded RMB 1.2 billion, representing a YOY increase of more than 30%, and the sales revenue of Yunnan Baiyao Plaster and Yunnan Baiyao Capsule achieved significant growth. Other branded TCM products showed impressive growth. The sales revenue of Pudilan Anti-inflammatory Tablet surpassed RMB 100 million, with a nearly double-digit growth year-on-year. The sales revenue of Gongxuening Capsule, used for gynecological inflammation, saw a 36% year-on-year increase. The sales revenue of Baotaikang Granule for Children and Pain Relief Capsule increased significantly. Botanical supplements also achieved significant growth, with the sales revenue of Qixuekang Oral Liquid surpassing RMB 100 million, and the sales revenue of Sanqi Shenfeng Oral Liquid increasing by more than 80% year-on-year. During the reporting period, the Pharmaceutical Business Group continued to implement the guidelines of focusing on the principal business, improving quality and efficiency, and promoted various key tasks from academic and clinical, marketing, channel cultivation, production efficiency and other aspects. In terms of academic and clinical aspects, a number of clinical studies on the secondary development of Yunnan Baiyao Capsule, Gongxuening Capsule, Qixuekang Oral Liquid and other core products have been steadily promoted. In terms of marketing, the Aerosol Campus Basketball Game was launched in Kunming, Shanghai, Changsha and Guangzhou, with 512 teams participating in the activity. The “Let’s go and play basketball” Douyin topic page recorded view counts of more than 290 million, and more than 38,000 videos have been submitted for the national mission, with the accumulated submissions exceeding 32,000. In terms of channel cultivation, the “generic drug for thousands of households” project was launched offline, and the first-level short channel operation model was built to achieve extensive small chain distribution. Great efforts were made to further the online channel development, acquiring about 350 million exposures, 2.96 million interactions, a user base of about 22.17 million audience for the brand through the content platform, and attracting 10.52 million visitors to the e-commerce platform, which brought more than 1.1 million consumers, and led to GMV increase of 47% year-on-year. In terms of production efficiency improvement, we have advanced projects such as biomass gasification intelligent heating, granule capacity increase and expansion, storage optimization, and Dali production line upgrading to lay a solid foundation for market supply assurance, cost reduction and efficiency increase. The compliance transformation of the clean separation coarse crushing process in the raw material center was completed, and 446 improvements were implemented to improve the intelligent level of production and manufacturing. In the second half of 2024, centering around the strategic positioning of “the leading brand of pain management in the field of traumatology,” the Pharmaceutical Business Group will promote the optimization of business deployment in an orderly manner, and initiate online and offline engagement across all touchpoints. Specifically, for our core series of Baiyao products, we will address market demands and focus on our pain management strategy. We aim to achieve breakthroughs with key individual products and develop a new pain management model, thereby fully leveraging our Company’s strengths in the field of trauma. We will establish a “Pain Service Center” by utilizing chain pharmacies located within communities. This center will consolidate pain management products, offer primary treatment services, and collaborate to extend medical resources comprehensively, thereby addressing the diverse pain management needs of the community. For branded TCM products, we will implement the refined growth strategy, take the treatment field as the standard, build the refined growth capabilities, enhance traceability across marketing, commercial control, and investment, and thus achieve integration between production and marketing. Regarding botanical supplements, we will capitalize on the autumn and winter season, which is ideal for Qi and blood replenishment, to rapidly increase the market share of our supplement products. (2) Health Products Business Group During the reporting period, the Health Products Business Group achieved an operating income of RMB 3.144 billion and a net profit of RMB 1.231 billion, with a year-on-year growth of 1.7% in net profit and a year-on- year growth of 0.7 percentage points in gross margin. In the oral care segment, the market share of Yunnan Baiyao Toothpaste maintained a leading position in China. During the “618” period in 2024, Yunnan Baiyao oral health brand successively ranked top 1 oral care brand in the whole network (Source: open.shangzhizhen.com). In the hair care and anti-hair loss segment, Yangyuanqing recorded sales revenue of RMB 195 million during the reporting period, up 41% year on year. With the special makeup certificate for hair care, the national invention patent certificate for hair care and anti-hair loss, and the product quality achieved through differentiated technological barriers that earn the trust of Chinese consumers, we have successfully created the core brand of Yunnan Baiyao Yangyuanqing - “For controlling oil and preventing hair loss, choose Yangyuanqing.” Thanks to increased market penetration, Yangyuanqing has outpaced the industry average growth in the anti-hair loss category amid intense competition. During the “618” shopping festival in 2024, it became the top domestic anti-hair loss shampoo brand on Tmall, with the six-month cumulative GMV on Douyin e-commerce platform exceeding RMB 100 million (Source: open.shangzhizhen.com). During the reporting period, the Health Products Business Group achieved the goal of lean operation and product leadership through digital-driven measures. In terms of R&D and innovation, the Health Products Business Group obtained 4 new patent authorizations, submitted 5 applications, and published 2 papers in top international SCI journals during the reporting period. In terms of content marketing, by focusing on the core keywords of the brands, such as “gum care” for Yunnan Baiyao Toothpaste, “anti-hair loss” for hair care and anti-hair loss series, we maintained content connection through private marketing and achieved joint creation and interaction with users for new products. We launched special initiatives at key moments and marketing campaigns such as “The Family Gets Together to Watch the Spring Festival Gala,” “Healthy Oral 123 Plan,” and “Good Oral Health for Longevity and Well-being,” to enhance national and professional brand recognition while precisely targeting our user base. These campaigns achieved a total exposure of over 3.6 billion. In the second half of 2024, the Health Products Business Group will focus on the “circle-breaking” growth of products, and create long-term end-to-end full value chain collaboration. In the future, we will strengthen the oral health professional positioning of Yunnan Baiyao. For oral care products, we will focus on gingival care and launch channel exclusive products to reach different consumer groups. For washing and care products, we will focus on “anti-hair loss” and promptly introduce targeted offerings such as a special travel package for “anti-hair loss,” tailored to the characteristics of each channel. Through the construction of digital system, we can achieve the operation digitalization, channel visualization, terminal lean management, and data-driven decision-making, and ultimately enabling omni-channel operations. (3) TCM Resources Business Group During the reporting period, while meeting the Company’s internal resource needs in a high-quality and efficient manner, the TCM Resources Business Group implemented lean operations, and achieved external operating income of RMB 894 million, representing a year-on-year increase of about 22% under the same caliber. In terms of continuously ensuring a stable supply and price of the Company’s strategic varieties, with an average order delivery rate of 99.36% in the first half of the year, we effectively stabilized the price of the Company’s feeding herbs, with their price increase significantly lower than the average industry-wide price rise for Chinese medicinal materials. Focusing on the Yunnan authentic herbs and the strategic advantageous varieties of Yunnan Baiyao, we maintained a leadership in the Panax notoginseng segment. In the natural plant extraction business, our sales revenue increased by 47% year-on-year during the reporting period. In the pharmaceutical services sector, the TCM Resources Business Group made strides by pioneering a channel covering “diagnosis and treatment - （未完）  |