Zhongzhi Pharmaceutical Holdings Limited (3737) AI Stock Analysis

• Market Cap: HK$694.54M
• Dividend Yield: 9.43%
• Average Volume (3M): 412.77K
• Price to Earnings (P/E): 28.9
• Beta (1Y): 0.12
• Revenue Growth: -1.99%
• EPS Growth: -81.52%
• Country: HK
• Employees: 2,577
• Sector: Healthcare
• Sector Strength: 45
• Industry: Drug Manufacturers - Specialty & Generic
• EPS (TTM): 0.01
• Shares Outstanding: 863,600,000
• 10 Day Avg. Volume: 391,300
• 30 Day Avg. Volume: 412,766
• PEG Ratio: -0.20
• Price to Book (P/B): 0.70
• Price to Sales (P/S): 0.35
• P/FCF Ratio: 19.84
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 68 Neutral
• Price Target: HK$0.92 ▲(4.09% Upside)

The score is primarily supported by solid financial positioning (strong revenue growth and a robust, low-leverage balance sheet). Offsetting this are weaker quality signals from declining margins and volatile/negative free cash flow, plus technical overbought conditions and a relatively high P/E despite a strong dividend yield.

Positive Factors

Revenue Growth

Sustained top-line expansion across multiple years signals durable demand and successful commercialization. Growing revenue supports scale economies, funds R&D and capacity investments, and underpins longer-term market share gains in specialty and generic pharmaceuticals.

Low Leverage / Strong Capital Base

A conservatively leveraged balance sheet provides lasting financial flexibility to fund product development, M&A or weather industry cycles. Low debt reduces fixed costs and refinancing risk, strengthening the company's ability to invest in strategic initiatives over years.

High Gross Margin

Consistently high gross margins indicate durable production or pricing advantages and effective cost management. This structural margin cushion supports investment in ratcheting up commercialization, absorbing SG&A increases, and sustaining profitability despite pricing pressure.

Negative Factors

Declining Net Profit Margins

A multi-year erosion of net and operating margins suggests rising costs or margin pressure that can persistently impair returns on sales. Lower margins reduce retained earnings available for reinvestment and make the business more sensitive to revenue shocks over the medium term.

Volatile / Negative Free Cash Flow

Inconsistent and recently negative free cash flow indicates structural cash conversion issues. Over months to years this constrains funding for capex, R&D, dividends or debt reduction, increasing reliance on external financing and limiting strategic optionality.

Declining Liquidity & ROE

Falling cash balances and a dropping ROE point to weakening liquidity and lower capital efficiency. Persisting deterioration would pressure operational resilience, reduce ability to seize growth opportunities, and could raise costs of capital over the medium term.

Zhongzhi Pharmaceutical Holdings Limited Business Overview & Revenue Model

Company Description

Zhongzhi Pharmaceutical Holdings Limited, an investment holding company, engages in the research, development, manufacture, and sale of pharmaceutical products in the People's Republic of China. The company operates through three segments: Pharmaceutical Manufacturing, Operation of Chain Pharmacies, and Operation of On-Line Pharmacies. It provides Chinese patent medicines and decoction pieces under the Zeus, Liumian, and Caojinghua brands. The company is also manufacture and sale of food and Chinese herbs; property management; and pharmaceutical drugs, as well as offers detection and testing services. As of December 31, 2021, it operated 398 self-operated chain pharmacies, including 361 medical insurance designated pharmacies located in Zhongshan in the Guangdong Province under the Zeus brand. The company was founded in 1993 and is headquartered in Zhongshan, the People's Republic of China. Zhongzhi Pharmaceutical Holdings Limited is a subsidiary of Crystal Talent Investment Group Limited.

How the Company Makes Money

Zhongzhi Pharmaceutical Holdings Limited generates revenue through several key streams. Primarily, the company earns income by selling its pharmaceutical products, which include a range of prescription and over-the-counter medications. The company's revenue model is supplemented by partnerships with healthcare institutions and distributors that enhance market reach and product availability. Additionally, Zhongzhi may engage in research collaborations and licensing agreements with other pharmaceutical firms, allowing it to monetize its intellectual property and innovations. The company's strategic focus on both traditional Chinese medicine and Western pharmaceutical products positions it to capture diverse market segments, contributing to its overall earnings.

Zhongzhi Pharmaceutical Holdings Limited Financial Statement Overview

Summary

Zhongzhi Pharmaceutical Holdings Limited shows strong revenue growth and a robust balance sheet with low leverage. However, declining profitability margins and volatile cash flows indicate operational challenges.

Income Statement

Zhongzhi Pharmaceutical Holdings Limited has shown consistent revenue growth, with a notable increase from 1,342 million HKD in 2019 to 2,215 million HKD in 2024. Gross profit margin remains strong, averaging above 57%, indicating efficient cost management. However, net profit margin has declined from 8.6% in 2020 to 4.3% in 2024, suggesting increased expenses or pricing pressures. The EBIT and EBITDA margins have also weakened slightly over the years.

Balance Sheet

The company's balance sheet is robust, with a healthy equity ratio consistently above 50%, indicating a strong capital base. The debt-to-equity ratio has remained low, averaging around 0.20, suggesting prudent leverage. However, the decline in cash and cash equivalents over the years could be a concern for liquidity. Return on equity has decreased, reflecting the decline in net income.

Cash Flow

Cash flow analysis reveals volatility, with free cash flow experiencing negative values in recent years, indicating potential cash management issues. Operating cash flow has fluctuated significantly, and the free cash flow to net income ratio has been inconsistent, pointing to operational challenges in converting profits into cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.01B	2.21B	2.05B	1.83B	1.75B	1.60B
Gross Profit	1.14B	1.29B	1.22B	1.07B	1.06B	991.09M
EBITDA	73.84M	170.39M	317.53M	153.87M	119.71M	203.69M
Net Income	20.55M	95.21M	162.78M	106.39M	52.13M	138.53M
Balance Sheet
Total Assets	1.84B	1.99B	1.79B	1.88B	1.52B	1.42B
Cash, Cash Equivalents and Short-Term Investments	176.31M	167.10M	166.65M	419.36M	242.18M	311.04M
Total Debt	139.50M	188.60M	225.06M	170.86M	175.74M	187.90M
Total Liabilities	752.07M	865.58M	739.30M	869.31M	622.94M	598.76M
Stockholders Equity	1.09B	1.12B	1.05B	1.00B	898.74M	820.18M
Cash Flow
Free Cash Flow	133.61M	39.62M	-69.93M	196.17M	-7.47M	-20.81M
Operating Cash Flow	197.40M	181.48M	101.50M	284.57M	178.38M	93.18M
Investing Cash Flow	-87.27M	-120.06M	-202.76M	13.38M	-135.98M	-250.42M
Financing Cash Flow	-126.94M	-58.73M	-154.62M	-68.14M	-40.83M	-71.93M

Zhongzhi Pharmaceutical Holdings Limited Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 0.88
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:3737, the sentiment is Positive. The current price of 0.88 is above the 20-day moving average (MA) of 0.64, above the 50-day MA of 0.61, and above the 200-day MA of 0.75, indicating a bullish trend. The MACD of 0.07 indicates Negative momentum. The RSI at 66.71 is Neutral, neither overbought nor oversold. The STOCH value of 81.75 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HK:3737.

Zhongzhi Pharmaceutical Holdings Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
0239	74 Outperform	HK$744.82M	10.50	9.75%	7.52%	-24.96%	-26.43%
3737	68 Neutral	HK$694.54M	28.90	1.87%	9.43%	-1.99%	-81.52%
0950	64 Neutral	HK$942.14M	9.75	5.35%	2.92%	19.80%	55.09%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%
1652	49 Neutral	HK$595.53M	-3.08	-40.38%	―	-43.46%	-96.48%
0897	46 Neutral	HK$427.54M	-28.86	-1.16%	7.50%	59.60%	-351.02%
1498	41 Neutral	HK$184.55M	-3.69	-33.22%	―	-17.32%	55.74%