China

Shanghai Jahwa United Expects 90% Net Profit Decrease in 2016

Summary:

  • Shanghai Jahwa United (600315.SS) expects its net profit in 2016 to drop 90% from 2015 to RMB 226 million, as reported by eastmoney.com.
  • The company expects its revenue to decrease slightly to RMB 5.3 billion from RMB 5.85 billion.

Why It Matters:

  • The company’s 2015 investment profit from selling a 23.8% stake in Jiangyin Tianjiang Pharmaceutical Co. resulted in a high comparison base. The company also increased its marketing expenditure for platforms such as Tmall.com.
  • Shanghai Jahwa United has partnered with Kao Corporation (4452.F) to distribute Kao’s products. In 2016, such business contributed RMB 945 million in revenue and RMB 27 million in net profit. The cooperation term expired at the end of 2016, and Shanghai Jahwa United decided not to continue the partnership.
  • Shanghai Jahwa United also conducted a major organisational restructure, and it expects double digit revenue growth in 2017, excluding Kao-related business.