China’s Largest Hyaluronic Acid Company Sees 70% Decline in Net Profit.

HuaXi BioTech Co., Ltd. (HuaXi BioTech) saw a 70.59% year-on-year decrease in net profit in 2024. The company’s market value has plummeted from its peak of 150 billion yuan to just over 20 billion yuan.

According to HuaXi BioTech’s “2024 Annual Report” released on April 11th, the company’s operating income in 2024 was 5.371 billion yuan, a year-on-year decline of 11.61%, with a net profit of 174 million yuan, down by 70.59% year-on-year. In the fourth quarter of 2024, its net profit was -188 million yuan, a decrease of 340.24% compared to the same period last year when it had a profit of 20.26 million yuan, indicating a loss in that quarter.

This marks the second consecutive year of declining net profits for HuaXi BioTech. Reports from KaiCaiJing on April 11th revealed that the company’s net profit was 970 million yuan in 2022, 593 million yuan in 2023, and further dropped to 174 million yuan in 2024. Compared to 2022, the net profit of HuaXi BioTech has plummeted by 82%, with the company experiencing its first quarterly loss since going public in the fourth quarter of 2024.

With the decline in performance, the stock price of HuaXi BioTech has also taken a significant hit. Since July 2021, the company’s stock price has been on a downward trend, falling from a peak of 313.1 yuan per share to around 43 yuan per share, a drop of over 85%.

At its peak, HuaXi BioTech had a market value of 150 billion yuan, but now it is left with just over 20 billion yuan.

Public records show that HuaXi BioTech was founded on January 3, 2000, and is a well-known biotech and biomaterials company, being China’s largest hyaluronic acid company.

Regarding the continuous decline in the company’s performance, analysts at KaiCaiJing have pointed out that HuaXi BioTech’s main businesses are raw materials, medical terminal, functional skincare products, and functional food. Among them, functional skincare products once accounted for over 70% of the company’s business. However, it was the functional skincare products that dragged down the company’s performance.

In 2023, the sales revenue of HuaXi BioTech’s functional skincare products was 3.757 billion yuan, a decrease of 18.45% year-on-year; in 2024, the sales revenue further dropped to 2.569 billion yuan, a decrease of 31.62%. With the company’s sales expense ratio reaching as high as 45% to 50%, the operating costs have remained high. Therefore, when sales revenue declines, the net profit sees a more substantial drop. Additionally, the increase in research and development expenses, management fees, and losses from asset impairment have all contributed to the significant decline in the company’s net profit.

Reports have revealed that the controlling shareholder of HuaXi BioTech once threatened employees with dismissal or job freeze, forcing the low-priced repurchase of stocks worth 200 million yuan valued at 880 million yuan by extortion. After the incident came to light, the Shandong Securities Regulatory Bureau launched an investigation, but no further actions were taken.

The reports indicate that the controlling shareholder demanded HuaXi BioTech employees to transfer shares at a price of 90 yuan per share when the stock price at the time was around 140 yuan per share. However, now the stock price of HuaXi BioTech has fallen below 50 yuan per share. HuaXi BioTech made its debut on the Sci-Tech Innovation Board in November 2019, and the controlling shareholder’s stock lock-up period was five years, which means it was only lifted at the end of 2024. This means that during the time when the stock price was at its peak, the controlling shareholder was unable to sell, and by the time they could, it had already plummeted.

As of 11:30:00 Beijing time on April 14th, the stock price of HuaXi BioTech was reported at 47.93 yuan per share, with a total market value of 23.087 billion yuan.