The Shanghai Stock Exchange recently sent an annual report inquiry letter to Baihua Pharma, focusing on the company's sharp increase in accounts receivable, high proportion of long-aging balances, and large individual bad debt provisions. In 2025, the company's revenue was 388 million yuan, up only 0.66 percent year-on-year, while the gross carrying amount of accounts receivable reached 175 million yuan, a year-on-year increase of 61.53 percent. Receivables aged over one year accounted for nearly 65 percent, and individual bad debt provisions for accounts receivable rose from 6.419 million yuan to 19.6276 million yuan, with the provision ratio increasing from 46.69 percent to 80.11 percent. Baihua Pharma responded that the sharp rise in accounts receivable was mainly due to prior-year research and development projects gradually reaching collection milestones, with original contract assets being transferred to accounts receivable. When combining accounts receivable and contract assets, the overall growth rate was only 7.38 percent. The long-aging balances stem from the lengthy pharmaceutical R&D cycle, adjustments in industry regulatory policies, and delayed payments by pharmaceutical clients under financial pressure. The individual provisions involve over twenty clients, most of whose projects have stalled and who face funding difficulties, with some cases already in litigation. The company stated that the basis for impairment provisions is sufficient.
Xinjiang Baihuacun Co LtdSSE inquiry highlights surge in receivables, high long-aging balances, and large bad debt provisions, indicating financial risk