HONG KONG, May 6, 2026 - (ACN Newswire) - The traditional Chinese medicine (TCM) decoction pieces sector continues to expand steadily, while its industry structure evolves toward greater standardization and consolidation.
Against this backdrop, Sichuan Neautus Traditional Chinese Medicine (Pieces) Co., Ltd. (“Neautus”) has completed its filing with the China Securities Regulatory Commission (CSRC) for overseas issuance and submitted its listing application to the Hong Kong Stock Exchange on April 30, 2026. The development marks a meaningful step in bringing a traditionally fragmented industry closer to capital markets, with increasing investor focus on sustainable growth, operational discipline, and cash flow quality.
Scale and Standardization Position Leaders to Benefit
Despite its large market size, estimated at around RMB 300 billion, the TCM decoction pieces industry remains relatively fragmented, leaving substantial room for consolidation. As regulatory standards continue to improve and healthcare procurement systems become more structured, competition is increasingly centered on supply chain capability, production standardization, quality control, and distribution efficiency.
In this environment, companies with established scale and standardized production systems are well positioned to benefit from ongoing industry upgrades. As standardization deepens and regulatory oversight strengthens, these advantages are expected to translate into gradual and sustained market share gains.
Sustained Growth with Strengthening Profitability
Neautus has delivered sustained revenue growth in recent years, with revenue increasing from RMB 1.146 billion in 2023 to RMB 1.335 billion in 2025.
Profitability has also improved alongside revenue expansion. Net profit for 2025 reached approximately RMB 106 million, while adjusted net profit, excluding listing-related expenses, rose to around RMB 127 million.
In the TCM decoction pieces sector, margins are generally stable rather than high, with profitability primarily driven by scale efficiency, cost control, and operational execution. Neautus’ performance reflects effective expansion under this model, supporting more sustainable and consistent profit growth while maintaining a well-balanced alignment with the needs of the healthcare system and ensuring stable and reliable supply to medical institutions.
Cash Flow Improvement Reinforces Earnings Quality
The company’s operating cash flow has improved significantly, rising from RMB 74.85 million in 2023 to RMB 154 million in 2025.
This trend highlights strengthening cash generation and improving earnings quality. The ability to translate revenue growth into operating cash flow is a key indicator of operational efficiency and financial discipline, and provides a solid foundation for future expansion.
Enhanced cash flow also supports greater financial flexibility, enabling the company to invest in capacity, quality systems, and channel development while maintaining balance sheet stability.
Disciplined Financial Structure Supports Sustainable Growth
Neautus maintains a balanced and disciplined financial structure. Accounts receivable have grown broadly in line with revenue and remain predominantly short-term in nature, with minimal long-aging exposure, indicating strong collection capability and customer quality.
At the same time, payables have remained stable, suggesting that the company has not relied on extending supplier credit to support growth. This reflects a measured and sustainable approach to working capital management.
Leverage levels have also improved, with the gearing ratio declining to 47% in 2025. Overall, the company’s financial profile demonstrates prudent risk management while supporting continued business expansion.
Cost Management Capability Enhances Resilience
In recent years, elevated raw material prices have increased cost pressure across the TCM decoction pieces industry, placing greater emphasis on procurement capability and operational efficiency.
Companies with stronger scale advantages are typically better positioned to manage such volatility, benefiting from improved bargaining power and cost control. Neautus’ ability to sustain growth during periods of higher input costs reflects operational resilience and effective cost management.
As raw material prices gradually stabilize, the industry may enter a phase of margin recovery, with companies that have established scale and efficiency advantages potentially seeing further improvement in profitability.
Leadership and Strategic Positioning
Neautus’ management team combines deep industry experience with technical expertise. Founder Jiang Yun has extensive experience in the pharmaceutical sector and was an early participant in advancing GMP-based production systems for TCM decoction pieces.
He has also been actively involved in industry standard-setting, including serving on the 10th Chinese Pharmacopoeia Committee. His contribution to the development of a DNA-based identification system for Chinese medicinal materials, now incorporated into the Chinese Pharmacopoeia, reflects a long-term focus on standardization and quality control.
At the management level, Jiang Ercheng, with a biochemistry background from the University of California, Los Angeles and Hong Kong Baptist University, is involved in research and strategic initiatives.
This combination of operational depth and standardization expertise may support the company’s strategic positioning as the industry continues to consolidate and move toward higher regulatory and quality standards.
Capital Market Progress Signals Industry Momentum
The TCM decoction pieces sector is supported by stable demand fundamentals, significant market size, and increasing regulatory standardization. At the same time, relatively low industry concentration continues to provide room for leading enterprises to expand.
In this context, Neautus’ listing progression represents not only an important corporate milestone but also a broader signal of the sector’s accelerating integration with capital markets.
Looking ahead, the company appears to be building a balanced development profile across growth, profitability, and cash flow. As industry consolidation advances and standardization deepens, companies with scale, operational discipline, and financial strength are expected to play an increasingly prominent role, with long-term value gradually becoming more visible to the market.
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