Analysis of Cash Flow and Capital Chain Safety of Buchang Pharmaceutical (603858)

The -RMB 164 million cash flow you mentioned should refer to the

. According to financial data, this figure was [0]. However, this is historical data, and .

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Indicator	2020	2021	2022	2023	2024
Operating Cash Flow (RMB 100 million)	195.88	132.05	275.56	-1.96	9.40
Free Cash Flow (FCF) (RMB 100 million)	142.23	88.70	221.25	-7.26	7.43
Ending Cash Balance (RMB 100 million)	146.97	136.33	212.13	69.23	81.75

1. 2023 was indeed a trough in cash flow in recent years
   : Operating cash flow turned from positive to negative, mainly due to:
   • Changes in working capital led to a capital occupation of approximately -RMB 1.74 billion
   • Inventory increased by approximately RMB 1.186 billion
   • Accounts payable decreased by approximately RMB 494 million

2. Sharp reversal in 2024
   :
   • Operating cash flow recovered to
     RMB 940 million
   • Free cash flow turned positive to
     RMB 743 million
   • Net cash increase of
     RMB 125 million
     [0]

3. The improvement trend continued in H1 2025
   : The net cash flow from operating activities was
   RMB 236 million
   , maintaining positive inflow [1]

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Indicator	Value	Industry Reference	Assessment
Current Ratio	1.15	1.5-2.0	Slightly low but safe
Quick Ratio	0.49	>1.0	Low
Ending Cash (2024)	RMB 818 million	-	Sufficient
Debt Risk Rating	Low Risk	-	Good

• Current ratio is greater than 1 (1.15), indicating that current assets can cover current liabilities
• Operating cash flow improved significantly in 2024, providing a stable cash source for daily operations
• The company continued to repay debts, with net debt repayment of approximately RMB 500 million in 2024 [0]

• Quick ratio is only 0.49, indicating that the company’s inventory accounts for a high proportion of current assets (approximately 44%), and the coverage of current liabilities by quick assets (cash + accounts receivable) is weak
• Cash reserves dropped sharply in 2023 (from RMB 2.12 billion to RMB 690 million), indicating pressure on the capital chain under extreme circumstances

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Outflow Item	Amount (RMB 100 million)	Proportion	Explanation
Share Repurchase	7.02	42%	Large-scale repurchase consumes cash
Dividend Payout	2.72	16%	High dividend policy
Capital Expenditure	1.97	12%	Fixed asset investment
Others	approx. 5	30%	Including investments, etc.
Total	approx. 16.7	100%	-

: In 2024, after turning positive in cash flow, the company carried out large-scale shareholder returns (repurchase + dividend totaling approximately RMB 970 million), which exerted certain pressure on cash reserves, but the company successfully maintained capital balance through operating cash inflows [0].

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1. ✅ Operating cash flow has returned to a healthy state (RMB 940 million in 2024, RMB 236 million in H1 2025)
2. ✅ Ending cash reserves are sufficient (RMB 818 million), which can cover approximately 4-6 months of operating expenses
3. ✅ Debt risk rating is “Low Risk”, with good control of financial leverage
4. ✅ Successfully achieved net cash inflow in 2024, reversing the unfavorable situation of net cash outflow of RMB 1.43 billion in 2023

1. ⚠️ Quick ratio is low (0.49), and inventory liquidity is crucial for short-term solvency
2. ⚠️ Capital chain tension occurred in 2023, indicating pressure under extreme circumstances
3. ⚠️ High dividend + share repurchase policy may affect the accumulation of cash reserves

. The operating cash flow of -RMB 196 million in 2023 was a temporary difficulty, which has been fundamentally improved in 2024. The company currently maintains positive operating cash flow, sufficient cash reserves, and low debt risk, with normal operation of its capital chain. However, investors should continue to pay attention to changes in its quick ratio and the potential impact of its high dividend policy on cash reserves [0][1].

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[0] Jinling API Financial Database - Financial Data of Buchang Pharmaceutical (603858.SS)
[1] Buchang Pharmaceutical 2025 Semi-Annual Report (https://stockmc.xueqiu.com/202508/603858_20250828_YYBD.pdf)