Dong-E E-Jiao Approaching Performance Peak: Earning 1.739 Billion Yuan with Nearly Full Dividend Distribution, Growth Slowing as 1.485 Billion Yuan Bet on Light Nourishment

Image Source: Visual China

Blue Whale News, March 20th (Reporter Dai Ziting) After seven years, Dong’e E Jiao is almost at its performance peak, just one step away.

On March 20th, Dong’e E Jiao (000423.SZ) released its 2025 annual report. The financial report shows that the company achieved an operating revenue of 6.7 billion yuan for the year, a 13.17% increase year-over-year after excluding accounting restatements; net profit attributable to shareholders was 1.739 billion yuan, up 11.67%; and net cash flow from operating activities was 2.289 billion yuan, up 5.45% year-over-year.

While performance steadily grew, the company continued its nearly two-year “clearance-style” dividend policy, planning to distribute a cash dividend of 14.31 yuan (tax included) per 10 shares to all shareholders, totaling 922 million yuan, accounting for 53.02% of the net profit attributable to shareholders for the year. Including the interim dividend of 818 million yuan already paid, the total annual dividend reaches 1.739 billion yuan, equal to 100% of the net profit for the year.

On the same day, the company also announced plans to roll over investments in principal-protected structured deposits and lower-risk bank financial products within a limit of 4 billion yuan; just over a month ago, Dong’e E Jiao disclosed plans to invest 1.485 billion yuan to build a health consumer goods industrial park. High dividend payout ratio, abundant cash reserves, and increased capacity in light health supplements form the three main themes of this annual report that attract the most attention.

However, behind this performance, issues such as slowing revenue growth, relatively low R&D investment, and raw material supply tensions still stand in Dong’e E Jiao’s way, drawing market attention.

The company’s performance continues to recover in a “V-shaped” pattern, with inventory cycle releases supporting growth, but signs of a slowdown in growth rate have appeared.

Financial data indicates that Dong’e E Jiao in 2025 is in one of its best states since listing. Looking at a longer timeline, 2018 was the company’s peak, with revenue reaching 7.338 billion yuan.

At that time, Dong’e E Jiao, leveraging its “national treasure of health supplements” brand halo and continuous price increases, was once praised as “Maotai among medicines.” Public data shows that from 2006 to September 2019, Dong’e E Jiao increased the prices of some products 18 times, with the factory price of E Jiao blocks rising from 40 yuan/250g to 1,500 yuan/250g, a 40-fold increase.

However, the sustained price hikes over many years, while boosting performance, also planted hidden risks. According to a previous report by China Securities Journal, because E Jiao has a shelf life of up to five years and the company kept raising prices, distributors developed an inertia of “stockpiling in anticipation of price hikes,” with hundreds of thousands to millions of yuan worth of inventory common in channels. In 2019, as price increase expectations waned, distributors’ motivation to stockpile diminished, leading many to actively reduce inventories or even sell old batch products at low prices, causing chaos in the terminal price system.

Meanwhile, at that time, the E Jiao industry lacked standards, and a large influx of low-priced competitors entered the market. Coupled with consumer doubts about E Jiao’s efficacy, these factors caused Dong’e E Jiao’s revenue to plummet nearly 60%, with net profit dropping from a profit of 2.085 billion yuan to a loss of 444 million yuan, marking its darkest moment since listing.

Since then, Dong’e E Jiao has undergone years of inventory reduction pain, with frequent management changes. After turning profitable in 2020, the company has been steadily recovering from 2021 to 2025, with revenue rebounding to 6.7 billion yuan in 2025, just one step away from the 2018 peak, and net profit attributable to shareholders returning to 1.739 billion yuan.

Dong’e E Jiao’s recovery owes much to recent “surgical” inventory clearing. In 2019, even amid losses, the company stated that to avoid long-term adverse effects on healthy operations, it would focus on clearing channel inventories, strictly controlling shipments, and compressing channel stock levels.

Now, the effects of this “surgical” approach are evident, as seen in the rising inventory turnover rate and significantly reduced inventory turnover days. According to Wind data, Dong’e E Jiao’s inventory turnover rate has increased sharply from a low point in 2020 to 2.02 times in 2025; the turnover days, reflecting inventory realization speed, have dropped from over 700 days in 2020 to about 178 days in 2025.

Additionally, as of the end of 2025, the company’s inventory book value was 836 million yuan, a decrease of about 9.8% from the end of the previous year’s 926 million yuan, and its proportion of total assets declined by 0.83% from the beginning of the period. Dong’e E Jiao stated in its annual report that the improvement in operating cash flow is related to faster working capital turnover and reduced working capital occupation, indicating that the company’s product liquidity and sales collection efficiency have significantly improved.

“Dong’e E Jiao has basically emerged from its trough,” said Zhu Danpeng, a Chinese food industry analyst. He pointed out that this revival is partly due to the company’s product innovation and cost reduction, and partly due to the overall recovery of the Chinese health supplement industry.

However, returning to peak performance does not mean there are no hidden concerns. The most obvious change is that Dong’e E Jiao’s revenue growth has begun to slow. In 2023, revenue increased by 16.66% year-over-year; in 2024, by 25.57%; but in 2025, after excluding restatement effects, growth slowed to 13.17%, and if using the restated comparable figures, only 8.83%.

Regarding this slowdown, Shen Meng, director of Xiangsong Capital, told Blue Whale News that Dong’e E Jiao previously experienced a significant operational adjustment period, and the high growth in recent years was more a rebound after performance contraction. As the company’s operations gradually return to normal, the slowdown in growth rate is consistent with business laws and indicates that the company is moving from recovery to normalized growth.

It seems that Dong’e E Jiao still has to “endure” a bit longer before reaching its performance peak.

Near “clearance-style” dividends combined with 4 billion yuan in financial products

On the other hand, as performance continues to improve, Dong’e E Jiao is “spreading money” more than ever. In 2025, the company continued its nearly two-year “clearance-style” dividend policy.

The annual report shows that based on the total share capital at the end of 2025, the company plans to distribute a cash dividend of 14.31 yuan per 10 shares, totaling about 922 million yuan; by mid-2025, it had already paid a dividend of 12.69 yuan per 10 shares, approximately 817 million yuan. If the final plan is approved, the total cash dividend for 2025 will be about 1.739 billion yuan, nearly equal to the net profit attributable to shareholders for the year.

This high payout ratio is not the first time. According to Blue Whale’s statistics, over the past five fiscal years, Dong’e E Jiao’s dividend payout ratio has consistently exceeded 96%, with 2023, 2024, and 2025 approaching 100%, meaning almost all profits are distributed. Dong’e E Jiao disclosed that since its first dividend in 1999, and after the mid-year dividend paid by September 3, 2025, the total cumulative dividends have exceeded 10 billion yuan, reaching 10.104 billion yuan. It is expected that after this year’s dividend is paid, this figure will be further refreshed.

From a cash return perspective, this “clearance-style” dividend policy means the company provides investors with more immediate returns. However, the company’s “calculations” are aimed elsewhere. Yuan Shua, an expert at the China Urban Development Research Institute, told Blue Whale that high dividends demonstrate the company’s good financial condition and profitability, attracting long-term investors. It also constrains management behavior to some extent, encouraging more cautious investment decisions, avoiding blind expansion and over-investment, and improving capital efficiency.

Moreover, on the same day the dividend plan was announced, Dong’e E Jiao also issued an “Announcement on Investing in Financial Products,” planning to use no more than 4 billion yuan of its own funds to invest in bank structured deposits or lower-risk financial products, with a single-term not exceeding six months.

However, Blue Whale noted that the company’s financial expenses in 2025 were -51.96 million yuan, a 54.90% decrease year-over-year. Dong’e E Jiao explained that this was due to “generally declining market interest rates, leading to a significant reduction in interest income.” In other words, the company holds a large amount of cash on its books, but interest income from deposits is decreasing. Rather than letting money sit idle and lose value, it is better to actively allocate funds through financial products to hedge against the decline in interest rates.

Despite maintaining a high dividend payout ratio, Dong’e E Jiao is not “cash-strapped.” The financial report shows that by the end of 2025, the company’s monetary funds plus trading financial assets totaled 9.082 billion yuan, with an asset-liability ratio of only 22.55%. Even considering the funds needed for the upcoming dividend and the health consumer goods industrial park, the company’s cash reserves remain ample.

Regarding the company’s continued high dividend payout and simultaneous financial investment, Shen Meng said this is related to the fact that the company’s core products have relatively low capital expenditure needs, and after returning to normal operations, profits are stable and cash flow is abundant. Using idle funds for low-risk investments under the premise of ensuring investor returns is more prudent than reckless expansion or investments, reflecting a sense of operational responsibility.

However, Shen also pointed out that management still needs to continuously select projects that are more suitable, less risky, and can bring better returns to investors, rather than staying long-term in a financial management mindset. Financial investments can be a phased approach to fund management but cannot replace the cultivation of future growth points.

1.485 Billion Yuan Bet on Health Consumer Goods: Solving Capacity Bottlenecks and Raw Material Challenges

After experiencing the pain of inventory clearance, Dong’e E Jiao, now reborn, is betting on “big health.”

In February this year, the company announced plans to invest 1.485 billion yuan to build a health consumer goods industrial park, covering an area of 406,800 square meters, with a construction cycle of 22 months. Notably, according to the announcement, this new industrial park is not aimed at expanding traditional E Jiao block capacity but focuses on “medicinal and food homology products, health supplements, functional foods,” including E Jiao cakes, E Jiao jujubes, E Jiao powder, and other production workshops.

In fact, before planning to build the park, Dong’e E Jiao had already been exploring product transformation. To break the stereotype that E Jiao is a women’s exclusive health supplement, the company previously planned to seek a second growth curve in the men’s health segment.

In 2023, the company officially launched the “Royal Weifang 1619” brand, strategically positioning itself in the men’s health field. The financial report also describes “Royal Weifang 1619” as “creating the number one brand for men’s health vitality,” with “Zhuangben” positioned as “building the second growth curve in men’s health supplements.”

It is worth noting that Dong’e E Jiao is also preparing to incorporate health products into its liquor offerings. According to reports from Xinhua News and other media, the company has announced its entry into the low-alcohol liquor sector, with its new E Jiao liquor expected to debut at the Chengdu Spring Sugar and Alcohol Fair on March 26, alongside industry giants like Moutai and Wuliangye.

From the revenue structure, this transformation is indeed urgent. The 2025 annual report shows that E Jiao and related products generated 6.198 billion yuan, accounting for 92.50% of revenue, up 11.80% year-over-year; other medicines and health products earned 386 million yuan, accounting for 5.76% of revenue, up 63.65%. Although the growth rate of health products is impressive, their absolute proportion remains below 6%, with E Jiao still dominating the core business.

Dong’e E Jiao openly admits in its financial report: “With the mechanization of agricultural transportation and urbanization, the utility value of donkeys is gradually disappearing, free-range numbers are continuously declining, and research breeding and disease prevention technologies still require a certain cycle, making raw material supply relatively tight.” It appears that over-reliance on a single business and the supply crisis of core raw materials are forcing Dong’e E Jiao to seek a “second growth curve.”

Although the company has expanded its production capacity through external purchases and self-breeding—its biological assets (donkeys) valued at 20.58 million yuan at the end of 2025, a 44.66% increase from the beginning of the period—donkey skins are still in short supply.

Behind this is a “disconnection” crisis in the upstream breeding industry chain. According to the “2025 Donkey Industry Development Situation and 2026 Outlook” report by the Shandong Provincial Bureau of Animal Husbandry and Veterinary Medicine, domestic demand for donkey skins exceeds 1.5 million skins annually, with less than 20% produced domestically, leaving a supply gap of over 60%. Meanwhile, in 2025, the price of fattening donkeys reached a record high of 90 yuan per kilogram. Due to high donkey meat prices, slaughterhouses prefer to sell with skins attached, making it difficult for raw skins to be effectively recovered for processing by E Jiao companies, further tightening raw material supply.

More critically, donkey farming is not a lucrative business. Compared to pigs and sheep, which can be slaughtered in a few months, donkeys have a 2-3 year cycle, and they are single-fetus animals with low reproductive rates. Even if donkey skin prices rise, farmers face long-term investments with no immediate returns, leading to continuous exit of small-scale farmers. The national donkey population has fallen from 12.7 million in 1954 to less than 1.3 million in 2024.

Facing the “neck” problem at the raw material end, Dong’e E Jiao aims to strengthen technological innovation. In 2025, R&D spending reached 272 million yuan, a 56.80% increase year-over-year, hitting a recent high. The funds are mainly allocated to two areas: in-depth research on E Jiao and its formulations, and ongoing efforts to improve upstream breeding technology.

However, the absolute amount of 272 million yuan is not “a lot” for a company with 6.7 billion yuan in annual revenue and 9 billion yuan in cash reserves. R&D investment accounts for only about 12.7% of sales expenses and 15.6% of dividends. The report also shows that nearly half of the R&D expenditure (130 million yuan) is outsourced to universities and research institutes, indicating a “contracted” R&D model rather than large-scale in-house labs and heavy asset investments.

Regarding the relatively low R&D proportion, Shen Meng believes that Dong’e E Jiao’s core product competitiveness is more based on long-term brand accumulation, product recognition, and historical reputation rather than short-term R&D breakthroughs. Therefore, the company’s large-scale R&D expenditure needs are relatively limited.

Jiang Han, senior researcher at PanGu Think Tank, told Blue Whale News that insufficient R&D investment could limit Dong’e E Jiao’s ability to develop new products and explore new markets, affecting its long-term competitiveness. The company should increase investment in innovation and new product development to address the plateauing of its traditional core business.

Nevertheless, based on 2025 results, raw material pressure has not yet significantly eroded the company’s profitability. The financial data shows that Dong’e E Jiao’s overall gross profit margin in 2025 was 73.47%, up 1.05 percentage points year-over-year; net profit margin was 25.95%, slightly down 0.35 percentage points. By product, E Jiao and related products still maintain a gross margin of 74.84%, confirming that “Maotai among medicines” is not just a name.

Regarding performance, dividends, financial investments, and low-alcohol liquor plans, Blue Whale News contacted Dong’e E Jiao’s securities and branding departments on March 20th but had not received responses as of press time.

Possibly driven by positive performance, on March 20th, Dong’e E Jiao’s stock opened high and closed at 56.02 yuan per share, up 6.14%, with a trading volume of 1.326 billion yuan and a turnover rate of 3.66%. Its latest market capitalization is 36.076 billion yuan.