Shaanxi Kanghui Pharmaceutical's holding subsidiary Shaanxi Youbang has suspended production.

Shaanxi Kanghui Pharmaceutical (603139.SH) announced that, influenced by the industry environment, there is increased competition in the market for the company's products, leading to a continuous decrease in gross profit from product sales. The company's controlling subsidiary, Shaanxi Youbang, intends to adjust its other products and try producing new products to address this issue. However, due to reasons such as product process, equipment updates, and immature technology, the production of the adjusted products has not been successful, resulting in continuous losses for Shaanxi Youbang. To prevent further losses and protect shareholder interests, Shaanxi Youbang has decided to completely halt production in workshops 1, 2, and 3 starting from recently, and will decide on whether to resume production in the future based on market conditions. Shaanxi Youbang is a subsidiary of the company, primarily producing pharmaceutical intermediates. With continuous losses in recent years, the halt in production is expected to help the company avoid further losses and reduce its impact on the company's performance. This decision aims to prevent larger scale losses and capital investments from continuing production, reduce operating costs, align with the company's strategic development direction, and benefit the company and all shareholders. Additionally, the halt in production may have an impact on the completion of performance commitments related to Shaanxi Youbang by relevant parties; the specific impact on the company's operating data will be based on audited financial reports. As of the end of 2024, Shaanxi Youbang's total assets accounted for 16.91% of the company's most recent audited total assets. In 2024, its operating income accounted for 1.42% of the company's consolidated statement operating income, and its net profit was -52,512.28 thousand yuan, impacting the company's most recent audited attributable net profit by -26,781.5 thousand yuan, representing 29.88% of the company's attributable net profit.