Dong-E-E-Jiao Approaches Peak Performance: Earns 1.739 Billion Yuan with Almost All Dividends, Slowing Growth at 1.485 Billion Yuan, Betting on Light Nourishing Supplements

Ask AI · Does Dong’e Ejiao’s growth rate switch indicate a new industry normal?

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Blue Whale News March 20 (Reporter Dai Ziting) Seven years later, Dong’e Ejiao is almost just one step away from its peak performance.

On March 20, Dong’e Ejiao (000423.SZ) released its 2025 annual report. The financial statement shows that the company achieved full-year operating revenue of RMB 6.70 billion. After excluding the impact of accounting restatements, this represents a year-on-year increase of 13.17%; net profit attributable to shareholders was RMB 1.739 billion, up 11.67% year-on-year; and net cash flow from operating activities was RMB 2.289 billion, up 5.45% year-on-year.

While performance continued to grow steadily, the company also continued a “clear-the-shelves” dividend practice from nearly the past two years. It plans to distribute cash dividends of RMB 14.31 per 10 shares to all shareholders (including tax), totaling RMB 922 million, accounting for 53.02% of the company’s net profit attributable to shareholders for that year. If you add the RMB 818 million already distributed as an interim dividend, the total annual dividend reaches RMB 1.739 billion, accounting for 100% of full-year net profit.

On the same day, the company also announced that it plans to make rolling investments in principal-guaranteed structured deposits and lower-risk bank wealth-management products within an amount not exceeding RMB 4.0 billion. Meanwhile, more than a month earlier, Dong’e Ejiao had just disclosed a plan to invest RMB 1.485 billion to build a healthy consumption products industrial park. High dividend payout ratio, ample cash reserves, and adding capacity for lightweight tonic products constitute the three main storylines that drew the most attention in this annual report.

However, behind this performance is still a range of issues in front of Dong’e Ejiao—slowing revenue growth, not-high absolute R&D spending, and tight raw-material “supply assurance”—which has drawn market attention.

Performance continued to “V-shape” repair; inventory cycle release supports growth, but signs of a growth-rate switch have already appeared

From the financial data, Dong’e Ejiao in 2025 is in one of the best conditions since its listing. Looking at a longer time frame, 2018 was Dong’e Ejiao’s historical peak year, when revenue reached RMB 7.338 billion.

At that time, Dong’e Ejiao, leveraging the brand halo of “a national treasure for tonifying” and a strategy of continuous price increases, was once dubbed “Moutai among medicines.” Public data shows that from 2006 to September 2019, Dong’e Ejiao raised prices 18 times for some products under its brand. The ex-factory price of Ejiao blocks rose from RMB 40 per 250g to RMB 1,500 per 250g, a 40-fold increase.

However, while the multi-year price-increase strategy helped create a peak in performance, it also planted hidden risks. Earlier reports from China Securities Journal said that because Ejiao has a shelf life of as long as five years and the company raised prices year after year, distributors formed an inertia of “stocking up and waiting for prices to rise.” Hundreds of thousands or even millions of yuan worth of stockpiling behavior were commonly seen in channels. In 2019, as price-increase expectations began to cool off, distributors’ motivation to stockpiled inventory weakened. Distributors then proactively reduced inventory, and even some sold off older batch products that had been hoarded at low prices, causing confusion in the terminal pricing system.

At the same time, back then, the Ejiao industry lacked standards. A large number of low-priced competing products flooded the market, and combined with consumers questioning the efficacy of Ejiao, a set of multiple factors jointly led to Dong’e Ejiao’s revenue plummeting by nearly 60%. Net profit fell abruptly from a profit of RMB 2.085 billion to a loss of RMB 444 million, ushering in the darkest time since its listing.

After that, Dong’e Ejiao went through several years of painful inventory-clearing. Management saw frequent changes. After turning profitable again in 2020, the company continued to repair from 2021 to 2025. In 2025, revenue had recovered to RMB 6.7 billion, only one step away from the 2018 high point. Net profit attributable to shareholders also returned to RMB 1.739 billion.

Dong’e Ejiao’s performance recovery cannot be separated from clearing inventory “as if cutting into the bone to cure poison.” In 2019, when the company was facing losses in profit, it already stated its position. To avoid unfavorable impacts on the company’s long-term healthy operations, the company mainly focused on clearing channel inventory, strictly controlling shipments, and comprehensively compressing the number of channel inventory holdings.

Now it appears that “cutting into the bone to cure poison” has produced significant results. This can be seen from the company’s inventory turnover ratio rising year after year and the clear decline in inventory turnover days. According to Wind data, Dong’e Ejiao’s inventory turnover ratio has surged from a low point in 2020 to 2.02 times in 2025. The turnover days that reflect the speed at which inventory is turned into cash also dropped significantly from over 700 days in 2020 to about 178 days in 2025.

In addition, as of end-2025, the company’s book value of inventories was RMB 836 million, down about 9.8% from RMB 926 million at the end of the previous year, and the proportion of total assets declined by 0.83% compared with the beginning of the period. In its annual report, Dong’e Ejiao stated that the improvement in net cash flow from operating activities is related to factors such as accelerating working-capital turnover and reducing working-capital occupation. This means the company’s product liquidity and the efficiency of collecting sales receivables have improved significantly.

“Dong’e Ejiao should be out of the trough by now.” Zhu Danpeng, a food industry analyst at China, pointed out that Dong’e Ejiao’s current recovery is due to two aspects. On one hand, it comes from the company’s own product innovation and cost-reduction and efficiency-improvement; on the other hand, it also benefits from the overall rebound in the Chinese tonifying supplement industry.

However, returning to peak performance does not mean there are no worries. The most direct change is that Dong’e Ejiao’s revenue growth has begun to slow down. In 2023, the company’s revenue grew 16.66% year-on-year; in 2024, it grew 25.57% year-on-year; but by 2025, after excluding the impact of restatements, the growth rate fell back to 13.17%. If measured on a comparable basis after restatements, it is only 8.83%.

Regarding Dong’e Ejiao’s current phenomenon of slowing growth, Shen Meng, director of Xiangzhong Capital, said in an interview with Blue Whale News reporters that Dong’e Ejiao previously experienced a period of relatively obvious operational adjustment. In recent years, the higher growth has mostly been a rebound after a contraction in performance. As the company’s operations gradually return to normal track, the slowdown in the growth slope itself is consistent with business laws and also means the company is moving from a repair stage toward a stage of normalized growth.

It seems, then, that Dong’e Ejiao may still need to “tough it out” for longer before it reaches its performance peak.

Combining something close to a “clear-the-account” dividend with RMB 4.0 billion of wealth management

On the other hand, as performance continues to warm up, Dong’e Ejiao is “throwing out money” without stopping. In 2025, the company continued a nearly “clear-the-shelves” style of cash distribution that has been in place for almost the past two years.

According to the annual report, the company plans to use the company’s total share capital at the end of 2025 as the base and distribute a cash dividend of RMB 14.31 per 10 shares to all shareholders, with a planned payout of about RMB 922 million. Meanwhile, in 2025 interim, the company had already implemented a cash dividend of RMB 12.69 per 10 shares, with an interim cash dividend of about RMB 817 million. If the annual proposal is ultimately approved, the total cash dividend for 2025 would be about RMB 1.739 billion, almost equal to the net profit attributable to shareholders for that year.

In fact, this high dividend payout policy is not the first time. Based on Blue Whale reporters’ statistics, in the past five fiscal years, Dong’e Ejiao’s dividend payment ratio has been above 96%. In 2023, 2024, and 2025—three full years—it was close to 100%, meaning that essentially nearly all the money it earned was used for dividends. Dong’e Ejiao disclosed that since it first started paying dividends in 1999, after the interim dividend was credited by September 3, 2025, its cumulative dividend amount had already exceeded RMB 10 billion, reaching RMB 10.104 billion. It can be expected that after dividends are credited in the new year, this figure may be refreshed again.

From the perspective of cash returns, Dong’e Ejiao’s “clear-the-shelves” style of dividend means it provides investors with richer immediate returns. However, Dong’e Ejiao’s “calculations” are ringing elsewhere. Yuan Shuai, an expert from the China Institute for Urban Development, told Blue Whale reporters that high dividends demonstrate the company’s solid financial condition and profitability, which helps attract long-term investors. At the same time, to a certain extent, it also constrains management behavior, prompting it to be more cautious in investment decision-making, avoid blind expansion and excessive investment, and improve the efficiency of capital use.

In addition, on the very day the dividend plan was disclosed, Dong’e Ejiao also simultaneously released the “Announcement on Investment in Financial Wealth-Management Products.” It plans to use its own funds of no more than RMB 4.0 billion to invest in bank structured deposits or lower-risk wealth-management products, with a single-term duration not exceeding 6 months.

However, Blue Whale reporters noted that in 2025, the company’s finance costs were negative RMB 51.9686 million, down 54.90% year-on-year. Dong’e Ejiao said the reason is that “market interest rates are generally declining, and interest income has consequently decreased significantly.” In other words, the company has a large amount of cash sitting on its books, but the interest income from deposits is falling. Rather than letting the money “devalue” in the accounts, it is better to actively allocate it for wealth-management purposes to offset the revenue loss caused by falling interest rates.

Don’t think that because Dong’e Ejiao maintains a high dividend payout ratio, it therefore has no money available. The financial report shows that as of end-2025, the company’s cash and cash equivalents plus trading financial assets totaled RMB 9.082 billion, and its asset-liability ratio was only 22.55%. Even considering the funding needs for the proposed annual dividends and the proposed construction of a healthy consumption products industrial park, the company’s capital reserves remain fairly sufficient.

Regarding Dong’e Ejiao’s continuation of a high dividend payout ratio while also carrying out wealth-management investments, Shen Meng said this is related to the company’s relatively small core-product capital expenditure needs, stable earnings after the main business returns to normal, and abundant cash flow. Under the premise of ensuring returns to investors, using idle funds for low-risk wealth management is more prudent than blindly expanding or investing casually, and it also reflects a certain sense of operational responsibility.

However, Shen Meng also pointed out that management still needs to continuously screen for projects that are more suitable for the company, have risks that are more controllable, and can deliver better returns to investors, and it cannot remain focused on the wealth-management approach for the long term. Wealth management can be a phased capital-management arrangement, but it cannot replace the company’s cultivation of future growth drivers.

RMB 1.485 billion betting on healthy consumption products: solving capacity bottlenecks and raw-material dilemmas

After going through the pain of clearing inventory, the cash-strapped Dong’e Ejiao has bet its future on “big health.”

This year in February, the company announced plans to invest RMB 1.485 billion to build a healthy consumption products industrial park, with a total land area of 406,800 square meters and a construction period of 22 months. Notably, according to the disclosure, the positioning of this new industrial park is not to expand the production capacity of traditional Ejiao blocks, but to target healthy consumption products such as “medicine-and-food-homologous foods, health products, and functional foods,” including production workshops for Ejiao cakes, Ejiao dates, Ejiao powder, and more.

In fact, before the planned park construction, Dong’e Ejiao had already been trying to transform its products. To break the ingrained perception that “Ejiao is a tonifying product exclusively for women,” the company earlier planned to seek a second growth curve by entering the segment for men’s health.

In 2023, the company officially launched the “Royal Pasture 1619” brand and laid out a strategic foothold in the male health field. The financial report also positions “Royal Pasture 1619” as “building the No. 1 brand for men’s health and vitality,” and “Zhuangben” as “constructing the second growth curve in men’s tonifying health.”

Worth mentioning is that Dong’e Ejiao’s “health-preserving classic” is also preparing to be put into liquor. As reported by multiple outlets including Xinhua News, the company has announced its entry into the low-alcohol liquor track. Its new product, an Ejiao liquor, is expected to appear at the Chengdu Spring China Liquor and Food Trade Fair opening on March 26, exhibited alongside industry benchmark brands such as Moutai and Wuliangye.

From the perspective of revenue structure, this kind of transformation indeed has urgency. Dong’e Ejiao’s 2025 annual report shows that revenue from Ejiao and related products was RMB 6.198 billion, accounting for 92.50% of revenue, up 11.80% year-on-year; revenue from other medicines and health products was RMB 386 million, accounting for 5.76% of revenue, up 63.65% year-on-year. Although the health-products segment has impressive growth, its absolute share still remains under 6%. Ejiao’s main business is still the absolute centerpiece.

In its financial report, Dong’e Ejiao frankly stated: “With the mechanization of agricultural transport equipment and the acceleration of urbanization, the value of using donkeys for labor has gradually disappeared, and the number of free-range breeding has continued to decline. At the same time, research and technological work such as scientific breeding and disease prevention still requires a certain time cycle, making raw-material supply assurance face a relatively tight trend.” Therefore, excessive reliance on a single business coupled with a supply crisis for core raw materials creates dual pressure, meaning Dong’e Ejiao must find a “second growth curve.”

Although the company has continuously expanded the scale of productive biological assets (breeding jennies) through external procurement and self-breeding—by end-2025, the book value reached RMB 20.5852 million, up 44.66% from the beginning of the period—there are indeed more donkeys, but donkey-hide remains in short supply.

Behind this is the “gap” crisis in the upstream donkey-raising industry chain. According to the “2025 Annual Donkey Industry Development Situation and 2026 Outlook” released by the Shandong Provincial Bureau of Animal Husbandry and Veterinary Medicine, domestic demand for donkey hide exceeds 1.5 million pieces per year, domestic production accounts for less than two tenths, and the supply shortfall is as high as over 60%. Meanwhile, in 2025, the price of fattened donkeys reportedly reached as high as RMB 90 per kilogram at one point, a record high. Reports said that due to the high price of donkey meat, slaughter enterprises are more inclined to sell donkey meat with hide. This causes the hides to be difficult to be effectively recovered to the processing end of Ejiao companies, further exacerbating tight supply of domestically sourced raw hide.

More importantly, raising donkeys is not a good business. As far as is known, compared with pigs and sheep that can be ready for market in just a few months, the donkey-raising cycle lasts 2 to 3 years. Also, donkeys are single-birth animals with a low reproduction rate. Even if donkey-hide prices are rising, breeders continue to invest without returns over those long 2 to 3 years, leading to free-range breeders continuing to exit the market. Nationwide, the number of donkeys kept fell from 12.7 million heads in 1954 to less than 1.3 million heads in 2024.

Faced with the “bottleneck” problem at the raw-material end, Dong’e Ejiao wants to push efforts on technology. In 2025, the company’s R&D spending was RMB 272 million, up 56.80%, reaching a new high in recent years. This money was spent on two directions: first, in-depth research on Ejiao and its formulations; second, continuous breakthroughs in upstream breeding technologies.

But the issue is the absolute value—RMB 272 million. For a company with annual revenue of RMB 6.7 billion and about RMB 9 billion in cash sitting on its books, this figure indeed is not “extravagantly lavish.” R&D spending is only about 12.7% of selling expenses, and about 15.6% of dividends. Moreover, the financial report shows that in 2025, outsourced R&D expenses were RMB 130 million, accounting for about 48% of total R&D investment. This means a large portion of the company’s R&D work is carried out through collaborations with universities and research institutes—a so-called “outsourced” model—rather than large-scale building of laboratories and heavy-asset investment.

Regarding Dong’e Ejiao’s relatively low share of spending on R&D, Shen Meng believes that the competitive strength of Dong’e Ejiao’s core products is built more on long-term brand accumulation, product recognition, and historical sedimentation, rather than relying on short-term R&D spending to quickly create blockbuster products. Therefore, the company’s demand for large-scale R&D spending on its core products is relatively limited.

Jiang Han, a senior researcher at Pangu Think Tank, told Blue Whale reporters that insufficient R&D spending may limit Dong’e Ejiao’s ability to expand into new products and new markets, thereby affecting its long-term competitiveness. In the future, companies still need to strengthen their investment in innovation and new product development to respond to the challenges facing the traditional Ejiao core business after it reaches its ceiling.

However, at least looking at the 2025 results, raw-material pressure has not yet clearly eroded the company’s profitability. The financial report shows that Dong’e Ejiao’s overall gross margin in 2025 was 73.47%, up 1.05 percentage points year-on-year; net profit margin was 25.95%, down slightly 0.35 percentage points year-on-year. By product segment, the gross margin for Ejiao and related products was still as high as 74.84%, and “Moutai among medicines” is not just a reputation.

With respect to the matters above including performance, dividends, wealth management, and low-alcohol liquor plans, on March 20, Blue Whale News reporters called and sent documents to Dong’e Ejiao’s securities department and brand department. As of the time of publication, no response had been received.

Possibly driven by the positive performance news, on March 20 Dong’e Ejiao’s stock opened higher and kept rising. By the close, it was RMB 56.02 per share, up 6.14%, with trading volume of RMB 1.326 billion, turnover rate of 3.66%, and the latest total market capitalization of RMB 36.076 billion.