(Yicai Global) March 29 -- Traditional Chinese medicine manufacturer Baiyao Group reported its first decline in net profit in nearly three decades last year because of poor investments in stock market.

Net profit dropped 49 percent to CNY2.8 billion (USD440.2 million) last year from a year ago, marking the first slump since 1995, the Kunming-based company said in its earnings report recently.

The firm had lost more than CNY1.9 billion (USD300 million) in 2021 due to badly placed securities bets. The largest culprit was Baiyao's investment in Xiaomi’s shares, resulting in about three-quarters of the total sum. Other unfortunate decisions involved drugmaker Hengrui Pharmaceuticals and internet giant Tencent Holdings.

The loss was unexpected. In 2020, Baiyao had recorded a 32 percent jump in net profit to almost CNY5.5 billion.

The aftermath is not over. The company has been adjusting its equity portfolio since last December so its net profit may be affected in the first quarter due to changes in asset value, according to the report. After the reduction, Baiyao has no plans to buy more shares, it added.

Baiyao is an old brand. The owner of the time-honored brand that was founded in 1902 went public on the Shenzhen Stock Exchange in 1993. But the firm is exploring new directions. The company is expanding its product portfolio to medical equipment, special skincare products, and dietary supplements, based on the report.

Baiyao's stock price [SHE: 000538] was 0.4 percent down at CNY80.59 (USD12.70) in the midday after closing 0.2 percent lower yesterday, the first trading day since the earnings report was released. The shares have dived by more than a third in value over the past 12 months.

Editor: Emmi Laine, Xiao Yi