(Yicai) Feb. 2 -- Shares of Pientzehuang Pharmaceutical have been sliding since the maker of traditional Chinese medicines reported annual earnings that inferred a plunge in fourth-quarter profit, erasing CNY26 billion (USD3.6 billion) from the firm’s market value.

The stock [SHA: 600436] tumbled by its daily trading limit in Shanghai on Jan. 31, the day after the Zhangzhou-based firm released preliminary earnings for last year. Today, it ended 1.4 percent lower at CNY188.51 (USD26.38), after falling by as much as 5.5 percent in the late afternoon, bringing the slump to 14 percent.

Net profit rose 12.6 percent to a record CNY2.8 billion (USD394.2 million) in the 12 months ended Dec. 31 from the previous year on a 15.4 percent gain in revenue to just over CNY10 billion for the first time. After deducting non-recurring items, profit was up 15 percent at CNY2.9 billion.

But investors appear to be focusing more on the quarterly numbers. Implied profit for the fourth quarter, calculated by subtracting nine-month earnings from the annual total, was down 56 percent on the third quarter, along with a quarterly decline in revenue of 4.7 percent.

Pientzehuang hiked prices of its core products in the second quarter of 2023, but with less success than in previous years, and its efforts to branch out into cosmetics, oral care, and other fields did not produce the desired results. 

The firm also gave first-quarter guidance, saying that profit is expected to rise at least 25 percent from a year ago. But even that did not stop the share slide.

According to some investors, the share price has nothing to do with Pientzehuang’s fundamentals and the slump is actually due to an exodus based on sentiment. The decline may have only just begun, they added. 

Editors: Shi Yi, Tom Litting