Will the historic city of Besunyen recapture its former glory through remedies like mystical teas and dietary drugs?
Besunyen Holdings Shifts Focus, Sees Growth in Dietary Drug Business
Besunyen Holdings Co. Ltd, once a household name for its 'slimming tea' products, is undergoing a significant transformation. The company, which has been experiencing years of losses and asset sales, has been actively transitioning from a 'slimming tea' company to a dietary drug company.
This shift began in 2015 when Besunyen acquired Guangzhou Runliang Pharmaceuticals, giving them entry into the pharmaceutical market. Since then, they have expanded their portfolio to include dietary drugs such as Orlistat. This strategic move has paid off, with dietary drugs now accounting for between 30% and 40% of Besunyen’s total revenue, up from less than 20%.
In the first half of 2025, Besunyen’s revenue grew by 1.8% to 258 million yuan. Dietary drug sales rose 14.5% to 99.2 million yuan, now accounting for 38.3% of total revenue, while tea product revenue declined 2.8% to 159 million yuan, making up 61.7% of total revenue. This shift is indicative of Besunyen’s success in reducing its long-time reliance on tea products.
The company’s net profit also saw a significant increase, logging a 46% year-on-year increase in the first half of 2025, largely driven by its dietary drug business. This improvement in fiscal health is a positive sign for Besunyen, suggesting that the transformation is bearing fruit.
Besunyen has also been implementing aggressive cost-cutting measures. In the same period, the company’s gross profit margin rose from 68.2% to 68.6%, and operating expenses were reduced by 2.8% to 165 million yuan. These efforts have helped Besunyen register a net profit of 16.8 million yuan in the period following these cost-cutting efforts.
However, the transformation is not without challenges. China's food and drug regulator issued a document in 2016 stating that health products should not contain any functional descriptions in their names, affecting Besunyen’s 'slimming tea' products. As a result, Besunyen had to pull its key products off the market and re-label them, before returning them to store shelves minus their previous familiar names.
Moreover, consumers are becoming more educated and rational about the efficacy of slimming products, leading to a decline in their popularity. This trend, coupled with regulatory changes, has contributed to a decline in Besunyen’s tea product revenue.
Despite these challenges, Besunyen’s stock price has been on the rise. The day after the midyear report’s release, the stock price rose over 25% to HK$3.20, close to a 52-week high and up 39.1% year-to-date. The company’s stock currently trades at a price-to-earnings (P/E) ratio of 24.3 times, much higher than the 11.6 times for traditional drug stalwart Tong Ren Tang (1666.HK).
As Besunyen continues to grow its pharmaceutical business, it remains to be seen if it can offset declines in its older tea segment and secure a sustainable future.
- Scientific research and development are crucial for the success of Besunyen's dietary drug business, given the pharmaceutical nature of their products.
- Personal finance management and wealth management will play significant roles for shareholders as they evaluate Besunyen's growth potential in the dietary drug market.
- The shift from a 'slimming tea' company to a dietary drug company has increased Besunyen's involvement in the health and wellness sector, which encompasses fitness and exercise, medical-conditions, and lifestyle choices.
- Investors may find interest in the broader context of the general news, technology, entertainment, and education industries, as they evaluate the impact of these forces on Besunyen's overall business strategy.
- The rise in Besunyen's stock price could be attributed to positive sentiments from casino and gambling enthusiasts, capitalizing on the speculative nature of the stock market.
- The decline in Besunyen's tea product revenue may prompt the company to explore other opportunities, such as financing, business expansion, or promoting their products in new markets.
- Regulatory changes and consumer trends in China have created challenges for the tea products industry, making it essential for companies to adapt and innovate in this competitive landscape.
- A balanced portfolio including investment in the pharmaceutical sector and careful monitoring of traditional and emerging market trends could be an effective wealth management strategy for individuals interested in Besunyen's development.
