Performance forecast changed from profit to loss in less than two months, this nucleic acid test kit company may face "*ST" designation

Question: How does the accounts receivable issue behind AI Mingde Biology’s performance turnaround trigger a chain reaction?

On March 23, Mingde Biology (002932.SZ) stock price hit the limit down, related to the company’s performance forecast reversal in less than two months.

The night before, Mingde Biology released a revised performance forecast for 2025, estimating a net loss attributable to shareholders of the listed company between 15 million and 25 million yuan, and a net profit after deducting non-recurring gains and losses of between -1 billion and -1.4 billion yuan.

Earlier, on January 30, Mingde Biology had issued a performance forecast expecting a net profit attributable to shareholders of about 12 million to 18 million yuan for 2025, and a net profit after deducting non-recurring gains and losses of about -78 million to -98 million yuan.

The sudden reversal in Mingde Biology’s performance may lead to the company being warned of delisting risk (stock abbreviation prefixed with “*ST”).

Mingde Biology stated that the company expects the total audited profit, net profit, and net profit after deducting non-recurring gains and losses for 2025 to be negative, and its operating income after deductions to be below 300 million yuan. According to Article 9.3.1, Paragraph 1, Item (1) of the Shenzhen Stock Exchange Listing Rules, the company’s stock trading may be subject to delisting risk warning after the 2025 annual report is disclosed.

Behind this performance reversal is related to slow collection of accounts receivable.

Mingde Biology explained that the company conducted a comprehensive review and cautious analysis of its operating income. Based on prudence, it did not recognize some transactions’ revenue due to significant uncertainty in collection, leading to a reduction in operating income and net profit attributable to shareholders for 2025. The company further communicated with its auditors, conducting impairment tests on assets with signs of impairment. Based on prudence, it adjusted impairment losses for assets such as inventories and fixed assets, which also resulted in a decrease in net profit attributable to shareholders.

Mingde Biology’s business covers in vitro diagnostic reagents and instruments, critical illness information solutions, and third-party medical testing services. Developing nucleic acid testing reagents is also one of its main businesses; for example, in February 2020, the company successfully developed a COVID-19 nucleic acid test reagent.

During the COVID-19 pandemic, benefiting from increased demand for nucleic acid testing reagents, Mingde Biology’s performance doubled from 2020 to 2022. However, starting in 2023, as the pandemic receded, the company’s performance continued to decline.

Factors affecting the company’s performance include bad debt losses from accounts receivable, reduced government subsidies, and industry-wide procurement pressure on profit margins in the in vitro diagnostics sector.

As of the third quarter of 2025, Mingde Biology’s accounts receivable amounted to 653 million yuan, approximately 2.88 times its revenue.

(This article is from First Financial)