China Traditional Chinese Medicine Sector "Q226 earnings preview: soft Q2..."

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China Traditional Chinese Medicine Sector "Q226 earnings preview: soft Q2..."

Global Research

7 July 2026ab

China Traditional Chinese Medicine Sector Equities

ChinaQ226 earnings preview: soft Q2 but attractive

dividends Healthcare

Michelle Zhu

Analyst

michelle.zhu@ubs.com

Navigating a soft Q2: DEEJ and CR Jiangzhong preferred +86-21-3866 8838

With investors largely viewing the TCM sector as lacking a meaningful growth story, the Chen Chen, PhD

investment focus has shifted toward dividend yield and earnings stability. Among the Analyst

stocks we cover, we highlight that DEEJ has experienced a valuation derating – with the S1460520100001

shares down 21% since April despite no material deterioration in fundamentals – and chen-zb.chen@ubs.com

offers attractive risk-reward at 15x/14x 2026/27E PE. CR Jiangzhong's share price +86-10-5832 8201

should remain well supported, as its CSI Dividend Low Volatility Index (H30269.CSI) Anita Wei

inclusion since December 2026 drives incremental passive fund inflows (the AUM of Analyst

index-linked products has reached Rmb50.5bn). Amid the seasonally weaker demand in anita.wei@ubs.com

Q2, we prefer DEEJ and CR Jiangzhong, followed by Yunnan Baiyao and CR Sanjiu +852-2971 7459

(all rated Buy).

DEEJ – growth and dividend steady; CRJ – better inventory, stable dividend

DEEJ: As Q2 is the traditional off-season for E-jiao bar, we expect DEEJ‘s Q226 revenue/

net profit to grow only 11%/8% YoY. Management continues to target around 10%

YoY growth in both revenue and earnings for the full year. For 2026, the company

expects E-jiao bar sales to grow by less than 10% YoY, E-jiao syrup by over 10% YoY, and

Taohuaji by over 20% YoY. New products, including men's health products and

astragalus powder, are also delivering strong growth.