On September 19, 2023, Chutian Technology Co., Ltd. made headlines after senior executive Lei Yu submitted his resignation, citing personal reasons. While he is stepping down from his current role, he will continue to serve the company in a different capacity.
In its announcement, Chutian Technology revealed that the police issued a “Notice of Release on Bail Pending Trial” for Lei Yu, effective September 14, 2024. The company disclosed that on September 6, it received a “Notice to Collect Evidence” from law enforcement, which indicated that Lei had been detained on suspicion of embezzlement. Notably, Lei only held his position for three months after joining the company on June 25, tasked with overseeing domestic sales.
Born in January 1991, Lei is a Chinese national with no permanent residency abroad. He earned a bachelor’s degree and began his career at Chutian Technology in February 2012, where he quickly advanced to become Senior Vice President in charge of domestic sales.
Founded in 2000, Chutian Technology specializes in medical equipment and comprehensive solutions. The company is publicly listed on China’s A-share market and gained significant attention in 2017 when it acquired Germany’s ROMACO Group for over 1.1 billion RMB, which greatly expanded its global footprint and employee base to nearly 10,000.
Chutian Technology operates a dual sales structure with both domestic and international divisions. The domestic sales department primarily sells directly to end customers, contributing a substantial portion to the company’s revenue. According to the annual report, in 2023, domestic sales reached 4.972 billion RMB, making up 72.56% of total revenue, while international sales accounted for 1.881 billion RMB, or 27.44%.
However, 2023 has been a challenging year for Chutian Technology, as evident in its recent financial reports. The company reported significant operational losses in the first half of the year, attributing these difficulties to fierce competition that triggered a continuous decline in gross margins. The report suggested that if no turnaround occurs in the latter half of the year, both revenue and net profit could drop year-on-year, jeopardizing the company’s projected targets.
Chutian’s half-year report indicated revenue of 2.829 billion RMB, a 15.71% decline compared to the previous year. Various business segments experienced different levels of decline, with sterile preparation solutions plummeting by 38.56% and testing and packaging solutions dropping by 14.21%.
The revenue decline was largely due to price adjustments on certain products to maintain market share, coupled with extended project timelines prompted by client demands, leading to delayed onsite project deliveries.
In this competitive environment, the company’s overall gross margin also suffered, falling to 27.34% in the first half of 2024, a decrease of 6.54% from the same period the previous year. Specifically, the gross margin for sterile preparation solutions dropped by 11.24%.
Furthermore, Chutian Technology’s stock price has suffered a dramatic decline of over 40% this year. As of September 19, the stock closed at 6.1 RMB, dipping to a new low of 5.99 RMB during trading hours. This has resulted in a market capitalization reduction to approximately 3.6 billion RMB, representing a staggering loss of 2.7 billion RMB in market value since the start of the year.
