Shandong Xinhua Pharmaceutical Co. Ltd. provided earnings guidance for the year ended December 31, 2012. For the year, the company expects to report net profit attributable to the shareholders of the company of approximately RMB 15,200,000 ­RMB 38,010,000 or RMB 0.03 per basic share to RMB 0.08 per basic share compared to RMB 76,020,000 or RMB 0.166 per basic share reported a year ago.

There is a downturn in both the domestic and foreign demand for the products of the company's bulk drugs. Sale of preparation products has been under the impact of, among other things, the medical reform, the tendering result and the limitation imposed on the use of antibiotic. The chemical product market in which the company's subsidiary operates is highly competitive and has experienced decline in both demand and prices.

The amount of interest expenses increased due to increased borrowings by the company for the purposes of ensuring usual production and operation of the company and funding the relocation of the company.