Shuangpu Ayes 528 Million Related-Party Acquisition Questioned | Valuation Multiple Over 24x and Performance Commitment Under Scrutiny | Quick Read Announcement

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Cailian Press, March 18 — (Reporter Wang Bin) Shapu Aisi (603168.SH) plans to acquire assets under its controlling shareholder for 528 million yuan in cash. The market has been concerned because the valuation of the target company has increased by over 24 times, and the company has received an inquiry letter from the Shanghai Stock Exchange. Previously, the company had acquired two hospitals from its controlling shareholder, but both experienced performance declines after the performance commitment period ended, and goodwill faces impairment risks.

On the evening of March 17, Shapu Aisi announced that it intends to acquire 100% equity of Shanghai Qinli Industrial Co., Ltd. (referred to as “Shanghai Qinli”) held by its controlling shareholder Shanghai Yanghe Industrial Co., Ltd. and its related party Shanghai Yihe Medical Management Co., Ltd., with a transaction price of 528 million yuan. The core asset of the target company is its wholly owned subsidiary, Shanghai Tianlun Hospital Co., Ltd. (“Tianlun Hospital”).

The company stated that this transaction aligns with its “Pharmaceutical + Medical” dual-drive strategy, which will help enhance profitability and risk resistance. It is also an important measure for the actual controller to fulfill commitments to resolve industry competition. The company emphasized that Tianlun Hospital is a high-quality target with outstanding profitability.

After the announcement, the Shanghai Stock Exchange quickly issued an inquiry letter requesting the company to provide additional disclosures on four key issues: the reasonableness of the transaction valuation, the achievability of performance commitments, sources of funds and payment ability, and the ownership and operational qualifications of the target assets. The company is required to respond in writing within five trading days and fulfill its disclosure obligations.

Specifically, the inquiry focused on the high valuation increase of 2,417.87%. According to the announcement, the valuation of the target company was assessed using the income approach, with a 100% equity valuation of 528 million yuan, while its net assets as of December 31, 2025, are only 20.97 million yuan. The target company is expected to generate revenue of 157 million yuan and net profit of 27.14 million yuan in 2025. The static price-to-earnings ratio for this transaction is approximately 19.45 times.

The Shanghai Stock Exchange asked the company to explain the basis and feasibility of future revenue growth predictions, considering the market competition landscape, changes in medical insurance policies, bed utilization rates, and historical and forecasted data on average bed-day costs in the region where Tianlun Hospital is located. It also requested clarification on the selection criteria and rationality of comparable companies used by the valuation agency, whether there was selective comparison leading to inflated valuation, and an analysis of the fairness of the transaction price, including whether there are any benefits transferred to related parties.

It is noteworthy that the company mentioned in the announcement that this transaction is part of the brotherly acts of the actual controllers Lin Hongli and Lin Hongyuan to fulfill prior “Supplementary Commitment Letters on Industry Competition.” However, the inquiry letter pointed out that the company had previously acquired Taizhou Maternity and Gynecology Hospital and Qingdao Sight康 Eye Hospital from its controlling shareholder, but both hospitals experienced performance declines after the performance commitment periods ended, and their goodwill is currently at risk of impairment.

The announcement shows that the counterparty committed that Shanghai Qinli’s net profits from 2026 to 2028 will not be less than 32.4 million yuan, 37.3 million yuan, and 42.65 million yuan respectively, showing significant growth compared to the net profits of 18.98 million yuan and 27.13 million yuan in 2024–2025. According to the income approach valuation, the target company’s revenue growth rates from 2026 to 2031 are forecasted at 9.50%, 8.34%, 7.52%, 6.37%, 5.79%, and 5.39%.

The Shanghai Stock Exchange asked the company to disclose the operating data of Tianlun Hospital over the past three years, and, based on historical performance fluctuations, explain the achievability of the performance commitments in this transaction. It also requested the company to analyze whether the performance commitment arrangements are conducive to protecting the interests of the listed company and preventing similar transaction risks, considering the “performance changes” in previous hospital acquisitions.

Funding sources and payment capacity are another major concern. The transaction price of 528 million yuan is significant compared to the company’s own financial strength. The SSE noted that, according to Shapu Aisi’s Q3 2025 report, the company’s cash and cash equivalents at the end of the quarter were about 1.01 billion yuan, with approximately 1.22 billion yuan in trading financial assets, totaling about 2.23 billion yuan, which is insufficient to cover the transaction price. The payment will be made in five installments, with the first two installments totaling about 370 million yuan.

The SSE asked the company to explain how it plans to raise funds, considering available cash, daily operating cash flow needs, bank credit limits, and whether there is a risk of transaction failure due to insufficient funds. It also requested an analysis of the impact of large cash acquisitions on the company’s liquidity and debt repayment capacity.

Additionally, the inquiry focused on ownership and operational risks of the target assets. The target company has leased property from Lin Chunguang, the father of the company’s actual controller. The SSE asked whether Tianlun Hospital’s ownership structure is clear, whether its core operating licenses such as the “Medical Institution Practice License” are complete and valid, whether there are leasing issues with the main operating premises, and whether there are potential risks of hospital operation disruptions due to landlord debts or disputes.

In terms of performance, in 2023 and 2024, Shapu Aisi’s net profit attributable to the parent declined for two consecutive years; for 2025, the company expects a net profit attributable to the parent of between -319 million and -213 million yuan.

According to the earnings forecast, the company has made goodwill impairment provisions for the two hospitals in 2025, which has a significant impact on the current period’s performance and is a main reason for the expected loss.

As of March 17, the secondary market closed with Shapu Aisi at 7.09 yuan per share, down 0.98% from the previous trading day; in the morning of March 18, after a strong opening, the stock surged and hit the daily limit, closing at 7.80 yuan per share, up 10.01%. The company’s latest total market value is 2.9 billion yuan.