Shuangpu Love Eye: Receives Recommendation Letter from China Securities Investor Service Center for RMB 528 Million Acquisition Deal

On March 24, Shapuaisi issued an announcement that the company received a shareholder suggestion letter from the China Securities Small and Medium Investors Service Center.

The company previously disclosed plans to acquire 100% equity of Shanghai Qinli Industrial Co., Ltd., held by the controlling shareholder and its concerted parties, Shanghai Yanghe Industrial Co., Ltd. and Shanghai Yihe Medical Management Co., Ltd., for 528 million yuan in cash, thereby indirectly holding 100% equity of Shanghai Tianlun Hospital Co., Ltd. The China Securities Investment Service Center questions the reasons for the significant growth in the target company’s operating performance over the past two years and the reasonableness of the valuation for this transaction.

The announcement states that Qinli Industrial’s core asset is 100% equity of Tianlun Hospital, with net profit growing from 2.01 million yuan in 2023 to 27.14 million yuan in 2025, with an average annual compound growth rate of 266.92%. Revenue growth for 2024 and 2025 is 30% and 18%, respectively, with a 55.56% increase in rehabilitation ward revenue in 2025.

However, Shanghai First People’s Hospital, a well-known tertiary public hospital located within 6 kilometers of Tianlun Hospital in Hongkou District, Shanghai, saw a 9.97% year-over-year increase in diagnosis and treatment revenue in 2024. Listed private medical institutions Nanjing Xinbai (600682) and Honghe Renai Medical (03869) reported medical service revenue increases of 8.84% and 1.02% in 2024, both far below Tianlun Hospital’s revenue growth over the past two years.

Moreover, there are questions about the transaction pricing. The predicted bed count in profit forecasts does not match the approved bed count disclosed on Tianlun Hospital’s official website, and the predicted bed utilization rate is much higher than the average for private hospitals nationwide and in Shanghai. Additionally, the high premium paid to acquire assets from the controlling shareholder is not conducive to safeguarding the company’s interests.

The announcement mentions that the suggestion letter recommends that Shapuaisi provide additional explanations for the reasons behind the significant growth in the target company’s performance before the acquisition, and to carefully consider the transaction pricing. It also notes that this high-premium acquisition of assets from the controlling shareholder is not beneficial to protecting the company’s interests.

(Shapuaisi Announcement)

(Edited by: Yang Yan, Lin Chen)

Keywords: Healthcare