[Hong Kong Stock IPO] Tongrentang Medical & Elderly Care Subscription Status and IPO Analysis

Company Name: Tongrentang Medical Care Investment Co., Ltd. (02667.HK, hereinafter referred to as the "Company")

Sponsor: CICC

Green Shoe: Yes (CICC)

Cornerstone Investors: 46.8%

Subscription Period: June 26 - July 2 (next Thursday)

Main Business: Drug sales + Medical institution operation

I. Sponsor, Green Shoe, Cornerstone Investors

Sponsored by CICC, with CICC as the green shoe underwriter. Cornerstone investors account for 46.8%, of which Henan Aviation Port Technology, under the local government, accounts for 34.6%. Mechanism B, public offering 22,000 lots.

Underwriters include Xiniu and Livermore, both known for being 'chefs' (market manipulators).

However, the company's listing date is July 7th, which has already missed the June 30th review. If it goes for the September review, the market cap would need to be pulled up to over 20 billion (the company's current float is 1.3 billion, needing a nearly 20x increase). To be included in Stock Connect in December, it would need an 8x increase and maintain that for half a year. Even with 'chefs', the possibility of achieving this in one step in either scenario is not high.

IPO Application Index: ★★★

II. Share Supply and Margin Financing Situation

Mechanism B, 10%, 29,000 lots. Currently only 8.6x oversubscribed, but given this is the third batch and everyone is waiting for Haiqing Zhiyuan's funds to return, it's normal for margin financing to be lower now.

IPO Application Index: ★★★

III. Valuation Assessment and Fundamental Analysis

Second attempt at an IPO. I recall they withdrew the application just before the deadline last time and didn't charge investors fees, which is better than Shougang Langze.

Another funny point: this company is an "Investment Co., Ltd." Actually, upon closer inspection, it makes sense. The company's performance growth basically comes from acquisitions.

Starting in 2022, the company successively acquired medical institutions like Sanxitang, Chengzhitang, and Zhonghetang. The medical revenue from these acquisitions for 2022-25 was 350 million, 510 million, 600 million, and 600 million respectively.

Looking at the company's total revenue since 2022, if we exclude the contributions from the acquired companies, the old business contributed 560 million, 640 million, 580 million, and 570 million for 2022-25 respectively, showing basically no growth.

Of course, if you can acquire good assets, that's your skill, like how Luoboteke acquired ficon TEC to enter the CPO market. But this company is clearly not the same case; instead, there's internal business conflict.

The prospectus shows that Sanxitang, to avoid business competition with Tongrentang, can now only sell Angong Niuhuang Wan, leading to a significant revenue decline.

This brings more than just a performance decline. Over the past few years, the company spent over 600 million to acquire these messy companies. Not to mention the cumulative net profit for the entire company over 4 years (2022-25) is less than 70 million, the book goodwill alone is as high as 470 million.

As Sanxitang's business shrinks, this goodwill is on the verge of impairment. The company's annual net profit is only tens of millions (2025 net profit margin 2.9%, pitifully low). If there's a goodwill impairment in the future, it will mean another loss of hundreds of millions.

This issuance valuation is still 2.89 billion, but after the 2025 results came out, the company's P/E ratio rose from 60x in the last issuance to a ridiculous 85x. I slowly type three question marks, are you selling AI Dihuang Wan???

In short, there's definitely no investment value. If you want to gamble, considering those troublesome underwriters, go ahead.

One more point I wrote about before:

IPO Application Index: ★★~★★★ (Final strategy and rating will be posted on the Xingqiu platform)

$TONGRENTANGCARE(02667.HK)