Delayed response again! Sapu Aisi's 528M yuan acquisition of Shanghai Qinli prompts rapid regulatory inquiry: four major concerns to be addressed—overvaluation, high stake bets, low cash reserves, and lack of disclosure

Ask AI · How does Sapubio respond to funding gaps and regulatory inquiries?

Blue Whale News, March 31, On March 31, Sapubio (603168) received from the Shanghai Stock Exchange an inquiry letter titled “Inquiry Letter Regarding Relevant Matters Concerning Zhejiang Sapubio Pharmaceutical Co., Ltd.’s Purchase of Assets from Related Parties” (Inquiry Letter from the Shanghai Stock Exchange General Office [2026] No. 0514). After two applications to postpone its reply, the company once again announced that it would respond to the inquiry letter with a delay of no more than 5 trading days.

On March 17, Sapubio disclosed that it plans to use cash of 528 million yuan to acquire 100% of the equity interests in Shanghai Qinli held by the controlling shareholder Yanghe Industrial and its acting-in-concert party Yihe Medical, thereby indirectly obtaining control over Shanghai Tianlun Hospital. The day after the announcement, the Shanghai Stock Exchange immediately issued an inquiry letter, directly pointing to core issues such as an allegedly excessively high transaction valuation, lack of support for performance commitments, and doubts about the source of funding. After two requests for an extension of the reply deadline, as of April 1, the company still had not completed a formal response.

Shanghai Qinli’s net assets are only 20.97 million yuan, yet its appraised value is as high as 528 million yuan, with an appreciation rate of 2,417.87% and a static P/E ratio of about 19.45x. The Shanghai Stock Exchange questioned whether the valuation is reasonable, and required the company to explain the basis for maintaining the future six-year compound annual growth rate of operating revenue at 6% to 9.5% in its income approach predictions—especially by validating it with objective data such as changes in the medical insurance reimbursement ratio in Hongkou District, the bed occupancy rate of private hospitals in the same area, and the average cost per bed-day. As of now, the company has not disclosed any detailed analysis regarding the actual operating data of Shanghai Tianlun Hospital over the past three years, nor provided horizontal comparison materials of operating indicators for similar institutions in the region.

The transaction includes a net profit commitment of no less than 112 million yuan in cumulative terms from 2026 to 2028; the three-year commitment values are 32.40 million yuan, 37.30 million yuan, and 42.65 million yuan, respectively—representing a significant increase compared with its 2025 net profit of 27.13 million yuan. In prior acquisitions, Sapubio’s Taizhou Obstetrics and Gynecology Hospital and Qingdao Shikang Ophthalmology Hospital both showed declines after their performance commitment periods ended, leading the company to record a large goodwill impairment in 2025 and to expect a full-year attributable net profit loss of between 213 million yuan and 319 million yuan. With this deal setting another high-growth “betting” arrangement, the company has not reflected on historical execution deviations, nor explained how it will avoid repeating past mistakes. The inquiry letter explicitly requires supplementary information on the past three years of the target asset’s operations. To date, the company has not publicly released relevant financial statements or audit working papers, and has not disclosed whether there are hidden liabilities, medical disputes, or risks of medical insurance claim denials.

As of the end of the third quarter of 2025, Sapubio’s balance of monetary funds was 101 million yuan, and its trading financial assets were 122 million yuan, totaling 223 million yuan—far below the payment obligations of about 370 million yuan combined for the first two tranches. The Shanghai Stock Exchange asked the company to explain its capital-raising arrangements and its ability to perform the obligations, including whether it relies on acquisition loans, and to assess the pressure caused by the resulting rise in the asset-liability ratio and an increase in financial expenses. So far, the company has not disclosed any financing agreements, credit line intention letters, or bank approval documents, and has not explained how it would fulfill its payment obligations if financing fails.

The Shanghai Stock Exchange is focusing on operational details such as the renewal risk of Shanghai Tianlun Hospital’s core qualification, the stability of the lease for its main business premises, responsibility allocation for medical accidents during the transition period, and compensation mechanisms for the loss of the core team. Sapubio has not published the validity period of the “Medical Institution Practice License” for the hospital or the progress on renewal, has not explained the remaining lease terms and renewal conditions in the lease contracts it signed with the landlord, and has not disclosed retention agreements or non-compete restrictions arrangements for key physicians and technical backbones.

This acquisition is characterized as an action by the actual controllers Lin Hongli and Lin Hongyuan to fulfill the “Letter of Supplementary Commitments on Non-Competition with Peers,” aiming to address potential non-competition with Taizhou Women and Children Hospital Co., Ltd. The prior two similar acquisitions have already led to goodwill impairments. This transaction does not set any reverse-constraint provisions or excess profit clawback mechanism.