24x Premium Acquisition of Related Assets: Shanghai Stock Exchange Questions the Reasonableness of the Shapuaisi Transaction

This article is reproduced from: Economic Information Daily

□Reporter Zhou Lijie

Postponed, and then postponed again—the market is still waiting for SupaCore (603168.SH) to respond to the Shanghai Stock Exchange’s inquiry letter.

Recently, a high-premium related-party acquisition involving this leading company in ophthalmology drugs for cataracts has drawn widespread attention from the market. According to the company’s announcement, it plans to purchase, for RMB 528 million in cash, 100% of the equity interests of Shanghai Qinglei Industrial Co., Ltd. (hereinafter referred to as “Shanghai Qinglei”) held by the controlling shareholder and its persons acting in concert. The book net assets of the underlying asset are only about RMB 20.97 million, while the appraisal appreciation rate is as high as 2,417.87%. On the day the announcement was released, the Shanghai Stock Exchange promptly issued an inquiry letter, directly focusing on key issues such as the fairness of the valuation, the reasonableness of the related-party transaction, and the logic supporting the performance.

Soon after, the China Securities and Futures Investor Service Center (hereinafter referred to as “CSFIS Center”) sent a recommendation letter as a shareholder, exercising its shareholder recommendation right in accordance with law. It advised SupaCore to prudently assess the reasonableness of the target company’s future revenue forecasts, to reconsider the valuation and consideration for this transaction, and to protect the interests of the listed company and the lawful rights and interests of minority shareholders.

The latest announcement shows that, as of April 1, SupaCore and intermediary institutions still need to further verify and improve the response content. After applying to the Shanghai Stock Exchange, the company will again defer its response to the inquiry letter, with the extension not exceeding five trading days.

Public information shows that the target company Shanghai Qinglei that SupaCore is acquiring was established in 2022. Its core assets are 100% of the equity interests in Shanghai Tairun Hospital Co., Ltd. (hereinafter referred to as “Tairun Hospital”). If this transaction is completed, SupaCore will indirectly hold 100% of the equity interests in Tairun Hospital.

Whether the underlying assets can support a high valuation and high-growth expectations is the focus of both the market and regulators. The announcement indicates that this transaction adopts the income approach for appraisal. The appraised value of 100% of the equity interests in the target company is RMB 528 million, which is an increase of 2,417.87% compared with the book value of all shareholders’ equity of RMB 20.9701 million under the consolidated basis. In 2025, the target company is expected to achieve operating revenue of RMB 157 million and net profit of RMB 27 million. The transaction-implied static price-to-earnings ratio is about 19.45x.

The Shanghai Stock Exchange’s inquiries probe the valuation issue step by step. It requires SupaCore to fully explain the reasonableness of the 24x high premium by tying in factors such as the core competitive strength of the underlying assets, continuing profitability, and future growth potential, and whether there are circumstances of transferring benefits to related parties. It also requires SupaCore to, based on historical operating data of the target company, industry policy, the regional competitive landscape, bed occupancy rates, and more, provide detailed explanations for the basis of key parameters in the income approach appraisal, such as the determination of revenue, net profit, and discount rates.

The CSFIS Center mainly focuses on the profitability forecast of the target company’s rehabilitation ward revenue, pointing to multiple data inconsistencies. The forecast number of beds does not match the approved number of beds disclosed on the website of Tairun Hospital. The predicted trend in operating costs for this transaction is also not aligned with the bed expansion data shown in the appraisal results. Moreover, the bed utilization rate in the profitability forecast is far higher than the average bed utilization rate of private hospitals in the whole country and in Shanghai.

This transaction sets performance commitments. The transaction counterpart commits that the target company will achieve net profits of not less than RMB 32.40 million in 2026, RMB 37.30 million in 2027, and RMB 42.65 million in 2028, respectively. The cumulative net profit commitment over the three years will be not less than RMB 112.35 million. Past performance shows that in recent years, the net profit level of Shanghai Qinglei has a clear gap from the committed amounts. Its net profits in 2024 and 2025 were RMB 18.98 million and RMB 27.13 million, respectively. Whether it can achieve a three-year consecutive high-growth commitment is what the market expects SupaCore to further explain.

The Shanghai Stock Exchange requires SupaCore to provide detailed explanations regarding the feasibility of meeting the performance commitments. It also requires disclosures on the underlying hospital’s department structure, fee standards, the proportion reimbursed by medical insurance, and the stability of the core physician team, among others, to demonstrate the support conditions for future revenue and profit growth. It also asks to fully flag the potential impact on the listed company if the performance commitments cannot be met.

According to the transaction agreement, the consideration for this transaction is RMB 528 million, paid through its own funds and bank loans. The transaction funds will be paid in five installments, with the total proportion paid in the first two installments amounting to about RMB 370 million. By contrast, looking at SupaCore’s financial fundamentals, the company faces funding pressure. As of the end of the third quarter of 2025, the company’s cash and cash equivalents were about RMB 101 million, and its trading financial assets were about RMB 122 million, for a total of about RMB 223 million—insufficient to cover the consideration for this transaction. In 2024, the company’s net profit attributable to the parent company was negative RMB 123 million. For 2025, it is expected to incur losses of between RMB 228 million and RMB 342 million, with the magnitude of losses continuing to grow.

Whether a leveraged acquisition at a high premium of the controlling person’s assets would adversely affect the company’s liquidity, debt-servicing capacity, and subsequent operations is a concern commonly held by investors. The Shanghai Stock Exchange’s inquiry letter also revolves around this real risk. It requires SupaCore to disclose in detail the specific sources for financing the RMB 528 million acquisition funds, and to disclose the progress of related financing arrangements. It also asks it to assess the potential impacts of large cash expenditures on the company’s day-to-day operations, its ability to repay debts, and its financial stability.

In addition, the Shanghai Stock Exchange also requires that SupaCore explain whether the relevant medical qualifications and practice licenses of Tairun Hospital are complete and valid, whether its medical insurance designated eligibility is fully complete and effective, and whether there are any administrative penalties or compliance risks, among other issues.