On the evening of February 21, China Traditional Chinese Medicine issued an announcement that Sinopharm proposed to arrange a plan at 4HK$6 in cash** privatization of Chinese medicine. Sinopharm's ** is at a premium of 34 compared with the latest ** price of Chinese traditional Chinese medicine11%, the total consideration of Sinopharm's privatization proposal is about 154HK$500 million.
China Traditional Chinese Medicine has applied to the Hong Kong Stock Exchange for the resumption of trading of its shares from 9 a.m. on 22 February.
Judging from the announcement, the key reason for the intention of China TCM to accept the privatization offer is that the trading** and trading liquidity of the shares have been at a low level for some time, and the trading volume is also limited. For 90 consecutive trading days up to and including the last trading day, the average daily trading volume of the Shares was approximately 26.62 million shares per day, representing only approximately 053%。
China Traditional Chinese Medicine said in the announcement that this restricts the company's ability to raise funds from the capital market, making it difficult to use equity financing to provide available funds for the company's business development** and support the company's development strategy; If the transaction is successfully implemented, it will be conducive to streamlining the company's governance, corporate and shareholding structure, optimizing the organizational layout, and avoiding additional governance costs and management expenses due to compliance needs and maintaining the company's listing status.
It is reported that rumors about the privatization of Chinese traditional medicine have been reported three times since 2021, claiming that Sinopharm will privatize Chinese traditional medicine. And every time the news of privatization spreads, the stock price of Chinese traditional medicine rises in a wave.
And the "fourth rumor" is true.
According to the announcement, the board of directors of the Offeror (Sinopharm Group Gongyu *** Sinopharm Group" or the "Offeror") and the Board of Directors jointly announced that on 9 February 2024, the Offeror requested the Board of Directors to submit to the scheme shareholders a proposal to privatize the Company, which, if approved, would result in the revocation of the listing of the shares on the Hong Kong Stock Exchange. The Board has reviewed the proposal and has agreed to present it to the Scheme Shareholders.
It is reported that China Traditional Chinese Medicine is the core platform of the Chinese medicine industry sector of Sinopharm Group, with a complete industrial chain from upstream planting to downstream sales. In terms of product portfolio, China TCM covers related fields such as Chinese herbal medicines, Chinese herbal decoction pieces, formula granules, Chinese patent medicines, Chinese medicine and health, and traditional Chinese medicine. In addition, Chinese traditional Chinese medicine is also a class of new Chinese medicine, the first prize of traditional Chinese medicine scientific and technological progress, and the confidential variety of traditional Chinese medicine - "artificial musk" national general first.
Thanks to the stable and improving domestic macroeconomic situation, in 2023, China Traditional Chinese Medicine will take multiple measures to promote the gradual recovery of its main business, and the sales revenue of traditional Chinese medicine formula granules, traditional Chinese medicine decoction pieces, Chinese patent medicines and other formats will increase significantly. Recently, China Traditional Chinese Medicine also released a profit forecast announcement for 2023, and it is expected that net profit will increase by 85% to 95% year-on-year last year.
According to the official website of Sinopharm Group, the company is a first-class enterprise with life and health as its main business. The Group's scale, efficiency and comprehensive strength are in the leading position in the same industry in the world, with an operating income of more than 700 billion yuan, ranking 80th among the world's top 500 companies and first among global pharmaceutical companies. WhileSinopharm currently has 9 listed companies, among which the listed companies of traditional Chinese medicine include China Traditional Chinese Medicine and Taiji Group.
For the privatization of Chinese traditional Chinese medicine, Jiang Guangce, chairman of Dechuan Investment, pointed out that since the relevant parties put forward the market value management assessment of central enterprises, the most noteworthy in the pharmaceutical sector is the Chinese medicine department, which is the real leader of China's pharmaceutical industry.
Can the privatization of traditional Chinese medicine in China open a new chapter in the reform of state-owned enterprises?
February** Dynamic Incentive Program