Haisco Pharmaceutical Group to Fully Acquire XinChanye Ophthalmology Amid Missed Earnings Targets: Can It Reverse Performance Decline?

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2016, 2023,Haohai Biological TechnologyAcquired in two phasesSznimo80% stake in ophthalmology business generates goodwill of 250 million yuan. Although Sznimo failed to meet its performance commitment last year and only achieved 20% of the full-year committed amount in the first half of this year, Haohai Biological Technology still plans to acquire the remaining 20% stake.

Acquisition of Remaining Subsidiary Equity at a 31.7% Discount, Target's Performance Pledge Not Met Last Year

On November 10, Haohai Biological Technology (688366.SH；06826.HK) announced on the Hong Kong Stock Exchange that the company plans to acquire the remaining 20% equity of its non-wholly owned subsidiary, Shenzhen New Industries Material of Ophthalmology Co., Ltd. (hereinafter referred to as: Sznimo) for 74 million yuan. After the transaction is completed, the subsidiary will become a wholly-owned subsidiary of Haohai Biological Technology.

Based on the calculation of 74 million yuan and 20% equity, the price for 100% equity of Sznimo is approximately 370 million yuan. As of June 30, the fair value of all equity of Sznimo was about 542 million yuan, indicating that the transaction price represents a discount of approximately 31.7% compared to the valuation.

It is reported that Haohai Biological Technology initially acquired 60% of Sznimo's equity in 2016 at a cost of 360 million yuan, valuing the target company at 600 million yuan. In 2023, Haohai Biological Technology acquired an additional 20% stake in Sznimo for 140 million yuan, increasing the overall valuation of the target company to 700 million yuan.

Compared with 2023, the transaction consideration for this acquisition of 20% equity in Sznimo has significantly declined, with a reduction of approximately 47.14%. In response, Haohai Biological Technology stated that after artificial crystalline lenses were first included in the national centralized procurement scope in November 2023, the artificial crystalline lens market underwent substantial changes, leading to a decline in product gross profit margins and performance in companies within this field.

Sznimo mainly engages in the manufacturing and sales of orthokeratology lens products and intraocular lens products, as well as the distribution of various imported ophthalmic products such as intraocular lenses, ophthalmic viscoelastic agents, and sodium hyaluronate gel for glaucoma surgery. According to the data disclosed by Shanghai Haohai Biological Technology Co., Ltd., Sznimo performed well after its acquisition, with net profits exceeding 50 million yuan each year from 2017 to 2019. However, by 2024, its net profit had dropped to only 24.8545 million yuan.

HKEX announcements show that, at the time of acquiring a 20% minority stake in 2023, the transferor of Sznimo made performance commitments: from 2023 to 2025, the business profits of Sznimo shall be no less than RMB 39.6 million, RMB 59.1 million, and RMB 81 million, respectively. Business profit refers to the sum of the target company's net profit and the net profit of intraocular lens products.

In 2023, Sznimo exceeded its performance commitment with a business profit of 41.1626 million yuan. However, in 2024, its business profit was only 22.0062 million yuan. As Sznimo failed to meet its performance commitment in 2024, Shanghai Haohai Biological Technology Co., Ltd. recognized a related performance compensation amount of approximately 26.4604 million yuan that year, which was recorded as a gain from changes in fair value.

In the first half of 2025, the combined net profit of Sznimo and its intraocular lens products was 16.1877 million yuan, compared to 81 million yuan for the entire year of 2025.ThePerformance CommitmentIn comparison, only about 20% completed。

Currently, Haohai Biological Technology still has goodwill on its books resulting from the acquisition of Sznimo.In 2016,When the company first acquired a 60% stake, it formed approximately RMB 252 million in goodwill, which was adjusted to RMB 250 million the following year. In 2020, Sznimo absorbed and merged with Zhuhai Aiguo, and their goodwill was combined into the asset group of Shenzhen New Industries Group for impairment testing. The goodwill of the new asset group amounted to RMB 266 million, which is the combination of Sznimo's goodwill of RMB 250 million and Zhuhai Aiguo’s goodwill of RMB 16 million. The goodwill of the asset group has not been impaired to date.

Haohai Biological Technology stated that the acquisition of the remaining 20% equity will help improve the management and operational efficiency of Sznimo, thereby enhancing the market competitiveness of the company's ophthalmic products.

Performance Reversal in the First Year of Listing, "Double Decline" in This Year's Q3 Report

Haohai Biological Technology was listed on the STAR Market in October 2019. It is mainly engaged in the research and development, production, and sales of medical devices and pharmaceuticals. Currently, it has basically completed the layout of "raw materials + R&D + manufacturing + sales" in four major therapeutic fields: medical aesthetics and wound care, ophthalmology, orthopedics, and surgical anti-adhesion and hemostasis, achieving the integration of the industrial chain from upstream raw materials to product R&D, production, and downstream market sales.

During the prospectus reporting period (2016 to 2018), the company's operating revenue increased from 860 million yuan to 1.558 billion yuan, and its net profit attributable to shareholders grew from 305 million yuan to 415 million yuan. However, in the year of its listing, the company experienced an increase in revenue without a corresponding increase in profit. In 2019, the company’s operating revenue increased by 2.94% year-on-year, but its net profit attributable to shareholders declined by 10.56%. In 2020, the company’s net profit attributable to shareholders continued to drop by 37.95%.

Thereafter, the company's performance fluctuated significantly. By 2024, the company achieved its best historical results, with operating revenue reaching 2.698 billion yuan and net profit attributable to shareholders amounting to 420 million yuan. However, in the first three quarters of this year, both revenue and net profit of Haohai Biological Technology declined. The company reported operating revenue of 1.899 billion yuan, a year-on-year decrease of 8.47%, net profit attributable to shareholders of 305 million yuan, a year-on-year decrease of 10.63%, and non-recurring net profit attributable to shareholders of 255 million yuan, a year-on-year decrease of 20.75%.

Haohai Biological Technology stated that in the first three quarters, due to factors such as price competition and tax rate adjustments, the company's sales revenue decreased compared to the same period last year.

Notably, in September this year, the company disclosed that one of its actual controllers, Jiang Wei, had received a pre-penalty notice from the CSRC for suspected insider trading. However, the announcement did not disclose details, and Shanghai Haohai Biological Technology Co., Ltd. merely stated that the matters involved were unrelated to the company.

Six Years After Listing, Fundraising Projects Delayed Again

When Haohai Biological Technology was listed on the STAR Market, it raised a total of 1.588 billion yuan. After deducting issuance expenses, the net proceeds amounted to 1.529 billion yuan, which were received in October 2019. Of this, 1.284 billion yuan was planned to be invested in the Shanghai Haohai Biological Technology International Pharmaceutical R&D and Industrialization Project (hereinafter referred to as: Project 208).

In December 2019, the Project 208 officially commenced, originally scheduled to reach the intended usable state by the end of 2023. However, in March 2022, Shanghai Haohai Biological Technology Co., Ltd. postponed the expected date for Project 208 to reach a usable state to the end of 2025.

Currently, the project has completed all construction and engineering works, including fire protection, electrical, purification, decoration, environmental protection, power, low-voltage electrical systems, and landscaping, as well as equipment procurement and installation. The production workshop for medical device products under the project has already finished trial production. However, the pharmaceuticals production workshop is still in the equipment validation stage.

Haohai Biological Technology stated that, after prudent evaluation, the overall 208 Project is expected to be delayed until June 2027 to reach a fully usable state.

As of October 31, 2025, the cumulative investment of the 208 project in raised funds has reached 1.116 billion yuan, with a usage rate of raised funds at 86.89%.

While announcing the further postponement of the fundraising projects, the company officially announced its plan to use no more than 300 million yuan of temporarily idle funds for cash management. The funds will be used to purchase investment products with high security, good liquidity, and principal protection agreements (including but not limited to agreed deposits, notice deposits, fixed-term deposits, large-denomination certificates of deposit, and income certificates). The term will be valid for 12 months from the date of approval by the company's board of directors.

As of June 30, 2025, the companySince listingInvestment income of 146 million yuan was obtained through cash management of idle funds.