Performance has declined for three consecutive years, will Youcare Pharmaceutical Group (688658.SH) "rescue-style" go public in Hong Kong?

Recently, Youcare Pharmaceutical Group (688658.SH) announced that, in order to further improve the company's overall competitiveness, enhance the company's international brand image, and better utilize the international capital market and diversified financing channels, the company plans to issue shares overseas (H shares) and list on the main board of the Hong Kong Stock Exchange. According to the announcement, the issuance and listing plan still needs to be submitted to the company's shareholders' meeting for deliberation and approval by relevant regulatory agencies such as the China Securities Regulatory Commission and the Hong Kong Stock Exchange. The company stated that it will choose an appropriate timing and issuance window to complete the issuance of H shares and listing within the effective period of the shareholder resolution (i.e. 24 months from the date of the shareholder meeting approval or any other extended period). Information shows that Youcare Pharmaceutical Group Co., Ltd. was established in 2001, headquartered in Beijing, and is a pharmaceutical group enterprise integrating new drug research and development, drug production, distribution sales, and international trade. It has formed nine core research and development platforms such as nucleic acid drug target discovery platform, peptide drug development platform, and controlled-release formulation technology platform, covering areas such as nucleic acid drugs, peptide drugs, traditional Chinese medicine innovative drugs, and high-end chemical drugs. On December 24, 2020, Youcare Pharmaceutical Group listed on the Shanghai Stock Exchange's sci-tech innovation board. However, the progress of the company's fundraising projects did not go smoothly. According to the prospectus, Youcare Pharmaceutical Group's initial public offering raised as much as 2.192 billion yuan, mainly for the construction of research centers, upgrading of high-end production lines, and other five major projects. However, this substantial fundraising did not bring sustained growth, but instead frequent adjustments due to project progress falling short of expectations. On December 19, 2024, Youcare Pharmaceutical Group announced the postponement of three core fundraising projects, including the construction of research centers and solid dosage form production lines, to the end of 2025, and the construction of marketing centers postponed to the end of 2026. At the same time, the originally planned investment of 80 million yuan in the intelligent coding system construction project was directly canceled, and the remaining funds were redirected to new drug research. With the IPO fundraising not fully deployed, Youcare Pharmaceutical Group has launched a new fundraising plan. In March 2025, the company announced its intention to issue shares to specific objects to raise up to 300 million yuan for the main business-related projects and supplementary working capital. Only a few months later, Youcare Pharmaceutical Group launched the H-share listing plan, claiming to "diversify financing channels and enhance international brand image". From IPO to preferential additional issuance, and now to the issuance of H shares, behind the three fundraising actions in nearly 5 years is the increasingly tense financial situation of the company. The financial report for the third quarter of 2025 shows that the net cash flow from operating activities of the company was 168 million yuan, a sharp decrease of 60.9% year-on-year, the net cash flow from investment activities was -402 million yuan, and the net increase in cash and cash equivalents was -256 million yuan, a staggering decrease of 338.24% year-on-year, showing a clear funding gap. Remarkably, in the past year, Youcare Pharmaceutical Group's core product Ginkgo Biloba Leaf Extract Injection was embroiled in a controversy of "one drug, two prices". Data uncovered by the public security bureau in Wulanhaote City showed that a drug named "Ginkgo Biloba Leaf" had a base price of 8.5 yuan per dose, a selling price of 25.28 yuan per dose, and doctors received a commission of 4 yuan for each dose used. Faced with attention from the National Medical Insurance Administration, Youcare Pharmaceutical Group responded proactively, promising to reduce the nationwide listed price to 11.2 yuan per dose. However, this measure undoubtedly impacted the company's performance. In the fourth quarter of 2024 alone, the company's revenue fell by 36%, with a net loss of 86.01 million yuan. In fact, Youcare Pharmaceutical Group's performance has declined for three consecutive years in recent years. From 2022 to 2024, the company's net profit attributable to shareholders decreased by 38.53%, 44.87%, and 33.05% respectively. In 2025, Youcare Pharmaceutical Group's performance further declined. According to the company's third-quarter financial report for 2025, the company achieved total operating income of 1.759 billion yuan, a year-on-year decrease of 41.20%; a net loss of 148 million yuan, compared to a profit of 210 million yuan in the same period last year; and a non-recurring net loss of 168 million yuan, compared to a profit of 202 million yuan in the same period last year. It is worth noting that Youcare Pharmaceutical Group's high market promotion expenses have also come under scrutiny for the compliance of sales expenses in the controversy of "one drug, two prices". According to previous financial reports, from 2021 to 2024, the company's sales expenses totaled 7.37 billion yuan, of which marketing expenses accounted for 7.189 billion yuan, or 97%. Moreover, the founder and controlling shareholder of Youcare Pharmaceutical Group, Yue Weishi family, with more than 50% stake in the company, has fallen into the troubles of passive reduction of holdings. On July 15, 2022, Youcare Pharmaceutical Group disclosed the progress of the second judicial auction of 26.5 million shares of unrestricted tradable shares held by its controlling shareholder Fuyang Jingyue Yonshun Information Consultation Co., Ltd. The confirmation document displayed on the JD.com judicial auction platform shows that the 26.5 million shares of unrestricted tradable shares held by Jingyue Yonshun have all been successfully auctioned, with a total transaction price of 486 million yuan. This article is sourced from the "Shenzhen Commerce Daily" public account. Editor: Jiang Yuanhua.