Caifinance News October 22 (Reporter Lu Afeng) Sichuan Hexie Shuangma (000935.SZ) seems to be not content with mediocrity in the current 'excited' market. Last night, it announced the acquisition of Shenzhen Jianyuan Technology Co., Ltd. The Caifinance News reporter noticed that before Sichuan Hexie Shuangma disclosed the plan, Xingyin Pharmaceutical, as the controlling shareholder, had previously invested over 0.6 billion yuan in Shenzhen Jianyuan.

A senior investor told Caifinance News reporters in an interview that from the above announcement, it seems that the other party in the transaction, Xingyin Pharmaceutical, had started 'optimizing' Shenzhen Jianyuan's financial data a long time ago, and the acquisition between Sichuan Hexie Shuangma and Xingyin Pharmaceutical should have been brewing for some time. Another senior investor told Caifinance News reporters in an interview that between this give and take, both parties got what they wanted.

1.6 billion 'cross-border' acquisition of GLP-1 concept Shenzhen Jianyuan

On the evening of the 21st, Sichuan Hexie Shuangma issued an announcement stating that the company plans to use a total of 1.596 billion yuan in self-owned and self-raised funds to purchase 92.1745% equity of Shenzhen Jianyuan Technology Co., Ltd., held by Xingyin Pharmaceutical and Xingyin Investment Group.

After the completion of this transaction, Sichuan Hexie Shuangma holds 92.1745% of Shenzhen Jianyuan, Xingyin Investment Group holds 3.0000%, and natural person Yao Zhiyong holds 4.8255%. Shenzhen Jianyuan becomes a wholly-owned subsidiary within the consolidated financial statements of Sichuan Hexie Shuangma.

It is known that Sichuan Hexie Shuangma is a listed company engaged in industrial investment and private equity fund management, mainly managing assets including building materials production and manufacturing companies and private equity fund management companies. The target of this acquisition, Shenzhen Jianyuan, is a typical peptide active pharmaceutical ingredient production company and a hot GLP-1 concept company.

Established in April 2009, Shenzhen Jianyuan is a biomedical enterprise dedicated to the independent research and development, production, sales, and customized development of peptide products. Its main business consists of three major sectors: peptide active pharmaceutical ingredient research and production, peptide customization development and production (CDMO) business, and cosmetic peptide research and production business, with revenue primarily from peptide active pharmaceutical ingredient business.

Key products of Shenzhen Jianyuan's peptide active pharmaceutical ingredients include more than 20 varieties such as Semaglutide, Tirzepatide, Liraglutide, Degarelix, and Oxytocin, among which Semaglutide and Tirzepatide have completed US FDA DMF filings.

A veteran investor mentioned in an interview with Caixin reporters that from the above announcement, Shenzhen Jianyuan's 'GLP-1' active pharmaceutical ingredient is attracting current investors' attention, while the topic of 'mergers and acquisitions' is undoubtedly encouraged by current policies and positive sentiment.

Did Xingyin Pharmaceuticals 'optimize' the financial data of Shenzhen Jianyuan?

According to the above announcement, as the controlling shareholder of Shenzhen Jianyuan, Xingyin Pharmaceuticals' 'optimization' of Shenzhen Jianyuan's financial data seems to have far-reaching implications.

Previously, Shenzhen Jianyuan, Hubei Jianxiang, and Shenzhen Jianxiang (referred to as the 'Company Group', with Hubei Jianxiang and Shenzhen Jianxiang as subsidiaries of Shenzhen Jianyuan) owed a large sum of money to Xingyin Pharmaceuticals. As of June 30, 2024, the Company Group owed Xingyin Pharmaceuticals a total loan principal of 0.456 billion yuan, as well as unpaid interest of 0.152 billion yuan, totaling 0.608 billion yuan in loan principal and interest.

However, in the announcement, Xingyin Pharmaceuticals agreed to waive the payable interest accrued from July 1, 2024, until the repayment date, as well as the penalty interest generated from the loan expiration date to the repayment date.

In October 2024, during the equity restructuring of Shenzhen Jianyuan, Xingyin Pharmaceuticals injected 0.608 billion yuan into Shenzhen Jianyuan. Subsequently, Shenzhen Jianyuan injected funds into Shenzhen Jianxiang and Hubei Jianxiang. After the capital injection, the Company Group repaid the aforementioned loan principal and interest to Xingyin Pharmaceuticals in the same month.

Earlier, in March 2024, Hubei Jianxiang provided joint liability guarantees for Xingyin Pharmaceuticals' 70 million yuan credit line at Bank of China. In June 2024, Shenzhen Jianyuan and Hubei Jianxiang jointly provided a joint liability guarantee for Xingyin Pharmaceuticals' 0.1 billion yuan credit line at China Construction Bank Corporation. These guarantee arrangements will be fully released by the delivery date.

"Perhaps there are other fundraising activities, the series of operations by Star Silver Pharmaceuticals directly made Shenzhen Jianyuan's financial data look good," the above-mentioned senior investor told reporters.

According to the above announcement, as of December 31, 2023, Shenzhen Jianyuan's total liabilities were 0.733 billion yuan, net assets were -0.062 billion yuan. However, as of June 30 this year, Shenzhen Jianyuan's total liabilities have decreased to only 0.142 billion yuan, with net assets at 0.609 billion yuan.

"One in, one out, Star Silver Pharmaceuticals directly transferred the liabilities to itself, beautified Shenzhen Jianyuan's financial statements, made huge profits from the transfer, can repay its own debts, while Sichuan Hexie Shuangma also obtained the GLP-1 concept they desired, becoming a 'merger and restructuring' concept," the above-mentioned senior investor summarized to Caixin reporters.

It is worth mentioning that the 'merger and restructuring' concept is quite hot in the market. Taking the example of Shuangcheng Pharmaceuticals (002693.SZ) in the pharmaceutical industry with the 'merger and restructuring' concept, it astonishingly had 20 daily limit up trades within just 22 trading days, with a cumulative increase of over 400%.