As China's CXO industry faces fluctuating conditions, another service provider is braving headwinds to pursue a Hong Kong IPO. Nanjing Haina Pharmaceutical Technology Co., Ltd. recently submitted its application to the Hong Kong Stock Exchange, marking its third attempt to access capital markets within three years. After a failed IPO attempt on the ChiNext board and an unsuccessful reverse merger with Chengdu Leadman, Haina is now swiftly pivoting to Hong Kong amid tightening cash flow and ongoing profit declines.
Disclosed prospectus data reveals that this company, which focuses on generic drug CXO services, is grappling with multiple challenges: a sharp drop in new orders, net profit falling over 25% for two consecutive years, a surge in trade receivables, and urgent cash flow pressures. With centralized drug procurement policies continuously deepening, how can Haina Pharmaceutical present a compelling story to investors?
Over the past three and a half years, Haina's new CXO projects have plummeted by nearly 70%, while net profit has dropped by more than 25% for two straight years. Unlike CXO leaders like WuXi AppTec and Tigermed that focus on innovative drugs, Haina primarily serves the modified new drug and high-end generic drug sectors, offering both CRO and CMO services while maintaining some proprietary product pipelines.
Superficially, Haina's total project count continues to grow—from 242 ongoing CXO projects in 2022 to 398 in the first half of 2025. However, scrutiny of incremental data reveals concerning trends. Impacted by generic drug market adjustments, new order volumes have shrunk significantly. New CRO projects decreased from 117 in 2022 to 88 in 2024, with only 41 added in first-half 2025. New CMO projects fell from 50 in 2022 to 22 in 2024, dropping further to 14 in first-half 2025. Overall, new projects have declined nearly 70% over three and a half years.
Reduced new projects directly translate to weak revenue growth. In first-half 2025, Haina reported revenue of 178 million yuan, down 16.8% year-over-year, with net profit attributable to shareholders plunging 25.8% to 22 million yuan. Notably, this marks the second consecutive year of over 25% profit decline. Simultaneously, the company faces asset impairment pressures. Net impairment losses on financial and contract assets surged from 4.875 million yuan in 2022 to 12.647 million yuan in 2024, remaining high at 11.872 million yuan in first-half 2025—a 19.18% year-over-year increase.
More alarming than profit declines is Haina's deteriorating cash flow situation. Despite substantial impairments, the book balance of trade receivables and notes skyrocketed from approximately 45 million yuan in 2022 to 176 million yuan in first-half 2025—nearly a fourfold increase in under three years. Even more concerning is the extended collection cycle: days sales outstanding for trade receivables and notes lengthened from 43 days in 2022 to 59 days in 2023, 111 days in 2024, and soared to 176 days in first-half 2025. This means Haina now waits nearly six months on average to receive payment after completing services. The company attributes this to receivables growing faster than revenue.
Slow collections directly impact cash flow performance. In 2024, net cash from operating activities turned negative at -35 million yuan, worsening to -42 million yuan in first-half 2025. Meanwhile, cash and equivalents plummeted from 192 million yuan at end-2023 to 63 million yuan by mid-2025—a nearly 70% contraction in eighteen months. In stark contrast, short-term debt pressures mount. Combined trade payables, other payables, and interest-bearing bank borrowings surged from about 80 million yuan in 2022 to 188 million yuan in first-half 2025, already exceeding available cash. Calculating from mid-2025 data, Haina's cash-to-short-term-debt ratio stands at a precarious 0.34, highlighting severe liquidity strain.
Compounding these challenges, some strategic investors are exiting amid cash flow pressures. Haina previously secured several funding rounds from prominent investors, including Hangzhou Binchuang (controlled by Binjiang Properties' Qi Jinxing), Boda Pharmaceutical, Nanjing Chuangyi (affiliated with Huatai Securities), China Renaissance Chuangsheng, and local state-owned platforms like Jiangsu Jincai and Hefei Investment. However, most investment agreements included IPO-linked redemption and share repurchase clauses. After two failed listing attempts, repurchase obligations emerged.
In March 2025, Haina attempted a reverse merger by transferring 65% equity to Chengdu Leadman, but negotiations collapsed within three months. Subsequently, shareholders including Granzordia, Tibet Kaide, Hubei Gaolong, Shanghai Dengding, and Nanjing Chuangyi initiated exit procedures. Between July and August 2025, Haina Changxing—controlled by actual controller Zou Qiaogen—repurchased a combined 5.76% stake from these investors for over 90 million yuan. This repurchase further strained company finances, prompting Haina's swift pivot to a Hong Kong IPO application in November 2025.
Haina's predicament reflects broader challenges facing China's generic drug CXO providers. Amid normalized centralized procurement and compressed generic drug profit margins, service providers in this sector confront multiple tests: dwindling orders, prolonged collection cycles, and cash flow pressures. For Haina, key questions remain unanswered: how to reignite growth amid sharp order declines, how to improve cash flow despite extended payment cycles, and how to stabilize investor confidence after strategic exits. Given Hong Kong market's reputation for rational pricing—often applying valuation discounts to companies with expanding losses and cash flow strains—Haina's third IPO journey likely remains fraught with obstacles.
Comments