In 2025, the innovative drug sector reached the peak of its bull market. However, Guizhou Bailing Group Pharmaceutical Co., Ltd., which was expected to make breakthroughs in this field and achieve a second entrepreneurial leap, faced a crisis.
While the innovative drug sector surged ahead, Guizhou Bailing’s stock price continued to decline, erasing billions in market capitalization (since early 2019 when Huachuang Securities intervened). This downturn is closely tied to the dispute between Huachuang Securities and the company’s actual controller.
Currently, the legal battle between the two parties is intensifying, leaving this once-celebrated "first Miao medicine stock" facing significant uncertainty.
**The Vanished Billion-Dollar Market Cap** As 2025 draws to a close, the A-share market has witnessed a remarkable tech stock rally, with innovative drugs and AI leading the charge.
Year-to-date, the Innovative Drug Index (886015) has surged over 34%, with many individual stocks doubling in value. Yet, despite this favorable market backdrop, Guizhou Bailing, which had pivoted toward innovative drugs in recent years, has been left behind.
Founded in 1996 and restructured under Jiang Wei’s leadership, Guizhou Bailing transformed into a leading pharmaceutical company, listing on the Shenzhen Stock Exchange in June 2010. Dubbed the "first Miao medicine stock," it ranked among China’s top 100 pharmaceutical companies for seven consecutive years.
Post-listing, the company maintained steady growth, peaking at a market cap of 53.1 billion yuan in 2015. However, following the market downturn and shareholder disputes, its market cap has since plummeted to less than 8 billion yuan—a loss of 45 billion yuan.
A closer look reveals that after receiving a 1.4 billion yuan bailout from Huachuang Securities in January 2019, Guizhou Bailing not only failed to reverse its decline but saw its stock price briefly rebound before falling again, wiping out over 10 billion yuan in market value.
Huachuang Securities stepped in as a rescuer, but the outcome was far from ideal.
From 2010 to 2018, Guizhou Bailing achieved nine consecutive years of revenue and profit growth, with 2018 marking a record net profit of 563 million yuan. However, after Huachuang Securities’ intervention, both performance and stock price collapsed, even leading to a temporary ST designation. By June 2024, the stock hit a low of 2.98 yuan, and even after delisting, it only briefly recovered to 6.94 yuan—far below previous levels.
From 2019 to 2021, net profit declined by 49.8%, 46.11%, and 22.24%, respectively, culminating in its first-ever loss in 2023. In the first three quarters of this year, net profit stood at just 56.81 million yuan, down 35.6% year-on-year—almost reverting to 2009 levels.
Instead of riding the innovative drug wave, Guizhou Bailing regressed, raising questions about Huachuang Securities’ bailout strategy.
**The Suspicious Bailout Plan** A lawsuit filed by Huachuang Securities against Guizhou Bailing’s major shareholder, Jiang Wei, was postponed after the latter countersued. The case involves 1.761 billion yuan and has drawn significant attention as an unusual example of securities bailouts for private enterprises.
The dispute traces back to 2018 when Jiang Wei faced high-interest debt from heavy-asset, long-cycle projects, compounded by a falling stock price and rising pledge ratios. In January 2019, Huachuang Securities provided a 1.4 billion yuan bailout via an asset management plan, acquiring an 11.54% stake (161 million shares) in Guizhou Bailing, with an agreement to divest within five years. Huachuang also extended a 361 million yuan stock pledge loan, due in August 2024.
Under the agreement, the bailout fund was to sell all shares within five years, with Jiang Wei retaining a right of first refusal. However, Huachuang Securities never sold any shares during this period, despite Jiang Wei reportedly paying over 400 million yuan in interest and dividends.
In August this year, Huachuang Securities sued Jiang Wei for failing to repurchase shares or repay debts, while Jiang Wei accused Huachuang of attempting a hostile takeover.
Several anomalies stand out: 1. Despite a 50% paper profit (over 700 million yuan) by April 2019, Huachuang sold no shares. 2. Huachuang later demanded voting rights for the bailout shares and deployed a 20-person team to key management roles, raising concerns about a takeover attempt. 3. Reports suggest Huachuang may have deliberately triggered Guizhou Bailing’s ST designation to pressure Jiang Wei. 4. Unusual short-selling activity during the bailout period—sometimes exceeding 10 million shares—led Jiang Wei to suspect Huachuang of driving down the stock price to force a margin call.
Jiang Wei now believes Huachuang’s bailout was a disguised power grab.
**The Mysterious White Knight** While most brokerages thrived in 2025, Huachuang Securities underperformed, with H1 revenue down 16.34% and net profit at just 191 million yuan.
As Guizhou’s only local brokerage, Huachuang is a mid-sized player with a controversial track record. It faced scrutiny for a high-premium acquisition of Huachuang Yunxin, conflicts with major shareholders, and regulatory penalties for internal control failures.
Huachuang’s involvement in Guizhou Bailing’s bailout has now escalated into a high-stakes legal battle, casting doubt on its motives and governance.
The case highlights broader debates about bailout mechanisms and the boundaries between rescuers and recipients. What should have been a lifeline for struggling private enterprises has devolved into a bitter feud—underscoring the need for clearer rules to ensure healthy corporate development.
Investors and regulators await further clarity as the dispute unfolds.
$Guizhou Bailing (002424)
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