The M&A "specialist" saw both revenue and profit decline in the first half of the year.
After more than four months, there has been new development in the case investigation of Shanghai Haohai Biological Technology Co.,Ltd. (6826.HK, 688366.SH), one of the "three medical aesthetics giants," whose controlling shareholder was investigated for insider trading.
On the evening of September 16, Shanghai Haohai Biological Technology Co.,Ltd. announced that its controlling shareholder Jiang Wei has received an "Administrative Penalty Advance Notice" issued by the China Securities Regulatory Commission (CSRC), and once again emphasized that the penalty "involves Mr. Jiang Wei personally and has no relation to the company."
A careful review of Shanghai Haohai Biological Technology Co.,Ltd.'s development history reveals that even though Jiang Wei no longer participates in daily operations and management, he and his wife You Jie have already deeply imprinted their mark on Shanghai Haohai Biological Technology Co.,Ltd. through a series of M&A and restructuring activities, and Shanghai Haohai Biological Technology Co.,Ltd. has been quite generous in rewarding the couple.
However, for Shanghai Haohai Biological Technology Co.,Ltd., this penalty notice may not be the company's most challenging problem. Issues such as stagnant performance growth, obstacles in medical aesthetics business development, and long-term stock price trading below net value have all cast heavy shadows over Shanghai Haohai Biological Technology Co.,Ltd.'s development prospects.
As of the close on September 18, Shanghai Haohai Biological Technology Co.,Ltd. A-shares closed at 53.2 yuan per share with a total market value of 12.4 billion yuan; H-shares closed at 28.08 HKD per share with a total market value of 6.5 billion HKD.
**Controlling Shareholder Under Investigation for Insider Trading** **Shanghai Haohai Biological Technology Co.,Ltd. "Cuts Ties"**
On the evening of September 16, Shanghai Haohai Biological Technology Co.,Ltd. announced that the company's controlling shareholder and one of the actual controllers, Jiang Wei, recently received an "Administrative Penalty Advance Notice" issued by the CSRC.
The reason for the penalty dates back to more than four months ago. On the evening of May 7, Shanghai Haohai Biological Technology Co.,Ltd. announced that Jiang Wei recently received a case filing notice from the CSRC, which initiated an investigation into him for suspected insider trading.
It is worth noting that since Jiang Wei was placed under investigation, Shanghai Haohai Biological Technology Co.,Ltd.'s intention to "draw clear boundaries" has been very obvious.
In the May 7 announcement, Shanghai Haohai Biological Technology Co.,Ltd. stated: "According to the company's understanding, this matter is unrelated to the company's stock," while emphasizing that this is an investigation targeting Jiang Wei personally.
Shanghai Haohai Biological Technology Co.,Ltd. Chairman Hou Yongtai told media: "What he did was not related to our company's stock. He is just an investor who likes to trade stocks. We have warned him that he definitely cannot trade our company's stock."
In the latest disclosed announcement, Shanghai Haohai Biological Technology Co.,Ltd. directly wrote "Non-Company Matter" in the title and emphasized again in the announcement text that Jiang Wei does not participate in the company's daily operations and management, and this matter will not have a significant impact on the company's daily operations, business, and finances.
Legal experts indicate that insider trading, depending on the severity of the circumstances, may involve civil, administrative, and criminal legal responsibilities and consequences.
Regarding civil penalties, Article 53 of the Securities Law stipulates: "If insider trading causes losses to investors, compensation liability shall be undertaken in accordance with the law." Regarding administrative penalties, Article 191 of the Securities Law stipulates: "For engaging in insider trading, orders shall be given to legally dispose of illegally held securities, confiscate illegal gains, and impose fines of not less than one time but not more than ten times the illegal gains; if there are no illegal gains or illegal gains are less than 500,000 yuan, fines of not less than 500,000 yuan but not more than 5 million yuan shall be imposed."
Criminal penalties refer to Article 180 of the Criminal Law: "For serious insider trading circumstances, imprisonment of not more than five years or criminal detention, and concurrent or independent fines of not less than one time but not more than five times the illegal gains; for particularly serious circumstances, imprisonment of not less than five years but not more than ten years, and fines of not less than one time but not more than five times the illegal gains."
Currently, Jiang Wei has received the "Administrative Penalty Advance Notice." Legal experts believe that whether Shanghai Haohai Biological Technology Co.,Ltd. will be affected by this penalty depends on whether the insider trading information is related to the company itself. Currently, Shanghai Haohai Biological Technology Co.,Ltd.'s attitude is only the company's unilateral statement, and the final penalty result must still be based on the CSRC's decision.
Just before this announcement was disclosed, the case of Kerui Tiancheng Chairman Zheng Yuewen and his girlfriend Chu Yinan being fined 400,000 yuan and criminally detained for insider trading was just exposed. Against the backdrop of regulators repeatedly emphasizing "strict supervision and management" and "growing teeth with thorns," Jiang Wei is unlikely to escape regulatory "heavy punches."
**M&A and Restructuring "Specialist": From No Actual Business to Shanghai Haohai Biological Technology Co.,Ltd. "Universe"**
From Shanghai Haohai Biological Technology Co.,Ltd.'s development history, regardless of how the company now tries to distance itself from Jiang Wei, Jiang Wei and his wife You Jie have been closely bound to the company since Shanghai Haohai Biological Technology Co.,Ltd.'s birth, making it difficult to draw clear boundaries.
On one hand, Shanghai Haohai Biological Technology Co.,Ltd.'s predecessor was co-founded by Jiang Wei. The prospectus shows that Shanghai Haohai Biological Technology Co.,Ltd.'s predecessor was Haohai Limited, jointly established by Shanghai Haohai Chemical Co., Ltd. and Jiang Wei on January 24, 2007, with an initial company name of "Shanghai Haohai Biotechnology Co., Ltd." and registered capital of 20 million yuan. Meanwhile, from its establishment to date, Jiang Wei and You Jie have always been the company's first and second largest shareholders. As of mid-year, Jiang Wei and You Jie held 28.53% and 17.29% respectively.
On the other hand, it was precisely through continuous M&A and restructuring that the Jiang Wei couple built Shanghai Haohai Biological Technology Co.,Ltd.'s current business landscape.
The prospectus shows that after Haohai Limited was established in 2007, it inherited the business operations of Songjiang Biological Pharmaceutical Factory, Qisheng Biology, and Jianhua Biology, and acquired Shanghai Likang Rui Bioengineering Co., Ltd., initially establishing four main business areas.
After 2015, Shanghai Haohai Biological Technology Co.,Ltd. used intraocular lenses, core medical devices for cataract surgery, as a breakthrough point and successively acquired Henan Cosmos, Aaren, Shenzhen New Industries, Zhuhai Aige, Contamac, and ODC; meanwhile, it acquired 100% equity of Qingdao Huayuan through the acquisition of China Ocean.
This series of operations transformed Shanghai Haohai Biological Technology Co.,Ltd. from a company with no actual business into a Shanghai Haohai Biological Technology Co.,Ltd. "universe" that encompasses four major business segments - ophthalmology, plastic surgery and wound care, orthopedics, and anti-adhesion and hemostasis - with business scope covering the upstream and downstream industrial chains of the aforementioned four major segments, all within just over ten years.
After going public in 2019, the pace of M&A and restructuring by the Jiang Wei couple did not stop. According to Wind data, from March 2022 to date, Shanghai Haohai Biological Technology Co.,Ltd. and its subsidiaries have successively promoted 6 M&A and restructuring matters, bringing companies such as Ouhuameike and Nanpeng Optics under their umbrella.
While the Jiang Wei couple helped the company "expand territory," Shanghai Haohai Biological Technology Co.,Ltd. also rewarded them with real money.
According to the 2025 interim report, Shanghai Haohai Biological Technology Co.,Ltd. plans to distribute cash dividends of 4 yuan per 10 shares (including tax), with a total planned cash dividend distribution of 91.4932 million yuan (including tax), accounting for 43.35% of the company's net profit attributable to shareholders of the listed company in the first half of 2025. Based on their shareholding ratio, the Jiang Wei couple is expected to receive cash dividends exceeding 40 million yuan.
In April this year, Shanghai Haohai Biological Technology Co.,Ltd. disclosed a 2024 dividend plan totaling 231 million yuan. Based on the Jiang Wei couple's shareholding ratio at that time, they could receive 106 million yuan in dividends.
According to the "2025 Hurun Global Rich List" released by the Hurun Research Institute in March this year, the Jiang Wei and You Jie couple ranked 3,206th with assets exceeding 7.3 billion yuan. This is also the fifth consecutive year that the Jiang Wei couple has appeared on this list.
**Revenue and Net Profit Both Decline** **Shanghai Haohai Biological Technology Co.,Ltd. Cannot Withstand Turmoil**
Since the two parties have established such a mutually beneficial close relationship, what reason makes Shanghai Haohai Biological Technology Co.,Ltd. eager to cut ties with its controlling shareholder? The main reason may be that the company itself is already facing significant financial pressure and cannot withstand turmoil.
The 2025 interim report shows that Shanghai Haohai Biological Technology Co.,Ltd.'s operating revenue was 1.304 billion yuan, down 7.12% year-on-year; net profit attributable to parent company was 211 million yuan, down 10.29% year-on-year; non-GAAP net profit was 204 million yuan, down 11.35% year-on-year.
From the interim report, Shanghai Haohai Biological Technology Co.,Ltd.'s three major business segments - medical aesthetics, ophthalmology, and orthopedics - all faced significant pressure in the first half of the year.
Among them, medical aesthetics and wound care products, which serve as an important growth engine, generated revenue of 575 million yuan in the first half of the year, down 9.31% year-on-year. The sharp decline in hyaluronic acid revenue, which once created huge profits for the company, was an important reason for the engine "stalling."
According to interim report data, Shanghai Haohai Biological Technology Co.,Ltd.'s hyaluronic acid revenue in the first half was 347 million yuan, a decrease of 70.1056 million yuan compared to the same period last year, representing a decline of 16.8%.
Shanghai Haohai Biological Technology Co.,Ltd. explained that this was due to, on one hand, decreased after-tax sales revenue caused by VAT rate changes at subsidiary Qisheng Biology, and on the other hand, the impact of decreased consumer demand for the company's first and second-generation hyaluronic acid products, resulting in a relatively significant decline in sales revenue compared to the same period last year. Meanwhile, Shanghai Haohai Biological Technology Co.,Ltd. emphasized: "The company's 'Haimei Yuebai' hyaluronic acid product approved in July 2024 achieved remarkable market performance, contributing considerable incremental revenue to the hyaluronic acid product line."
Ophthalmology products generated operating revenue of 368 million yuan in the first half, down 18.61% year-on-year, representing the steepest revenue decline among the four main businesses, and its proportion of total group revenue also decreased from 32.18% in the first half of last year to 28.33% this year.
Anti-adhesion and hemostatic products revenue became a "bright spot" in the interim report. Data shows that Shanghai Haohai Biological Technology Co.,Ltd.'s revenue from this segment was 110 million yuan in the first half of this year, up 59.61% year-on-year. However, as of mid-year, this product accounted for only 8.51% of Shanghai Haohai Biological Technology Co.,Ltd.'s total revenue, unable to significantly improve its revenue situation.
Additionally, Shanghai Haohai Biological Technology Co.,Ltd., which describes itself as "a technology innovation enterprise engaged in the R&D, production and sales of medical devices and pharmaceuticals," chose to direct its cost reduction and efficiency improvement "knife" toward R&D in the first half of the year. The interim report shows that Shanghai Haohai Biological Technology Co.,Ltd. incurred R&D expenses of 98.401 million yuan in the first half, a decrease of 26.9993 million yuan compared to the same period last year, down 21.53%.
In response, Shanghai Haohai Biological Technology Co.,Ltd. stated that this was due to several core R&D projects successively entering the later stages of clinical trials or having entered the registration review stage in the first half of the year, leading to a periodic decrease in related R&D expenses, particularly direct R&D labor costs and direct materials for testing.
Beyond the unsatisfactory financial statements, Shanghai Haohai Biological Technology Co.,Ltd.'s performance in the secondary market is even more concerning.
When Shanghai Haohai Biological Technology Co.,Ltd. went public on the STAR Market in 2019, it was once called the "first hyaluronic acid stock," setting a new record for STAR Market issuance price at 89.23 yuan per share, and became the first "STAR Market + H-shares" biopharmaceutical enterprise. It was also known as one of China's "three hyaluronic acid giants" along with Bloomage Biotechnology Corporation Limited (688363.SH) and Imeik Technology Development Co.,Ltd. (300896.SZ).
According to Wind data, in July 2021, Shanghai Haohai Biological Technology Co.,Ltd. A-shares once touched a historical high of 193.62 yuan per share, then fluctuated downward, falling into the "pit" of stock price breaking net value at the end of that year and has never been able to climb out. H-shares, except for rising all the way to a high of 94.6 HKD per share in the first half of 2021, have spent most other times hovering below 30 HKD per share.
The above performances have also affected sell-side expectations for Shanghai Haohai Biological Technology Co.,Ltd. As early as April this year, after Shanghai Haohai Biological Technology Co.,Ltd. disclosed its 2024 annual report, Soochow Securities' research report downgraded its 2025 and 2026 net profit attributable to parent company expectations from 511 million yuan and 632 million yuan to 506 million yuan and 598 million yuan respectively.
From this perspective, Shanghai Haohai Biological Technology Co.,Ltd.'s "cutting ties" with Jiang Wei may also be a helpless move to stabilize investor expectations and avoid adding insult to injury to the company's predicament. What are your views on their relationship and Shanghai Haohai Biological Technology Co.,Ltd.'s development prospects?
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