Tongrentangcare (02667) has announced the launch of its initial public offering, which will be open for subscription from June 26 to July 2. The company plans a global offering of 108 million H-shares. Of these, approximately 10% will be allocated for the Hong Kong public offering, subject to reallocation, while the remaining 90% is designated for the international offering, which is also subject to reallocation and the potential exercise of an over-allotment option.
The indicative price range for the shares is set between HK$5.48 and HK$6.21 per share, with a board lot size of 500 shares. Trading of the H-shares on the Stock Exchange of Hong Kong is expected to commence at 9:00 a.m. on Tuesday, July 7.
The company operates as a strategic subsidiary of Tongrentang, focusing on traditional Chinese medicine healthcare services in China. Its business model integrates medical treatment with wellness care, offering modern and customized TCM medical services. It provides comprehensive TCM healthcare to individual clients, standardized management services to institutional clients, and also sells a variety of health and other related products. The company combines TCM pharmacological treatments with non-pharmacological therapies, delivering standardized management to create suitable treatment plans for its diverse clientele.
Historically, the majority of the company's revenue has been generated from providing TCM healthcare services to clients in China. For the fiscal years ended December 31, 2023, 2024, and 2025, revenue from TCM healthcare services amounted to RMB 994.9 million, RMB 987.7 million, and RMB 994.9 million, respectively. These figures represented 86.3%, 84.1%, and 84.9% of the company's total revenue in those respective years. Consequently, the company's business growth and financial performance have been, and will continue to be, significantly influenced by the development of the TCM healthcare services industry in China.
The company has entered into cornerstone investment agreements with several investors, including Airport Technology Capital, Aurora SF, and CICCFT (in relation to an over-the-counter swap). Under these agreements, the cornerstone investors have agreed, subject to certain conditions, to subscribe for, or procure their designated entities to subscribe for, a specific number of offer shares at the offer price, with the total subscription amount approximating HK$296.1 million.
The company estimates that, assuming an offer price of HK$5.85 per share (the midpoint of the price range) and after deducting underwriting commissions and estimated expenses related to the global offering (and assuming the over-allotment option is not exercised), the net proceeds from the global offering will be approximately HK$562.4 million.
The company intends to allocate the net proceeds from the global offering as follows: approximately 63.7% will be used to expand its TCM healthcare service network and enhance its TCM service capabilities between 2026 and 2030, aiming to meet the substantial medical demands arising from its growing customer base. About 26.3% is expected to be allocated for the repayment of certain outstanding bank loans, and the remaining 10.0% will be used as working capital and for other general corporate purposes.
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