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After only three days of planning, the change of control of *ST Dayao (603963) was hastily declared terminated.

On the evening of August 6, *ST Dayao issued an announcement that the company received a notice from its controlling shareholder and actual controller Yang Junxiang on the same day, stating that due to failure to reach an agreement with the counterparty, it decided to terminate the previously planned agreement to transfer shares. The company's shares will resume trading on August 7.

*ST Dayao stated that the termination of the above-mentioned matters will not have an adverse impact on the company's production and operation, nor will it affect its future development strategy.

On August 4 (Sunday), Yang Junxiang, the actual controller of *ST Dayao, informed the listed company that he was planning a share transfer, which might lead to a change in the company's control. As the matter was under negotiation and the parties to the transaction had not signed an agreement, there was significant uncertainty, and *ST Dayao was suspended on August 5 and August 6.

According to the plan, the suspension time for the above matters is expected to be no more than two trading days in total. However, it is quite surprising that when the suspension time limit was reached, *ST Dayao announced the termination of the change of control. From the public information, it is still unknown who originally planned to take over the control of *ST Dayao from Yang Junxiang.

It is worth mentioning that the company's stock price rose sharply in the two trading days before *ST Dayao announced that the actual controller was planning to transfer control. Specifically, on August 1, *ST Dayao's stock price rose by 5.02%, and on August 2, it hit the daily limit during the trading session and closed up 4.46%.

According to public information, *ST Dayao was listed on the main board of the Shanghai Stock Exchange on September 22, 2017. It is the first A-share main board listed company in Dali Prefecture, Yunnan Province, and currently the only A-share listed company in Dali. The actual controller is the Yang Junxiang family.

As of the end of the first quarter of this year, Yang Junxiang held 51.2042 million shares of *ST Dayao, accounting for 23.31% of the total share capital; Yang Qinglong and Yin Cuixian are Yang Junxiang's son and wife, respectively, with shareholding ratios of 11.94% and 3.06%, respectively. The three of them hold a total of 38.31% of the shares, and are all recognized as the actual controllers of the company. In addition, Yang Junxiang's younger brother Yang Junwei also holds 0.56% of the listed company's shares and is a person acting in concert with Yang Junxiang.

More than a year ago, Yang Junxiang and Yang Junwei had a round of share reduction. From January 9, 2023 to June 29, 2023, Yang Junxiang reduced his holdings by 4.8193 million shares, accounting for 2.19% of the total share capital, and the total amount of reduction was 57.5571 million yuan; from December 30, 2022 to June 28, 2023, Yang Junwei reduced his holdings by 411,900 shares, accounting for 0.19% of the total share capital, and the amount of reduction was 5.407 million yuan.

According to public information, *ST Dayao's main business is the production and sales of traditional Chinese medicine injections and pharmaceutical commercial distribution business. It currently has 20 varieties and 44 specifications of injection drug approval numbers, of which 16 varieties and 38 specifications are included in the "National Basic Medical Insurance, Work Injury Insurance and Maternity Insurance Drug Catalog (2023 Edition)". The company's main products are "Zhongjing®" Xingnaojing Injection and Shenmai Injection.

In recent years, affected by factors such as the centralized procurement of Chinese patent medicines and restrictions on medical insurance payments, the sales price and sales volume of *ST Dayao's main products have been on a downward trend, resulting in a year-on-year decline in revenue and losses for many consecutive years. From 2021 to 2023, the company's revenue will be 171 million yuan, 132 million yuan, and 87.27 million yuan respectively; the net profit will be -41.8906 million yuan, -17.7015 million yuan, and -20.0314 million yuan respectively.

The performance forecast shows that *ST Dayao is expected to remain in a loss-making state in the first half of this year, with a specific loss of 11 million to 14 million yuan; the net profit after deducting non-operating items will be a loss of 13 million to 16 million yuan.

Regarding the reasons for the loss, *ST Dayao stated that, first, the sales price of its main product Xingnaojing Injection dropped significantly after it was selected in the centralized procurement of traditional Chinese medicines compared to before winning the bid, which severely squeezed the profit margin. In addition, due to restrictions on medical insurance payments and few hospitals reporting sales, sales fell short of expectations. Second, although sales of another major product, Shenmai Injection, increased significantly in the winning provinces such as Jiangsu, Shandong, Anhui, and Guangdong, and the overall sales of Shenmai Injection products increased compared to the previous period, the product's revenue scale was not large, with a low gross profit margin and limited contribution to profits.

Editor: Peng Bo

Proofreading: Ran Yanqing