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Zebra Consumer Model

Starting with a compound Danshen dripping pill, Yan Xijun spent more than 30 years to create a business legend and made Tasly one of the leading companies in the A-share Chinese medicine sector. Now, Yan Xijun's family has decided to hand over the control of the company to others.

The market is surging with surprises and even more puzzles. When the consideration of 7.3 billion yuan is settled, where will the company go in the future?

As the second largest shareholder, how will Yan Xijun's family cooperate with the new owner, China Resources Sanjiu, to grow bigger and stronger in the field of traditional Chinese medicine?

Leave everything to time.

Selling for 7.3 billion

Tasly (600535.SH) is famous in the industry for the box of compound Danshen dripping pills in your hand. This drug, which is the most widely used in the field of cardiovascular diseases, has long held the dominant position in this niche field.

In the early years, Yan Xijun took this product as the core and gradually extended it to other business areas such as pharmaceutical logistics and health, making Tasly one of the leaders of the A-share Chinese medicine sector. At its peak, the total market value exceeded 60 billion yuan.

After the glory, Yan Xijun decided to let go.

Recently, the controlling shareholder Tasly Group and its concerted actors transferred 418 million shares of the listed company to China Resources Sanjiu, accounting for 28% of the total issued shares of the company, with a total consideration of 6.212 billion yuan. In addition, Tasly Group transferred 74.6975 million shares to Guoxin Investment, accounting for 5% of the company's total share capital, with a consideration of 1.109 billion yuan.

Tasly Group is controlled by Yan Xijun, Wu Naifeng (wife of Yan Xijun), Yan Kaijing and Li Bihui (wife of Yan Kaijing), who together hold 50.33% of the shares of the listed company. After the completion of this transfer, Tasly Group and its persons acting in concert will hold 17.5% of the shares, the company's controlling shareholder will be changed to China Resources Sanjiu, and the actual controller will be China Resources.

Tasly Group also promised to give up the voting rights corresponding to its 5% stake in Tasly, so that the proportion of voting rights it controls will not exceed 12.5008%.

Yan Xijun's family pocketed 7.3 billion yuan and became the company's second largest shareholder.

In this equity transfer, the beneficiaries are not only Yan Xijun's family. Jianfeng Group (600668.SH) and Central Pharmaceutical, which hold 20.76% and 12.15% of Tasly Group's equity respectively, are also indirect beneficiaries.

Jianfeng Group mainly engages in cement and medical businesses and is a listed company under the Jinhua State-owned Assets Supervision and Administration Commission; Central Pharmaceutical is a wholly-owned subsidiary of Lisheng Pharmaceutical (002393.SZ), and its actual controller is the Tianjin State-owned Assets Supervision and Administration Commission.

According to preliminary calculations based on shareholding ratios, the above two companies will receive transfer payments of approximately 1.506 billion yuan and 881 million yuan respectively.

It happened suddenly

On August 1, Tasly announced that it was planning to change its control and suspended trading. It resumed trading on August 5. Tasly's small and medium-sized investors experienced a psychological journey of surprise, confusion and hesitation.

On August 5, the stock price hit the daily limit at the opening, but the increase narrowed later, closing up 5.68% on the day. Yesterday, the stock price continued to open high and close low, closing at 14.31 yuan, down 3.83%, with a total market value of 21.378 billion yuan.

The company has a new owner, and the uncertainty of future internal governance and operations may be one of the reasons for the stock price fluctuations.

Although China Resources Sanjiu (000999.SZ) stated that this transaction would help both parties to leverage the synergy of the traditional Chinese medicine industry chain and empower each other in the cultivation and manufacturing of traditional Chinese medicines, it still failed to calm the emotions of small and medium-sized investors.

Since 2020, under the leadership of the second-generation CEO Yan Kaijing, the company has disposed of some of its non-pharmaceutical manufacturing businesses. That year, its pharmaceutical distribution company Tasly Marketing was transferred to Chongqing Pharmaceutical.

In September last year, the company planned to transfer 90% of the equity of its Tasly Pharmacy chain and 60% of the equity of Jinan Pingjia Pharmacy to Shuyu Pingmin (301017.SZ), but later terminated the transaction.

The company had to reluctantly divest its pharmaceutical retail business, resulting in a significant decline in the revenue scale of its pharmaceutical commercial business, from 7.122 billion yuan in 2020 to 1.215 billion yuan in 2023.

Yan Kaijing leads the company's external equity investment business. Due to the performance fluctuations in 2022, the investment business has further shrunk significantly. At the end of 2023, the book value of the company's securities investment was only about 90 million yuan, a year-on-year decrease of 60.53%.

Over the past two years, the company has divested its pharmaceutical retail sector and reduced its investment business, continuously sending the message to the market that it will focus on making good medicines in the future.

But why the Yan family was willing to give up control this time is indeed puzzling. Such a major decision must have been considered and argued for a long time within the family.

Two years ago, when the company was adjusting its asset structure to adapt to the cycle, Yan Kaijing said in an interview that Tasly was built brick by brick by his father's generation, and the decision to sell assets was difficult.

change destiny

More than 30 years ago, Yan Xijun might never have imagined that a small compound danshen pill would change his destiny.

In the late 1980s, he and his wife Wu Naifeng successfully developed the compound Danshen dripping pill. In 1994, Tianshili's predecessor, Tianshili United Pharmaceutical, was founded, and the company placed its bet on the compound Danshen dripping pill.

At that time, Compound Danshen Drops was a new drug that had just entered the fields of coronary heart disease and angina pectoris. Due to its good effect, it gradually became a basic clinical first-line drug in these two major fields.

In 2002, the annual sales of Compound Danshen Dropping Pills exceeded 1 billion yuan, becoming the first Chinese patent medicine product in China to reach this scale. To date, the sales of this product remain hot, and in 2023, about 141 million boxes were sold.

Focusing on this flagship product, the company has focused on the three largest and fastest-growing disease areas of cardiovascular and cerebrovascular diseases, digestive metabolism, and tumors in recent years to build a product matrix.

Among them, Yangxueshengnao Granules (Pills) used for migraine, Yiqi Fumai and Qishen Yiqi Drops used in the cardiotonic and anti-shock market rank at the top in market share among similar products.

After gaining a firm foothold in its main business, the company actively expanded its big health business.

Yan Xijun once publicly stated that in addition to making a box of medicine, the company is also planning to expand into areas such as water, tea, wine, health management and children's education.

The company has invested heavily in these businesses.

In 2010, Tasly invested 320 million yuan in Jilin to produce mineral water products, and also invested 4.5 billion yuan in Pu'er City, Yunnan, to enter the Pu'er tea industry. However, the revenue status of mineral water and Pu'er tea has not appeared in the financial report so far.

Pharmaceutical industry revenue is still the company's main force. In 2023, the pharmaceutical industry sector's revenue was 7.421 billion yuan, accounting for 85.56% of the company's total revenue, with a gross profit margin of 72.96%.

In 2014, Yan Kaijing officially took over as the chairman of Tasly. Unlike his parents who have a medical background, he studied securities and investment abroad in his early years and has a special liking for the capital market. From 2019 to 2021, he tried to spin off his subsidiary Tasly Biotechnology to enter the capital market, but ultimately failed.

In May this year, Yan Xijun handed over Guotai Liquor to Yan Kaijing. In 1999, Yan Xijun invested in this sauce-flavored liquor company. After the IPO attempt was terminated in 2021, his enthusiasm for the capital market remained unabated and he was selected into the reserve list of listed companies in Guizhou for four consecutive years.

According to the prospectus, Guotai Liquor's revenue in 2019 was 1.888 billion yuan and its net profit attributable to the parent company was 374 million yuan. At the National Distributor Conference held in early 2022, the company announced that its sales in 2021, including tax, had exceeded 10 billion yuan.

Now that the popularity of sauce-flavored liquor has waned and the liquor consumption market is in a state of chill, the burden of Guotai Liquor's listing falls on Yan Kaijing's shoulders.