After the identification of the restructuring investor, *ST Jingfeng, which had already seen its stock price surge by four times due to restructuring expectations, continued to push its stock price higher.

As of the close on August 29, *ST Jingfeng once again hit the upper limit of the daily price fluctuation, closing at 4.17 yuan per share. Choice data shows that this is the 38th time in the last 42 trading days that *ST Jingfeng has hit the upper limit. From July 3 to now, in less than two months, the stock has increased by 479%.

The driving force behind the rise is the restructuring expectations of *ST Jingfeng. The company announced on the evening of August 27 that the consortium led by Stone Pharmaceutical Group Co., Ltd. (referred to as "Stone Pharmaceutical Holdings") was selected as the restructuring investor. There had been many signs of Stone Pharmaceutical Holdings' involvement. In early July, the two new directors added to *ST Jingfeng were executives of Stone Pharmaceutical Holdings. The company also required in its public recruitment announcement for restructuring investors in mid-August that investors should be large pharmaceutical industry groups with an annual turnover of more than 30 billion yuan.

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However, the road to restructuring for *ST Jingfeng may still face many challenges. Previously, the company's performance has been sluggish, with net profit losses exceeding 2.3 billion yuan in the past five years. In 2023, the audited net assets were negative, and the stock was subject to delisting risk warning. In addition, the company's liquidity has been tight, with overdue debt totaling more than 300 million yuan.

The restructuring investor emerges

The emergence of the restructuring investor adds "fuel to the fire" for the frenzied rise of *ST Jingfeng.

On the evening of August 27, *ST Jingfeng announced that after negotiations with the temporary administrator and prospective investors, the consortium led by Stone Pharmaceutical Holdings was finally determined as the selected restructuring investor. According to the disclosure, although four investors submitted application materials, only one investor (the consortium is counted as one) paid the due diligence deposit. In the two trading days after the announcement, *ST Jingfeng's stock price hit the upper limit, closing at 4.17 yuan per share on the 29th.

Before the identification of the heavyweight restructuring investor, *ST Jingfeng had already risen sharply for more than a month, getting rid of the risk of delisting due to low stock price.

From May 30 to July 2, *ST Jingfeng's stock price continued to decline, falling from 1.72 yuan per share to 0.72 yuan per share, a drop of more than 60%. Starting from June 24, the stock operated below 1 yuan for 13 consecutive trading days, with the risk of delisting looming. However, starting from July 2, the stock kept rising, with 38 out of the last 42 trading days hitting the upper limit, and the stock price also rose from 0.72 yuan per share to above 4 yuan per share, surging by 479% during the period.

The continuous rise in stock price is related to the restructuring expectations of *ST Jingfeng.As early as July 2nd, *ST Jingfeng announced changes in the company's senior management. Among them, the two newly added directors are senior executives from CSPC Holdings. This move is also considered by the industry as a sign of CSPC Holdings' entry into the reorganization. On July 3rd, the company received a decision letter from Changde Intermediate Court in Hunan, proposing to initiate pre-reorganization for the company.

On August 2nd, *ST Jingfeng announced the recruitment of reorganization investors, requiring that the investor or the controlling shareholder of the investor should be a large pharmaceutical industry group, with experience in operating A-share or Hong Kong-listed companies, and an annual turnover of more than 30 billion yuan.

CSPC Holdings fits this condition perfectly. Public information shows that CSPC Holdings has a Hong Kong-listed company, CSPC Group (01093.HK). According to the financial report for 2023, the operating income of CSPC Group from 2021 to 2023 was 27.867 billion yuan, 30.937 billion yuan, and 31.45 billion yuan, respectively.

A person from a pharmaceutical listed company told the reporter that there are only a few companies in the industry that meet *ST Jingfeng's revenue requirements, basically only a few top pharmaceutical companies such as CSPC Holdings and Yunnan Baiyao. In combination with the earlier parachute of CSPC Holdings' senior executives into *ST Jingfeng, it can be speculated that the two parties have completed preliminary contact and reached a certain intention.

Under the fermentation of favorable expectations, speculative capital also entered the market for speculation. According to the Dragon and Tiger List information, the company has been on the Dragon and Tiger List 21 times in the past three months, with the top five buying branches mostly being speculative capital. Taking August 26th as an example, the top five branches that bought the shares were Dongfang Fortune Mountain South Xiangqu East Road Branch, Dongfang Fortune Lhasa Financial City South Ring Road Branch, Dongfang Fortune Lhasa East Ring Road First Branch, Dongfang Securities Xiamen Xianyue Road Branch, and Guojin Securities Shanghai Jing'an District Nanjing West Road Branch, which are basically all branches where speculative capital gathers. Among them, the Dongfang Fortune Lhasa Financial City South Ring Road and Mountain South Xiangqu East Road branches have appeared on the Dragon and Tiger List of *ST Jingfeng in August many times.

Can *ST Jingfeng turn around?

Before the release of the reorganization news, *ST Jingfeng was facing multiple business difficulties.

In recent years, the performance of *ST Jingfeng has been in a continuous downturn.

According to the financial report, in 2023, the company achieved an operating income of 657 million yuan, a decrease of 21.86% compared to the same period last year; net profit was -215 million yuan, a decrease of 75.54% compared to the same period last year. From 2019 to 2023, the company's net profit was negative, with losses of 890 million yuan, 969 million yuan, 153 million yuan, 123 million yuan, and 215 million yuan, with a total loss of more than 2.3 billion yuan.

The net profit loss is mainly related to industry changes. *ST Jingfeng's main products focus on three major areas: cardiovascular and cerebrovascular, orthopedics, and anti-tumor, including multiple products such as Shenxiong Glucose Injection, Hydrochloride Tirofiban Sodium Chloride Injection, and Lanxiang Xylene Emulsion Injection.However, some of the main injectable products began to be strictly controlled by policies after 2018.

The company stated in its financial report for 2019 that the revenue turnaround was mainly affected by policies such as medical insurance cost control, key monitoring, and auxiliary medication. The company's main product, Shenkun Glucose Injection, failed to enter the new national medical insurance directory in August 2019, and the main product, Lanxiangene Emulsion Injection, was also restricted within the payment scope of the new national medical insurance directory that year, narrowing the clinical use of the product. As a result, the revenue from injectable products in 2019 decreased by 70.31% compared to the same period of the previous year.

As the performance continues to be sluggish, the liquidity problem of *ST Jingfeng has also begun to stand out. *ST Jingfeng stated in recent announcements that as of December 31, 2023, the company's undistributed profits were -1.177 billion yuan, and the asset-liability ratio was 114.49%.

Difficulties in liquidity have led to multiple debt defaults. As of July 1, the total amount of interest-bearing debt of the company and its consolidated subsidiaries was 564 million yuan, and the total amount of overdue debt was 333 million yuan. Among them, the "16 Jingfeng 01" bond was overdue, and the bond should have repaid a principal and interest of 295 million yuan on July 1 this year.

In 2023, the company's stock was subject to delisting risk warning due to the negative net assets at the end of the audit period.

The industry believes that this time, the planned entry of Shi Yao Holdings into the reorganization has become the "life-saving straw" for *ST Jingfeng. Although the specific progress of the reorganization has not been announced for the time being, the company's previous announcement of recruiting reorganization investors mentioned that the leading investor needs to clarify its intention to obtain control of the company through participation in the reorganization investment, and the expression of intention to obtain control of the company made by the interested investor is irrevocable.

This also means that if Shi Yao Holdings participates in the reorganization, it will most likely not participate in the form of investment, but directly obtain control of *ST Jingfeng.

An individual from a pharmaceutical listed company analyzed for the reporter, referring to Kangmei Pharmaceutical's gradual emergence from the financial crisis after GY Group took over, with the support of the industry giant's funds and credibility endorsement. The market is also optimistic about the similar situation of Shi Yao Holdings and *ST Jingfeng. From the business line, Shi Yao Holdings is also involved in the traditional Chinese medicine business, which has a certain similarity with the main business of *ST Jingfeng. However, the industry is also observing the form of reorganization after Shi Yao Holdings enters the market, paying attention to whether it is possible to inject its own traditional Chinese medicine business assets into *ST Jingfeng.