Core Viewpoint - Haofan Bio is facing capacity bottlenecks and has proposed an acquisition plan to enhance its production capacity, despite the target company reporting losses in the past year and the first quarter of this year [1][3]. Group 1: Acquisition Details - Haofan Bio plans to use 160 million yuan of its own or raised funds to acquire 100% equity of Hangzhou Foster Pharmaceutical Co., Ltd. The acquisition will occur in two phases, with the first phase granting Haofan Bio 85% equity and the second phase achieving full ownership [1][3]. - Hangzhou Foster specializes in the research, production, and sales of advanced intermediates and specialty APIs, focusing on oncology, antiviral, allergy, cardiovascular, and psychiatric medications [1][3]. Group 2: Strategic Rationale - The acquisition will allow Haofan Bio to extend its product chain into downstream intermediates and APIs, enriching and optimizing its product structure, and creating new business and profit growth points [3]. - The target company has established a GMP-compliant production and quality management system, which will enhance Haofan Bio's quality management capabilities and overall service capacity [3]. - The acquisition is expected to facilitate resource sharing and market synergy between Haofan Bio and Hangzhou Foster, enhancing customer resource and sales channel integration [3]. Group 3: Financial Performance of Target Company - Hangzhou Foster reported a revenue of 204 million yuan in 2024 with a net loss of 28.44 million yuan, and for the first quarter of 2025, it generated a revenue of 26.18 million yuan with a net loss of 8.44 million yuan [4]. - The company has been facing cash flow challenges, with negative cash flow from operating activities reported [4]. Group 4: Valuation and Premium - The acquisition involves a premium, with the assessed value of Hangzhou Foster's equity at 162 million yuan, reflecting a 251.52% increase over its book value of 46.03 million yuan [5]. - The premium is justified based on the asset's growth potential and market positioning, although significant premiums warrant caution from management and investors [5].