CSPC Innovation(SZ:300765) Zhong Jin Zai Xian·2025-12-11 14:28Core Viewpoint - The journey of Sinovation has shifted from a grand vision of building an "innovative pharmaceutical empire" to facing harsh realities, particularly after the termination of a significant acquisition deal, leading to a deteriorating financial situation and challenges in the Hong Kong IPO market [1][2]. Group 1: Company Transformation and Challenges - Sinovation, initially a functional raw material producer, aimed to transform into an innovative pharmaceutical company by acquiring assets in cutting-edge fields like ADC and mRNA vaccines [1]. - The planned acquisition of Shiyao Baike for 7.6 billion yuan was halted due to a drastic price drop of its core product, "Jin You Li," from approximately 1,600 yuan to about 666 yuan, alongside stagnant sales and increased market competition [1]. - The anticipated GLP-1 weight loss drug pipeline lacks competitive advantages, failing to fill the revenue gap [1]. Group 2: Financial Deterioration - The cessation of external funding from the halted acquisition has led to a rapid decline in Sinovation's financial health, characterized by a struggling caffeine business and escalating R&D costs, which surged by 81% year-on-year in the first half of 2025 [2]. - The IPO in Hong Kong is perceived more as a necessity to address a significant funding gap rather than a strategic global expansion [2]. Group 3: Market Environment and IPO Challenges - Sinovation's IPO faces a challenging market environment, with a rising post-listing failure rate of 42.10% since November, compared to 30.23% in the first half of 2025 and 35.71% for the entire year of 2024, indicating a shift towards selective investment by investors [3]. - The valuation conflict in the "A+H" model poses a significant challenge, as Hong Kong investors prioritize cash flow and dividend returns, while Sinovation is currently unprofitable with negative cash flow [3]. Group 4: Liquidity Concerns and Funding Utilization - New IPO regulations in Hong Kong allow issuers to set public offering ratios between 10% and 60%, leading to potential liquidity issues as over 90% of shares may be concentrated among a few cornerstone and institutional investors [4]. - The ambiguity surrounding the use of funds raised from the IPO raises concerns about whether they will be effectively utilized for breakthrough projects or diluted across broad R&D investments [5][6]. Group 5: Future Prospects and Commercialization Challenges - The future value of Sinovation hinges on its ability to commercialize its innovative drug pipeline, with existing products lacking competitive advantages and future prospects in ADC and mRNA vaccine platforms facing intense competition [6]. - Successfully entering the Hong Kong market is only the first step; the real challenge lies in demonstrating to a more rational international market that the company is not only in need of funds but also worthy of investment [6].