Core Viewpoint - The acquisition of Renfu Pharmaceutical by China Merchants Group appears to be a rescue from debt, but underlying issues reveal a complex capital game with significant risks and potential mismanagement [2][10]. Financial Performance - Renfu Pharmaceutical's net profit plummeted to 1.33 billion yuan in 2024, a 37.7% year-on-year decline, marking the largest drop in six years [3]. - Despite the profit decline, the dividend payout surged to 820 million yuan, nearly doubling from three years prior, raising concerns about "profit transfer" to the original controlling shareholder [3][4]. - The dividend payout ratio skyrocketed from 17.3% to 61.6%, significantly exceeding the industry average of around 30% [3]. Shareholder Dynamics - The original controlling shareholder, Contemporary Technology, remains under judicial restructuring, with its shares frozen multiple times, creating instability in Renfu's ownership structure [5]. - The transaction for 26.62% voting rights by China Merchants Group was valued at 11.8 billion yuan, reflecting a high price-to-earnings ratio of 23, which is 40% above the industry average [6]. Asset Management - Renfu Pharmaceutical has sold over 3 billion yuan in non-core assets since 2022, but the quality of these disposals has been questioned, with significant impairments noted [7][8]. - The company reported asset impairment losses of 677 million yuan in 2024, including 135 million yuan in goodwill impairment from previous high-priced acquisitions [8]. Governance and Strategic Direction - The new management's focus on "core business" has led to questionable asset sales, raising concerns about the long-term competitiveness of the company [9]. - The governance structure is criticized for lacking industry expertise, with key board members from China Merchants Group having no pharmaceutical background, potentially leading to strategic misalignment [9]. Overall Outlook - The fundamental challenges of Renfu Pharmaceutical, including ongoing debt issues and weak core business growth, remain unresolved despite the capital infusion from China Merchants Group [10].