Core Viewpoint - HaiLi Bio plans to acquire 41% of Shaanxi Ruisheng Biotechnology Co., Ltd. for 399.3 million yuan, increasing its stake from 55% to 96%, raising concerns about the pricing and performance commitments of the transaction [1][3]. Group 1: Acquisition Details - The acquisition price of 399.3 million yuan offsets a previous transaction difference owed by Meilun Management Co., Ltd. [1] - After the acquisition, HaiLi Bio will strengthen its control over Ruisheng, which is crucial for its oral medical device business [3]. - The acquisition is part of a broader strategy to optimize resource allocation and enhance operational efficiency in the oral business sector [3]. Group 2: Financial Performance and Adjustments - Ruisheng achieved a net profit of 138 million yuan in 2024, exceeding its performance commitments [2]. - The initial acquisition price was adjusted from 935 million yuan to 535.7 million yuan due to Meilun's financial difficulties, requiring a refund of 399.3 million yuan [2]. - Meilun proposed to settle the transaction difference by transferring its 41% stake in Ruisheng to HaiLi Bio, which the company accepted to mitigate collection risks [3]. Group 3: Regulatory and Market Concerns - HaiLi Bio received a regulatory inquiry regarding the acquisition, focusing on the fairness of the transaction pricing and the performance guarantees [4][5]. - The valuation method used for the acquisition raised questions, as the income approach showed a significant premium compared to the market approach [5]. - Concerns exist regarding Meilun's ability to meet future performance targets for Ruisheng, given its current financial challenges [6]. Group 4: Shareholder Dynamics - There are concerns about major shareholders exiting the top ten list after the acquisition, raising questions about the confidence in the company's future [6]. - HaiLi Bio stated that the shareholder reductions were based on individual needs and that the company complied with disclosure regulations [7]. - The company aims to continue seeking quality projects in both the oral and IVD sectors to bolster its market position [7].

Core Viewpoint - Haili Biological has adjusted the acquisition price of 55% equity in Ruisheng Biological from 935 million yuan to 536 million yuan due to industry policy changes and intensified market competition, aiming to mitigate goodwill impairment risks [2][5][6]. Company Summary - Haili Biological completed the acquisition of Ruisheng Biological in October 2024, marking a significant business transformation into the oral repair materials sector [2]. - The acquisition price was initially set at 935 million yuan, but was later reduced to 536 million yuan, with a difference of approximately 399 million yuan to be refunded by Meilun Management [5][6]. - The adjustment reflects a decrease in Ruisheng Biological's valuation from 1.711 billion yuan to 974 million yuan, resulting in a significant reduction in goodwill [5][6]. - Haili Biological still holds 55% of Ruisheng Biological after the price adjustment, which is expected to positively impact cash flow [2][6]. Industry Summary - Ruisheng Biological specializes in human tissue repair and regenerative medical products, including oral bone graft materials and absorbable membranes [3]. - The market has seen an influx of new competitors, leading to price wars that have negatively impacted Ruisheng Biological's product pricing, with a nearly 30% decrease in prices compared to Q1 2024 and a further 40% drop in Q2 2025 [4][9]. - The tightening of tax incentives has also adversely affected Ruisheng Biological's revenue and profit margins, as the company shifted from a simplified tax rate of 3% to a general tax rate of 13% [5]. - Despite the challenges, Haili Biological anticipates long-term growth in the oral repair materials market driven by aging populations and increasing demand for dental implants [9][10].