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China Traditional Chinese Medicine / Equity Bottom-Up

China Traditional Chinese Medicine (570 HK)

<ul>
 <li>
<a href="https://smartkarma.com/entities/china-traditional-chinese-medicine-holdings-co-ltd">China Traditional Chinese Medicine</a> (CTCM) is a market leader in China's Traditional Chinese Medicine (TCM) sector, particularly in concentrated TCM granules (CTCMG), but is facing significant financial headwinds.</li>
 <li>The company's financial performance has deteriorated sharply, swinging from a net profit to a significant net loss in the most recent fiscal year, driven by declining revenues, margin pressure, and increased impairments.</li>
 <li>Deeply discounted valuation multiples relative to peers reflect the current operational challenges and high uncertainty, but the company could benefit from long-term industry tailwinds such as an aging population and government support for TCM.</li>
</ul>This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.


  
China Traditional Chinese Medicine (CTCM) is a market leader in China's Traditional Chinese Medicine (TCM) sector, particularly in concentrated TCM granules (CTCMG), but is facing significant financial headwinds.
  The company's financial performance has deteriorated sharply, swinging from a net profit to a significant net loss in the most recent fiscal year, driven by declining revenues, margin pressure, and increased impairments.
  Deeply discounted valuation multiples relative to peers reflect the current operational challenges and high uncertainty, but the company could benefit from long-term industry tailwinds such as an aging population and government support for TCM.
This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

Primer: China Traditional Chinese Medicine (570 HK) - Aug 2026

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>China TCM’s Profit Warning indicates a weak 25H1 results. Performance downturn is longer-than-expected. But as an industry leader, China TCM will enhance its bargaining power by integrating the industrial chain.</li>
<li>Investors have reignited interest in betting on privatization of China TCM and potential merger with Taiji, as deadline is approaching.Privatization price may be lower considering China TCM’s weak 25H1 results.</li>
<li>HK$0.84-2.17/Share is the reasonable share price range at this stage.The catalyst for China TCM’s share price is CNPGC may announce how to address the horizontal competition issue within three months.</li>
</ul>


China TCM’s Profit Warning indicates a weak 25H1 results. Performance downturn is longer-than-expected. But as an industry leader, China TCM will enhance its bargaining power by integrating the industrial chain.
Investors have reignited interest in betting on privatization of China TCM and potential merger with Taiji, as deadline is approaching.Privatization price may be lower considering China TCM’s weak 25H1 results.
HK$0.84-2.17/Share is the reasonable share price range at this stage.The catalyst for China TCM’s share price is CNPGC may announce how to address the horizontal competition issue within three months.


China TCM (570.HK) - About the 25H1 Profit Warning and the Outlook

<ul>
<li>TCM finished drugs and TCM decoction pieces businesses could be the second and third growth curve of China TCM when the concentrated TCM granules business is facing VBP headwinds.</li>
<li>2024 would be the performance low point. Due to 2024 low base, we would see positive growth in 2025.Performance recovery is expected in next three years based on our forecast.</li>
<li>Annual profit of RMB1 billion is achievable. If based on 10x P/E, market value is RMB10 billion.We think if valuations fall below RMB10 billion, investors can consider buying on dips.</li>
</ul>


TCM finished drugs and TCM decoction pieces businesses could be the second and third growth curve of China TCM when the concentrated TCM granules business is facing VBP headwinds.
2024 would be the performance low point. Due to 2024 low base, we would see positive growth in 2025.Performance recovery is expected in next three years based on our forecast.
Annual profit of RMB1 billion is achievable. If based on 10x P/E, market value is RMB10 billion.We think if valuations fall below RMB10 billion, investors can consider buying on dips.


China TCM (570.HK) - Updates on Performance Forecast and Valuation Outlook Based on 2024 Results

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>On the 26th March, <a href="https://www.smartkarma.com/entities/enn-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:316:1" rel="noopener">ENN Energy (2688 HK)</a> announced a cash/scrip Offer from <a href="https://www.smartkarma.com/entities/enn-natural-gas-co-ltd" target="_blank" data-smartkarma-citation="entities:16456:1" rel="noopener">ENN Natural Gas (600803 CH)</a> (ENN-NG), its largest shareholder.</li>
<li>The pushback is that the scrip portion pivots off the value of newly-listed ENN-NG H-shares. And the IFA's theoretical assessment on such leaves a lot to be desired.</li>
<li>A redacted version of ENN-NG's application proof is now out. Curiously, the share ratio - new ENN-NG H Shares for each ENN shares - is noticeably absent</li>
</ul>


On the 26th March, ENN Energy (2688 HK) announced a cash/scrip Offer from ENN Natural Gas (600803 CH) (ENN-NG), its largest shareholder.
The pushback is that the scrip portion pivots off the value of newly-listed ENN-NG H-shares. And the IFA's theoretical assessment on such leaves a lot to be desired.
A redacted version of ENN-NG's application proof is now out. Curiously, the share ratio - new ENN-NG H Shares for each ENN shares - is noticeably absent


ENN Energy (2688 HK): ENN Natural Gas' Application Proof Is Out. Interesting For What Is Not Present

<ul>
<li>You might have to go all the back to <a href="https://www.smartkarma.com/entities/guoco-group-ltd" target="_blank" data-smartkarma-citation="entities:5290:1" rel="noopener">Guoco Group Ltd (53 HK)</a>'s 2012/2013 unconditional cash offer, which was ostensibly blocked by First Eagle AND Elliott Advisors.</li>
<li>Otherwise, it's slim pickings. Past Schemes or Tender Offers arguably failed as minorities were simply not supportive. There are exceptions, like <a href="https://www.smartkarma.com/entities/soho-china-ltd" target="_blank" data-smartkarma-citation="entities:4123:1" rel="noopener">Soho China (410 HK)</a> and <a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">TCM (570 HK)</a>
</li>
<li>IF LVC wish to remain active in this space/region, they appear to be going about it in a counterproductive way. I still don't understand why they would want to block.</li>
</ul>


You might have to go all the back to Guoco Group Ltd (53 HK)'s 2012/2013 unconditional cash offer, which was ostensibly blocked by First Eagle AND Elliott Advisors.
Otherwise, it's slim pickings. Past Schemes or Tender Offers arguably failed as minorities were simply not supportive. There are exceptions, like Soho China (410 HK) and TCM (570 HK)

IF LVC wish to remain active in this space/region, they appear to be going about it in a counterproductive way. I still don't understand why they would want to block.


Henlius (2696 HK): So, When Was The Last Time A PE/VC Outfit Blocked A Deal?

Hong Kong

China Traditional Chinese Medicine Holdings Co. Ltd. is an investment holding company engaged in the research, development, production, and sale of traditional Chinese medicine (TCM) and pharmaceutical products. It offers concentrated TCM granules, healthcare products, decoction pieces, and finished drugs, as well as Chinese medical healthcare solutions. The company was founded in 1905 and is headquartered in Hong Kong.

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China Traditional Chinese Medicine (570 HK)

Primer: China Traditional Chinese Medicine (570 HK) - Aug 2026

China Traditional Chinese Medicine (CTCM) is a market leader in China's Traditional Chinese Medicine (TCM) sector, particularly in concentrated...

αSK Primers

China TCM (570.HK) - About the 25H1 Profit Warning and the Outlook

China TCM released weak 25H1 result,but it make investors reignite interest in betting on privatization/merger with Taiji.The Catalyst is CNPGC may...

Xinyao (Criss) Wang

China TCM (570.HK) - Updates on Performance Forecast and Valuation Outlook Based on 2024 Results

China TCM’s valuation hit RMB10 billion, in line with our analysis in the insight.As annual profit scale of RMB1bn is achievable, we think this is...

Xinyao (Criss) Wang

ENN Energy (2688 HK): ENN Natural Gas' Application Proof Is Out. Interesting For What Is Not Present

I still would not enter here. The H-share price may surprise to the downside. The Scheme may even get voted down. Unless you have a strong...

David Blennerhassett

Henlius (2696 HK): So, When Was The Last Time A PE/VC Outfit Blocked A Deal?

PE and/or a VC outfit blocking deals are rare. Which may suggest LVC doesn't want that moniker. You could therefore, extrapolate that line of...

David Blennerhassett

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