80x Price-to-Earnings Ratio Scares Off Investors! The Old Brand Halo Fades, Tongrentang's Medical and Wellness IPO Fails for the Fourth Time

Tongrentang Group’s capital expansion plan has run into unexpected changes. Originally scheduled to list on Hong Kong stocks on March 30 (02667.HK), Beijing Tongrentang Healthcare and Elderly Care Investment Co., Ltd. (hereinafter “Tongrentang Healthcare and Elderly Care”) released an announcement on March 27 stating that, after considering multiple factors including the current market environment, it has decided to postpone its global offering and listing plan. This means the landing timeline for the group’s fourth listed platform has been delayed again, and the IPO track record of four filing submissions and two hearing failures, which has already faced setbacks, now faces yet another twist.

Behind the postponement of Tongrentang Healthcare and Elderly Care’s listing is not only objective constraints from the market environment and subscription enthusiasm, but also closely tied to longstanding operational disputes within the company itself. Multiple pain points exposed in its fundamentals are also the core reasons the market is observing from the sidelines.

Weak subscription demand

The valuation for Tongrentang Healthcare and Elderly Care’s IPO is significantly on the high side, and market subscription enthusiasm is notably insufficient—one of the direct triggers for the delay in its listing. Based on the proposed issue price upper limit of 8.30 Hong Kong dollars, the post-issue market capitalization is about HK$3.86 billion, corresponding to a price-to-earnings (P/E) ratio of over 80 times based on 2024 net profit. By comparison, in the same sector, the P/E ratio of the Hong Kong-listed company Gushengtang is about 19 times, while within the group, Tongrentang Technology and Tongrentang Guoyao’s P/E ratios are both within 20 times.

According to publicly available data, the over-subscription multiple for Tongrentang Healthcare and Elderly Care’s public offering is only 4.85 times. It is understood that the over-subscription multiple refers to margin lending in the Hong Kong stock market; the over-subscription multiple directly reflects market subscription momentum— the higher the multiple, the more attention and participation the market shows in that IPO; conversely, lower multiples indicate weak subscription enthusiasm. It is worth noting that among the other three companies pricing on the same day, the over-subscription index for the healthcare segment, DESHI-B, was 637.82 times, forming a stark contrast with Tongrentang Healthcare and Elderly Care.

With retail investors’ subscription enthusiasm being low, and with four companies launching synchronized bookbuilding on the listing day, subscription funds are further diluted. With multiple factors compounding, the listing pressure on Tongrentang Healthcare and Elderly Care has increased significantly.

As a core platform of Tongrentang Group focusing on traditional Chinese medicine medical care and elderly care services, the company originally hoped to complete capital deployment through this IPO, further supporting merger-and-acquisition expansion and business upgrades. Sun Tianyi, a senior consultant at Junhe Consulting, told a reporter from The Huaxia Times that the sudden delay of the listing plan’s most direct impact is that the capital chain faces pressure. The fundraising intended for network expansion has fallen through, forcing the pace of expansion through external acquisitions to slow down. In addition, the cooling of public subscription exposed market doubts about its “high valuation and weak growth” model; its brand credibility has been damaged, making subsequent financing more difficult, which in turn forces it to shift from “building scale through acquisitions” to strengthening its internal profitability.

Looking back at its IPO “on-ramp” journey, Tongrentang Healthcare and Elderly Care’s path to listing has been full of twists and turns. After its first filing in June 2024 was declared ineffective, its two subsequent filings in December 2024 and June 2025 were again declared ineffective due to issues such as the market environment and the company’s own preparations. Only after its fourth filing in January 2026 did it pass the hearing and begin the offering, with the originally planned listing date of March 30. If this listing proceeds smoothly, Tongrentang Group will form an industrial layout with “A+H” presence across dual markets and coordinated linkage among four listed platforms, covering the entire industrial chain from Chinese medicine production, R&D, overseas sales, to healthcare and elderly care services. However, the delay also highlights the market’s continuing concerns about its excessive reliance on the group’s capital infusions, profitability supported by a single product line, and notable risks related to compliance and goodwill. At present, Tongrentang Healthcare and Elderly Care has initiated refund procedures. Whether the company can restart the listing process under adjusted market conditions remains to be continuously observed by the market.

Turning losses around through consolidation

In the early stage of its establishment in 2015, Tongrentang Healthcare and Elderly Care operated as an investment platform, with high dependence on the acquisition path to drive performance expansion. In 2022, it acquired Zhejiang Sanxitang Healthcare Hospital and Sanxitang Guoyao Pharmacy. In 2024, it obtained the equity interests of two traditional Chinese medicine outpatient departments, Shanghai Chengzitang and Zhonghetang, achieving rapid scale uplift and turning losses into profits through quick consolidation.

Financial data shows that Tongrentang Healthcare and Elderly Care’s turnaround in performance depends heavily on acquisition-based consolidation, while its internal profitability capability remains relatively weak. In 2022, the company recorded a net loss of RMB 9.23M, but in 2023 it achieved a net profit of RMB 42.63M and successfully turned around; the core incremental contribution came from the consolidation of Sanxitang, which drove performance. In 2024, the company’s net profit further increased to RMB 46.2M, maintaining a profit-making trend. However, if the performance dividend brought by acquisitions through consolidation is stripped out, Tongrentang Healthcare and Elderly Care’s internal profitability capability is hard to describe as optimistic. As for the company’s flagship single product, Angong Niuhuang Wan, it has become the core pillar supporting the company’s profitability fundamentals.

To support its healthcare and elderly care platform, Tongrentang Group has tilted significant resources toward it. In January 2024, Sanxitang was granted the exclusive sales rights to the Angong Niuhuang Wan series products within the entire Zhejiang Province scope (excluding Tongrentang Group’s pharmacies and medical institutions). Backed by this high-gross-margin Chinese medicine single product, Sanxitang achieved sales revenue of only RMB 73.15M from the natural product Angong Niuhuang Wan that same year; with wholesale revenue accounting for as much as 70.5%, it became the most core source of profitability for Tongrentang Healthcare and Elderly Care.

From the perspective of revenue structure, Tongrentang Healthcare and Elderly Care’s business is mainly traditional Chinese medicine medical services. In 2024, this segment generated revenue of RMB 988 million, accounting for 84.1% of total revenue. Sales of health products came next, with revenue of RMB 167 million, representing 14.2% of total revenue, and Angong Niuhuang Wan is precisely the core support for the health products segment.

It is worth noting that the “quality” of the company’s profits still needs to be improved. In its 2024 net profit, there is a one-off gain of RMB 17.10 million from the sale of the Shijiazhuang Tongrentang Traditional Chinese Medicine Hospital. After excluding this portion of non-recurring gains and losses, profit from core operations actually showed a decline. In 2025, the company’s net profit further fell to RMB 33.80 million, down 26.8% year over year. Behind the slowing growth rate in profitability are multiple real dilemmas: the fade-out of acquisition dividends, weak internal growth momentum, and increased compliance costs.

Operational pain points become prominent

In terms of its operational layout, although Tongrentang Healthcare and Elderly Care bears the name “healthcare and elderly care,” its core business still focuses on traditional Chinese medicine diagnosis and treatment. Elderly care services account for a negligible share, and the integration of healthcare and elderly care largely remains at the conceptual level. In 2024, the company’s revenue from healthcare and elderly care management services was only RMB 15.50 million, accounting for less than 1.3% of total revenue. Moreover, the business is highly concentrated in Beijing, Zhejiang, and Shanghai—three regions—with extremely high regional concentration, and the balance of its business layout needs improvement.

More troublesome than its operational weaknesses is the frequent occurrence of compliance risks. The violations disclosed in the prospectus show that from 2022 to 2025, multiple medical institutions under Tongrentang Healthcare and Elderly Care were cumulatively fined more than RMB 4.0 million due to multiple compliance issues. The penalties involved multiple core institutions, with violations of various types, and some issues continued to be exposed. Among them, Shanghai Zhonghetang violated regulatory requirements for医保-designated institutions before transferring equity interests, and the single fine reached RMB 2.98 million, making it the institution with the highest single penalty amount within its portfolio. Shijiazhuang Tongrentang Traditional Chinese Medicine Hospital, Shanghai Chengzitang, and Shanghai Zhonghetang were collectively fined about RMB 1.20 million for issues such as improper pricing and improper reimbursement of医保 expenses. Shanghai Chengzitang was also penalized by regulators for publishing medical advertisements without obtaining medical advertising review approval. As for Beijing Tongrentang Traditional Chinese Medicine Hospital, it has repeatedly shown management gaps, and was repeatedly warned and fined by regulatory authorities for issues including the use of non-medical technical personnel, not filling medical records in accordance with regulations, and improper handling of medical waste.

At the same time, the company’s high goodwill risk also cannot be ignored. As of the end of September 2025, Tongrentang Healthcare and Elderly Care’s goodwill carrying value was as high as RMB 263 million, with goodwill mainly arising from acquisition targets such as Sanxitang and Shanghai Chengzitang. If the subsequent performance of these acquisition targets fails to meet expectations, goodwill impairment will directly impact the company’s profitability, further intensifying its operational pressure.

Overall, the delay in Tongrentang Healthcare and Elderly Care’s listing is both an objective result of insufficient market subscription enthusiasm and closely related to multiple pain points such as the company’s own profit structure and operational management. In its announcement, the company states that it “remains committed to completing the global offering and listing in a timely manner.” Regarding the subsequent IPO plan, the company’s board secretary office told a reporter from The Huaxia Times that everything will be subject to the announcement. As an important part of Tongrentang Group’s efforts to improve the layout across the whole industrial chain, whether the company can rectify its operational shortcomings, resolve compliance and goodwill risks, and successfully restart the listing process, a reporter from The Huaxia Times will continue to pay attention.

Editor of this issue: Sun Qi