Shapu Aisi 24x Premium "Swallows" the Actual Controller's Assets

Ask AI · Are the valuation grounds for Sapure Life’s premium acquisition reliable?

China Jing News reporter Su Hao, Lu Zikun, Beijing report

(Outside view of Sapure Life’s building Company website / Photo)

Recently, Sapure Life (603168.SH) released a major asset acquisition plan, proposing to acquire, in cash, 528 million yuan to purchase 100% of the equity interest in Shanghai Qinli Industrial Co., Ltd. (hereinafter referred to as “Shanghai Qinli”) held by its controlling shareholder and related parties.

However, behind the surface-level capital acquisition are a valuation appreciation rate as high as 24x, inadequate book funds, and a series of asset reshuffling operations under the “Putian system” background of the actual controller. That same night after the announcement was disclosed, the Shanghai Stock Exchange immediately issued a letter of inquiry, directly pointing to key issues such as whether the transaction valuation is reasonable, whether the performance commitments are feasible, and the source of funds.

Regarding the specific details and subsequent arrangements of this transaction, reporters from China Business Journal previously sent a letter and called Sapure Life to request an interview, but they did not receive a response. During that period, the reporters repeatedly dialed the company’s investor relations department phone number, but no one answered.

The mystery of the 24x premium

According to the acquisition plan, Sapure Life plans to indirectly fully control Shanghai Tielun Hospital through the acquisition of equity interests in Shanghai Qinli held by Shanghai Yihe Medical Management Co., Ltd. and Shanghai Yanghe Industrial Co., Ltd. After the transaction is completed, Sapure Life will indirectly hold 100% equity of Shanghai Tielun Hospital.

Tielun Hospital is located in Hongkou District, Shanghai. It is a comprehensive hospital serving primarily middle-aged and elderly patients. In the announcement, Sapure Life emphasized that the proportion of people aged 60 and above in Hongkou District is as high as 45.2%, the highest among all districts in Shanghai. With the silver economy market being large, the acquisition aligns with the company’s strategy of focusing deeply on the “silver economy.”

However, what truly drew market attention is the pricing of the underlying assets. According to the acquisition plan, Shanghai Qinli was established in July 2022, with a registered capital of 15 million yuan, and the legal representative is Lin Hongli, the actual controller of Sapure Life. As of the valuation benchmark date of December 31, 2025, the book value of total shareholders’ equity (consolidated basis) of Shanghai Qinli was only 20.9701 million yuan, while the appraised value was as high as 528 million yuan. The appraised appreciation was 507 million yuan, and the appreciation rate reached 2,417.87%.

Sapure Life tried to justify the transaction’s reasonableness in the announcement with the claim that “the static P/E is 19.45 times, lower than the industry average,” but when the valuation details are examined closely, the issue is far more complex than that.

This valuation employed both the asset-based approach and the income approach, yet the results differ greatly: the asset-based approach appraisal value was only 22.8287 million yuan, while the income approach appraisal value was as high as 528 million yuan. The difference between the two was 505 million yuan, and the variance rate was as high as 2,112.88%.

The company ultimately chose the income approach result as the basis for transaction pricing, citing advantages such as “the hospital’s operations having stability, strong anti-cyclicality, and good cash flow.” According to the valuation report, the forecast of Shanghai Qinli’s revenue growth rates for the forecast period 2026 to 2031 are 9.50%, 8.34%, 7.52%, 6.37%, 5.79%, and 5.39%, respectively.

In response, the Shanghai Stock Exchange’s letter of inquiry also required Sapure Life to explain: taking into account the market competition landscape in the region where Tielun Hospital is located, changes in medical insurance policies, historical data on bed occupancy rates and average daily bed charges, as well as the basis for forecasts—what exactly is the specific basis and feasibility of the future revenue growth forecasts? Is there a situation where valuation is inflated due to the selective selection of parameters, thereby transferring benefits to related parties?

If the high premium already made this transaction full of doubts, Sapure Life’s capacity to pay funds adds a layer of uncertainty to the deal.

Under the transaction terms, the 528 million yuan consideration for this acquisition will be paid entirely in cash, in five installments. Of these, the first two installments total about 370 million yuan and will be paid no later than within 10 business days after completing the equity industrial and commercial change.

However, as of the end of the third quarter of 2025, Sapure Life’s cash and cash equivalents on its books were only 101 million yuan, and its trading financial assets were about 122 million yuan; together they totaled only about 223 million yuan. This means that even if the company used all the cash on its books, it would still be insufficient to cover the 370 million yuan required for the first two installments.

In its announcement, Sapure Life stated that the source of funds is “own funds and bank loans,” but this statement clearly cannot allay market concerns. The Shanghai Stock Exchange’s letter of inquiry explicitly required the company to explain the approval progress of the acquisition loans, and whether there is a risk that the transaction could fail due to insufficient funds.

Asset reshuffling under the “Putian system”

In fact, to understand the logic behind this acquisition, it is necessary to look back at the trajectory of how the Lin brothers took control of Sapure Life.

Public information shows that Sapure Life’s former controlling shareholder was Chen DeKang. In May 2020, brothers Lin Hongli and Lin Hongyuan entered the listed company by taking control through Yihe Investment. The Lin brothers are the sons of Lin Chunguang, a representative figure of medical capital under the “Putian system.” Behind them, the Lin family holds extensive medical investment business.

Shanghai Qinli—the underlying asset of this acquisition—was established in July 2022. After only a little more than three years, it was sold to the listed company at a high price of 528 million yuan. During this period, the underlying asset also leased property from Lin Chunguang, the father of the actual controller, indicating a clear related-party leasing relationship.

This is also not the first time the Lin brothers injected their own assets into a listed company. Looking back to October 2020, Sapure Life acquired Taizhou Women’s and Children’s Hospital Co., Ltd. (hereinafter referred to as “Taizhou Hospital”), owned by the actual controller, for 502 million yuan, with an appreciation rate of 278.88%. In January 2023, it again acquired Qingdao Shikang Ophthalmology Hospital Co., Ltd., an affiliated entity, for 66.5 million yuan, with an appreciation rate of 299.51%.

At that time, these two deals were widely regarded by the outside world as the actual controller fulfilling the commitment to avoid competition and “showing good intentions” by injecting assets into the listed company. However, facts later proved that after the performance commitment period ended, the operating conditions of these two hospitals quickly “changed face.”

According to financial report data, in 2024, Taizhou Hospital’s business growth fell short of expectations, leading the company to recognize a goodwill impairment of 29.8796 million yuan. Entering 2025, the situation worsened further. In the performance forecast released by Sapure Life in January this year, the company said it expects its net profit attributable to the parent company to suffer a loss of 213 million yuan to 319 million yuan in 2025. The company explained that the loss was mainly due to, based on the principle of prudence, making large goodwill impairment provisions for the aforementioned two hospitals.

Based on the two failed acquisition experiences above, the Shanghai Stock Exchange’s letter of inquiry specifically required Sapure Life to explain: considering the experience of the previous acquisition “hitting a snag,” what specific measures the company will take to ensure that Shanghai Qinli can continue to operate steadily even after the performance commitment period, and to prevent the risk of the business “changing face” from happening again.

It is worth noting that in the acquisition announcement, Sapure Life claimed that acquiring Tielun Hospital aligns with the company’s strategy of deepening its focus on the “silver economy.” The company cited data that by the end of 2024, the number of people aged 60 and above in China first exceeded 300 million, accounting for 22.0% of the national population. In Hongkou District, Shanghai, the proportion of people aged 60 and above is as high as 45.2%, the highest in the entire city. Sapure Life said it will “make effective use of capital market operations to enhance its own brand awareness and social influence,” and “seize the market in the medical services industry.”

The announcement also highlighted Tielun Hospital’s core advantages: the hospital’s core departments are led by senior experts from top-tier hospitals and subject leaders. The proportion of doctors with senior or intermediate professional titles across the hospital is over 60%. The main focus areas include management and care for chronic diseases among the elderly, postoperative rehabilitation, and complex dental restoration, among others.

However, according to the “List of Random Inspection Results by the Shanghai Municipal Healthcare Security Administration for 2024” published by the Shanghai Municipal Healthcare Security Administration in March 2025, Shanghai Tielun Hospital is listed.

The inspection results show that the institution had behaviors such as “providing unnecessary medical services, excessive treatment, and incorporating medical expenses that do not fall within the scope of medical insurance fund payments into the settlement of medical insurance funds,” resulting in losses to the medical insurance fund. It was subject to administrative handling and administrative penalties. Moreover, based on public information, the hospital has previously been punished by the medical insurance bureau and the health commission multiple times for illegal acts such as excessive examinations, repeated charges, and excessive treatment.

As of March 24, Sapure Life had still not responded to the Shanghai Stock Exchange’s letter of inquiry. That same night, the company issued an announcement stating it would delay its response to the letter of inquiry. On the same day, the company also received a “Shareholder Proposal Letter” from the China Securities Investor Protection Fund’s center, requesting the company to supplement explanations for the reasons behind the underlying company’s significant growth in performance before the acquisition, and recommending that the company carefully consider the transaction valuation.

(Editor: Cao Xueping; Reviewer: Tong Haihua; Proofread: Chen Li)