Toujing Life Sciences (300642.SZ), engaged in in vitro diagnostics and gene sequencing services, is experiencing its most significant performance "Waterloo" since going public.
On the evening of August 25, Toujing Life Sciences released its semi-annual report for 2024, showing that the company achieved a business income of 215 million yuan in the first half of the year, a year-on-year decrease of 21.86%, marking the largest decline since the same period in 2020. The net profit attributable to the parent company after deducting non-recurring gains was only 3.1117 million yuan, a year-on-year decrease of 87.98%, representing the worst performance in profitable years.
The reduction in demand from third-party testing institutions and health check-up organizations, along with the decline in income from supporting testing equipment, is the main reason for the decline in Toujing Life Sciences' performance. Additionally, the impairment of accounts receivable and inventory devaluation has also eroded profits.
Among the top ten shareholders of Toujing Life Sciences, well-known foreign shareholders such as Goldman Sachs, Morgan Stanley, and UBS had purchased and held shares from 2020 to 2021. Since 2022, the stock price of Toujing Life Sciences has cumulatively fallen by 60%, with the latest stock price in the lowest historical range, deeply trapping these foreign shareholders.
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The decline in industry demand has led to a significant drop in performance.
Toujing Life Sciences' main business is the research and development, production, and sales of self-branded in vitro diagnostic products, positioned in the mid-to-high-end in vitro diagnostic reagents. The current products mainly involve a series of products for tumor detection throughout the course, autoimmune, hormones, cardiovascular diseases, pathogen infections, and reproductive health as the main application directions.
The financial report shows that in the first half of the year, Toujing Life Sciences achieved a business income of 215 million yuan, a year-on-year decrease of 21.86%, and the net profit attributable to the parent company was 6.6334 million yuan, a year-on-year decrease of 80.97%. The net profit attributable to the parent company after deducting non-recurring gains was 3.1117 million yuan, a year-on-year decrease of 87.98%.
However, looking only at the second quarter, the company's revenue decreased by 20.48% quarter-on-quarter, to 122 million yuan, and the net profit attributable to the parent company turned from loss to profit, to 11.1219 million yuan.
It is worth noting that during the reporting period, there is a significant gap between the gross margin and net margin of Toujing Life Sciences. The sales gross margin is 63.55%, and the sales net margin is 1.65%, with a difference of nearly 62 percentage points.
From an industry perspective, the decline in market demand and the reduction in customer procurement volume are the main reasons for the decline in Toujing Life Sciences' performance. The company's main customers are medical institutions, health check-up centers, and third-party testing centers. Since the beginning of this year, some third-party testing institutions have successively carried out price negotiations for HPV products. The procurement volume of HPV products by price-sensitive third-party testing institutions for Toujing Life Sciences has significantly decreased. At the same time, the demand for high-end tumor detection has also decreased, leading to a decline in operating performance.During the reporting period, credit impairment losses amounted to 10.046.3 million yuan, primarily due to provisions for bad debts of accounts receivable, other receivables, and long-term receivables.
As of June 30, the accounts receivable of Transgenomic Life Sciences stood at 234 million yuan, with monetary funds at 317 million yuan. Additionally, the company's asset impairment losses were approximately 6.88 million yuan, mainly due to the company's provision for inventory devaluation.
Goldman Sachs and UBS are trapped, and funds are leaving in a "group" manner.
Recently, the concept of monkeypox has become a hot topic in the Shanghai and Shenzhen stock markets, with related concept stocks being actively traded by capital. Transgenomic Life Sciences, which has been performing poorly, has also become a target of speculation.
On the morning of August 27, monkeypox concept stocks opened higher, with several stocks hitting the daily limit. Transgenomic Life Sciences surged by more than 12% within five minutes of opening, defying the negative mid-year performance, and closed up 6.19%, with a total market value of 2 billion yuan.
Since mid-August, as the monkeypox concept has heated up, Transgenomic Life Sciences has been repeatedly speculated by capital. On August 16, Transgenomic Life Sciences hit the "20cm" daily limit, and then rose by 7.07% the next day, with intraday prices reaching a near 8-month high.
However, from August 20 to 26, Transgenomic Life Sciences fell by 24.3%, giving up all previous gains, with a year-to-date change of -30.27%.
Regarding the development of monkeypox testing business, Transgenomic Life Sciences disclosed in a stock trading abnormality announcement that the company has developed a monkeypox virus nucleic acid detection kit using different methodologies and has obtained the EU CE market access qualification. However, it has not yet obtained the medical device registration certificate for monkeypox testing approved by the National Medical Products Administration. To date, the company has not received orders for monkeypox testing products, nor has it started production of these products, which has not impacted the company's production and operations.
As the company's operating performance continues to decline, institutional investors are no longer staying. Wind data shows that as of August 26, a total of 9 institutional investors disclosed holding shares of Transgenomic Life Sciences A-shares, with a combined holding of 54.2084 million shares, accounting for 33.25% of the total share capital of Transgenomic Life Sciences. Compared to the previous quarter, the combined institutional holding ratio has decreased by 0.32 percentage points. Institutions including UBS AG (Switzerland), Shanghai Pudong New Star Newsta Venture Investment Co., Ltd., Goldman Sachs, Morgan Stanley, and Zhuhai Abama Asset Management Co., Ltd. are all on the list.
In the past three years, as Transgenomic Life Sciences' performance has declined, the stock price has continued to fall, with a cumulative drop of 60.38% so far in 2022, causing significant losses for many foreign investors who have held onto their shares.In the second quarter of 2020, UBS and Morgan Stanley newly became the top ten shareholders of Transgen Life Sciences. Goldman Sachs and Merrill Lynch joined the ranks in the first quarter of 2021. Over the past four years, these four institutional shareholders have made minor buy and sell transactions, but have always been among the top ten shareholders of Transgen Life Sciences. As of June 30th of this year, UBS, Merrill Lynch, Goldman Sachs Group, and Morgan Stanley respectively held 8.27 million, 6.08 million, 6.02 million, and 5.78 million shares of the listed company.
Additionally, in 2021, Transgen Life Sciences conducted a mid-year dividend of a 10-to-8 stock bonus. The average share price for the quarter of the bonus shares was 39.25 yuan per share (pre-rights), which is a 68.9% discount compared to the current price. Currently, the stock price of Transgen Life Sciences is in its historical low range, significantly lower than the stock price when the aforementioned four shareholders entered the market. Based on this calculation, the shares held by shareholders such as Goldman Sachs, UBS, and Morgan Stanley are all locked in.
Funds have also experienced a "herding" buy-in and a "herding" exit from Transgen Life Sciences. Data from Eastmoney Choice shows that as of September 30, 2023, there were no public mutual funds among the shareholders of Transgen Life Sciences. However, by December 31st of the same year, 65 funds held 3.85 million shares of the company, accounting for 2.8% of the circulating shares. During that quarter, Transgen Life Sciences fell by 8.55%. In the first quarter of this year, Transgen Life Sciences plummeted by nearly 21%, and by the end of that quarter, all 65 funds had exited, with no new funds purchasing shares of the company. This situation continued until the end of the second quarter.
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