New Stocks Outlook | Shanghai Shengsheng goes public in Hong Kong to seize the opportunity in the pharmaceutical cold chain industry.

According to recent disclosures by the Hong Kong Stock Exchange, Shanghai Shengsheng Pharmaceutical Cold Chain Technology Co., Ltd. ("Shanghai Shengsheng") has submitted an application for listing on the main board of the Hong Kong Stock Exchange, with CICC and Sinolink (Hong Kong) as its joint sponsors. It is worth noting that this is not the company's first attempt at an IPO: In June 2023, the company had submitted an application for listing on the main board of the Shanghai Stock Exchange, and was once expected to become the first A-share company in the pharmaceutical cold chain industry. However, after a round of inquiries, the company voluntarily withdrew its application materials in 2024, putting its A-share listing on hold. Regarding the shift to listing in Hong Kong, Shanghai Shengsheng explained that it was considering the future expansion needs of the company. The Hong Kong listing will provide the company with an international platform to attract foreign capital and promote the group to overseas investors. However, considering the actual situation, fluctuations in performance may be a more realistic consideration: In 2024, the company's profits experienced a significant decline due to increased share-based payment expenses. In contrast, the Hong Kong stock market is often more tolerant of profit fluctuations for growth-oriented companies. Against the backdrop of the continued hot pursuit of innovative drug research and development, as a "water seller" serving this field, Shanghai Shengsheng's listing in Hong Kong this time is expected to attract the attention of many investors. Significant profit fluctuations in the past three years Public information shows that Shanghai Shengsheng is an integrated temperature-controlled supply chain service provider in the pharmaceutical and life sciences industry, focusing mainly on clinical trial temperature-controlled supply chain services. It has also extended its services to the commercial stage of medical product temperature-controlled supply chain services, as well as research and manufacturing of temperature control equipment and materials, creating comprehensive temperature-controlled supply chain capabilities for the full lifecycle and application scenarios. It is understood that the company's financial performance over the past three years has shown a characteristic of "steady revenue growth and significant profit fluctuations." For the first nine months of 2023, 2024, and 2025, revenue was approximately RMB 614 million, RMB 654 million, and RMB 538 million, respectively, while net profits for the same period were RMB 92.03 million, RMB 26.39 million, and RMB 113 million, respectively. In 2024, the company's revenue increased by 6.56% year-on-year, but profits declined by 70% year-on-year, mainly due to share-based payment expenses of RMB 72.123 million. In addition, sales and marketing expenses increased by 56.8%, administrative expenses increased by 96.1%, and impairment losses on trade and other receivables also increased by over 60%, collectively squeezing the profit margin. In 2025, the company's revenue rebounded with double-digit growth, increasing by 10.97% year-on-year in the first nine months, while adjusted net profit increased by 70.29% year-on-year. The gross profit margin also improved significantly, rising from 31.7% in the same period last year to 37.6%. The company attributed this to the increase in revenue from clinical trial services, scale effects from digitalization and optimized business processes, and improved operational efficiency. In terms of network layout, as of January 5, 2026, the company has established three clinical drug warehouses and a biospecimen warehouse in Shanghai, Beijing, and Guangzhou, with over 130 operating sites, including over 40 regional operating centers in logistics hubs such as Wuhan, Xi'an, and Chengdu. The company's network supports door-to-door delivery services, with delivery times in most areas achievable within 24 to 48 hours and up to 48 to 72 hours in remote areas. Despite having a solid business foundation, Shanghai Shengsheng still faces several operational challenges. According to the prospectus data, the company has a high concentration of customers, with sales to the top five customers increasing from 15.9% in the first three quarters of 2023 to 19.5% in the same period in 2025, and the share of the largest single customer increasing from 6.0% to 9.6%. Although the company stated that most of the top five customers have maintained long-term cooperative relationships, any changes in key customers could still have a significant impact on performance. Furthermore, the scale of trade receivables has been continuously expanding, reaching RMB 221 million by the end of September 2025, with days of turnover increasing from 98 days to 105 days. This indicates that while the company is expanding its business, it is also facing significant repayment pressures and bad debt risks. Deeply tied to the innovative drug industry, with over 80% of revenue coming from a single business From the revenue structure perspective, clinical trial temperature-controlled supply chain services are undoubtedly the company's core pillar, accounting for over 82% of revenue since 2023. This business mainly serves innovative drug development, covering temperature-sensitive biopharmaceutical therapies such as monoclonal and bispecific antibodies, antibody-drug conjugates, recombinant proteins, nucleic acid drugs, cell and gene therapies, and others. As for other businesses, commercial medical product temperature-controlled services account for only about 15% of revenue, while temperature-controlled product sales are less than 4%, with generally smaller revenue scales. As a company deeply tied to performance and the innovative drug industry, Shanghai Shengsheng's performance is expected to continue benefiting from the high prosperity of the innovative drug industry in the future. Data from the National Medical Products Administration shows that as of 2025, China has approved a record-high of 76 innovative drugs for market entry, exceeding the 48 approvals in 2024; the total amount of authorized transactions for innovative drugs in China exceeded $130 billion in 2025, with over 150 transaction deals, setting a new historical record. In terms of capital market performance, the innovative drug sector remains active, with the Hong Kong Stock Connect Innovation Drug Index rising by 66.52% in 2025, significantly outperforming the 27.77% increase in the Hang Seng Index during the same period. In the A-share market, the CS Innovation Drug Index rose by 19.34% in 2025, also outperforming the 17.66% increase in the Shanghai and Shenzhen 300 Index. It is understood that clinical trial innovative drugs and therapies typically have high temperature requirements, transport stability, and compliance standards, making it a field with significant technical barriers. Shanghai Shengsheng currently provides solutions supporting a wide range of temperatures, with a technology portfolio covering refrigeration, freezing, dry ice, and liquid nitrogen. The company's phase change materials span 18 phase transition points from -70C to +37C, catering to diverse temperature requirements. With over 60 patents and patent applications in areas such as composite integration, thermal performance enhancement, and structural design, the company has established certain technological barriers. Looking solely at the clinical trial temperature-controlled supply chain service business, Shanghai Shengsheng has established a leading position in the segmented track. According to a Frost & Sullivan report based on 2024 revenue, Shanghai Shengsheng is the largest clinical trial temperature-controlled supply chain service provider in China by revenue and one of the top ten globally, with a market share of only 1.5% in 2024 based on revenue, indicating that the company still faces considerable competition in overseas markets. In 2024, Shanghai Shengsheng's overseas revenue was RMB 47.517 million, an increase of 135.99% year-on-year; in the first nine months of 2025, the company's revenue from overseas was RMB 37.206 million, an increase of 10.36% year-on-year, with a significant slowdown in growth compared to the previous year, and the contribution of overseas markets to the company's total revenue decreased by 0.1 percentage points. On the other hand, aside from expanding the commercial medical product temperature-controlled supply chain services and sales, the company mentioned in its prospectus that it plans to extend the application scenarios of temperature control technology from the pharmaceutical and life sciences industry to advanced manufacturing and new energy sectors in the future. However, it is worth noting that the pharmaceutical cold chain logistics industry has many competitors, with leading logistics companies occupying dominant market positions based on their mature logistics systems, and pharmaceutical companies opting to build their cold chain networks. Cross-industry scenarios such as new energy have significant differences in technology requirements, management standards, etc., and may not contribute significantly to performance in the short term. In addition, it is worth noting that the company's research and development expenses decreased by 5.5% year-on-year in the first nine months of 2025, accounting for only 3% of total revenue. The company explained that this was mainly due to the optimization of the IT research and development personnel structure as part of its digitalization strategy. The reduction in research and development investment may also affect the company's long-term technical reserves. Overall, Shanghai Shengsheng's core business is deeply tied to the thriving innovative drug industry, with high customer stickiness and a certain level of technological moat, presenting a clear business logic. However, the company also faces risks of significant profit fluctuations, a single business structure, and challenges in overseas markets and new business expansion. If the pace of research and development investment in innovative drugs slows down in the future, or industry competition intensifies, it could directly impact the company's growth momentum. For Shanghai Shengsheng, the story of being a "water seller" in innovative drugs is appealing, but whether the company can achieve stable and sustainable high growth in the future, build a second growth curve on top of its existing business, and enhance its growth potential, will likely require time to be tested.