Olin Biotech's Hong Kong Listing: Can the Superbug Vaccine Story Allay Concerns Over “Paper Wealth”?

ZC Asia has learnt that recently, the STAR Market-listed vaccine company Chengdu Olin Biotech Co., Ltd. (hereinafter referred to as ‘Olin Biotech’) formally submitted its application for a Main Board listing to the Hong Kong Stock Exchange, marking a crucial step towards achieving dual listing on both the A-share and H-share markets.

Established in 2009 and headquartered in Chengdu, Olin Biotech specialises in vaccine research, development and production. Listed on the STAR Market of the Shanghai Stock Exchange since 2021, its core business encompasses the development, manufacturing and commercialisation of human vaccines. Currently, its independently developed adsorbed tetanus vaccine dominates the domestic market. In recent years, the company has strategically pivoted towards pioneering vaccines targeting multidrug-resistant bacteria.

Dual Performance Under Father-Daughter Leadership: High Margins and ‘Paper Wealth’

Olin Biotech is jointly led by 72-year-old industry veteran Fan Shaowen and his 44-year-old daughter Fan Fan. As of the latest practicable date, the pair collectively control approximately 26.23% of the company's voting rights through a concerted action agreement, making them the actual controllers.

The company's recent financial performance exhibits contradictory duality. On one hand, leveraging its core product – the Tetanus Toxoid Conjugate Vaccine (TTCV) – which commands nearly 70% of the domestic market share, the company has seen steady revenue growth. Its gross profit margin has consistently remained at an astonishingly high level exceeding 92%. In the first half of 2025, the company achieved operating revenue of RMB 305 million and net profit attributable to shareholders of RMB 13.231 million, successfully reversing losses year-on-year.

However, behind this impressive performance lies the unignorable concern of ‘paper prosperity’. The company's net profit margin has persistently hovered at a low level between 2% and 5%, significantly below that of comparable industry peers. The root cause lies in exorbitant sales expenses and sustained R&D investments severely eroding profits. During the reporting period, sales and distribution costs consistently exceeded 50% of revenue. Concurrently, to advance its pipeline of investigational products, the company maintained an R&D expenditure ratio above 20% for years, with R&D investment reaching RMB 134 million in 2024.

Contrasting with the reported profit growth, the company's cash flow from operating activities has remained persistently strained, registering a net outflow of RMB 9.7312 million in 2024 and a further RMB 20 million in the first half of 2025. This insufficient cash generation stems from the sharp expansion of accounts receivable and the ongoing decline in collection efficiency.

The adsorbed tetanus vaccine remains the company's absolute performance pillar, contributing between 80.1% and 93.7% of total revenue from 2022 to 2024. In 2024, its sales revenue reached RMB 536 million, accounting for a staggering 90.99% of total revenue.

This ‘all eggs in one basket’ model renders the company's performance stability exceptionally fragile. Should market demand for this product fluctuate or robust competitive alternatives emerge, the company would be directly exposed to significant risk.

Notably, even the market outlook for this cornerstone product has been quietly downgraded. According to a report by the same industry consultant,灼识咨询, its forecast for China's tetanus adsorption vaccine market size by 2030 has been reduced from RMB 2.434 billion in the A-share prospectus to RMB 1.5 billion in the Hong Kong IPO prospectus.

Deteriorating Accounts Receivable and Liquidity Constraints

During the reporting period, the company's aggregate accounts receivable and notes receivable surged from RMB 524 million in 2022 to RMB 694 million by the end of June 2025. More alarmingly, the quality of collections deteriorated significantly: by June 2025, accounts receivable aged over one year totalled RMB 329 million, accounting for 53.2% of the total receivables. This indicates that over half of sales proceeds remained tied up with customers for more than a year.

This protracted collection cycle directly impedes the company's capital utilisation efficiency, with trade receivables turnover days extending from 272 days in 2022 to 328 days in the third quarter of 2025. These substantial, long-aged receivables not only tie up significant working capital but also pose substantial impairment risks. During the reporting period, cumulative impairment losses on accounts receivable exceeded RMB 46 million, persistently eroding the company's already meagre net profit.

Controlling Shareholder Share Reduction, Terminated Private Placement and Urgency for Hong Kong Listing

Around the time of its Hong Kong listing application, Olin Biotech's series of capital market manoeuvres drew market scrutiny. Firstly, in September 2025, the company proactively terminated a planned A-share private placement that had been in preparation for over a year. Initially targeting RMB 175 million, the fundraising target was later reduced to RMB 125 million before ultimately being scrapped due to ‘market conditions and corporate development plans’.

Subsequently, between September and October 2025, the controlling shareholder, Shanghai Wushan Biotechnology Co., Ltd., cumulatively reduced its holdings by approximately 12.178 million shares through concentrated bidding and block trading, realising proceeds of around RMB 279 million. Following this disposal, the shareholding ratio of the controlling shareholder and its concerted parties decreased.

On one hand, the controlling shareholder's substantial cash-out and the stalled A-share financing; on the other, the accelerated push for a Hong Kong IPO. The timing of these actions is rather delicate, inevitably raising market questions about the company's cash flow constraints and future funding requirements.

The Tale of the ‘Superbug Vaccine’ and the Spectre of History Repeating Itself

To break free from single-product dependency, Olin Biotech has staked its future on the innovative ‘superbug vaccine’ track. Its core candidate product, the recombinant Staphylococcus aureus vaccine, is the world's only such product currently in Phase III clinical trials, with plans to unblind results in 2026 and commence mass production in 2027. Additionally, the company has established a vaccine pipeline targeting drug-resistant pathogens such as Helicobacter pylori and Pseudomonas aeruginosa.

While this narrative holds promising prospects, it entails substantial investment and extreme risk. From clinical trials to market launch, each stage carries the potential for failure or delays. Historical precedents serve as cautionary tales: as early as 2009, listed company Yueyang Xingchang garnered significant attention for developing an ‘oral recombinant Helicobacter pylori vaccine,’ yet production process validation issues ultimately prevented its market launch to this day. How Olin Biotech avoids repeating such setbacks in process development and industrialisation represents a critical challenge it must confront.

Olin Biotech's Hong Kong IPO represents a financing journey seeking breakthrough through the grand narrative of a ‘superbug vaccine’. While the company has established a leading position in the niche field of tetanus vaccines, investors in the Hong Kong market may need to look beyond its future innovation story and scrutinise more critically whether it can effectively resolve its current operational challenges and pave a sustainable financial pathway for its protracted innovation and R&D endeavours.

Disclaimer: The content herein is for reference only and does not constitute any form of investment advice. Should any information contained herein prove inaccurate, incomplete, or potentially misleading, please refer to the company's official announcements. Market risks exist; investment requires caution.