Tong Ren Tang Healthcare Launches Hong Kong IPO: Centuries-Old Brand Expands Its Capital footprint, Facing Both Profitability and Expansion Pressures

ZC Asia has learnt that on 20 March 2026, Beijing Tong Ren Tang Healthcare Investment Co., Ltd. officially launched its public offering in Hong Kong, with the stock code 02667.HK. According to the offering arrangements, the company intends to offer approximately 108 million H-shares globally, comprising 10.8155 million shares for the Hong Kong public offering and 97.338 million shares for the international offering. The price range has been set at HK$7.30 to HK$8.30 per share, with a board lot size of 500 shares. The company is expected to be listed on the Main Board of the Hong Kong Stock Exchange on 30 March. China International Capital Corporation Hong Kong Securities Limited is acting as the sole sponsor for this offering.

The company has entered into investment agreements with two cornerstone investors: Aviation Port Technology Capital (Hong Kong) Limited and Aurora SF (as a sub-fund of EasternGate Investments VCC) have collectively subscribed for approximately HK$389.3 million. Based on the mid-point of the offer price range, this represents a significant proportion of the shares offered.

Tong Ren Tang Healthcare is a subsidiary of the Tong Ren Tang Group specialising in traditional Chinese medicine (TCM) healthcare services, with operations covering TCM medical services, management services, and the sale of health products and other goods. With “integrated medical and elderly care” as its core philosophy, the Company combines traditional Chinese medicine (TCM) pharmacotherapy with non-pharmacological therapies to provide customised healthcare service solutions. As at the Latest Practicable Date, the Company had established a tiered TCM healthcare service network comprising 12 proprietary offline medical institutions, one internet hospital, and 12 offline managed medical institutions, forming a healthcare resource system that spans both online and offline channels.

In terms of market position, based on total outpatient and inpatient visits in 2024, Tongrentang Medical and Care is the largest group of traditional Chinese medicine hospitals in China’s non-public TCM hospital sector, with a market share of 1.7%. Based on total revenue from TCM medical services in the same year, the company ranks second in the non-public TCM hospital sector with a 0.2% share. It is worth noting that the market size of non-public TCM hospitals accounted for 46.5% of the total market size of China’s TCM healthcare services sector in the same year, indicating that market concentration in this segment remains relatively low, with room for consolidation among leading enterprises.

Financial data shows that the company’s total revenue grew from RMB 911 million in 2022 to RMB 1.175 billion in 2024, representing a compound annual growth rate (CAGR) of 13.6%. Gross profit performance was even more impressive, rising from RMB 143 million in 2022 to RMB 223 million in 2024, representing a CAGR of 24.8%. In terms of profitability, the company recorded a net loss of RMB 9.2 million in 2022, turned a profit in 2023 with a net profit of RMB 42.6 million, and saw this further increase to RMB 46.2 million in 2024. However, it is worth noting that for the nine months ended 30 September 2025, the company’s net profit stood at 24 million yuan, a decrease of 9.8% compared to the 26.6 million yuan recorded in the same period of 2024, indicating volatility in recent profit growth.

In terms of operational metrics, the total number of patient visits at medical institutions within the company’s network increased from 1.3 million in 2022 to 3.0 million in 2024, representing a compound annual growth rate of 51.9%. The membership scheme has also achieved some success, with the cumulative number of members rising from 436,000 at the end of 2022 to 740,000 at the end of 2024, and further increasing to 767,000 as at 30 September 2025.

Based on a median offer price of HK$7.80 per share and assuming the over-allotment option is not exercised, the net proceeds from this global offering are expected to be approximately HK$771 million. The Company plans to allocate 47.5% of the net proceeds to expanding its traditional Chinese medicine (TCM) healthcare service network, 23.6% to enhancing TCM healthcare service capabilities, 18.9% to repaying certain outstanding bank loans, and the remaining approximately 10.0% for working capital and other general corporate purposes.

Behind the brand prestige and scale expansion, Tongrentang Healthcare also faces multiple operational risks that warrant attention.

In terms of profitability, although the company has turned a loss into a profit, its net profit margin remains low. For the full year of 2024, net profit stood at 46.2 million yuan against revenue of 1.175 billion yuan, representing a net profit margin of less than 4%. The traditional Chinese medicine healthcare sector generally faces challenges such as high labour costs, stricter medical insurance cost controls and significant operational expenditure; whether the company can maintain profitability stability during its rapid expansion phase remains to be seen.

Regarding debt structure, nearly 20% of the raised funds are earmarked for repaying bank loans, reflecting that the company still faces some debt pressure. For a healthcare services group with a capital-intensive business model, rising debt levels during an expansion phase are common; however, if revenue growth from newly established medical institutions falls short of expectations upon commencement of operations, this may pose a sustained challenge to cash flow.

In terms of management models, the company plans to allocate nearly half of the raised funds to expanding its traditional Chinese medicine (TCM) healthcare service network, indicating that it will remain in a phase of rapid expansion for the coming years. Currently, its 12 proprietary medical institutions are spread across multiple locations; when combined with internet hospitals and managed facilities, the scope of management has expanded significantly. How to achieve scalable replication whilst maintaining Tongrentang’s traditional standards of clinical care and operational quality represents a core long-term challenge for the company.

In terms of the industry environment, although the traditional Chinese medicine healthcare sector has received policy support in recent years, the ongoing reform of medical insurance payment methods is having a potential impact on the revenue structure and profit models of traditional Chinese medicine institutions. At the same time, other branded traditional Chinese medicine chain groups in the market are also accelerating their expansion, and intensified industry competition may affect the company’s pricing power and market share.

The Tongrentang Group currently has three listed companies, including Tongrentang Co., Ltd., Tongrentang Technology and Tongrentang Pharmaceutical. Should Tongrentang Healthcare & Wellness successfully list, it will become the fourth listed entity within the Group, signifying a further deepening of the century-old brand’s capital deployment in the healthcare sector. For investors, the investment value of Tongrentang Healthcare & Wellness lies more in the long-term narrative of brand strength and expansion potential than in short-term profit realisation. The performance in its first annual report following the listing, along with the operational effectiveness of newly established medical institutions, will serve as a key indicator of the quality of its expansion.

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.