Shanghai Sheng Sheng Medical Cold Chain Technology Co., Ltd. (hereinafter referred to as "Shanghai Sheng Sheng") has recently submitted a listing application to the Hong Kong Stock Exchange. The company had previously applied for a listing on the STAR Market but ultimately withdrew its application. According to a report by Frost & Sullivan, based on 2024 revenue, Shanghai Sheng Sheng is the leading pharmaceutical and life science temperature-controlled supply chain service provider in China. Within the niche segment of clinical trial temperature-controlled supply chains, the company serves 100% of the top 20 pharmaceutical companies in China and 50% of the top 20 global pharmaceutical companies.
As China's top-ranked service provider in this sector, Shanghai Sheng Sheng operates in the promising field of innovative drug research and development, presenting an attractive "pick-and-shovel" investment narrative. However, an examination of the prospectus and related materials reveals several underlying concerns, including stagnant revenue growth, a highly concentrated business structure, intricate related-party transactions, and controversial capital operations by its actual controllers.
Revenue growth has plateaued, hinting at an emerging bottleneck. While financial data shows steady revenue growth in recent years—reaching 614 million yuan in 2023, 654 million yuan in 2024, and 538 million yuan for the first three quarters of 2025—a longer-term view reveals stagnation. As early as 2021, the company's revenue was already 525 million yuan, rising to 634 million yuan in 2022. Over the past five years, the compound annual growth rate has been minimal, with revenue hovering around the 6 billion yuan mark.
Net profit has experienced significant volatility during the same period, fluctuating sharply. Net profits were 92.033 million yuan, 26.396 million yuan, and 113 million yuan for 2023, 2024, and the first nine months of 2025, respectively. The dramatic drop of over 70% year-on-year in 2024 was primarily due to a share-based payment expense of 72.123 million yuan recognized that year. This expense occurred in the year the company withdrew its IPO application from the Shanghai Stock Exchange and pivoted to Hong Kong, representing a concentrated equity incentive for the team ahead of the listing.
Notably, this incentive was not broad-based but highly concentrated, with approximately 80% of the shares allocated to core management. In 2024, the total remuneration for the five highest-paid individuals surged to 61.6 million yuan from 3.01 million yuan in 2023. Share-based payments within this remuneration amounted to 55.93 million yuan, accounting for about 77% of the total share-based payment expenses for the period.
Regarding profitability metrics, the company's gross profit margin showed an overall upward trend from 2021 to the first half of 2025, with margins of 29.14%, 27.96%, 32.93%, 32.92%, and 37.57% respectively, significantly higher than those of traditional logistics companies. However, this impressive gross margin contrasts with mounting cash flow pressure evident on the balance sheet.
During the same periods, notes receivable and accounts receivable continued to rise, reaching 130 million yuan, 171 million yuan, 192 million yuan, 229 million yuan, and 248 million yuan respectively. The corresponding days sales outstanding (DSO) also increased steadily, from 69.7 days to 85.35 days, 98 days, 98 days, and 105 days.
Typically, a rising gross margin indicates enhanced competitiveness of a company's products and services and a stronger position within the industry chain. Consequently, a company would seek to utilize more funds from upstream suppliers and shorten credit terms for downstream customers, leading to a reduction in DSO and the absolute value of receivables. The concurrent increase in Shanghai Sheng Sheng's gross margin alongside rising receivables and DSO raises questions about the authenticity of its financial figures.
Over 80% of the company's revenue comes from clinical trial temperature-controlled supply chain services. This business directly supports the core stages of innovative drug development and regulatory submission, demanding extremely stringent temperature control (such as liquid nitrogen environments as low as -150°C) and timeliness, which creates high technical and qualification barriers.
This has allowed the company to establish a leading market position. According to Frost & Sullivan, based on 2024 revenue, Shanghai Sheng Sheng is the top player in China's pharmaceutical and life science temperature-controlled supply chain market. It has achieved 100% coverage of the top 20 pharmaceutical companies in China and serves 50% of the top 20 global pharmaceutical companies, with a cumulative client base exceeding 7,000. Its services penetrate approximately 34% of new drug clinical trial applications in China.
However, this also means the company's business performance is entirely tied to the R&D investment cycles of global pharmaceutical companies, making cyclical fluctuations an inherent characteristic of its earnings. Furthermore, the overall addressable market for pharmaceutical and life science temperature-controlled supply chains is relatively limited. The prospectus indicates that the company held only a 1.5% share of the global niche market in 2024, and the industry is highly concentrated, with the top ten players holding over 60% market share. Looking ahead, further penetration into the domestic market, where it already leads, will become increasingly difficult. Gaining each additional percentage point of global market share will involve intense competition with international giants, making the growth ceiling clearly visible.
To break through this bottleneck, the company has planned two growth strategies: international expansion and diversification. However, the current status of both is unsatisfactory. The overseas market was once seen as highly promising, with overseas revenue surging 135.99% year-on-year in 2024. Yet, this high growth stemmed largely from a low base. By the first three quarters of 2025, the growth rate had slowed to 10.36%. Simultaneously, the proportion of overseas revenue to total revenue remains very limited, at just 6.9% for the first three quarters of 2025.
Regarding diversification, the company's commercial medical product temperature control services (B2B) and temperature-controlled equipment sales business together contribute less than 20% of total revenue. Among these, the commercial cold chain service faces stiff competition from domestic distribution giants like Sinopharm and Shanghai Pharma, and its growth is nearly stagnant. Plans to expand temperature-control technology into new areas like new energy remain conceptual, facing dual uncertainties regarding technology conversion paths and market demand validation. Consequently, the company's second and third growth curves are far from established. For the foreseeable future, it will remain heavily reliant on its single business structure centered on innovative drug clinical trial services.
Beyond business and financial risks, Shanghai Sheng Sheng has also exposed several issues at the corporate governance level. The most controversial involves a series of operations by the actual controllers, Ju Jibing and Xiao Zhongmei (a married couple), which have been questioned by the market as sophisticated financial engineering.
In 2020, the couple borrowed 74.6621 million yuan from the predecessor of Shanghai Sheng Sheng to acquire equity from old shareholders. Subsequently, their controlled holding platform, Ningbo Yanjia, acquired this equity at an extremely low cost of 1 yuan per registered capital. Just a few months later, Ningbo Yanjia sold most of this equity to several well-known external institutions, including CMC Capital and Hillhouse Capital, at a price of 223.26 yuan per registered capital, realizing proceeds of 134 million yuan. The difference between the acquisition and disposal prices exceeded 200 times on paper.
The company stated that these operations had "reasonable background and reasons." However, their essence involves the actual controllers using company funds to generate personal profit, raising market concerns about potential利益输送 (benefit transfer) to the controllers. This challenges perceptions of the rigor of the company's internal controls and the principle of fairness towards all shareholders.
Furthermore, the company has an unresolved network of related-party transactions. During the previous A-share IPO inquiry, the Shanghai Stock Exchange specifically questioned these intricate transactions. According to the previous prospectus and inquiry letters, the company engaged in dozens of related-party transactions, covering various forms such as sales, purchases, and fund lending.
Although the company stated that most of these transactions stemmed from normal business needs of associated enterprises where its directors had investor backgrounds, and that sales-related transactions accounted for only 2.2% to 2.4% of revenue—a relatively low absolute value—the frequency and complexity of this related-party transaction network persistently raise market concerns about the independence of its business and the fairness of its transaction pricing.