[IPO Spotlight] Making a run for the title of 'First Stock in Pharmaceutical Cold Chain Logistics Services,' what is the foundation of Shanghai Shengsheng?

Recently, Shanghai Shengsheng Pharmaceutical Cold Chain Technology Co., Ltd. (hereinafter referred to as 'Shanghai Shengsheng') officially submitted its prospectus to the Hong Kong Stock Exchange, aiming to become the 'first stock in pharmaceutical cold chain logistics services' on the Hong Kong stock market.

This company, which holds a leading position in a niche domestic market, has experienced a bumpy road to its IPO. It previously attempted to list on the main board of the Shanghai Stock Exchange but withdrew its application after the first round of inquiries. Now, it is shifting its focus to Hong Kong stocks. Against the backdrop of high prosperity in the pharmaceutical cold chain industry, can Shanghai Shengsheng successfully break through? Beneath its光环, concerns such as earnings volatility and weak overseas growth remain unresolved.

After failing in the A-share market, the company shifts to Hong Kong stocks, aiming for the 'first-mover' position in a niche market

Shanghai Shengsheng's path to capitalization began in June 2023 when the company first submitted an application for listing on the A-share main board.

However, the SSE's inquiry letter directly pointed to its core issues: related-party fund borrowing by the actual controller, equity cash-out controversies, and the reasonableness of profit fluctuations. A series of compliance and financial questions became obstacles to the IPO. In June 2024, shortly after completing the response to the first round of inquiries, Shanghai Shengsheng voluntarily withdrew its application, bringing its A-share push to a temporary halt.

Following this, the company chose to pivot to the Hong Kong Stock Exchange to restart its IPO process. This time around, Shanghai Shengsheng is targeting the title of 'the first pharmaceutical cold chain logistics service stock,' drawing confidence from its leading position in the niche market.

According to the prospectus, the company focuses on providing temperature-controlled supply chain services to the pharmaceutical and life sciences sectors. Its core business covers temperature-controlled supply chains for clinical trials and commercial medical products, as well as value-added services like warehousing and transportation, spanning the entire chain from drug research and development, production, to sales.

As the leader in this sector, Shanghai Shengsheng enjoys a significant competitive edge. According to a Frost & Sullivan report, based on 2024 revenue, the company ranks first in China and among the top ten globally for clinical trial temperature-controlled supply chain service providers. It is also the only Chinese company among the global top ten.

In terms of client resources, the company has achieved 100% coverage of the top 20 pharmaceutical companies in China, with 50% of the world’s top 20 pharmaceutical firms being its clients. It has served over 7,000 clients cumulatively and provided temperature-controlled supply chain support for approximately 34% of new drug clinical trial applications in China, establishing a deep client moat.

At the capital level, Shanghai Shengsheng has already garnered favor from top-tier institutions. The prospectus reveals that the company received multiple rounds of financing from renowned institutions such as Hillhouse Capital, $Deppon Logistics (603056.SH)$ Junlian Capital, Zhongding Capital, and others. Following a share transfer in 2021, the company's valuation reached 4 billion RMB.

Beneath the光环, profit volatility and overseas growth challenges remain unresolved

Despite its advantageous position in the industry, Shanghai Shengsheng's financial performance and business development still show significant weaknesses, posing potential concerns for its Hong Kong IPO.

The first issue is severe profit volatility. According to the prospectus, the company’s revenue has maintained steady growth, with operating revenues of RMB 614 million (in RMB, same below) and RMB 654 million in 2023 and 2024 respectively; revenue for the first nine months of 2025 reached RMB 538 million, continuing the growth trend. However, profit performance has been highly erratic, with net profit in 2024 at only RMB 26.396 million, a sharp decline of over 70% year-on-year.

The core reason for the profit decline was a share-based compensation expense of RMB 72.123 million incurred in 2024, a one-time cost that directly reduced the period’s profits. Although the adjusted net profit after deducting share-based compensation remained relatively stable, with an adjusted net profit of RMB 118 million in the first nine months of 2025, representing a year-on-year increase of over 70%, such profit fluctuations caused by non-recurring factors may still raise investor concerns about the stability of its profitability.

Another major challenge is weak overseas business growth. The prospectus shows that the company operates in more than 70 countries and regions worldwide, and overseas markets should have been a key growth driver, but actual performance has been disappointing. In 2024, overseas revenue grew by over 130% year-on-year, but this high growth rate was largely due to a low base. In the first nine months of 2025, overseas revenue growth plummeted to 10.36%, and overseas revenue accounted for only 6.9%, failing to continuously contribute to growth momentum. In the global pharmaceutical cold chain market, Shanghai Shengsheng faces pressure from international giants like DHL and UPS, with insufficient local service capabilities and brand influence abroad, which have become key constraints on expansion.

For the intended use of proceeds from this Hong Kong IPO, Shanghai Shengsheng plans to primarily allocate funds towards expanding domestic and international service networks, upgrading technology systems, and pursuing potential global strategic acquisitions. This strategy aims to address overseas business weaknesses and strengthen domestic network advantages, but whether effective breakthroughs can be achieved through fundraising remains questionable. On one hand, building a pharmaceutical cold chain network requires significant investment and long cycles, making short-term results unlikely; on the other hand, overseas acquisitions face multiple challenges such as cultural integration and compliance risks, demanding higher capital operation and management capabilities from the company.

Summary

As a leading player in China's pharmaceutical cold chain sector, Shanghai Shengsheng's push for a Hong Kong IPO coincides with a golden window of high industry prosperity, while also facing real challenges such as earnings volatility and difficulties in overseas expansion. Its core strengths lie in deep industry accumulation, a comprehensive service network, and high-quality customer resources, forming the foundation for the company to withstand risks and benefit from growth dividends. The “first pharmaceutical cold chain stock” scarcity could also attract attention from the Hong Kong market.

However, investors must also be wary of potential risks: insufficient profit stability, pressure on overseas growth, and previous compliance-related issues exposed during the A-share listing process, all of which may become valuation constraints post-IPO.

Author: Yuan

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