Tianjin Pharmaceutical Da Ren Tang Group Provides Extensive Update on Placement Proceeds Utilization and Project Cessations

Key Highlights from the Board Report (As at 31 December 2025)

• Significant Permanent Reallocation of Proceeds: The Company has permanently reallocated RMB 158.17 million of unutilised net proceeds from previously funded projects to working capital, following project completions and terminations.
• Major Project Cessations and Terminations: Several flagship projects funded by the Placement, including the Terminal Marketing Network and Promotional System Project, Bozhou Industrial Park Construction Projects (Chinese Medicine Decoction Pieces and Chinese Medicine Extraction & Preparation), and the Phase I Dripping Pill Manufacturing Base Project, have been either ceased or terminated.
• Material Changes to Use of Proceeds: 42.24% of the original net proceeds have undergone changes in use, reflecting substantial strategic shifts.
• Project Substitutions: The “Wellness and Functional Vegetable Beverages Project” was replaced with the “Phase I Dripping Pill Manufacturing Base Project” after shareholders’ approval, reflecting the Company’s adaptation to industry trends and market conditions.
• Strong Corporate Governance: All major changes were approved by shareholders at AGMs or EGMs, with proper information disclosures made in a timely and compliant manner. The Placement Agent confirmed full compliance with all regulatory requirements.
• Financial Status: As at 31 December 2025, the Company’s designated account holds a balance of RMB 49.22 million in net proceeds.

Detailed Article for Investors

Tianjin Pharmaceutical Da Ren Tang Group Corporation Limited (“the Company”) has released a comprehensive update concerning the use and management of net proceeds from its 2015 A-shares Placement. This update, which comes as of 31 December 2025, carries significant implications for shareholders, particularly regarding major strategic shifts, project completions, and the permanent reallocation of unused funds.

Background and Net Proceeds Overview

The Placement, completed in June 2015, raised RMB 836.08 million gross (net RMB 814.34 million after expenses). The proceeds were strictly managed via designated bank accounts, with rigorous oversight and annual disclosures.

Permanently Reallocated Proceeds – RMB 158.17 Million

In a move with direct financial impact, the Board and shareholders have approved the permanent reallocation of RMB 158.17 million (potentially up to RMB 207.27 million) from unutilised project funds and interest income to general working capital. This reallocation reflects a strategic pivot and is intended to enhance operational flexibility in the face of changing market conditions.

Project Cessations and Terminations – Strategic Changes

• Terminal Marketing Network & Promotional System Project, Bozhou Industrial Park Construction Project (Chinese Medicine Decoction Pieces): Both projects achieved intended objectives and were ceased.
• Bozhou Industrial Park Construction Project (Chinese Medicine Extraction & Preparation): This project was terminated before any proceeds were deployed, due to unfavorable market environment, industry trends, and the Company’s revised strategic direction after a mixed-ownership reform. The Board cited uncertainty in investment returns and a mismatch between planned capacity and market demand as key factors.
• Phase I Dripping Pill Manufacturing Base Project: The project reached its construction milestones, and the investment was scaled back to the actual amount invested as at end-2024 (~RMB 207.47 million). The Company will not pursue further production line expansions with Placement funds, opting instead to use internal resources for any future expenditure.

Major Change in Project Use – 42.24% of Proceeds Affected

The Company has recorded changes to the use of RMB 343.99 million in Placement proceeds, accounting for 42.24% of the net funds raised. Notably, the “Wellness and Functional Vegetable Beverages Project” was discontinued due to the beverage sector’s market downturn and replaced by the “Phase I Dripping Pill Manufacturing Base Project.” This substitution was approved by shareholders in 2018, indicating the Company’s proactive approach to evolving market dynamics.

Financial and Operational Prudence

• Temporary Use of Proceeds: At one point, up to RMB 230 million was temporarily deployed for cash flow purposes but was fully returned to designated accounts by 26 May 2025, ahead of schedule.
• Balance as of Year-End 2025: RMB 49.22 million remains in the designated account, all other accounts having been closed after project completion or cessation.
• No Overuse or Non-Compliance: The Company confirmed that no proceeds were used for new projects, asset acquisition, or repayment of loans in excess of raised funds. There is no cash management of these proceeds as at 31 December 2025.

Corporate Governance and Regulatory Compliance

The Company has strictly adhered to the Measures for the Management of Proceeds, with all material decisions regarding project changes, terminations, and reallocation of funds approved at AGMs/EGMs. The independent directors, Supervisory Committee, and Placement Agent have provided oversight and express support for all changes.

The Placement Agent, China Galaxy Securities Co., Ltd., issued a special verification opinion confirming that the Company’s management of proceeds is fully compliant with all relevant PRC laws, the Shanghai Stock Exchange rules, and regulatory guidelines. No disguised changes in proceeds use or any prejudice to shareholder interests were noted.

Shareholder-Relevant and Price-Sensitive Information

• Major strategic pivot from specific growth projects to strengthening working capital and operational flexibility, which may have an impact on future earnings growth and capital allocation efficiency.
• Project terminations and reallocations are a response to unfavorable market and industry trends, and reflect management’s risk-averse approach and focus on capital efficiency.
• Substantial amount of proceeds (over 42%) diverted from original project purposes, a factor that investors should consider when evaluating the Company’s long-term growth trajectory, business focus, and capital allocation discipline.

Conclusion

The latest update from Tianjin Pharmaceutical Da Ren Tang Group Corporation Limited marks a significant shift in its capital allocation and project management strategy. The cessation and termination of several major projects, coupled with a large permanent reallocation of funds to working capital, are likely to be viewed as price-sensitive developments. Investors should closely monitor how this increased operational flexibility translates into future business performance, and whether the Company can deliver returns from the redeployed capital.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consult with professional advisers before making any investment decisions. The author and publisher are not liable for any actions taken based on the information provided herein.

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