Baihua Pharmaceuticals Reinitiates Planning for Control Change; Xinjiang Tycoon Mienhua Family Firmly Resists Withdrawal

Ask AI · Why has the Mi’enhua family decided to exit despite earnings volatility?

Each reporter: Chen Xing    Each editor: Xu Shaohang

Within three months, Baihua Pharmaceutical has twice set the stage for a change in control.

On the evening of March 30, Baihua Pharmaceutical announced that its controlling shareholder and actual controller, Mi Zaixi, Mi’enhua, and Yang Xiaoling, are in the process of arranging a share transfer via agreement. This matter could lead to a change in the company’s controlling rights.

Of note is that last December, the company had already announced it was planning to transfer control. But on January 6 of this year, it was terminated because the two transaction parties failed to reach agreement. This second restart may indicate that the Mi’enhua family of Xinjiang, a wealthy family, has made up its mind to exit this listed company they have controlled for nearly seven years.

Second restart: less than three months since the last termination of the control transfer

On the evening of March 30, the company announced that it received a notice from its controlling shareholder and actual controllers, Mi Zaixi, Mi’enhua, and Yang Xiaoling. The three are currently planning a share transfer agreement for the company. The matter could result in a change in the company’s controlling rights. The equity agreement transfer is still being negotiated and there remains uncertainty. Baihua Pharmaceutical will suspend trading starting from the opening of trading on March 31, and the expected suspension period will not exceed two trading days.

It is worth noting that in December last year, Baihua Pharmaceutical also announced that it was planning to transfer control. However, on January 6 of this year, Baihua Pharmaceutical announced that, because the company’s controlling shareholder and actual controller and the counterparty had not reached a consensus on major matters related to the change in control, they decided to terminate the then planned control change.

The second restart of the control transfer seems to mean that the Mi’enhua family of Xinjiang is determined to exit Baihua Pharmaceutical.

Mi’enhua is the founder of the Xinjiang “Hualing” enterprise group, and Yang Xiaoling is his spouse. Mi Zaixi is the son of the Mi’enhua and Yang Xiaoling couple. Public information shows that Mi’enhua was born in 1958. In 1988, at age 30, Mi’enhua registered and founded the “Urumqi Hualing Industrial and Trading Co., Ltd.” with capital of 30k yuan, riding the “get rich by going to sea” wave. He later gradually developed the Hualing market.

According to information on the official website, the Hualing Group has developed into a private enterprise group centered on commodity markets, integrating commercial services, real estate development, foreign trade, animal husbandry, large-scale logistics, overseas investment, landscaping and greening, heat supply, finance, education, and more.

Mi’enhua’s personal wealth has also grown rapidly as the Hualing Group’s footprint expanded. In October 2019, Mi’enhua first appeared on the Hurun Rich List with wealth of 15 billion yuan, ranking 244th. In 2024, the Mi’enhua family’s wealth had risen to 29 billion yuan, ranking 157th on the Hurun Rich List.

In April 2019, the Hualing Group acquired 19.86% of the equity of Baihuacun to become the company’s largest shareholder, and the Mi’enhua couple became the actual controllers. On March 1, 2024, Baihua Pharmaceutical announced that it received notice that the registered capital of the controlling shareholder, Hualing Group, had increased from 500 million yuan to 1.1 billion yuan. Hualing’s sole controlling shareholder is Mi Zaixi. Through holding Hualing Group, Mi Zaixi has newly become one of Baihua Pharmaceutical’s actual controllers.

Earnings up and down: volatility under Mi’enhua’s control for six years

As “the First Stock of the Bingtuan,” Baihua Pharmaceutical has undergone multiple business reshuffles and changes in equity structure since it went public in 1996.

Its former name was “Baihuacun.” In the early period after listing, the company’s operations were small-scale commercial businesses such as department store retail, catering, and trading. In 2002, the company acquired 51% of the shares of Guangzhou Xintuoke Technology Development Co., Ltd., shifting its focus to the IT industry.

Starting in 2006, in combination with the share reform, Baihua Pharmaceutical transformed into a coal-mining company—a “three mines and one plant” model mainly based on Zhengxin Coal Industry Co., Ltd., Natural Products Trading Co., Ltd., No. 101 Coal Mine, and Hongji Coke Processing Co., Ltd. At that time, with a coal mining and washing and coal chemical industrial chain, the company had considerable production capacity: annual output of raw coal up to 1.6 million tons, coking coal 800k tons, and urea 210k tons, and electricity generation up to 182 million kilowatt-hours.

In 2016, Baihua Pharmaceutical divested the then loss-making coal and coal-chemical business with an unfavorable development outlook, and transformed into a pharmaceutical R&D services business, becoming Xinjiang Production and Construction Corps’ first listed company mainly focused on pharmaceutical R&D.

However, when Baihua Pharmaceutical first entered pharmaceutical R&D services, it immediately encountered major setbacks. After acquiring Huawei Pharma, Huawei Pharma failed to fulfill its performance commitments. As a result, in 2017 and 2018, Baihua Pharmaceutical recorded goodwill impairment for two consecutive years: 623 million yuan in impairment in 2017 and 908 million yuan in impairment in 2018, totaling 1.5 billion yuan over the two years.

During this period, Baihua Pharmaceutical’s performance was also very poor. In 2017 and 2018, the net profit after deducting non-recurring items was -570 million yuan and -819 million yuan, respectively, and it was also embroiled in litigation involving Zhang Xiaoqing, the founder of Huawei Pharma.

After Huawei Pharma’s performance blew up, Baihua Pharmaceutical’s original controlling shareholder, the Sixth Division State-owned Assets Company, transferred the controlling stake. The Mi family officially took over Baihua Pharmaceutical.

During the years when Mi’enhua controlled Baihua Pharmaceutical, the company’s performance exhibited a distinctive pattern of “losses and profits alternating.” Data shows that from 2019 to 2024, the company’s net profit attributable to shareholders was 34.3847 million yuan, -320 million yuan, 59.8271 million yuan, -34.7647 million yuan, 12.9723 million yuan, and 41.4790 million yuan, respectively. Among these, 2020 saw a large loss, mainly because Huawei Pharma terminated 58 pharmaceutical R&D contracts, together with factors such as goodwill impairment.

During the period of control by the Mi’enhua family, Baihua Pharmaceutical also had issues related to information disclosure. In October 2023, because the company repeatedly implied on investor interaction platforms that it had weight-loss drug-related business, and the information disclosure was inaccurate and incomplete, the company and the secretary to the board of directors received a warning letter from the Xinjiang Securities Regulatory Bureau. In June 2024, due to the untimely disclosure of the matter regarding the change in the actual controller, the company, controlling shareholder, actual controller, and others received regulatory warning letters again, and they were also recorded in the capital market integrity file.

The Economic Daily News