(Yicai Global) Oct. 25 -- Shares in Fosun Pharmaceutical Group advanced both on the mainland and in Hong Kong today, ending a seven-week rout that has seen the stock lose more than 20 percent of its value in both markets, after the Chinese drug developer said that its parent firm, cash-strapped conglomerate Fosun International, has dropped its plan to reduce its stake.

Fosun Pharma’s mainland-listed stock [SHA:600196] closed up 1 percent at CNY31.11 (USD4.26) while its Hong Kong-traded shares [HKG:2196] gained 3.1 percent to finish at HKD19 (USD2.42). The stock has lost 22 percent of its value in Shanghai and 24 percent in Hong Kong since Sept. 5.

Shanghai Fosun High Technology Group, a unit of Fosun International, has already sold 1.4 percent of Fosun Pharma’s share capital, worth around CNY1.2 billion (USD161.9 million), but it has promised not to sell any more stock within the next 12 months, Fosun Pharma said yesterday.

Fosun International, which has been actively raising money through the sale of assets, said on Sept. 2 that it will offload a maximum of 5 percent of the pharmaceutical firm’s share capital through centralized bidding and block trading.

It is the first time that Fosun International has reduced its interest in Fosun Pharma, in which it held a 35.8 percent stake, since the drugmaker was listed in Shanghai in 1998. But it will not affect the health-to-smart-manufacturing conglomerate’s status as the controlling shareholder.

On Sept. 5, the first trading day after the announcement, Fosun Pharma’s mainland-traded shares plunged by the exchange-imposed daily trading limit of 10 percent and its Hong Kong stock plummeted 13 percent.

In a bid to restore market confidence, the following day, Fosun Pharma said 18 of its senior executives will hike their stakes in the company using their own funds. Together they bought back 460,000 shares, amounting to 0.017 percent of the company’s overall equity. But the stock price continued to slide.

Fosun International had racked up debts of CNY261.1 billion (USD37.7 billion) as of June 30, up from CNY237.1 billion at the end of last year, according to its latest earnings report. The Shanghai-based company cited business expansion as the cause. Its debt-to-asset ratio reached 56.8 percent, 3 percentage points higher than at the end of 2021.

Fosun Pharma logged a 37.6 percent dive in net profit in the first half from the same period last year at CNY1.5 billion (USD211.7 million). Revenue, though, jumped 25.8 percent to CNY21.3 billion (USD2.9 billion). Its third-quarter earnings report will be released on Oct. 31.

Editor: Kim Taylor