Within three months, Baihua Pharmaceutical kicked off two changes of control.
On the evening of March 30, Baihua Pharmaceutical announced that the company’s controlling shareholders and actual controllers Mi Zaiqi, Mi Enhua, and Yang Xiaoling are planning a share agreement transfer, which may lead to a change in the company’s control.
It is worth noting that in December last year, the company announced plans to transfer control, but it was terminated on January 6 this year because the two parties failed to reach an agreement. This second restart may mean that Xinjiang's wealthy Mi Enhua family is determined to withdraw from this listed company that has been in power for nearly seven years.
Second restart: less than three months since the last termination of control transfer
On the evening of March 30, the company announced that it had received notices from the controlling shareholders and actual controllers Mi Zaiqi, Mi Enhua, and Yang Xiaoling. The three were planning the transfer of the company's share agreement, which may lead to a change in the company's control. The equity agreement transfer is currently under negotiation and there are still uncertainties. Baihua Pharmaceutical has been suspended from trading since the market opened on March 31, and the suspension is expected to last no more than 2 trading days.
It is worth noting that in December last year, Baihua Pharmaceutical announced plans to transfer control. However, on January 6 this year, Baihua Pharmaceutical announced that because the company's controlling shareholder, actual controller and counterparty did not reach an agreement on major matters related to the change of control, it decided to terminate the change of control at that time.
The resumption of the transfer of control for the second time seems to mean that Xinjiang's wealthy Mi Enhua family is determined to withdraw from Baihua Pharmaceutical.
Mi Enhua is the founder of Xinjiang's "Hualing" enterprise group and is married to Yang Xiaoling, while Mi Zaiqi is the son of Mi Enhua and Yang Xiaoling. Public information shows that Mi Enhua was born in 1958. In 1988, 30-year-old Mi Enhua registered and established "Urumqi Hualing Industry and Trade Company" with a capital of 30,000 yuan, and participated in the "going overseas" craze. Later, the Hualing market gradually developed.
Official website information shows that the current Hualing Group has developed into a private enterprise group with the commodity market as its main body and integrating commercial services, real estate development, foreign trade, animal husbandry industry, large-scale logistics, overseas investment, landscaping, heating, finance, education, etc.
Mi Enhua's net worth has also increased with the expansion of Hualing Group's territory. In October 2019, Mi Enhua appeared on the Hurun Rich List for the first time with a wealth of 15 billion yuan, ranking 244th. In 2024, the Mi Enhua family's net worth has risen to 29 billion yuan, ranking 157th on the Hurun Rich List.
In April 2019, Hualing Group acquired 19.86% of Baihua Village's equity and became the company's largest shareholder, with Mi Enhua and his wife becoming the actual controllers. On March 1, 2024, Baihua Pharmaceutical announced that it had received notice that the registered capital of the controlling shareholder Hualing Group had increased from RMB 500 million to 1.1 billion yuan. Mi Zaiqi, the sole controlling shareholder of Hualing Holdings, has become one of the actual controllers of Baihua Pharmaceutical through controlling Hualing Group.
Performance ups and downs: Six years of volatility under Mi Enhua’s control
As the “No. 1 stock in Xingtuan”, Baihua Pharmaceutical has undergone many transformations in its main business and changes in its ownership structure since its listing in 1996.
Its original name was "Baihua Village". In the early days of its listing, the company operated small-scale commercial businesses such as department store retail, catering, and trade. In 2002, the company acquired 51% of the shares of Guangzhou Xintuo Technology Development Co., Ltd. and transformed into the IT industry.
Since 2006, combined with the shareholding reform, Baihua Pharmaceutical has transformed into a coal mining company – "three mines and one factory" consisting of Yuxin Coal Company, Natural Products Company, 101 Coal Mine, and Hongji Coking Company. At that time, the company had considerable production capacity in the coking coal mining and coal chemical industry chain, with an annual output of 1.6 million tons of raw coal, 800,000 tons of coke, 210,000 tons of urea, and a power generation capacity of 182 million kilowatt hours.
In 2016, Baihua Pharmaceutical divested its coal and coal chemical businesses, which were suffering serious losses and with poor development prospects at the time, and transformed into the pharmaceutical R&D service industry, becoming the first listed company in the Xinjiang Production and Construction Corps with pharmaceutical R&D as its main business.
However, Baihua Pharmaceutical, which was new to pharmaceutical R&D services, encountered major setbacks at the beginning. After acquiring Warwick Pharmaceuticals, Warwick Pharmaceuticals did not fulfill its performance commitments. As a result, Baihua Pharmaceutical suffered impairment of goodwill for two consecutive years in 2017 and 2018. In 2017, the impairment was RMB 623 million, in 2018 it was RMB 908 million, and the cumulative impairment in the two years was RMB 1.5 billion.
During this period, Baihua Pharmaceutical's performance was also very ugly. The non-net profits in 2017 and 2018 were -570 million yuan and -819 million yuan respectively. It was also involved in litigation with Zhang Xiaoqing, the founder of Warwick Pharmaceuticals.
After the performance of Warwick Pharmaceuticals exploded, the original controlling shareholder of Baihua Pharmaceuticals, the Sixth Division State-owned Assets Company, transferred its controlling stake in the listed company, and the Mi family officially took over Baihua Pharmaceuticals.
During the years when Mi Enhua controlled Baihua Pharmaceutical, the company's performance showed significant fluctuations of "alternating between losses and profits." Data shows that from 2019 to 2024, the company's net profits attributable to the parent company were 34.3847 million yuan, -320 million yuan, 59.8271 million yuan, -34.7647 million yuan, 12.9723 million yuan and 41.479 million yuan respectively. Among them, there was a significant loss in 2020, mainly due to factors such as the termination of 58 pharmaceutical research and development contracts by Warwick Pharmaceuticals and the impairment of goodwill.
During the period of control by the Mi Enhua family, Baihua Pharmaceutical also had problems with information disclosure. In October 2023, the company and the board secretary received a warning letter from the Xinjiang Securities Regulatory Bureau due to multiple hints on the investor interaction platform that the company had weight-loss drug-related businesses and inaccurate and incomplete information disclosure. In June 2024, due to the untimely disclosure of changes in the actual controller, the company, controlling shareholders, actual controllers, etc. once again received regulatory warning letters and were recorded in the capital market integrity file.
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