HONG KONG, April 18, 2023 /PRNewswire/ — Huayi Tencent Entertainment Company Limited (“Huayi Tencent Entertainment“, the “Company“; Stock code: 419.HK; together with its subsidiaries collectively known as the “Group“) and its subsidiary “Shaanxi Yizhinuo Information Technology Company Limited” (the “Echartnow“) are pleased to announce that they entered into the Capital Increase Agreement with Zhangjiagang Yitang Equity Investment Partnership (Limited Partnership) (the “New Investor“). The Capital Increase Agreement stated that based on the valuation of Echartnow at RMB600 million before the completion of the Capital Increase, the New Investor has conditionally agreed to make a capital contribution in total of RMB40 million in cash to acquire 6.25% equity interests of Echartnow.

Echartnow to be benefited from the strong background of state-owned investor

Echartnow has experienced rapid growth in revenue and development in the past two years, and has successfully built up the businesses of digital marketing services for pharmaceuticals. In order to further support the long-term growth of Echartnow, management of the Group considered that it is currently the appropriate timing to introduce a new financial investor. The New Investor, Zhangjiagang Yitang Equity Investment Partnership (Limited Partnership), is principally engaged in equity investment, investment management, asset management, technology promotion and application services in the form of private equity funds. Its ultimate controller is Zhangjiagang High-tech Zone Investment Holding Company Limited, an investment holding company which is a state-owned entity in Zhangjiagang City, Jiangsu Province of the PRC. The Capital Increase from a state-owned entity is a proof of the Group’s development achievements of Echartnow. With this Capital Increase, Echartnow will be able to benefit from the additional government, business and networking resources from the New Investor, enabling Echartnow to occupy the leading position in China’s digital healthcare marketing market.

The Capital Increase from the New Investor also justifies the Group’s decision to acquire Echartnow. Since the Group acquired Echartnow in April 2021, it has gradually developed and has quickly become the core business of the Group. Its total operating revenue and gross profits in 2022 have reached approximately HK$608 million and HK$336 million respectively. Upon completion of the Capital Increase, the equity interests in Echartnow owned by the Group will have been diluted to less than 50%, but the Group will still retain control over the operations of Echartnow in the future. Therefore, Echartnow will continue to be treated as subsidiaries of the Group, and accordingly the revenue and the financial results of Echartnow will continue to be consolidated into the Group’s consolidated financial statements.

Echartnow is planning for IPO within five years, which will significantly boost the Group’s return

Upon completion of the Capital Increase, Echartnow’s entity value will be enhanced to RMB640 million, representing an approximately 2.6-times increase in value comparing to the implied value as reflected by the Group’s investment costs up to RMB90 million for a 51% interest before the Capital Increase, which proved that the Group has successfully transformed to internet healthcare businesses with the market recognition of the outstanding performance of Echartnow, and its future value will be far beyond that.

With the execution of the Capital Increase Agreement, the Group and the New Investor also entered into the Echartnow Shareholders’ Agreement, in which Echartnow shall use all endeavours to achieve the initial public offering on a reputable securities exchange (namely the Shanghai Stock Exchange, the Shenzhen Stock Exchange, the Science and Technology Innovation Board of the Shanghai Stock Exchange, the Stock Exchange, the New York Stock Exchange or NASDAQ) within 5 years. The Group will make every effort to realise the IPO of Echartnow, and promote the continuous growth of Echartnow with the goal of maximising the shareholder value.

Strong in execution, the Group’s management aims to become a leading digital healthcare marketing enterprise in the PRC

Mr. Yuen Hoi Po, Executive Director and Chief Executive Officer of Huayi Tencent Entertainment, said, “The Group is very pleased to bring in a new investor for Echartnow. Looking back at the beginning of 2021, the Group’s management had the foresight to foresee the development potential of internet healthcare market in the PRC, and seized the opportunity and made a strategic move to transform into the internet healthcare sector. The Group has achieved such remarkable results in a short period of time, which proved that the Group’s management has great insights. The Group has established a firm foothold in the internet healthcare and digital healthcare marketing sector, and is on its way to becoming the market leader.”

Mr. Yuen Hoi Po also pointed that, “After the past two years’ dedicated development, Echartnow has been continuously upgrading, expanding in scale, and has rapidly become one of the core businesses of the Group. The capital increase from the New Investor with state-owned background has fully verified the great confidence to the prospects of Echartnow. Looking forward, the Group will further drive the long-term growth of Echartnow’s performance target so that Echartnow can continue to thrive, and be successfully listed within five years. The Group will use all endeavours to maximise the value of the Group and Echartnow for the benefit of our shareholders.” 

About Huayi Tencent Entertainment Company Limited

Huayi Tencent Entertainment Company Limited (Stock Code: 00419.HK) conducts businesses mainly in internet medical healthcare sector, which include “Echartnow”, a digital marketing services platform for pharmaceuticals, and “Meerkat Health”, a platform for smart healthcare services, striving to provide a series of online healthcare services and to build an internet healthcare platform ecosystem.

For more information about Huayi Tencent Entertainment, please visit the official website of the Group: http://www.huayitencent.com.

This press release is issued by Joint PR Consultants Limited on behalf of Huayi Tencent Entertainment Company Limited.