Across The Border | Donkey skin just the tonic for China’s urbanites

Dong-E E-Jiao, a Shenzhen-listed company that produces the traditional Chinese medicine e-jiao, has seen its shares jump 14 per cent so far this month, with analysts saying the industry leader will maintain its attractiveness due to pricing power and the upcoming Shenzhen Hong Kong Stock Connect.

E-jiao, with a 3,000 year of history, is a traditional Chinese health care product in the form of gelatin and made of donkey skin. It is used as a blood tonic, especially for females.

The Shandong-based company saw its shares rally to 52.9 yuan after its biggest shareholder and senior management increased their holdings this month. On June 7, six Dong-E E-Jiao executives, including its president, spent over 120 million yuan (HK$141.4 million) buying 0.4 per cent of the company’s shares at 46.31 yuan apiece. It was the management’s largest ever shareholding increase in terms of value, according to UBS Securities.

Then on Wednesday, China Resources Pharmaceutical Group increased its shareholding in the firm from 23.14 per cent to 27.8 per cent.

“These moves reflect their confidence in the company’s financial results in the second half,” said David Li, Bocom International’s health care analyst. Li expects the company’s share price to reach 60.31 yuan.

Dong-E E-Jiao’s revenue for 2015 jumped 35.94 per cent year on year to 5.45 billion yuan, with net profit rising 19 per cent to 1.37 billion yuan.