Humanwell Healthcare After Control Change: Analysis of Advantages in Psychoactive Drug Business and Valuation Reassessment

Humanwell Healthcare is a leading enterprise in China’s psychoactive drug industry, and its psychoactive drug business has formed high entry barriers relying on strict industry regulation [0]. In July 2025, the former controlling shareholder, Contemporary Technology, underwent restructuring due to debt crisis, and China Merchants Group obtained 23.7% voting rights through an RMB 11.8 billion investment, completing the company’s control change [0].

After the control change, the company’s stock price dropped from $20.99 on July 1 to $19.22 on December 19, a decrease of 8.43%, and the market’s short-term response was flat [0]. However, from the valuation perspective, the company’s current P/E ratio is 21.76x, P/B ratio is 1.64x, and ROE is 7.83% [0], while the DCF valuation model shows significant upside potential: conservative scenario is $53.58 (+181.3%), base scenario is $75.41 (+295.9%), and optimistic scenario can reach $138.08 (+624.8%) [0].

The state-owned background of China Merchants Group brings a stable development environment for the company, which is expected to further strengthen the regulatory barrier advantage of the psychoactive drug business [0]. Technical analysis shows that the stock price has been in a sideways consolidation phase recently, with support at $18.60 and resistance at $19.50 [0].

1. Synergies between Psychoactive Drug Business Barriers and State-Owned Background
   : The strong regulatory nature of the psychoactive drug industry requires enterprises to have a stable policy environment and compliance capabilities. The state-owned background of China Merchants Group helps to strengthen the company’s advantages in compliance operations and resource acquisition, further consolidating the leading position of the psychoactive drug business.
2. Divergence Between Valuation Model and Market Performance
   : The significant upside potential shown by the DCF valuation contrasts with the short-term stock price decline after the control change, indicating that the market may not have fully recognized the company’s intrinsic value or is affected by other short-term factors.
3. Potential Value Release from Restructuring and Integration
   : The RMB 11.8 billion investment provides sufficient capital support for the company. If effectively used for business expansion and debt optimization, it will promote the improvement of the company’s fundamentals and create conditions for valuation reassessment.

• Risks
  :
  • Changes in regulatory policies for psychoactive drug business may affect business advantages [0]
  • The integration effect after control change remains to be observed
  • DCF valuation is based on assumptions, and actual results may differ from predictions [0]
• Opportunities
  :
  • The company is currently significantly undervalued, with potential for valuation repair [0]
  • Stability and resource support brought by the state-owned background of China Merchants Group
  • The high barrier characteristic of the psychoactive drug business provides guarantee for long-term growth

As a leading enterprise in China’s psychoactive drug industry, Humanwell Healthcare is expected to maintain the strong regulatory barrier advantage of its psychoactive drug business after the control is transferred to China Merchants Group. Despite the flat short-term stock performance, the DCF valuation shows huge upside potential for the company, and the state-owned background of China Merchants Group provides strong support for the company’s long-term stable development. Investors should pay attention to changes in the policy environment, integration effects, and the time window for valuation repair, and make decisions based on their own investment strategies and risk tolerance.