Baiying Bio (百英生物) Faces Tough Beijing Stock Exchange Review Over “Abnormal” Margins, Customer Shake‑up and Revenue Questions

IPO under the microscope

Baiying Bio (百英生物), a Shanghai‑based contract research organisation (CRO) focused on antibody and protein services, is facing intensified scrutiny as it seeks a Beijing Stock Exchange (BSE) listing — a hearing slated for March 31. Regulators have twice grilled the company over three core issues: an apparently outsized and rising gross margin, a rapid turnover among its largest customers, and a dual‑track revenue recognition policy that regulators say could mask timing or accuracy problems. The company has offered explanations, but investors and the BSE remain unconvinced that its profitability and revenue reporting are robust.

Revenue recognition and rising overseas exposure

At the centre of the inquiry is what the prospectus calls a “dual” income confirmation standard: domestic projects are recognised only after the client sends acceptance e‑mail, while for overseas projects Baiying counts revenue when the company itself issues a project‑closing e‑mail. Can a unilateral confirmation rule for foreign clients withstand audit scrutiny? It has been reported that Baiying cited peers such as WuXi Biologics (药明生物) and GenScript Biotech (金斯瑞生物科技) to argue the practice follows industry norms, but regulators worry that the approach — combined with a growing share of overseas revenue (rising to about 63% in H1 2025) — increases the risk of cross‑period adjustments if foreign clients later dispute results.

Margins, client churn and profitability signals

Baiying’s CRO gross margins climbed into the high‑60s — materially above some listed peers — even as comparable firms showed divergent trends. The company attributes the gap to technical improvements, lower input costs and a shift toward higher‑margin overseas contracts. But frequent “big‑client” turnover — with domestic pharmaceutical names leaving the top‑five and global players such as Moderna and AstraZeneca appearing in later periods — raises questions about customer stickiness and whether recent margin gains are sustainable or one‑off. Why would a small CRO suddenly outpace incumbents on both top‑line growth and margin expansion without clear, verifiable drivers?

Third‑party payments, equity quirks and geopolitical context

Compounding the debate are rising third‑party payments (including platform and group finance company receipts) and governance flags: it has been reported that the general manager received a 9% equity grant in 2020 at zero cost with limited performance conditions, and that the controlling shareholder sold about RMB 133 million of stock ahead of the IPO. Third‑party payment channels — especially cross‑border platform flows — make cash‑flow verification harder and arrive at a sensitive moment when Western export controls and heightened US‑China scrutiny of biotech supply chains are increasing diligence demands. The BSE’s two rounds of questioning signal that Chinese regulators will press smaller CROs hard on accounting consistency and governance before allowing them into the public market.

Market participants say the March hearing will be a real test of whether Baiying can turn its fast growth into a defensible public company story, or whether the red flags will force further disclosure, adjustment or delay. The broader question: how will Chinese regulators balance capital access for fast‑growing biotech service firms against tougher demands for transparency in a geopolitically fraught sector?