[ 2T 0a 2b 4l 年e_S 0t 3o 月ckI 2n 6f 日o] 证券研究报告•2023年年报点评 当前价： 4.60港元 爱康医疗（1789.HK） 医疗保健 目标价： ——港元 业绩短期承压，看好 24 年重整旗鼓 投资要点 西南证券研究发展中心 [T ab事le件_S：u2m02m4a年ry3] 月26日公司发布公告，2023年实现营业收入10.9亿元（+3.8%）， [分Ta析bl师e_：Au杜th向or阳] 实现归母净利润1.8亿元（-11.1%），实现扣非归母净利润1.8亿元（-6.6%）。 执业证号：S1250520030002 电话：021-68416017  受医疗反腐影响，医院手术量下滑导致公司业绩短期承压。公司2023年收入端 邮箱：duxy@swsc.com.cn 增速减慢主要系2023年7月国家反腐政策出台，关节类高值耗材医院手术量有 所下降所致。利润端下滑主要系公司研发以及市场开拓投入增加所致。从盈利 [相Tab对le指_Q数u表ot现eP ic] 能力上看，公司2023年毛利率为61.7%（+1.2pp），净利率为16.6%（-2.9pp）， 爱康医疗 恒生指数 ...

股 票 研 究 [Table_industryInfo] 医药 [ Table_Main[爱I Tnaf 康bol]e 医_Ti疗tle]（ 1789） [评Tab级le_：Inv est] 增持 当前价格（港元）： 4.87 外部扰动影响业绩，2024 年增速有望回升 2024.03.27 海 ——爱康医疗2023 年报业绩点评 [ 交Ta易bl数e_M据a rket] 外 丁丹(分析师) 谈嘉程(分析师) 52周内股价区间（港元） 4.05-11.08 当前股本（百万股） 1,122 公 0755-23976735 021-38038429 当前市值（百万港元） 5,464 司 dingdan@gtjas.com tanjiacheng@gtjas.com 证书编号 S0880514030001 S0880523070004 （ 中 本报告导读： 国 受外部扰动影响公司2023H2业绩承压，2024年有望重返增长轨道，维持增持评级。 香 摘要： 港 [维Ta持ble增_S持um评m级ar。y]考 虑到2023H2 外部扰动对公司业务开拓节奏的影响，下 ） 调2024-2025 年预测EPS 为0.23/0 ...

Revenue and Profit Performance - Revenue for the year ended December 31, 2023, reached RMB 1,093.9 million, a 4.0% increase compared to 2022[2] - Net profit for 2023 decreased by 11.1% to RMB 182.1 million, primarily due to increased R&D and market expansion investments[2] - Total revenue from external customers reached RMB 1,093,862 thousand in 2023, up from RMB 1,052,047 thousand in 2022, a growth of 4.0%[15][19] - Total reported segment profit was RMB 232,744 thousand in 2023, slightly down from RMB 237,400 thousand in 2022[19] - Revenue for the year ended December 31, 2023, was RMB 1,093.9 million, a 4.0% increase compared to RMB 1,052.0 million in 2022[53] - Net profit for the year ended December 31, 2023, was RMB 182.1 million, a decrease of 11.1% compared to RMB 204.8 million in 2022[53] - Total revenue for the year ended December 31, 2023, was RMB 1,093.862 million, an increase of 4.0% compared to RMB 1,052.047 million in 2022[62] - Gross profit for 2023 was RMB 674.5 million, up 6.0% from RMB 636.4 million in 2022, with gross margin improving to 61.7% from 60.5%[63] Overseas and Domestic Revenue - Overseas revenue saw significant growth, contributing to the overall revenue increase despite a decline in domestic hospital surgeries due to anti-corruption actions[2] - Revenue from external customers in the UK increased to RMB 102,497 thousand in 2023 from RMB 77,844 thousand in 2022, a growth of 31.7%[19] - Revenue from other countries (excluding China and the UK) rose to RMB 171,954 thousand in 2023 from RMB 123,254 thousand in 2022, a growth of 39.5%[22] - Overseas sales revenue for the year ended December 31, 2023, was RMB 227.1 million, a significant increase of 37.1% compared to the previous year[60] - Domestic sales revenue for the year ended December 31, 2023, was RMB 866.7 million, a decrease of 2.2% compared to the previous year[60] Product Revenue Breakdown - Revenue from hip replacement implants decreased to RMB 590,396 thousand in 2023 from RMB 654,999 thousand in 2022, a decline of 9.9%[15] - Revenue from knee replacement implants increased to RMB 311,351 thousand in 2023 from RMB 266,415 thousand in 2022, a growth of 16.9%[15] - Revenue from spine and trauma implants surged to RMB 123,268 thousand in 2023 from RMB 60,006 thousand in 2022, a significant increase of 105.4%[15] - Revenue from spine and trauma implants for the year ended December 31, 2023, was RMB 123.3 million, a significant increase of 105.4% compared to RMB 60.0 million in 2022[57] - Revenue from knee replacement implants for the year ended December 31, 2023, was RMB 311.4 million, an increase of 16.9% compared to RMB 266.4 million in 2022[56] - Revenue from hip replacement implants for the year ended December 31, 2023, was RMB 590.4 million, a decrease of 9.9% compared to RMB 655.0 million in 2022[56] - Revenue from customized products and services for the year ended December 31, 2023, was RMB 49.6 million, an increase of 5.6% compared to RMB 47.0 million in 2022[58] - Revenue from other products (surgical instruments and third-party orthopedic products) for the year ended December 31, 2023, was RMB 19.3 million, a decrease of 18.7% compared to RMB 23.7 million in 2022[59] R&D and Innovation - R&D expenses increased to RMB 137.1 million in 2023, up from RMB 110.9 million in 2022[4] - The company obtained 18 new Class III medical device registrations from the National Medical Products Administration (NMPA) in 2023, including 3D-printed knee joint prostheses, 3D-printed second-generation interbody fusion devices, and 3D-printed customized long-segment bone and thoracolumbar prostheses[44] - As of December 31, 2023, the company held 88 Class III medical device registrations from the NMPA, 15 CE certifications from European regulatory agencies, and 2 certifications from the U.S. Food and Drug Administration[44] - The company's iBot hip surgery robot received regulatory approval, forming a comprehensive digital orthopedic solution from 3D printing to surgical navigation and robotic systems[45] - The company holds 304 invention patents, 404 utility model patents, and 31 authorized PCT patents as of December 31, 2023[45] - The company's Apollo self-stabilizing vertebral body product, the first 3D-printed self-stabilizing vertebral body product in China, received positive market feedback[48] - The company's Osteo Match system, featuring bone modulus-matched spinal fusion implants, is the world's first biomechanically matched spinal fusion system[48] - The company's digital orthopedic business has developed capabilities in surgical planning, personalized surgical models, surgical guides, and robotic-assisted joint replacement systems[50] - R&D expenses grew by 23.7% to RMB 137.1 million in 2023, reflecting continued investment in new product development and team expansion[67] Financial Position and Assets - Total assets as of December 31, 2023, amounted to RMB 2,504.9 million, compared to RMB 2,338.1 million in 2022[7] - Cash and cash equivalents decreased to RMB 331.2 million in 2023 from RMB 625.8 million in 2022[6] - Inventory increased to RMB 595.5 million in 2023, up from RMB 402.3 million in 2022[6] - The company's equity attributable to shareholders totaled RMB 2,391.9 million as of December 31, 2023, compared to RMB 2,243.8 million in 2022[9] - Total reported segment assets increased to RMB 2,549,016 thousand in 2023 from RMB 2,305,637 thousand in 2022[19] - Cash and cash equivalents decreased to RMB 757.3 million in 2023 from RMB 1,083.3 million in 2022, partly due to investments in new factory construction[70] - Net current assets decreased to RMB 1,476.6 million in 2023 from RMB 1,629.0 million in 2022, primarily due to new factory construction[71] - Total capital expenditure for 2023 was approximately RMB 230.8 million, mainly allocated to factory construction, patent purchases, and production equipment[73] - The company's capital-to-debt ratio stood at 2.2% as of December 31, 2023, with loans used for new factory construction[75] Dividends and Shareholder Returns - The company proposed a final dividend of 4.5 HK cents per share for the year ended December 31, 2023[3] - A final dividend of 4.5 HK cents per share was proposed for 2023, totaling RMB 45,750 thousand, compared to 6.0 HK cents per share in 2022[32] - The company paid a final dividend of 6.0 HK cents per share for the previous fiscal year in 2023, amounting to RMB 61,509 thousand[33] - A final dividend of 4.5 HK cents per ordinary share is proposed for the year ended December 31, 2023, down from 6.0 HK cents in 2022[84] Market Expansion and Strategy - The company achieved a market share of over 20% in joint implantations in Beijing in 2023[46] - The company's joint business expanded to Vietnam and Uzbekistan, with Southeast Asian market growth exceeding 50% in 2023[49] - The company entered 262 new hospitals with its 3D-printed spine products in 2023, including 52 provincial-level hospitals[48] - Sales and distribution expenses rose by 21.5% to RMB 218.8 million in 2023, driven by increased market expansion and promotional activities[65] Employee and Operational Costs - Employee costs rose to RMB 254,964 thousand in 2023, compared to RMB 214,178 thousand in 2022, driven by higher salaries, wages, and benefits[24] - Inventory costs for 2023 were RMB 435,315 thousand, slightly up from RMB 426,461 thousand in 2022, including employee costs, depreciation, and amortization expenses[25] - Employee headcount increased to 1,052 in 2023 from 1,034 in 2022, with total employee compensation rising to RMB 255.0 million from RMB 206.0 million[77] Tax and Other Financials - Tax expenses for 2023 totaled RMB 49,013 thousand, up from RMB 35,518 thousand in 2022, with current tax provisions increasing to RMB 40,623 thousand[25] - The company's Chinese subsidiaries benefit from a preferential corporate income tax rate of 15% due to their high-tech enterprise status[26] - Other income net increased to RMB 26,370 thousand in 2023, up from RMB 11,193 thousand in 2022, with government subsidies contributing RMB 19,944 thousand[23] - Other income for 2023 increased to RMB 26.4 million from RMB 11.2 million in 2022, primarily due to higher government subsidies[64] Corporate Governance and Leadership - The company's chairman and CEO roles are both held by Mr. Li Zhijiang, deviating from the corporate governance code due to his extensive industry experience and leadership capabilities[78] - The board of directors includes executive directors Mr. Li Zhijiang, Ms. Zhang Bin, Mr. Zhang Chaoyang, and Ms. Zhao Xiaohong, non-executive director Dr. Wang Guowei, and independent non-executive directors Mr. Jiang Zhiwu, Dr. Li Shurong, and Mr. Eric Wang[86] Audits and Compliance - The company's consolidated financial statements for the year ended December 31, 2023, were reviewed by KPMG, with figures matching the audited financial statements[79] - The company's audit committee has reviewed the annual results for the year ended December 31, 2023[80] - No significant acquisitions or disposals of subsidiaries, associates, or joint ventures were made during the year[82] - The company's public shareholding remained at least 25% of the total issued share capital throughout the year[82] Shareholder Meetings and Reporting - The company will hold its Annual General Meeting on June 18, 2024[83] - The company will suspend share transfer registration from June 13 to June 18, 2024, for the AGM and from June 26 to June 28, 2024, for the final dividend[84] - The annual report for 2023 will be published on the company's website and the HKEX website[85]

2023 中期報告 2023 公司資料 | --- | --- | |---------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------| | 董事 | 註冊辦事處 | | | Conyers Trust Company (Cayman) Limited | | 執行董事 | Cricket Square | | 李志疆先生 （董事會主席及行政總裁） | Hutchins Drive | | 張斌女士 | PO Box 2681 | | 張朝陽先生 | Grand Cayman | | 趙曉紅女士 | KY1-1111 | | | Cayman Islands | | 非執行董事 王國瑋博士 獨立非執行董事 江智武先生 李澍榮博士 Eric Wang 先生 | 中國人民共和國（「中國」）主要營業地點 ...

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性或完 整性亦不發表任何聲明，並明確表示，概不就因本公告全部或任何部分內容而產生或因依賴該等內 容而引致的任何損失承擔任何責任。 截至6月30日止六個月 2023年 2022年 變動百分比 人民幣千元 人民幣千元 % 收入 648,686 531,211 22.1% 毛利 401,565 338,535 18.6% 期內溢利 132,574 126,033 5.2% 本公司權益股東應佔溢利 132,574 126,033 5.2% 每股盈利 基本 人民幣0.12元 人民幣0.11元 攤薄 人民幣0.12元 人民幣0.11元 截至2023年6月30日止六個月的 中期業績公告 財務摘要 愛康醫療控股有限公司（「本公司」）董事（「董事」）會（「董事會」）謹此宣佈本公司及其附屬公司（此後統 稱「本集團」）截至2023年6月30日止六個月（「報告期間」）的未經審核綜合中期業績，其已經本公司審 計委員會（「審計委員會」）審閱。本集團於報告期間的財務摘要連同上一期間同期的比較數字載列如 下： 截至2023年6月30日止六個月，本集團實現收入約人 ...

Financial Performance - The company achieved a revenue of RMB 1,052.0 million for the year ended December 31, 2022, representing a growth of 38.2% compared to RMB 761.4 million in 2021[9]. - Gross profit for the same period was RMB 636.4 million, an increase of 27.5% from RMB 499.2 million in 2021[8]. - Net profit reached RMB 204.8 million, marking a significant increase of 121.1% from RMB 92.6 million in the previous year[9]. - The company achieved a sales revenue of RMB 1,052.0 million in 2022, an increase of 38.2% year-on-year, and a net profit of RMB 204.8 million, up 121.1% year-on-year[25]. - Revenue from hip and knee implant products reached RMB 921.4 million in 2022, representing a growth of 44.7% compared to the previous year[26]. - The revenue from customized products and services increased by 101.3% year-on-year, totaling RMB 47.0 million in 2022[32]. - Sales revenue from overseas markets grew by 27.2% to RMB 165.7 million, while domestic sales in China increased by 40.4% to RMB 886.3 million[56]. - The company reported a significant increase in revenue for the year ending December 31, 2022, with audited financial statements reflecting strong performance[109]. Dividend and Shareholder Information - The company plans to pay a final dividend of HKD 0.06 per share for the year ended December 31, 2022[10]. - The company intends to distribute a final dividend of HKD 0.06 per share for the year ended December 31, 2022, up from HKD 0.025 in 2021, subject to shareholder approval[125]. - As of December 31, 2022, the total reserves available for distribution to equity shareholders amounted to RMB 1,027.6 million[134]. Market Position and Strategy - The domestic business revenue accounted for a significant portion of total sales, with a market share exceeding 90% in provincial hospitals[20]. - The company won the largest bid volume in the national joint implant procurement, enhancing its market share in the orthopedic industry[25]. - The company aims to enhance its market share in the mid-to-high-end market while consolidating its position in the mass market through advanced technology and professional services[42]. - The company plans to continue expanding its market presence, particularly in orthopedic surgeries, following the rapid growth in surgical volumes due to the implementation of volume-based procurement policies[115]. Product Development and Innovation - The company has obtained 6 new Class III medical device registrations, bringing the total to 72, enhancing its product offerings[20]. - The company has accumulated over 650 patents, ranking among the top three in the national invention patent list for specialized and innovative small giant enterprises in the medical device sector[20]. - The company has developed a digital surgical navigation system for hip joint replacement, marking its entry into the orthopedic surgical navigation and robotics field[33]. - The company launched multiple new products in 2022, including the first domestic high-crosslinked, dual-system knee joint unicompartmental replacement system and the first 3D printed total hip joint product in China[40]. - The company is committed to promoting digital orthopedic technology commercialization and exploring new biomaterials in collaboration with research institutions[42]. Operational Efficiency and Cost Management - The cost of sales for the year was RMB 415.6 million, an increase of 58.5% from RMB 262.3 million in 2021, primarily due to higher sales volume[57]. - Gross profit for the year was RMB 636.4 million, up 27.5% from RMB 499.2 million in 2021, with a gross margin of 60.5%, down from 65.6% in the previous year[58]. - The implementation of the volume-based procurement policy has led to increased demand for the company's products, offsetting price declines due to competitive bidding[22]. Research and Development - The company is actively involved in research and development of orthopedic implants, with a dedicated research center led by a director with over 10 years of experience in the field[102]. - The company conducted over 40 academic activities in 2022, training more than 300,000 doctors, focusing on complex and revision surgery techniques for hip and knee joints[43]. - The company plans to further commercialize 3D printing products, expanding their application in small joints, spine, and trauma fields[42]. Corporate Governance and Management - The company emphasizes corporate governance and sustainable development, with independent directors like Jiang Zhiwu, who has over 20 years of experience in accounting and auditing[92]. - The company has a strong board of directors with members possessing extensive experience in healthcare and finance, including Dr. Wang Guowei, who has over 10 years of experience in the medical industry[90]. - The management team is committed to strategic planning and operational efficiency to drive growth and profitability in the competitive healthcare sector[89]. - The company has made strategic appointments in its human resources department to strengthen its management capabilities across subsidiaries[106][107]. Employee and Training Initiatives - The company emphasizes employee training and development, investing resources in continuous education programs to enhance skills and knowledge[118]. - The group employed 1,034 employees as of December 31, 2022, with total employee compensation expenses amounting to RMB 206.0 million, slightly up from RMB 204.5 million for the year ended December 31, 2021[77]. Financial Position and Assets - As of December 31, 2022, the group had cash and cash equivalents of RMB 625.8 million, with total current assets net worth increasing to RMB 1,629.0 million from RMB 1,444.9 million as of December 31, 2021[67][68]. - The group had no outstanding bank loans or other borrowings as of December 31, 2022, resulting in a capital debt ratio of 0%[73]. - The company has no outstanding borrowings as of December 31, 2022, indicating a strong financial position[129]. Risks and Challenges - The company acknowledges the potential risks associated with COVID-19, which may impact hospital surgical volumes in early 2023[114].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性或完 整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容而產生或因倚賴該等內 容而引致的任何損失承擔任何責任。 截至2022年12月31日止年度之年度業績公告 愛康醫療控股有限公司（「本公司」）董事（「董事」）會（「董事會」）宣佈本公司及其附屬公司（統稱「本集 團」）截至2022年12月31日止年度的綜合年度業績連同去年的比較數字。 | --- | --- | --- | --- | |----------------------------|------------|------------------|------------| | | | | | | 財務摘要 | | | | | | | | | | | | 截至 12 月 31 日 | | | | 2022 年 | 2021 年 | 變動百分比 | | | 人民幣千元 | 人民幣千元 | % | | 收入 | 1,052,047 | 761,441 | 38.2% | | 毛利 | 636,435 | 499,189 | 27.5% | | 年內溢利 | ...

Financial Performance - Revenue for 2021 decreased by 26.5% to RMB 761.4 million, primarily due to reduced purchases by distributors under the national joint implant volume procurement policy and a provision of RMB 103.8 million for future sales price discounts[4] - Net profit for 2021 dropped significantly by 70.5% to RMB 92.6 million, mainly due to decreased revenue, increased R&D and marketing expenses, and one-time relocation costs[4] - The company achieved sales revenue of RMB 761.4 million and net profit of RMB 92.6 million in 2021, representing a decrease of 26.5% and 70.5% respectively compared to the previous year[10] - Gross profit for 2021 decreased by 30.1% to RMB 499.2 million, reflecting the impact of national joint implant volume-based procurement[24] - Net profit attributable to equity shareholders for 2021 decreased by 70.5% to RMB 92.6 million, impacted by the volume-based procurement policy[24] - Domestic sales revenue decreased by 32.3% to RMB 631.1 million, primarily due to price reductions and a provision of RMB 103.8 million for future sales discounts[33] - Gross profit decreased by 30.1% to RMB 499.2 million, with gross margin dropping to 65.6% from 69.0% due to revenue decline and price discount provisions[35] - Sales revenue for 2021 was RMB 761.4 million, a decrease of 26.5% compared to 2020[66] - Net profit for 2021 was RMB 92.6 million, a decrease of 70.5% compared to 2020[66] Market Share and Procurement - The company achieved a market share of nearly 20% in the Chinese joint market by securing bids for three brands and four product lines in the joint implant volume procurement[8] - The company's three brands and four product series all won bids in the national volume-based procurement, ranking first in hospital-reported demand for surgical volume among all brands[12] - The national volume-based procurement for joint implants covered 306,000 hip joint systems and 232,000 knee joint systems, with a total contracted procurement volume of 538,000 units[12] - The average retail price of joint implants dropped by 82% after the national volume-based procurement[11] - The company's three brands and four product lines all won bids in the national joint implant procurement, securing the maximum surgical volume submitted by hospitals[67] - The implementation of the procurement results by provincial governments remains unclear, potentially affecting the company's market share growth[67] Product Development and Innovation - The company launched the ICOS customized platform, offering tailored implants and surgical planning, simplifying complex surgeries[8] - The company's hip and knee joint replacement diagnostic and treatment technology project won the first prize of Beijing Science and Technology Progress Award[8] - The company successfully launched 3 new products based on 3D printing technology in 2021 and won the first prize of Beijing Science and Technology Progress Award[10] - The company launched a new product for early-stage femoral head necrosis and the TMK knee joint system in 2021, leveraging 3D printing technology[17] - The company established 6 national-level 3D printing customization centers and 8 provincial training centers in 2021, covering nearly 1,300 key hospitals and training over 100,000 customers[19] - The company is the only one in China with 3D printing customized product registration certificates, aiming to increase market share in the mid-to-high-end market[21] - The company plans to leverage its 3D printing customization technology to increase its market share in the mid-to-high-end market and strengthen its leadership position in the mass market in 2022[9] - The company aims to become the world's best innovative and efficient medical enterprise by 2030 and will introduce long-term equity incentives in 2022 to enhance employee motivation and creativity[9] - The proportion of innovative products in the company's overall product portfolio is expected to gradually increase, enhancing profitability[23] - The company plans to strengthen its R&D capabilities and continue launching innovative products to address clinical needs[23] Revenue Breakdown - The company's hip and knee implant business generated revenue of RMB 636.9 million in 2021, a year-on-year decrease of 31.9%[13] - The company's spine and trauma implant business achieved revenue of RMB 79.3 million in 2021, a year-on-year increase of 14.5%[14] - Customized products and services revenue reached RMB 23.3 million in 2021, a year-on-year increase of 303.1%[15] - Hip joint implant revenue decreased by 30.6% to RMB 469.5 million, while knee joint implant revenue decreased by 35.1% to RMB 167.4 million[28] - Spine and trauma implant revenue increased by 14.5% to RMB 79.3 million, driven by the expansion of 3D-printed spine products[29] - Customized products and services revenue surged by 303.1% to RMB 23.3 million, driven by successful entry into multiple top-tier hospitals[30] - Overseas sales grew by 26.4% in 2021, reflecting the company's active expansion into international markets[25] - Overseas sales revenue increased by 26.4% to RMB 130.3 million, driven by market expansion and increased surgical volume[33] R&D and Expenses - R&D expenses increased by 7.7% to RMB 113.1 million, driven by digital bone technology projects and team expansion[39] - The company made a provision of RMB 103.8 million for price discounts on certain primary hip and knee systems due to the expected price reduction from the national volume-based procurement[10] - The company's ICOS products and surgical value-added services achieved significant growth, entering multiple hospitals and contributing to revenue growth[25] Assets and Liabilities - Total assets increased to RMB 2,605.3 million in 2021, up from RMB 2,526.9 million in 2020[7] - Total liabilities rose to RMB 573.7 million in 2021, compared to RMB 484.1 million in 2020[7] - The company's equity totaled RMB 2,031.6 million in 2021, slightly down from RMB 2,042.8 million in 2020[7] - Cash and cash equivalents totaled RMB 948.3 million, including RMB 475.6 million in cash, RMB 361.2 million in structured deposits, and RMB 106.5 million in fixed-term deposits[42] - Total capital expenditure for 2021 was RMB 106.1 million, primarily for production and R&D equipment, patents, and land purchases[45] Dividends and Shareholder Returns - The company proposed a final dividend of 2.5 HK cents per share for the year ended December 31, 2021, down from 4.0 HK cents per share in 2020[5] - The company proposed a final dividend of 2.5 HK cents per ordinary share for the year ended December 31, 2021, compared to 4.0 HK cents in 2020[74] - The total reserves available for distribution to shareholders as of December 31, 2021, were RMB 965.9 million[79] International Market Challenges - The company faced challenges in its international market strategy due to the COVID-19 pandemic and disruptions in the supply chain caused by the joint implant volume procurement policy[8] - The COVID-19 pandemic continues to negatively impact the industry, with occasional outbreaks and tightened control policies potentially reducing hospital surgical volumes[67] Employee and Management - Employee headcount decreased to 908 from 1,019, while total employee compensation increased to RMB 204.5 million due to higher social insurance costs and relocation expenses[50] - The company emphasizes the importance of employee training and development, investing in continuous education and training programs for management and staff[69] - The company provides product knowledge training courses to distributors and assists them in sales and marketing activities[70] - The company organizes and participates in industry and academic seminars to strengthen relationships with key opinion leaders and external industry experts[70] - The company offers 3D ACT solutions to surgeons to help them perform surgeries more effectively[70] - The company collects feedback from surgeons to improve user experience and make product enhancements[70] Corporate Governance and Compliance - The company complied with all relevant environmental laws and regulations as of December 31, 2021[72] - The company complied with all relevant laws and regulations in China, the UK, the Cayman Islands, and Hong Kong for the year 2021[73] - The company's board of directors includes four executive directors, one non-executive director, and three independent non-executive directors[80] - No significant contracts were in place at the end of or during the year ended December 31, 2021, involving the company or its subsidiaries, and no major contracts were provided by controlling shareholders or their subsidiaries[86] - Non-compete agreements with Himalaya Limited, Shenma Limited, Mr. Li Zhijiang, Ms. Zhang Bin, and Rainbow Holdings Limited were fully complied with during the year ended December 31, 2021[87] - No stock-linked agreements were entered into or remained in effect at the end of the year ended December 31, 2021, that would require the company to issue shares[88] - The company has adopted a diversity policy for the board of directors, considering factors such as gender, age, education, and professional experience[123] - The company has complied with all provisions of the Corporate Governance Code except for provision A.2.1 (re-numbered as C.2.1 from January 1, 2022)[129] - The company has established a written guideline for employee securities trading, with no instances of non-compliance reported[130] - The board of directors held six meetings during the year, with all directors attending all meetings except for one independent non-executive director who attended five out of six[134] - The Chairman and CEO roles are both held by Mr. Li Zhijiang, who is the founder of the group and has extensive industry experience, providing strong and consistent leadership for the company[135] - The company has complied with the requirement to appoint at least three independent non-executive directors, with one possessing appropriate professional qualifications or accounting/financial management expertise[136] - Non-executive directors, including independent non-executive directors, are appointed for a specific term of three years and are eligible for re-election after their term expires[137] - The Board of Directors is responsible for leading and controlling the company, overseeing operations and financial performance, and ensuring effective internal control and risk management systems[137] - All directors have access to comprehensive and timely information and can seek independent professional advice when necessary to fulfill their duties[138] - The company has arranged appropriate directors' and officers' liability insurance to cover potential legal actions arising from the company's business[138] - The Audit Committee, consisting of two independent non-executive directors and one non-executive director, held two meetings in 2021 to review financial performance, internal audit issues, and risk management systems[141] - The Audit Committee met twice with the external auditors during 2021 to discuss significant matters related to financial reporting and internal control systems[141] - The Remuneration Committee consists of three members, including two independent non-executive directors and one executive director, with Dr. Li Shurong serving as the chairman[143] - The Remuneration Committee held one meeting in 2021 to review the company's remuneration policies and structures, as well as the compensation of directors and senior management[144] - In 2021, the company had 1 director earning below RMB 500,000, 6 directors earning between RMB 500,000 and RMB 999,999, and 2 directors earning above RMB 1,000,000[146] - The Nomination Committee is composed of three members, including one executive director and two independent non-executive directors, with Mr. Li Zhijiang serving as the chairman[146] - The Nomination Committee met once in 2021 to review the board's structure, size, and diversity, as well as the independence of independent non-executive directors[147] - The company has adopted a Board Diversity Policy, which outlines methods to achieve board diversity and is available on the company's website[149] - The Nomination Committee is responsible for identifying and selecting qualified candidates for board membership, considering factors such as gender, age, cultural and educational background, and professional experience[149] - The Nomination Committee believes that the board has achieved sufficient diversity and will review the Board Diversity Policy as necessary to ensure its effectiveness[149] - The company has adopted a Director Nomination Policy, which sets out the selection criteria and procedures for director nominations and appointments, aiming to ensure a balanced mix of skills, experience, and diverse perspectives on the board[150] - The company's risk management and internal control systems were deemed effective and adequate for the year ended December 31, 2021, as confirmed by management and reviewed by the Board and Audit Committee[152] - The company paid RMB 3,955 in audit fees to KPMG for the year ended December 31, 2021, with no non-audit services provided[155] - The company has implemented a whistleblowing procedure to allow employees to report concerns about criminal offenses, financial misconduct, or other issues anonymously[152] - The company's internal control team independently reviews the adequacy and effectiveness of risk management and internal control systems, providing results and recommendations to the Audit Committee for improvement[152] - The company has established an insider information policy to ensure fair and timely disclosure of material information to the public in compliance with applicable laws and regulations[152] - The Board reviewed the company's corporate governance policies, training for directors and senior management, and compliance with legal and regulatory requirements for the year ended December 31, 2021[151] - The company's Audit Committee assists the Board in overseeing the design, implementation, and monitoring of risk management and internal control systems[152] - The company has implemented control procedures to prohibit unauthorized access and use of insider information[153] - The company's directors are responsible for preparing the consolidated financial statements for the year ended December 31, 2021, and are not aware of any significant uncertainties that may cast doubt on the company's ability to continue as a going concern[154] - The company's co-company secretaries, Ms. Han Yu and Ms. Li Xinying, received at least 15 hours of relevant professional training during the year ended December 31, 2021, in compliance with Listing Rule 3.29[156] ESG and Sustainability - The company has identified and assessed climate change risks, set environmental goals covering carbon emissions and energy consumption, and implemented energy-saving and safety production actions[163] - The company has a three-level management structure for ESG issues, involving the board of directors, the ESG working group, and functional departments and subsidiaries[165] - The company has implemented a shareholder communication policy to ensure that shareholder opinions and concerns are properly addressed[161] - The company has adopted a dividend policy without a predetermined payout ratio, with dividends subject to the company's financial condition and shareholder approval[161] - The company has completed the identification and assessment of climate change risks and formulated corresponding response measures[163] - The company has established an ESG working group responsible for coordinating daily ESG management, including identifying significant ESG issues and preparing annual ESG reports[164] - The company has set environmental and safety production goals and regularly reviews their achievement, with progress reported to the management and board of directors[163] - The company has conducted a materiality analysis for ESG issues, comparing results with previous years to identify key topics and differences[163] - The company has set a target to reduce carbon emission intensity by 32% by 2030, with a baseline year of 2020, aiming to decrease from 0.044 tons CO2e per 10,000 yuan to 0.030 tons CO2e per 10,000 yuan[176] - In 2021, the company's greenhouse gas emissions per 10,000 yuan of production output were 0.055 tons CO2e, with detailed emissions data provided for the past three years[176] - The company has established a climate change management system, with the board of directors responsible for overseeing climate-related risks and opportunities, and the ESG working group executing quarterly assessments[173] - To address acute physical risks from extreme weather, the company has implemented a natural disaster warning mechanism and strengthened supply chain resilience by diversifying suppliers[174] - The company is actively monitoring and managing greenhouse gas emissions, with plans to consider third-party verification for carbon emissions to enhance scientific accuracy[176] - The company has committed to improving energy efficiency and reducing emissions through measures such as strict control of production, building, and office energy usage[176] - The company has identified market risks related to shifting consumer preferences towards low-carbon products and is addressing this through distributor training and public disclosure of carbon performance[175] - The company has completed acquisitions of JRI Orthopaedics Limited in 2018 and Beijing Libeier Bioengineering Research Institute Co., Ltd. in 2020, expanding its market presence[171] - The company has implemented a unified ESG information collection system since its listing, ensuring consistent ESG data reporting and disclosure[171] - The company has developed a climate risk response strategy, incorporating climate-related financial impacts into future considerations and introducing incentive measures for climate-related issues[173] - Total carbon emissions in 2021 were 4,242.8 tons CO2e, a decrease of 7.6% compared to 2020[177] - Scope 1 (direct) emissions intensity remained stable at 0.004 tons CO2e per 10,000 yuan from 2020 to 2021[177] - Scope 2 (indirect) emissions decreased by 6.8% to 3,911.7 tons CO2e in 2021 compared to 2020[177] - The company achieved 100% compliance rate for pollutant emissions (water, noise, dust, gas, solid waste) in 2021[180] - General solid waste generation in 2021 was 15.6 tons, with an intensity of 0.2 kg per 10,000 yuan of output value[184] - Dust generation intensity in 2021 was 0.1 kg per 10,000 yuan of output value[184] - Hazardous waste liquid generation intensity in 2021 was 1.1 kg per 10,000 yuan of output value[184] - The company obtained ISO14001:2015 environmental management system certification during the reporting period[178] - No major pollution incidents occurred in 2021, maintaining a zero-incident record[180] - The company implemented a comprehensive environmental management system with specific control procedures for different types of waste[182] - Total wastewater discharge in 2021 was 11,435.0 tons, a decrease of 11.8% compared to 2020[185] - Chemical Oxygen Demand (COD) in 2021 was 1,192.7 kg, a significant increase from 346.4 kg in 2020

Financial Performance - For the six months ended June 30, 2021, the company reported revenue of RMB 447.6 million, a decrease of 6.5% compared to RMB 478.9 million in the same period of 2020[4]. - Gross profit for the same period was RMB 308.3 million, down 8.3% from RMB 336.3 million year-on-year[4]. - Net profit for the first half of 2021 was RMB 111.5 million, representing a significant decline of 31.6% from RMB 162.9 million in the previous year[4]. - Revenue from hip joint replacement implants was RMB 243.4 million, a decrease of 10.2% from RMB 271.1 million in 2020[19]. - Revenue from knee joint replacement implants was RMB 108.9 million, down 11.2% from RMB 122.6 million in 2020[19]. - Revenue from spinal and trauma products increased by 109.3% year-on-year, totaling RMB 20.3 million[9]. - Revenue from external customers for orthopedic implants in China reached RMB 408,682,000, a decrease of 9.1% compared to RMB 449,957,000 in the same period last year[52]. - The total comprehensive income for the period was RMB 107,045 thousand, down from RMB 172,011 thousand in the previous year, a decrease of around 37.8%[41]. - The operating profit for the six months ended June 30, 2021, was RMB 128,919 thousand, down from RMB 192,356 thousand in the previous year, indicating a decrease of about 33.0%[41]. - Basic and diluted earnings per share for the six months ended June 30, 2021, were RMB 0.10, down from RMB 0.15 in the same period of 2020, representing a decrease of 33.3%[41]. Product Development and Innovation - The company achieved sales revenue of RMB 64.3 million from its 3D printing products, marking a growth of 6.1% compared to the same period last year[5]. - The company launched a key new product, the 3D printed total knee joint and implant system, which has been used in over 80 surgeries to date[5]. - As of June 30, 2021, the company obtained three new medical device registrations for 3D printed implants, bringing the total to eight approved products[5]. - The company launched the 3D metal printing bio-knee joint product system, becoming the first in China to receive registration for this type of product[11]. - The "Master Plan" project aims to create an integrated platform for innovative products, technology, and customer engagement, enhancing academic exchange and product promotion[11]. - The company plans to continue expanding its product offerings in orthopedic implants and surgical instruments, focusing on innovation and market penetration[48]. Market and Industry Trends - The company anticipates that the national volume-based procurement policy will significantly lower terminal prices for orthopedic products, impacting the industry’s business model[5]. - The overall market for orthopedic products is expected to undergo significant changes due to the new procurement policies, presenting both challenges and opportunities for market share expansion[5]. - The national volume-based procurement will significantly change the competitive landscape and distribution model in the artificial joint industry[7]. - The company anticipates that national volume-based procurement will accelerate industry consolidation, providing opportunities to expand market share[14]. Financial Position and Cash Flow - Cash and cash equivalents as of June 30, 2021, were RMB 541.1 million, down from RMB 956.1 million as of December 31, 2020[31]. - Operating cash flow for the six months ended June 30, 2021, was RMB 4.69 million, significantly lower than RMB 145.88 million for the same period in 2020[45]. - Net cash used in investing activities was RMB 143.11 million, compared to RMB 594.33 million in the previous year, indicating a reduction in investment outflows[45]. - The company reported a foreign exchange loss of RMB 4,438 thousand for the period, compared to a gain of RMB 9,140 thousand in the previous year[41]. Research and Development - Research and development expenses increased by 17.9% to RMB 51.7 million for the six months ended June 30, 2021, compared to RMB 43.9 million in the same period of 2020[28]. - The company is shifting its R&D focus towards complex revision surgeries and early treatment products in response to volume-based procurement pressures[10]. Shareholder Information - The approved interim dividend per ordinary share for the last fiscal year was 4.0 HK cents, down from 7.5 HK cents in 2020, reflecting a decrease of 46.67%[66]. - The company purchased 1,922,000 shares at a total cost of RMB 16,785,000 under the share award plan during the reporting period[68]. - The company’s directors and senior management held a total of 505,157,500 shares, representing approximately 45.29% of the company's equity as of June 30, 2021[75]. - The major shareholders with 5% or more equity include LZY Trust and Bamboo Trust, among others[79]. Compliance and Governance - The audit committee, consisting of independent non-executive directors, reviewed the interim financial report for the six months ending June 30, 2021, and found it to be in accordance with applicable accounting standards[105]. - The interim financial report has been reviewed by KPMG in accordance with the relevant review standards[107]. - The company has adopted the standard code of conduct for securities trading as per the listing rules, confirming compliance by all directors for the six months ending June 30, 2021[104].