Core Viewpoint - YunKang Group (02325) announced the resignation of Ms. Huang Luo as a non-executive director effective from August 1, 2025, to dedicate more time to personal matters [1] - Mr. Zhang Wei has been appointed as a non-executive director effective from August 1, 2025 [1]

中國廣州 2025年8月1日 云康集团有限公司董事會（「董事會」）成員載列如下： 張勇先生 （董事長、執行董事） 張為結先生 （非執行董事） 王憑慧博士 （非執行董事） 王瑞華博士 （非執行董事） 喻世友先生 （獨立非執行董事） 謝少華先生 （獨立非執行董事） 董敏博士 （獨立非執行董事） 董事會下設三個委員會。下表提供各董事會成員在該等委員會中所擔任的職位。 | | 委員會 | | | | | --- | --- | --- | --- | --- | | 董事 | | 審核委員會 | 薪酬委員會 | 提名委員會 | | 張勇先生 | | | 成員 | 主席 | | 張為結先生 | | | | | | 王憑慧博士 | | | | | | 王瑞華博士 | | 成員 | | | | 喻世友先生 | | 成員 | 主席 | | | 謝少華先生 | | 主席 | 成員 | 成員 | | 董敏博士 | | | | 成員 | Yunkang Group Limited 云康集团有限公司 （於開曼群島註冊成立的有限公司） （股份代號：2325） 董事名單與其角色及職能 ...

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所產生或因依賴 該等內容而引致的任何損失承擔任何責任。 YUNKANG GROUP LIMITED 云康集团有限公司 （於開曼群島註冊成立的有限公司） 非執行董事辭任 董事（「董事」）會（「董事會」）欣然宣佈，黃珞女士（「黃女士」）為投入更多時間處 理其個人事務而辭任本公司非執行董事，自2025年8月1日起生效。黃女士已確 認，彼與董事會並無意見分歧，且概無有關彼辭任之事宜須提請本公司股東及聯 交所垂注。董事會謹藉此機會對黃女士於任期內為本集團作出之貢獻表示感謝。 委任非執行董事 董事會欣然宣佈，張為結先生（「張先生」）已獲委任為本公司非執行董事，自2025 年8月1日起生效。 1 有關張先生之資料 張先生之履歷詳情載列如下： （股份代號：2325） 非執行董事變更 本公告乃由云康集团有限公司（「本公司」，連同其附屬公司及綜合聯屬實體統稱 「本集團」）根據香港聯合交易所有限公司（「聯交所」）證券上市規則（「上市規則」） 第13.51(2)條而作出。 張先生已與 ...

Core Viewpoint - The third-party medical testing industry in China has experienced significant growth, particularly during the pandemic, with a market size reaching 630.5 billion yuan in 2022, but is expected to return to pre-pandemic levels in 2023 and stabilize around 388.8 billion yuan in 2024 [1][6]. Group 1: Industry Definition and Business Model - Medical testing is a discipline that utilizes modern physical and chemical methods for clinical diagnosis and treatment [2]. - Independent clinical laboratories (ICLs), also known as third-party medical laboratories, operate independently of hospitals and are licensed by health authorities to provide clinical testing and pathology services [2]. Group 2: Current Development Status - The ICL industry in China began in the 1980s and has become an essential part of the healthcare system due to increasing demand and favorable policies [4]. - The number of ICLs has grown from fewer than 70 in 2009 to an estimated 2,800 by 2024, with projections of reaching 2,845 by 2025 [4]. Group 3: Market Size and Growth Projections - The market size for third-party medical testing services in China was 630.5 billion yuan in 2022, with a significant drop expected in 2023 as pandemic testing demands decrease [6]. - The projected market size for 2024 is 388.8 billion yuan, with special testing accounting for 189.3 billion yuan and general testing for 199.5 billion yuan [6]. - By 2025, the market is expected to grow to approximately 444.9 billion yuan, with special testing at 218.1 billion yuan and general testing at 226.8 billion yuan [6]. Group 4: Industry Chain Structure - The third-party medical testing industry relies on specialized medical services, acting as a substitute for traditional hospital testing departments [8]. - The upstream of the industry includes suppliers of medical devices and testing reagents, while the downstream consists of various healthcare institutions that increasingly outsource testing services [8]. Group 5: Competitive Landscape - The market is characterized by a concentration of major players, with KingMed and Dian Diagnostics holding a combined market share of 36.16% [15]. - KingMed leads the market with a 17.04% share, providing services to over 20,000 medical institutions across 31 provinces and regions [15]. - Smaller third-party testing institutions face challenges due to limited scale and capabilities, leading to market exit pressures since 2015 [15]. Group 6: Financial Performance of Key Players - In 2024, KingMed reported revenues of 6.627 billion yuan, Dian Diagnostics 4.520 billion yuan, and Aidi Kang 2.914 billion yuan, among others [18]. Group 7: Development Trends - The third-party medical testing sector is becoming increasingly important, with regulatory changes posing new challenges [20]. - The industry is expected to focus on technological upgrades and strategic partnerships to enhance profitability and service quality [20]. - Automation, platformization, and intelligence are emerging as key trends in the development of third-party medical laboratories [20].

Group 1 - The biotechnology stocks in the Hong Kong market mostly declined, with notable drops in several companies [1] - Kangfang Biotech (09926.HK) experienced a decline of over 12% [1] - Yunkang Group (02325.HK) fell by more than 6% [1] - Other companies such as Sillod Medical (01244.HK) and Zai Lab (09688.HK) also saw declines exceeding 4% [1]

Financial Performance - The company reported a comprehensive income statement for the fiscal year ending December 31, 2024, detailing financial performance metrics [3]. - The five-year financial summary indicates a consistent growth trend, with significant increases in revenue and net income compared to previous years [5]. - The company reported revenue of RMB 711.9 million for the year ended December 31, 2024, a decrease of 20.1% compared to RMB 891.5 million in 2023 [19]. - The net loss for the company was RMB 793.2 million, significantly higher than the net loss of RMB 101.9 million recorded in 2023, representing an increase of 678.4% [19]. - The gross profit decreased by 35.2% to RMB 211.1 million, down from RMB 325.8 million in the previous year [18]. - The company's diagnostic testing services recorded revenue of RMB 711.9 million, a decrease of 20.1% compared to the same period last year [40]. - Revenue from diagnostic testing services provided to medical alliances decreased by 12.4% to RMB 377.3 million, accounting for 53.0% of total revenue, an increase of 4.7% year-on-year [56]. - Revenue from diagnostic outsourcing services fell by 27.0% to RMB 301.8 million, primarily due to increased industry competition and a slowdown in market demand [57]. - Revenue from diagnostic testing services for non-medical institutions decreased by 30.3% to RMB 32.8 million, impacted by external market conditions [58]. - The company's gross profit margin for the year ended December 31, 2024, was 29.6%, down from 36.5% in 2023 [87]. Strategic Initiatives - Future outlook suggests a projected revenue growth of 20% for the next fiscal year, driven by new product launches and market expansion initiatives [5]. - The company is investing in R&D for new technologies, with a budget allocation of $10 million aimed at enhancing product offerings [5]. - Market expansion plans include entering three new international markets by the end of 2025, targeting a 25% increase in global market share [5]. - The company is considering strategic acquisitions to bolster its market position, with potential targets identified in the healthcare sector [5]. - A new product line is set to launch in Q2 2025, expected to contribute an additional $5 million in revenue within the first year [5]. - The company aims to build a dual innovation-driven system with a "Six Forces Model + AI Model" to support the full chain transition from laboratory to industrialization [27]. - The company implemented a "horizontal and vertical" strategy to enhance the medical service ecosystem, focusing on regional medical testing centers and establishing joint laboratories with leading enterprises [29]. Operational Efficiency - The company reported a 30% increase in operational efficiency due to recent technological upgrades and process optimizations [5]. - The company is committed to enhancing credit control and collection efforts for clients with good credit ratings to manage accounts receivable levels [20]. - The company focused on optimizing its client and product structure, which contributed to a decline in overall diagnostic testing service revenue [20]. - The company has successfully introduced several AI-assisted diagnostic applications, enhancing diagnostic efficiency and effectiveness [52]. - AI technology has been fully integrated into the group's medical laboratories, significantly improving testing efficiency and report turnaround time [51]. Research and Development - Research and development expenses were approximately RMB 53.0 million, increasing the R&D expenditure as a percentage of total revenue from 6.2% in 2023 to 7.4% in 2024 [20]. - The company initiated 11 research collaborations with 9 leading hospitals in 4 provinces, leading to 4 projects with promotable results in the field of infectious disease diagnostics [23]. - The "Medical Testing Joint Innovation Platform" has successfully developed over 10 different diagnostic products for various infectious syndromes in collaboration with top medical institutions [44]. Corporate Governance - The company has adopted corporate governance codes and principles to ensure high standards of governance and shareholder protection [130]. - The board consists of one executive director, three non-executive directors, and three independent non-executive directors [134]. - The company has established three committees: audit committee, remuneration committee, and nomination committee, to oversee various aspects of its operations [150]. - The company emphasizes integrity and accountability as core values to drive employee potential and sustainable development [127]. - The company has a strong commitment to corporate governance, believing it is essential for enhancing company value and accountability [129]. Challenges and Risks - The company may face adverse impacts on its business, financial condition, and prospects if it cannot raise sufficient additional funds under acceptable terms [200]. - Uncertainties related to China's bulk purchasing policies may affect the company's operations [200]. - Failure to keep pace with industry and technological developments in a cost-effective manner may hinder the company's competitiveness and reduce demand for its services [200]. - The business may be adversely affected by obstacles in China's healthcare reform [200]. - Inability to effectively recover trade receivables could negatively impact the company's business, financial condition, and operating performance [200].

Financial Performance - The company reported revenue of RMB 711.9 million for the year ended December 31, 2024, a decrease of 20.1% compared to RMB 891.5 million in 2023[7]. - The net loss for the year was RMB 793.2 million, significantly widening from a net loss of RMB 101.9 million in the previous year, representing an increase of 678.4%[7]. - Gross profit decreased by 35.2% to RMB 211.1 million, down from RMB 325.8 million in 2023[4]. - Basic and diluted loss per share increased to RMB (1.33) from RMB (0.17), reflecting a 682.4% increase[6]. - The company reported a loss attributable to owners of RMB 791,682,000 for the year ended December 31, 2024, compared to a loss of RMB 102,259,000 in 2023, representing a significant increase in losses[31]. - The loss before tax increased significantly from RMB 86.8 million for the year ending December 31, 2023, to RMB 791.2 million for the year ending December 31, 2024, attributed to lower-than-expected growth in routine testing demand and high fixed costs[82]. Revenue Breakdown - Total revenue from diagnostic services for the year ended December 31, 2024, was RMB 711,884,000, a decrease of 20.2% from RMB 891,500,000 in 2023[19]. - Revenue from the southern region of China was RMB 565,055,000, down 22.8% from RMB 732,061,000 in 2023[21]. - Revenue from diagnostic testing services provided to medical alliances decreased by 12.4% to RMB 377.3 million, accounting for 53.0% of total revenue, an increase of 4.7% year-on-year[69]. - Revenue from diagnostic outsourcing services fell by 27.0% to RMB 301.8 million, primarily due to increased industry competition and a slowdown in market demand[70]. - Revenue from diagnostic testing services for non-medical institutions decreased by 30.3% to RMB 32.8 million, impacted by external market conditions[71]. Expenses and Losses - The company recorded a significant increase in credit impairment losses, amounting to RMB 536.2 million, compared to RMB 104.6 million in the previous year[8]. - Selling expenses increased by 19.5% to RMB 180.2 million, driven by higher sales staff and operational service costs[75]. - Administrative expenses rose by 38.2% to RMB 264.8 million, influenced by measures to expedite trade receivables recovery and one-time consulting service costs[75]. - Financial asset impairment losses increased by 412.6% from RMB 104.6 million for the year ending December 31, 2023, to RMB 536.2 million for the year ending December 31, 2024, primarily due to provisions for trade receivables[79]. Assets and Liabilities - Total assets decreased to RMB 3,228.3 million from RMB 4,532.1 million in 2023[11]. - Total liabilities decreased to RMB 2,078,459,000 in 2024 from RMB 2,412,195,000 in 2023, reflecting a reduction of 13.8%[22]. - Total equity as of December 31, 2024, was RMB 1,149,877,000, down from RMB 2,119,857,000 in 2023, representing a decrease of 45.8%[22]. - Current liabilities decreased to RMB 1,916,435,000 in 2024 from RMB 2,188,631,000 in 2023, a decline of 12.4%[22]. - Trade receivables significantly declined to RMB 628.5 million from RMB 1,515.5 million in the previous year[11]. Research and Development - Research and development expenses rose to RMB 53.0 million, accounting for 7.4% of total revenue, up from 6.2% in 2023[8]. - R&D expenses decreased by 4.2% from RMB 55.3 million for the year ending December 31, 2023, to RMB 53.0 million for the year ending December 31, 2024, while the proportion of R&D expenses to total revenue increased from 6.2% to 7.4%[77]. Strategic Initiatives - The company is focusing on optimizing customer and product structures to enhance operational efficiency amid increased industry competition[8]. - The management plans to strengthen credit control and collection efforts to mitigate the impact of extended payment cycles from certain customers[8]. - The company is actively involved in the healthcare sector, which is expected to drive economic growth, supported by government policies and technological innovations[46]. - The company is focusing on innovative service models based on specialization, standardization, and digitalization to empower healthcare development[53]. Market and Industry Trends - The integration of AI technology in medical testing is enhancing diagnostic accuracy and efficiency, reducing costs, and accelerating innovation[50]. - The national health policy aims for over 90% of counties to establish a tight-knit medical community by the end of 2025, promoting the construction of a hierarchical medical system[48]. - The company anticipates that advancements in AI and international cooperation will enhance the healthcare sector's development and resource sharing[46]. Employee and Corporate Governance - The total salary cost for the year ending December 31, 2024, was RMB 299.8 million, slightly up from RMB 299.7 million for the previous year[110]. - The company had 1,249 employees as of December 31, 2024, down from 1,510 employees as of December 31, 2023[110]. - The board of directors does not recommend the distribution of a final dividend for the year ending December 31, 2024[120].

这个策略以及这一波AI如何能够顾能到整个ICDL这边的服务以及整个医疗体系也是基于我们的一些浅浅的理解和大家分享一下 这里先给大家简单的介绍一下云康整个AI的服务框架我们把云康的业务定义为诊疗一级化的服务框架在PPT的左边我们把整个数据到最后形成顺流化的作为一个分层 主要是分开四层,从最底层的一个数据的底座,到如何把数据通过一系列的清洗或者说加工形成一定的知识。 那再通过最后经过人工智能这样的一个辅助往前去延伸如何来做这个一键联合创新的服务模式到了最后实现我们能够和客户端形成这个端对端的这个业务的提供以及信息的互通整个的框架给大家做一个详细的介绍下一 那首先我们先来看一下整个框架里面的最底层 我们的数据底座 云铿的数据底座是基于整个一联体和一共体的共建服务体系来做成的云铿的ISL和整个的业务的发展的模式我们是基于一联体和一共体来发展的我们通过和区域的融投意愿形成一个完整的一联体和一共体的 服务网络然后再通过区域的龙头医院延伸到下层的县区级医院以及基层社区卫生服务中心在专业领域我们现在选择的是感染类的疾病肿瘤的疾病和生殖遗传这个领域整个的运营体系里面我们除了 这个基础的ICLC这样的一个服务以外呢其实看右手边目 ...

[Glossary and Technical Terms](index=3&type=section&id=Item%201.%20Glossary%20and%20Technical%20Terms) Provides definitions for key terms and technical vocabulary used in the report [Company Information](index=6&type=section&id=Item%202.%20Company%20Information) Presents essential corporate details and contact information [Financial Highlights](index=7&type=section&id=Item%203.%20Financial%20Highlights) Summarizes the company's key financial performance and strategic outlook for the reporting period [Key Financial Data](index=7&type=section&id=Item%203.1%20Key%20Financial%20Data) During the reporting period, the company's revenue decreased by 20.3% year-on-year to RMB 379.9 million, resulting in a net loss of RMB 126.1 million, compared to a net profit in the same period last year, primarily due to lower-than-expected market demand, price reductions, and increased impairment provisions Key Financial Data | Indicator | 2024 (RMB Thousand) | 2023 (RMB Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 379,943 | 476,865 | (20.3)% | | (Loss)/Profit Before Income Tax | (131,775) | 50,809 | Not Applicable | | (Loss)/Profit for the Period | (126,055) | 48,027 | Not Applicable | | (Loss)/Profit Attributable to Owners of the Company | (126,129) | 48,715 | Not Applicable | | Basic (Loss)/Earnings Per Share | (0.21) | 0.08 | Not Applicable | | Diluted (Loss)/Earnings Per Share | (0.21) | 0.08 | Not Applicable | - Revenue decrease primarily due to changes in the overall economic environment, profound reforms in the medical service market, and intense market competition, leading to lower-than-expected growth in demand for routine testing services and price reductions[12](index=12&type=chunk) - Net loss mainly due to decreased overall diagnostic service revenue, lower gross profit margin from high fixed cost investments, and significant impairment provisions due to long collection cycles and lower-than-expected recovery of trade receivables[13](index=13&type=chunk) [Operating Strategies and Outlook](index=8&type=section&id=Item%203.2%20Operating%20Strategies%20and%20Outlook) Facing macroeconomic challenges, the company will deepen its 'in-depth service, lean operation' strategy, aiming for high-quality growth by understanding customer needs, exploring new models, optimizing management processes, enhancing operational efficiency, and leveraging digital empowerment - In the long term, demographic changes, national emphasis on the healthcare industry, favorable policies, and advancements in innovative medical technologies will bring development opportunities[13](index=13&type=chunk) - The company will continue to deepen its understanding and response to the needs of medical institution clients, exploring new methods and models to enhance medical service capabilities and efficiency, thereby solidifying its foundation for long-term development[13](index=13&type=chunk) - The company will further improve its enterprise operation and management mechanisms, optimize capacity layout, eliminate redundancies, and leverage rapidly developing digital technologies to adhere to lean operations, building an efficient operating system for high-quality growth[13](index=13&type=chunk) [Management Discussion and Analysis](index=9&type=section&id=Item%204.%20Management%20Discussion%20and%20Analysis) Provides a comprehensive review of the company's operational performance and financial position, along with an analysis of industry trends and future strategies [Business Review](index=9&type=section&id=Item%204.1%20Business%20Review) Outlines the company's operating performance amidst complex macroeconomic and healthcare policy landscapes, highlighting progress in medical consortium services, product innovation, integrated medical testing platforms, healthcare technology industrial innovation, and 'AI+Healthcare', while acknowledging short-term performance pressures from market challenges [Industry Overview](index=9&type=section&id=Item%204.1.1%20Industry%20Overview) Describes the impact of the 2024 international and domestic macroeconomic situation on the third-party medical testing industry, highlighting opportunities such as policy support, demand growth, and technological innovation, alongside challenges like increased regulation, price reductions, and intense market competition [International and Domestic Macroeconomic Situation](index=9&type=section&id=Item%204.1.1.1%20International%20and%20Domestic%20Macroeconomic%20Situation) In 2024, global economic recovery faces geopolitical tensions and supply chain instability, while China's economy maintains steady progress, with the government addressing challenges through innovation-driven development and fostering new quality productive forces - The international political and economic macroeconomic situation in 2024 is complex and volatile, with global economic growth expected to remain around **3%**, still below pre-pandemic levels, facing challenges such as geopolitical tensions and supply chain instability[15](index=15&type=chunk) - China's economy maintained steady progress in the first half of the year, with the government implementing measures to strengthen macroeconomic regulation, promote high-quality development, accelerate the development of new quality productive forces, and address difficulties and problems in economic operations[15](index=15&type=chunk) - The state strongly supports innovation-driven development, cultivating new growth drivers, expanding new growth spaces, leveraging the leading role of enterprises, and promoting breakthroughs in key core technologies[15](index=15&type=chunk) [Third-Party Medical Testing Industry](index=9&type=section&id=Item%204.1.1.2%20Third-Party%20Medical%20Testing%20Industry) Post-COVID-19, the third-party medical testing industry faces both opportunities and challenges; long-term trends like an aging population and rising chronic diseases drive demand for precise testing, while short-term economic and policy impacts necessitate technological innovation and differentiated development amidst intense market competition - In the medium to long term, China's population aging trend is evident, chronic disease incidence is increasing, and public attention to health management is rising, which will lead to a surge in demand for precise testing services such as early disease screening and personalized treatment monitoring[16](index=16&type=chunk) - In the short term, influenced by economic and market factors and overall medical policies, the medical service industry has entered a period of deep adjustment, with lower-than-expected growth in demand for routine medical testing and increasingly fierce market competition[16](index=16&type=chunk) - Leading enterprises in the industry need to seek breakthroughs in technology and product enhancement, internal management, operational efficiency, and innovative cooperation, pursuing a path of technological innovation and differentiated development[16](index=16&type=chunk) [Policy Support and Industry Regulation](index=10&type=section&id=Item%204.1.1.2.1%20Policy%20Support%20and%20Industry%20Regulation) National policies continue to favor medical consortium development, promoting the decentralization of quality medical resources and boosting the third-party medical testing sector; LDT pilot programs steadily advance, adding to precision medicine, while medical insurance payment reforms and centralized procurement policies drive industry transformation but also lead to price reductions and profit pressures - National policies have been successively issued, clearly promoting the comprehensive construction of closely integrated urban medical groups and county-level medical communities, reflecting the government's determination to decentralize quality medical resources and providing strong impetus for the development of the third-party medical testing industry[17](index=17&type=chunk) - LDT (Laboratory Developed Test) policies have made significant progress, with the National Medical Products Administration issuing the 'Regulations on the Supervision and Administration of Medical Devices' providing legal basis, and various regions actively responding with supportive policies, bringing market increments for the development of precision medicine[18](index=18&type=chunk)[19](index=19&type=chunk) - Medical insurance payment system reforms and centralized procurement policies continue to be implemented, on one hand increasing demand for third-party medical testing services and raising industry penetration, and on the other hand leading to significant reductions in clinical diagnostic reagent prices, intensifying short-term competition and decreasing corporate profitability[20](index=20&type=chunk) [Technological Progress and Innovative Applications](index=11&type=section&id=Item%204.1.1.2.2%20Technological%20Progress%20and%20Innovative%20Applications) Rapid advancements in biotechnology and AI accelerate technological updates in the medical testing industry, enhancing diagnostic efficiency and accuracy, and fostering collaboration between medical testing institutions and healthcare facilities - Technological innovation is the core driving force for the development of the medical testing service market, with rapid advancements in biotechnology expanding the scope of the bioeconomy[21](index=21&type=chunk) - The development of new general technologies such as PCR, NGS, digital PCR, remote AI pathology, mass spectrometry, and the deep application of AI technology will further accelerate the pace of technological updates in the industry, improving work efficiency and result accuracy[21](index=21&type=chunk) - Innovations in medical biotechnology have significantly enhanced the technical service capabilities of medical testing institutions, attracting more healthcare facilities to choose cooperation with external organizations[21](index=21&type=chunk) [Business Review (Company Specific)](index=12&type=section&id=Item%204.1.2%20Business%20Review%20(Company%20Specific)) During the reporting period, the company's revenue decreased by 20.3% to RMB 379.9 million, resulting in a net loss of RMB 126.1 million; despite short-term performance pressure, the company made significant progress in medical consortium services, product innovation, integrated medical testing platforms, healthcare technology industrial innovation, and 'AI+Healthcare', while continuously advancing lean operations to address challenges - During the reporting period, the Group recorded revenue of **RMB 379.9 million**, a decrease of **20.3%** compared to the same period in 2023, and a net loss of **RMB 126.1 million**[22](index=22&type=chunk) - Excluding the impact of nationwide phased testing and screening revenue in early 2023, the Group's diagnostic testing services for medical consortia continued to maintain high-quality growth, becoming the Group's largest source of revenue[22](index=22&type=chunk) - The Group achieved multiple breakthroughs in product and model innovation, and deeply advanced lean operational management and digital empowerment, laying a solid foundation for the Group's long-term high-quality development[22](index=22&type=chunk) [In-depth Service—Product Innovation + Model Innovation, Building New Quality Productive Forces](index=13&type=section&id=Item%204.1.2.1%20In-depth%20Service%E2%80%94Product%20Innovation%20%2B%20Model%20Innovation%2C%20Building%20New%20Quality%20Productive%20Forces) The company achieves high-quality growth through innovative business models, such as diagnostic testing services for medical consortia, and continuously develops over 3,500 disease and clinically-oriented testing projects; the integrated medical testing innovation platform is rapidly replicated, healthcare technology industrial innovation creates new models, and a focus on 'AI+Healthcare' enhances diagnostic efficiency and accuracy - Providing diagnostic testing services for medical consortia is the Group's largest source of revenue, contributing approximately **48.0%** of total revenue, and this segment continues to maintain high-quality growth, excluding the impact of nationwide phased testing and screening revenue in early 2023[23](index=23&type=chunk) - The Group has successfully provided professional diagnostic services to over **1,500** medical consortium partner institutions in more than **430** on-site diagnostic centers nationwide, offering a '3+1' technical system support and in-depth service system[23](index=23&type=chunk) - The Group has built a series of high-tech platforms including PCR, high-throughput protein sequencing, NGS, capable of providing over **3,500** testing projects, with an annual sample volume exceeding **10 million** cases, and launched over **500** new testing projects in the first half of 2024[24](index=24&type=chunk)[25](index=25&type=chunk) - The Group pioneered the 'Integrated Medical Testing Innovation Platform', collaborating with dozens of top domestic medical institutions to jointly explore scientific research and achievement transformation, with innovative products in the reporting period exceeding last year's full-year levels in both testing volume and revenue[26](index=26&type=chunk) - The Group explores new models of joint innovation and cooperation with medical schools, local governments, and medical institutions, and after the reporting period, signed strategic cooperation agreements with Ouhai District People's Government of Wenzhou City and Wenzhou Medical University to advance multiple key project constructions[27](index=27&type=chunk)[28](index=28&type=chunk) - The Group deeply explores cutting-edge medical fields such as remote pathology, digital pathology, and AI, building an 'AI+Healthcare' professional service platform; its independently developed remote pathology consultation platform has provided services to nearly **300** medical institutions and successfully introduced projects such as pathology DNA ploidy AI-assisted diagnosis[29](index=29&type=chunk)[30](index=30&type=chunk) [Lean Operations—Continuously Building Lean Operational Capabilities, Reducing Costs and Increasing Efficiency](index=16&type=section&id=Item%204.1.2.2%20Lean%20Operations%E2%80%94Continuously%20Building%20Lean%20Operational%20Capabilities%2C%20Reducing%20Costs%20and%20Increasing%20Efficiency) Through the 'Strengthening Project Phase II', the company deepens lean operational management, refines rules and systems, establishes a digital operational data support system, and comprehensively reduces costs and enhances efficiency across marketing, laboratories, supply chain, logistics, and human resources - The Group launched the 'Strengthening Project Phase II' to deepen the foundation of lean operational management, aiming to reduce operating costs, optimize operational platforms, improve resource utilization efficiency, and achieve cost reduction and efficiency enhancement[31](index=31&type=chunk) - Project achievements include improving operational rules and systems, optimizing core operational management processes, establishing a structured operational data support system, and comprehensively reducing costs and enhancing efficiency across marketing, laboratories, supply chain, logistics, and human resources through lean management[31](index=31&type=chunk) - In the future, the Group will continue to advance the Strengthening Project, enhancing enterprise value and competitiveness through full-process value chain management, thereby strengthening its market position and profitability[31](index=31&type=chunk) [Financial Review](index=17&type=section&id=Item%204.2%20Financial%20Review) Provides a detailed review of the financial performance during the reporting period, including revenue, costs, gross profit, various expenses, financial asset impairment, finance costs, taxation, asset and liability status, liquidity, and capital management, explaining the main reasons for the decline in performance [Overview](index=17&type=section&id=Item%204.2.1%20Overview) The financial summary is extracted or calculated from the Group's unaudited condensed consolidated interim financial statements for the reporting period, prepared in accordance with applicable disclosure provisions of the Listing Rules, including compliance with Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants [Revenue](index=17&type=section&id=Item%204.2.2%20Revenue) Revenue for the reporting period was RMB 379.9 million, a year-on-year decrease of 20.3%, primarily affected by the economic environment, market competition, and reduced prices for routine testing; the medical consortium services segment maintained high-quality growth after excluding the impact of phased testing and screening revenue in early 2023 Revenue by Business Segment | Business Segment | 2024 (RMB Thousand) | 2023 (RMB Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Diagnostic testing services for medical consortia | 182,272 | 197,876 | (7.9)% | | Diagnostic outsourcing services | 179,614 | 254,438 | (29.4)% | | Diagnostic testing services for non-medical institutions | 18,057 | 24,551 | (26.5)% | | **Total Revenue** | **379,943** | **476,865** | **(20.3)%** | - The decrease in overall revenue and revenue from each business segment was primarily due to changes in the overall economic environment, profound reforms in the medical service market, and intense market competition, leading to lower-than-expected growth in demand for routine testing services and market-driven price reductions[34](index=34&type=chunk) - Excluding the impact of nationwide phased testing and screening revenue in early 2023, the Group's diagnostic testing services for medical consortia continued to maintain high-quality growth[34](index=34&type=chunk) [Cost of Revenue](index=18&type=section&id=Item%204.2.3%20Cost%20of%20Revenue) Cost of revenue decreased by 14.7% year-on-year to RMB 251.7 million, primarily due to a corresponding reduction in costs resulting from the overall decline in revenue - Cost of revenue decreased by **14.7%** from **RMB 295.2 million** in the same period of 2023 to **RMB 251.7 million** in the same period of 2024[36](index=36&type=chunk) - The decrease was primarily due to slower-than-expected growth in demand for market diagnostic testing services and market-driven price reductions for routine testing, leading to an overall decrease in revenue and a corresponding reduction in cost of revenue[36](index=36&type=chunk) [Gross Profit and Gross Profit Margin](index=18&type=section&id=Item%204.2.4%20Gross%20Profit%20and%20Gross%20Profit%20Margin) Gross profit decreased by 29.4% year-on-year to RMB 128.2 million, with gross profit margin falling from 38.1% to 33.7%, primarily due to lower-than-expected market demand growth, reduced business scale, price reductions, and higher fixed cost investments Gross Profit and Gross Profit Margin | Indicator | 2024 (RMB Thousand) | 2023 (RMB Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Gross Profit | 128,198 | 181,665 | (29.4)% | | Gross Profit Margin | 33.7% | 38.1% | (4.4) percentage points | - The decrease in gross profit and gross profit margin was primarily due to slower-than-expected growth in demand for market diagnostic testing services, reduced business scale, market-driven price reductions for routine testing, and higher fixed cost investments[37](index=37&type=chunk) [Other Income](index=18&type=section&id=Item%204.2.5%20Other%20Income) Other income decreased by 82.9% year-on-year to RMB 1.0 million, primarily due to a reduction in government grants - Other income decreased by **82.9%** from **RMB 6.1 million** in the same period of 2023 to **RMB 1.0 million** in the same period of 2024[37](index=37&type=chunk) - This decrease was primarily due to a reduction in government grants received[37](index=37&type=chunk) [Other Gains – Net](index=18&type=section&id=Item%204.2.6%20Other%20Gains%20%E2%80%93%20Net) Other net gains decreased from RMB 31.1 million to RMB 6.6 million, primarily due to reduced exchange gains from currency fluctuations and lower gains from the redemption of financial assets measured at fair value through profit or loss - Other net gains decreased from **RMB 31.1 million** in the same period of 2023 to **RMB 6.6 million** in the same period of 2024[38](index=38&type=chunk) - This decrease was primarily attributable to reduced exchange gains from currency fluctuations and lower gains from the redemption of financial assets measured at fair value through profit or loss[38](index=38&type=chunk) [Selling Expenses](index=18&type=section&id=Item%204.2.7%20Selling%20Expenses) Selling expenses increased by 3.5% year-on-year to RMB 89.9 million, primarily due to increased marketing expenses to promote business development and collection of trade receivables - Selling expenses increased by **3.5%** from **RMB 86.9 million** in the same period of 2023 to **RMB 89.9 million** in the same period of 2024[39](index=39&type=chunk) - The increase was primarily due to increased marketing expenses to promote business development and collection of trade receivables[39](index=39&type=chunk) [Administrative Expenses](index=19&type=section&id=Item%204.2.8%20Administrative%20Expenses) Administrative expenses increased by 23.8% year-on-year to RMB 99.7 million, primarily due to an increase of RMB 17.7 million in share-based payment expenses - Administrative expenses increased by **23.8%** from **RMB 80.5 million** in the same period of 2023 to **RMB 99.7 million** in the same period of 2024[40](index=40&type=chunk) - The increase was primarily due to an increase of **RMB 17.7 million** in share-based payment expenses[40](index=40&type=chunk) [Research and Development Expenses](index=19&type=section&id=Item%204.2.9%20Research%20and%20Development%20Expenses) Research and development expenses slightly decreased to RMB 24.7 million, but their proportion of total revenue increased from 5.5% to 6.5%, reflecting the company's continued focus on medical technology and operational system R&D - Research and development expenses slightly decreased from **RMB 26.4 million** in the same period of 2023 to **RMB 24.7 million** in the same period of 2024[40](index=40&type=chunk) - The proportion of R&D expenses to total revenue increased from **5.5%** in the same period of 2023 to **6.5%** in the same period of 2024, primarily due to the Group's continuous focus on research and development of medical technology and operational systems[40](index=40&type=chunk) [Impairment Loss on Financial Assets](index=19&type=section&id=Item%204.2.10%20Impairment%20Loss%20on%20Financial%20Assets) Impairment loss on financial assets significantly increased by RMB 48.1 million to RMB 52.4 million, primarily due to long collection cycles and lower-than-expected recovery of certain trade receivables from nationwide phased testing and screening Impairment Loss on Financial Assets | Indicator | 2024 (RMB Million) | 2023 (RMB Million) | Change (RMB Million) | | :--- | :--- | :--- | :--- | | Impairment Loss on Financial Assets | 52.4 | 4.3 | 48.1 (Increase) | - The increase in impairment loss was due to the longer collection cycle and lower-than-expected recovery progress of certain trade receivables resulting from nationwide phased testing and screening[41](index=41&type=chunk) [Finance Costs – Net](index=19&type=section&id=Item%204.2.11%20Finance%20Costs%20%E2%80%93%20Net) Net finance costs increased to RMB 24.3 million, primarily due to increased interest expenses on interest-bearing borrowings - Net finance costs increased from **RMB 15.1 million** in the same period of 2023 to **RMB 24.3 million** in the same period of 2024[41](index=41&type=chunk) - The increase was primarily due to increased interest expenses on interest-bearing borrowings[41](index=41&type=chunk) [(Loss)/Profit Before Income Tax](index=19&type=section&id=Item%204.2.12%20(Loss)%2FProfit%20Before%20Income%20Tax) The reporting period recorded a loss before income tax of RMB 131.8 million, compared to a profit in the same period last year, primarily due to decreased revenue, high fixed cost investments leading to unclear economies of scale, and significant impairment losses on trade receivables (Loss)/Profit Before Income Tax | Indicator | 2024 (RMB Million) | 2023 (RMB Million) | | :--- | :--- | :--- | | (Loss)/Profit Before Income Tax | (131.8) | 50.8 | - The recorded loss was primarily due to slower-than-expected growth in demand for routine testing, decreased overall diagnostic service revenue, and high fixed cost investments, leading to unclear economies of scale[42](index=42&type=chunk) - Additionally, the longer collection cycle for certain trade receivables resulted in a significant amount of impairment loss on financial assets[42](index=42&type=chunk) [Income Tax Credit/(Expense)](index=20&type=section&id=Item%204.2.13%20Income%20Tax%20Credit%2F(Expense)) An income tax credit of RMB 5.7 million was recorded, compared to an expense in the same period last year, primarily due to the shift from net profit to net loss Income Tax Credit/(Expense) | Indicator | 2024 (RMB Million) | 2023 (RMB Million) | | :--- | :--- | :--- | | Income Tax Credit/(Expense) | 5.7 | (2.8) | - The income tax credit was primarily due to the shift from net profit to net loss[43](index=43&type=chunk) [Property and Equipment](index=20&type=section&id=Item%204.2.14%20Property%20and%20Equipment) Property and equipment decreased from RMB 396.9 million to RMB 369.3 million, primarily due to depreciation and amortization Carrying Amount of Property and Equipment | Indicator | June 30, 2024 (RMB Million) | December 31, 2023 (RMB Million) | | :--- | :--- | :--- | | Property and Equipment | 369.3 | 396.9 | - The decrease was primarily due to depreciation and amortization of property and equipment[43](index=43&type=chunk) [Financial Assets Measured at Fair Value](index=20&type=section&id=Item%204.2.15%20Financial%20Assets%20Measured%20at%20Fair%20Value) Financial assets measured at fair value through profit or loss decreased by RMB 211.5 million to RMB 577.4 million, primarily due to the redemption of structured notes; financial assets measured at fair value through other comprehensive income increased by RMB 5.0 million to RMB 79.5 million due to increased equity investments Financial Assets Measured at Fair Value | Indicator | June 30, 2024 (RMB Million) | December 31, 2023 (RMB Million) | | :--- | :--- | :--- | | Financial Assets Measured at Fair Value Through Profit or Loss | 577.4 | 788.9 | - Financial assets measured at fair value through profit or loss decreased by **RMB 211.5 million**, primarily due to the redemption of structured notes during the reporting period[43](index=43&type=chunk) - Financial assets measured at fair value through other comprehensive income increased by **RMB 5.0 million**, primarily due to an additional equity investment during the reporting period[43](index=43&type=chunk) [Inventories](index=20&type=section&id=Item%204.2.16%20Inventories) Inventories decreased to RMB 15.5 million, primarily due to reduced procurement volume in line with decreased business scale and strengthened inventory management Inventories | Indicator | June 30, 2024 (RMB Million) | December 31, 2023 (RMB Million) | | :--- | :--- | :--- | | Inventories | 15.5 | 18.0 | - The decrease in inventories was due to the Group's reduced procurement volume in line with decreased business scale and continuous strengthening of inventory management[43](index=43&type=chunk) [Trade Receivables](index=21&type=section&id=Item%204.2.17%20Trade%20Receivables) Trade receivables decreased to RMB 1,355.1 million, primarily due to collections, provision for impairment, and reduced revenue; most balances are over one year old, mainly from public hospitals and CDCs with long collection cycles, but management believes there are no significant recoverability issues for the net amount Trade Receivables | Indicator | June 30, 2024 (RMB Million) | December 31, 2023 (RMB Million) | | :--- | :--- | :--- | | Trade Receivables | 1,355.1 | 1,515.5 | - The decrease in trade receivables was primarily due to collections, provision for impairment of trade receivables, and the impact of decreased diagnostic testing service revenue[45](index=45&type=chunk) - Affected by the market conditions of nationwide phased testing and screening, most of the Group's trade receivables are over **one year** old, with debtor clients mainly including public hospitals and China Centers for Disease Control and Prevention, whose settlements require government appropriations and lengthy internal administrative procedures[46](index=46&type=chunk) - Management believes there are no significant recoverability issues for its net trade receivables and continues to negotiate repayment plans with clients; as of the latest practicable date, approximately **RMB 172.6 million** of trade receivables have been settled[46](index=46&type=chunk) [Prepayments and Other Receivables](index=22&type=section&id=Item%204.2.18%20Prepayments%20and%20Other%20Receivables) Prepayments and other receivables decreased to RMB 24.6 million, primarily due to reduced property leases and a corresponding decrease in related deposits Prepayments and Other Receivables | Indicator | June 30, 2024 (RMB Million) | December 31, 2023 (RMB Million) | | :--- | :--- | :--- | | Prepayments and Other Receivables | 24.6 | 33.3 | - The decrease was primarily due to reduced property leases to lower operating costs and improve operational efficiency, leading to a decrease in related deposits[48](index=48&type=chunk) [Trade and Other Payables](index=22&type=section&id=Item%204.2.19%20Trade%20and%20Other%20Payables) Trade and other payables decreased to RMB 926.3 million, primarily due to a reduction in procurement volume in line with the decrease in revenue scale Trade and Other Payables | Indicator | June 30, 2024 (RMB Million) | December 31, 2023 (RMB Million) | | :--- | :--- | :--- | | Trade and Other Payables | 926.3 | 975.5 | - The decrease was primarily due to the Group's reduced procurement volume in line with the decrease in revenue scale during the period[49](index=49&type=chunk) [Capital Management](index=22&type=section&id=Item%204.2.20%20Capital%20Management) The Group aims to safeguard its ability to continue as a going concern, provide returns to shareholders, and maintain a sound liquidity position through centralized financing and treasury policies - The Group's capital management objective is to safeguard its ability to continue as a going concern, so as to provide returns for shareholders and benefits for other stakeholders[50](index=50&type=chunk) - The Group maintains a sound liquidity position with sufficient cash and available bank facilities to meet its commitments and working capital requirements[55](index=55&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Item%204.2.21%20Liquidity%20and%20Capital%20Resources) Cash and cash equivalents increased to RMB 1,289.8 million, primarily due to the redemption of prior year investments; net current assets decreased to RMB 1,445.7 million Cash and Cash Equivalents | Indicator | June 30, 2024 (RMB Million) | December 31, 2023 (RMB Million) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 1,289.8 | 1,244.1 | - The increase in cash and cash equivalents was primarily due to the Group's redemption of prior year investments, leading to an increase in cash[50](index=50&type=chunk) - Net current assets decreased from **RMB 1,649.7 million** as at December 31, 2023, to **RMB 1,445.7 million** as at June 30, 2024[51](index=51&type=chunk) [Key Financial Ratios](index=23&type=section&id=Item%204.2.22%20Key%20Financial%20Ratios) Gross profit margin decreased from 38.1% to 33.7%, current ratio and quick ratio slightly declined, and the debt-to-asset ratio remained at 0.53 Key Financial Ratios | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Gross Profit Margin | 33.7% | 38.1% | | Current Ratio | 1.74 | 1.75 | | Quick Ratio | 1.73 | 1.75 | | Debt-to-Asset Ratio | 0.53 | 0.53 | [Contingent Liabilities](index=23&type=section&id=Item%204.2.23%20Contingent%20Liabilities) A contingent liability of RMB 19,199,000 exists, related to a legal dispute with a sub-contracted service provider, which remains unresolved as of the reporting date - As at June 30, 2024, a contingent liability of **RMB 19,199,000** relates to a legal dispute initiated by a sub-contracted service provider against the Group, which remains unresolved as of the date of this report[54](index=54&type=chunk) - The legal dispute concerns disagreements over the basis for determining certain sub-contracted service fees and penalties for delayed payment of such fees[54](index=54&type=chunk) [Financing and Treasury Policies](index=23&type=section&id=Item%204.2.24%20Financing%20and%20Treasury%20Policies) The Group adopts a centralized financing and treasury policy to ensure efficient use of funds, maintain sound liquidity, and regularly review its capital structure - The Group adopts a centralized financing and treasury policy to ensure the effective use of the Group's funds and maintain a sound liquidity position[55](index=55&type=chunk) - The Group's primary objective in capital management is to safeguard its ability to generate returns for shareholders and benefits for other stakeholders by pricing products commensurate with risk levels and obtaining financing at reasonable costs[55](index=55&type=chunk) [Foreign Exchange Risk](index=24&type=section&id=Item%204.2.25%20Foreign%20Exchange%20Risk) The Group's primary business is in China, with foreign exchange risk arising from bank deposits and financial assets denominated in HKD or USD, and borrowings denominated in USD or CHF; forward foreign currency swap arrangements have been implemented to mitigate some of this risk - The Group's business is primarily concentrated in China, with foreign exchange risk arising from bank deposits and financial assets denominated in HKD or USD, and borrowings denominated in USD or CHF[56](index=56&type=chunk) - The Group has entered into forward foreign currency swap arrangements for borrowings denominated in USD or CHF to mitigate exchange rate risk[56](index=56&type=chunk) [Cash Flow and Fair Value Interest Rate Risk](index=24&type=section&id=Item%204.2.26%20Cash%20Flow%20and%20Fair%20Value%20Interest%20Rate%20Risk) Floating-rate borrowings expose the Group to cash flow interest rate risk, while fixed-rate borrowings expose it to fair value interest rate risk; the Group currently does not use interest rate swaps but will consider hedging when necessary - The Group's interest rate risk arises from borrowings; borrowings bearing interest at floating rates expose the Group to cash flow interest rate risk, while borrowings bearing interest at fixed rates expose the Group to fair value interest rate risk[57](index=57&type=chunk) - The Group currently does not have any interest rate swap arrangements but will consider hedging interest rate risk when necessary[57](index=57&type=chunk) [Credit Risk](index=24&type=section&id=Item%204.2.27%20Credit%20Risk) The Group is exposed to credit risk related to trade and other receivables, amounts due from related parties, and bank cash deposits, with the carrying amounts representing the maximum credit risk exposure - The Group is exposed to credit risk in relation to trade and other receivables, amounts due from related parties, and bank cash deposits[58](index=58&type=chunk) - The carrying amounts of each of the above financial assets represent the Group's maximum exposure to credit risk for the respective financial asset class[58](index=58&type=chunk) [Liquidity Risk](index=24&type=section&id=Item%204.2.28%20Liquidity%20Risk) The Group manages liquidity risk by regularly monitoring its liquidity requirements and compliance with borrowing covenants, ensuring sufficient cash reserves and bank facilities to meet both short-term and long-term liquidity needs - To manage liquidity risk, the Group's policy is to regularly monitor its liquidity requirements and compliance with borrowing covenants[59](index=59&type=chunk) - It ensures adequate cash reserves and committed banking facilities from major financial institutions to meet both short-term and long-term liquidity needs[59](index=59&type=chunk) [Borrowings and Gearing Ratio](index=24&type=section&id=Item%204.2.29%20Borrowings%20and%20Gearing%20Ratio) Total borrowings decreased to RMB 1,149.3 million, and the gearing ratio decreased to 61.1% Borrowings and Gearing Ratio | Indicator | June 30, 2024 (RMB Million) | December 31, 2023 (RMB Million) | | :--- | :--- | :--- | | Borrowings | 1,149.3 | 1,347.8 | | Gearing Ratio | 61.1% | 65.6% | - As at June 30, 2024, the Group's borrowings amounted to **RMB 1,149.3 million**, of which **RMB 739.7 million** bore interest at fixed rates[60](index=60&type=chunk) - The gearing ratio (calculated as total interest-bearing borrowings and lease liabilities divided by total equity plus other financial liabilities as at the same date) decreased to **61.1%**[60](index=60&type=chunk) [Pledge of Assets](index=25&type=section&id=Item%204.2.30%20Pledge%20of%20Assets) Approximately RMB 375.6 million of borrowings are secured by certain equipment and pledged time deposits of the Group - As at June 30, 2024, borrowings of approximately **RMB 375.6 million** were secured by certain equipment and pledged time deposits of the Group[61](index=61&type=chunk) [Material Investments, Material Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures During the Reporting Period](index=25&type=section&id=Item%204.2.31%20Material%20Investments%2C%20Material%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%2C%20Associates%20and%20Joint%20Ventures%20During%20the%20Reporting%20Period) There were no material investments, acquisitions, or disposals during the reporting period - The Group did not undertake any material investments, material acquisitions, or disposals of subsidiaries, associates, and joint ventures during the reporting period[61](index=61&type=chunk) [Events After the Reporting Period](index=25&type=section&id=Item%204.2.32%20Events%20After%20the%20Reporting%20Period) No significant events affecting the Group occurred from June 30, 2024, up to the date of this report - No significant events affecting the Group occurred from June 30, 2024, up to the date of this report[61](index=61&type=chunk) [Future Plans for Material Investments and Capital Assets](index=25&type=section&id=Item%204.2.33%20Future%20Plans%20for%20Material%20Investments%20and%20Capital%20Assets) As of the reporting date, there are no specific committed future plans for material investments and capital assets - As of the date of this report, the Group has no specific committed plans for material investments and capital assets[61](index=61&type=chunk) [Employees and Remuneration](index=25&type=section&id=Item%204.2.34%20Employees%20and%20Remuneration) As of June 30, 2024, the Group had 1,459 employees, with total staff costs of RMB 156.2 million, including RMB 17.7 million in restricted share award expenses Employees and Remuneration | Indicator | June 30, 2024 | June 30, 2023 | | :--- | :--- | :--- | | Number of Employees | 1,459 | 1,931 | | Total Staff Costs (RMB Million) | 156.2 | 153.6 | - Total staff costs for the six months ended June 30, 2024, included expenses of approximately **RMB 17.7 million** related to restricted share awards[61](index=61&type=chunk) - The Company adopted the Restricted Share Unit Scheme on November 23, 2022, to attract, retain, and incentivize key personnel and partners of the Company[61](index=61&type=chunk) [Corporate Governance and Other Information](index=26&type=section&id=Item%205.%20Corporate%20Governance%20and%20Other%20Information) Covers corporate governance practices, directors' and major shareholders' interests, share schemes, and other relevant disclosures [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures](index=26&type=section&id=Item%205.1%20Directors%27%20and%20Chief%20Executive%27s%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures) Discloses the interests of directors and the chief executive in the company's shares and associated corporations, with Mr. Zhang Yong holding 40.25% of the company's shares through a controlled corporation Directors' Interests in the Company's Shares | Director's Name | Capacity/Nature of Interest | Number of Shares | Approximate Percentage of Total Issued Shares | | :--- | :--- | :--- | :--- | | Mr. Zhang Yong (Executive Director and Chief Executive Officer) | Interest in a controlled corporation | 250,108,000 (L) | 40.25% | - Mr. Zhang Yong holds and controls **64.04%** interest in YK Development through his wholly-owned Huizekx Limited, and YK Development directly holds **250,108,000** shares[65](index=65&type=chunk) Directors' Interests in Associated Corporations | Director/Chief Executive's Name | Name of Associated Corporation | Capacity/Nature of Interest | Number of Shares Held in Associated Corporation | Approximate Percentage of Equity Interest in Associated Corporation | | :--- | :--- | :--- | :--- | :--- | | Mr. Zhang Yong | Huizekx Limited | Beneficial owner | 1 (L) | 100.00% | | Mr. Zhang Yong | YK Development | Interest in a controlled corporation | 3,203,250 (L) | 64.04% | [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares](index=27&type=section&id=Item%205.2%20Substantial%20Shareholders%27%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) Discloses the interests of substantial shareholders in the company's shares, including Huizekx Limited, YK Development, Da An Gene and its subsidiaries, Shanghai Pudong Development Bank Co., Ltd., among others Substantial Shareholders' Interests in Shares | Name/Designation of Substantial Shareholder | Capacity/Nature of Interest | Number of Shares | Approximate Percentage of Equity Interest | | :--- | :--- | :--- | :--- | | Huizekx Limited | Interest in a controlled corporation | 250,108,000 (L) | 40.25% | | YK Development | Beneficial owner | 250,108,000 (L) | 40.25% | | Da An Gene | Interest in a controlled corporation | 209,783,000 (L) | 33.76% | | Da An International | Beneficial owner | 209,783,000 (L) | 33.76% | | Shanghai Pudong Development Bank Co., Ltd. | Interest in a controlled corporation | 181,108,000 (L) | 29.15% | | PNB International (Hong Kong) Limited | Person with security interest in shares | 120,493,220 (L) | 19.39% | | Shanghai Pudong Development Bank Guangzhou Wuyang Sub-branch | Person with security interest in shares | 60,614,780 (L) | 9.75% | - YK Development is **64.04%** held and controlled by Huizekx Limited, which is wholly-owned by Mr. Zhang Yong, and has pledged a portion of its shares[71](index=71&type=chunk) - Da An International is wholly-owned by Guangzhou Da An Gene Science and Technology, which is wholly-owned by Da An Gene[71](index=71&type=chunk) [2022 Restricted Share Unit Scheme](index=28&type=section&id=Item%205.3%202022%20Restricted%20Share%20Unit%20Scheme) Details the purpose, selected participants, total shares, equity cap, vesting conditions, acceptance method, purchase price, and remaining term of the 2022 Restricted Share Unit Scheme, along with changes during the reporting period - The 2022 Restricted Share Unit Scheme aims to attract, retain, and incentivize key employees and partners of the Company, aligning their interests closely with the Company's performance[74](index=74&type=chunk) - Selected participants of the scheme include full-time or part-time employees, customers, suppliers, agents, partners, or consultants of the Group, and other persons selected by the Board[75](index=75&type=chunk) Changes in 2022 Restricted Share Unit Scheme | Indicator | As at January 1, 2024 | Granted | Lapsed | Unvested as at June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Restricted Share Units | 0 | 15,101,500 | 392,500 | 14,709,000 | - As at June 30, 2024, none of the grantees of Restricted Share Units were Directors or core connected persons of the Company[76](index=76&type=chunk) [Directors' Rights to Acquire Shares or Debentures](index=32&type=section&id=Item%205.4%20Directors%27%20Rights%20to%20Acquire%20Shares%20or%20Debentures) During the reporting period, neither the company nor any of its subsidiaries was a party to any arrangement enabling directors to acquire benefits by means of acquiring shares or debentures of the company or any other body corporate - Save as disclosed in this report, during the reporting period, neither the Company nor any of its subsidiaries was a party to any arrangement to enable the Directors to acquire benefits by means of acquiring shares or debentures of the Company or any other body corporate[84](index=84&type=chunk) [Compliance with Code Provisions in Part 2 of the Corporate Governance Code](index=32&type=section&id=Item%205.5%20Compliance%20with%20Code%20Provisions%20in%20Part%202%20of%20the%20Corporate%20Governance%20Code) The company has complied with all applicable code provisions of the Corporate Governance Code, except for the combined roles of Chairman and Chief Executive Officer held by Mr. Zhang Yong, which the Board believes benefits the Group's operations and management - During the reporting period, the Company has complied with all applicable code provisions set out in Part 2 of the Corporate Governance Code, save for a deviation from code provision C.2.1 of the Corporate Governance Code[85](index=85&type=chunk) - Mr. Zhang Yong currently serves as both the Chairman of the Board and the Chief Executive Officer of the Company, and the Board believes that his dual role is beneficial to the Group's business operations and management[85](index=85&type=chunk) [Compliance with Model Code](index=32&type=section&id=Item%205.6%20Compliance%20with%20Model%20Code) The company has adopted the Model Code to regulate directors' securities transactions and has made specific inquiries to all directors, who confirmed compliance with the Model Code during the reporting period - The Company has adopted the Model Code as its code of conduct for securities transactions by Directors in the Company's securities, and having made specific enquiries of all Directors, they confirmed that they have complied with the Model Code during the reporting period[86](index=86&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=33&type=section&id=Item%205.7%20Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) During the reporting period, neither the company, any subsidiary of the Group, nor any consolidated affiliated entity purchased, redeemed, or sold any of the company's listed securities - During the reporting period, neither the Company, any subsidiary of the Group, nor any consolidated affiliated entity purchased, redeemed, or sold any of the Company's listed securities[87](index=87&type=chunk) [Changes in Directors' Information](index=33&type=section&id=Item%205.8%20Changes%20in%20Directors%27%20Information) Dr. Wang Ruihua was appointed as an independent director of China National Medicines Corporation Ltd. since May 2024 - Since May 2024, Dr. Wang Ruihua has been appointed as an independent director of China National Medicines Corporation Ltd. (whose shares are listed on the Shanghai Stock Exchange, stock code: 600056)[87](index=87&type=chunk) [Interim Dividend](index=33&type=section&id=Item%205.9%20Interim%20Dividend) The Board announced no interim dividend would be distributed for the six months ended June 30, 2024 - The Board announced that no interim dividend would be distributed for the six months ended June 30, 2024 (for the six months ended June 30, 2023: nil)[87](index=87&type=chunk) [Audit Committee](index=33&type=section&id=Item%205.10%20Audit%20Committee) The Audit Committee has reviewed the Group's unaudited condensed consolidated interim financial statements and interim report for the six months ended June 30, 2024, and discussed accounting policies and internal controls without objection - The Audit Committee has reviewed the Group's unaudited condensed consolidated interim financial statements and interim report for the six months ended June 30, 2024[88](index=88&type=chunk) - The Audit Committee also discussed matters concerning the accounting policies and practices adopted by the Company and internal control measures with senior management members, raising no objections to the accounting treatments adopted by the Company[88](index=88&type=chunk) [Use of Proceeds from Global Offering](index=33&type=section&id=Item%205.11%20Use%20of%20Proceeds%20from%20Global%20Offering) On June 28, 2024, the company announced a reallocation of the net proceeds from the global offering and an extension of their usage period, detailing the allocation proportions, utilized amounts, unutilized amounts, and expected timetable for each purpose - The net proceeds from the global offering were approximately **HKD 811.8 million**, and the Company announced on June 28, 2024, a reallocation of the use of net proceeds and an extension of the time for using the net proceeds[89](index=89&type=chunk) Use of Proceeds from Global Offering | Purpose | Allocation Proportion in Prospectus | Utilized as at June 30, 2024 (HKD Million) | Unutilized as at June 30, 2024 (HKD Million) | Expected Timetable for Full Utilization | | :--- | :--- | :--- | :--- | :--- | | Expansion and deepening of medical consortium network | 55.0% | 229.0 | 175.1 | Before end of 2026 | | Upgrading and enhancing operational capabilities | 20.0% | 131.5 | 58.3 | Before end of 2026 | | Expanding diagnostic capabilities and enriching diagnostic test portfolio | 10.0% | 32.8 | 20.9 | Before end of 2026 | | Potential investment and acquisition opportunities | 5.0% | – | 55.0 | Before end of 2026 | | Recruitment and training of talent pool | 5.0% | 27.0 | 31.6 | Before end of 2026 | | Working capital and general corporate purposes | 5.0% | 50.6 | – | Not Applicable | | **Total** | **100.0%** | **470.9** | **340.9** | | [Events After Reporting Period End](index=34&type=section&id=Item%205.12%20Events%20After%20Reporting%20Period%20End) No significant events requiring disclosure in this report occurred from the end of the reporting period up to the date of this interim report - No significant events requiring disclosure in this report occurred from the end of the reporting period up to the date of this interim report[91](index=91&type=chunk) [Condensed Consolidated Interim Statement of Comprehensive Income](index=35&type=section&id=Item%206.%20Condensed%20Consolidated%20Interim%20Statement%20of%20Comprehensive%20Income) Presents the Group's financial performance, including revenue, expenses, and profit or loss, for the interim period Summary of Condensed Consolidated Interim Statement of Comprehensive Income | Item | Six Months Ended June 30, 2024 (RMB Thousand) | Six Months Ended June 30, 2023 (RMB Thousand) | | :--- | :--- | :--- | | Revenue | 379,943 | 476,865 | | Cost of revenue | (251,745) | (295,200) | | Gross profit | 128,198 | 181,665 | | Selling expenses | (89,945) | (86,874) | | Administrative expenses | (99,706) | (80,512) | | Net impairment loss on financial assets | (52,447) | (4,274) | | Other income | 1,034 | 6,052 | | Other gains – net | 6,590 | 31,091 | | Fair value changes of financial assets measured at fair value through profit or loss | (1,241) | 18,713 | | Operating (loss)/profit | (107,517) | 65,861 | | Finance costs – net | (24,258) | (15,052) | | (Loss)/Profit before income tax | (131,775) | 50,809 | | Income tax credit/(expense) | 5,720 | (2,782) | | (Loss)/Profit for the period | (126,055) | 48,027 | | Total comprehensive (loss)/income for the period | (126,055) | 48,027 | | (Loss)/Profit attributable to owners of the Company | (126,129) | 48,715 | | Basic and diluted (loss)/earnings per share (RMB) | (0.21) | 0.08 | [Condensed Consolidated Interim Statement of Financial Position](index=36&type=section&id=Item%207.%20Condensed%20Consolidated%20Interim%20Statement%20of%20Financial%20Position) Provides a snapshot of the Group's assets, liabilities, and equity as of the reporting date Summary of Condensed Consolidated Interim Statement of Financial Position | Item | June 30, 2024 (RMB Thousand) | December 31, 2023 (RMB Thousand) | | :--- | :--- | :--- | | **Assets** | | | | Non-current assets | 672,170 | 693,771 | | Current assets | 3,398,054 | 3,838,281 | | **Total Assets** | **4,070,224** | **4,532,052** | | **Equity** | | | | Equity Attributable to Owners of the Company | 1,918,259 | 2,112,152 | | Non-controlling interests | 7,779 | 7,705 | | **Total Equity** | **1,926,038** | **2,119,857** | | **Liabilities** | | | | Non-current liabilities | 191,818 | 223,564 | | Current liabilities | 1,952,368 | 2,188,631 | | **Total Liabilities** | **2,144,186** | **2,412,195** | | **Total Equity and Liabilities** | **4,070,224** | **4,532,052** | [Condensed Consolidated Interim Statement of Changes in Equity](index=38&type=section&id=Item%208.%20Condensed%20Consolidated%20Interim%20Statement%20of%20Changes%20in%20Equity) Details the changes in the Group's equity components over the interim period, including profit/loss, share-based payments, and dividends Summary of Condensed Consolidated Interim Statement of Changes in Equity | Item | Share Capital and Share Premium (RMB Thousand) | Shares Held for Employee Share Scheme (RMB Thousand) | Other Reserves (RMB Thousand) | Retained Earnings (RMB Thousand) | Sub-total (RMB Thousand) | Non-controlling Interests (RMB Thousand) | Total (RMB Thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Balance at January 1, 2024 | 621,314 | (188,524) | 929,692 | 749,670 | 2,112,152 | 7,705 | 2,119,857 | | (Loss)/Profit for the period | – | – | – | (126,129) | (126,129) | 74 | (126,055) | | Share-based payment expenses | – | – | 17,692 | – | 17,692 | – | 17,692 | | Acquisition of shares under 2022 Restricted Share Unit Scheme | – | (74,532) | – | – | (74,532) | – | (74,532) | | Dividends | (10,924) | – | – | – | (10,924) | – | (10,924) | | **Balance at June 30, 2024** | **610,390** | **(263,056)** | **947,384** | **623,541** | **1,918,259** | **7,779** | **1,926,038** | [Condensed Consolidated Interim Statement of Cash Flows](index=39&type=section&id=Item%209.%20Condensed%20Consolidated%20Interim%20Statement%20of%20Cash%20Flows) Summarizes the cash inflows and outflows from operating, investing, and financing activities for the interim period Summary of Condensed Consolidated Interim Statement of Cash Flows | Item | Six Months Ended June 30, 2024 (RMB Thousand) | Six Months Ended June 30, 2023 (RMB Thousand) | | :--- | :--- | :--- | | Net cash generated from operating activities | 87,595 | 168,540 | | Net cash generated from investing activities | 290,245 | 292,113 | | Net cash (used in)/generated from financing activities | (333,309) | 11,417 | | Net increase in cash and cash equivalents | 44,531 | 472,070 | | Cash and cash equivalents at beginning of period | 1,244,120 | 787,742 | | Effect of exchange rate changes on cash and cash equivalents | 1,180 | 8,763 | | **Cash and cash equivalents at end of period** | **1,289,831** | **1,268,575** | [Notes to the Condensed Consolidated Interim Financial Statements](index=40&type=section&id=Item%2010.%20Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated interim financial statements [General Information](index=40&type=section&id=Item%2010.1%20General%20Information) Yun Kang Group Limited was incorporated in the Cayman Islands on July 20, 2018, primarily engaged in diagnostic testing services in China, with its shares listed on the Main Board of The Stock Exchange of Hong Kong Limited on May 18, 2022 - Yun Kang Group Limited was incorporated as an exempted company in the Cayman Islands on July 20, 2018[99](index=99&type=chunk) - The Company is an investment holding company, and its subsidiaries are principally engaged in the provision of diagnostic testing services in the People's Republic of China[99](index=99&type=chunk) - The shares of the Company were listed on the Main Board of The Stock Exchange of Hong Kong Limited on May 18, 2022[99](index=99&type=chunk) [Basis of Preparation and Accounting Policies](index=40&type=section&id=Item%2010.2%20Basis%20of%20Preparation%20and%20Accounting%20Policies) The condensed consolidated interim financial statements are prepared in accordance with the Listing Rules and Hong Kong Accounting Standard 34, and should be read in conjunction with the 2023 annual financial statements; new and revised standards adopted during the reporting period had no significant impact on performance or financial position - The Group's condensed consolidated interim financial statements for the six months ended June 30, 2024, have been prepared in accordance with the Listing Rules and Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants[100](index=100&type=chunk) - The accounting policies applied in preparing this financial information are consistent with those applied in the previous financial year and the corresponding interim reporting period, except for the adoption of revised standards[100](index=100&type=chunk) New and Revised Standards Mandatorily Applied for Accounting Periods Beginning on or After January 1, 2024 | Standard | Amendments | | :--- | :--- | | HKAS 1 (Amendments) | Classification of Liabilities as Current or Non-current | | HKAS 1 (Amendments) | Non-current Liabilities with Covenants | | HKAS 7 and HKFRS 7 (Amendments) | Supplier Finance Arrangements | | HKFRS 16 (Amendments) | Lease Liability in a Sale and Leaseback | - The adoption of these new and revised standards had no significant impact on the Group's results and financial position[101](index=101&type=chunk) [Critical Accounting Estimates and Judgements](index=42&type=section&id=Item%2010.3%20Critical%20Accounting%20Estimates%20and%20Judgements) The preparation of interim financial information requires management to make judgments, estimates, and assumptions, which are consistent with those applied in the consolidated financial statements for the year ended December 31, 2023 - In preparing the interim financial information, the critical judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty are the same as those applied in the Group's consolidated financial statements for the year ended December 31, 2023[104](index=104&type=chunk) [Financial Risk Management](index=42&type=section&id=Item%2010.4%20Financial%20Risk%20Management) The Group's operations are exposed to market risks (foreign exchange, interest rates), credit risk, and liquidity risk, with no changes in risk management policies since year-end; detailed disclosures include liquidity risk analysis and fair value measurement hierarchy and changes [Financial Risk Factors](index=42&type=section&id=Item%2010.4.1%20Financial%20Risk%20Factors) The Group is exposed to financial risks including market risk (foreign exchange, cash flow, and fair value interest rate risk), credit risk, and liquidity risk, with no changes in risk management policies since year-end - The Group's operations are exposed to various financial risks: market risk (including foreign exchange risk, cash flow and fair value interest rate risk), credit risk, and liquidity risk[105](index=105&type=chunk) - There have been no changes in the risk management policies approved by the Board since the year-end[105](index=105&type=chunk) [Liquidity Risk](index=42&type=section&id=Item%2010.4.2%20Liquidity%20Risk) The Group manages liquidity risk by monitoring cash and cash equivalents levels; the analysis of contractual undiscounted cash flows for financial liabilities is disclosed, noting that trade payables include amounts due to related parties for purchases - To manage liquidity risk, the Group monitors and maintains levels of cash and cash equivalents that management deems sufficient to fund the Group's operations and mitigate the impact of cash flow fluctuations[106](index=106&type=chunk) Financial Liabilities Maturity Analysis (Contractual Undiscounted Cash Flows) | Item | Less than 1 year (RMB Thousand) | 1 to 2 years (RMB Thousand) | 2 to 3 years (RMB Thousand) | More than 3 years (RMB Thousand) | Total (RMB Thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | **As at June 30, 2024** | | | | | | | Borrowings | 1,003,446 | 124,110 | 18,794 | 35,330 | 1,181,680 | | Lease liabilities | 14,058 | 10,358 | 4,771 | 757 | 29,944 | | Trade and other payables | 862,602 | – | – | – | 862,602 | | **Total** | **1,880,106** | **134,468** | **23,565** | **36,087** | **2,074,226** | - As at June 30, 2024, trade payables amounted to **RMB 620,950,000**, arising from purchases of raw materials from the Group's related parties; the Group has closely monitored liquidity risk and may defer payments to related parties if necessary[107](index=107&type=chunk) [Fair Value Estimation](index=44&type=section&id=Item%2010.4.3%20Fair%20Value%20Estimation) The Group categorizes financial instruments into three fair value hierarchy levels and discloses the fair values of financial assets within each level; during the reporting period, financial assets measured at fair value through profit or loss recorded a fair value loss of RMB 1,241,000 - The Group categorizes financial instruments into three levels based on accounting standards to indicate the reliability of inputs used to determine fair value[109](index=109&type=chunk) Fair Value Hierarchy of Financial Assets | Item | Level 1 (RMB Thousand) | Level 2 (RMB Thousand) | Level 3 (RMB Thousand) | Total (RMB Thousand) | | :--- | :--- | :--- | :--- | :--- | | **As at June 30, 2024** | | | | | | Financial assets measured at fair value through profit or loss | – | 327,596 | 249,833 | 577,429 | | Financial assets measured at fair value through other comprehensive income | – | – | 79,508 | 79,508 | | **Total Financial Assets** | **–** | **327,596** | **329,341** | **656,937** | - For the six months ended June 30, 2024, the Group recognized a total fair value loss of **RMB 1,241,000** on financial assets measured at fair value through profit or loss[111](index=111&type=chunk) [Segment and Revenue Information](index=47&type=section&id=Item%2010.5%20Segment%20and%20Revenue%20Information) The Group's primary operating entities are located in China, with all revenue derived from China; during the reporting period, all revenue from a single external customer was less than 10% of total revenue, and diagnostic testing service performance obligations were not significant - The Group's principal operating entities are located in China; accordingly, all of the Group's revenue for the six months ended June 30, 2024, was derived from China[115](index=115&type=chunk) Revenue by Business Line | Business Line | 2024 (RMB Thousand) | 2023 (RMB Thousand) | | :--- | :--- | :--- | | Diagnostic Services | 379,943 | 476,865 | - For the six months ended June 30, 2024, all revenue from a single external customer was less than **10%** of the Group's total revenue[117](index=117&type=chunk) [Other Gains – Net](index=48&type=section&id=Item%2010.6%20Other%20Gains%20%E2%80%93%20Net) Other net gains amounted to RMB 6,590 thousand, primarily comprising gains from redemption of financial assets measured at fair value through profit or loss, gains on disposal of property and equipment, and exchange gains Composition of Other Gains – Net | Item | 2024 (RMB Thousand) | 2023 (RMB Thousand) | | :--- | :--- | :--- | | Gains on redemption of financial assets measured at fair value through profit or loss | 2,369 | 22,225 | | Gains on disposal of property and equipment | 3,282 | 743 | | Exchange gains – net | 863 | 9,179 | | Others | 76 | (1,056) | | **Total** | **6,590** | **31,091** | [Expenses by Nature](index=48&type=section&id=Item%2010.7%20Expenses%20by%20Nature) Details various expenses recognized in cost of revenue, selling expenses, and administrative expenses, including costs of reagents and pharmaceuticals, staff costs, share-based paymen

Investment Rating - The report assigns a "Buy" rating to Yunkang Group (2325 HK) with a target price of HKD 10 5, implying a potential upside of 26% from the current price of HKD 8 4 [3] Core Views - Yunkang Group's 1H24 performance was weak, with a net loss of RMB 130 million, primarily due to declining revenues across its three core business segments and increased industry competition [1] - The company's revenue fell by 20% YoY to RMB 380 million in 1H24, driven by slower-than-expected growth in routine testing demand and price declines in the ICL industry [1] - Gross margin decreased by 4 4 percentage points to 33 7% due to high fixed costs and reduced economies of scale [1] - Accounts receivable impairment continued to impact profitability, with RMB 100 million in impairment losses recorded in 1H24 [1] - The ICL industry is expected to face intensified price competition in the short term, as post-pandemic testing demand has declined, leading to excess capacity [1] - Accounts receivable aging is increasing, with 50% of receivables aged 1-2 years, and impairment is expected to continue affecting profitability [1] Financial Performance and Forecasts - Revenue for 2024E is projected at RMB 720 million, with a YoY decline of 19 2%, followed by a gradual recovery to RMB 807 million by 2026E [2] - Gross margin is expected to stabilize at around 32 0% in 2024E, improving to 36 0% by 2026E [5] - The company is forecasted to remain in a loss-making position in 2024E and 2025E, with a slight profit of RMB 5 2 million expected in 2026E [5] - The DCF valuation model, with a WACC of 10 0% and a perpetual growth rate of 2 0%, supports the target price of HKD 10 5 [1] Industry Context - Major ICL companies, including KingMed, Dian Diagnostics, and Adicon, also reported significant revenue and profit declines in 1H24, reflecting broader industry challenges [1] - The National Healthcare Security Administration's policy to accelerate medical insurance fund payments could potentially improve accounts receivable collection in the future [1] Market Expectations - The market consensus for Yunkang Group's target price ranges from HKD 7 0 to HKD 13 0, with SPDBI's base case target at HKD 10 5 [8] - The optimistic scenario assumes a steady gross margin above 50% and a core non-COVID revenue CAGR of over 20% from 2023-26E, while the pessimistic scenario projects a gross margin below 30% and a CAGR below 5% [8]