[Cover and Table of Contents](index=1&type=section&id=Cover%20and%20Table%20of%20Contents) [Company Information](index=3&type=section&id=Company%20Information) This section provides essential company details, including board and supervisory committee members, company secretary, authorized representatives, registered address, principal place of business, website, and auditor - Executive Directors include Ms. Shi Wenling, Mr. Xie Fengbao, Mr. Shi Chunbao, and Ms. Yue Shujun[3](index=3&type=chunk) - The company's auditor is Da Xin Certified Public Accountants (Special General Partnership)[3](index=3&type=chunk) [Management Discussion and Analysis](index=4&type=section&id=Management%20Discussion%20and%20Analysis) Despite pandemic challenges, the company achieved steady revenue growth in H1 2022 through a "volume-for-price" strategy under national artificial joint procurement policies, advancing product registration, R&D, market network, and financial performance [Industry Overview and Competitive Advantages](index=4&type=section&id=Industry%20Overview%20and%20Competitive%20Advantages) In H1 2022, national artificial joint volume-based procurement policies reshaped the industry, with the company leveraging its comprehensive medical device registrations, strong R&D, high-end ceramic joint products, and extensive sales network to establish significant competitive advantages - National artificial joint volume-based procurement policies were progressively implemented across provinces, significantly influencing the industry landscape[4](index=4&type=chunk) - As of June 30, 2022, the company held **59 medical device registration certificates and filing credentials** in China, making it one of the domestic enterprises with the most comprehensive joint prosthesis registrations[5](index=5&type=chunk) - The company was the first domestic enterprise to obtain registration for BIOLOX®delta fourth-generation ceramic joint prosthesis products and the first to possess registration for BIOLOX®OPTION tapered ceramic heads in 2020[10](index=10&type=chunk) [Financial Review](index=8&type=section&id=Financial%20Review) For the six months ended June 30, 2022, revenue increased by **18.39%** to **RMB 571 million**, driven by joint prosthesis volume-for-price and rapid growth in spine and sports medicine products, while net profit slightly increased by **0.92%** to **RMB 157 million** despite rising R&D expenses Product Category Revenue (RMB Thousand) | Product Category | H1 2022 Revenue (RMB Thousand) | H1 2021 Revenue (RMB Thousand) | YoY Growth | | :--- | :--- | :--- | :--- | | Joint Prosthesis Products | 524,208 | 462,134 | 13.43% | | Spine Products | 41,105 | 18,535 | 121.77% | | Sports Medicine Products | 4,544 | 1,141 | 298.25% | | **Total** | **571,392** | **482,631** | **18.39%** | - Gross margin decreased from **76.51%** in the prior period to **74.52%**, primarily due to increased raw material prices and lower unit selling prices from volume-based procurement policies[16](index=16&type=chunk) - R&D expenses significantly increased by **111.19%** year-on-year to **RMB 72.3 million**, representing **12.65%** of revenue, mainly due to increased investment in new areas such as joint robots, PRP, sports medicine, and dentistry[19](index=19&type=chunk) - Net profit increased by **0.92%** year-on-year to **RMB 157 million**, as the company maintained stable profits through internal cost reduction, efficiency improvements, and external market expansion via a "volume-for-price" strategy[22](index=22&type=chunk) [Liquidity and Financial Resources](index=9&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2022, the company's liquidity decreased to **RMB 1.107 billion** from **RMB 1.737 billion** at the beginning of the year, primarily due to net cash outflow from operating activities of **RMB 81.5 million** and investing activities of **RMB 510 million** - Net cash outflow from operating activities was approximately **RMB 81.5 million**, primarily due to increased cash expenses for sales, R&D, and higher accounts receivable[32](index=32&type=chunk) - Net cash outflow from investing activities was approximately **RMB 510 million**, mainly due to new wealth management investments[32](index=32&type=chunk) - As of June 30, 2022, the principal amount of unredeemed structured deposit wealth management products subscribed by the company was **RMB 738 million**[32](index=32&type=chunk) [Use of Proceeds](index=10&type=section&id=Use%20of%20Proceeds) The company utilized net proceeds of approximately **RMB 186 million** from H-share global offering and **RMB 1.067 billion** from A-share listing on the STAR Market, primarily for developing the Daxing production base, R&D activities, expanding marketing networks, and supplementing working capital H-share Proceeds Use (RMB Million) | H-share Proceeds Use | Available Amount (RMB Million) | Amount Expended as of 2022/6/30 (RMB Million) | Remaining Amount (RMB Million) | | :--- | :--- | :--- | :--- | | Development of Daxing New Production Base Phase I | 92.93 | 87.25 | 5.68 | | R&D Activities | 37.55 | 21.59 | 15.96 | | Expansion of Marketing and Distribution Network | 37.17 | 37.17 | 0.00 | | Working Capital and Others | 18.21 | 18.21 | 0.00 | | **Total** | **185.86** | **164.22** | **21.64** | - Net proceeds from A-share offering amounted to **RMB 1.067 billion**, used to replace **RMB 128 million** of self-raised funds previously invested and to purchase **RMB 415 million** in wealth management products with idle proceeds[26](index=26&type=chunk)[28](index=28&type=chunk) [Future Outlook](index=13&type=section&id=Future%20Outlook) The company anticipates benefiting from an aging population, increased per capita income, and expanded medical insurance coverage, planning to enrich product lines, enhance innovation, expand brand influence, and optimize talent development to achieve its goal of becoming a globally renowned orthopedic medical device manufacturer - The company plans to develop advanced customized individual joint prosthesis products using new materials and 3D reconstruction technologies to meet broader patient needs and achieve higher profit margins[35](index=35&type=chunk) - Plans include establishing a product R&D center at the new Daxing production base and leveraging platforms such as academician expert workstations and postdoctoral research workstations to strengthen R&D talent cultivation and collaboration with external institutions[36](index=36&type=chunk) [Corporate Governance and Other Information](index=15&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section details the company's corporate governance practices, compliance with securities dealing codes by directors and supervisors, and shareholding details of directors, supervisors, and major shareholders, confirming adherence to HKEX Listing Rules' Corporate Governance Code [Corporate Governance and Compliance](index=15&type=section&id=Corporate%20Governance%20and%20Compliance) The company maintains high corporate governance standards, complying with all code provisions of the Corporate Governance Code in Appendix 14 of the HKEX Listing Rules during the reporting period, with the Audit Committee having reviewed the interim financial statements - The Board believes that the company has complied with all code provisions of the Corporate Governance Code during the reporting period[41](index=41&type=chunk) - The Board's Audit Committee has reviewed the company's consolidated financial statements for the six months ended June 30, 2022[43](index=43&type=chunk) [Interests of Directors, Supervisors and Major Shareholders](index=15&type=section&id=Interests%20of%20Directors%2C%20Supervisors%20and%20Major%20Shareholders) As of June 30, 2022, controlling shareholders Mr. Shi Chunbao and Ms. Yue Shujun (a married couple) collectively controlled **54.42%** of the company's total issued share capital, with detailed interests of directors, supervisors, and major shareholders in A and H shares disclosed Interests of Directors (Shares and Percentage of Total Share Capital) | Director Name | Share Class | Number of Shares | Nature of Interest | Percentage of Total Share Capital | | :--- | :--- | :--- | :--- | :--- | | Mr. Shi Chunbao | A-share | 113,685,435 | Beneficial Owner | 29.58% | | | H-share | 1,155,250 | Beneficial Owner | 0.3006% | | | A-share | 95,447,900 | Spouse's Interest | 24.84% | | Ms. Yue Shujun | A-share | 95,447,900 | Beneficial Owner | 24.84% | | | A-share | 113,685,435 | Spouse's Interest | 29.58% | | | H-share | 1,155,250 | Spouse's Interest | 0.3006% | - CITIC Securities Co., Ltd. holds **19,750,000 A-shares** through its controlled entities, representing **5.14%** of the total share capital[47](index=47&type=chunk) [Review Report](index=18&type=section&id=Review%20Report) This section presents the review report by Da Xin Certified Public Accountants (Special General Partnership) on the company's 2022 interim financial statements, concluding that no matters were identified suggesting the statements were not prepared in accordance with enterprise accounting standards or did not fairly reflect the company's financial position, operating results, and cash flows in all material respects - The review institution is Da Xin Certified Public Accountants (Special General Partnership)[50](index=50&type=chunk) - The review conclusion states that "nothing has come to our attention that causes us to believe that the financial statements are not prepared in accordance with enterprise accounting standards, nor do they fairly reflect in all material respects," indicating a standard limited assurance conclusion with no material issues identified[51](index=51&type=chunk) [Financial Statements](index=19&type=section&id=Financial%20Statements) This section includes the company's unaudited consolidated and parent company financial statements for the period ended June 30, 2022, and comparative periods, comprising the balance sheet, income statement, cash flow statement, and statement of changes in equity, comprehensively reflecting the company's financial position, operating results, and cash flows [Consolidated Balance Sheet](index=19&type=section&id=Consolidated%20Balance%20Sheet) As of June 30, 2022, total assets were **RMB 3.107 billion**, a slight increase from **RMB 3.000 billion** at the beginning of the year, with total liabilities remaining stable at **RMB 531 million** and equity attributable to parent company shareholders increasing to **RMB 2.576 billion** Consolidated Balance Sheet (RMB) | Item | June 30, 2022 (RMB) | December 31, 2021 (RMB) | | :--- | :--- | :--- | | Total Current Assets | 2,500,429,723.24 | 2,447,763,881.22 | | Total Non-current Assets | 606,472,609.72 | 551,893,480.23 | | **Total Assets** | **3,106,902,332.96** | **2,999,657,361.45** | | Total Current Liabilities | 441,738,289.37 | 439,618,888.24 | | Total Non-current Liabilities | 89,060,560.51 | 90,961,086.73 | | **Total Liabilities** | **530,798,849.88** | **530,579,974.97** | | **Total Shareholders' Equity** | **2,576,103,483.08** | **2,469,077,386.48** | [Consolidated Income Statement](index=23&type=section&id=Consolidated%20Income%20Statement) In H1 2022, the company achieved operating revenue of **RMB 571 million**, an **18.4%** year-on-year increase, with operating profit at **RMB 175 million** (down from **RMB 182 million**), and net profit stable at **RMB 157 million**, a **0.9%** increase Consolidated Income Statement (RMB) | Item | Current Period (RMB) | Prior Period (RMB) | | :--- | :--- | :--- | | Operating Revenue | 571,391,616.43 | 482,631,531.05 | | Operating Profit | 174,637,494.77 | 182,432,709.61 | | Total Profit | 172,397,259.62 | 182,250,045.85 | | Net Profit | 156,982,496.60 | 155,555,218.93 | | Basic Earnings Per Share | 0.41 | 0.45 | [Consolidated Cash Flow Statement](index=25&type=section&id=Consolidated%20Cash%20Flow%20Statement) In H1 2022, net cash flow from operating activities was a **RMB 81.51 million** outflow, from investing activities a **RMB 510.36 million** outflow, and from financing activities a **RMB 38.13 million** outflow, resulting in a **RMB 629.64 million** decrease in cash and cash equivalents Consolidated Cash Flow Statement (RMB) | Item | Current Period (RMB) | Prior Period (RMB) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -81,512,729.59 | 18,949,001.41 | | Net Cash Flow from Investing Activities | -510,359,121.29 | -108,484,921.71 | | Net Cash Flow from Financing Activities | -38,133,052.89 | -1,277,869.50 | | Net Increase/Decrease in Cash and Cash Equivalents | -629,642,997.67 | -91,283,894.57 | [Consolidated Statement of Changes in Shareholders' Equity](index=30&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Shareholders'%20Equity) As of June 30, 2022, total equity attributable to parent company shareholders was **RMB 2.576 billion**, an increase from **RMB 2.469 billion** at the beginning of the period, primarily due to **RMB 157 million** in net profit, partially offset by **RMB 49.96 million** in dividend distribution - Beginning balance of equity attributable to parent company shareholders was **RMB 2.469 billion**[71](index=71&type=chunk) - Total comprehensive income (i.e., net profit) for the period was **RMB 157 million**, increasing shareholders' equity[71](index=71&type=chunk) - Profit distribution (distribution to shareholders) for the period decreased shareholders' equity by **RMB 49.96 million**[71](index=71&type=chunk) [Notes to Financial Statements](index=34&type=section&id=Notes%20to%20Financial%20Statements) This section provides detailed notes to the financial statements, covering the company's basic information, basis of preparation, significant accounting policies and estimates, taxation, notes to major items in consolidated financial statements, related party transactions, commitments and contingencies, and other significant matters [Company Profile and Basis of Preparation](index=34&type=section&id=Company%20Profile%20and%20Basis%20of%20Preparation) Beijing Chunli Zhengda Medical Devices Co., Ltd., established in 1998 and headquartered in Beijing, is listed on the HKEX (01858.HK) and Shanghai Stock Exchange STAR Market (688236.SH) within the medical device industry, with financial statements prepared on a going concern basis - The company was listed on the Hong Kong Stock Exchange in March 2015 and on the Shanghai Stock Exchange STAR Market in December 2021[77](index=77&type=chunk) - Financial statements are prepared on a going concern basis, with the ability to continue as a going concern for at least 12 months from the end of the reporting period[78](index=78&type=chunk) [Significant Accounting Policies and Estimates](index=35&type=section&id=Significant%20Accounting%20Policies%20and%20Estimates) This section details the company's key accounting policies and estimates, including revenue recognition upon customer obtaining control, impairment of financial instruments using the expected credit loss model, inventory valuation at the lower of cost or net realizable value using the weighted-average method, and depreciation of fixed assets using the straight-line method - Revenue Recognition: The company recognizes revenue when the customer obtains control of the related goods or services; for distribution, upon dealer's receipt; for direct sales and delivery, upon actual use by the hospital; for overseas sales, upon customs export declaration[125](index=125&type=chunk)[126](index=126&type=chunk) - Expected Credit Loss: The company accounts for impairment of financial assets based on expected credit losses; for receivables without significant financing components, the simplified approach is used to measure loss allowances at an amount equal to the lifetime expected credit losses[98](index=98&type=chunk)[99](index=99&type=chunk) - Inventory Valuation: Inventories are valued using the weighted-average method upon issuance and measured at the lower of cost or net realizable value at period-end[103](index=103&type=chunk) [Notes to Major Items in Consolidated Financial Statements](index=58&type=section&id=Notes%20to%20Major%20Items%20in%20Consolidated%20Financial%20Statements) This section provides detailed notes on key consolidated financial statement items, including accounts receivable increasing to **RMB 657 million** with an **8.14%** bad debt provision, inventory rising to **RMB 182 million**, fixed assets significantly increasing to **RMB 287 million** due to transfers from construction in progress, and substantial R&D expenses primarily for new projects, with **RMB 491 million** in wealth management products purchased with idle funds - Accounts receivable balance increased from **RMB 439 million** at the beginning of the year to **RMB 657 million**, with bad debt provision increasing from **RMB 39.2 million** to **RMB 53.48 million** accordingly[147](index=147&type=chunk)[148](index=148&type=chunk) - Fixed assets book value increased from **RMB 178 million** at the beginning of the year to **RMB 362 million**, primarily due to **RMB 180 million** transferred from construction in progress[166](index=166&type=chunk) - Market development expenses of **RMB 121 million** were a major component of selling expenses[212](index=212&type=chunk) - Technical service fees, employee compensation, and material consumption were the main expenditures within R&D expenses, collectively accounting for over **75%** of total R&D expenses[214](index=214&type=chunk) [Related Party Relationships and Transactions](index=93&type=section&id=Related%20Party%20Relationships%20and%20Transactions) The company's actual controllers are Mr. Shi Chunbao and Ms. Yue Shujun, a married couple; during the reporting period, the company conducted sales of goods totaling **RMB 2.56 million** with Beijing Meizhuo Medical Devices Co., Ltd., a related party, and disclosed key management personnel compensation of **RMB 2.11 million** - The company's actual controllers are Mr. Shi Chunbao (Executive Director) and Ms. Yue Shujun (Executive Director and Deputy General Manager), a married couple, who collectively hold **54.72%** of the company's voting rights[248](index=248&type=chunk) - Sales of goods to related party Beijing Meizhuo Medical Devices Co., Ltd. amounted to **RMB 2,564,968.32**, representing **0.45%** of similar transactions for the period[251](index=251&type=chunk) - Total compensation paid to key management personnel for the period was **RMB 2,109,438.92**[252](index=252&type=chunk)

Financial Performance - The company reported a total revenue of RMB 500 million for the first half of 2022, representing a year-on-year increase of 20%[19] - The company's revenue for the first half of 2022 was approximately ¥571.39 million, representing an increase of 18.39% compared to ¥482.63 million in the same period last year[28] - Net profit attributable to shareholders was approximately ¥156.98 million, a slight increase of 0.92% from ¥155.56 million year-on-year[28] - The company achieved a revenue of 571.39 million yuan in the first half of 2022, representing a year-on-year growth of 18.39%[140] - Net profit attributable to shareholders was 156.98 million yuan, with a year-on-year growth of 0.92%, while the net profit excluding non-recurring items increased by 8.55% to 156.66 million yuan[142] Research and Development - The company is investing RMB 50 million in R&D for advanced medical technologies, focusing on minimally invasive surgical devices[19] - The R&D expenditure accounted for 12.65% of the revenue, an increase of 5.56 percentage points compared to 7.09% in the same period last year[32] - The company's R&D expenses surged by 111.19% to CNY 72.29 million, reflecting a strong focus on new product and technology development[159] - The company has increased its R&D personnel to 281, representing 23.28% of the total workforce, up from 21.78% in the previous year[132] - The average salary for R&D personnel has risen to CNY 6.76 million, compared to CNY 6.18 million in the previous year[134] Market Expansion and Product Development - The company plans to launch three new orthopedic products by the end of 2022, targeting a market expansion of 30% in the orthopedic device sector[19] - Future guidance estimates a revenue growth of 25% for the second half of 2022, driven by increased demand and new product launches[19] - Market expansion efforts include entering two new provinces in China, aiming for a 10% market share in those regions by 2023[19] - The company is focused on the continuous development and research of orthopedic medical devices, which are critical in the healthcare sector[38] - The company is expanding its market presence through the development of new products and technologies[44] Strategic Acquisitions and Partnerships - The company has completed a strategic acquisition of a local competitor, which is expected to enhance its market position and increase revenue by 15%[19] - The company has established partnerships with three major hospitals to improve product distribution and increase brand visibility[19] - The company is also exploring mergers and acquisitions to enhance its market position and product portfolio[44] Operational Efficiency - The management highlighted a focus on enhancing supply chain efficiency, which is projected to reduce costs by 5% in the next fiscal year[19] - The company has implemented a comprehensive procurement strategy, focusing on raw materials, energy, and external processing services to support efficient operations[85] - The production model is aligned with strategic planning and market demand, ensuring annual supply capabilities while maintaining safety stock levels[88] Risks and Challenges - The company is facing risks related to reliance on a single foreign supplier for core materials, which could impact production if supply is disrupted[147] - The company is adapting to changes in sales models due to policies like "two-invoice system" and "volume-based procurement," which may affect revenue distribution[144] - The company is facing risks from national procurement policies that may lead to price reductions and lower gross margins[149] - The company is closely monitoring the impact of macroeconomic factors, including the ongoing COVID-19 pandemic and international political changes, on its business operations[153] Product Offerings - The company is a leading domestic orthopedic medical device manufacturer, focusing on the research, production, and sales of implantable orthopedic medical devices[44] - Main product categories include joint prosthetics, spinal implants, and sports medicine products, covering various human joints such as hip, knee, shoulder, and elbow[45] - The company offers a full range of spinal internal fixation systems as part of its spinal implant product line[44] - The company's sports medicine products include non-absorbable suture anchors and titanium plates, designed for soft tissue repair in various joints[81] Financial Position - The company's total assets at the end of the reporting period were approximately ¥3.11 billion, an increase of 3.58% from ¥2.99 billion at the end of the previous year[28] - The accounts receivable balance at the end of the reporting period was 603.22 million yuan, an increase of 20.30 million yuan from the beginning of the period, indicating potential credit risk[148] - Inventory rose to ¥182.32 million, reflecting a 14.18% increase from ¥159.68 million, driven by product stockpiling based on market demand[162] Sustainability and Corporate Governance - The company has implemented energy-saving measures, including geothermal heat pump air conditioning and solar power generation at its new production base, indicating significant future energy savings[196] - The company implemented measures to reduce carbon emissions, including promoting paper-saving practices and green commuting among employees[197] - The company does not plan to distribute profits or increase capital reserves, with no dividends or stock bonuses proposed for the reporting period[192]

Financial Performance - The company's revenue for Q1 2022 was ¥257,113,202.13, representing a year-on-year increase of 13.45%[6] - Net profit attributable to shareholders was ¥74,021,366.53, reflecting an 8.09% increase compared to the same period last year[6] - The net profit after deducting non-recurring gains and losses was ¥74,435,071.03, up by 10.05% year-on-year[6] - Total operating revenue for Q1 2022 was 257,113,202.13, an increase from 226,624,200.07 in Q1 2021, representing a growth of approximately 13.3%[32] - Net profit for Q1 2022 reached 74,021,366.53, compared to 68,481,917.59 in Q1 2021, reflecting a growth of approximately 8.5%[35] - The company reported a total comprehensive income of 74,021,366.53 for Q1 2022, compared to 68,481,917.59 in Q1 2021, reflecting an increase of approximately 8.5%[35] Research and Development - Research and development expenses totaled ¥33,114,231.75, marking a significant increase of 124.70%[9] - R&D expenses accounted for 12.88% of total revenue, an increase of 6.38 percentage points compared to the previous year[9] - Research and development expenses in Q1 2022 amounted to 33,114,231.75, significantly higher than 14,736,953.37 in Q1 2021, marking an increase of about 125%[32] Assets and Liabilities - The company's total assets at the end of the reporting period were ¥3,040,149,651.90, a 1.35% increase from the end of the previous year[9] - Total current assets as of March 31, 2022, amounted to approximately CNY 2.48 billion, an increase from CNY 2.45 billion as of December 31, 2021, reflecting a growth of about 1%[24] - Total assets reached CNY 3.04 billion, up from CNY 2.99 billion, indicating an increase of approximately 1%[27] - Total liabilities included accounts payable of CNY 100.62 million, down from CNY 142.42 million, a decrease of about 29%[27] - Total liabilities decreased from 530,579,974.97 to 497,050,898.89, a reduction of approximately 6.3%[29] - Total equity attributable to shareholders increased from 2,469,077,386.48 to 2,543,098,753.01, representing a growth of about 3%[29] Cash Flow - The net cash flow from operating activities was -¥20,120,816.00, a decline of 290.44% compared to the same period last year[6] - In Q1 2022, the cash inflow from operating activities was CNY 209,155,705.21, an increase from CNY 187,095,545.12 in Q1 2021, representing an increase of approximately 11.0%[37] - The net cash outflow from operating activities in Q1 2022 was CNY -20,120,816.00, compared to a net inflow of CNY 10,565,240.29 in Q1 2021[37] - The total cash outflow from operating activities in Q1 2022 was CNY 229,276,521.21, compared to CNY 176,530,304.83 in Q1 2021, reflecting an increase of approximately 29.8%[37] Shareholder Information - The total number of ordinary shareholders at the end of the reporting period was 21,622[16] - The company reported a basic earnings per share of ¥0.19, down by 5.00% year-on-year[9] - Earnings per share for Q1 2022 were 0.19, slightly down from 0.20 in Q1 2021[35] Other Financial Metrics - The weighted average return on equity was 2.95%, a decrease of 3.20 percentage points year-on-year[9] - Cash and cash equivalents decreased to CNY 1.03 billion from CNY 1.74 billion, representing a decline of approximately 41%[24] - Accounts receivable increased to CNY 494.51 million from CNY 400.19 million, showing a growth of about 23%[24] - The company’s inventory decreased to CNY 155.36 million from CNY 159.68 million, a decline of approximately 3%[24] - The company’s other receivables increased to CNY 5.49 million from CNY 4.49 million, showing a growth of about 23%[24] - The company reported a decrease in employee compensation payable to CNY 25.02 million from CNY 46.27 million, a reduction of approximately 46%[27] - The company’s non-current assets totaled CNY 562.68 million, slightly up from CNY 551.89 million, reflecting an increase of about 2%[27] - Deferred income tax liabilities decreased from 5,402,815.13 to 5,210,334.06, a decline of approximately 3.5%[29] - The impact of exchange rate changes on cash and cash equivalents in Q1 2022 was CNY -218,020.84, contrasting with a positive impact of CNY 43,992.26 in Q1 2021[39] - The cash inflow from investment activities in Q1 2022 was CNY 904,215.33, down from CNY 2,203,041.10 in Q1 2021, a decrease of approximately 58.9%[39] - The net cash outflow from investment activities in Q1 2022 was CNY -690,328,193.10, compared to CNY -50,448,583.11 in Q1 2021, indicating a significant increase in outflows[39]

Financial Performance - The net profit attributable to the parent company for 2021 was RMB 322.36 million, representing a 15.50% cash dividend distribution from the net profit[4]. - The cash dividend distribution ratio for 2021 is below 30% of the net profit attributable to shareholders[7]. - The company reported a total revenue of RMB 1.2 billion for the fiscal year 2021, representing a year-over-year increase of 15% compared to RMB 1.04 billion in 2020[20]. - The company reported a net profit of RMB 300 million for 2021, reflecting a net profit margin of 25%[20]. - The company achieved operating revenue of CNY 1,108,139,520.61 in 2021, representing a year-on-year increase of 18.18%[30]. - The net profit attributable to shareholders was CNY 322,360,736.79, up 13.76% compared to the previous year[30]. - The net cash flow from operating activities decreased by 36.79% to CNY 164,785,786.45, primarily due to increased R&D and marketing expenditures[30]. - The company reported a significant increase in non-operating income for 2021, primarily due to the receipt of policy rewards from the Beijing Urban Sub-center, amounting to 14,667,744.31[37]. - The company reported a total revenue of 27,780 million RMB, with a significant increase in R&D investment to 10,035.64 million RMB compared to the previous period[8]. - The company’s accounts receivable have been steadily increasing from 2018 to 2021, raising concerns about potential overdue payments and bad debts[109]. Research and Development - The company plans to continue increasing R&D investment to enhance its product pipeline and expand domestic and international sales teams[4]. - The company has allocated RMB 100 million for R&D in 2022, focusing on advanced materials and minimally invasive surgical technologies[20]. - R&D investment accounted for 9.46% of operating revenue, an increase of 1.72 percentage points compared to the previous year[30]. - The company is actively pursuing innovation in emerging technologies, with ongoing research and development efforts in new materials and manufacturing processes[75]. - The company received 173 new intellectual property rights this year, bringing the total to 283, including 15 invention patents and 153 utility model patents[86]. - The company is focusing on the development of joint surgery robots and sports medicine products in response to national joint procurement policies[88]. - The company’s R&D efforts are aimed at improving the longevity and performance of orthopedic implants, with a focus on innovative materials[91]. - The company’s testing center received CNAS laboratory accreditation, enhancing its research capabilities[86]. - The company is developing a series of hip joint products with a total investment of ¥81.46 million, of which ¥14.25 million was invested this period[91]. - The company is expanding its product line by integrating surgical robots with joint prosthetics, which is expected to significantly boost sales in the joint segment[11]. Market and Competitive Landscape - The orthopedic implant medical device market in China is projected to reach approximately 60.7 billion yuan by 2024, with a compound annual growth rate (CAGR) of about 14.51% from 2019 to 2024[60]. - The trauma segment accounted for the largest share of the orthopedic implant market in 2019, with a market share of 29.80%, while the spinal segment held 28.23% and the joint segment 27.77%[60]. - The market size for joint implant medical devices in China is expected to reach around 18.7 billion yuan by 2024, growing at a CAGR of approximately 6.87% from 2019 to 2024[60]. - The spinal implant medical device market is projected to reach about 17.1 billion yuan by 2024, with a CAGR of approximately 14.42% from 2019 to 2024[63]. - The trauma implant medical device market is expected to grow to around 17 billion yuan by 2024, with a CAGR of about 13.15% from 2019 to 2024[64]. - The top five companies in the orthopedic implant market in China held a combined market share of 42.71% in 2019, with Johnson & Johnson leading at 17.24%[68]. - The orthopedic market in China is experiencing significant growth, with foreign companies holding market shares of 67.88%, 66.71%, and 65.06% from 2017 to 2019, while domestic companies increased their shares from 32.12% to 34.94% during the same period[72]. - The company faces risks related to market competition, particularly from established international brands, and must adapt to changing sales models to maintain its market position[103]. - The company is navigating uncertainties in the import substitution process, facing challenges against international competitors with stronger resources and brand influence[108]. Product Development and Innovation - The company plans to expand its product line by introducing three new orthopedic implants in 2022, targeting a market share increase of 10% in the orthopedic sector[20]. - The company has successfully completed the clinical trials for its new PRP technology, which is expected to launch in Q3 2022[20]. - The company has introduced various 3D printing technologies, including EBM and MJF, to develop customized prosthetic products, enhancing production capabilities[73]. - The company is leading a project on porous tantalum bone repair materials, which has been approved as a key national R&D plan by the Ministry of Science and Technology[75]. - The development of biodegradable magnesium alloys is underway, focusing on their advantages in biocompatibility and mechanical properties, with the project currently in the design phase[75]. - The company has developed multiple core technologies in orthopedic implants, including hip, knee, shoulder, elbow, and spinal technologies[76]. - The company emphasizes the importance of advanced processing techniques to ensure product reliability and performance in clinical settings[76]. - The company’s core technologies are aligned with industry standards, ensuring competitive positioning in the orthopedic market[76]. - The company is committed to continuous innovation and development of new technologies to enhance patient outcomes and expand market reach[76]. - The company has advanced shoulder and elbow joint prosthesis design technologies, enhancing stability and longevity of implants[81]. Operational Strategies - The company plans to continue expanding its market presence and enhancing product competitiveness through increased R&D efforts[30]. - The traditional distribution model remains the primary sales strategy, with a focus on selecting distributors based on their qualifications and past performance[50]. - The implementation of the "two-invoice system" has led to a gradual increase in revenue from this model and the distribution model in recent years[50]. - The company has established a supplier evaluation mechanism to ensure that suppliers meet quality management standards and contractual obligations[44]. - The company engages in monthly reconciliations with suppliers and processes payments based on contractual agreements, allowing for credit terms with long-term partners[46]. - The company employs a unitized production management model for small-batch products, enhancing production efficiency and adaptability to product variety changes[47]. - The company has established a partnership with Syntellix Asia PTE. LTD. to market magnesium alloy orthopedic implant products, with a minimum purchase commitment over five years[52]. - The company is actively pursuing new materials such as porous tantalum and biodegradable magnesium alloys, which are expected to enhance its competitive edge[101]. - The company is investing in product innovation and R&D to maintain competitive advantages in a rapidly changing market environment[105]. - The company has implemented cost reduction strategies through increased production efficiency and reduced outsourcing costs[131]. Governance and Management - The company has a strong management team with nearly 30 years of experience in the medical device industry, led by Shi Chunbao and Yue Shujun[182]. - The company held 1 annual general meeting and 2 special meetings during the reporting period, ensuring compliance with legal requirements[169]. - The board of directors consists of 7 members, including 3 independent non-executive directors, ensuring compliance with relevant laws and regulations[169]. - The company maintains independence in finance, personnel, assets, and operations, ensuring no conflicts of interest with controlling shareholders[169]. - The total pre-tax remuneration for all directors and supervisors during the reporting period was 6.5708 million yuan[183]. - The company has established a comprehensive compensation management system that links employee bonuses and salary increases to individual and company performance[200]. - The company’s board of directors and remuneration committee review the remuneration policies for directors and supervisors[187]. - The company has not faced any penalties from securities regulatory authorities in the past three years[187]. - The company has not reported any changes in the positions of directors, supervisors, and senior management during the reporting period[187]. - The company plans to enhance its financing capabilities by leveraging capital market tools, which will support long-term sustainable development[164].