Core Viewpoint - The company reported disappointing financial results for 1H25, with a significant decline in revenue and adjusted net profit, primarily due to policy impacts and operational challenges [1][2]. Financial Performance - Revenue for 1H25 was 1.289 billion yuan, a year-on-year decrease of 10.7% [1]. - Adjusted net profit fell to 82 million yuan, down 67.0% year-on-year, which was below market expectations [1]. - The company incurred a net loss of 1.04 billion yuan, largely due to impairment losses on goodwill and intangible assets in the U.S. HRC segment [2]. Development Trends - The company anticipates a recovery in 2026 as the impact of new insurance policies stabilizes and patient volumes return to IVF treatments [1]. - The shift in the proportion of artificial insemination (IUI) cycles has temporarily affected average transaction prices and profit margins [1]. - The company plans to relocate its Shenzhen facility, which is expected to increase capacity and improve revenue and profit recovery [1]. Strategic Focus - The company is focusing on risk release, cash flow recovery, and enhancing shareholder returns through asset management and business restructuring [2]. - There is an expectation of continued supportive policies for fertility, which may boost the overall growth of the assisted reproductive industry [3]. - The company is exploring new growth opportunities in egg freezing services, which have strong customer retention and longer service cycles [3]. Profit Forecast and Valuation - The adjusted net profit forecasts for 2025 and 2026 have been reduced by 59.9% and 7.5% to 170 million yuan and 417 million yuan, respectively [3]. - The current stock price corresponds to adjusted P/E ratios of 47.58 and 20.80 for 2025 and 2026 [3]. - The company maintains an "outperform" rating with a target price of 3.90 HKD, indicating a potential upside of 25.0% from the current closing price [3].

Core Viewpoint - The report from CICC indicates a downward adjustment in the net profit forecast for Jinxin Fertility (01951) for 2025-2026 due to the impact of medical insurance payment policies and zero markup on medical consumables, with a projected decrease of 59.9% and 7.5% to 170 million and 417 million yuan respectively, while maintaining an "outperform" rating and a target price of HKD 3.90, suggesting a potential upside of 25.0% from the current closing price [1][2]. Group 1 - Jinxin Fertility's 1H25 performance fell short of market expectations, reporting revenue of 1.289 billion yuan, a year-on-year decline of 10.7%, and an adjusted net profit of 82 million yuan, down 67.0% year-on-year, primarily due to the impact of medical insurance policies on cycle numbers and average transaction prices, as well as the execution of zero markup policies on drug costs [2][3]. - The company anticipates a recovery in 2026 as the impact of policies stabilizes, with a gradual return of patients to IVF services, alongside the expected capacity release from the new building in Shenzhen [3][5]. Group 2 - In 1H25, the company faced short-term pressure due to policy impacts, with a significant increase in the proportion of artificial insemination (IUI) cycles affecting average transaction prices and profit margins [3]. - The company reported a net loss attributable to shareholders of 1.04 billion yuan in 1H25, largely due to impairment losses on goodwill and intangible assets in the US HRC amounting to 950 million yuan, and other investment impairments [4]. - The company plans to enhance shareholder returns through a long-term share buyback program after optimizing leverage, while also focusing on asset liability risk release and liquidity assurance through business restructuring and overseas loan renewals [4]. Group 3 - The company is focusing on key business areas as supportive policies for fertility are expected to continue, with the implementation of child-rearing subsidy policies likely to boost fertility intentions and benefit the overall growth of the assisted reproduction industry [5]. - The potential for policy support in egg freezing services is anticipated, as this area has stronger customer retention and longer service cycles, which could become a new growth driver for the company [5]. - The company expects to start relocating its Shenzhen facility in Q1 2026, aiming for a business capacity of 12,000-15,000 cycles, while continuing to strengthen core assisted reproduction services in Yunnan and Wuhan [5].