Investment Rating - The report indicates a strong growth potential for the AI surgical planning industry in China, with a projected market size increase from 0.1 billion CNY in 2022 to 21.2 billion CNY by 2030, reflecting a compound annual growth rate (CAGR) of 76.1% from 2024 to 2030 [4][3]. Core Insights - The AI surgical planning industry in China is entering a high-growth phase, driven by policy support, technological advancements, and increasing clinical acceptance. The market is expected to transition from a nascent stage to a rapid growth phase, with significant commercial opportunities emerging [5][11]. - The industry is characterized by three major trends: expansion of indications, accelerated technology integration, and innovative business models. These trends are expected to enhance surgical precision and safety while reducing costs [5][11]. Market Size and Growth Drivers - The market size for AI surgical planning medical devices is projected to grow significantly, with a CAGR of 122.8% from 2022 to 2024 and 76.1% from 2024 to 2030, reaching 21.2 billion CNY by 2030 [4][3]. - Key drivers include the reform of medical insurance payments, the demand for updated medical equipment, the accumulation of clinical evidence, and the increasing acceptance of AI technologies among physicians [25][24]. Competitive Landscape - As of May 2025, five AI surgical planning products have received approval as Class III medical devices in China, with companies like Qianglian Zhichuang, Tuixiang Medical, and Unisound Medical leading the market [9][8]. - The competitive landscape is consolidating around these key players, with a focus on various surgical specialties including neurosurgery, liver and kidney surgery, and orthopedic procedures [10][9]. Future Trends - The industry is expected to evolve towards deeper specialization in surgical indications, integration of AI with surgical robots and AR devices, and innovative business models such as SaaS subscriptions and bundled sales with prosthetic manufacturers [5][11]. - The integration of AI surgical planning with robotic systems and AR/VR technologies is anticipated to create a closed-loop ecosystem that enhances surgical execution and decision-making [17][26].

Core Viewpoint - The report from CICC maintains the EPS forecast for Aikang Medical (01789) at 0.30 CNY for 2025 and 0.36 CNY for 2026, with a target price of 7.11 HKD, indicating a potential upside of 26.73% from the latest closing price [1] Group 1: Financial Performance - In 1H25, Aikang Medical reported revenue of 694 million CNY, a year-on-year increase of 5.7%, and a net profit attributable to shareholders of 161 million CNY, up 15.3%, with diluted EPS of 0.14 CNY, aligning with CICC's expectations [1] - The company's hip joint business generated revenue of 410 million CNY, a 14% increase year-on-year, while knee joint business revenue was approximately 194 million CNY, a slight decline of 0.7% due to price adjustments and returns [2] - The gross profit margin for 1H25 was 59.1%, down 1.5% year-on-year, primarily due to a decrease in the revenue share from spinal products [4] Group 2: Growth Drivers - The company anticipates accelerated growth in overseas sales in the second half of 2025, with overseas revenue reaching 128 million CNY in 1H25, and an estimated actual growth rate of about 7% after adjustments [2] - Aikang Medical is responding to favorable policies by initiating a digital transformation, with seven products entering the innovation channel and five digital orthopedic training centers established [3] - The net profit margin increased to 23.1%, up 1.9 percentage points year-on-year, supported by revenue growth and cost control measures [4] Group 3: Market Position and Strategy - The company maintains its industry-leading position, with strong performance in Southeast Asia and Central Asia, where revenues grew approximately 60% and 30%, respectively [2] - Aikang Medical plans to build a comprehensive ecosystem covering pre-operative (AI surgical planning), intra-operative (robotics/navigation), and post-operative (patient management) phases to drive growth in orthopedic smart assistive device installations [3]