Core Viewpoint - The company experienced a significant decline in revenue and net profit in the first three quarters of 2025, attributed to market fluctuations and external factors such as trade wars, but showed some improvement in profit margins in Q3 [1][2]. Financial Performance - In the first three quarters of 2025, the company achieved revenue of 308 million (down 20.76% year-on-year) and a net profit of 22 million (down 75.04% year-on-year) [1]. - For Q3 2025, revenue was 105 million (down 13.84% year-on-year) with a net profit of 10 million (down 42.12% year-on-year) [1]. - The net profit margin for Q3 2025 improved to 9.21%, an increase of 6.53 percentage points from the previous quarter, mainly due to better management and R&D cost control [2]. Industry Context - The POCT (Point-of-Care Testing) industry is currently under pressure, with several companies, including competitors, experiencing revenue declines, indicating a challenging market environment [3]. - The company is launching new products, which are expected to contribute positively to revenue in the future. Notably, the heart multi-detection project has received CE marking in the EU, and the VINScreenTM series has obtained FDA approval for sale in the U.S. [3]. Strategic Initiatives - The company is strategically investing in brain-computer interface technology through its subsidiary, which could open up significant long-term market opportunities, particularly for treating severe depression [4]. - The brain-computer interface market is expected to grow, supported by policy backing and technological advancements, with the potential for accelerated commercialization of related products [4]. Profit Forecast - Revenue projections for 2025-2027 are estimated at 496 million, 693 million, and 887 million respectively, with year-on-year changes of -11.42%, +39.78%, and +28.11% [4]. - Net profit forecasts for the same period are 60 million, 158 million, and 215 million, with year-on-year changes of -64.49%, +162.50%, and +35.95% [4].

Investment Rating - The report maintains a "Buy" rating for the company [7] Core Views - The company achieved revenue of 1.246 billion RMB in 1H25, a year-on-year decrease of 20.9%, and a net profit attributable to the parent company of 189 million RMB, down 46.8% year-on-year, primarily due to domestic policy changes affecting hospital demand and a weaker outbreak of respiratory infectious diseases compared to the same period in 2024 [1][3] - Despite short-term challenges, the company is expected to maintain long-term growth potential due to its expanding product portfolio and improving domestic and international sales networks [1][3] Summary by Sections Revenue and Profitability - The company's gross margin in 1H25 was 62.9%, a decrease of 1.5 percentage points year-on-year, attributed to domestic policy changes impacting product pricing [2] - The sales, management, and R&D expense ratios for 1H25 were 25.6%, 7.3%, and 14.0%, respectively, with increases of 5.4, 0.5, and 1.5 percentage points year-on-year, indicating ongoing investment in commercialization and R&D [2] Business Segments - The U.S. subsidiary's revenue in 1H25 is estimated to have grown nearly 20%, supported by stable toxicology testing and new respiratory testing products [3] - The international department's revenue is expected to show steady growth due to ongoing localization efforts and the introduction of new products [3] - Domestic business revenue is projected to decline in 1H25 due to external environmental factors, but long-term growth is anticipated through strategic advancements in immunofluorescence and other key areas [3] Long-term Business Outlook - Infectious disease testing revenue was 379 million RMB, down 21.1% year-on-year, primarily due to lower outbreak intensity [4] - Chronic disease testing revenue was 563 million RMB, down 26.1% year-on-year, affected by policy changes [4] - Toxicology and prenatal testing revenues were 145 million RMB and 138 million RMB, showing growth of 4.3% and a decline of 11.7% respectively, with expectations for improvement through new product launches and e-commerce channel development [4] Profit Forecast and Valuation - The report adjusts the profit forecast for 2025-2027, estimating net profits of 426 million RMB, 491 million RMB, and 582 million RMB, reflecting downward adjustments of 35% for 2025 and 2026, and 33% for 2027 [5][13] - The company is valued at a 34x PE for 2025, with a target price of 30.09 RMB, up from a previous estimate of 27.07 RMB [5][8]