Financial Performance - In the first half of 2025, the company achieved operating revenue of 1.075 billion CNY, a year-on-year decrease of 15.94% [2] - Net profit attributable to shareholders was 34 million CNY, down 83.12% year-on-year, while net profit excluding non-recurring items was 63 million CNY, a decrease of 68.24% [2] - The decline in revenue was primarily due to a reduction in agency product sales and increased competition in the domestic in vitro diagnostic market [2][4] Revenue Breakdown - Agency product sales revenue was approximately 200 million CNY, with an expected total for the year between 400-500 million CNY, projected to stabilize around 300 million CNY [10] - Self-owned product sales revenue was 872 million CNY, a decrease of 60 million CNY, representing a decline of 6.49% [2] - Self-owned instrument sales revenue reached 107 million CNY, a year-on-year increase of 44.48%, while self-owned reagent sales revenue was 765 million CNY, down 10.86% [6] Industry Analysis - The industry is experiencing intensified competition due to policy changes, shifting from an incremental market to a stock market [5] - The average ex-factory prices of biochemical, immunological, and clinical testing reagents have decreased due to increased competition [6] - The overall testing volume for biochemical tests decreased by 2%, while immunological tests increased by approximately 10% [10] Strategic Focus - The company is prioritizing the development of smart laboratories, which are expected to help hospitals reduce costs and improve efficiency [11] - A total of 16 smart laboratories have been signed, with 7 delivered, indicating a strong market acceptance [9] - The company aims to enhance its market share through existing products while focusing on long-term development strategies [9] Future Outlook - The current policy environment is expected to exert pressure on performance in the short term, but the company is adapting its strategy to focus on smart laboratory solutions [15] - The impact of collection policies on the sales of biochemical reagents is anticipated to stabilize over the next two years [10] - The company is well-positioned to leverage its capabilities in smart laboratory solutions, which are recognized by secondary and tertiary hospitals [13]

Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of RMB 14.90 [1][7]. Core Views - The company achieved revenue of RMB 1.075 billion and a net profit attributable to the parent of RMB 34 million in 1H25, reflecting a year-on-year decline of 15.9% and 83.1% respectively, primarily due to adjustments in revenue structure and increased competition in the domestic market [1]. - The company's self-developed products generated revenue of RMB 872 million in 1H25, down 6.5% year-on-year, but the sales volume of self-developed reagents increased by 3.8% [1]. - The company has made significant progress in the commercialization of large instruments and production lines, with a total of 2,409 units shipped in 1H25, representing a year-on-year increase of 4.7% [1]. - The overseas market performance is strong, with overseas revenue reaching RMB 108 million in 1H25, up 37.6% year-on-year, and an increase in gross margin by 7.4 percentage points [1]. Summary by Sections Financial Performance - The company's gross margin for 1H25 was 57.0%, showing stability with a slight decrease of 0.04 percentage points year-on-year [2]. - The sales, management, and R&D expense ratios for 1H25 were 25.5%, 8.6%, and 14.2% respectively, reflecting increases of 3.1, 2.5, and 2.9 percentage points year-on-year [2]. Product Segments - Chemical luminescence reagents generated revenue of RMB 452 million in 1H25, down 6.2% year-on-year, but the sales volume increased by 9.6% [3]. - The company shipped 151 new immunoassay instruments and 846 new immune platform instruments in 1H25, contributing to a positive growth in instrument holdings [3]. - The company expects stable growth in chemical luminescence reagent revenue for the full year 2025, driven by increased instrument installations and favorable bidding outcomes [3]. Other Business Segments - Biochemical segment revenue was RMB 195 million in 1H25, down 25.2% year-on-year, attributed to price adjustments following inter-provincial alliance bidding [4]. - The clinical testing segment saw revenue of RMB 114 million in 1H25, up 6.2% year-on-year, with a significant increase in sales volume [4]. - Agency revenue decreased to RMB 193 million in 1H25, down 42.2% year-on-year, while the proportion of self-developed product revenue reached 81.1%, up 8.2 percentage points year-on-year [4]. Profit Forecast and Valuation - The company adjusted its profit forecast for 2025-2027, expecting EPS of RMB 0.35, 0.42, and 0.53, reflecting downward adjustments of 29%, 27%, and 24% respectively [5]. - The valuation method has switched to PE, with a target PE of 43x for 2025, compared to the industry average of 45x [5]. - The target price of RMB 14.90 reflects a revised estimate based on the company's self-developed and agency business contributions [5].

Group 1: Financial Performance - In 2024, the company achieved revenue of CNY 2.549 billion, with a net profit of CNY 127 million, representing a decline of 11.98% and 59.44% year-on-year respectively [5] - In Q1 2025, the company reported revenue of CNY 510 million and a net profit of CNY 24 million, down 17.22% and 80.09% year-on-year [5] - The revenue from agency products in 2024 was CNY 612 million, while revenue from self-developed products was CNY 1.913 billion, with a growth of 1.75% in self-developed product sales [5] Group 2: Product Performance - In 2024, self-developed immunological reagents generated CNY 1.029 billion in revenue, an increase of 8.04% year-on-year; biochemical reagents generated CNY 499 million, a decrease of 12.53%; and clinical testing reagents generated CNY 214 million, an increase of 21.70% [5] - In Q1 2025, self-developed product sales revenue was CNY 407 million, down 3.23% year-on-year, with immunological reagents at CNY 210 million (down 4.20%), biochemical reagents at CNY 95 million (down 26%), and clinical testing reagents at CNY 49 million (stable) [6] Group 3: Profitability and Cost Management - The overall gross margin for 2024 was approximately 55%, with a decline of about 1 percentage point in Q1 2025 compared to Q1 2024 [7] - The gross margin for self-developed products decreased by 4.76 percentage points, while the average gross margin for self-developed reagents remained stable at around 80% [9] - In 2024, operational expenses were effectively controlled, with sales expenses down about 1%, management expenses down about 10%, and financial expenses down about 30% [10] Group 4: Business Strategy and Market Trends - The company is focusing on the separation of agency business and enhancing self-developed products, with a strategic shift towards automated laboratory solutions [5] - The impact of national policies such as medical insurance reform and centralized procurement is expected to gradually manifest, with an estimated 20%-30% impact on overall testing volumes in the terminal market [14] - The company plans to limit the proportion of agency products to below 10% in the future, as the revenue from agency products has significantly decreased [20] Group 5: International Business and Future Outlook - In 2024, overseas sales revenue reached CNY 160 million, a year-on-year increase of nearly 60%, with Q1 2025 overseas sales revenue close to CNY 50 million, up 90% [15] - The company is optimistic about future overseas sales and plans to establish a new overseas sales subsidiary in 2025 [15] - The company anticipates that the next two to three years will be critical for industry development, with a focus on enhancing market share in both domestic and international markets [21]