Core Viewpoint - The company, Jinxin Fertility, has made significant progress in the number of IVF egg retrieval cycles, maintaining strong confidence in the long-term development prospects of the industry and future growth of the group due to solid industry fundamentals and supportive national policies [1] Group 1: IVF Cycle Performance - For the nine months ending September 30, 2025, the overall decline in IVF egg retrieval cycles has slowed from -8.3% in the first half of 2024 to -5.2% in the first three quarters of 2025 [1] - The flagship hospital in Chengdu saw a reduction in IVF egg retrieval cycles from a decline of -6.1% in the first half of 2025 to -1.9% for the nine months ending September 30, 2025 [1] - The Shenzhen hospital's improvement in IVF egg retrieval cycles is slower due to preparations for a relocation planned for the end of 2025 [1] Group 2: Market Conditions - In the U.S. market, the delay in the implementation of California Senate Bill SB729, which requires commercial insurance to cover assisted reproduction, has led to a postponement in IVF egg retrieval cycles, resulting in a decline that aligns with expectations for the company's U.S. operations [1]

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].