Core Viewpoint - The company reported a significant decline in revenue and net profit for the first half of 2025, primarily due to price reductions in tumor marker detection products and decreased demand for high-end tumor testing [1][2]. Financial Performance - For H1 2025, the company achieved operating revenue of 159 million yuan, a decrease of 26.25% year-on-year, and a net profit attributable to shareholders of 3 million yuan, down 58.41% [1]. - In Q2 2025, operating revenue was 84 million yuan, a decline of 31.35%, with a net profit of 2 million yuan, down 79.43% [1]. Revenue Sources - The main revenue source, reagent sales, amounted to 147 million yuan in H1 2025, reflecting a year-on-year decrease of 27.48% due to industry policy adjustments and reduced market demand for high-end tumor testing [2]. - The sales prices of tumor marker detection products and HPV testing products have decreased compared to the same period last year [2]. R&D and Product Development - The company maintains a high R&D expenditure rate of around 15%, with 70 ongoing projects across various technology platforms, including PCR and mass spectrometry [3]. - In H1 2025, the company obtained 2 new invention patents and completed the installation of 121 units of various instruments, indicating a significant improvement in installation speed compared to previous years [3]. Strategic Acquisitions - The company has completed the integration of its subsidiary, Hebei Toukeng, focusing on invasive fungal disease detection, thereby entering a new market segment [3]. - In August, the company announced plans to acquire Kanglu Bio, a leader in the pathology diagnosis field, which will enhance its capabilities in molecular pathology technologies [4]. Future Outlook - The company expects net profits for 2025, 2026, and 2027 to be 9 million, 13 million, and 17 million yuan, respectively, with corresponding PE ratios of 444, 293, and 224 [4]. - A DCF model estimates the company's overall valuation at 5 billion yuan, with a target price of approximately 31 yuan per share, maintaining a "recommend" rating [4].

Investment Rating - The investment rating for the company is "Buy" (maintained) [5] Core Views - The company is expected to face domestic pressure in the short term, but the production line is anticipated to drive reagent volume growth [5] - Revenue forecasts for 2025-2027 are projected at 48.58 billion, 54.96 billion, and 63.48 billion RMB, with year-on-year growth rates of 7.12%, 13.12%, and 15.51% respectively [6] - The net profit attributable to the parent company for the same period is expected to be 18.32 billion, 20.65 billion, and 23.85 billion RMB, with growth rates of 0.17%, 12.77%, and 15.48% respectively [6] - The current stock price corresponds to a price-to-earnings ratio (PE) of 25x, 22x, and 19x for the years 2025, 2026, and 2027 [6] Financial Performance Summary - In the first half of 2025, the company achieved revenue of 21.85 billion RMB (down 1.18% year-on-year) and a net profit of 7.71 billion RMB (down 14.62% year-on-year) [8] - The company's reagent revenue was 15.21 billion RMB (down 4.40% year-on-year), while instrument revenue was 6.60 billion RMB (up 7.37% year-on-year) [8] - Domestic revenue was 12.29 billion RMB (down 12.81% year-on-year), with domestic instrument business revenue increasing by 18.18% [8] - Overseas revenue reached 9.52 billion RMB (up 19.57% year-on-year), with reagent business revenue growing by 36.86% [8] - The overall gross margin for the first half of 2025 was 68.64% (down 4.14 percentage points year-on-year) [8] - The company’s R&D expense ratio was 10.86% (up 1.62 percentage points year-on-year) [8] Revenue and Profit Forecasts - Revenue forecasts for 2025-2027 are 48.58 billion, 54.96 billion, and 63.48 billion RMB, with corresponding year-on-year growth rates of 7.12%, 13.12%, and 15.51% [6] - The net profit attributable to the parent company is projected to be 18.32 billion, 20.65 billion, and 23.85 billion RMB for 2025, 2026, and 2027, with growth rates of 0.17%, 12.77%, and 15.48% respectively [6] - The earnings per share (EPS) for 2025 is expected to be 2.33 RMB, with a projected increase to 3.04 RMB by 2027 [9]

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]