Core Viewpoint - Lepu Medical achieved a net profit attributable to shareholders of 980 million yuan in the first three quarters of 2025, representing a year-on-year increase of 22.4% [1] Financial Performance - In Q3 2025, the net profit attributable to shareholders was 290 million yuan, showing a quarter-on-quarter decrease of 6.8%, indicating stable performance with potential for continued operational improvement [1] Revenue Breakdown - Revenue from cardiovascular interventional products was 550 million yuan in Q3 2025, down 10.5% quarter-on-quarter, primarily due to the company's proactive inventory management in anticipation of centralized procurement for certain products [1] - Long-term benefits are expected from centralized procurement as the company is positioned as a leading player in the market [1] Business Outlook - The impact of policies is expected to stabilize, with the in-vitro diagnostics business reaching a bottom and the surgical anesthesia business likely to see a recovery in growth [1] - The debut of the "Youthful Needle" product is promising, with significant growth anticipated in the medical aesthetics sector [1] - Progress in the development of brain-computer interfaces is ongoing, with substantial market potential in the field of neurological diseases [1] Valuation - The company maintains a target price of 20.52 yuan based on a 38x PE ratio for 2025, sustaining a "Buy" rating [1]

Investment Rating - The report maintains a "Buy" rating for the company [2][6]. Core Views - The company is expected to see a performance recovery throughout the year, with a projected EPS of 0.54, 0.61, and 0.67 for 2025-2027, respectively [2][10]. - The target price is set at 12.42 CNY, based on a 23x P/E ratio for 2025 [2][6]. Financial Performance Summary - For 2023, the company reported a revenue of 7,980 million CNY, which is a decrease of 24.8% year-on-year. The revenue is expected to recover to 6,835 million CNY in 2025, reflecting a growth of 12.0% [4][10]. - The net profit attributable to the parent company for 2023 was 1,258 million CNY, down 42.9% year-on-year, with a forecasted recovery to 1,010 million CNY in 2025, representing a growth of 309.1% [4][10]. - The gross margin is projected to be 62.2% in 2025, slightly improving from 60.9% in 2024 [4][10]. Business Segment Performance - In 2024, the medical device segment generated revenue of 33.3 billion CNY, down 9.5% year-on-year, while the structural heart disease business showed strong growth with a 44.0% increase [10]. - The pharmaceutical segment's revenue in 2024 was 17.6 billion CNY, a decline of 42.3% due to price governance impacts [10]. - The company is focusing on innovation and internationalization, with new products in the cardiovascular field and ongoing clinical trials for innovative drugs [10].

Core Insights - Lepu Medical reported a revenue decline of 23.52% to 6.103 billion yuan and a net profit drop of 80.37% to 247 million yuan for the year 2024 [1] Group 1: Medical Device Segment - The medical device segment is the largest revenue-generating area for the company, with three main sub-segments: cardiovascular intervention, in vitro diagnostics, and surgical anesthesia [1] - The cardiovascular intervention segment generated revenue of 3.326 billion yuan, a decrease of 9.47% year-on-year, with coronary intervention revenue at 1.622 billion yuan, an increase of 6.35%, and structural heart disease revenue at 469 million yuan, an increase of 44.03% [1] - The surgical anesthesia business achieved revenue of 541 million yuan, a slight increase of 0.27% [1] Group 2: In Vitro Diagnostics and Pharmaceutical Segment - The in vitro diagnostics segment reported revenue of 333 million yuan, a significant decline of 51.31%, attributed to intensified competition and price reductions, with personnel and strategic adjustments causing some business fluctuations [2] - The pharmaceutical segment generated revenue of 1.758 billion yuan, down 42.25%, with formulations (generic drugs) at 1.409 billion yuan, a decrease of 46.50%, and raw materials at 349 million yuan, down 14.99% [2] - The company shifted its focus to OTC retail after core products were included in national procurement [2] Group 3: Medical Services and Health Management - The medical services and health management segment reported revenue of 1.019 billion yuan, a decline of 19.24%, while the Hefei Cardiovascular Hospital experienced significant growth, with revenue increasing by 15.60% under new leadership [2]