Summary of Tongce Medical's Conference Call Company Overview - **Company**: Tongce Medical - **Period**: First half of 2025 - **Revenue**: 1.448 billion CNY, up 2.68% year-on-year - **Net Profit**: 321 million CNY, up 3.67% year-on-year - **Operating Cash Flow**: 355 million CNY, up 9.7% year-on-year [2][3] Key Business Segments Orthodontics - **Growth**: 7.75% increase in orthodontic business, driven by AI technology and new materials, along with consumer credit policy support [2][4] - **Market Potential**: Expected to reach or exceed 100 billion CNY by 2030 [2][4] - **Patient Base**: Stable growth in demand, particularly among adolescents [4] Dental Implants - **Volume**: 32,000 implants, up 1.1% year-on-year; procurement accounted for 78% of total [2][9] - **Pricing**: Average price per implant maintained at 1,000 CNY, with slight increase in non-procurement ratio [9] Dandelion Clinics - **Revenue**: 393 million CNY, up 21% year-on-year; net profit of 54 million CNY, up 36% [2][8] - **Growth Target**: Expected annual growth of 25%, aiming for 900 million CNY in revenue [8] Main Hospital Operations - **Zijin Port Hospital**: First phase trial operation with 42 dental chairs, generating 3.5 million CNY in the first month [2][10][12] - **Overall Performance**: Mixed results across various hospitals, with some experiencing revenue declines while others showed growth [7] Strategic Initiatives - **Hospital Development**: Slowing down new hospital construction to focus on improving existing projects and internal profitability [2][11][21] - **Technology Investment**: Continued investment in AI and new materials to enhance patient experience and maintain industry leadership [6][20] Market Dynamics - **Industry Potential**: The dental industry has significant growth potential with low market concentration, positioning Tongce Medical as a potential industry consolidator [2][25][26] - **Competitive Landscape**: Stability in competition, with many small institutions facing operational difficulties, but new investors entering the market [14][16] Future Outlook - **Economic Environment**: Cautious optimism with a focus on internal improvements and leveraging government policies to boost business, especially in high-value projects like orthodontics [6][20] - **Expansion Plans**: Gradual expansion into new regions, with a focus on enhancing existing operations rather than aggressive new openings [19][21] Financial Performance by Segment - **Revenue Breakdown**: - Implants: 255 million CNY, flat year-on-year - Orthodontics: 229 million CNY, up 7.8% - Pediatrics: 236 million CNY, slight decline - Restorative: 230 million CNY, up 3.6% - Comprehensive Services: 394 million CNY, up 2.44% [24] Conclusion - **Overall Performance**: Tongce Medical has shown resilience in a challenging economic environment, with steady growth in key segments and a strategic focus on enhancing operational efficiency and market positioning [2][22]

Core Viewpoint - Tongce Medical, a leading player in the dental medical service sector in A-shares, reported a nearly stagnant growth in total revenue and net profit for 2024, facing challenges from both the impact of dental implant centralized procurement policies and weak consumer demand, resulting in a significant decline in market valuation from its peak [1][2]. Financial Performance - In 2024, Tongce Medical achieved total revenue of 2.874 billion yuan, a slight increase of 0.96% year-on-year; net profit attributable to shareholders was 501 million yuan, with a minimal growth of 0.20% [2]. - The company's gross margin and net margin decreased to 39% and 19.91%, respectively, down from 46% and 28.27% in 2021, indicating a substantial reduction in profitability [2]. Business Segments - The dental implant business saw revenue of 530 million yuan, a year-on-year increase of 10.60%, benefiting from a strategy of "increasing volume to compensate for price" despite ongoing concerns about profit margin compression [3]. - The orthodontics segment experienced a revenue decline of 5.05% to 474 million yuan, marking three consecutive years of negative growth, attributed to consumer downgrade and intensified industry competition [3]. - Other business segments contributed 28.01% of total revenue, but growth slowed significantly from 8.34% in 2023 to just 1.27% in 2024, with pediatric and restoration services also showing insufficient growth [3]. Market Expansion Strategy - Tongce Medical has historically relied on the Zhejiang provincial market, which accounts for nearly 90% of its revenue, but performance in core hospitals has been weak, with notable declines in revenue and net profit in several key locations [4]. - The company has shifted its expansion strategy from aggressive growth to a model focused on "mergers and acquisitions + light asset franchising," with a recent example being the acquisition of a 56.28% stake in a dental hospital in Hunan, although the hospital's net profit fell short of expectations [4]. Conclusion - The year 2024 represents a period of struggle in the existing market while exploring new growth avenues for Tongce Medical. Although the implant business is currently driving growth, the profit ceiling under centralized procurement is evident, and the orthodontics segment continues to decline. The effectiveness of the new expansion model remains to be seen, and how the company reconstructs its growth logic in this new cycle will be crucial for regaining favor in the capital market [5].