Core Insights - The company reported a revenue of $548 million for 1H25, a year-on-year decrease of 2%, but the net loss attributable to shareholders narrowed to $47 million from $97 million, representing a 52% reduction in loss [1] - Despite revenue pressures, effective cost control and contributions from foreign exchange gains and asset disposals led to better-than-expected profit performance [1] Revenue Trends - Major business segments experienced varying degrees of revenue pressure: - Coronary revenue decreased by 2.1%, with domestic revenue stable and balloon and accessory revenues increasing by 38% and 21% respectively; overseas revenue fell by 10% due to Middle East conflicts and channel adjustments [1] - Orthopedic revenue declined by 3.7%, and cardiac rhythm management revenue decreased by 1.4% [1] - Revenue from large artery and peripheral segments dropped by 9.2%, while neurointervention revenue fell by 6.2% [1] - Structural heart disease revenue increased by 2.7%, surgical robot revenue surged by 77%, and surgical revenue rose by 42.8% [1] - International business revenue grew by 57.3%, reaching $60 million [1] Cost Management and EBITDA - The orthopedic segment's net loss narrowed by 57.9%, with EBITDA increasing by 28.5% [2] - Cardiac rhythm management achieved positive EBITDA, while Heartlink Medical's net loss decreased by 96.2% and minimally invasive robotics' net loss reduced by 58.9% [2] - Overall, total expenses decreased by 14.5% year-on-year, and the operating expense ratio improved by 8.1 percentage points, with R&D expense ratio dropping from 20.6% to 13.2% [2] - The company's overall EBITDA increased to $128 million from $59 million in 1H24 [2] Strategic Initiatives - The company plans to restructure its cardiac rhythm management business, with a potential merger with minimally invasive Heartlink's operations [2] - The company is also looking to sell several properties and other assets, engaging with multiple potential investors to improve its debt and cash flow situation [2] Profit Forecast and Valuation - The profit forecast for 2025/26 remains unchanged at a net profit of -$39 million and $74 million respectively, maintaining an outperform rating [2] - The target price based on DCF model remains at HKD 17, indicating a 40% upside potential from the current price [2]

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].