Investment Rating - The investment rating for the company is "Accumulate" [4] Core Views - The company's H1 2025 revenue was 260 million yuan, a year-on-year decline of 26.4%, with a net profit attributable to the parent company of -41 million yuan. Q2 revenue was 137 million yuan, down 25.8% year-on-year, but showed signs of improvement compared to Q1. The decline in revenue and profit was attributed to a slowdown in hospital bidding and inventory adjustments. However, H2 is expected to show recovery due to a low base and gradual commercialization of new products [1][2] - The company has launched several new products, including the AQ-400 flagship model and various endoscopes, which are expected to drive new revenue growth. The ongoing development of endoscopic surgical robots and 3D digestive endoscopes is also anticipated to contribute to long-term revenue increases [2] - The gross margin for H1 2025 was 62.4%, down 9.1 percentage points year-on-year, primarily due to an increase in overseas revenue and changes in product mix. The net profit margin is expected to remain low in 2025 but may improve in subsequent years as new products gain traction and bidding activities recover [3] Financial Summary - Revenue projections for 2025-2027 are 753 million, 944 million, and 1.157 billion yuan, with year-on-year growth rates of 0.44%, 25.41%, and 22.55% respectively. Net profit attributable to the parent company is projected to be 30 million, 107 million, and 166 million yuan for the same years, with significant growth rates of 45.12%, 249.40%, and 55.82% respectively [4][5]

Investment Rating - The report maintains a "Buy" rating for the company [7] Core Views - The company experienced a revenue decline of 26.4% year-on-year in 1H25, with a net loss of 41 million yuan, attributed to strategic adjustments in domestic operations and increased investment for long-term growth [1][2] - Despite short-term challenges, the company is optimistic about its long-term growth potential, particularly in international markets where revenue has shown some growth [1][3] - The company has made significant progress in product approvals and market expansion for its high-end products, such as the AQ-400 system, which enhances its competitive position in the high-end market [4] Summary by Sections Financial Performance - In 1H25, the company reported revenues of 260 million yuan and a gross margin of 62.4%, down 9.1 percentage points year-on-year, primarily due to an increase in lower-margin overseas business [2] - The company’s sales, management, and R&D expense ratios increased to 38.5%, 19.3%, and 28.4% respectively, reflecting a strategic focus on core technology innovation and market competitiveness [2] Business Segments - Endoscope Equipment: Revenue was 240 million yuan in 1H25, down 29.6% year-on-year, due to a proactive adjustment in domestic business pace. The company is expanding into high-end markets and strengthening its presence in county-level markets [3] - Endoscopic Consumables: Revenue increased by 40.1% year-on-year to 9.66 million yuan, indicating strong product competitiveness [3] - Endoscope Maintenance: Revenue surged by 122.3% year-on-year to 9.33 million yuan, with expectations for rapid growth as maintenance capabilities improve [3] Product Development and Market Strategy - The AQ-400 system has received domestic approval, enhancing the company's competitive edge in the high-end market. Additionally, the company is advancing its 3D endoscope and endoscopic robot products, which are expected to provide innovative solutions for complex procedures [4] Profit Forecast and Valuation - The company has adjusted its profit forecasts, projecting net profits of 1 million yuan, 10 million yuan, and 16 million yuan for 2025-2027, respectively. The target price is set at 60.43 yuan, reflecting an increase from the previous estimate of 55.12 yuan [5][20]