SONOSCAPE(300633)：REVENUE GREW STEADILY IN 2025 AND 1Q26 AS NEWBUSINESSES CONTINUE TO GAIN MOMENTUM

Key takeaway

The company’s annual report exceeded expectations, while 1Q revenue met expectations, and profit recorded a loss due to FX impact and incentive expenses. Looking ahead to 2026, the company’s traditional ultrasound product line is expected to maintain stable growth, while the flexible endoscope product line is likely to achieve rapid growth driven by the ramp? up of HD? 650. New business lines, including minimally invasive surgery and cardiology, are both expected to maintain rapid growth, with losses continuing to narrow. The company is still expected to continue channel inventory adjustments in 2026, but the impact on revenue should remain relatively manageable. As the proportion of high? end products increases and scale effects from new businesses emerge, the company’s gross margin is expected to improve steadily. With continued strengthening of expense control, we expect the company’s profit margin to improve, although FX gains and losses may still cause shortterm fluctuations in net margin.

Event

The company released its 2025 annual report and 1Q26 report

In 2025, revenue reached RMB2.309bn (+14.65%), net profit attributable to shareholders of the parent company was RMB197mn (+38.54%), and net profit attributable to shareholders of the parent company excluding non? recurring items was RMB180mn (+63.41%). EPS was RMB0.46 per share. It plans to distribute a cash dividend of RMB1.8 (tax included) for every10 shares to all shareholders.

Brief analysis

Annual report revenue and profit exceeded expectations: 1Q profit was affected by FX and incentive expenses In 2025, the company achieved revenue of RMB2.309bn (+14.65%), net profit attributable to shareholders of the parent company of RMB197mn (+38.54%), and net profit attributable to shareholders of the parent company excluding non-recurring items of RMB180mn (+63.41%). In 4Q25 alone, revenue was RMB850mn (+38.00%), net profit attributable to shareholders of the parent company was RMB164mn (+390.16%), and net profit attributable to shareholders of the parent company excluding non-recurring items was RMB156mn (+545.72%). Full-year 2025 results exceeded our expectations in the previous outlook report. Revenue and profit in 4Q reached record highs for a single quarter. This was mainly due to improved domestic tendering in 2025. The company’s market share in both ultrasound and endoscope products increased. Profit grew rapidly on a low base.

In 1Q26, the company recorded revenue of RMB481mn (+11.79%), net profit attributable to shareholders of the parent company of -RMB12mn (-243.78%), and net profit attributable to shareholders of the parent company excluding non-recurring items of -RMB14mn (-338.24%). Revenue was in line with expectations, while profit was below expectations. The loss was mainly due to: 1) a significant decline in the EUR and USD exchange rates, resulting in FX losses of about RMB20mn; 2) share-based payment expenses impacting net profit by about RMB10mn.

Traditional ultrasound business remained stable: Endoscope business continued to gain momentum, while surgical and cardiology products scaled up rapidly

In 2025, revenue from the company’s ultrasound business line reached RMB1.237bn, up 4.52% YoY. The traditional ultrasound product line was flat YoY, while the IVUS product l ine grew by more than 200% YoY. In 2025, the company fully upgraded the high-end general-purpose system S8 and the obstetrics and gynecology system P80 series, and successfully launched the “Shengxi large model” technology. Revenue from endoscope and consumables reached RMB1.014bn, up 27.42% YoY. Among them, the digestive endoscopy product line grew by nearly 30% YoY, the minimally invasive surgery product line grew by more than 30% YoY, and Wilson Optoelectronics revenue increased by about 5%. In 2025, the HD-650 series endoscope products began stable large-scale sales. Imaging quality and scope maneuverability both achieved significant improvements. By region, the company’s domestic revenue reached RMB1.169bn in 2025, up 12.04% YoY. Overseas revenue reache d RMB1.140bn, up 17.46% YoY.

In 1Q26, the company’s ultrasound product line was basically flat YoY, while the gastrointestinal endoscopy and minimally invasive surgery product lines both recorded growth of over 20%, and the IVUS product line grew by more than 90%. Meanwhile, the bidding market share of the company’s ultrasound and endoscopy products in the domestic market increased in 1Q compared with the same period last year. The number of bids won by the HD-650 series in 1Q has already exceeded the total for the full year of 2025 (the product began commercial sales in 2H25).

Channel inventory adjustment impact may continue in the short term: Full-year revenue expected to maintain steady growth, with margins likely to improve

Looking ahead to 2026, the company’s traditional ultrasound product line is expected to maintain stable growth, while the flexible endoscope product line is likely to achieve rapid growth driven by the ramp? up of HD? 650. New business lines, including minimally invasive surgery and cardiology, are both expected to maintain rapid growth, with losses continuing to narrow. Although the company’s channel inventory level declined in 2025, channel inventory adjustments are expected to continue in 2026, but the impact on revenue is relatively controllable. As the proportion of high? end products increases and scale effects from new businesses emerge, the company’s gross margin is expected to improve steadily. With continued strengthening of expense control, we expect the company’s profit margin to improve, although FX gains and losses may still cause short? term fluctuations in net margin.

Gross margin under some pressure: Expense ratios generally stabilizing, with FX gains and losses having a notable short-term impact on the financial expense ratio

Gross margin in 2025 was 61.99% (-1.79pcts), mainly affected by centralized procurement of medical equipment in China and the relatively lower gross margin of new products. Selling expense ratio was 29.26% (+0.81pcts), administrative expense ratio was 6.34% (-0.47pcts), R&D expense ratio was 21.47% (-2.01pcts), and financial expense ratio was -1.43% (+0.43pcts), with the overall expense ratio stabilizing while slightly declining. Net cash flow from operating activities was -RMB48mn, down 115.70% YoY, mainly due to increased cash paid to employees and higher cash paid for purchasing goods and receiving services. Accounts receivable turnover days were 39.94 days, up 5.44 days YoY, mainly because the growth in accounts receivable exceeded the revenue growth rate. Other financial indicators were largely normal.

In 1Q26, gross margin was 61.44% (-1.75pcts), the selling expense ratio was 32.24% (-0.45pcts), the administrative expense ratio was 8.58% (+0.80pcts), and the R&D expense ratio was 23.99% ( -5.25pcts). The pace of R&D spending is related to the progress of R&D projects and shows certain seasonal fluctuations. The financial expense ratio was 4.36% (+8.50pcts). The sharp increase in financial expense was mainly due to higher FX losses during the period. Net cash flow from operating activities was -RMB140mn, compared with - RMB285mn in the same period last year. The YoY improvement was mainly due to increased cash received from sales of goods and provision of services during the period.

In the short term, new ultrasound and endoscopy products are expected to drive revenue growth: In the medium to long term, market share is likely to continue increasing with improved product competitiveness and policy support

In the short term, new products such as the Ultrasound 80/90 series and the flexible endoscope HD-650 are expected to drive steady growth in the company’s core business, while volume ramp-up of products such as minimally invasive surgery and IVUS is expected to contribute incremental revenue. In the medium to long term, the company’s market share in the endoscopy industry is expected to steadily increase, leading the domestic substitution process in the endoscopy field. Its international business is being steadily deployed and is expected to continue expanding in overseas markets. We expect the company’s operating revenue to reach RMB2.663bn, RMB3.027bn, and RMB3.455bn in 2026–2028, representing YoY growth of 15.3%, 13.7%, and 14.1%. Net profit attributable to shareholders of the parent company is expected to be RMB319mn, RMB447mn, and RMB581mn, representing YoY growth of 61.7%, 40.3%, and 29.8%. We maintain a "Buy" rating.

Risks

1) Risk of intensified industry competition: The competitive landscape in the flexible endoscope field is currently favorable. If competition among domestic companies intensifies in the future, the company’s market share growth may fall short of expectations;

2) Overseas market risk: Overseas geopolitical conflicts may affect the growth rate of the company’s overseas performance, and exchange rate fluctuations may also impact the company’s results;

3) New product R&D risk: If the company’s new product R&D progress is slower than expected, it may adversely affect the company’s future growth;

4) Slower-than-expected product adoption: The company has obtained approval for several new products in recent years. If hospital onboarding or clinical adoption falls short of expectations, earnings may be negatively affected;

5) Industry policy risk: Prosperity in the medical device industry is mainly related to the level of national policy support and the availability of hospital procurement funds. Some national policies are unpredictable, and our earnings forecast may fall short of expectations. For example, policies such as plans for new construction/expansion/renovation/upgrading of hospitals, medical equipment replacement programs, compliance inspections in the medical industry, and mutual recognition of test and examination results may affect procurement demand in the medical device industry. Funding sources for hospitals to procure medical equipment mainly include national and local fiscal support and hospitals’ own funds. Whether hospitals have sufficient procurement funds is influenced by multiple policies, including medical insurance cost control policies and medical service price reforms. Centralized procurement policies in the medical device industry may affect the ex-factory prices and gross margins of related manufacturers’ products.

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