Key takeaway

The company's 2025 earnings exceeded expectations. The revenue side was pressured by factors such as the VAT rate adjustment and overseas sales restructuring, while the profit side achieved high growth due to cost reduction and efficiency improvement. 1Q26 results met expectations. Revenue growth was pressured mainly due to a high revenue base in 1Q25, and the profit side was also impacted by foreign exchange losses. Looking ahead to 2026, as the impact of the VAT rate adjustment clears, full-year revenue is expected to return to a steady growth trajectory. In terms of quarterly trends, the company's performance returned to a normal base starting from 2Q25 last year, and both revenue and profit growth rates in 2Q26 are expected to improve significantly compared to 1Q26. As domestic regulation and payment policies for genetic testing continue to improve, samples are expected to flow back to hospitals, which will benefit the company's compliant in-hospital products. We are optimistic about the company's long-term development.

Event

The company releases 2025 annual report and 1Q26 report. For full-year 2025, the company achieved operating revenue of RMB1.20bn (+8.0%), net profit attributable to shareholders of the parent company of RMB361mn (+41.7%), and recurring net profit attributable to shareholders of the parent company of RMB343mn (+47.3%). Basic earnings per share were RMB0.91 per share.

In 1Q26, the company achieved operating revenue of RMB260mn (-4.32%), net profit attributable to shareholders of the parent company of RMB85mn (-5.87%), and recurring net profit attributable to shareholders of the parent company of RMB83mn (-5.12%). Basic EPS was RMB0.22 per share.

Risks

1) Risk of intensified industry competition: Currently, there are many approved NGS companion diagnostic products in China. If market competition intensifies in the future, it may lead to significant price declines and changes in the company's market share.

2) Risks from policy changes such as centralized procurement and medical service price adjustments: In August 2025, the Jiangsu Medical Insurance Bureau issued the "Jiangsu Province 11th Round Volume-Based Procurement of Consumables (Special Volume-Based Procurement of Tumor Genetic Testing Services) Plan (Draft for Comments)," proposing volume-based procurement for tumor genetic testing services. It cannot be ruled out that more provinces will include tumor genetic testing services in the scope of centralized procurement in the future. Additionally, there is a risk of downward adjustment in tumor genetic testing charges, both of which could lead to a decline in the terminal prices of the company's companion diagnostic products, adversely affecting the company's revenue and profit margins.

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

4) Some domestic medical policies, overseas exchange rates, geopolitical factors and other factors are unpredictable, and our earnings forecasts may fall short of expectations.