Key takeaway

The company's 2025 and 1Q26 performance met expectations. In 2025, the company's domestic business faced certain pressure due to policy factors such as VBP implementation, VAT rate adjustment, and the unbundling of testing packages, while its overseas business maintained stable growth, and the revenue share of overseas reagents rose further.. In 1Q26, the policy impact on domestic business weakened and the YoY decline narrowed, but overseas instrument shipments were affected by the Middle East conflict and international logistics disruptions. In 2026, the impacts of VBP, testing package unbundling, and VAT rate adjustments are expected to gradually clear, and revenue and profit are likely to achieve steady growth, but it remains necessary to monitor the conflicts in the Middle East, the FX losses, and the implementation progress of testing fee adjustments. In the medium to long term, the company is expected to continuously benefit from the import substitution process in the chemiluminescence field. Meanwhile, the company continues to improve its overseas presence and possesses strong potential for international development.

Event

The company releases 2025 annual report and 1Q26 report. In 2025, the company achieved revenue of RMB4.577bn (+0.91% YoY), net profit attributable to the parent company of RMB1.62bn (-11.39% YoY), and net profit attributable to the parent company after deducting non-recurring items of RMB1.564bn (-9.12% YoY). In 1Q26, the company achieved operating revenue of RMB1.129bn (+0.34%), net profit attributable to the parent company of RMB442mn (+1.02%), and net profit attributable to the parent company after deducting non-recurring items of RMB421mn (+1.11%).

Risks:

1) VBP policy risk: Anhui Province led the VBP of chemiluminescence reagents in 2023 and 2024, which is currently being gradually implemented and may impact the ex-factory prices of the company's products, affecting the revenue and profit margins of the company's products. 2) Intensified market competition: With many manufacturers in the IVD industry, competition is gradually intensifying, and some manufacturers may lower prices to expand market share, affecting the company's market share and further intensifying industry competition. 3) R&D and approval progress falling short of expectations: The company's instruments for product lines such as molecular diagnostics and coagulation reagents still require continuous updates and iterations, and the chemiluminescence reagent project is still expanding. The uncertainty in the R&D progress of the company 's instruments and reagents may have a certain impact on the company's performance. 4) Stricter medical compliance requirements: Policies such as stricter compliance requirements in the medical industry may delay the bidding process, reduce the number of instrument installations, and subsequently affect reagent output. 5) Geopolitical risks: Geopolitical factors and trade conflicts may affect the company’s overseas revenue and margins; exchange-rate volatility may also impact earnings. 7) In March 2026, the National Healthcare Security Administration issued a draft guideline on the registration of testing prices for public consultation. If adjustments are made to testing fees nationwide, this may affect the Company's ex-factory prices for reagents. 8) Some of the above risks are unpredictable, and there is a risk that our performance forecasts may not be met.