Key takeaway

2025 results were in line with expectations, while 1Q26 revenue and profit both beat expectations. In 1Q26, the company achieved operating revenue of RMB820mn (+10.52%), with net profit attributable to shareholders of the parent company reaching RMB71mn (+158.97%). Profitability improved significantly, mainly driven by the continued recovery in refractive and optometry demand during the winter holiday, coupled with higher per-customer spending brought by the company's introduction of new refractive technologies. The core driver for the substantial improvement on the profit side was a 2.74pct YoY decrease in the administrative expense ratio. The company's measures to reduce headquarters' administrative expenses continued to show results in 1Q26. As of the end of 2025, the company operated 36 ophthalmic hospitals and 4 outpatient clinics. Looking ahead to 2026, as demand for ophthalmic medical services recovers, revenue from new hospitals continues to ramp up and their profits gradually turn around, combined with the sustained effectiveness of the company's refined management measures for cost reduction and efficiency improvement, among others, this will help the company restore its net profit margin. On a quarterly basis, the revenue base for 2Q26 and 3Q26 is relatively lower than that of 1Q26, so revenue growth is expected to accelerate over the next two quarters.

Event

The company released its 2025 annual report and 1Q26 quarterly report

In 2025, the company achieved operating revenue of RMB2.797bn (+4.44%), net profit attributable to shareholders of the parent company of -RMB61mn (loss narrowed by 40.19%), and recurring net profit attributable to shareholders of the parent company of -RMB48mn (loss narrowed by 43.43%), with EPS of -RMB0.41 (compared to -RMB0.68 in 2024).

In 1Q26, the company achieved operating revenue of RMB820mn (+10.52%), net profit attributable to shareholders of the parent company of RMB71mn (+158.97%), and recurring net profit attributable to shareholders of the parent company of RMB71mn (+150.16%), with EPS of RMB0.47 (+161.11%).

Risks:

1. Medical insurance cost control risks: Under the backdrop of total medical insurance expenditure control, if the company continues to increase its reliance on medical insurance revenue or fails to smoothly expand other non-medical insurance revenue streams, the stability and sustainability of its future revenue growth may be adversely affected;

2. Medical dispute and accident risks: Ophthalmic diagnosis and treatment inherently involve varying degrees of risk. Should a medical accident or dispute occur, the company may face complaints, financial compensation, administrative penalties, or legal proceedings, which could harm its brand reputation and, in turn, adversely affect its business operation capabilities, operating performance, and financial condition;

3. Risks of volume-based procurement and other policies affecting profitability: The medical services industry is significantly influenced by policy factors. If adjustments to ophthalmic medical service pricing or substantial price reductions from volume-based procurement of high-value ophthalmic consumables occur, the company's profitability may be affected;

4. Hospital operation risks: The daily operations of a hospital involve risks related to medical safety, medical quality, and the compliant use of medical insurance funds. Insufficient compliance controls may lead to compliance risks amid heightened medical industry compliance requirements and intensified unannounced medical insurance inspections.

5. Some of the above risks are unpredictable (such as medical policy risks or changes in the company's business plans), which may result in our profit forecasts falling short of expectations.