Key takeaway

The company’s 1Q26 results exceeded expectations, and the overseas business is expected to sustain high growth, becoming the core engine driving the company’s overall growth. Looking ahead to full-year 2026, the company’s overseas business is expected to maintain a high-speed growth trend. Rare earth export controls may have a certain impact on the competitive landscape of the global dental zirconia market. As a leading domestic company, the firm is expected to capture a larger share of the global market. The domestic market is expected to maintain a growth trend, and new products such as implants and 3D printing equipment may contribute incremental performance.

Event

The company releases 2025 annual report and 1Q26 report In 2025, the company recorded revenue of RMB1.035bn (+16.51% YoY), net profit attributable to shareholders of the parent company of RMB196mn (+30.39% YoY), and net profit attributable to shareholders of the parent company excluding non-recurring items of RMB173mn (+17.65% YoY). EPS was RMB1.84 per share.

In 1Q26, revenue reached RMB257mn (+25.35% YoY), net profit attributable to shareholders of the parent company was RMB38mn (+22.33% YoY), and net profit attributable to shareholders of the parent company excluding non-recurring items was RMB35mn (+27.4% YoY). EPS was RMB0.36 per share.

Brief analysis

1Q26 results exceed expectations, overseas business sustains high growth

In 2025, the growth rate of net profit attributable to shareholders of the parent company was significantly faster than that of revenue and net profit attributable to shareholders of the parent company excluding non-recurring items, mainly because the company recorded RMB21.81mn in gains and losses from fair value changes and disposal gains from financial assets held. From a single-quarter perspective in 4Q25, the company recorded revenue of RMB288mn, net profit attributable to shareholders of the parent company of RMB55mn, and net profit attributable to shareholders of the parent company excluding non-recurring items of RMB46mn, maintaining steady growth and results in line with market expectations. In 1Q26, the company recorded revenue of RMB257mn (+25.35% YoY), net profit attributable to shareholders of the parent company of RMB38mn (+22.33% YoY), and net profit attributable to shareholders of the parent company excluding non-recurring items of RMB35mn (+27.4% YoY), with both revenue and profit growth exceeding expectations. The company’s performance growth mainly benefited from long-term deployment and continuous deep cultivation in overseas markets. In 2025, overseas revenue reached RMB686mn (+24.90% YoY) , accounting for 66.31% of total revenue. In 1Q26, the share of overseas revenue is expected to further increase, becoming the core engine driving the company’s overall growth.

Deepening global presence: Coordinated development of “materials + equipment + implants” Advantages in core restorative materials consolidated, new capacity release expected. As a leading domestic enterprise in dental zirconia materials, the company’s core materials business maintained steady growth. In 2025, oral restorative materials generated revenue of RMB736mn (+13.97% YoY). Sales volume of zirconia ceramic blocks for all-ceramic dentures, the core product, increased by 32.7% YoY, reflecting strong market demand. The IPO-funded project “AIDITE dental industrial park” is progressing smoothly in construction. It is expected to officially commence production in September 2026 and is likely to break the capacity bottleneck. By taking an equity stake in upstream zirconia powder company Wanwei, the company is expected to continuously optimize costs.

Digitalization and implant business accelerate, improving the full-chain presence. In 2025, the oral digital equipment business recorded revenue of RMB222mn, up 20.5% YoY, with significant synergy with the materials business. In 2025, the company increased its shareholding in Korea-based Warantec to 97.35%, achieving deep integration. The company actively empowers Woran, launching a digital implant solution for edentulous full-arch patients, and strategically invested in implant surgical robot company Yakebot in 1Q26 to build a digital closed loop from data acquisition to surgical execution, continuously strengthening long-term competitiveness. Global expansion continues to deepen, and overseas markets have become the core driver of the company’s performance growth. The company’s overseas business recorded revenue of RMB686mn, up 24.9% YoY. In mature markets such as Europe and the US, the strategy of focusing on key accounts has delivered results, while in emerging markets such as Southeast Asia and Latin America the company actively expands by empowering distributors. Domestic business recorded revenue of RMB349mn, up 2.9% YoY, with relatively stable growth.

Full-year performance in 2026 is expected to achieve steady growth. Looking ahead to full-year 2026, the company’s overseas business is expecte d to maintain a high-speed growth trend. Rare earth export controls may have a certain impact on the competitive landscape of the global dental zirconia market. As a leading domestic company, the firm is expected to capture a larger share of the global market. The domestic market is expected to maintain a growth trend, and new products such as implants and 3D printing equipment may contribute incremental performance.

Financial indicators remain healthy, with continued increase in R&D investment

In 2025, the company’s gross profit margin was 52.55%, down 0.39pct YoY; the selling expense ratio was 19.40%, down 0.95pct YoY; the administrative expense ratio was 7.57%, down 0.35pct YoY, reflecting effective expense control. The company continued to increase R&D investment. R&D expenses reached RMB73.59mn, up 55.37% YoY, and the R&D expense ratio increased from 5.33% in 2024 to 7.11%, mainly due to intensified development of new products and processes as well as product iteration. Financial expense was RMB-6.66mn, mainly affected by exchange gains and interest income. The company’s operating quality continued to improve. Net cash flow from operating activities for the full year reached RMB274mn, up 82.32% YoY, far exceeding the growth rate of net profit, with strong cash collection. In 1Q26, as the proportion of overseas business continued to rise and scale effects were released, the company’s overall gross profit margin increased to 55.97% (+4.97pct YoY), while other financial indicators remained generally normal.

Earnings forecast and valuation:

We forecast that in 2026–2028 the company’s revenue will reach RMB1.22bn, RMB1.41bn, and RMB1.59bn, representing YoY increases of 17.90%, 15.55%, and 12.93%, respectively; net profit attributable to shareholders of the parent company will reach RMB235mn, RMB270mn, and RMB307mn, representing YoY increases of 19.74%, 14.92% and 13.51%, respectively. We maintain a "Buy" rating.

Risks

1. Risk that overseas business expansion falls short of expectations: In recent years, the company’s overseas business has accounted for a relatively high share and maintained rapid growth. Its products are exported to more than 120 countries and regions, and it has subsidiaries in the United States, Germany, and South Korea, becoming a long-term partner of leading dental prosthetics manufacturers in the United States, Germany, France, Japan, and South Korea. However, the development of overseas business is affected by multiple factors such as geopolitical risks; if overseas expansion falls short of expectations, it may affect the company’s revenue growth and profitability. Some domestic policies, overseas geopolitical factors and other factors are unpredictable, and our earnings forecasts may fall short of expectations.

2. Risk of intensified market competition: The dental consumables and dental digital equipment industries at home and abroad are highly market-oriented and fiercely competitive. On the one hand, overseas brands represented by Dentsply Sirona and Envista have long been deeply established in the international market; on the other hand, the company’s domestic competitors may compete for domestic market share through technological innovation and expanded marketing. If the company fails to maintain its competitive advantages in product R&D and marketing, it may adversely affect its market share and financial condition.

3. Exchange rate fluctuation risk: The company’s procurement and sales are affected by the combined fluctuations of multiple foreign exchange rates. If the exchange rate of foreign currencies against RMB experiences significant short-term or sustained volatility in the future, it may affect the stability of the company’s operations.

4. Potential risk from stricter compliance requirements in the domestic healthcare industry: Rising compliance requirements in China’s healthcare industry may delay the bidding and procurement processes of hospitals, clinics, and dental laboratories, which could affect related orders and pose potential risks that the company’s performance growth falls short of expectations.