On June 30th, the fiscal year 2026 annual report was officially released, followed by a successful earnings briefing on July 2nd. YIDU TECH (HKEX: 02158), a leading AI healthcare company in Hong Kong, has decisively answered the question of profitability in the AI medical sector with a series of concrete figures. Both the annual report and the subsequent briefing conveyed a singular, powerful signal: an inflection point has been reached.
Total annual revenue reached RMB 820 million, a year-on-year increase of 14.6%, marking the company's first full-year profit. Annual profit amounted to RMB 78.8 million, exceeding the upper end of the positive profit alert range (RMB 55-70 million) issued in April by 12.5%. Net profit attributable to owners was RMB 72.7 million, surpassing the forecast's upper limit by as much as 30%. Crucially, operating cash flow turned positive in the second half of the year, reaching RMB 29.3 million.
This signifies that the previous market framework of valuing YIDU TECH based on a Price-to-Sales (PS) logic, treating it as a "story stock" in AI healthcare, is now obsolete. The era of relying on growth narratives, betting on the future, and trading losses for expansion is over. With the achievement of its first annual profit, a positive shift in cash flow, and concurrent growth across its three major business segments, YIDU TECH deserves to be measured by a new standard. It has become the first profitable entity in the AI healthcare field to successfully run a closed-loop ecosystem connecting "medical care, pharmaceuticals, insurance, and patients."
The Profit Inflection: A Qualitative Shift from External Reliance to Self-Sufficiency
The market's excitement should not be confined to the RMB 78.8 million profit figure but should focus on the profound structural improvements behind it. First, the quality of profitability far exceeded expectations. While the company recorded a loss of RMB 15.8 million in the first half, the full-year profit was almost entirely contributed by second-half performance. A simple annualization of the second-half profit suggests a projected net profit for FY2027 in the range of RMB 140 million to RMB 170 million.
Based on the reported profit of RMB 78.8 million and a market capitalization of HKD 5.2 billion (as of the close on July 3rd), the static P/E ratio is approximately 63x. However, if we annualize the second-half profit, the forward P/E ratio drops to just over 20x. This valuation level is hardly expensive for a technology company that has just reached its profitability inflection point.
The cash flow inflection is even more compelling. The net outflow from operating activities narrowed sharply by 91.2% for the full year and turned positive in the second half. For a hard-tech company, turning profitable validates the business model, but a substantive improvement in cash flow signifies a fundamental leap in operational quality. The company is no longer reliant on external financing to sustain operations but is driven by self-generated cash flow from its business. The onset of this self-sufficiency capability is often more unsettling for skeptics than mere paper profits.
Furthermore, the board has proposed a final dividend of HKD 0.04 per share, the company's first dividend since listing. In the capital-intensive AI healthcare sector, the act of paying a dividend itself sends a clear signal to the market: confidence in future cash flows is strong.
A Moat Built on Three Core Segments
YIDU TECH's profitability is not accidental but the inevitable result of the synergistic force of its complete "medical-pharmaceutical-insurance-patient" business loop. Each segment is valuable in its own right.
AI for Medical: A Highly Certain Core Foundation
As the core revenue base, generating over RMB 380 million, this segment saw its gross margin surge from 29.7% to 39.7%, showcasing a brilliant transformation from a project-based to a product-based model. Standardized products like the AI middleware and the "Yidu Zhi Xun" evidence-based intelligent agent are being adopted at scale by the market. Clients include government bodies and top-tier hospitals, such as the Hainan Provincial Public Health Platform, Peking University Cancer Hospital, and Sun Yat-sen University Cancer Center. While payment cycles are long, the certainty is extremely high, forming a stable anchor for the company.
AI for Life Sciences: The Ballast for Profits
This segment, with revenue of RMB 270 million, is often undervalued by the market. Seventeen of the global top 20 multinational pharmaceutical companies are clients of YIDU TECH. With Real-World Evidence (RWE) becoming a standard for new drug applications, YIDU TECH's full-stack capability of "data + algorithms + compliance" ensures its penetration among pharmaceutical companies will only increase. The segment's growth rate may appear moderate at 9.4%, but it serves as the ballast for profits due to its high unit price, strong stickiness, and long cycles, providing a stable source of earnings.
AI for Care: An Underestimated Growth Engine
This segment delivered the brightest growth signal in the report, with revenue surging 37.6% year-on-year to RMB 170 million. The company's continuous operation of "Hui Min Bao" supplementary insurance programs in cities like Beijing and Shenzhen, leveraging a massive insured base and an intelligent fast-claim model, demonstrates its powerful C-end operation and monetization capabilities. Simultaneously, digital therapeutics are expanding from Hainan to more regions like Shanxi and Tianjin, showing strong replicability.
Sustained Commercial Momentum
Order growth continues to confirm commercial capabilities. New orders for the Big Data Platform & Solutions grew 22.3% year-on-year in FY2026, while new orders for Life Sciences grew 42%. The continuous landing of multi-million-dollar provincial platform projects and top-tier oncology hospital projects, alongside expansion in both domestic and international markets, provides solid order support for future performance growth.
The Market Requires a New Yardstick
When a company simultaneously possesses key elements like "full-year profitability, positive cash flow, growth across three major segments, high penetration among multinational pharma, and deep experience with public health insurance programs," it becomes a rarity in the secondary market. The AI healthcare sector is at a critical juncture, shifting from "storytelling" to "scrutinizing the numbers."
While the market is transitioning from PS to PE valuation, applying a PE ruler designed for cyclical stocks to an AI company at its inflection point is itself a mismatch. Referencing other foundational AI companies, even those in a loss-making phase can command PS valuations in the hundreds, with the core logic being scarcity.
YIDU TECH, as the first company in the AI healthcare field to achieve a profitability inflection point, possesses both the data moat from its YiduCore platform, which is authorized to process nearly 9 billion medical records, and the ecosystem moat of its "medical-pharmaceutical-insurance-patient" closed loop. Its scarcity arguably surpasses that of its peers. A more reasonable valuation benchmark might be a P/E multiple in the range of 30x to 45x, comparable to more mature healthcare technology names.
During the July 2nd earnings briefing, management focused not on grand narratives but repeatedly emphasized "order backlog," "renewal rates," and "product standardization"—this is the pragmatic posture a hard-tech company should adopt after crossing the inflection point. Against the backdrop of national goals for "Artificial Intelligence + Healthcare" by 2030, it's hard to find more than a handful of AI healthcare stocks in the secondary market that meet all the criteria of "full-year profit, positive cash flow, growth across three segments, 17 of the top 20 MNC clients, and deep public insurance program experience." This annual report from YIDU TECH is not an end point but the starting point for the market to re-anchor its valuation.
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