In August this year, the interim financial reports for the first half of 2025 were successively disclosed by the two leading domestic companies in the non-invasive prenatal testing (NIPT) sector - BGI Genomics Co.,Ltd. and Berry Genomics. The former saw revenue decline by 12.82% year-over-year, with adjusted net profit recording a loss for the first time; the latter experienced an 18.91% year-over-year revenue decline and recorded a net loss exceeding 27 million yuan. According to both companies' financial reports, the significant decline in NIPT business revenue was a major factor causing their revenue fluctuations.
In recent years, structural changes in the domestic NIPT market, coupled with industry-wide bulk procurement policies, have led the NIPT market to bid farewell to its previous high-growth era and enter a new phase of inventory competition. AnnoRoad Gene Technology, as the third-largest company by market share in China's NIPT industry, is knocking on the Hong Kong Stock Exchange's door precisely during this industry adjustment period.
According to observations, on September 30th, AnnoRoad Gene Technology submitted its application to the Hong Kong Stock Exchange Main Board, with CCB International and Guotai Junan International serving as joint sponsors. The company had previously submitted its initial listing application to the Hong Kong Stock Exchange on March 25th this year, but the prospectus expired on September 25th after six months. Therefore, this represents the company's second submission.
**How Big a Share Can the Third Player in NIPT Industry Claim?**
The prospectus shows that AnnoRoad Gene Technology is a company specializing in IVD (in vitro diagnostic products) medical devices based on molecular diagnostics and multi-omics life science research services. The company also specializes in NGS-based prenatal testing IVD products.
AnnoRoad's clinical sequencing solutions include self-produced gene sequencing-based IVD detection kits, gene sequencers, bioinformatics analysis software, as well as supporting technical support and laboratory design services. However, since approximately 60% of AnnoRoad's revenue comes from clinical sequencing solutions (mainly including NIPT and CNV-seq kits), and the company expects its future revenue growth to depend on the continued adoption of this existing product business, the growth and competitive landscape of the NIPT industry are closely related to its performance.
From a market perspective, China's pro-birth policies in recent years have promoted NIPT as one of the fastest-growing gene sequencing products in China, widely used in prenatal examinations for pregnant women. According to CIC data, the penetration rate of NIPT kits among Chinese pregnant women has increased from approximately 15.4% in 2018 to approximately 48.8% in 2023, with the penetration rate expected to reach 97.8% by 2033. This brings certain benefits to the performance of domestic companies with reproductive health genetic testing-related businesses.
Taking the industry's top two leaders as examples, from 2015-2019, BGI Genomics Co.,Ltd.'s reproductive health services revenue grew from 568 million yuan to 1.176 billion yuan, with this business once accounting for more than 50% of its total revenue. Berry Genomics, which considers NIPT as one of its core businesses, saw revenue continuously rise and reach a peak of 1.618 billion yuan in 2019.
Against this background, AnnoRoad Gene Technology, as the third-largest company by market share in China's NIPT industry, also enjoyed development dividends. In the prospectus, the company mentioned that its revenue from selling clinical sequencing solutions in 2022, 2023, and 2024 was 251 million yuan, 270 million yuan, and 329 million yuan respectively, mainly due to increased sales of NIPT and CNV-seq kits. Since its CNV-seq kit business revenue is only about 30 million yuan, it can be reasonably inferred that the NIPT business occupies a dominant position in its revenue growth.
However, as NIPT gradually becomes more widespread, the industry has also entered a price standardization phase, and the emergence of bulk procurement has compressed the profit margins of NIPT supplier companies to some extent. Previously, domestic NIPT prices were typically above 1,000 yuan. However, in recent years, Beijing, Hebei, Tianjin, and other regions have successively introduced policies, causing terminal prices to show a clear downward trend. In July last year, Jiangsu Province's Medical Insurance Bureau issued a NIPT volume-based procurement plan, setting the maximum effective bid price at 345 yuan and stipulating that companies with bids not exceeding 275 yuan would be directly selected. Compared to before, NIPT price reductions exceeded 70%.
This pricing logic reshaping brought about by bulk procurement is one of the direct reasons for the performance fluctuations of the two leading companies, BGI Genomics Co.,Ltd. and Berry Genomics.
It's worth noting that NIPT is one of the most mature businesses in the current IVD market, where typically only one manufacturer is selected through bidding in each region, and replacement costs are high. According to the prospectus, among companies providing NMPA-approved NIPT detection kits in China as of the end of 2023, the top three market shares were 50.5%, 15.9%, and 12.1% respectively, with AnnoRoad Gene Technology's sample market share ranking third. Therefore, under the current inventory competition industry background, it would be challenging for AnnoRoad Gene Technology to catch up with the market shares of the top two players in the short term. This also means the company may face considerable resistance in achieving sustained performance growth.
**What Supports the 4 Billion Yuan Valuation?**
Since its establishment, AnnoRoad Gene Technology has completed 6 funding rounds, with shareholders including well-known investment institutions such as Chongde Hongxin, Gao Te Jia Investment, and Northern Light Venture Capital. After completing its last funding round in October 2022, the company's post-investment valuation reached 4.049 billion yuan (calculated based on the last round's financing cost of 67.61 yuan per share).
However, to stably support a 4 billion yuan valuation after listing in Hong Kong, it still needs fundamental support. But as the third-largest company in the NIPT industry, against the backdrop of performance fluctuations among the top two leaders, AnnoRoad Gene Technology's profitability has also been affected to some extent.
The prospectus shows that in 2022, 2023, 2024, and the first half of 2025, AnnoRoad Gene Technology's revenue was 435 million yuan, 475 million yuan, 518 million yuan, and 269 million yuan respectively; corresponding gross margins were 31.7%, 32.6%, 35.4%, and 33.9% respectively.
Although AnnoRoad Gene Technology's revenue and gross profit growth during the reporting period were commendable, it still cannot escape losses. Financial reports show that the company's net losses during the reporting period were 67 million yuan, 240 million yuan, 126 million yuan, and 29 million yuan respectively, with net loss rates of 15.4%, 50.6%, 24.3%, and 10.8% respectively. This means AnnoRoad Gene Technology accumulated losses of approximately 462 million yuan over three and a half years, with losses mainly stemming from high operating expenses and financial costs. Among these, the "accrued interest on special shareholder rights liabilities" item accumulated approximately 338 million yuan from 2022-2024.
In terms of cash flow, the company's cash-generating ability also needs improvement. Financial reports show that AnnoRoad Gene Technology's net cash flow from operating activities has fluctuated significantly in recent years, with net outflows of 26 million yuan and 55 million yuan in 2023 and the first half of this year respectively.
It's clear that since AnnoRoad Gene Technology has not yet achieved stable profitability, its fundamentals still have considerable room for improvement, which may affect secondary market valuation assessments to some extent.
Referring to the valuation situations of comparable companies BGI Genomics Co.,Ltd. and Berry Genomics, their current PB valuations are 2.27 times and 2.83 times respectively. Even calculating with a 3 times PB valuation, based on AnnoRoad Gene Technology's net assets of 530 million yuan at the end of 2024, its secondary market valuation would only be 1.59 billion yuan, far below the 4 billion yuan valuation given by the primary market previously.
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