Everbright Securities released a research report stating that, after comprehensive consideration of factors such as the impact of centralized procurement, the company's efforts to reduce various expenses, and its focus on core businesses, it is projected that MICROPORT (00853) is expected to achieve sustained reductions in losses. The net profit forecasts for 2025-2026 have been revised upward to -30/96 million USD (from previous values of -59/91 million USD), with a newly added net profit forecast of 133 million USD for 2027. As a leading domestic enterprise in high-value consumables with strong R&D capabilities, the "Buy" rating is maintained. The main points from Everbright Securities are as follows: Recent corporate announcements include: 1) According to MICROPORT's group accounting policies, while it cannot control MicroPort Brain Science, it still maintains significant influence, leading to the termination of its consolidation, constituting a disclosable transaction. 2) MicroPort CardioFlow convened a shareholders' meeting, where the resolution for the significant asset reorganization involving the acquisition of MicroPort Cardiac Rhythm Management was reviewed and passed. This merger is set to drive deep integration between MICROPORT's two core business segments: structural heart disease and cardiac rhythm management. Improvements in governance structure are injecting new momentum, while the overseas business has become a core growth engine. At the corporate governance level, a fund under Shanghai Industrial Capital has become a significant strategic shareholder, potentially bringing new dynamism to governance and business development. The recent reorganization of the cardiac rhythm management and structural heart disease businesses aims to create a comprehensive cardiology platform. The new entity will integrate MicroPort Cardiac Rhythm Management's AI diagnostics and algorithm technologies with MicroPort CardioFlow's expertise in interventional treatments for structural heart disease, delivery systems, and biomaterials, forging an integrated platform for "Structural Heart Disease + Cardiac Rhythm Management + Heart Failure Management." The termination of the consolidation of MicroPort Brain Science is seen as part of ongoing governance enhancements. Concurrently, the company is actively building a global commercialization platform to facilitate the overseas expansion of products from various business units. In H1 2025, overseas business revenue reached 59.8 million USD, a 57.3% year-on-year increase, effectively countering pressures from domestic centralized procurement and other factors. As a leader in high-value consumables, the company has achieved numerous R&D milestones across various business lines since 2025: it secured 20 first-time Class III NMPA medical device registrations and added 232 first-time overseas registrations. The Toumai remote surgical robot became the world's first remote surgical robot product approved for market. Significant results in cost reduction and efficiency enhancement are leading to a narrowing of losses as anticipated. Through measures such as focusing on core businesses and optimizing resource allocation, the company's profitability has improved markedly. Amid a complex domestic and international environment, the company achieved H1 2025 revenue of 548 million USD, a slight decrease of 2.0% year-on-year; however, the net loss narrowed substantially to 36.36 million USD from 107 million USD in the same period last year, indicating an operational inflection point. This profit improvement is largely attributable to effective expense control: the company's operating expense ratio improved by 8.1 percentage points year-on-year, and the R&D expense ratio decreased from 20.6% to 13.2%. The company had previously announced targets to achieve: a net loss not exceeding 110 million USD for H1 2025, a net loss not exceeding 55 million USD for the full year 2025, a net profit of no less than 45 million USD for H1 2026, and a net profit of no less than 90 million USD for the full year 2026. Overall, the company is achieving substantial loss reduction through business focus, revenue enhancement, and expense reduction initiatives. Risk warnings include potential high-value consumable price cuts exceeding expectations, orthopedic business loss reduction falling short of expectations, and risks associated with acquisition integration.
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