While the Hang Seng Index continues its upward momentum and popular concept stocks generally rise, "the first medical AI large model stock" XUNFEIHEALTH (02506) seeks to prove its investment value through performance. According to recent financial data, XUNFEIHEALTH (02506) recently released its first half 2025 financial report, with revenue maintaining high growth levels. During the period, operating revenue reached RMB 299 million, up 30% year-on-year, continuing the high-growth momentum with a compound annual growth rate of 24.7% from 2022-2024. This growth is primarily attributed to the company's R&D-driven approach, commercialization of research outcomes, and synergistic development across GBC (Government, Business, Consumer) application scenarios, creating multiple drivers for continued revenue growth.

Additionally, the company's profitability has improved significantly. On one hand, gross margin remained stable at a high level of 51.5%, while operational efficiency continued to optimize. Sales and administrative expense ratios decreased by 7.5 percentage points, and net loss ratio narrowed significantly to 22%, improving by 15.5 percentage points year-on-year.

XUNFEIHEALTH focuses on becoming "an AI diagnostic assistant for every doctor and an AI health assistant for everyone." Based on industry-leading artificial intelligence technology and deep industry expertise, the company has created AI diagnostic assistant and AI health assistant product families that empower Government (G), Business (B), and Consumer (C) sectors, forming a diversified GBC three-scenario driven model.

In the first half of 2025, the government segment delivered outstanding performance with revenue of RMB 140 million, up 87% year-on-year, accounting for 47.4% of total revenue. Within this segment, grassroots solution revenue grew 52% year-on-year, while regional solution revenue surged 178%. The hospital and patient segments combined generated RMB 156 million in revenue, up 3.7% year-on-year, representing 52.6% of total revenue.

**Multi-Driver Approach Building GBC Product Matrix**

In the G segment, core products like the grassroots solution "Smart Medical Assistant" serve as the industry's only AI system to pass the National Medical Practitioner Qualification Examination comprehensive written test. It has covered 697 districts and counties nationwide, over 75,000 grassroots institutions, and completed over 1.01 billion AI-assisted diagnoses. The regional solution's AI infectious disease prevention and control system has been deployed at scale across multiple provinces including Anhui, Jiangxi, Zhejiang, Shaanxi, and Hunan.

The B segment continues to maintain industry-leading deployment speed for large models, capturing market opportunities. The core Smart Hospital Solution provides integrated "smart services, smart healthcare, and smart management" services, implemented in over 500 tertiary hospitals nationwide, including Beijing Union Medical College Hospital, West China Hospital of Sichuan University, and Shandong Provincial Hospital. As of June 2025, XUNFEIHEALTH's Spark Medical Large Model has been deployed in over 20 leading hospitals nationwide.

XUNFEIHEALTH's G and B segments are deeply integrated, continuously improving penetration rates and brand influence under the dual driving forces of policy and market. The hospital segment represents the largest source of patients, capturing potential demand from the largest application scenarios through data flywheel effects. The patient segment represents the largest application market and has the greatest growth prospects, providing sustained strong growth momentum for the company.

In the C segment, the company has built a comprehensive product matrix including AI post-diagnosis patient management, imaging cloud and auxiliary diagnosis platforms, and XUNFEI XiaoYi. Under the combined drive of B and C segments, user application scale maintains high growth momentum. Taking XUNFEI XiaoYi as an example, in March 2025, the XUNFEI XiaoYi APP integrated XUNFEIHEALTH's Spark Medical Large Model X1, fully launching deep thinking mode. It supports over 1,600 common diseases, over 2,000 symptoms, over 50,000 medications, achieves 97% medical OCR recognition accuracy, and covers 98% of mainstream medical report formats. With powerful functionality, the APP also integrates with Huawei Health, third-party hardware, and other health data. As of June 2025, XUNFEI XiaoYi APP downloads exceeded 24 million, with cumulative AI consultations surpassing 140 million.

The GBC three application scenarios have built strong user barriers for XUNFEIHEALTH, leveraging first-mover advantages to continuously expand market share during the industry's early development phase. The company's high R&D investment has constructed a technological moat, maintaining leadership in medical large models and preserving a cutting-edge position in AI medical technology.

**R&D-Driven with Value Discovery Potential**

In March this year, the company launched the Spark Medical Large Model X1 with "deep reasoning and thinking capabilities," outperforming GPT-4o and DeepSeek R1 in medical tasks such as diagnostic recommendations and health consultations. Just four months later, the model was further upgraded in July, maintaining significant industry leadership in general medical tasks including general practice auxiliary diagnosis, physical examination report interpretation, health consultation, and medical guidance.

In August, XUNFEIHEALTH's Spark Medical Large Model topped the authoritative Chinese medical large model evaluation platform MedBench with a high score of 100.2, continuing to lead the industry.

Notably, XUNFEIHEALTH is also an industry standard setter, being the only company participating in developing "Technical Evaluation System and Standard Specifications for Large Language Models in the Medical Field." The company also participated in writing "Expert Consensus on Large Model Application Effect Evaluation in Medical Scenarios" and served as a core drafting unit leading the development of "Medical and Health Industry Intelligent Agent Standard System" at the World Artificial Intelligence Conference (WAIC) in late July, spearheading the formulation of 10 sub-standards including health consultation intelligent agents and medical record generation and quality control intelligent agents.

High-intensity R&D enables the company to maintain cutting-edge industry technology levels. In the first half of 2025, R&D investment reached RMB 134 million, accounting for 45% of revenue, with commercialization of R&D results providing marginal contribution improvements.

AI medical technology has extremely high market prospects. According to research reports, China's medical AI industry market size grew at a compound annual growth rate of 33.8% from 2019-2023, and is expected to reach RMB 315.7 billion by 2033 with a compound growth rate of 43.1%. The medical institution application market size is projected to reach RMB 224.4 billion with a compound growth rate of 42.8%.

Policy support continues to drive industry development. For instance, government departments released "Information Function Guidelines for Closely-Integrated County Medical Communities" in March and "Guiding Opinions on Optimizing the Layout and Construction of Grassroots Medical and Health Institutions" in April, both clearly requiring the promotion of "AI + Medical" implementation.

As the industry leader in AI medical large models, XUNFEIHEALTH will benefit from dual dividends of high industry growth and policy driving. The company's long-term value revaluation will be driven by three factors: first, favor from industrial capital, such as the Wanjia Health Industry Fund, where the company has risen to become the sixth largest holding as of the end of June; second, value discovery by long-term value investors amid sustained performance delivery, with significant increases in both trading volume and stock price in recent weeks; third, speculation by hot money, as AI medical represents a currently popular sector that has maintained upward trends for three consecutive months, with company stock price potential yet to be fully explored.

From a fundamental perspective, XUNFEIHEALTH, with its R&D-driven technological moat, user barriers built through GBC synergy, and massive C-segment user pool, supported by leading and comprehensive product matrix, is poised for a high-speed development cycle. As the first medical large model stock in Hong Kong, its scarcity combined with performance growth expectations will drive valuation rerating. The long-term development philosophy also provides valuation upside potential.

From third-party research perspectives, analysts generally maintain positive views, mostly rating overweight and buy, with most brokerages setting high target prices. Guotai Haitong recently raised its target price to HK$154.48, representing a 38.86% premium to current price.

As of now, the company's stock price has risen for four consecutive weeks with a 10% gain. Recent strength in the AI medical concept sector, combined with solid fundamentals, suggests significant valuation upside potential, making it worthy of investor attention.