GTHT released a research report maintaining an overweight rating on AK Medical (01789), stating that the company's first-half performance met expectations with potential acceleration in the second half. Based on industry conditions and the company's business development, the firm slightly revised down its 2025-2027 EPS forecasts to RMB0.30/0.36/0.44 (previously RMB0.31/0.39/0.48). Referencing comparable company valuations, GTHT assigned a target PE of 21x for 2026, giving a target price of RMB7.56 (equivalent to HK$8.26).
GTHT's main viewpoints are as follows:
**H1 2025 Performance Shows Steady Growth, Meeting Expectations**
AK Medical achieved revenue of RMB694 million in H1 2025 (+5.6% YoY), with net profit attributable to shareholders of RMB161 million (+15.3%). The company delivered steady growth despite the high base from H1 2024's improved hospital environment, with performance meeting expectations.
**Domestic Business Continues Breakthrough, Overseas Export Business Expands**
In H1 2025, the results of the national procurement for artificial joints were implemented across provinces, accelerating import substitution. Leveraging leading product performance and market reputation, the company's implant market share continued to rise, achieving breakthrough progress in clinical applications at high-end hospitals. Particularly in economically developed regions like the Yangtze River Delta and Pearl River Delta, the company's products have achieved large-scale sales in key tertiary hospitals previously dominated by imports, with surgical volume share continuously increasing, breaking the long-standing dominance of imported brands. The spinal business faced some pressure due to policy impacts, while the digital orthopedics customization business remained stable. Overall domestic revenue in H1 2025 grew 6.0% YoY to RMB566 million.
Overseas business continued expanding, with H1 2025 seeing new registrations in 4 countries and registration processes underway in 15 countries. Overseas revenue grew 4.0% YoY to RMB128 million in H1 2025, with acceleration expected in the second half.
**Continued Investment in New Technology R&D, Strengthening Competitiveness in Orthopedics**
The company continued strengthening its digital orthopedics layout. As of end-June 2025, the company's intelligent auxiliary equipment had completed over 1,700 clinical surgeries. The fully self-developed K3 intelligent surgical robot received market approval in May 2025, capable of assisting doctors throughout the pre-operative, intra-operative, and post-operative process, with one unit already commercialized by end-August. The company also further iterated and improved conventional prosthetics and 3D printing platforms, expanding into sports medicine small joints and biomaterials, with comprehensive competitiveness expected to strengthen further.
**Risk Factors:** Surgical volume growth below expectations, intensified competition.