Fenghe Medical's Sci-Tech Innovation Board IPO terminated. The company has achieved a breakthrough and mastered key core technologies of minimally invasive surgical instruments such as staplers.

On August 23, Jiangsu Fenghe Medical Equipment Co., Ltd. (referred to as Fenghe Medical) had its IPO application status on the Shanghai Stock Exchange Science and Technology Innovation Board changed to "terminated". Fenghe Medical and its sponsor withdrew their application for listing, leading to the termination of the IPO review by the stock exchange in accordance with relevant regulations. According to the prospectus, Fenghe Medical is a leading domestic innovative enterprise focusing on the research, production, and sales of minimally invasive surgical equipment and consumables. Since its establishment, the company has been committed to independent research and technological innovation to create high-performance minimally invasive surgical equipment products to meet the growing and changing clinical needs in minimally invasive surgery. After more than a decade of technological accumulation and iteration, the company has built a comprehensive product matrix and advanced product layout, including endoscopic staplers (including electric and manual endoscopic staplers), open staplers, and other minimally invasive surgical equipment (such as puncture instruments, ligating clips, and clip appliers). As of the signing date of this prospectus, the company has been approved for 17 products, including 3 products with NMPA Class III medical device registration certificates, 14 products with NMPA Class II medical device registration certificates, 3 products with FDA certification, and 12 products with CE certification. The company is actively promoting technological upgrades and new product development, with 1 product in the registration permit application stage and 12 products in the design and development stage. Through years of research and clinical practice, the company has mastered the key core technologies of staplers, puncture instruments, and other minimally invasive surgical equipment. Among them, single motor multi-functional drive technology, intelligent pre-squeeze control technology, one-key multi-function technology, reciprocating cutting control technology, double back cutting technology, and suture puncture instrument technology are domestically initiated, with core performance indicators reaching the same level as international medical giants. Through independent research and development, the company has achieved electric control in key operating steps of staplers, effectively improving cutting and stapling quality and clinical safety. As a leading domestic manufacturer representing the intelligence of staplers, the company has introduced software, algorithms, and sensors into its products to identify and feedback on the staplers' work status, enabling human-machine interaction capabilities and breaking the monopoly of international medical giants in stapler core technology, filling the domestic technological gap. Financially, Fenghe Medical achieved operating revenues of approximately RMB 147 million, RMB 266 million, and RMB 311 million in 2020, 2021, and 2022, respectively. During the same period, the company realized net profits of RMB 28.257 million, RMB 27.9165 million, and RMB 57.8116 million, respectively. It is noteworthy that Fenghe Medical mentioned in the prospectus that the company faces risks related to the impact of volume-based procurement policies. Currently, in various provinces/purchasing alliances nationwide, volume-based procurement involving open staplers, endoscopic staplers, and other minimally invasive surgical equipment and consumables has been gradually launched. If the company fails to win bids in a certain region, it will lose a significant market share in that region during the procurement cycle. The company will need to compete with many other non-winning manufacturers for market share beyond the volume-based procurement in that region, potentially forcing the company to lower product prices to adapt to more intense market competition, leading to risks of declining product sales, prices, and increased sales expenses, resulting in a significant reduction in revenue levels, profit levels, and gross profit margin levels. In addition, volume-based procurement products typically use a price bidding model. To reduce the risk of product losing bids, bidding enterprises tend to exchange volume for price. If the winning price in volume-based procurement significantly decreases compared to the original end-user price, further resulting in a significant decline in the company's ex-factory price, even if the company's products win bids in a certain region, there may still be risks of sales volume increase not compensating for the decline in selling price and gross profit margins, potentially negatively impacting the company's profitability.