Huachuang Securities: Maintains a "buy" rating on JXR (01951) with a target price of HK$3.23.

Huachuang Securities released a research report stating that domestic assisted reproduction has been fully covered by medical insurance, coupled with support policies such as fertility subsidies, the industry penetration rate is expected to accelerate. As a leading company in the industry, JXR (01951) has significant advantages in brand and licenses, and short-term business disruptions will not change the long-term growth trend. The bank predicts that the company's revenue for 2025-2027 will be 26.02\28.67\31.78 billion yuan; the adjusted net profit attributable to the parent is forecasted to be 2.82\3.25\3.76 billion yuan. The bank has set a target price of 3.23 Hong Kong dollars and maintains a "recommendation" rating. Key points of Huachuang Securities: Events The company released its 2025 interim performance announcement. In 2025, the company achieved revenue of 1.289 billion yuan (-10.7%), the net loss attributable to owners of the parent company was 1.04 billion yuan, the adjusted net profit under non-international financial reporting standards was 82 million yuan (-68.3%), and operating cash flow was 268 million yuan (-30.2%). Pressure on revenue side, regional performance varies The company achieved revenue of 1.289 billion yuan (-10.7%) in the first half of 2025. A breakdown by region shows: - Medical service revenue in Chengdu was 768 million yuan (-13.1%), with 7,111 egg retrieval cycles (-6.1%). The decrease in cycle numbers was mainly due to a decrease in new patients and a significant increase in the proportion of intrauterine insemination (IUI) cycles. - Medical service revenue in the Greater Bay Area was 206 million yuan (-14.9%), with 2,539 egg retrieval cycles (-16.0%). The decrease in cycle numbers was also affected by changes in clinical referral processes and a significant increase in the proportion of IUI cycles. - Business revenue in Kunming and Wuhan was 131 million yuan (+0.8%), with 2,059 egg retrieval cycles (-3.5%). - Overseas medical service revenue was 405 million yuan (+3.7%), with 2,058 egg retrieval cycles (-8.9%), mainly affected by fluctuations in US-China relations and delays in the implementation of the California IVF insurance coverage bill (SB729). Adjustment of business structure and one-time impairment resulting in short-term profit pressure The gross profit margin for the first half of 2025 was 30.4% (-10.0pct). The decrease in gross profit margin was mainly due to a decrease in revenue and an increase in operating costs. Factors contributing to the decrease in gross profit margin include a higher proportion of lower-priced IUI patients among ARS patients, a decrease in average single-cycle prices after medical insurance adjustments, and a decrease in traditional delivery volume. Additionally, impairment of goodwill and intangible assets was another major reason for profit losses. Risk warning: The penetration rate of the assisted reproductive industry may not increase as expected, risks related to overseas business expansion and integration, and impairment of goodwill and intangible assets.