"Joint procurement + reduction" opens a three-month downtrend, SCIENTECH (02291) advance starts the "Guaranteed Communication War" in 2026?

On November 19, SCIENTECH (02291) hit a lowest price of 17.95 Hong Kong dollars during trading hours. This is the first time since April 22 this year, when the company's stock price rose by 49.26% in a single day, that the stock price has fallen below 18 Hong Kong dollars. It can be observed that the stock price continued to decline afterwards. On December 8, SCIENTECH closed at 17.20 Hong Kong dollars, just steps away from the recent interim low of 17.01 Hong Kong dollars. In fact, this downward cycle for SCIENTECH began on August 26, and this can be traced back to the announcement of a major shareholder's reduction. Shareholder reduction leads to holding off-market Before the Hong Kong stock market opened on August 26, SCIENTECH issued an announcement of "major shareholder reduction", stating that its controlling shareholder Lepu Medical Technology "sold a total of 11.14 million H shares of the company through block trading at a price of 22.79 Hong Kong dollars per share on August 26, 2025, accounting for approximately 3.21% of the total number of issued shares of the company as of the date of this announcement (sale matter)," and stated, "Lepu Medical Technology is confident in the business operation of the Group, and the sale is aimed at enhancing the liquidity of the company's stock." Following the announcement, it immediately triggered selling by on-market holders on the same day. On August 26, the stock price of SCIENTECH quickly dropped after the market opened, with a drop of nearly 9% in 1 minute; the maximum drop in stock price was over 12% in half an hour. The stock price continued to decline throughout the day, ending with a drop of 12.75%, with an opening price of 27.60 Hong Kong dollars becoming the highest point for SCIENTECH on that day and in the following period. Since then, SCIENTECH has entered into a downward cycle that has lasted for more than 3 months. From a technical perspective, the sharp drop on August 26 directly pulled the company's stock price from above the upper BOLL line to the lower BOLL line, then the "seven consecutive decline" continued to widen the gap as the BOLL line continued to move downwards. Although there were signs of a rebound in SCIENTECH's stock price for 2 trading days after the shareholder reduction announcement, and the stock price briefly touched the BOLL midline, there was no clear increase in trading volume to support it, and there was no significant breakout in the form of a solid candlestick, which technically qualifies as a "false breakout" of the BOLL line indicator. Therefore, after a longer "eleven consecutive decline," SCIENTECH's stock price returned to below the BOLL line and continued to decline between the narrowed BOLL line and its lower line. Although SCIENTECH stated in the reduction announcement that its controlling shareholder "is confident in the business operation of the Group, and the sale is aimed at enhancing the liquidity of the company's stock," the trading volume for SCIENTECH on the day of the reduction announcement only reached 16.42 million shares, and in the first three trading days before the start of the downward cycle, the trading volume exceeded one million shares continuously. However, the daily average trading volume for SCIENTECH remained below 1 million shares after that, with the lowest daily trading volume during the period being only 107,000 shares. Generally speaking, sustained market trading inertia and declining volume indicate a lack of confidence in the worth of the stock by on-market holders and a unanimous wait-and-see attitude by off-market holders. From both a technical and volume perspective, there are no signs of a short-term rebound in SCIENTECH's stock price. The continuous fluctuation and decline in stock price and market value have also begun to undermine SCIENTECH's position in the Hong Kong Stock Connect. According to data, the next round of regular adjustment for the Hang Seng Index and the Hong Kong Stock Connect is in March next year, with the announcement of the review results on February 25 and the review period from January 1, 2025, to December 31, 2025. Currently, SCIENTECH's average market value in this review period is 6.85 billion Hong Kong dollars, which is only 814 million Hong Kong dollars higher than the current 6.71 billion Hong Kong dollars market value threshold. Considering it is now early December, there is only a little over 20 days left until the end of the review period for the Hong Kong Stock Connect's latest round of adjustments, so as long as SCIENTECH's market value does not experience sudden drastic fluctuations, it should be able to maintain its status in the new round of adjustments. However, if there is no subsequent rebound in stock price and market value, SCIENTECH's risk of being delisted from the Stock Connect may continue to be a concern for the company. Joint procurement is coming, is it an opportunity or a "double-edged sword"? One week before SCIENTECH's major shareholder announced the reduction, on August 19, the Sichuan Medical Devices Tendering and Procurement Service Center and the Inner Mongolia Autonomous Region Medical Procurement website issued notices: the historical procurement data reporting for structural heart disease occluder medical consumables has officially started. Then, on October 22, the Fujian Provincial Medical Insurance Bureau issued a notice for public comment on the "Provincial Inter-Provincial Alliance Centralized Volume Procurement Plan for Structural Heart Disease Occluder Medical Consumables (Draft for Comment)" On November 12, the Fujian Provincial Medical Insurance Bureau again released the "Announcement of the Provincial Inter-Provincial Alliance Centralized Volume Procurement of Structural Heart Disease Occluder Medical Consumables" (No. 1) (No. 2), officially announcing that this round of structural heart disease occluder inter-provincial alliance procurement will be led by Fujian Province and cover provinces nationwide. The document clearly stated that this procurement will cover all provinces, autonomous regions, and municipalities forming a procurement alliance to carry out the centralized volume procurement of structural heart disease occluder medical consumables. Furthermore, any medical institution that performs operations using structural heart disease occluders and their delivery systems in 2024 must participate in this procurement. These measures mean that this year's inter-provincial alliance procurement led by Fujian Province has now evolved into a nationwide joint procurement. As of October, Sichuan, Shanxi, Inner Mongolia, and other regions have already completed the historical procurement data reporting work, and Hainan has also explicitly joined the structural heart disease occluder joint procurement project led by the Fujian alliance. Therefore, it is widely believed in the market that this may be the most comprehensive and extensive inter-provincial alliance procurement for "structural heart disease occluder medical consumables", and the scale effect it will create may lead to a comprehensive reduction in the prices of occluder consumables. In fact, this is not the first time that structural heart disease occluder medical consumables have been included in joint procurement. As early as 2023, Hebei led the Sanming alliance procurement and the Beijing-Tianjin-Hebei "3+N" alliance procurement separately included "atrial septal defect occluder" and "left atrial ear occluder and its delivery system" in the procurement scope. In December last year, in Anhui province's joint procurement, "patent ductus arteriosus occluder, atrial septal defect occluder, ventricular septal defect occluder, left atrial ear occluder" were included. It is understood that occluders are important devices for interventional treatment of structural heart disease. In terms of product types, heart occluders mainly include congenital heart disease occluders and stroke prevention occluders. In terms of market size, it is estimated that by 2025, the market size of China's heart occluders (including congenital heart disease occluders and stroke prevention occluders) will exceed 6 billion yuan and maintain a high double-digit growth rate. Looking at the market landscape, domestic products have already replaced imported products in the field of congenital heart disease occluders. According to Frost & Sullivan data, in the Chinese congenital heart disease occluder market in 2021, SCIENTECH and LIFETECH SCI held the first and second market shares respectively, with an overall domestication rate of 95%; in the stroke prevention occluder field, imported brands still dominate, with the 2022 "China Medical Devices Blue Book" data showing that in the Chinese left atrial ear occluder market, Boston Scientific accounted for 67% of the market share, while LIFETECH SCI accounted for 25%. From the Hebei alliance procurement to the Anhui procurement, the average price reduction of the selected products in these two joint procurements decreased from 64.9% to 33.29%, indicating a more moderate reduction. In the case of SCIENTECH, looking at its performance, the company's revenue from congenital heart disease occluder products in the first half of this year was 161 million yuan, accounting for 48.7% of the total revenue for the period, an increase of 24.8% from the same period last year when it was 129 million yuan, and the proportion of revenue has remained stable at around 50%. It can be seen that the congenital heart disease occluders are currently the core source of income for SCIENTECH. In this context, the outcomes of the joint procurement may directly impact SCIENTECH's future performance. If the results of this national joint procurement show a reduction in prices in line with expectations, SCIENTECH may be able to accelerate the market penetration of its products, but if not, it may significantly impact the company's profits in the short term. In fact, the low daily trading volume of SCIENTECH currently reflects the wait-and-see attitude of off-market holders. The day when the results of this nationwide joint procurement are announced may be a critical turning point for SCIENTECH.