Annual profit reversal and earnings release, MICROPORT (00853) stock price surged and then retreated, is it also a "money-making signal"?

On the evening of January 22, MICROPORT (00853) announced that it is expected to achieve a profit in the year 2025, with a net profit of no less than 20 million US dollars. In the announcement, MICROPORT pointed out that the company's expected return to profit is mainly attributed to the continuous growth in revenue during the period, especially the overseas business revenue continuing to contribute to a high-speed growth of about 70% year-on-year. Although the company faces downward pressure on product prices due to domestic industry policies, it benefits from the implementation of cost optimization measures, and the gross profit margin is expected to increase by 2-3 percentage points year-on-year. At the same time, the company is also continuously improving operational efficiency, with operating expenses expected to decrease by about 10-11% year-on-year. Finally, the disposal of subsidiary companies also contributed positively to MICROPORT's overall income. Benefiting from the positive news, on January 23, MICROPORT's stock price opened high and continued to rise, with a peak increase of up to 12.84% in the morning session. However, the upward momentum lasted for less than half an hour, as MICROPORT's stock price began to plummet after hitting a high, with the increase narrowing to less than 4% by the morning close. In terms of trading volume, MICROPORT's trading volume reached 77.0671 million shares, setting a new record since last October. Looking at the distribution of trading volume by time, most active trading occurred at the opening, indicating that many investors bought at the "peak" of that day. The upward movement followed by a decline under the guise of good news Looking at the market, since hitting a high of 16.28 Hong Kong dollars on October 8 last year, MICROPORT's stock price has entered a two-month period of fluctuating decline. Within this range, the company's stock price dropped from a high of 16.28 Hong Kong dollars to a low of 9.80 Hong Kong dollars, with a maximum amplitude of 39.80%. From a technical perspective, on October 8 last year, which was the second trading day that MICROPORT's stock price surged above the upper Bollinger Band, the stock price did not continue to rise steadily with the Bollinger Band opening upwards. Instead, the next day, a large bearish candlestick signaled the start of a volume-driven bear market. From October 9 to November 19 last year, MICROPORT's stock price completed a technical regression from the upper Bollinger Band to the lower band in a little over a month. During this period, it only took 3 trading days for MICROPORT's stock price to fall below the midline of the Bollinger Band, followed by a month of continuous oscillation downward until November 19, when the stock price first touched the lower band of the Bollinger Band. In terms of market sentiment, only on October 9 last year did the daily trading volume exceed 50 million shares, with daily trading volumes remaining weak thereafter, indicating that off-market holders were in a holding/waiting state, with a lack of market support. On the other hand, there was a significant internal disagreement among holders within the company, with continuous pressure selling leading to only 8 trading days within this range showing positive movements in stock price. Touching the lower band of the Bollinger Band on November 19 last year was considered a milestone for MICROPORT, as its average PE valuation over the past 3 months was 2.7 times, and on November 19, it reached a low of 2.51 times, far from the valuation center, while the mother company's market value was lower than the equity of its subsidiary companies, signaling an oversold condition. Therefore, after further pressing down the PE valuation to 2.46 times for 2 trading days, MICROPORT launched a rebound on November 24, with the stock price crossing the Bollinger Band continuously during the oscillation and touching the upper band on December 29, then continuing to oscillate upwards until now. Supported by funds from the Hong Kong Stock Connect In MICROPORT's recent "U-shaped" market trend, the movement of funds from the Hong Kong Stock Connect is worth watching. According to observations, in the broker trading of MICROPORT over the past 60 days, the top five selling positions are occupied by Standard Chartered Bank, Citigroup, Hong Kong Stock Connect (Shenzhen), Huatai Securities, and China International Capital Corporation, selling 38.95 million shares, 25.89 million shares, 21.27 million shares, 5.45 million shares, and 5.03 million shares respectively. In terms of buying positions, Hong Kong Stock Connect (Shanghai) is the largest net buyer of MICROPORT, with a net inflow of 50.3573 million shares. Bringing the timeline closer, and combining it with the records of the holdings of the Hong Kong Stock Connect, it can be seen that since the second half of December last year, the holdings of MICROPORT by funds from the Hong Kong Stock Connect have significantly increased, and the funds have switched from "buying more as it falls, selling more as it rises" to right-side trades. It was observed that in the past 5 days, Hong Kong Stock Connect (Shanghai) remained the largest net buyer of MICROPORT, with a net purchase of 8.0736 million shares, while the second-largest net buyer became Hong Kong Stock Connect (Shenzhen) with a net purchase of 2.3004 million shares. On January 23, the two major fund channels of the Hong Kong Stock Connect ranked as the first and second largest net buyers of MICROPORT, with net purchases of 4.5933 million and 1.5385 million shares, respectively. Data shows that as of now, the holding cost of the Hong Kong Stock Connect funds for MICROPORT is 11.23 Hong Kong dollars, with an overall profit ratio of 15.46%. In terms of investment strategy for MICROPORT, the Hong Kong Stock Connect has changed its previous logic of buying more as it falls, and now gradually adds positions as the market goes up, perhaps indicating a long-term positive outlook on this undervalued company, with improving fundamentals being one of the important factors driving the change in market investment strategy. In fact, the improvement in MICROPORT's performance in 2025 was in line with previous market expectations, but achieving a return to profit exceeded expectations. In recent years, MICROPORT's stock valuation has been weak for a very important reason, as the company's domestic business has been affected by downward pressure on product prices due to industry policies, prompting MICROPORT to focus on overseas performance. For example, in the first half of 2025, the company's overseas business revenue reached 598 million US dollars, a year-on-year increase of 57.3%, confirming the effectiveness of this business in offsetting pressures such as domestic centralized purchasing. On the other hand, despite a 2.0% year-on-year decrease in revenue to 548 million US dollars in the first half of 2025, MICROPORT's net loss significantly narrowed from 107 million US dollars in the same period the previous year to 36.36 million US dollars, signaling a turning point in operations. The improvement in profitability was mainly due to significant cost control measures: the company's operating expense ratio improved by 8.1 percentage points year-on-year, with research and development expenses decreasing from 20.6% to 13.2%. Furthermore, in a previous announcement, MICROPORT had stated that it would achieve the following performance goals: a net loss of not more than 110 million US dollars in the first half of 2025, a net loss of not more than 55 million US dollars for the full year 2025, a net profit of not less than 45 million US dollars for the first half of 2026, and a net profit of not less than 90 million US dollars for the full year 2026. Therefore, given its stable performance in the mid-year report for 2025, several brokerage firms have raised their profit expectations for MICROPORT. For example, in a recent research report, EB SECURITIES stated, "Taking into account the impact of centralized purchasing, the company's reduction in various expenses, and its focus on core business, we expect the company to continue reducing losses. We have raised our profit forecasts for 2025-2026 to -30/96 million US dollars (original -59/91 million US dollars) and added a profit forecast of 133 million US dollars for 2027. The company is a leading domestic high-value medical supplies enterprise with strong R&D capabilities, and we maintain a 'buy' rating." The annual return to profit disclosed by MICROPORT in its recent positive announcement clearly exceeded market expectations, drawing more attention from investors to MICROPORT's future performance. From this perspective, although the company's stock price experienced a significant high followed by a decline on January 23, the nearly 80 million shares traded in a single day indicated a noticeable recovery in market support, suggesting that off-market holders may be transitioning from a wait-and-see approach to one where they are actively holding positions.