Over the past year, GAUSH MEDITECH (02407) has been stuck in a liquidity quagmire, urgently needing a strong financial report to "save the day"?

Thanks to the strong performance of the Hong Kong stock market pharmaceutical sector in 2025 and the outstanding performance of the company's interim report, GAUSH MEDITECH (02407) saw its stock price achieve a monthly "four consecutive rise" after being removed from the Hong Kong stock connect list in March last year. From May to September last year, the company's stock price rose by a cumulative 65.50%, performing well among the "outbound stocks" at the time. However, GAUSH MEDITECH's stock price did not continue to rise all the way. Starting in late September last year, following a general downturn in the Hong Kong stock pharmaceutical sector, GAUSH MEDITECH's stock price began a three-month period of sideways fluctuations, only starting to decline at the end of December last year. It is observed that from December 22 last year to the present, GAUSH MEDITECH's stock price has fallen by nearly 20%, basically giving back all the gains since the interim report last year. Now, as the 2025 annual report is about to be released, can it once again gain market favor with its outstanding performance? Is a new round of market clearing by the Hong Kong stock connect funds starting? On March 10 last year, the first batch of 2025 Hong Kong stock connect targets list adjustment took effect. On that day, the stocks removed from the Hong Kong stock connect saw an average price drop of 14.24%, with average trading volume increasing by 19%. Among them, 20 stocks saw a decline of over 10%, including GAUSH MEDITECH. Usually, after being removed from the list, there is often one-way selling pressure from the onshore Hong Kong stock connect funds. Is the recent decline in GAUSH MEDITECH's stock price from the second half of December last year until now a new round of market clearing by the Hong Kong stock connect funds? It is understood that due to GAUSH MEDITECH's average market value during the review period before being removed from the list was only HK$2.464 billion, it was already destined to be removed from the Hong Kong stock connect list before the list adjustment took effect. In this situation, Hong Kong stock connect funds continued to reduce their holdings in 2025, and even when GAUSH MEDITECH's stock price rebounded later, the trend of reducing holdings by the Hong Kong stock connect funds did not stop. On the day when the Hong Kong stock connect list adjustment took effect on March 10, GAUSH MEDITECH's Hong Kong stock connect holding ratio was 6.85%. However, despite the twists and turns in the stock price trend in 2025, the Hong Kong stock connect holding ratio did not show a significant decrease following the company's delisting. Currently, the onshore Hong Kong stock connect holding ratio of GAUSH MEDITECH is still at 3.85%. That is to say, in the past ten months, the onshore Hong Kong stock connect funds' selling proportion of GAUSH MEDITECH was only 3%. Combining with the trading volume data, after the delisting, the liquidity of the company's stock visibly slowed down. The data showed that in February, March, and April last year, GAUSH MEDITECH's monthly stock trading volume was 13.6134 million shares, 8.7966 million shares, and 2.1247 million shares respectively. Compared to the pre-delisting February and post-delisting April, GAUSH MEDITECH's monthly stock trading volume dropped by a substantial 84.39%. By December last year, GAUSH MEDITECH's monthly stock trading volume was only 973,500 shares. Looking at the broker trading data, in the past twenty days, the top five sellers of GAUSH MEDITECH were the Hong Kong stock connect (Shenzhen), Citibank, the Hong Kong stock connect (Shanghai), Haifu, and Chuangxing, selling 78,100 shares, 72,600 shares, 55,500 shares, 50,200 shares, and 9,000 shares respectively. As for the buyers, the top five buyers were Futu Securities, BNP Paribas, Zhongxin Liang, Bank of China, and Changqiao, buying 60,000 shares, 49,100 shares, 44,100 shares, 34,800 shares, and 32,700 shares respectively. Although the onshore Hong Kong stock connect funds of GAUSH MEDITECH have consistently been the net sellers in the past twenty days, the decrease in their holding ratio is only 0.1%. This indicates that currently, the Hong Kong stock connect funds are more inclined towards right-side trading in GAUSH MEDITECH, but have not reached the level of clearing out their positions entirely. Can the annual report bring about a price rebound? The GAUSH MEDITECH stock price performed poorly in Q1 of last year, partly due to the impact of being delisted and also due to the unsatisfactory performance in the 2024 annual report. It is understood that GAUSH MEDITECH achieved a revenue of 1.428 billion yuan in 2024, a year-on-year increase of 1.6%; meanwhile, the gross profit for that period decreased by 4.1% to 663 million yuan, and the net profit attributable to the mother company was 92.394 million yuan, a substantial decrease of 46.75% year-on-year. The poor profitability was partly due to factors such as exchange rate fluctuations, the implementation of the national policy for artificial crystalline lenses, and the overall decrease in the comprehensive gross profit margin, leading to a decrease in gross profit; another significant reason for the downturn in GAUSH MEDITECH's performance was the impairment of goodwill, with the company having accumulated a total impairment of 23.257 million yuan by 2024. In addition to the above factors, the low proportion of sales of their own products has also been one of the reasons affecting the company's stock price and valuation. GAUSH MEDITECH has mainly relied on distribution products as its main source of income. This issue has been apparent since its IPO. According to the prospectus at the time: in the reporting period, GAUSH MEDITECH's revenue from distribution products was 986 million yuan, 793 million yuan, and 811 million yuan respectively, accounting for 98.9%, 97%, and 72% of total revenue; while revenue from their own products was 11.329 million yuan, 24.72 million yuan, and 31.6 million yuan respectively, accounting for 1.1%, 3%, and 28% of total revenue. It is clear that GAUSH MEDITECH has been consciously adjusting its business structure: moving away from distribution products and increasing the proportion of their own products. However, in 2024, the proportion of revenue from distribution products actually rebounded and increased. The data showed that in 2023, the proportion of revenue from distribution products was 67.93%, while in 2024, this proportion rebounded to 68.55%. However, with the release of the interim report in August last year, the market discovered that GAUSH MEDITECH had improved in the above areas. Data showed that in the first half of 2025, GAUSH MEDITECH achieved a revenue of 653 million yuan, a year-on-year increase of 1.7%; a gross profit of 316 million yuan, with a gross profit margin of 48.3%, an increase of 1.8 percentage points; and a net profit of 35.9 million yuan, a year-on-year increase of 33.5%. Overall, the improvement in gross profit margin and a significant increase in net profit were achieved. In terms of optimizing income structure, in the first half of 2025, GAUSH MEDITECH saw a noticeable increase in the proportion of revenue from their own products. Firstly, in terms of research and development investment, in the first half of 2025, the company invested 43.4 million yuan in R&D, an increase of 23.6% year-on-year. Amid continued investment, in the first half of last year, the revenue from their own business reached 322 million yuan, contributing to nearly half of total revenue, an improvement from the 30% contribution in the 2024 annual report. The revenue from their own products was 203 million yuan, a year-on-year increase of 14.05%; and revenue from their own technical services reached 119 million yuan, an increase of 8.3%. In response to this, Western issued a research report stating that they expect GAUSH MEDITECH to achieve revenues of 1.564 billion yuan, 1.715 billion yuan, and 1.875 billion yuan in 2025-2027, with year-on-year growth rates of 9.48%, 9.67%, and 9.33%; and net profits attributable to the parent company of 135 million yuan, 180 million yuan, and 214 million yuan, with year-on-year growth rates of 45.85%, 33.71%, and 18.99%, maintaining a "buy" rating. On the day after the release of the 2025 interim report, GAUSH MEDITECH's stock price surged by 9.58%, followed by another 8.87% increase the next trading day, resulting in a cumulative increase of 19.31% over the two days, outperforming the pharmaceutical sector in the Hong Kong stock market for the same period. Looking at the trading volume, on August 29 last year, GAUSH MEDITECH's daily stock trading volume reached 913,000 shares, returning to the level before the delisting. Looking at GAUSH MEDITECH's current market performance, due to the stock price breaking below the platform in late December last year, the company's stock price is now oscillating around the middle and lower Bollinger Bands, with even two trading days in the past month having trading volumes of less than 1,000 shares, indicating a subdued trading environment on and off the exchange. However, with the Bollinger Bands converging at low levels, it may indicate that GAUSH MEDITECH's recent downtrend is nearing a bottom, and subsequent movements may see oscillations around the middle Bollinger Band. From the performance after the mid-year report last year, GAUSH MEDITECH's impressive performance is expected to bring about positive feedback in terms of volume and price escalation. This may be why many investors are paying close attention to GAUSH MEDITECH's performance during the annual report season.