CICC: Maintains AK MEDICAL (01789) "outperform" rating and raises target price to HKD 7.63.

CICC released a research report stating that it maintains a "outperform" rating for AK MEDICAL (01789), with the current price corresponding to a P/E ratio of 13.9/11.2x for 26-27 years. Taking into account the sector's valuation rebound, the target price has been raised by 7.3% to HK$7.63, corresponding to a P/E ratio of 18.3/14.7x for 26-27 years, representing a 31.3% upside potential from the latest closing price. Considering the high growth of overseas business and progress in the commercialization of Siasun Robot & Automation, the bank has raised the 26-year EPS forecast by 3.9% to HK$0.37 and introduced a 27-year EPS forecast of HK$0.46. The company announced its full year 2025 performance, with a revenue of HK$1.482 billion, a year-on-year increase of 10%; net profit attributable to owners of the company was HK$339 million, a year-on-year increase of 24%, corresponding to an EPS of HK$0.3, meeting the bank's expectations. With the full implementation of joint procurement, the domestic market has entered a normalized stage of steady growth in surgical volume within the dosage range, driving the full-year revenue of hip and knee joints to HK$1.281 billion (+13.0%) in 2025. The revenue from digital orthopedics and customized services in 2025 increased by 22.8%, and the revenue of orthopedics from Siasun Robot & Automation grew by over 200%, driving 4,000 surgeries. The gross profit margin for 2025 increased to 60.5%, benefiting from overseas export business and a higher proportion of high-margin digital orthopedics. The overseas revenue in 2025 was HK$330 million (+20.1%), with significant results from the "JRI+AK" dual-brand strategy. Operational efficiency significantly improved, with inventory turnover days reduced by 72 days in 2025; operating cash flow accounted for 120% of net profit. The company continues to focus on shareholder returns, planning to pay a dividend of HK$119 million and repurchase shares worth HK$150 million. On the research and development front, new products such as magnetic control non-invasive extended prostheses and hip joint prosthesis components have entered the innovation pipeline, with 8 products receiving national innovation support. According to the company's performance meeting, the company will accelerate deployment in 2026 with a target of installing 100-120 units of equipment, driving 10,000-14,000 surgeries and achieving approximately HK$40 million in revenue from Siasun Robot & Automation business. Regarding products, the K3+ full joint Siasun Robot & Automation received certification in January 2026, with the company expected VTS and K3 systems to be CE certified in 2026-2027. The bank believes that the company is expected to achieve scale contribution in emerging businesses through the "navigation/Siasun Robot & Automation + consumables" closed-loop model.