CICC: Maintains OUTPERFORM rating on MICROPORT (00853) and lowers target price to 14.5 Hong Kong dollars.

CICC released a research report stating that it maintains the net profit forecast for MICROPORT (00853) in 2026 at 0.74 billion US dollars, and introduces a net profit forecast of 0.24 billion US dollars for 2027 for the first time. The bank kept the outperform industry rating unchanged, and lowered the target price by 15% to 14.5 Hong Kong dollars based on DCF, with a 58% upside potential. CICC's main points are as follows: Performance in 2025 meets market expectations The company announced its performance in 2025: revenue of 1.105 billion US dollars, a year-on-year increase of +6.0% (excluding the impact of exchange rates); net profit attributable to shareholders of 0.049 billion US dollars, achieving a turnaround in profitability year-on-year; net cash flow from operating activities of 0.069 billion US dollars, turning positive for the first time since 2020. The revenue performance of various sectors in 2025 was mixed, but the overall trend is positive, with strong growth in the global communication platform. 1) Cardiovascular intervention business revenue was 0.182 billion US dollars, a year-on-year increase of 11% excluding exchange rates. The bank expects that new products outside of stents are expected to further drive revenue growth. 2) Orthopedic business revenue was 0.235 billion US dollars, a decrease of 7.5% excluding exchange rates. Overseas revenue declined slightly, with more drag from the Chinese market due to centralized procurement and operational adjustments. The bank expects a recovery in growth in 2026. 3) CRM business revenue was 0.23 billion US dollars, remaining flat overall and synergy expected with Minimally Invasive Heart Surgery after integration. 4) Structural heart business revenue was 0.051 billion US dollars, a 1.3% increase excluding exchange rates. 5) Revenue from the great arteries and peripheral vascular business was 0.189 billion US dollars, a 12% increase excluding exchange rates, showing steady growth. 6) Revenue from the brain science business was about 0.111 billion US dollars, a 3.8% increase excluding exchange rates. 7) Revenue from Surgical Siasun Robot & Automation was 0.078 billion US dollars, a 114% increase excluding exchange rates. The company's overall overseas business revenue was 0.584 billion US dollars, a year-on-year increase of 15%, accounting for 53% of total revenue; among them, the revenue of the global communication platform in 2025 reached 0.164 billion US dollars, a 78.8% increase excluding exchange rates, accounting for 15% of total revenue, significantly driving overseas growth in sectors such as Surgical Siasun Robot & Automation, structural heart disease, great arteries and peripheral vascular, brain science, etc. The bank expects the company's global communication platform in 2025 to have achieved breakeven. Cost reduction and efficiency improvement and asset restructuring continue The gross margin in 2025 increased by 1.7 percentage points to 57.4%, and the operating expense ratio decreased by 10.3 percentage points to 57.4%. With the advancement of overseas business, profit margin release, and new product volume, the bank expects the company's gross margin/operating expense ratio to further improve/decrease in 2026, and it is expected to achieve operating profit in 2026. The integration of Minimally Invasive Heart Surgery and CRM was completed in December 2025, eliminating a buyback obligation of 0.27 billion US dollars and expected to achieve cost synergy. Asset disposal gains exceeded 0.3 billion US dollars in 2025. The bank expects the company to continue to dispose of non-core assets and optimize its structure, improve debt and cash flow through asset sales, and introduce investors. In 2025, the company's interest-bearing liabilities decreased from 1.84 billion US dollars at the beginning of the year to 1.55 billion US dollars, and its financial health improved significantly. Risk warning: Mergers and acquisitions integration fall short of expectations, internationalization falls short of expectations, deteriorating competitive landscape.