CICC: Maintain a "Outperform" rating for ZYLOXTB (02190) with a target price of HKD 32.

China International Capital Corporation (CICC) has released a research report stating that due to the efficiency improvement of ZYLOXTB (02190), the adjusted net profit for 2026 and 2027 has been raised by 13% and 8% to RMB 385 million and RMB 484 million, respectively. The current stock price corresponds to a price-to-earnings ratio of 17 times for 2026 and 13 times for 2027. The bank maintains an "outperform" rating for the industry and keeps the target price unchanged at HKD 32 based on a DCF model (WACC of 11.4% and perpetual growth rate of 2.2%), corresponding to a price-to-earnings ratio of 26 times for 2026 and 20 times for 2027, indicating a 52% upside potential compared to the current stock price. CICC's main viewpoints are as follows: Net profit for 1H26 exceeded the bank's expectations. The company announced its 1H26 performance: revenue was RMB 632 million, a year-on-year increase of 31.1%; adjusted net profit attributable to the parent company was RMB 191 million, a year-on-year increase of 45.7%. The revenue met the bank's expectations, and the net profit exceeded expectations primarily due to efficiency improvements and optimized product structure. Peripheral business continued to grow rapidly, with the market share of core products on the rise. In 1H26, revenue from peripheral vascular interventions was RMB 247 million (+40.0% YoY), mainly driven by mature products such as drug-coated balloons and radio frequency closure catheters, as well as new products like thrombectomy systems and blood dialysis balloons. Revenue from neurointerventions in 1H26 was RMB 366 million (+20.2% YoY), with mature products like the stent maintain growth and the Feilong embolization assist stent starting to contribute to revenue. Considering that most core products have completed centralized procurement and the renewal prices are stabilizing, the bank believes that market share is expected to further concentrate on leading companies in the post-centralized procurement era. Overseas revenue exceeded 10% for the first time, and the integration of Optimed has begun to contribute to performance. In 1H26, overseas revenue reached RMB 70.6 million, a year-on-year increase of 349.3%, accounting for 11.2% of total revenue. The company completed the delivery of 60% equity in Optimed in April, and both sides have preliminarily completed the integration of teams, channels, supply chains, and IT systems. The company has a complementary product range with Optimed, establishing a dual-brand strategy. The bank expects that overseas business will likely become the companys second growth curve. A series of new products have been approved, and differentiated products will support mid-term growth. From the beginning of the year to date, the company has received NMPA approval for 11 products, and the bank expects these products to start contributing revenue from 2027. The bank anticipates that the company will likely gain approval for 8 key products in 2027, of which 3 (peripheral point stent/peripheral balloon expandable stent/thrombectomy catheter) have received NMPA innovation medical device designation. The bank judges that the company will further concentrate its R&D resources on differentiated products with global intellectual property and international potential. Risk warnings: centralized procurement and medical insurance cost control exceeding expectations; commercialization of new products not meeting expectations; Optimed integration falling short of expectations.