PEIJIA-B (09996) Mid-term Report Observation: Core AR product volume exceeds expectations, profit signals reinforce investment certainty.

In the first half of this year, the Hong Kong stock market's pharmaceutical and medical device sector has undergone a phase of valuation digestion alongside a reconfiguration of industrial logic, displaying notable structural differentiation. The market's pricing standards for leading enterprises have also shifted towards innovation capability, globalization potential, performance certainty, and business model resilience. This is a significant reason for the enhanced investment certainty for PEIJIA-B (09996) following the disclosure of its H1 2026 financial results. On August 21, PEIJIA Medical disclosed its mid-year performance for 2026. The financial report revealed that the company achieved total revenue of 425 million yuan during the reporting period, representing a year-on-year increase of 20.1%. With the combined effects of growth in main revenue and refined management, the quality of the company's earnings continues to improve: the gross profit for the period amounted to 290 million yuan, up 17.1% year-on-year; both EBITDA and pre-tax profits turned positive; and the net loss for the period was significantly narrowed by 87.4% year-on-year to approximately 8.99 million yuan, making profitability in sight. At the same time, the net cash generated from operating activities reached 49.41 million yuan, a substantial year-on-year increase of 1394.5%, further affirming PEIJIA's capability to realize innovation outcomes. As core products continue to expand in volume, the commercial innovation achievements are further translating into profits and cash flow. The TAVR products have shown sustained growth, with significant outperformance in the AR sector. In the first half of this year, PEIJIA Medical has further solidified its position as a leading brand in the field of transcatheter valve intervention in China, thanks to its higher sales and R&D efficiency. During the reporting period, the company's transcatheter valve treatment business generated revenue of 207 million yuan, reflecting a 28.3% year-on-year increase. Notably, the losses in this business segment significantly narrowed by 87.2% year-on-year to 9.72 million yuan, positioning PEIJIA to potentially become the first domestic valve manufacturer to overcome persistent losses. Behind the impressive financial data, driven by the expansion in the AS + AR dual-indication product scale, the companys TAVR products have added coverage in approximately 70 hospitals. As of June 30, 2026, the cumulative coverage in Greater China exceeded 850 hospitals, with about 2,830 TAVR products implanted, a year-on-year increase of 36.5%, further enlarging the company's leading advantage in this market. In particular, driven by effective commercialization, the AR business represented by the TaurusTrio product became one of the highlights in PEIJIA's current financial report. With its differentiated product design, safety, and standardized procedures, TaurusTrio quickly gained clinical recognition after its launch. During the reporting period, the product has nearly completed provincial network registration nationwide, with market access continuously advancing; the implantation volume rose rapidly month by month, exceeding 660 units in the first half of this year. Entering the second half, the pace of commercialization accelerated further, with July 2026 alone seeing 330 implants. It is noted that, in a higher-priced AR regurgitant valve product market, PEIJIA's AR product growth accelerated, further validating the current strong demand market and the value of the TaurusTrio as the first integrated positioning key transcatheter device for aortic regurgitation intervention approved in China. It is worth mentioning that, during the earnings call held on August 24, PEIJIA's management raised the annual implantation guidance for the company's valve business from the initial expected 5,000+ units to 6,000-6,500 units by the end of the year. The implantation volume for regurgitant valves is expected to be no less than 2,500 units, with revenue growth exceeding 30%, showcasing the company's strong confidence in sustained growth for this business. The foundation of the neurointervention sector remains strong, with profit contributions continuing to rise. As PEIJIA's longstanding "cash cow" business, the neurointerventional sector continues to be a crucial pillar supporting the company's steady growth. In the first half of 2026, the company's neurointerventional business recorded revenue of 217 million yuan, a year-on-year increase of 13.3%. The segment's profit reached 73.2 million yuan, a substantial year-on-year growth of 79.0%, further enhancing profitability alongside stable revenue growth. Based on confidence in robust growth for the neurointerventional business, the company's management reiterated the performance guidance for this segment of a revenue growth rate of 15%-20% for the entire year. On the business front, in the first half of this year, PEIJIA continued to advance its product expansion strategy of independent innovation + strategic cooperation. In terms of self-developed products, the company leveraged innovative clinical procedures during the period to continuously expand application scenarios, achieving sustained improvement in clinical penetration for core self-developed products including the Syphonet thrombectomy stent, Fastunnel delivery balloon, and DCwire microguidewire, further solidifying the company's foundation in the access/ischemia business. In terms of strategic cooperation, the companys exclusive agency for the YonFlow blood flow-directed mesh stent and the Qida disposable neuro catheter sheath achieved rapid commercialization growth during the period, becoming a new driver of revenue growth. At the same time, the company reached a strategic collaboration with B. Braun Medical, obtaining exclusive distribution rights for the SeQuent CIS drug-coated intracranial balloon in mainland China. This product is currently undergoing registration review and is expected to be approved and launched within the year, further enhancing the companys treatment layout in the ischemia sector and expanding options for "intervention without implantation," which investors should keep an eye on for its subsequent sales growth potential. In summary, During the half-year financial results conference call, PEIJIA's management indicated that the company is expected to "achieve profitability without relying on external BD events." This means that the company has a clear expectation of crossing the breakeven point this year, and the subsequent market valuation model will transition from a PS valuation supported by sales and expectations to a PE valuation validated by performance and profits. The resulting significant expectation gap is likely to become a core driver for the company's stock price to demonstrate greater upward resilience in the mid to long term.