The lifting of restrictions on restricted shares tests the fundamentals of STAR SPORTS MED (01609), and with sustained performance growth, the valuation has entered a reasonable range.

STAR SPORTS MED (01609), known as the "first domestic sports medicine stock in Hong Kong," is about to face new challenges after its share price fell below the issue price. On May 5, 2026, STAR SPORTS MED successfully listed on the Hong Kong stock market at HK$98.5 per share, rising as high as HK$299 during intraday trading, a maximum gain of 203.55%. Although the closing gain retreated, it still recorded a gain of 118.27%, capturing the market's full attention on its first day of listing. However, STAR SPORTS MED's share price began a continuous decline from the second trading day onward. After plunging 15.30% on September 30, it hit a historic low of HK$74.50, down 75.08% from the high of HK$299 and down 24.37% from the issue price. As the share price hits new lows, the upcoming lifting of restrictions on restricted shares will become another challenge STAR SPORTS MED must confront directly. It has been observed that 2.9229 million restricted shares held by STAR SPORTS MED's four cornerstone investors will officially be unlocked on November 5. These shares account for 34.7% of the global offering and 5.34% of the company's total issued share capital. Based on the closing price of HK$75.55 on September 30, the total market value of these 2.9229 million shares is approximately RMB 221 million. For STAR SPORTS MED, the lifting of restrictions at a low share price is more like a liquidity "stress test." Investors cannot help but wonder: after this event lands, how will STAR SPORTS MED's share price perform? **Cornerstones Are Overall Industry-Oriented Allocations, Impact May Be Limited to Sentiment** To understand the actual impact of the lifting of restricted shares on the company's share price, one must start from the sourceSTAR SPORTS MED's post-listing share price performance. From the stellar performance on the first day of listing to the current decline below the issue price, this is actually the result of four factors working together: overheated market sentiment, a relatively small free float, an overstretched valuation level, and a return to value. The market's "enthusiasm" for STAR SPORTS MED was actually evident as early as the IPO subscription stage. It has been observed that STAR SPORTS MED offered a total of approximately 8.4219 million H shares in its IPO, accounting for approximately 15.36% of the company's total share capital. Among these, the number of shares under the public offering was approximately 842,200 shares, accounting for 10% of the offered shares, and the number of shares under the international placing was approximately 7.5797 million shares, accounting for 90% of the offered shares. According to the allotment results announcement, STAR SPORTS MED's public offering was oversubscribed by 7,823.13 times, and the international placing was oversubscribed by 10.41 times, indicating that both retail and institutional investors were scrambling for STAR SPORTS MED shares. Particularly in the public offering, because Mechanism B was adopted for issuance without clawback, the mere 842,200 shares led to an extreme supply-demand imbalance, resulting in over 7,000 times oversubscription. It is worth noting that although the shares offered by STAR SPORTS MED accounted for 15.36% of the company's total share capital, the actually tradable float after listing was limited, with obvious thin-float characteristics. This is because STAR SPORTS MED introduced 4 cornerstone investors in the international placing, who collectively subscribed to approximately 2.9229 million shares, accounting for 38.56% of the international placing shares and 34.70% of the total offered shares. This means that the actually tradable float after listing accounted for 65.3% of the total offered shares and approximately 10% of the company's total share capital, namely 5.499 million H shares. Based on the issue price of HK$98.50 per share, the actual tradable market value was only approximately HK$540 million. On the basis of elevated market sentiment and a small free float, the dominant international placing investors quickly pulled out extremely high gains to successfully attract market attention, then swiftly cashed out their floating profits and exited. On the first day of listing, STAR SPORTS MED opened at HK$288, corresponding to a gain of 192.39%, then within two minutes rose to a high of HK$299, more than doubling from the issue price. This was followed by a rapid plunge in the share price, with the intraday gain once falling back to 103%, ultimately closing with a gain of 118.27%, with full-day turnover reaching as high as HK$918 million. Even though the first-day gain retreated significantly, STAR SPORTS MED's market value at that time was still as high as HK$11.78 billion, and the valuation was still clearly elevated, as can be corroborated by data. In 2025, STAR SPORTS MED's revenue was approximately RMB 403 million, and adjusted net profit was approximately RMB 154 million. The HK$11.78 billion market value corresponded to a PS valuation of approximately 26.8 times and a PE valuation of approximately 70.2 times. For comparison, Hong Kong-listed Beijing Chunlizhengda Medical Instruments, AK MEDICAL, and WEIGAO GROUP had TTM PE of only 912 times during the same period, while ZYLOXTB was approximately 20 times, all significantly lower than STAR SPORTS MED's valuation level. Under such a valuation system, STAR SPORTS MED's evolution from an excessively high valuation toward a return to value became inevitable. Because STAR SPORTS MED did not set up a "greenshoe" mechanism, with weak stabilizing forces and a smooth decline, after a continuous decline lasting as long as 5 months, STAR SPORTS MED's share price hit a historic low on October 2, at HK$74.25 per share, down 24.62% from the issue price, with market value having dropped to approximately HK$4.1 billion. In fact, the continuously declining share price had already priced in the upcoming lifting of restricted shares to some extent. And judging from the attributes of the cornerstones, the impact of this event on STAR SPORTS MED's share price may only remain at the sentiment level. It has been observed that STAR SPORTS MED introduced a total of 4 cornerstone investors in the international placing, among which JSC International held approximately 3.59% of the company's total share capital. This cornerstone represents E-Town Sheng Hai, backed by Yizhuang International and Beijing Economic-Technological Development Area state-owned assets, leaning toward industrial capital attributes. Ober Asia Fund IV held approximately 0.73%. This cornerstone is a global healthcare VC and a pre-IPO existing shareholder, leaning toward "professional medical investment + industrial synergy" attributes, but also with financial return demands; the Greater BAY AREA DEV Fund held approximately 1.02% through two accounts combined. This cornerstone focuses on Bay Area sci-tech biotech, leaning toward regional industrial allocation. It can thus be seen that STAR SPORTS MED's cornerstones are overall mainly backed by industry/state-owned capital, and are not purely short-term arbitrage players. Under the current temporary floating loss situation, cornerstone investors exiting at low levels would only cause greater losses due to difficulty in absorbing liquidity. Whether from the perspective of capital attributes or cost-benefit ratio, this is not a rational exit window. **Medium-Speed Growth Has Certainty, Fundamentals Provide Support at Low Share Price** If the upcoming cornerstone unlock's impact on STAR SPORTS MED's share price may only remain at the sentiment level, then the continuously rapid growth in performance is the most core pillar supporting STAR SPORTS MED's share price at low levels. Data shows that from 2023 to 2025, STAR SPORTS MED's revenue was approximately RMB 239 million, RMB 327 million, and RMB 403 million, respectively, with a compound annual growth rate of approximately 30%; adjusted net profit during the same period was RMB 58.017 million, RMB 96.472 million, and RMB 154 million, respectively, with a compound annual growth rate of 62.94%. This is a dazzling report card of high growth on the revenue side and explosive profit growth. The continuous revenue growth is mainly supported by three major logics: First, centralized procurement opened up the hospital admission logic for domestic sports medicine. In the past, this track was dominated by foreign players such as Smith & Nephew, Johnson & Johnson, and Stryker. Even if domestic products were cost-effective, they struggled to enter top-tier hospitals and obtain reported volumes. After the national centralized procurement of sports medicine high-value consumables landed in 2024, 14 core implants from STAR SPORTS MED won bids, with the average price compressed from RMB 712 per unit in 2023 to RMB 437 per unit in 2025. Per-unit revenue shrank significantly, but centralized procurement directly opened up hospital procurement pathways, with sales volume jumping from 262,000 units to 560,000 units, then surging to 710,000 units, nearly 1.7 times higher over two years. This is not simply "trading price for volume," but rather STAR SPORTS MED using bid-winning qualifications to obtain reported volumes and hospital admission quotas that were previously unattainable, then using differentiated models such as all-suture anchors, PEEK interference screws, and absorbable fixation devices to retain clinical procedure stickiness, truly capturing the share ceded by foreign players. From 2023 to 2025, STAR SPORTS MED's implant product revenue was RMB 187 million, RMB 250 million, and RMB 310 million, respectively, accounting for 78.2%, 76.4%, and 77.1%, making this product the key driving force behind revenue growth. Second, while implants are accelerating in volume, equipment and consumables continue to thicken per-hospital output. Arthroscopic cameras, plasma ablation, wireless shavers, and other equipment do not themselves generate significant profits after entering hospitals, but they lock in hospital procedure scenarios, with subsequent anchors, sutures, tool kits, and disposable blades continuing to be repurchased. This drove equipment and consumables revenue from RMB 52 million in 2023 to RMB 92 million, with its proportion consistently maintained above 20%. Third, overseas markets have also become a new growth curve. In 2023, STAR SPORTS MED's overseas revenue was only RMB 6.67 million, accounting for 2.8%. By 2025, it had surged to RMB 70.27 million, accounting for 17.4%. This relies on STAR SPORTS MED's strategy of obtaining registration certificates country by country and landing local distribution to penetrate European, Southeast Asian, Middle Eastern, and Latin American markets, using mid-range pricing plus a complete product matrix to offset the growth loss from domestic centralized procurement price pressure. It can thus be seen that after combining the three lines of volume growth as the foundation, equipment customer stickiness, and overseas hedging, STAR SPORTS MED was able to achieve high revenue growth in the centralized procurement cycle of declining average prices without relying on price increases or burning cash. From 2023 to 2025, the key reasons why STAR SPORTS MED's adjusted net profit growth far exceeded revenue growth are mainly twofold. First, gross margin clearly recovered in 2025. Although the national centralized procurement of sports medicine high-value consumables landing in 2024 caused overall gross margin to decline from 74.3% to 69.6%, entering 2025, thanks to effective cost management and economies of scale, gross margin recovered to 74.1%, and profitability stabilized. Second, after centralized procurement volume ramp-up, channel expenses were diluted, and the continuous decline in selling expense ratio accelerated profit release. Data shows that from 2023 to 2025, STAR SPORTS MED's three expense ratios were 50.96%, 44.11%, and 40.90%, respectively, among which selling and distribution expense ratios were 27.72%, 22.81%, and 20%, respectively, becoming the key force driving the decline in the three expense ratio. Entering the first half of 2026, STAR SPORTS MED's operations are still following the inertia of the past two years: implant volume ramp-up, overseas acceleration, and deepening coverage of tertiary hospitals. This drove the company's revenue growth of 21.6% to RMB 163.4 million during the reporting period, with adjusted net profit of RMB 48.897 million, a year-on-year increase of 24.3%. Gross margin during the period was 74.2%, flat with 74.1% in the same period of 2025, indicating that the centralized procurement average price impact has been absorbed by product mix and affordable volume ramp-up, and has not continued to transmit to the gross margin side. But the real variable hanging over STAR SPORTS MED's fundamentals is the price uncertainty of sports medicine follow-up procurement. The first round of national procurement for sports medicine has a 2-year cycle calculated on a rolling basis from each province's first execution date. The first-round average price of Tianxing's 14 core products has already been reduced by approximately 39% compared with before centralized procurement; in April 2026, the joint procurement platform has launched sports medicine follow-up information maintenance. If it ultimately turns to re-bidding, the follow-up price will be determined in the "volume reportingdocumentsbid opening" process, then implemented by provinces in batches, with the time window most likely falling in the second half of 2026 to 2027. If only annual renewal is pursued, the original winning price will be used without forming a new price reduction; if national procurement is re-conducted, prices may come under pressure again. Currently, the market expects a moderate downward trend in follow-up prices with a relatively high probability. Under such a scenario, STAR SPORTS MED's implants can still maintain positive revenue growth relying on volume growth of over 25%. On this basis, the rapid growth of overseas revenue and the gradual volume ramp-up of equipment and consumables under high certainty will allow STAR SPORTS MED to maintain medium-speed growth. And this fundamental certainty of "medium-speed growth with support, follow-up price reduction can be hedged" is the most solid supporting logic for STAR SPORTS MED's share price at low levels. And from a valuation perspective, if STAR SPORTS MED's 24% adjusted net profit growth in the first half of 2026 is extrapolated to the full year, then 2026 adjusted net profit could reach approximately RMB 191 million. The current market value of HK$4.372 billion corresponds to a 2026 PE of 21 times, which has entered a reasonable valuation range. The lifting of restrictions has never been a fundamental variable, but merely a concentrated release of short-term sentimentwhen the unlock is priced in by the market in advance and the negative factors are gradually cleared as the unlock date lands, the pricing power of the share price will truly shift from "anxiety over waiting for the unlock" back to "common sense of looking at performance," and its share price may also change accordingly.