In May last year, CHUNLI MEDICAL (01858) successfully bid for three hip joint product systems and a total knee joint system in China's centralized procurement program for artificial joints. Following this, the company adjusted prices for pre-procurement channel inventory, leading to short-term financial pressure. By Q3 2024, revenue had declined 49.03% YoY, resulting in a net loss. However, as channel inventory adjustments concluded, CHUNLI MEDICAL's performance stabilized and rebounded significantly within a year.
Recent financial results show the company achieved revenue of RMB756 million in the first three quarters of 2025, up 48.75% YoY, with net profit attributable to shareholders surging 213.21% to RMB192 million. Q3 alone saw revenue jump 109.51% YoY to RMB268 million, while net profit turned around to RMB77.06 million.
With centralized procurement effects diminishing, CHUNLI MEDICAL regained market confidence, its stock rising 122.13% YTD as of October 31.
Early signs of recovery emerged in Q1 2025 when the company posted its first profit growth post-decline, with revenue up 3.6% and net profit increasing 5.2%. This followed three years of revenue growth without profit expansion after entering centralized procurement in 2021. Gross margin rebounded to 66.7% and net margin to 25.2% in Q1, signaling rapid clearance of procurement-related pressures.
Market optimism was evident in trading patterns: after a 13% drop in October 2024, the stock gradually recovered over five months, gaining 17.73% with declining volumes, indicating strong holder confidence.
The domestic orthopedic sector's recovery outpaced expectations. In H1 2025, peers like Dabo Medical and Weigao Orthopedics saw net profit growth of 76.69% and 52.43% respectively, while Sanyou Medical reported a staggering 2083.64% increase. CHUNLI MEDICAL's orthopedic segment grew 62.85% YoY in Q2.
The stock rallied notably from May to July (up 17.69%, 12.18%, and 29.85% respectively) amid increased trading volumes, before entering a three-month consolidation phase with 23.50% volatility but minimal net gain (0.2%). During this period, average holding costs rose to HK$15.88, with low-cost positions significantly reduced.
Notably, institutional flows turned positive in early September, with net inflows reaching HK$32.31 million, sustaining through October. Post-Q3 earnings, the stock surged 14.04% on October 31 with heavy turnover (20.54 million shares, 21.59% turnover rate), suggesting profit-taking by early investors.
Technically, the sharp rise pushed the stock into overbought territory (BOLL upper band, RSI divergence), hinting at potential short-term correction. However, long-term value remains intact given industry recovery and clear international expansion strategy.
Globally, the orthopedic market is projected to grow steadily at 5.3% CAGR, reaching $94 billion by 2032. For CHUNLI MEDICAL, overseas markets now contribute 40% of revenue, supported by FDA/CE certifications for hip/knee products and proprietary surgical navigation systems—China's first handheld orthopedic robotics solution.
With 35 new certificates obtained YTD and R&D spending at 11.44% of revenue, CHUNLI MEDICAL's technological edge and international competitiveness underpin its valuation growth potential.