CICC has released a research report stating that, considering the business recovery of JXR (01951) in the second half of 2025, it has raised its forecast for the company's adjusted net profit for 2025 by 19% to RMB 200 million. However, due to increased depreciation and amortization from the new Shenzhen facility and an adjustment in the financial recognition method for interest expenses in 2026, it has lowered its 2026 forecast by 34% to RMB 280 million and introduced a 2027 forecast of RMB 360 million. At the current share price, this implies a 2026 P/E ratio of 24.8x. CICC maintains its "Outperform" rating on the stock. While accounting for changes in profit forecasts, the report also notes a sector-wide valuation correction, leading to a 10% reduction in the target price to HK$3.5, which corresponds to a 2026 P/E of 34.9x and implies a potential upside of 41.1% from the current price.
CICC's key views are as follows: It forecasts an adjusted net profit of approximately RMB 200 million for FY2025. JXR is scheduled to release its full-year 2025 results in late March, and CICC expects a slight year-on-year decline in revenue, with adjusted net profit around RMB 200 million. A significant sequential improvement in both revenue and profit is anticipated for the second half of 2025.
The number of treatment cycles showed quarter-on-quarter improvement in 2H25, and a return to steady growth is expected in 2026. Influenced by the inclusion of assisted reproductive technology in medical insurance schemes, the proportion of Intrauterine Insemination (IUI) cycles within the company's total cycles has increased, impacting the average customer spend and revenue. A noticeable recovery began in the second half of 2025. According to the company's announcement, the cumulative number of cycles for FY2025 decreased by 1.4% year-on-year, a significant narrowing from the declines of 8.3% and 5.2% seen in 1H25 and the first three quarters of 2025, respectively. Considering that average customer spend still faced some pressure in 1H25, CICC expects a slight year-on-year decline in revenue for FY2025. However, with the improving operational trend, both cycle numbers and revenue are expected to return to a healthy growth rate of 5-10% in FY2026.
Operational quality and asset structure are being optimized, with expectations for improved profitability and cash flow. In the first half of 2025, the company addressed risk items including impairments on overseas assets. CICC expects a substantial one-time loss to still be reported for FY2025, with adjusted net profit around RMB 200 million, although a clear sequential improvement was already evident in the second half. As the company continues to advance structural optimization, cost management, and asset quality improvement, the benefits are expected to further materialize in 2026 profitability. CICC forecasts that FY2026 EBITDA could return to approximately RMB 550 million, with corresponding improvements in net profit and free cash flow.
The company is focusing on its core business, aiming to recoup funds and enhance shareholder returns. JXR expects the relocation to the new Shenzhen facility to be fully completed in the first quarter of 2026, which is anticipated to accelerate market share gains for its core business. According to the company's official social media channels, it is actively promoting the restructuring of its US-based HRC operations, expecting significant improvements and capital recoupment by the end of the first half of 2026. Furthermore, the company has disclosed plans to initiate a medium- to long-term share repurchase program once its leverage ratio decreases.
Risk warnings include industry demand growth falling short of expectations, policy changes, and unforeseen medical incidents.