Where our views differ from the market’s
The market is concerned about: 1) whether general-purpose large models will weaken the technical barriers and commercialization space of vertical models; 2) whether customized projects can be scale-replicated. We think that: 1) in the medical imaging market, general-purpose large models and vertical models are more likely to form a layered system of ‘foundation model + specialty application’, and clinical implementation still relies on specialty data, doctor experience, and medical device registration; 2) foundation models can reduce the marginal development cost of specialty models. By leveraging foundation models, specialty data, regulatory qualifications, and hospital deployment capabilities, the company could precipitate clinical knowledge into reusable, high-cost-performance small models.
Earnings forecasts and valuation
We expect the company’s total revenue for 2026/2027/2028 to be RMB333/652/ 1,245mn (+102.6/+95.9/+90.8% YoY). Our SOTP analysis: 1) model services at 40x 2027E PS, reflecting market confidence in the company’s competitive moats within vertical (specialized) domains and its long-term expansion potential; 2) other businesses at 6.9x 2027E PS, in line with their peer group on VA consensus. Our target price is HKD296.13.
Risks: risks of product regulatory approval and commercialization; risks of market acceptance and distribution networks; uncertainties in government grants and support; political and economic uncertainties in global expansion; actual outcome falling short of assumptions.