In August this year, the financial reports for the first half of 2025 of the two leading companies in the domestic non-invasive prenatal testing (NIPT) field, BGI Genomics and Berry Genomics, were successively disclosed. The former saw a year-on-year revenue decline of 12.82%, with a net profit loss for the first time after excluding non-recurring items; the latter experienced a year-on-year revenue decline of 18.91%, recording a net loss of over 27 million yuan. According to the financial reports of both companies, the significant decline in NIPT business revenue is an important reason for their revenue fluctuations.
In recent years, structural changes in the domestic NIPT market, coupled with industry collective procurement, have led the NIPT market to bid farewell to the past era of high growth and enter a new stage of competition for existing market share. Annoroad, as the third-largest company in the domestic NIPT industry by market share, has now knocked on the door of the Hong Kong Stock Exchange during this painful period for the industry.
According to observations from Zhitong Finance APP, on September 30, Annoroad submitted its application to the main board of the Hong Kong Stock Exchange, with CCB International and Guotai Junan International as its joint sponsors. It had previously submitted its initial listing application to the Hong Kong Stock Exchange on March 25 this year, but it became invalid on September 25 due to the expiration of the prospectus after six months. Therefore, this is the company's second application.
<h2>How much of the NIPT industry cake can the third player share?</h2>
The prospectus shows that Annoroad is a company focused on IVD (in vitro diagnostic products) medical devices and multi-group life science research services based on molecular diagnostics. The company also specializes in NIPT IVD products based on NGS (Next Generation Sequencing).
Annoroad's clinical sequencing solutions include self-produced IVD testing kits based on gene sequencing, gene sequencers, and bioinformatics analysis software, as well as supporting technical support and laboratory design services. However, since about 60% of Annoroad's revenue comes from clinical sequencing solutions (mainly including NIPT and CNV-seq testing kits), and the company expects its future revenue growth to depend on the continued popularity of this business, the growth and competition in the NIPT industry are closely related to it.
From a market perspective, in recent years, the frequent introduction of pro-natalist policies in China has promoted NIPT (non-invasive prenatal genetic testing) to become one of the fastest-growing gene sequencing products in China, widely used in prenatal examinations for pregnant women. According to data from ZhiShi Consulting, the penetration rate of NIPT testing kits among pregnant women in China has increased from about 15.4% in 2018 to about 48.8% in 2023, with the penetration rate expected to reach 97.8% by 2033.
This brings certain benefits to companies in China with businesses related to reproductive health genetic testing. Taking the two leading companies in the industry as examples, from 2015 to 2019, BGI Genomics' revenue from reproductive health services increased from 568 million yuan to 1.176 billion yuan, with this business once accounting for more than 50% of its total revenue; meanwhile, Berry Genomics, which has NIPT as one of its core businesses, saw its revenue rise continuously, reaching a peak of 1.618 billion yuan in 2019.
Against this backdrop, Annoroad, as the third player in the domestic NIPT market by market share, has also enjoyed the development dividends. In the prospectus, the company mentioned that its revenue from sales of clinical sequencing solutions for 2022, 2023, and 2024 is expected to be 251 million yuan, 270 million yuan, and 329 million yuan, respectively, mainly due to the increase in sales of NIPT and CNV-seq testing kits. Since its CNV-seq testing kit business revenue is only about 30 million yuan, it can be reasonably inferred that the NIPT business occupies a dominant position in its revenue growth
However, with the gradual popularization of NIPT, the industry has entered a stage of price regulation, and the emergence of centralized procurement has somewhat compressed the profit margins of NIPT suppliers.
According to Zhitong Finance APP, prior to this, the price of NIPT in China was around a thousand yuan or more. However, in recent years, policies have been introduced in places like Beijing, Hebei, and Tianjin, leading to a significant downward trend in its terminal prices. In July last year, the Jiangsu Provincial Medical Insurance Bureau even released a volume-based procurement plan for NIPT, setting the maximum effective bid price at 345 yuan, and stipulating that companies bidding no higher than 275 yuan would be directly selected. Compared to before, the price of NIPT has dropped by more than 70%.
The restructuring of pricing logic brought about by this centralized procurement is one of the direct reasons for the fluctuations in the performance of leading companies like BGI Genomics and Berry Genomics.
It is worth mentioning that NIPT is currently one of the most mature businesses in the IVD market, often with only one manufacturer providing services in a region, and the replacement cost is relatively high. According to the prospectus, as of the end of 2023, among the companies in China providing NIPT testing kits approved by the National Medical Products Administration, the top three market shares are 50.5%, 15.9%, and 12.1%, with Annoroad ranking third in sample market share.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251010/1760063345250310.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="image.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251010/1760063345250310.png"/>
Therefore, under the current background of fierce competition in the industry, it is not easy for Annoroad to catch up with the market share of the top two companies in a short period of time. This also means that the company may face significant resistance in achieving sustained growth in performance.
<h2>What supports the 4 billion valuation?</h2>
Since its establishment, Annoroad has completed six rounds of financing, with notable investors including Chongde Hongxin, Gaotejia Investment, and Northern Light Venture Capital. After completing its last round of financing in October 2022, the company's post-investment valuation reached 4.049 billion yuan (calculated based on the last round of financing at a per-share cost of 67.61 yuan). However, to maintain a stable support for the 4 billion valuation after listing in Hong Kong, it needs to be backed by fundamental support.
As the third company in the NIPT industry, Annoroad's profitability has also been affected by the performance fluctuations of the top two leading companies.
The prospectus shows that in 2022, 2023, 2024, and the first half of 2025, Annoroad's revenue was 435 million yuan, 475 million yuan, 518 million yuan, and 269 million yuan (in RMB, the same unit); corresponding gross profit margins were 31.7%, 32.6%, 35.4%, and 33.9%; although Annoroad's revenue and gross profit growth during the reporting period are commendable, it still cannot escape losses. The financial report shows that the company's net losses during the reporting period were 67 million yuan, 240 million yuan, 126 million yuan, and 29 million yuan, with net loss rates of 15.4%, 50.6%, 24.3%, and 10.8%
In other words, Annoroad has accumulated losses of approximately 462 million yuan over three and a half years, primarily due to high operating expenses and financial costs. Among them, the &#34;special shareholder rights liability accrued interest&#34; item has accumulated approximately 338 million yuan from 2022 to 2024.
In terms of cash flow, the company's ability to generate cash also needs improvement. The financial report shows that in recent years, the net cash flow from operating activities of Annoroad has shown significant fluctuations, with net outflows of 26 million yuan in 2023 and 55 million yuan in the first half of this year.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251010/1760063362975158.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="image.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251010/1760063362975158.png"/>
It is not difficult to see that since Annoroad has not yet achieved stable profitability, its fundamentals still have considerable room for improvement, which may to some extent affect the secondary market's valuation assessment of it. Referring to the valuation situations of comparable companies BGI Genomics and Berry Genomics, their PB valuations are currently 2.27 times and 2.83 times, respectively. Even with a PB valuation of 3 times, based on Annoroad's net assets of 530 million yuan at the end of 2024, its secondary market valuation would only be 1.59 billion yuan, far lower than the 4 billion yuan valuation previously given by the primary market

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Annoroad submitted a secondary listing application to the Hong Kong Stock Exchange on September 30, becoming the third largest company in the domestic NIPT industry. In recent years, the NIPT market has undergone structural changes, and industry growth has slowed. Financial reports from BGI Genomics and Berry Genomics show a significant decline in revenue, and Annoroad's future revenue growth will depend on the popularization of its clinical sequencing solutions. This application is co-sponsored by Jianyin International and Guotai Junan International

New Stock Outlook | With a valuation of 4 billion, can Annoroad become the "BGI Genomics of the Hong Kong market"?