The impact of centralized procurement has dissipated, and the stock price of Chunli Medical has risen over 120% this year. Where will it head after three months of consolidation?

In May last year, the national procurement project for artificial joints opened bidding in Tianjin. Chunli Medical (01858) successfully won bids for three hip joint product systems and a total knee joint system. Subsequently, the company adjusted prices for channel inventory before the centralized procurement, resulting in short-term pressure on performance due to the impact of centralized procurement. In the third quarter of 2024, the company's revenue fell by 49.03% year-on-year, and it reported a net loss.

However, as the adjustment of channel inventory neared completion, a year later, Chunli Medical's performance showed a significant stabilization and rebound.

According to Zhitong Finance APP, Chunli Medical recently released its performance for the first three quarters of 2025. The financial report showed that the company achieved operating revenue of 756 million yuan during the period, a year-on-year increase of 48.75%; the net profit attributable to shareholders of the listed company was 192 million yuan, a substantial year-on-year increase of 213.21%. In the third quarter alone, the company achieved operating revenue of 268 million yuan, a year-on-year increase of 109.51%; the net profit attributable to the parent company was 77.0619 million yuan, turning losses into profits year-on-year.

As the impact of centralized procurement on the company gradually diminishes, Chunli Medical, with its recovering profitability, has also regained recognition in the secondary market. Since the beginning of this year, the company's stock price has entered a steady upward range, with a year-to-date increase of 122.13% as of October 31.

Signs of Price Increase Before Performance Disclosure?

After three years of centralized procurement sweeping the orthopedic consumables industry, many domestic orthopedic leaders finally delivered a rebound report in Q1 of this year, among which Chunli Medical saw its first positive profit growth after a decline, achieving revenue of 230 million yuan (+3.6%) and a net profit attributable to the parent company of 58 million yuan (+5.2%).

Behind the slight increase in revenue and profit is the continuously improving profitability quality of Chunli Medical. According to Zhitong Finance APP, after entering centralized procurement in 2021, although sales of joint products increased by 63%, the company experienced three consecutive years of revenue growth without profit growth, with last year's net profit even dropping significantly by 66%. However, in Q1 of this year, the company's gross profit margin rebounded to 66.7% month-on-month, and the net profit margin rose to 25.2%, leading the market to judge that the negative impact of centralized procurement on the company is rapidly clearing.

The monthly performance of the company's stock price and changes in trading volume clearly reflect the attitude changes of market participants. The chip distribution chart of Chunli Medical in mid-March this year showed that its chip peak concentrated around the cost price of 8.40 Hong Kong dollars, with a low proportion of trapped chips above, indicating that many market participants likely entered the market after the decline in mid-October last year.

Although Chunli Medical's stock price fell by 13% in October last year, it showed a slow stabilization and rebound over the next five months. From November 2024 to March this year, the stock price recorded five consecutive monthly increases, accumulating a rise of 17.73%, but the corresponding monthly trading volume significantly decreased, with only February this year seeing trading volume surpassing 10 million shares, while the minimum trading volume dropped to 4.9385 million shares, reflecting the consistent optimistic attitude of market participants towards Chunli Medical's future growth.

![image.png](https://img.zhitongcaijing.com/image/20251102/1762081813973162.png? But the market seems to still underestimate the speed of recovery in the domestic orthopedic consumables industry. In the first half of 2025, the net profit growth rates of Dabo Medical, Chunli Medical, and Weigao Orthopedics reached 76.69%, 44.85%, and 52.43%, respectively; Sanyou Medical's net profit for the period even increased by a staggering 2083.64% year-on-year, achieving more than 20 times growth; even for the steadily growing Aikang Medical, its net profit year-on-year growth rate was 15.3%.

This also confirms the market's previous judgment on the domestic orthopedic consumables industry, which is that as the centralized procurement of various categories is executed for more than 1-2 years, channel inventory is gradually digested, scale effects become apparent, and companies will begin to enjoy the dividends of exchanging price for volume. Among them, looking specifically at the orthopedic consumables business, Chunli Medical's segment revenue growth rate in the second quarter of 2025 was higher than its peers, reaching 62.85%.

In terms of market conditions, benefiting from this year's bull market in Hong Kong's innovative drugs and medical devices, Chunli Medical's stock price saw significant increases in May, June, and July, with growth rates of 17.69%, 12.18%, and 29.85%, respectively. During this process, its overall trading volume fluctuated significantly, reaching 34.5134 million shares, 28.5463 million shares, and 50.7748 million shares.

However, afterwards, Chunli Medical entered a three-month period of sideways consolidation. From July 24 to October 30, its stock price increased by only 0.2% within the range, but the amplitude reached 23.50%, maintaining a stable sideways effect while also experiencing significant price fluctuations within the range. During this period, buying funds used part of their chips to suppress the market while also absorbing selling pressure chips, locking most of their chips in the accumulation area. At this time, the average cost of chips for Chunli Medical in the market had risen to HKD 15.88. Compared to early August this year, the proportion of low-cost chips at the bottom had significantly decreased.

During this sideways consolidation period, Chunli Medical's main funds showed significant abnormal movements. In the first week of September this year, its main funds reversed the previous net outflow and slight inflow actions, with a net inflow of HKD 32.3101 million, and then maintained a gradually decreasing net outflow over the next five weeks, with net inflows continuously increasing. Overall, in September and October, it maintained a net inflow of funds, and finally, after the company's Q3 financial report was disclosed, the main funds in the market chose to rapidly increase. On October 31, Chunli Medical closed up 14.04%, with a single-day trading volume of 20.5379 million shares and a turnover rate of 21.59%, indicating that the main funds began to take profits and exit during the upward process.

![image.png](https://img.zhitongcaijing.com/image/20251102/1762081841234658.png?

Direction for Going Abroad Confirmed, Long-term Investment Value Remains

From a technical perspective, the significant rise on October 31st quickly propelled Chunli Medical's stock price to the upper Bollinger Band, with the corresponding RSI indicator rapidly diverging upwards after a golden cross, establishing a short-term overbought signal, which may bring subsequent technical regression to Chunli Medical's stock price.

However, against the backdrop of industry concentration warming and a highly determined direction for going abroad, even if there is a short-term pullback, it will not affect Chunli Medical's long-term value, which is a reassurance for long-term investors.

From a market perspective, according to statistics from Fortune, the global orthopedic medical device market is expected to grow to USD 62.22 billion in 2024 and is projected to exceed USD 94 billion by 2032, with a stable annual growth rate of 5.3%. In the current domestic traditional orthopedic market, which has been covered by centralized procurement and entered into stock market competition, expanding into overseas markets to obtain a second growth curve has almost become a necessary option for leading enterprises in the industry.

As one of the earliest domestic orthopedic consumable companies to go abroad, Chunli Medical began implementing a simultaneous strategy for its own brand and OEM brand early on. One of the key supports for this strategy is Chunli Medical's commitment to continuous and rhythmic product research and development and registration.

In recent years, the company's femoral head reconstruction rods, tantalum metal filling, and hip prosthesis components have been approved for market launch by the National Medical Products Administration, marking the company's break from foreign monopolies and making it the first and only domestic enterprise to possess chemical vapor deposition manufacturing of porous tantalum metal implants; the company has also obtained multiple registration certificates for 3D printed titanium alloy wire anchor nails, tantalum-coated wire anchor nails, and wire anchor nails (insertion type), further enriching its sports medicine product line; the company has also obtained registration certificates for knee replacement surgery navigation systems and hip replacement surgery navigation systems, making it the first domestically developed orthopedic handheld robotic system. In the first nine months of this year, the company's R&D investment accounted for 11.44% of its revenue during the same period, and it has newly approved 35 new registration certificates in its business.

As the company actively expands its international market business, rapidly growing overseas revenue has become an important source of income. In the first half of this year, Chunli Medical's overseas revenue accounted for 40%.

Chunli Medical's current export products mainly include hip joints, knee joints, and other products. With a high level of product technology and proactive product registration, the company successfully passed the CE annual system audit and supervision audit for hip, knee, and spine series products as early as 2023.

With the knee prosthesis system obtaining FDA 510(K) approval in the United States, it indicates that the company's technological advantages have reached an internationally leading level, possessing strong international market competitiveness, which will help the company continuously enhance its international sales and lay a solid fundamental basis for the subsequent stable growth of the company's valuation