Tianxing Medical (01609.HK) included in the Stock Connect: The value re-rating of the sports medicine leader officially begins

On September 4, Tianxing Medical (01609.HK) was officially included as a constituent of the Stock Connect. For this domestic leader in sports medicine, which has been listed for only a few months, this marks a new turning point from pricing by industrial capital to valuation by the broader market, bringing the company into the view of a wider investor base. $STAR SPORTS MED (01609.HK)$

The core question facing the market is: Does this company, which has broken through against the tide during centralized procurement, seen explosive growth in its overseas business, and rapidly launched its innovative pipeline, possess the growth logic to navigate economic cycles and support a new leap in market capitalization?

The answer lies within four verifiable core anchors, which also serve as a crucial basis for southbound capital to continuously reassess its value in the future.

1. Scarcity Anchor: Leader in a Niche Sector Amid the Wave of Domestic Substitution

Sports medicine in China is a "long slope with thick snow" sector within the medical device industry, indicating sustained high growth. The domestic end-market size is expected to exceed RMB 21 billion. According to data from Frost & Sullivan (Zhishi Consulting), the more specific market for implants and instruments was valued at approximately RMB 5.4 billion in 2024 and is projected to reach RMB 12.1 billion by 2030, representing a compound annual growth rate (CAGR) of 14.3%. Growth drivers include increased sports participation rates and an aging population, resulting in highly certain demand.

However, this sector has long been monopolized by multinational giants such as Smith & Nephew and Johnson & Johnson, with imported brands collectively holding 60%-70% of the market share. Four of the top five players are foreign brands. Tianxing Medical is the only company that has broken this pattern: based on 2024 sales revenue, the company ranks fourth in the implant and instrument market with a 6.5% share, making it the largest domestic supplier and the only local brand among the top five industry players. In terms of the end-market, the market share of domestic brands is currently only 9%, leaving considerable room for future domestic substitution.

As the leading domestic brand in this sector, Tianxing Medical's scarcity value stems from its hard-core technology and product barriers. The company holds 27 Class III medical device registration certificates, over 80% of which are either domestically developed or the first approved in China, ranking first in the industry for the number of licenses held. Its absorbable materials and all-suture technologies are at a domestic leading and globally synchronized level. Notably, its absorbable interference screws and suture anchors rank first in domestic sales, and its all-suture technology makes it the world's first manufacturer to achieve full suture integration across its entire product series.

For southbound capital, "domestic substitution + niche sector leader" is a consensus investment theme. The scarcity value of Tianxing Medical will be gradually priced in after its inclusion in the Stock Connect program.

2. Innovation Anchor: Acceleration of the Second Growth Curve Driving Valuation Re-rating

Most notably, the innovative business matrix extended from core technological accumulation is continuously opening up the second growth curve for Tianxing Medical's long-term expansion, which also determines the upside potential of the company's valuation. Currently, the company has built a full-cycle technology reserve covering "prevention-treatment-rehabilitation" around sports medicine, and expanded into regenerative medicine, medical aesthetics, brain-computer interfaces, and AI in medical physics. All innovative businesses stem from the spillover of core technologies, featuring clear tiering and definite implementation paths.

Multiple core pipelines within the full-cycle layout have entered the harvest period: the sports medicine surgical robot was submitted for registration this year and is expected to be approved next year, potentially becoming the world's first product of its kind, driving the company's upgrade from a consumables supplier to a provider of comprehensive surgical solutions; the osteoarthritis regenerative repair solution, utilizing BMAC stem cell and scaffold technology, is expected to launch next year, covering patients at all levels; the intelligent agent for exercise prescription rehabilitation has already been approved, achieving full-scenario coverage from hospitals to homes, with commercialization initiated in the first half of the year, thereby closing the loop on post-surgical recovery.

Leveraging underlying biomaterial technologies such as silk fibroin, the company continues to expand the boundaries of its second growth curve, deeply cultivating regenerative medicine and laying out frontier directions such as anti-aging medical aesthetics, brain-computer interfaces, and AI in medical physics. These pipelines are not distant concepts but represent incremental performance gains that can be gradually realized within 1-3 years,有望 (expected to) drive the company's valuation logic toward that of an innovative platform enterprise.

3. Profitability Anchor: High-Growth Resilience Under Centralized Procurement Pressure

Previously, the market's core concern regarding medical device companies was the price shock and profit erosion caused by centralized volume-based procurement (VBP). However, Tianxing Medical has demonstrated over two consecutive years of performance that VBP has not weakened its profitability; instead, it has served as a litmus test validating its growth resilience and optimizing operational quality.

First, the company's products are anchored in domestic substitution. Against the backdrop of VBP, the company is replacing high-priced imported brands, allowing it to maintain high gross margin levels despite procurement pressures. The company's overall gross profit margin rebounded from 69.58% in 2024 to 74.14% in 2025, and remained at a robust 74.2% in the first half of 2026, basically flat year-on-year, thereby validating the sustainability of its high margins.

Second, in terms of financial performance, the company achieved operating revenue of RMB 163 million in the first half of 2026, a year-on-year increase of 21.6%, indicating steady expansion of its core business. During the same period, it recorded a net profit of approximately RMB 27.402 million, with an adjusted net profit (excluding listing expenses and share-based compensation expenses) of RMB 48.897 million, up 24.3% year-on-year, highlighting the resilience of its operational profitability. During the earnings call, management projected full-year revenue growth of at least 30% and expected full-year net profit growth to range between 30% and 40%. This suggests not only high visibility for full-year performance growth but also implies accelerating growth in the second half of 2026.

4. Growth Anchor: Overseas Breakthroughs Lift the Market Cap Ceiling

If domestic substitution forms Tianxing Medical's foundation, explosive growth in overseas markets has lifted its market capitalization ceiling. The company's overseas business is in a rapid breakthrough phase from zero to one: revenue surged from RMB 379,000 in 2022 to RMB 70.266 million in 2025, representing a more than 185-fold increase over three years, with its contribution rising from less than 3% to 17.4%. In the first half of 2026, overseas revenue reached approximately RMB 40.698 million, up 70.6% year-on-year, accounting for 24.9% of total revenue, continuing to serve as a core growth engine.

Currently, the company's products have entered over 60 countries, accumulating more than 200 international certifications, with core coverage in Europe, Southeast Asia, Latin America, and other regions. Overseas growth is driven by a differentiated strategy of "comprehensive product solutions + exceptional cost-performance ratio," rather than low-price dumping. Full product line coverage offers an advantage difficult for overseas competitors to match, which, combined with cost advantages and localized sales teams, is gradually achieving market breakthroughs.

More critically, the progress of international expansion validates the strength of the company's global competitiveness. Previously, valuations for domestic medical device companies were often anchored to the domestic ceiling. Once proven capable of competing head-to-head with foreign giants, the valuation framework undergoes a profound shift. It is reported that the company plans to expand its coverage to more than 80 countries, accelerating its layout through overseas M&A and international cooperation, which is expected to further increase the proportion of overseas revenue.

From an investment perspective, inclusion in the Southbound Trading Scheme signifies more than just improved liquidity; it reshapes the market pricing system.Previously, the market largely viewed Tianxing Medical merely as a sports medicine device company. As capital fully uncovers its value, its multiple attributes—as a leader in domestic substitution, an innovative platform for global competition, and a driver of a second growth curve—will continue to materialize, paving the way for a new round of value re-rating.

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