U.S. Business Recovery and Cost Optimization Drive Improvements in Jinxin's 1H26 Revenue and Profit

Overview

This report reviews Jinxin's 1H26 results. Nomura believes the company's revenue returned to growth and net profit attributable to shareholders turned positive, mainly driven by the U.S. business recovery, margin improvement, and the fading impact of a one-off impairment in the prior-year period. It therefore maintains its Buy rating and HKD2.96 target price.

Core views

Jinxin announced its 1H26 results on August 21, 2026: revenue increased 6.6% YoY to CNY1,373mn, with sales growth returning to positive territory; net profit attributable to shareholders was CNY107mn, compared with a net loss of CNY1,040mn in 1H25 due to a one-off impairment. Excluding one-off factors, the operating improvement remained evident: non-IFRS adjusted net profit increased 79.8% YoY to CNY148mn, while adjusted EBITDA increased 49.8% YoY to CNY336.5mn. This indicates that the return to profitability was not merely the result of a low base and the fading impairment impact, but also reflected a recovery in core operating efficiency and profitability. By region, domestic China revenue was flat at CNY985mn, with divergent internal performance: Shenzhen, Wuhan, and Kunming recorded growth, while Chengdu declined. Overseas market revenue increased 22.8% YoY to CNY498mn, mainly from U.S. HRC; the report attributed the growth to improved insurance coverage policies and noted a simultaneous increase in the overseas segment's margin. Accordingly, the primary incremental contribution to overall growth in 1H26 came from the overseas business, while the domestic business had yet to achieve broad-based growth. Margin improvement was another key theme of the earnings recovery during the period. Gross margin increased 7.0 percentage points YoY to 37.4%, while gross profit increased 31.1% YoY to CNY513mn. As revenue grew, cost of sales decreased from CNY897mn to CNY860mn, down 4.1% YoY. U.S. HRC significantly optimized labor costs, while administrative expenses decreased 2.4% YoY to CNY214mn. As a result, operating profit increased 119.2% YoY to CNY196mn, with the operating margin rising from 7.0% to 14.3%. However, R&D expenses increased 31.3% YoY to CNY12mn, selling expenses rose 23.9% to CNY91mn, and interest expenses increased 33.5% to CNY58mn, continuing to exert pressure on the expense side. Year-over-year changes in the income statement were also affected by one-off items: other income and expenses swung from negative CNY1,135mn in 1H25 to positive CNY16mn in 1H26, driving profit before tax from a loss of CNY1,089mn to a profit of CNY155mn. Profit after tax turned from a loss of CNY1,044mn to a profit of CNY110mn, while the net margin recovered from -81.0% to 8.0%. Non-controlling interests swung from negative CNY4mn to positive CNY3mn, resulting in net profit attributable to shareholders of CNY107mn. Nomura maintains its Buy rating and HKD2.96 target price. The target price is based on a DCF model assuming a WACC of 10.8% and a terminal growth rate of 3.5%; the closing price shown in the report is HKD2.23. The stock currently trades at 27.3x FY26F fully diluted EPS of CNY0.07. The rating benchmark is the Hang Seng Index, and the Buy rating indicates expected outperformance versus the benchmark over the next 12 months. Achievement of the target price depends on the sustainability of the U.S. business recovery, IVF demand and the competitive environment, as well as M&A execution and medical safety.

Analysis framework

Nomura first compared the 1H26 and 1H25 income statements on a year-over-year basis, distinguishing the fading impact of the one-off impairment from adjusted operating improvement. It then broke down revenue between domestic China and overseas markets, tracing the effects of U.S. insurance policies and labor cost optimization on revenue and margins. Finally, it derived the target price using a DCF model and tested the valuation assumptions against the FY26F P/E ratio and explicitly identified risks.

Methodology notes

• Valuation MethodologyDCF Discounted Cash Flow

  DCF Valuation

  This method discounts the company's future cash flows to their present value using the cost of capital. The report uses a WACC of 10.8% and a terminal growth rate of 3.5% to derive a target price of HKD2.96.

• Company Fundamentals and Financial FrameworkEarnings Quality Analysis

  Distinguishing one-off impairments, adjusted profit, and changes in operating margin

  Rather than relying solely on the swing in net profit attributable to shareholders from a loss to a profit, the report excludes the one-off impairment in 1H25 and assesses the sustainability of core operating improvements by examining adjusted net profit, EBITDA, gross margin, expenses, and operating margin.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Jinxin (1951.HK)

  The U.S. HRC business recovery and cost optimization drove Jinxin's 1H26 revenue back to growth, improved margins, and enabled net profit attributable to shareholders to turn positive.

  Strengths

  Overseas revenue increased 22.8% YoY, gross margin rose to 37.4%, and adjusted net profit and adjusted EBITDA increased 79.8% and 49.8%, respectively.

  Weaknesses

  Overall domestic China revenue was flat, while revenue in Chengdu declined; R&D, selling, and interest expenses all increased YoY.

  Comparison

  The report uses the Hang Seng Index as the stock's rating benchmark, with Buy indicating expected outperformance versus the index over the next 12 months.

  Risks

  Weaker-than-expected IVF demand or intensifying competition, a slower-than-expected recovery in the U.S. business, M&A failing to deliver as planned, and medical incidents.

Key data

• 1H26 RevenueCNY1,373mnCNY1,289mn in 1H25, up 6.6% YoY.
• 1H26 Net Profit Attributable to ShareholdersCNY107mnA net loss of CNY1,040mn was recorded in 1H25, marking a turnaround to profitability.
• Non-IFRS Adjusted Net ProfitCNY148mnUp 79.8% YoY.
• Adjusted EBITDACNY336.5mnUp 49.8% YoY.
• Domestic China RevenueCNY985mnFlat YoY; Shenzhen, Wuhan, and Kunming recorded growth, while Chengdu declined.
• Overseas Market RevenueCNY498mnUp 22.8% YoY, mainly driven by U.S. HRC and improved insurance coverage policies.
• Cost of SalesCNY897mn in 1H25; CNY860mn in 1H26Down 4.1% YoY.
• Gross ProfitCNY513mnCNY391mn in 1H25, up 31.1% YoY.
• Gross Margin37.4%30.4% in 1H25, up 7.0 percentage points YoY.
• R&D ExpensesCNY12mnCNY9mn in 1H25, up 31.3% YoY.
• Administrative ExpensesCNY214mnCNY219mn in 1H25, down 2.4% YoY.
• Selling ExpensesCNY91mnCNY74mn in 1H25, up 23.9% YoY.
• Operating ProfitCNY196mnCNY90mn in 1H25, up 119.2% YoY.
• Operating Margin14.3%7.0% in 1H25.
• Other Income and ExpensesCNY16mnNegative CNY1,135mn in 1H25, mainly reflecting the fading impact of the one-off impairment in the prior-year period.
• Interest ExpensesCNY58mnCNY43mn in 1H25, up 33.5% YoY.
• Profit Before TaxCNY155mnA loss of CNY1,089mn was recorded in 1H25.
• Income TaxCNY45mnPositive CNY44mn in 1H25.
• Profit After Tax and Net MarginCNY110mn; 8.0%A loss of CNY1,044mn and -81.0%, respectively, in 1H25.
• Non-Controlling InterestsCNY3mnNegative CNY4mn in 1H25.
• FY26F Valuation27.3xBased on FY26F fully diluted EPS of CNY0.07.
• Key DCF AssumptionsWACC 10.8%; terminal growth rate 3.5%Used to derive the HKD2.96 target price.

Impact & implications

The report believes that the recovery in U.S. HRC revenue, improvement in overseas margins, and labor cost optimization provide operating support for Jinxin's earnings recovery, rather than the recovery being attributable solely to the low-base effect caused by the prior year's one-off impairment. Meanwhile, overall domestic China revenue remained flat and regional performance diverged, implying that future earnings delivery will continue to depend significantly on the U.S. business recovering as expected and sustained margin improvement.

Risks

• IVF demand may be weaker than expected, or market competition may intensify.
• The U.S. business may recover more slowly than expected.
• M&A transactions may fail to deliver the intended results as planned.
• Medical incidents may occur.