How have responsibilities changed between management and the board?

  • Effective 22 October, founder Chang Zhaohua resigned as a director and from other related positions while remaining chief scientific officer; former rotating co-CEO Jonathan W. Chen became executive director, CEO and authorised representative.
  • Chen is responsible for day-to-day operations, reports directly to the board and is supported by the president’s office. The company will also review the delegation of authority and reporting arrangements between the board and management.

Why do the approval rules matter to the assessment of trading resumption?

  • The company clarified that matters requiring board approval that proceed without it will be deemed unauthorised and should be reported promptly to the board; matters in doubt must be submitted to the board before action is taken.
  • The company also plans to improve its governance policies, clarify which matters require board approval, and dismantle governance structures and management organisations established or implemented without formal board approval. JPMorgan believes these measures strengthen board oversight and help rebuild investor confidence.
  • However, there is no timetable for either the lease-related audit review or the resumption of trading in the shares. The bank hopes the company will provide further details of the lease review.

How is the influence of shareholders with state-owned backgrounds reflected?

  • Huang Jing was appointed a non-executive director, a member of the audit committee and chair of the strategy committee on 28 August. Pudong Innovation Investment, where she works, is an investment platform under the State-owned Assets Supervision and Administration Commission of Pudong New Area.
  • JPMorgan believes the appointment is related to SIIC Capital’s investment in MicroPort Scientific. The Shanghai Healthcare Industry M&A Fund managed by SIIC Capital agreed in July 2025 to acquire shares from Otsuka, and the transaction was completed in September of the same year.
  • The audit review of the lease matters and subsequent governance improvements took place after Huang Jing’s appointment; on that basis, the bank believes shareholders with state-owned backgrounds are gaining influence over board oversight.

What are the operating targets and valuation assessment?

  • Management’s targets for 2026 have shifted toward the quality of earnings: reported revenue growth of 15%, an operating margin of 4% and positive operating cash flow. JPMorgan expects coronary intervention, robotics and overseas expansion to drive growth.
  • The bank expects profit improvement to come from better operations and a substantial reduction in financial burdens, although net profit will still include non-recurring items. After the announcement of results for fiscal 2025, the bank raised its revenue forecasts for 2026 to 2028 slightly, while lowering its price target for December 2026 to 18 Hong Kong dollars because of higher expected operating expenses. It maintained its Overweight rating.
  • Key downside risks include weaker-than-expected progress on profitability and cost optimisation, higher-than-expected financial obligations including the CRM share repurchase, and dilution from further equity financing.