Guotou Securities: First initiates a "buy-A" investment rating for Xunfei Health (02506) - Starfire model empowers comprehensive medical care.

Guotou Securities released a research report stating that for the first time it covers XUNFEIHEALTH (02506) and gives it a "buy-A" investment rating. Based on a dynamic market-to-sales ratio of 9 times in 2026, a target price of 105.54 Hong Kong dollars is given for a 6-month period. XUNFEIHEALTH is a leading AI medical enterprise in China. In the context of accelerated penetration of AI and large-scale model applications, healthcare is one of the first landing scenarios. The company actively enters incremental markets while maintaining a high market share with its strong AI capabilities. The bank expects the company's revenue for 2025-2027 to be 925 million/1.256 billion/1.577 billion yuan, respectively. Guotou Securities' main points are as follows: Policy-driven AI medical industry, business covering GBC terminals In recent years, the national government has introduced a series of policies to support the development of the AI medical industry. The company focuses on grassroots medical services, regional management platforms, hospital services, and patient services around policies, with a comprehensive business layout covering customers in the GBC terminals. According to Deloitte's prediction, the market size of AI medical health solutions is expected to exceed 20 billion yuan in 2025 and exceed 100 billion yuan in 2030, with a CAGR of 43.2%. Solidifying AI technology barriers, deepening cooperation with top hospitals With the strong intelligent voice recognition capabilities of its parent company Iflytek Co., Ltd., the company independently develops the Xinghuo Medical large model and continues to upgrade it. The model ranks first in the MedBench evaluation and is at the level of attending physicians in double-blind clinical comparative tests, significantly ahead of general large models. The company is also jointly building special disease large models with top-tier institutions such as Huaxi Hospital and Qilu Hospital, promoting the clinical landing of AI in core diseases such as cardiovascular and cerebrovascular diseases, and improving technical reliability and commercial replicability. Maintain leading advantages in the G end and continue to accelerate B-end expansion The company's core product Intelligent Medical Assistant has covered over 800 districts in 31 provinces and cities nationwide, and more than 77,000 grassroots medical institutions, providing over 1.1 billion AI auxiliary diagnosis suggestions, becoming an effective example of the deep integration of general medical AI scenes and professional disease control scenes. The company has launched the Intelligent Hospital solution for tertiary hospitals, covering all three stages of pre-diagnosis, during diagnosis, and post-diagnosis. In the pre-diagnosis stage, it provides intelligent triage systems and medical history collection systems for patients; in the during diagnosis stage, it provides a smart accompaniment system and iDoctor, an intelligent workstation for doctors; in the post-diagnosis stage, it provides intelligent tools for revisits, follow-ups, and satisfaction surveys. Extend the service chain, C-end patients are expected to become a new growth curve With the improvement of residents' awareness of health payment and the policy focus on service continuity, the company actively lays out AI products for the patient end, providing intelligent follow-up and personalized health management services through voice recognition and large model technology. With AI-empowered refined patient operations, the company is expected to form a service closed loop from doctors to patients, opening up a new round of growth momentum. Risk warning Risks include lower-than-expected downstream demand, slower-than-expected technological iterations, intensified industry competition, slower-than-expected commercialization, business compliance and regulatory risks, regional business advancement relying on local resources, and slower-than-expected project acceptance and repayment pace.