Xiangyu Medical's Brain-Computer Interface Ambitions Face Investor Skepticism Amid Declining Profits, Insider Selling, and Discounted Equity Offering

Source: TMTPost

A large-scale private placement plan has cooled down the market enthusiasm that had just surged from the brain science concept (brain-computer interface, BK251393).Xiangyu Medical(688626.SH), once again becomes the focus of the market.

On the evening of June 18, this rehabilitation medical device company unveiled its plan for a private placement of A-shares in 2026, aiming to raise no more than RMB 1.366 billion in total funds, with RMB 966 million allocated to the R&D project for innovative rehabilitation medical products and RMB 400 million used to supplement working capital. The product R&D project aligns precisely with the brain-computer interface (BCI) concept, including BCI-based rehabilitation medical products and rehabilitation...RobotProducts and other innovative rehabilitation medical products.

This did not generate positive market expectations; instead, it triggered a sharp correction in the stock price on the first trading day following the disclosure of the preliminary plan. On June 22, the A-share brain-computer interface (BCI) concept index rose by 0.13%, with 35 constituent stocks advancing and 54 declining. Xiangyu Medical led the decline within the sector, dropping more than 9% at one point during early trading before narrowing its loss to 5.71% at the close.

Since May 19, Sunnyou Medical has experienced a continuous decline in its stock price, possibly reflecting investors’ complex sentiments over the company’s net profit attributable to shareholders having decreased for two consecutive years, major shareholders reducing their holdings at high levels, and the launch of a large-scale private placement at a relatively low stock price.

A 1-Billion Bet on Brain-Computer Interfaces: Why Is the Market Unconvinced?

After a cycle of hype and subsequent decline in the brain-computer interface concept, Sunnyou Medical’s launch of a large-scale equity financing plan has struck a sensitive nerve in the market.

According to the disclosure in the plan, the number of shares issued in this offering shall not exceed 48 million, accounting for 30% of the total share capital prior to the issuance. The issuance is targeted at no more than 35 qualified specific investors. The pricing benchmark date shall be the first day of the issuance period, and the issue price shall be no less than 80% of the average trading price of the Company’s shares over the 20 trading days preceding the pricing benchmark date. The lock-up period for the subscribed shares shall be six months.

The Company reviewed and analyzed the stock performance over the 20 trading days preceding the announcement, during which the average trading price was RMB 51.67 per share, corresponding to a discounted floor price of approximately RMB 41.34 per share (calculated at 80% of the average). By comparison, this floor price still remains somewhat below the latest share price of RMB 45.38.

According to the company’s estimates, based on a 2025 net profit attributable to shareholders of the parent company of RMB 78.1564 million and a net profit after deducting non-recurring gains and losses of RMB 58.2733 million, and assuming flat performance in 2026, the basic earnings per share (EPS) after deducting non-recurring items will be diluted from RMB 0.38 per share before the issuance to RMB 0.29 per share after the issuance, representing a decline of more than 23%.

The market’s heightened sensitivity to private placements stems primarily from concerns over equity dilution. As the company’s profitability has not yet returned to an upward trajectory, a large-scale share issuance at this juncture will inevitably dilute immediate returns. Given that R&D projects will take several years to generate revenue, investors must bear the dilution costs in the short term, while the future returns from the funded projects remain uncertain.

The newly disclosed dividend payout plan struggles to soothe market anxieties amid the reality of continuously declining profits.

Based on the data, from 2023 to 2025, the proportion of cash dividends distributed by the company relative to the net profit attributable to shareholders of the parent company for the respective periods was 36.36%, 35.95%, and 35.94%, respectively. Although the dividend payout ratio remained stable, the absolute amount of dividends declined continuously, which is essentially a result of the consecutive decline in net profit. Over the past three years, the company’s accumulated retained earnings were primarily used to supplement working capital and fund project investments, thereby supporting business development and the implementation of strategic initiatives.

In 2024, the Company achieved operating revenue of RMB 744 million, a slight year-on-year decrease of 0.17%, while net profit attributable to shareholders of the parent company dropped significantly by 54.68% year-on-year to RMB 103 million. In 2025, the Company recorded operating revenue of RMB 768 million, a year-on-year increase of 3.26%; however, net profit attributable to shareholders of the parent company continued to decline by 24.08% to RMB 78 million, with net profit attributable to shareholders of the parent company after deducting non-recurring gains and losses amounting to RMB 58 million, representing a decrease of 35.23%.

Regarding the continued decline in net profit, Sunnyou Medical explained that it was mainly due to the company’s firm implementation of its strategy to invest in frontier technologies such as brain-computer interfaces, resulting in a continuous increase in R&D expenditure. Financial reports show that the company’s R&D expenses amounted to RMB 152 million in 2024, a year-on-year increase of 42%; in 2025, R&D expenses further rose to RMB 175 million, representing a year-on-year increase of 15.13%.

Nevertheless, the quarterly data revealed some positive signs. In the fourth quarter of 2025, the company's net profit attributable to shareholders increased by 15.73% year-on-year; in the first quarter of 2026, the net profit attributable to shareholders rose by 10.33% year-on-year, while the growth rate of net profit attributable to shareholders after deducting non-recurring items reached 24.51%.

In its dividend distribution plan, the Company has established a differentiated cash dividend policy. During growth stages with significant capital expenditure arrangements, the proportion of cash dividends in profit distribution shall be no less than 20%, and the Company is currently in a peak period of research and development investment.

In the absence of any major investment plans or significant cash expenditures, the Company shall distribute no less than 10% of its distributable profits realized in the current year in the form of cash dividends. Meanwhile, the Company commits that the cumulative cash dividends distributed over the past three years shall amount to no less than 30% of the average annual distributable profits realized during the same period.

Amidst the Trust Deficit: The Pains of Transformation and the Long Road to Breakthrough

A sharp stock price decline triggered by a private placement reflects, on the surface, the market’s short-term resistance to equity dilution, but at a deeper level, it signifies investors’ collective scrutiny of the company’s strategic transformation path. At this critical juncture of intelligent upgrading in the industry, what are the odds of success in exchanging equity dilution for increased R&D investment and future growth potential?

The trust deficit created by shareholders’ concentrated share reductions at peak stock prices has further amplified market skepticism.

Reconstructing the Timeline: From Late 2025 to Early 2026, the Brain-Computer Interface (BCI) Sector Experienced a Phase of Speculative Frenzy. The Stock Price of Sunnyou Surged Accordingly, Hitting the 20% Daily Limit Up on January 5 and 6 Consecutively. On January 7, It Intraday Peaked at 95 Yuan. Within Just Three Trading Days, the Maximum Interval Gain Reached 57%, Marking Its Highest Stock Price in Nearly Four and a Half Years.

On January 13, when the stock price was at a phase peak, Anyang Qixu, an acting-in-concert party of the company’s controlling shareholder, disclosed a share reduction plan, proposing to reduce its holdings by no more than 3% of the company’s total share capital. The reduction window is from February 4 to May 3, with a maximum of 1% to be reduced through centralized bidding and a maximum of 2% through block trading.

Following the opening of the share reduction window, the company’s stock price generally entered a downward channel; although a slight rebound occurred within the period, it did not reverse the medium-term weakening trend.

On April 7, Anyang Qixu announced the early termination of its current share reduction plan. A total of 4.71932 million shares were ultimately reduced, representing 2.95% of the total share capital, with only 80,680 shares remaining to reach the 3% reduction cap. The transaction price range for this reduction was between RMB 55.01 and RMB 73.80 per share, resulting in cumulative cash proceeds of approximately RMB 278 million. Following the completion of the reduction, the entity's shareholding ratio decreased to 2.43%. The vast majority of the reduced shares were transacted within the relatively high-price range of this round of concept-driven market rally.

When the company unveiled its RMB 1.366 billion private placement plan six months later, its share price had already fallen sharply from the peak reached earlier in the year. The timing—where insiders cashed out at the height of the concept-driven rally, followed by the listed company seeking to raise funds from the secondary market after the price correction—inevitably sparked resistance among retail investors.

The core of the market controversy lies in the imbalance between the company’s expectation management and the equilibrium of interests between majority and minority shareholders.

Anyang Qixu, which is implementing share reductions and acts in concert with the controlling shareholder, demonstrates a clear disconnect between its actions and the company’s public narrative of continuously increasing investments in brain-computer interfaces and maintaining long-term optimism about the intelligent rehabilitation sector. Meanwhile, the current private placement plan does not specify whether the controlling shareholder and actual controller will participate in the subscription. If the actual controllers do not commit their own funds to follow up on the investment, the costs of equity dilution and earnings dilution will inevitably be borne by minority shareholders.

Broadening the perspective to the entire medical device industry, the sector as a whole is mired in the growing pains of transformation, characterized by pressure on traditional businesses and high investment in innovative ventures. Within the same track,Pumen TechnologyThis serves as a reference: in 2025, both revenue and net profit declined, yet full-year R&D investment increased by 13.45% year-on-year, with the R&D expense ratio rising to 22.03%. It has become a phased industry norm to achieve revenue growth without corresponding profit growth.

The era of rapid expansion fueled by the industry dividend from mid- to low-end rehabilitation and physiotherapy equipment has come to an end. As the focus of future industry competition shifts toward high-end innovative sectors such as brain-computer interfaces (BCI) and intelligent rehabilitation robots, only enterprises that first achieve technological implementation and realize commercial scale-up will secure their ticket to the next round of growth.

The industry’s growth potential is underpinned by solid fundamentals. Industry estimates indicate that the domestic market size for AI-enabled rehabilitation software and hardware in China reached approximately RMB 6.97 billion in 2025 and is projected to climb to RMB 31.2 billion by 2030, representing a five-year compound annual growth rate (CAGR) of over 35%. Coupled with the accelerating pace of import substitution for mid-to-high-end rehabilitation equipment, the high-end intelligent device segment—long monopolized by foreign brands—is witnessing continuous technological breakthroughs by local enterprises, ensuring substantial and certain incremental growth driven by import replacement.

Meanwhile, the operational risks behind the high R&D investment cannot be ignored. In its announcement on abnormal stock price fluctuations, Xiangyu Medical cautioned that although the company has completed its full-chain layout of technology, products, and channels for brain-computer interfaces, there is a lag in hospital bidding processes and terminal clinical sales. As of the end of 2025, related products had not yet generated scaled sales revenue, accounting for a small proportion of total revenue. This path toward innovation is destined to endure growing pains brought by greater uncertainty.Text | Company Observation, Author | Cao Qian, Editor | Cao Shengyuan)

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