Xiangyu Medical Announces Proposed RMB 1.366 Billion Private Placement to Advance Brain-Computer Interface and Rehabilitation Robotics

Source: China Business Network

Reported by Su Hao and Lu Zhikun, China Economic Journalists, in Beijing

On the evening of June 18,Sunnyou Medical(688626.SH) announced that it plans to raise no more than RMB 1.366 billion through a private placement. Of this amount, RMB 966 million will be invested in the “R&D Project for Innovative Rehabilitation Medical Products,” with a construction period of five years, covering brain-computer interface rehabilitation medical products and rehabilitationRobotand other innovative products; the remaining RMB 400 million will be used to supplement working capital.

However, behind this private placement plan lies the operational reality of the company’s declining net profit attributable to shareholders for two consecutive years, as well as a forward-looking project with a five-year construction period that will not generate profits in the short term. From R&D investments of 966 million yuan to 400 million yuan earmarked for replenishing working capital, and from the five-year construction timeline to the income statement showing two straight years of declining profits, Sunnyou Medical’s private placement proposal raises several questions worthy of scrutiny.

Regarding the specific details of this private placement, a reporter from China Business News sent letters and made phone calls to Sunnyou Medical for an interview. A staff member of the company’s Board Office stated that they had received the inquiry, but as of press time, no response had been received.

Construction period spans up to 5 years

According to the announcement, the core focus of this private placement is the R&D project for innovative rehabilitation medical products. Of the 966 million yuan raised, 916 million yuan will be allocated to product R&D, and 50 million yuan to the procurement of R&D equipment. The product R&D projects include brain-computer interface (BCI) rehabilitation medical products, rehabilitation robots, and other innovative rehabilitation medical products. Sunnyou stated that the implementation of these projects will enable the company to build dual advantages of “in-house development of underlying technologies + in-house manufacturing of core equipment,” thereby forming integrated application capabilities that deeply merge frontier BCI technologies with its proprietary rehabilitation equipment.

Based on the current progress of Sunnyou’s brain-computer interface (BCI) business, commercialization remains in its early stages. As of June 2026, the company holds registration certificates for two EEG acquisition devices, and in May 2026, it obtained four additional registration certificates for non-invasive EEG evoked potential devices. The company has achieved independent research and development across the entire chain, including complete systems, specialized chips, core algorithms, and electrode accessories. Its related products have been deployed in more than 800 Grade A tertiary hospitals across China. Recently, the company has collaborated with over 600 leading hospitals in China to establish BCI rehabilitation therapy and clinical research translation centers.

As of the end of 2025, Sunnyou’s brain-computer interface (BCI)-related products had not yet achieved large-scale sales, accounting for a small proportion of its revenue. In the first three quarters of 2025, more than 60% of the company’s R&D investment was directed toward BCI-related areas. Sunnyou expects that relevant products will successively obtain registration certificates from late 2025 to early 2026. In December 2025, the company centrally launched 14 new BCI products.

From an industry perspective, brain-computer interfaces have been incorporated into the Outline of the 15th Five-Year Plan and explicitly identified as a key area for cultivating future industries.

Data from IT Juzi shows that there were 24 to 26 financing events in the brain-computer interface (BCI) sector throughout 2025, with total funding amounting to nearly RMB 1.45 billion. The report projects that China's BCI market size is expected to surpass RMB 5 billion in 2026 and maintain rapid growth, with the market size anticipated to exceed RMB 15 billion by 2030.

Sunnyou has indeed made early strategic moves in the field of brain-computer interfaces (BCI). The company initiated BCI research and development in 2015, established a specialized neuroscience laboratory, and led or participated in multiple national key R&D projects. However, the path from obtaining regulatory approval to large-scale hospital adoption, and from equipment sales to service-based revenue generation, remains lengthy.

The company acknowledged in its announcement that, due to the substantial R&D investment required for new products, lengthy registration cycles, and rapid product iteration, if the implementation outcomes and progress of the current fundraising investment projects fail to meet expectations, the corresponding products may face the “risk of being unable to achieve profitability in the short term.”

Furthermore, the company highlighted risks associated with technological innovation in its announcement: if the company’s projections regarding industry technology trends prove inaccurate, or if competitors achieve significant breakthroughs in technological research first, the company may lose its technological advantages, exposing its products and technologies to the risk of substitution. The brain-computer interface (BCI) field is characterized by rapid technological iteration, with numerous domestic and international enterprises and research institutions accelerating their strategic layouts. In this context, a five-year construction period is not insignificant, as both technological pathways and the competitive landscape may undergo substantial changes during this timeframe.

Performance Declined for Two Consecutive Years

According to its official website, Sunnyou was established in 2002 and successfully listed on the STAR Market in 2021. The company specializes in rehabilitation fields including pain management, neurology, orthopedics, postpartum care, postoperative recovery, cardiopulmonary rehabilitation, traditional Chinese medicine (TCM), elderly care, and integrated medical and elderly care services. It provides a range of rehabilitation products and comprehensive solutions to medical institutions, elderly care facilities, disabled persons’ federations at all levels across China, as well as households.

As Sunnyou Medical released its private placement plan, the company was facing operational pressure from two consecutive years of declining net profit attributable to shareholders.

The financial report shows that in 2024, the company achieved operating revenue of RMB 744 million, a year-on-year decrease of 0.17%; net profit attributable to shareholders was RMB 103 million, a year-on-year decrease of 54.68%; and net profit after deducting non-recurring items was RMB 90 million, a year-on-year decrease of 55.90%.

In 2025, the downward trend continued. The company achieved an annual operating revenue of RMB 768 million, a year-on-year increase of 3.26%; net profit attributable to shareholders was only RMB 78 million, a year-on-year decrease of 24.08%; and net profit after deducting non-recurring gains and losses amounted to RMB 58 million, with a decline of 35.23%. The company fell into the predicament of "increasing revenue without increasing profits."

Profit margins were under pressure primarily due to the dual squeeze from R&D investment and depreciation and amortization expenses. In 2025, the company’s R&D expenditure reached RMB 189 million, a year-on-year increase of 24.47%, accounting for 24.65% of total revenue. As of the end of 2025, the number of R&D personnel at the company and its subsidiaries totaled 687, representing 31.30% of the total workforce. Meanwhile, previously constructed projects have been progressively put into use, leading to a continuous rise in depreciation and amortization expenses.

From a business structure perspective, revenue from rehabilitation and physiotherapy equipment, which accounts for the majority of income, amounted to RMB 478 million, representing a year-on-year decrease of 5.22%. The company attributed this decline to “the integration and adjustment of medical insurance charging policies, leading to phased pressure on demand from hospitals.” Revenue from rehabilitation training equipment reached RMB 176 million, a year-on-year increase of 7.00%; revenue from rehabilitation assessment equipment totaled RMB 41 million, a year-on-year increase of 46.67%. The gross profit margin for core businesses was 67.90%.

Furthermore, the company’s quarterly performance data has shown some marginal changes. In the fourth quarter of 2025, the company’s revenue amounted to RMB 231 million, a year-on-year decrease of 2.61%; net profit attributable to shareholders of the listed company reached RMB 34 million, representing a year-on-year increase of 15.73%. In the first quarter of 2026, the company’s revenue totaled RMB 193 million, up 3.78% year on year; net profit attributable to shareholders was RMB 25 million, an increase of 10.33% compared with the same period last year; and net profit deducting non-recurring gains and losses stood at RMB 23 million, rising by 24.51% year on year. After six consecutive quarters of declining profits, it remains to be seen whether the company’s performance has reached a turning point.

Of the funds raised in this private placement, RMB 966 million will be allocated to research and development, while RMB 400 million will be used to supplement working capital. On paper, the company’s liquidity position is not tight. As of the end of 2025, Sunnyou Medical’s total assets amounted to RMB 3.268 billion, with net assets attributable to shareholders of the listed company reaching RMB 2.070 billion. The debt-to-asset ratio stood at a mere 18.6% at the end of 2025. The company maintains ample cash reserves, with monetary funds totaling approximately RMB 722 million at the end of 2025 and rising to around RMB 760 million by the end of the first quarter of 2026.

Given the low debt level and high cash reserves, the necessity of raising substantial funds through a private placement, including RMB 400 million to supplement working capital, warrants scrutiny.

Beyond the private placement, He Yongzheng, the actual controller of Sunnyou Medical, proposed a more ambitious strategic plan. He publicly stated that, on the upstream front, Sunnyou Medical will strengthen chip research and development and establish a multi-source supply system to ensure security. In terms of horizontal expansion, the company plans to carry out 3 to 5 mergers and acquisitions between 2026 and 2030, incubate no fewer than 10 high-growth startups, and plan the construction of a chain of rehabilitation hospitals featuring clinical application and research in rehabilitation robotics.

From the perspective of equity dilution, no more than 48 million shares are proposed to be issued in this offering, accounting for 30% of the total share capital of 160 million shares prior to the issuance. Before the issuance, Mr. He Yongzheng and Ms. Guo Junling, as a married couple, collectively controlled 64.64% of the company’s shares through direct and indirect holdings. Based on calculations using the maximum issuance size, their combined controlling stake after the issuance will be no less than 49.72%, and they will remain the actual controllers.

Sunnyou also clarified in its announcement that this issuance will dilute earnings per share in the short term, and the company has implemented measures to offset the impact on performance. However, the private placement is still subject to approval by the shareholders’ meeting, review and approval by the Shanghai Stock Exchange, and registration with the China Securities Regulatory Commission before it can be implemented.