On the afternoon of November 23, the National Healthcare Security Administration held a press conference to interpret the 17 batches of medical services price project guidelines that have been issued. It was pointed out that to support relatively mature AI-assisted technologies to enter clinical applications while preventing additional burden on patients, the National Healthcare Security Administration analyzed potential application scenarios for AI and established "AI-assisted" expansion items in radiological examinations, ultrasound examinations, and rehabilitation projects.

The emergence of "AI-assisted diagnosis" has sparked a surge in several stocks in the Hong Kong medical sector during intraday trading on November 26, including Xintai Medical, Yidu Technology, and also including Adicon Holdings (09860), which had been in a sideways movement for nearly 2 months.

Zhitong Finance APP observed that the stock price of Adicon soared by 75% at one point in the morning of November 26, but then the price increase quickly fell back, closing with a rise of only 25%, and followed by three consecutive declines in stock price from November 27 to 29. Among the ups and downs, who becomes the biggest beneficiary is worth investors' attention.

Who is taking advantage of the bullish sentiment?

After mid-September this year, the Hang Seng Index experienced a wave of increases. Although Adicon's stock price saw three consecutive declines from September 9 to 11, it began to follow the market's upward trend starting September 13. However, unlike most stocks that started a correction period on October 7 or 8, Adicon's recent trend ended abruptly on October 3, leading to nearly two months of sideways fluctuations. During this period, the company's stock price dropped to a new listing low of 6.18 Hong Kong dollars on November 22, with the daily minimum volume also falling below 0.2 million shares.

Zhitong Finance APP noted that in the past five days, the top five sellers of Adicon were HSBC, ubs group, Merrill Lynch, HSBC Securities, and Hua Fu Jianye. HSBC acted as the largest seller, selling 1.79 million shares, while the other four sellers sold less than 0.02 million shares each. On the buying side, Citibank was the largest buyer, purchasing 1.0986 million shares; Hong Kong Stock Connect (Shenzhen) and Hong Kong Stock Connect (Shanghai) ranked second and third in buyers, purchasing 0.492 million shares and 78,500 shares respectively.

Looking at a longer time frame, in the past 60 days, HSBC remains the largest seller of adicon holdings, having sold 8.7245 million shares; while Citibank, Hong Kong Stock Connect (Shenzhen), and Hong Kong Stock Connect (Shanghai) are the top three buyers, having purchased 2.4234 million shares, 2.208 million shares, and 1.5625 million shares respectively. It can be seen that over the last two months, while Citibank and funds from Hong Kong Stock Connect have been heavily buying, HSBC, as the broker with the highest shareholding ratio, has not stopped its selling pace.

In this round of straight-up surge on November 26, the price of adicon holdings reached a 75% increase, but swiftly fell on the same day, finally narrowing the closing price increase to 25%. Then from November 27 to 29, it experienced three consecutive trading days of declines, showing obvious signs of selling. However, although the dominant funds chose to cash out at a high point during this time, it does not necessarily leave the small and medium speculators with a mess.

A new round of distribution is imminent; when will it start?

From a technical perspective, for adicon holdings, if no large funds enter to change the pattern, a "MACD death cross" would originally appear on the November 26 node. As a trend-following indicator, it is common for technical indicators to choose to temporarily exit at the MACD zero death cross node while waiting for opportunities. However, on November 26, a wave of large funds entering turned the originally impending MACD green bar to red, creating a "death cross that does not die" situation. When adicon holdings' stock price closed down the next day, the red bar continued to rise.

According to Zhithong Finance APP, the refusal of the MACD indicator to produce a death cross is when the DIFF line receives support from the DEA line, also known as "half dead, half alive." The specific shape occurs when the DIFF line running above the DEA line retraces near the DEA line, receiving support from it and rising again. In short, when a MACD red bar reversal appears, it indicates that the market may embark on a bullish trend, serving as an entry signal from a technical perspective. Under the continuous rise of the red bars, the probability of subsequent stock price increases becomes larger.

However, currently, adicon holdings' stock price has not stabilized above the 60-day moving average, and the rebound trend needs to be observed. At this time, combined with the position cost distribution chart, it can be seen that adicon holdings may welcome a new round of washout trends.

From the position cost distribution of this stock, over the past two months, the peak above 9 Hong Kong dollars is a concentrated area, blocking the stock price from continuing to rise. Only after a significant surge during the intraday session on November 26 did the concentrated peak for adicon holdings show some loosening. However, currently, near the average cost line of 8.22 Hong Kong dollars, there are still relatively concentrated trapped chips. Therefore, although there are gradually profit-taking chips accumulating, the high position chips have not been completely digested, and a large amount of chips remains above the average cost line, exerting strong pressure on the company's stock price increase.

Generally speaking, during the process of washing positions, block orders often use various methods to clean up the unsteady positions in the market, forcing investors with low-cost hold positions to sell. Meanwhile, new investors buy in at relatively higher prices, overall raising the average cost of market participants' positions. By increasing the average cost, the selling pressure that block orders face during the subsequent price rise will be relatively reduced, which is beneficial for the stable rise of stock prices.

At this time, adicon holdings has not yet fully formed a position peak near the cost moving average, and there are still many high-cost trapped positions above that have not been sold. Similarly, near the support level below, there is also a certain proportion of low-cost floating positions gathered, making the overall position cost distribution unfavorable for block orders to immediately push up the price, thus washing positions is inevitable.

From a fundamental perspective, looking at the industry level, in recent years, although the impact of the pandemic combined with policies to control medical insurance costs has deeply corrected the stock prices and valuations of third-party medical testing companies. For example, since the beginning of this year, leading companies in the industry such as guangzhou kingmed diagnostics group (603882.SH) and dian diagnostics group (300244.SZ) have seen their stock prices fall by more than 40%.

In contrast, due to the surge on November 26, adicon holdings has significantly returned to its valuation, with the current PE ratio at 20.71 times, higher than the industry average of 16.08 times, and exceeding historical valuation data by 40%, placing it in the upper-middle range of the company's reasonable valuation. However, the current stock price and valuation level are obviously not a good time for large funds aiming for greater odds to escape the cost range.

From a fundamental perspective, the previously disclosed 2024H1 financial report shows that adicon holdings achieved revenue of 1.466 billion yuan in the first half of the year. Among them, the regular business grew by more than 10% year-on-year, and the special inspection business grew by more than 30% year-on-year. In terms of profitability, adicon holdings' gross margin reached 38%, and the adjusted net margin reached 7%, continuing to lead the industry level. With stable fundamental support, the company's overall valuation is expected to be well supported, creating opportunities for bullish speculation based on performance. Therefore, at this point, as the mid-year report has passed and the annual report has not yet arrived, gradually completing the entry and accumulation is undoubtedly a better choice for large funds.