China Medtech: Q226/H126E preview: revenue expansion but profit weakness

研报英文原文证据摘录

China Medtech: Q226/H126E preview: revenue expansion but profit weakness

e biggest risk

Liz Han, CFAGovernment policy continued to impact covered companies' domestic business in Q226,

Analyst

including but not limited to: 1) intensified anti-corruption efforts; 2) the newly liz.han@ubs.com

announced VBP plan for capital equipment; and 3) lingering risks from the in-vitro +852-2971 6106

diagnostics (IVD) test fee unification. We expect policy to slow down the sales volume

David Guo, PhDramp and erode product market prices, although some leading local companies may be

able to offset the impact via market share gains. For profitability, some policies could S1460524040001

negatively impact sector GPM. Overall, we expect government policy to have a sustained david-za.guo@ubs.com

and profound impact on the growth potential and profitability of the China medtech +86-10-5832 8010

market. Therefore, we cut our domestic revenue estimates and trim GPM forecasts for a

Judy Xie

number of companies to reflect our more cautious view. Associate

S1460125100001

Our new top picks: MicroPort MedBot and Angelalign judy.xie@ubs.com

Based on the above we cut our revenue/GPM forecasts, leading to median cuts of +86-105-832 8006

3.4%/6.2%/8.3% in 2026/27/28E EPS. We lower our price targets by a median 14.1%.

Specifically, we raise our PT for MicroPort Medbot; maintain our PTs for three companies

(including Angelalign); and cut PTs for nine companies (including Mindray and United

Imaging). Our ratings are unchanged as we think our investment thesis is largely intact

(more detail on page 2). Given a likely challenging outlook for the China market, we

changed our preference order to companies with high revenue exposure and high

growth in overseas markets, despite the short-term FX impact.