1Q26 in line; overseas and emerging businesses driving growth

Mindray (300760 CH) 1Q26in line;overseas and emergingbusinesses drivinggrowth Target PriceRMB204.54Up/Downside27.0%Current PriceRMB161.11 Mindray reported 1Q26 revenue of RMB8.35bn (+1.4% YoY) andattributablenet profit of RMB2.3bn(-11.3% YoY),largely in line with our expectations.Overseas business remains the major growth driver with robust momentum inEuropeand developing markets.Domestic business still faced near-termheadwinds from channel destockingin 1Q26.We maintain ourFY26Erevenueforecast, expectinga return to positive domestic growthin 2026E. China Healthcare Jill WU, CFA(852) 3900 0842jillwu@cmbi.com.hk Rapidoverseasgrowthled by Europeand emerging markets.Overseasrevenueincreased15.7% YoY to RMB4.45bn,representing53% of totalrevenue in 1Q26.Revenue fromEurope grew more than 25% YoY, with keymarketsincluding the UK, France, Germany, and Italy delivering rapidgrowthas penetration into high-end accounts accelerated.Emergingmarkets also recovered, up 15% YoY, with India and Mexico each growingmore than 30%.By segment, overseas IVD (>20% YoY), PMLS (15% YoY),and medical imaging (>10% YoY) allreportedstrong growth. We expectdeepening localization andcontinued progress in high-end accounts to driveoverseas growth in 2026E. Cathy WANG(852)3916 1729cathywang@cmbi.com.hk Stock Data Domesticbusiness remained under pressure but is expected torecoverin 2026E.Domestic revenue declined 11.1% YoY to RMB3.9bnin1Q26, primarily due to channel destockingin PMLS and MIS. However,domestic CLIA revenue increased by ~10% YoY in 1Q26 despite VBP-related price pressure,driven by further penetration into large hospitalaccounts.Consequently, Mindray’sshare incore IVDcategories(CLIA,chemistry, coagulation)rose from 10% in 1H25 to 13% in 1Q26,accordingtoMindray’s 1Q26 report.The MT8000 TLA system completed over 80installations in 1Q26, whichshould support reagent pull-through goingforward. Moreover, domestic emerging businesses increased over 18% YoYand accounted for 23% of domestic revenue.While destocking in equipmentbusinesses(PMLS+MIS)may still weigh on near-term growth,thesesegments accounted for less than 30% ofdomesticrevenue. Therefore, weexpect domestic revenue to return to positive growth in 2026E, supportedby IVD share gains, continued growth in emerging businesses, and aneasier comparison base. Shareholding Structure Emerging businesses grew rapidly.Revenue from emerging businessesreached RMB1.4bnin 1Q26, up 18.2% YoY. Notably, IVD and emergingbusinesses together accounted for nearly 40% ofoverseasrevenue andmorethan 70%of domestic revenue,highlighting steady progress inMindray’s shift toward recurring, consumables-based revenue mix. Source: FactSet Maintain BUY.Wemaintainour FY26-28E earnings forecastsandderiveourtarget price ofRMB204.54based on a 9-year DCF model (WACC:9.1%,terminal growth:3.0%; both unchanged).Earnings Summary Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content of this research report, in whole or in part, certifies thatwith respect to the securities or issuer that the analyst covered in thisreport: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered inthis research report within 30 calendar days prior to the date of issue of this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3)serve as an officer of any of theHongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies coveredin this report. CMBIGM RatingsBUY : Stock with potential return of over 15% over next 12 monthsHOLD: Stock withpotential return of +15% to-10% over next 12 monthsSELL: Stock with potential loss of over 10% over next 12 monthsNOT RATED: Stock is not rated byCMBIGM :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expected to perform in-line with the relevant broad market benchmark over next 12 months:Industry expected to underperform the relevant broad market benchmark overnext 12 months CMB InternationalGlobal MarketsLimited Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong, Tel: (852) 3900 0888 Fax: (852) 3900 0800CMB InternationalGlobal MarketsLimited (“CMBIGM”) is a wholly owned subsidiary of CMBInternational Capital Corporation Limited (a wholly ownedsubsidiary of China Merchants Bank) Important DisclosuresThere are risks involved in transacting in any securities. The information contained in this r