United Imaging (UIH) reported 1H26 revenue of RMB7,052mn, up 17% YoY, representing 42% of our prior full-year forecast and below the ~47% historical average. Overseas revenue remained strong, up 54.5% YoY while domestic revenue grew a modest 8.5% YoY against a weak domestic market. Attributable net profit decreased 10% YoY to RMB897mn, primarily due to FX losses. On an ex-FX basis, bottom-line grew a resilient 9% YoY. Given weaker-than-expected domestic procurement in 1H26 and the lag between tender wins and revenue recognition, we lower our 2026E revenue forecast by 3.7%. We also cut our 2026E earnings forecast by 6.8%, reflecting the FX losses already recorded in 1H26 and near-term gross margin pressure from broader domestic centralized procurement, although we expect FX headwinds to moderate in 2H26E. Looking ahead, we believe that the sales mix shifts to mid- to high-end products and services should help offset centralized procurement-related margin pressure in the long term.

Overseas growth remained strong, with improving margins. Overseas revenue increased 54.5% YoY to RMB1,765mn, expanding the overseas revenue mix by 6ppts to 25% (+6ppts YoY). The robust growth was primarily driven by APAC (+148.5% YoY) and Europe (+49.4% YoY). Service revenue overseas increased 64% YoY, driven by a growing installed base. Notably, favorable mix toward mid- to high-end products, together with improving localization and operating efficiency, drove overseas gross margin up by over 3ppts YoY. The order intake remained healthy, with mix continuing to shift toward higher-end products. We therefore expect overseas revenue growth to remain strong in 2H26.

Domestic share gains led by high-end products. Domestic revenue grew 8.5% YoY to RMB5,287mn despite a weak market in 1H26, with UIH gaining 1.7ppts of domestic market share YoY. Share gains were particularly notable in high-end products such as 3.0T MR (+1.5ppts), PET/MR (+40 ppts), DSA (+6ppts). In addition, we believe UIH’s increasing revenue mix of mid- and high-end products should help mitigate the margin pressure from centralized procurement over time. According to MDDi, the domestic market for medical imaging equipment declined 15.8% YoY in 1H26. Given the high base in 2H25 and the tender-to-revenue lag, we expect 2H26E domestic revenue will inevitably face growth pressure. However, the recovery in procurement activities since July should support solid growth in late-2H26E and 1H27E.

Maintain BUY. We lower our 2026E earnings forecasts to reflect near-term FX losses and pressure from centralized procurement, but remain positive on UIH’s long-term growth. We therefore lower TP to RMB154.95 based on a 9-year DCF model (WACC: 8.1%, terminal growth: 4.0%).