Mindray reported 1H25 revenue of RMB16.7bn (-18.4% YoY) and attributable net profit of RMB5.1bn (-33.0% YoY). During the period, domestic revenue fell 33.4% YoY to RMB8.4bn, pressured by longer tender-to-revenue conversion, channel inventory destocking and price headwinds. Domestic pricing pressure also resulted in the declined GPM (-2.8ppts). Overseas sales remained resilient at RMB8.3bn (+5.4% YoY). Looking ahead, we expect pricing pressure will persist in IVD reagent and mid/low-end medical equipment. However, with ~63% YoY growth in China’s medical equipment tenders in 1H25, according to Joinchain, we expect Mindray’s revenue growth to turn positive from 3Q25E and forecast total revenue growth of 15% YoY in 2H25E.

IVD: solid overseas growth in 1H25; the Company’s medium-term growth driver. In 1H25, IVD segment reported revenue of RMB6.4bn (-16% YoY), negatively impacted by the pricing pressure and tightening medical insurance reimbursement in China, such as the unbundle of unnecessary testing packages. Despite near-term headwinds, we view IVD as a core long-term growth engine for the Company, given that: 1) Mindray’s domestic share in key categories (CLIA, clinical chemistry, coagulation) remains low at ~10%, indicating significant growth potential. Mgmt aims to double its domestic share over three years by penetrating ~1,800 top-tier hospitals; 2) the Company’s overseas IVD revenue grew 12% YoY in 1H25, representing 37% of segment sales. We see large potential in overseas IVD sales growth.

MIS: ongoing high-end upgrade. MIS segment reported revenue of RMB3.3bn in 1H25, down 22.5% YoY, dragged by domestic weakness. We think MIS segment’s growth will be increasingly supported by overseas markets and the penetration of high-end/ultra-high-end ultrasound portfolio. Overseas MIS revenue grew at a mid- to high-single-digit rate in 1H25. The sales of ultra-high-end Resona A20 approaching RMB400mn in 1H25, nearly reaching its 2024 sales. We believe rising adoption of Resona A20 and upcoming premium product launches will continue to drive the segment growth.

PMLS: near-term pressure. Reduced special purpose bond issuance led to slower hospital capex in 1H25. As a result, PMLS revenue declined 32% YoY to RMB5.5bn in 1H25. However, the minimally invasive surgery (MIS) business delivered strong growth of nearly 30% YoY, highlighting its potential to become a key long-term growth engine for the PMLS business.

Maintain BUY. Given ongoing pressure on both demand and pricing in the IVD segment in 1H25, we have revised down our 2025E forecasts. However, supported by recovering domestic medical equipment tenders and a potential earnings recovery in 2H25E, we slightly raise our TP to RMB279.70 based on a 9-year DCF model.