Mindray reported 1Q26 revenue of RMB8.35bn (+1.4% YoY) and attributable net profit of RMB2.3bn (-11.3% YoY), largely in line with our expectations. Overseas business remains the major growth driver with robust momentum in Europe and developing markets. Domestic business still faced near-term headwinds from channel destocking in 1Q26. We maintain our FY26E revenue forecast, expecting a return to positive domestic growth in 2026E.

Rapid overseas growth led by Europe and emerging markets. Overseas revenue increased 15.7% YoY to RMB4.45bn, representing 53% of total revenue in 1Q26. Revenue from Europe grew more than 25% YoY, with key markets including the UK, France, Germany, and Italy delivering rapid growth as penetration into high-end accounts accelerated. Emerging markets also recovered, up 15% YoY, with India and Mexico each growing more than 30%. By segment, overseas IVD (>20% YoY), PMLS (15% YoY), and medical imaging (>10% YoY) all reported strong growth. We expect deepening localization and continued progress in high-end accounts to drive overseas growth in 2026E.

Domestic business remained under pressure but is expected to recover in 2026E. Domestic revenue declined 11.1% YoY to RMB3.9bn in 1Q26, primarily due to channel destocking in PMLS and MIS. However, domestic CLIA revenue increased by ~10% YoY in 1Q26 despite VBPrelated price pressure, driven by further penetration into large hospital accounts. Consequently, Mindray’s share in core IVD categories (CLIA, chemistry, coagulation) rose from 10% in 1H25 to 13% in 1Q26, according to Mindray’s 1Q26 report. The MT8000 TLA system completed over 80 installations in 1Q26, which should support reagent pull-through going forward. Moreover, domestic emerging businesses increased over 18% YoY and accounted for 23% of domestic revenue. While destocking in equipment businesses (PMLS+MIS) may still weigh on near-term growth, these segments accounted for less than 30% of domestic revenue. Therefore, we expect domestic revenue to return to positive growth in 2026E, supported by IVD share gains, continued growth in emerging businesses, and an easier comparison base.

Emerging businesses grew rapidly. Revenue from emerging businesses reached RMB1.4bn in 1Q26, up 18.2% YoY. Notably, IVD and emerging businesses together accounted for nearly 40% of overseas revenue and more than 70% of domestic revenue, highlighting steady progress in Mindray’s shift toward recurring, consumables-based revenue mix.

Maintain BUY. We maintain our FY26-28E earnings forecasts and derive our target price of RMB204.54 based on a 9-year DCF model (WACC: 9.1%, terminal growth: 3.0%; both unchanged).