MR(300760)：OVERSEAS REVENUE GROWTH ACCELERATES IVD SEGMENT DELIVERS STRONG PERFORMANCE

Key takeaway

1Q26 results were in line with expectations. Revenue recorded positive YoY growth for the third consecutive quarter, while profit was significantly affected by foreign exchange gains and losses. Under a neutral exchange rate assumption, 1Q revenue increased by 2.55% YoY. Excluding the impact of foreign exchange gains and losses and income tax expenses, net profit decreased by 4.88% YoY. According to the company’s announcement, domestic business is expected to achieve positive growth in 2026, while overseas revenue is likely to maintain a rapid growth trend. Looking ahead to 2026, we expect the company to gradually emerge from external industry pressures. The overall earnings growth pace may show a pattern of slower growth in the first half and faster growth in the second half. Full-year revenue is expected to achieve positive growth. Profit margins may face pressure due to multiple factors, including adjustments to the income tax rate, exchange rate fluctuations, and changes in the overseas macro environment.

Event

1Q26 report released

Brief analysis

Results in line with expectations, revenue achieves positive growth for three consecutive quarters

In 1Q26, the company recorded revenue of RMB8.352bn (+1.39% YoY), net profit attributable to shareholders of the parent company of RMB2.33bn (-11.37% YoY), and net profit attributable to shareholders of the parent company excluding non-recurring items of RMB2.296bn (-9.25% YoY). Results were in line with expectations. Revenue recorded positive YoY growth for the third consecutive quarter, while profit was significantly affected by foreign exchange gains and losses. Under a neutral exchange rate assumption, the company’s 1Q revenue increased by 2.55% YoY. Excluding the impact of foreign exchange gains and losses and income tax expenses, net profit decreased by 4.88% YoY, and net profit excluding non-recurring items decreased by 2.49% YoY. According to the company’s announcement, domestic business is expected to achieve positive growth in 2026, while overseas revenue is likely to maintain a rapid growth trend. By region, the company’s domestic business generated revenue of RMB3.903bn in 1Q (-11.1% YoY), mainly affected by channel inventory adjustments in the domestic equipment business and IVD-related policies. Overseas revenue reached RMB4.449bn (+15.7% YoY), accounting for 53% of total revenue. Calculated in USD terms, overseas revenue increased by 20% YoY. Revenue from developing countries increased by 15% YoY, or 19% YoY in USD terms. Revenue from the European market increased by more than 25% YoY.

By product line: IVD business delivers strong performance, emerging businesses maintain rapid growth

1) The IVD business recorded revenue of RMB3.193bn in 1Q (+4.96%), accounting for more than 36% of the group’s total revenue, of which overseas IVD revenue grew by more than 20% and overseas immunoassay business grew by more than 30%. The domestic market is still affected by industry policies, but the compa ny’s market share continues to increase. The average market share of immunoassay, biochemistry, and coagulation rose from 10% in mid 2025 to 12% at end 2025, and further increased to 13% in 26Q1.

2) The life information and support business recorded revenue of RMB2.264bn in 1Q (-5.86%). Among this, overseas life information and support business grew by 15% YoY, and the proportion of overseas revenue increased to 79%.

3) The medical imaging business recorded revenue of RMB1.396bn in 1Q (-11.83%), of which the international ultrasound business grew by more than 10%. Sales of the ultra high end Resona A20 series in overseas markets exceeded the total for last year during 1Q.

4) Emerging businesses recorded revenue of RMB1.398bn in 1Q (+18.22%), accounting for about 17% of the group’s total revenue. Among them, the minimally invasive intervention business grew by 25% YoY, and the animal healthcare business achieved double digit growth.

Outlook for 2026: The company’s revenue is expected to grow steadily, while the full year profit margin may still face pressure

The company has achieved positive revenue growth for three consecutive quarters. The profit side is still under short term pressure due to factors such as geopolitical conflicts in the Middle East and exchange rate fluctuations. Looking ahead to 2026, we expect the company to gradually emerge from external industry pressures. The overall earnings growth pace may show a pattern of slower growth in the first half and faster growth in the second half. Full-year revenue is expected to achieve positive growth. Profit margins may face pressure due to multiple factors, including adjustments to the income tax rate, exchange rate fluctuations, and changes in the overseas macro environment.

Gross margin declined slightly: Foreign exchange gains and losses had a significant impact on financial expense

In 1Q, the company’s gross margin was 61.87% (-0.66 pcts). Centralized procurement of domestic equipment and price cuts for IVD reagents had an impact on gross margin. The selling expense ratio was 14.84% (+0.54 pcts), the administrative expense ratio was 4.12% (-0.03 pcts), the R&D expense ratio was 9.60% (+0.29 pcts), and the financial expense ratio was 2.89% (+4.86 pcts), mainly affected by foreign exchange gains a nd losses. Net cash flow from operating activities in 1Q was RMB1.381bn (-7.59%), mainly because the growth rate of cash inflows from operating activities was slower than that of cash outflows. Days sales outstanding was 37.62 days, an increase of 1.78 days compared with end 2025, remaining basically stable, while other financial indicators were generally normal.

Short term focus on the earnings inflection point; digital intelligence, assembly -line operations and internationalization to drive medium- to long-term growth

In the short term, the company is approaching a long cycle inflection point. Revenue is expected to return to steady growth in 2026. Against the backdrop of earnings recovery, a Hong Kong listing, and strategic transformation, valuation re rating is likely. In the medium to long term, the company has a clear strategic roadmap for digital intelligence, assembly-line operations, and internationalization. The business structure will upgrade from being primarily equipment sales to a sustainable, recurring revenue model, which will open a higher growth ceiling. The company’s capabilities in R&D innovation, sales management, globalization, and M&A have been fully validated, and its global market share will continue to increase. We expect the company ’s revenue in 2026–2028 to reach RMB36.158bn, RMB40.29bn, and RMB45.213bn, representing growth of 8.6%, 11.4%, and 12.2% YoY. Net profit attributable to shareholders of the parent company is expected to reach RMB8.311bn, RMB9.146bn, and RMB10.123bn, representing growth of 2.2%, 10.1%, and 10.7% YoY. We maintain a "Buy" rating.

Risks

1) Industry policy uncertainty: Certain industry policies are unpredictable, posing risks to the realization of our earnings forecasts. For example, if volume-based procurement policies exceed expectations, IVD reagent terminal prices may decline further; if prices drop to ex-factory levels, this may adversely affect the company’s margins. Rising compliance requirements may also delay tendering processes.

2) Increasing industry competition: The company has a high domestic market share in certain product categories. If competition among domestic players intensifies, market share gains may fall short of expectations.

3) Overseas market risks: Geopolitical factors and trade conflicts may affect the company’s overseas revenue and margins; exchange-rate volatility may also impact earnings.

4) Product development and technology iteration risks: AI technologies evolve rapidly; if the company’s R&D progress lags behind expectations, product competitiveness may decline and adversely affect future growth.

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