In 2024, Mindray reported revenue of RMB 36.7bn (+5.1% YoY) and attributable net profit of RMB 11.7bn (+0.7% YoY). GPM dropped by 1.1 ppts YoY to 63.1%, primarily due to 1) pricing pressure on IVD reagents and mid- to low-end medical equipment, 2) weaker IVD testing demand following DRG 2.0 implementation and inter-hospital recognition of test results. The proportion of revenue from IVD reagent declined in 4Q24. The Sino-US trade frictions may raise costs for US- sourced raw materials in 2025E, while Mindray is actively seeking substitutes to protect margins. In 1Q25, Mindray’s revenue fell by 12.1% YoY to RMB8.2bn, mainly due to 1) over 20% YoY decline in domestic revenue, as revenue recognition lagged behind procurement recovery, 2) a high overseas revenue base in 1Q24 (up nearly 30% YoY), resulting in slow 1Q25 overseas growth of 4.3% YoY.

Steady growth from overseas. In 2024, overseas revenue grew by 21.3% YoY to RMB16.4bn, accounting for 44.7% of total revenue (+6.0ppts). Ex- North America revenue rose 26% YoY to RMB13.8bn, with Asia-Pacific continuing as the growth engine. Mindray achieved further breakthroughs in high-end markets, with high-end strategic customers contributing 14% of overseas revenue. With enhanced localization and installations of high-end products such as the MT 8000, we expect the overseas revenue to grow by a mid-teens percentage in 2025E. As the US contributed only ~6% of Mindray’s total revenue, the impact of trade frictions may be moderate. Diversified manufacturing across 13 countries and proactive inventory management should help mitigate related risks.

Domestic market remained under pressure. In 2024, domestic revenue decreased by 5.1% YoY to RMB20.3bn. Revenue from PMLS and MIS segments fell 31% YoY and 2% YoY, respectively, due to weak hospital procurement. According to IQVIA, China’s medical equipment market decreased 12.3% YoY in 2024. Policy headwinds including DRG 2.0, inter- hospital recognition of test results, and reagent price cuts further weighed on IVD revenue. IQVIA estimated a decline in the biochemical market and flat growth in immunology market in 2024. Therefore, Mindray’s domestic IVD revenue increased 1% YoY in 2024. However, Joinchain data shows a 67.5% YoY increase in medical equipment bidding value in 1Q25, indicating potential recovery of domestic medical equipment procurement. We anticipate the revenue recovery will occur in 2H25E, primarily due to the time lag between the bidding process and revenue recognition.

Maintain BUY. Given the uncertainties of the timeline of domestic procurement recovery and trade frictions, we revise down our earnings forecasts. We expect revenue and attributable net profit to grow 9.4% and 6.5% YoY, respectively, in 2025E. Based on a 9-year DCF model, we adjust our TP to RMB249.19 (WACC: 9.2%, terminal growth rate: 3.0%).