Mindray(300760) 浦银国际证券·2024-10-31 08:01Investment Rating - Maintains a "Buy" rating with a target price of RMB 350 [1][3] Core Views - Domestic revenue is expected to remain under pressure in 4Q24, with a potential recovery in 2025 [1] - Overseas business continues to grow steadily, while domestic growth is sluggish due to anti-corruption measures and delayed equipment renewal tenders [1] - 3Q24 revenue growth was modest, with domestic revenue declining by 10% YoY, while overseas revenue grew by 19% YoY [1] - Life Information & Support segment revenue fell by over 20% YoY in 3Q24, while IVD and Medical Imaging grew by less than 10% and 3% respectively [1] - Gross margin in 3Q24 declined by 5.5 ppts YoY, mainly due to accounting adjustments, but remained stable on a like-for-like basis [1] - Medical special bonds and local special bonds issuance accelerated in September 2024, but the impact on 4Q24 performance is expected to be limited [1] - The company plans to reduce inventory levels from 4 months to 2 months by the end of 2024, which may pressure 4Q24 revenue growth [1] - Full-year 2024 revenue growth is expected to slow to 7% YoY, with a significant recovery anticipated in 2025 as equipment renewal projects materialize [1] Financial Performance and Forecasts - 2024E revenue is projected at RMB 37.4 billion, with a 7.1% YoY growth, while 2025E revenue is expected to grow by 21% YoY to RMB 45.3 billion [2] - 2024E net profit attributable to shareholders is forecasted at RMB 12.5 billion, with a 7.6% YoY increase, and 2025E net profit is expected to grow by 21% YoY to RMB 15.1 billion [2] - Gross margin for 2024E is projected at 64.2%, slightly lower than 2023A's 66.2% [4] - Operating cash flow for 2024E is expected to be RMB 15.6 billion, with capital expenditures of RMB 6.8 billion [5] Dividend Policy - The company announced a second dividend of RMB 1.65 per share for 2024, maintaining a payout ratio of 65% [1] - The single dividend yield is 0.6% based on the closing price on the announcement date [1] Valuation Metrics - The target price of RMB 350 implies a 28x 2025E PE, in line with the 3-year historical average [1] - 2024E PE is projected at 26.4x, declining to 21.8x in 2025E [2] - The dividend yield for 2024E is expected to be 2.5%, increasing to 3.0% in 2025E [5]