Summary of Conference Call on China Healthcare Industry and Companies Industry Overview - **Sector**: China Healthcare, specifically focusing on hospital equipment bidding - **Key Data**: November 2025 public hospital medical equipment bidding value increased by **15% YoY**, surpassing previous expectations of flat-to-low single-digit growth [1] Core Insights - **Bidding Activity**: - The increase in bidding value was unexpected, as leading indicators suggested weaker dynamics for 2025 compared to 2024 [1] - United Imaging indicated that while trade-in program execution is faster than last year, some procurement may be deferred to 2026, suggesting a recovery in non-trade-in demand [1] - **Future Outlook**: - A cautious stance is maintained for bidding activity into December 2025 and the first half of 2026 due to tougher base effects and uneven trade-in execution across regions [2] - The base-case assumption for bidding value has been revised from a flat-to-single-digit decline to flat-to-modest YoY growth for December 2025 and 1H26 [2] Company-Specific Insights United Imaging - **Performance**: - Domestic revenue grew **73% YoY** in 3Q25, driven by previous hospital bidding revenue recognition; overseas revenue increased by **81% YoY** [14] - Service revenue grew **22% YoY**, indicating resilience to economic cycles [14] - November growth was **30% YoY**, significantly higher than the industry average of **15%** [14] - **Valuation**: - Currently trading near its median P/E multiple since listing, with significant long-term net profit growth potential anticipated [14] Mindray - **Performance**: - Core businesses showed mixed results: PMLS grew **2.6%**, MI grew **1%**, while IVD declined **2.8%** in 3Q25 [16] - Domestic PMLS revenue decline narrowed to **-25%** from **-57%** in 1H25, with overseas sales up **14% YoY** [16] - Management expects destocking to complete by 4Q25, with revenue recovery anticipated in 2026 [16] - **Growth Drivers**: - Long-term double-digit growth supported by recurring business in China and market share gains in emerging markets [16] - High-potential products expected to drive significant revenue growth in China from 2024 to 2035 [16] Risks and Challenges - **Mindray**: - Risks include potential impacts from VBP on product pricing, challenges in penetrating top-tier hospitals, and difficulties in entering North American and European markets [77] - **United Imaging**: - Risks include chip supply chain issues, raw material risks, macroeconomic downturns in China, and potential VBP risks [78] Investment Ratings - **Mindray**: Rated as "Buy" with a 12-month target price of **Rmb285**, indicating an upside of **43.4%** [79] - **United Imaging**: Rated as "Buy" with a 12-month target price of **Rmb174**, indicating an upside of **34.9%** [82] Conclusion - The China healthcare equipment sector is showing signs of recovery with better-than-expected bidding activity, particularly for United Imaging. Mindray is facing challenges but has potential growth drivers in emerging markets and high-potential products. Both companies are rated as "Buy" with significant upside potential.