Summary of Conference Call Notes Industry Overview - **Industry**: China Healthcare, specifically focusing on hospital equipment and medical devices - **Key Trends**: - July 2025 bidding value data showed a -11% month-over-month (MoM) decline, marking the third consecutive month of decrease, but a +23% year-over-year (YoY) increase was noted, indicating actual demand growth in hospitals [1][2] - The trade-in stimulus, deferred from 2024 to 2025, is expected to have a less pronounced effect compared to previous years [2] Company-Specific Insights United Imaging - **Management Outlook**: Optimistic about the new trade-in program in 2025, expecting a smoother process compared to 2024. However, revenue recognition cycles have lengthened due to changes in hospital bidding processes [19] - **Revenue Growth Projections**: Estimated growth rates for China revenue are +10% for 2Q25, +45% for 3Q25, and +26.8% for 4Q25. The DSA (imaging-guided therapy) product is identified as a near-term growth driver [21] - **Market Position**: Currently trading near median P/E multiple since listing, with significant long-term growth potential anticipated [21][88] Mindray - **Market Performance**: Slower YoY growth observed in patient monitors (+21% in July vs. +50% in June) and ultrasound (+24% in July vs. +48% in June) due to ASP pressure from VBP [26] - **Inventory Management**: Expected to normalize inventory turnover by 2Q25 across all segments [26] - **Investment Thesis**: Strong healthcare infrastructure and domestic substitution trends are expected to support growth. Trading below 5-year average forward P/E due to policy risks, but maintaining market leadership is anticipated [87] Key Data Points - **Bidding Value Trends**: - Positive YoY growth for nine consecutive months, with domestic brands outperforming MNCs [10] - Significant price declines in ultrasound and CT segments due to VBP, with ultrasound prices expected to remain under pressure [14] - **Procurement Value Changes**: - Ultrasound procurement value increased by +24% YoY in July, while CT scanners saw a +44% increase [45][47] - LINAC procurement value increased by +46% YoY in July, down from +161% in June [65] Risks and Challenges - **Market Risks**: - Ongoing regional VBPs are a key concern, with potential impacts on pricing and procurement processes [14] - Risks associated with chip supply chains, raw material availability, and macroeconomic downturns in China [92] Conclusion - The healthcare equipment industry in China is experiencing a complex landscape with both growth opportunities and challenges. Domestic companies like United Imaging and Mindray are positioned to benefit from favorable trends, although they must navigate pricing pressures and changing procurement dynamics.

Investment Rating - The report maintains a "Buy" rating on Mindray, highlighting its strong market position and growth potential in the healthcare sector [92]. Core Insights - The procurement value of main medical devices in China showed a year-on-year growth rate of 49% in June 2025, although it fell short of previous expectations due to a 3% month-on-month decline driven by lower unit prices from Value-Based Procurement (VBP) policies [1]. - The report anticipates a decline in the trade-in stimulus effect for the second half of 2025, as applications for trade-in funding have decreased in recent months [1]. - The ultrasound segment has experienced significant price declines due to VBP, with CT scanners also seeing sharp price reductions [9][13]. - The market share of non-GPSU brands in CT scanners has increased during the first half of 2025, indicating a shift in brand dynamics within the industry [24]. Summary by Sections Procurement Trends - The total bidding value for nine main medical devices in China has shown fluctuations, with significant year-on-year growth in various segments, including a 62% increase for CT scanners in June 2025 compared to May 2025 [51]. - The report notes that 30% of ultrasound procurement volume is expected to be impacted by VBP by the end of 2025, with an average price cut of 50%-60% [22]. Company-Specific Insights - Mindray is positioned as a leading medtech device manufacturer in China, with 55% of its revenue coming from the domestic market. The company is expected to benefit from strong healthcare infrastructure development and increasing overseas revenue [92]. - United Imaging has expanded its presence globally and is witnessing a rebound in medical equipment procurement in China, supported by government initiatives [93]. Market Dynamics - The report highlights that both domestic and multinational companies achieved notable year-on-year growth in June, indicating a competitive landscape in the medical device sector [74]. - The ongoing VBP policies are a key concern, affecting pricing and procurement strategies across various medical device categories [9].

Investment Rating - The report maintains a "Buy" rating for both Mindray and United Imaging, indicating a positive outlook for their stock performance in the near future [82][83]. Core Insights - The procurement value of main medical devices in China has shown strong year-over-year (YoY) growth, with a month-over-month (MoM) increase of 13% in April, surpassing expectations [1]. - The report anticipates a high level of activity in medical equipment procurement throughout 2025, driven by government funding and a recovery in hospital demand [1][25]. - Mindray is expected to maintain its market leadership with multiple growth drivers, while United Imaging is projected to see significant long-term growth potential due to increasing service-related revenue [82][83]. Summary by Sections Procurement Trends - The total bidding value for nine main medical devices in China has reached a high level, with positive MoM growth observed in seven out of nine devices in March [26]. - The report notes that procurement activities are supported by government funding and the implementation of a trade-in program, which is expected to drive demand in the coming quarters [1][25]. Company Performance - Mindray's revenue growth is projected to be +10% in 2Q24, +40% in 3Q25, and +36.5% in 4Q25, reflecting a recovery in its end markets [9]. - United Imaging's management expressed optimism about the upcoming trade-in program in 2025, expecting a smoother process compared to 2024 [9]. Market Dynamics - The report highlights that both domestic and multinational companies achieved notable YoY growth in April, indicating a balanced competitive landscape in the medical device sector [64]. - The trend of domestic substitution is not particularly evident, as both local and multinational companies are performing well in the procurement market [64].