Shenzhen Mindray (.SZ)_ Eyes on 2025 rebound; overseas strong growth to continue

Company and Industry Overview * Company: Shenzhen Mindray (300760.SZ), a leading medical device manufacturer with three product lines: patient monitors and life support (PMLS), in vitro diagnostics (IVD), and medical imaging. * Industry: Medical equipment and devices, with a focus on patient monitoring, diagnostics, and imaging. * Market Position: Mindray holds a leading position in its three product lines in China and globally, with a strong focus on emerging markets and high-potential fields like endoscopy and animal care. Key Points and Evidence * 2024 Outlook: Management expects slower tendering and processes of medical equipment to limit major sales rebound in 4Q24. However, they are more confident about the 2025 outlook, driven by overseas growth momentum and domestic growth recovery supported by continuous stimulus. * Segmental Growth: * IVD: Grew by 21% yoy in 1-3Q24, with overseas business increasing by over 30% yoy. Domestic IVD revenue dropped due to DRG curbing elective cares. * Medical Imaging: Grew by 11% yoy in 1-3Q24, benefiting from Resona A20 gaining more market share. * Patient Monitoring & Life Support: Dropped by 12% yoy in 1-3Q24, with overseas markets growing by over 10% yoy. * Overseas Business: Outperformed with 18%+ yoy growth in 1-3Q24, driven by strong growth in European and APAC markets. Mindray plans to place local manufacturing sites in 13 countries. * Emerging Businesses: Minimally invasive surgery, animal health, and cardiovascular products are expected to grow strongly in 2025. * Valuation: Citi Research reduced revenue forecasts for FY24/25/26E by 7%/8%/8% and EPS estimates by 8%/8%/9% due to delayed medical equipment upgrade pace in China. Target price lowered to Rmb385 from Rmb420 based on SOTP model. * Rating: Citi Research maintains a "Buy" rating on Mindray, considering its leading position in its product lines and potential for growth in emerging markets. Additional Important Points * Geopolitical Risks: Potential impact on revenue sources, investments, or global raw materials sourcing due to geopolitical tensions. * GPO Impacts: Adverse impacts from GPO if product prices are significantly reduced and volume ramp-up cannot offset price decreases. * Regulatory Challenges: Potential harm to business and competitive positions if Mindray is unable to obtain patent protection for certain products or technologies. * Market Demand: Adverse impact on financial condition if Mindray is unable to accurately assess technological trends and customer needs. * Supply Chain Disruptions: Potential delays in manufacturing and assembly processes and negative impact on business due to interruptions in material or component supplies. * Distribution Network Disruptions: Negative impact on the company's ability to effectively sell products.