2025-12-11 02:23Summary 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.