Goldman Sachs: SNIBE expects slower domestic reagent price declines in 2027, while overseas growth faces near-term headwinds

How far has the domestic business recovered?

In the third quarter of 2026, SNIBE’s domestic revenue fell approximately 3% year on year, with instrument revenue down 18% and reagent revenue up approximately 1%; management attributed the performance partly to a high base in the prior-year period.
After the second round of centralized procurement was implemented, the average selling price of reagents fell approximately 7%, while test volume rose approximately 8%. Management estimates that the company’s share of the domestic immunodiagnostics market is approximately 10%, up more than 1 percentage point year on year.
Industry demand remains weak: in the third quarter, average test volume per instrument at tertiary hospitals fell 3%–4% year on year, although the decline narrowed markedly from more than 10% a year earlier. Management considers 2025 the low point for the domestic business and 2026 a transitional recovery period.

Management believes recent provincial plans to reform testing service prices were better than Goldman Sachs, the market and management itself had previously expected. It therefore expects domestic reagent average selling prices to fall 3%–5% in 2027, better than its previous forecast of a 5%–10% decline.
Domestic reagent prices fell approximately 30% cumulatively over 2024–2026. Management said approximately two-thirds of testing items have already undergone substantial price adjustments and are expected to retain their current prices. The remaining third still faces price-cut pressure, although distributors may absorb part of the reductions.
Medical insurance cost controls and testing restrictions continue to constrain demand. Management expects overall industry test volume to be broadly flat in 2027. The company is targeting domestic test-volume growth of approximately 15% and, together with slower price declines, expects reagent revenue growth to approach 10%.

Overseas revenue grew approximately 12% year on year in the third quarter of 2026, below management’s previous expectations, mainly due to geopolitical conflict in the Middle East and appreciation of the renminbi. The Middle East has historically accounted for approximately 15% of overseas revenue; regional conflict and disruptions to Red Sea shipping affected instrument deliveries, distributor expansion and local public hospital procurement.
Other regions grew faster: third-quarter revenue rose 29% year on year in Europe, and 20% and 18% in Latin America and Africa, respectively. Europe currently accounts for nearly 29% of overseas revenue.
Management expects geopolitical and currency headwinds to continue into the fourth quarter of 2026, limiting the near-term recovery in overseas growth, but it still targets overseas revenue growth of more than 15% for the full year 2026.

Management expects improving domestic fundamentals in 2027, a higher revenue share from high-margin reagents, overseas expansion and cost advantages from in-house production of key raw materials to support earnings growth outpacing revenue growth.
The company recorded foreign exchange losses of more than 90 million yuan in the first nine months of 2026; management estimates that underlying earnings growth exceeded 20% excluding currency effects. If renminbi appreciation slows, lower foreign exchange losses could also support reported earnings growth in 2027.
Goldman Sachs believes easing domestic policy pressure and overseas expansion will support a recovery in earnings growth, while noting uncertainty over the pace of recovery in domestic testing demand and when Middle East operations will return to normal. The bank has a Buy rating and a 12-month price target of 68 yuan.