HSBC Qianhai Securities Limited: HSBC Qianhai: Mindray’s overseas growth supports third-quarter revenue, while centralized procurement and foreign exchange weigh on earnings forecasts

Why did profit fall despite third-quarter revenue growth?

Mindray reported third-quarter 2026 revenue of 9.4 billion yuan, up 2.9% year on year; recurring net profit was 2.5 billion yuan, down 1.6% year on year. Overall performance was broadly in line with HSBC Qianhai’s expectations.
Foreign exchange was one source of pressure on profit: on HSBC Qianhai’s calculation, consolidated recurring net profit rose 4.7% year on year excluding foreign-exchange losses.
Regional performance diverged markedly: overseas business grew 6.3% year on year in the third quarter, while domestic business fell 0.7%. Overseas growth supported overall revenue.

In the first nine months of 2026, overseas business revenue grew 11% year on year and accounted for 53% of company revenue; growth was 16% at constant exchange rates, showing that currency movements lowered the reported growth rate. HSBC Qianhai expects Europe and developing markets to support sustained double-digit overseas growth over the medium term.
In China, recurring businesses such as in vitro diagnostics (IVD) and emerging businesses already account for 74% of domestic revenue. HSBC Qianhai believes IVD share gains and growth in emerging businesses will make this segment an engine of domestic growth over the medium term, and expects the domestic business to bottom out starting in 2026.
However, centralized procurement of medical equipment and IVD reagents in China is putting pressure on prices; the recovery would also come under pressure if hospitals delay equipment purchases or IVD reagent price cuts exceed expectations.

Taking into account equipment and reagent price cuts resulting from domestic policy and foreign-exchange pressure, HSBC Qianhai cut its 2027–2028 revenue forecasts by 2%–3% and lowered its gross margin assumptions by 59–63 basis points. Improved cost control and a lower tax-rate assumption partially offset the pressure, resulting in net profit forecast cuts of 1%–3% for the two years.
The bank expects compound annual growth rates of 11.4% for revenue and 10.9% for net profit over 2026–2028. Despite the cuts to near-term earnings forecasts, HSBC Qianhai raised its long-term operating margin assumption because of estimate adjustments and improved cost control, increased its discounted cash flow target price from 208 yuan to 220 yuan, and maintained its buy rating.