J.P. Morgan: Mindray’s domestic business decline narrows in the third quarter as currency and costs weigh on profit

How far has the domestic business recovered?

In the first three quarters of 2026, Mindray’s domestic revenue fell 1.3% year over year; it fell 0.7% year over year in the third quarter but rose 2.0% quarter over quarter. Management still expects positive domestic revenue growth for the full year.
Diagnostics is the main support for the recovery: management said domestic diagnostics revenue rose approximately 2% year over year in the first three quarters and approximately 4% quarter over quarter in the third quarter, benefiting from expansion among large hospital customers and reagent consumption following equipment installations.
Management estimates that the company’s average share in biochemistry, immunoassay and coagulation rose from approximately 10% in mid-2025 to approximately 15%, with a target of reaching 20% by the end of 2027. JPMorgan believes share gains and regional laboratory projects can aid the recovery, but the quarter-on-quarter improvement should not be extrapolated into a broad rebound in hospital spending.

In the first three quarters of 2026, overseas revenue rose 11% year over year in renminbi terms and 16% in US dollar terms, accounting for 53% of group sales. Growth in US dollar terms slowed to approximately 12% in the third quarter; management attributed part of the slowdown to currency effects and disruptions in certain markets.
The company’s partnerships with Apollo, Einstein Hospital and Essen University Hospital reflect a shift from sales of individual devices toward broader clinical and digital solutions. JPMorgan believes this helps deepen customer relationships and cross-selling, but geopolitics, trade barriers and uneven order timing continue to affect overseas operations.

In the first three quarters of 2026, emerging business revenue rose 20.5% year over year to 4.74 billion yuan, with both minimally invasive surgery and interventional products growing by more than 20%, adding sources of growth beyond traditional equipment.
Management said domestic surgical consumables revenue more than doubled in the first three quarters, and APT Medical’s pulsed-field ablation procedure volume exceeded 10 thousand cases. JPMorgan is monitoring APT Medical’s contribution and continued growth in consumables use; subsequent procurement rounds could expand hospital coverage, but earnings gains depend on whether volume growth can offset price pressure.

Management said third-quarter foreign exchange losses were 279 million yuan and additional component costs were approximately 110 million yuan, and expects cost and price pressures to persist for some time. JPMorgan believes it remains unclear when margins will bottom out and is therefore cautious about the pace of earnings recovery.
The bank cut its revenue forecasts for each fiscal year from 2026 through 2028 by 1% and lowered each gross margin assumption by 0.2 percentage points. Together with an expected increase in research and development expenses in 2026, it cut its recurring net profit forecasts for the three years by 3%, 1% and 1%, respectively.
JPMorgan forecasts revenue growth of 5.8% year over year in 2026 and adjusted net profit falling to 7.77 billion yuan, below the 8.136 billion yuan recorded in 2025. The bank maintained its Overweight rating and lowered its December 2027 price target from 240 yuan to 233 yuan.
Cash flow continues to support shareholder returns: operating cash flow in the first three quarters of 2026 rose 14.1% year over year to 8.3 billion yuan, and the board approved a third interim dividend of 1.30 yuan per share. Management expects major construction spending to decline and said it does not rule out a special dividend.