Shenzhen New Industries China summit feedback: overseas orders support growth, while domestic price pressure still bears watching

Overview

This report is Morgan Stanley's feedback note on Shenzhen New Industries following China Summit 2026. The core discussion covers 2026 domestic and overseas revenue guidance, TLA installations, the mix of reagents and analyzers, the gross margin outlook, DCF valuation assumptions, and upside and downside risks. The overall tone is positive, with overseas orders and share gains expected to support growth, while domestic ASP declines, VBP policy, and geopolitical trade risks remain key uncertainties.

Core views

The company maintained its 2026 China sales growth guidance of 5-10%, expecting volume growth of more than 10% to partially offset about a 5% ASP decline; overseas, it still guides for 20-25% growth, with healthy order volumes offsetting the impact of Middle East delivery disruptions. In the medium to long term, gross margins are expected to edge up in the out years, supported by stable domestic gross margins, scale effects and cost control, as well as a better overseas sales mix. However, the report believes the assumption that China ASP declines only in the low single digits annually after 2027 is somewhat optimistic.

Analysis framework

The report combines conference feedback with company operating guidance, together with Morgan Stanley ModelWare forecasts, DCF valuation, and the rating framework. It focuses on the trade-off between domestic volume growth and ASP declines, the balance between overseas orders and delivery disruptions, TLA installation targets, the effect of reagent mix on margins, and the upside to the target price relative to the current share price.

Methodology notes

• Valuation methodsDCF

  discounted cash flow valuation

  The report uses the DCF method, assuming an 8.8% WACC and a 3.0% terminal growth rate, with the DCF model starting from 2026.

• ForecastMorgan Stanley ModelWare

  internal forecasting framework

  Unless otherwise stated, the report's metrics are based on the Morgan Stanley ModelWare framework; some data come from consensus estimates or Refinitiv Estimates.

• RatingMorgan Stanley relative rating system

  Overweight relative rating

  Overweight means the stock's total return over the next 12 to 18 months is expected to exceed the average of the analyst's industry coverage universe on a risk-adjusted basis; this rating is not the same as the traditional buy, hold, or sell system.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Shenzhen New Industries (300832.SZ)

  research target

  Strengths

  Healthy overseas orders, 2026 overseas sales growth guidance of 20-25%, clear TLA installation targets, and scale effects plus cost control may support margins.

  Weaknesses

  Domestic ASP declines, 1Q26 domestic sales expected to be flat or slightly positive while margins are under pressure, and sensitivity to reagent prices and installation pace.

  Comparison

  The report places the company within Morgan Stanley's China healthcare coverage universe, with an Overweight rating and an Attractive industry view.

  Risks

  VBP price cuts worse than expected, prolonged anti-corruption impacts, Middle East delivery disruptions, higher transportation costs, and trade tensions in the EU and some emerging markets.

Key data

• Stock ratingOverweightA positive rating under Morgan Stanley's relative rating system.
• Industry viewAttractiveThe report table shows the industry view as Attractive.
• Target priceRmb67.00Relative to the March 31, 2026 closing price of Rmb49.07.
• Implied upside37%Calculated based on the target price and closing price.
• 2026 China sales growth guidance5-10%The company maintained this guidance, but a deeper reagent price cut could create downside risk.
• 2026 overseas sales growth guidance20-25%Overseas order volumes are healthy, but Middle East delivery disruptions and higher transportation costs warrant attention.
• Expected China volume growth10%+Expected to partially offset about a 5% ASP decline.
• Estimated ASP declineabout 5%Mainly driven by VBP price cuts for thyroid function reagents.
• 2026 China TLA installation target200 unitsThe 2025 figure was 208 units.
• 2026 overseas TLA installation target50 unitsOverseas installations are one of the key growth watchpoints.
• 2025 biochemical salesRmb150mnAbout 70% came from analyzers and about 30% from reagents, mainly driven by TLA output.
• 2024A/2025E/2026E/2027E net revenueRmb4,535.4mn / Rmb4,625.4mn / Rmb5,206.2mn / Rmb5,894.3mnFrom the financial forecast table.
• 2026E EPSRmb2.32Morgan Stanley estimate; consensus estimate is Rmb2.54.
• 2026E P/E21.1xDisclosed in the valuation table.

Impact & implications

For investors, the positive implication of the report is that overseas growth targets remain higher than domestic growth, healthy orders and the reagent business mix are expected to improve gross margins in the out years, and the target price still implies meaningful upside from the current share price. The negative implication is that domestic growth remains highly dependent on volume improvement and share gains; if VBP reagent price cuts are deeper than expected, anti-corruption impacts persist, or trade tensions intensify in the EU and some emerging markets, both revenue and margins could come under pressure.

Risks

• If VBP price cuts for thyroid function reagents are deeper than expected, this would create downside risk to the 2026 China sales growth target of 5-10%.
• If anti-corruption actions persist, they may weigh on domestic analyzer installations and reagent sales recovery.
• Middle East conflicts have already caused overseas delivery disruptions in 1Q26, and higher transportation costs may also lead customers to delay shipments.
• Potential trade tensions in the EU and some emerging markets could affect overseas business.
• The assumption that domestic ASP declines only in the low single digits annually after 2027 may be too optimistic.
• If key new products are approved or scaled more slowly than expected, upside potential would be reduced.

What to watch

• Whether 2026 China sales can achieve 5-10% growth.
• Whether domestic volume growth can stay above 10% and offset about a 5% ASP decline.
• Whether the thyroid function reagent VBP guidelines and bidding results become more adverse.
• The pace at which overseas orders are recognized as revenue, especially amid Middle East logistics disruptions and customer shipment delays.
• Progress toward the 2026 targets of 200 TLA installations in China and 50 overseas.
• Whether a higher overseas reagent mix can improve the sales mix and support margins.
• Whether an overseas reagent plant is built to improve supply chain stability.