United Imaging's 1H26 revenue was in line and net profit beat expectations, with overseas and recurring revenue sustaining strong growth

Overview

The report reviews United Imaging's 1H26 results and explains the drivers of future growth from the perspectives of regions, products, service revenue, supply chain, and profitability. Goldman Sachs believes that overseas revenue and recurring service revenue will maintain strong growth, domestic procurement is showing signs of recovery, and high-end and new products are also broadening the sources of growth. It therefore reiterates its Buy rating and 12-month target price of Rmb182.

Core views

United Imaging generated 1H26 revenue of Rmb7,052mn, up 17% yoy and broadly in line with Goldman Sachs' forecast of Rmb7,032mn. Net profit was Rmb897mn, down 10% yoy but above Goldman Sachs' forecast of Rmb754mn, mainly because the selling expense ratio and effective tax rate were lower than expected. The yoy decline in net profit was primarily caused by foreign exchange losses; excluding this factor, net profit would have increased 9% yoy, indicating that underlying operating performance was stronger than the reported yoy change in profit. Overseas markets were the most prominent source of growth in the first half. International revenue increased 54.5% yoy, while overseas gross margin rose 3.8 percentage points. Revenue in Asia Pacific grew 148.5%, and revenue in Europe increased 49.4%; the US market maintained positive growth despite geopolitical pressures. The company expects full-year overseas revenue growth of more than 50%. This not only expands its revenue scale but also improves its revenue mix through higher gross margins and subsequent service demand. Domestic revenue increased 8.5% yoy, while overall market share rose 1.7 percentage points. The report observes that China's hospital equipment tendering market has begun to recover and believes that, as procurement rebounds, growth in the domestic business could accelerate further in the second half. The company stated that the impact of volume-based procurement remains limited, with relatively little pressure on ex-factory prices, while the policy also helps it gain market share. The report therefore does not regard it as a major current impediment to growth, although it remains one of the key risks. Product growth was driven more by high-end equipment. Revenue from high-end DSA nearly tripled, while RT equipment sales increased 64% yoy. MRI revenue grew 16%, with the ultra-high-end 5T model growing more than 50%, and the company expects to launch a helium-free MRI model in 2027. The MI business grew 26%, with a global installed base exceeding 750 units, including nearly 350 overseas. The CT business achieved a breakthrough in independently developed X-ray tubes, and management said high-end tubes are about to enter mass production. The ultrasound business remains at an early stage of commercialization but has obtained European CE certification and US FDA clearance, creating the conditions for simultaneous domestic and overseas market expansion in the second half. Recurring revenue continued to expand. The company's global equipment installed base has exceeded 40,000 units, driving 20% yoy growth in service revenue. Overseas service revenue increased 64% as the installed base expanded, including growth of more than 80% in Europe and more than 30% in North America. The report believes that, as the global installed base continues to accumulate, the share of service revenue should rise and improve the company's overall gross margin, gradually extending the source of growth from one-off equipment sales to recurring service revenue. Risks related to key raw materials and the supply chain are currently considered manageable. Liquid helium prices have declined from previous highs, easing cost pressure. The company also brought forward procurement of electronic components in the fourth quarter of 2025 and currently has relatively sufficient inventory. Based on stable supplies of key raw materials, favorable price trends, and advance procurement, the company expects its full-year gross margin to remain stable. However, Goldman Sachs continues to include the semiconductor supply chain and raw material risks, represented by helium, among the principal risks. The company expects full-year revenue to increase by more than 20% yoy and has adopted systematic management measures to hedge foreign exchange risk. Management believes that cost controls, improved operating efficiency, and mitigation of foreign exchange risk will drive meaningful improvements in full-year profitability and margins. Goldman Sachs made only minor adjustments to its model based on these results and reiterated its Buy rating and 12-month target price of Rmb182. From a medium- to long-term perspective, the report positions United Imaging as China's leading manufacturer of large-scale medical imaging equipment, with operations covering more than 100 countries globally. A recovery in domestic medical equipment procurement, increased government funding support, and market share gains provide the foundation for domestic growth, while overseas expansion and a higher service revenue contribution should improve gross margin. The company currently trades near its median P/E since listing, and Goldman Sachs believes that the expected growth in revenue, gross margin, and net margin can still support significant long-term growth potential. The Rmb182 target price is based on a two-stage DCF valuation, assuming a 9% discount rate and a 2% perpetual growth rate.

Analysis framework

The report first compares actual 1H26 revenue and net profit with Goldman Sachs' forecasts, then attributes the profit variance to the selling expense ratio, effective tax rate, and foreign exchange losses. It subsequently breaks down growth drivers by region, product, and revenue type, and assesses the profitability trend by considering the installed base, service revenue, raw material supplies, and the company's full-year guidance. Finally, it uses the historical P/E position to support its valuation assessment and derives the 12-month target price using a two-stage DCF.

Methodology notes

• Valuation methodDCF discounted cash flow

  Two-stage DCF valuation

  The report discounts the company's future cash flows to present value and distinguishes between an explicit forecast period and a perpetual period; the Rmb182 target price uses a 9% discount rate and a 2% perpetual growth rate.

• Valuation methodPE/PEG valuation

  Comparison with the median P/E since listing

  The report compares the current P/E with the company's historical median since listing to determine where the current valuation stands, and evaluates long-term potential in conjunction with expected growth in revenue, gross margin, and net margin.

• (Method outside the vocabulary)

  Comparison of actual results with Goldman Sachs' forecasts and attribution of profit variance

  The report compares actual revenue and net profit with Goldman Sachs' forecasts, then explains the variances through the selling expense ratio, effective tax rate, and foreign exchange losses to distinguish the impact of operating improvements from non-operating factors.

Asset mapping & comparison

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

• United Imaging (688271.SS)

  The report believes the company will benefit from overseas business expansion, a recovery in domestic equipment procurement, service revenue growth, and the ramp-up of high-end products.

  Strengths

  Overseas revenue and gross margin are growing rapidly, the global installed base exceeds 40,000 units, high-end equipment is performing strongly, and the company has made progress in ultrasound and independently developed X-ray tubes.

  Weaknesses

  1H26 net profit declined 10% yoy due to foreign exchange losses, while the ultrasound business remains at an early stage of commercialization.

  Comparison

  The current trading valuation is close to the company's median P/E since listing.

  Risks

  Semiconductor supply chain, raw materials such as helium, a macroeconomic downturn in China, and volume-based procurement risks.

Key data

• 1H26 revenueRmb7,052mnUp 17% yoy and broadly in line with Goldman Sachs' forecast of Rmb7,032mn
• 1H26 net profitRmb897mnDown 10% yoy but above Goldman Sachs' forecast of Rmb754mn
• Net profit growth excluding foreign exchange losses+9% yoyForeign exchange losses were the main reason for the yoy decline in reported net profit
• Overseas revenue growth+54.5% yoyRapid growth in the overseas business
• Change in overseas gross margin+3.8 percentage pointsYoy increase
• Asia Pacific revenue growth+148.5% yoyThe fastest-growing market among the major regions
• European revenue growth+49.4% yoyMaintained strong growth
• Domestic revenue growth+8.5% yoyOverall market share increased by 1.7 percentage points during the same period
• RT equipment sales growth+64% yoyAn important source of high-end product growth
• MRI revenue growth+16% yoyThe ultra-high-end 5T model grew by more than 50%
• MI business growth+26% yoyThe global installed base exceeded 750 units, including nearly 350 overseas
• Global equipment installed baseMore than 40,000 unitsProvides a foundation for sustained service revenue growth
• Service revenue growth+20% yoyRecurring revenue maintained steady growth
• Overseas service revenue growth+64% yoyEurope grew by more than 80%, while North America grew by more than 30%
• Full-year revenue growth guidanceMore than 20% yoyCompany full-year guidance
• Full-year overseas revenue growth guidanceMore than 50% yoyThe company expects the overseas business to continue growing rapidly
• 12-month target priceRmb182Unchanged
• DCF discount rate9%Two-stage DCF valuation assumption
• DCF perpetual growth rate2%Two-stage DCF valuation assumption

Impact & implications

The report believes that rapid overseas growth, expansion of the global installed base, and a higher service revenue contribution can collectively improve revenue quality and gross margin, while a recovery in domestic hospital procurement and market share gains will support growth in the second half. The ramp-up of high-end equipment, expansion of ultrasound products, and mass production of independently developed core components should broaden the sources of product growth, while foreign exchange hedging, cost controls, and supply chain preparations will influence whether the expected full-year margin improvement is realized.

Risks

• Fluctuations in the semiconductor supply chain may affect production and delivery.
• Raw material supply or price fluctuations may increase costs, particularly helium-related risks.
• A macroeconomic downturn in China may weaken demand for medical equipment procurement.
• Volume-based procurement policies may put pressure on product prices and profitability.

What to watch

• Monitor future monthly procurement data from Chinese hospitals to assess the sustainability of the recovery in the domestic tendering market.
• Monitor the formal launch of the ultrasound product line and progress in its domestic and overseas market expansion.