Mindray conference takeaways: domestic IVD exceeded expectations, and emerging businesses and AI continue to drive growth

Overview

This report is a Mindray meeting note published by Goldman Sachs after its 2026 China Healthcare Corporate Day, focusing on the company's IR team's comments on the domestic IVD policy environment, emerging businesses and AI development, 2026 guidance, and medium-term outlook. The report maintains a Buy rating and believes the company still has growth drivers from import substitution, overseas expansion, and multiple business lines.

Core views

The core views include: first, although domestic IVD is affected by cost controls, VBP, and DRG pressure, greater hospital sensitivity to costs and stronger competitiveness of domestic products are beneficial for Mindray to gain share from multinationals and weaker local competitors. Second, emerging businesses and AI are the medium- to long-term growth directions emphasized by management; high-value consumables, minimally invasive surgery, animal healthcare, wearable monitoring, surgical robots, and AI products are all seen as growth drivers. Third, domestic business is expected to return to growth in 2026, while overseas business should maintain relatively fast growth in USD terms, but FX losses caused by RMB appreciation are the main near-term drag on profits. Fourth, Goldman Sachs believes the company's valuation being below its 5-year forward P/E average mainly reflects policy risk, while it still expects the company to maintain its industry leadership.

Analysis framework

The report is mainly based on management discussions during the corporate day and Goldman Sachs' existing model, combining qualitative and quantitative analysis around policy impact, business line growth, overseas revenue, profit pressure, valuation methodology, and downside risks.

Methodology notes

• Valuation methodsTwo-stage DCF

  12-month target price

  Goldman Sachs' 12-month target price of Rmb247 is based on a two-stage DCF valuation, with a terminal growth rate of 2% and a WACC of 9.5%, both assumptions unchanged.

• Factor profileGS Factor Profile

  Growth, financial returns, valuation multiples, and composite factors

  GS Factor Profile compares attributes such as a stock's growth, financial returns, and valuation multiples against the market and industry peers by percentile, providing investment context.

• M&A assessmentM&A Rank

  Potential acquisition probability score

  Goldman Sachs discloses that its global coverage uses the M&A framework to assign companies a 1-3 score for potential acquisition probability; if the score is 1 or 2, M&A factors may be incorporated into the target price under standard procedures.

• Data toolQuantum

  Goldman Sachs proprietary financial database

  Quantum provides historical financial statements, forecasts, and ratio data for deep single-company analysis or cross-company comparisons.

Asset mapping & comparison

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

• Mindray (300760.SZ)

  Research target; Goldman Sachs Buy rating

  Strengths

  A leading domestic medical device company covering patient monitoring, medical imaging, and IVD; supported by multiple drivers including import substitution, overseas expansion, emerging businesses, and new product launches.

  Weaknesses

  Domestic equipment is still affected by channel inventory normalization, the AI business currently has a small customer base and revenue scale, and profits are under short-term pressure from FX losses.

  Comparison

  Management believes that as hospitals place greater emphasis on cost efficiency and domestic products improve their menu capabilities, the company can accelerate share gains from multinational companies and weaker local competitors.

  Risks

  Further VBP-driven cuts to ex-factory prices, weaker-than-expected penetration into top-tier hospitals, difficulties entering North America and Europe, patent litigation, changes in trade policy, and exchange-rate fluctuations.

• China IVD/medical equipment import substitution theme

  Industry driver

  Strengths

  In a cost-control environment, cost-effective domestic products are more readily accepted by hospitals; healthcare infrastructure construction and import substitution continue to support long-term demand.

  Weaknesses

  The industry faces ongoing cost-control pressure, and hospital laboratories are shifting from profit centers to cost centers, meaning both prices and testing volumes may come under pressure.

  Comparison

  Leading domestic players have cost and localization advantages versus multinationals, but still need to continue proving their capabilities in key test menus, penetration into top hospitals, and entry into high-end overseas markets.

  Risks

  Expansion of VBP, medical service price guidance opinions, the rollout pace of DRG 3.0, and local tender results may alter the industry's profitability and growth path.

Key data

• Report date2026-06-29The report page shows 29 June 2026.
• RatingBuyThe report explicitly states We are Buy-rated on Mindray.
• 12-month target priceRmb247Based on a two-stage DCF valuation.
• Current priceRmb133.98The disclosure page lists Mindray (Rmb133.98).
• Domestic IVDExpected to grow by more than 10% in 2026An important support for management's guidance of resumed growth in domestic business.
• Emerging businessesExpected to grow by more than 20% in 2026Including high-value consumables, minimally invasive surgery, animal healthcare, wearable monitoring, surgical robots, and AI products.
• Ultrasonic scalpel and stapler businessLess than Rmb200mn in 2025, expected to reach around Rmb400mn in 2026Management's growth target for this high-value consumables subsegment.
• Overseas revenueExpected to grow by more than 15% in USD termsGrowth in RMB-reported terms may be dragged by exchange rates.
• Overseas IVDExpected to grow by more than 20%Management's segment guidance for overseas business.
• Overseas equipmentExpected to grow by around 10%Management's segment guidance for overseas equipment revenue.
• AI hospital customersAbout 30 in 2025, expected to reach 60 in 2026The AI business is still small in scale, but viewed as strategically important.
• China revenue contribution55% in 2024The report states that 55% of Mindray's 2024 revenue came from China.
• Chemiluminescence VBPImplemented in 28 provincesEnd-market prices fell by 40%-50%, while the company expects ex-factory prices to decline by about 10%-20%.
• FX lossRMB400mn in 1Q26FX losses caused by RMB appreciation are the biggest recent drag on profits.
• Valuation assumptionsTerminal growth rate 2%; WACC 9.5%Key parameters in the target price methodology.

Impact & implications

For investors, the report conveys a relatively positive signal of fundamental recovery: domestic IVD and emerging businesses are expected to drive a return to growth in 2026, overseas markets continue to provide medium- to long-term expansion opportunities, and although AI products contribute limited revenue in the short term, they may enhance customer stickiness and equipment procurement preferences. The main constraints are policy cost controls, VBP, DRG, exchange rates, and difficulty entering overseas markets; short-term earnings elasticity will depend on FX pressure and the progress of domestic equipment inventory normalization.

Risks

• VBP may further reduce ex-factory prices for some products.
• Penetration into top domestic hospitals may progress more slowly than expected.
• Entering the North American and European markets may face greater difficulty.
• Patent-related litigation risk.
• Unexpected changes in trade policy.
• DRG 3.0 and medical service price guidance opinions may affect testing volumes and reagent prices.
• FX losses caused by RMB appreciation may continue to weigh on short-term profits.
• Normalization of domestic equipment channel inventory may continue to drag on the equipment business.

What to watch

• The pace of recovery in domestic procurement activity.
• Updates and implementation of the medical equipment trade-in policy.
• Progress of new product launches.
• The launch timing of DRG 3.0 and its impact on testing volumes.
• Pressure on reagent prices from formal medical service price guidance opinions.
• Implementation of VBP across more provinces and categories.
• Growth in overseas revenue in USD terms and FX drag in RMB-reported terms.
• The number of hospital customers for AI products, real-world scenario deployment, and their influence on equipment procurement preferences.
• Ramp-up progress of emerging businesses such as high-value consumables and orthopedics.