2Q26 Results in Line with Expectations; Easing Policy Impact and Overseas Expansion Support Growth

Overview

This report reviews Shenzhen New Industries' 2Q26 earnings call. The analyst believes quarterly performance was in line with expectations, with subsequent focus shifting to the actual implementation of domestic clinical testing pricing policies, recovery in domestic demand, and the sustainability of overseas expansion.

Core views

Domestically, the drag on gross margin from centralized reagent procurement and VAT is expected to be absorbed in 2H26. The year-on-year decline in China per-instrument output for the X8 analyzer stabilized at -2% in 2Q26, indicating that pressure from test-panel unbundling is easing. On policy, the company expects the impact of the latest clinical testing catalog and pricing guidance to be more moderate than the two rounds of CLIA reagent centralized procurement in 2024–2025, with a longer implementation cycle, and potentially to create further import-substitution opportunities. Overseas, the company expects overseas revenue to grow 15%–20% in 2026–2027 despite geopolitical and foreign-exchange headwinds; the August 2026 launch of the mini T8 TLA is expected to boost overseas placements and reagent sales.

Analysis framework

The report assesses the company's outlook by combining management comments from the earnings call, domestic and overseas reagent sales trends, policy interpretation, and DCF valuation.

Methodology notes

• Valuation methodsDiscounted cash flow (DCF)

  Estimates the company's intrinsic value by discounting projected free cash flow and calculating terminal value.

  The model starts from 2026 and uses a 9.0% weighted average cost of capital and a 3.0% perpetual growth rate; the 9.0% WACC is consistent with peers.

• Earnings forecastModelWare forecasting framework

  Aggregates revenue, profit, and valuation metrics based on Morgan Stanley's forecasting methodology.

  Unless otherwise stated, forecast metrics in the table are based on the Morgan Stanley ModelWare framework.

Asset mapping & comparison

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

• Shenzhen New Industries (300832.SZ)

  Covered company

  Strengths

  Domestic policy pressure is easing at the margin; overseas revenue is maintaining relatively rapid growth; overseas reagent gross margin is higher than domestic levels; proprietary small-molecule sandwich assays are growing rapidly and help entry into top-tier hospitals; the mini T8 TLA launch is expected to support overseas placements and reagent sales.

  Weaknesses

  Domestic business remains affected by testing pricing, centralized procurement, and test-panel unbundling; overseas growth remains exposed to foreign-exchange and geopolitical disruptions.

  Comparison

  The report indicates that the expected impact of the latest guidance is more moderate and implementation slower than the two rounds of CLIA reagent centralized procurement in 2024–2025; overseas reagent gross margin has already exceeded that in the China market.

  Risks

  Continued negative impact from anti-corruption actions, deterioration in centralized procurement guidance or tender outcomes, intensifying competition, and trade frictions with the EU and certain emerging markets.

Key data

• 2Q26 overseas business year-on-year growth27%1H26 growth was 15%; excluding foreign-exchange effects, 1H26 growth exceeded 20%.
• Overseas business growth guidance15%–20% in 2026–2027The company's conservative expectation amid geopolitical disruptions and negative foreign-exchange effects.
• Proprietary small-molecule sandwich assay salesRmb157.7mnUp 84% year on year in 1H26, accounting for 9% of reagent sales.
• 2026 forecast revenueRmb4,953.0mnMorgan Stanley forecast.
• 2026 forecast earnings per shareRmb2.20Consensus earnings per share in the table is Rmb2.33.
• 2026 forecast price-to-earnings ratio23.3xBased on the valuation table in the report.
• Valuation assumptionsWACC 9.0%; perpetual growth rate 3.0%The DCF model forecasts from 2026 onward.

Impact & implications

If policy impacts are implemented in a more moderate and phased manner as the company expects, pressure on domestic reagent pricing and gross margin could be lower than market concerns based on prior centralized procurement experience. Higher overseas reagent gross margins than domestic levels, increased overseas placements, and new product launches provide potential support for improving the earnings mix; however, actual delivery still depends on policy execution, exchange rates, the international trade environment, and the competitive landscape.

Risks

• Recovery in domestic analyzer placements and reagent sales falls short of expectations.
• The company's market-share gains fall short of expectations.
• Overseas expansion is affected by geopolitics, foreign exchange, or trade frictions.
• The negative impact of anti-corruption actions persists longer than expected.
• Centralized procurement guidance, pricing rules, or tender results deteriorate.
• Industry competition intensifies.
• Approval or volume ramp-up of key new products falls short of expectations.

What to watch

• The timing and specific impact of clinical testing catalog and trial pricing guidance pilots in 2H26 and broader rollout in 2027.
• Recovery in domestic reagent gross margin after absorption of centralized procurement and VAT impacts.
• Per-instrument output for the X8 analyzer in China, as well as domestic placement and reagent-sales recovery trends.
• Overseas revenue growth, foreign-exchange effects, and overseas reagent gross-margin performance.
• The impact of the mini T8 TLA launch in August 2026 on overseas placements and reagent sales.
• Penetration of proprietary small-molecule sandwich assays in top-tier hospitals and changes in their sales contribution.