20260828-招银国际-南微医学-688029.SH-Overseas_strength_offsets_domestic_pressure_eyes_on_upcoming_national_VBP_6页_1mb

Micro-Tech (688029 CH) Summary

Core Content

Micro-Tech, a Chinese medical technology company, reported its first-half performance for 2026, with revenue reaching RMB1,728 million, up 10.4% year-over-year (YoY). However, attributable net profit declined by 16.5% YoY to RMB303 million, primarily due to RMB83 million in foreign exchange (FX) losses. Adjusted attributable net profit, excluding FX losses and related tax effects, rose 16.4% YoY. The company is currently preparing for the upcoming 7th National Value-Based Pricing (VBP) policy, which is expected to be announced on September 10, 2026. The VBP is anticipated to significantly impact the domestic market, but the company's strong overseas performance is expected to offset these pressures.

Key Financial Highlights

Revenue and Profit Growth

• Revenue (RMB mn):

  • FY24A: 2,755
  • FY25A: 3,184
  • FY26E: 3,508
  • FY27E: 3,792
  • FY28E: 4,377

• YoY Growth (%):

  • FY24A: 14.3
  • FY25A: 15.5
  • FY26E: 10.2
  • FY27E: 8.1
  • FY28E: 15.4

• Attributable Net Profit (RMB mn):

  • FY24A: 553
  • FY25A: 570
  • FY26E: 536
  • FY27E: 677
  • FY28E: 811

• YoY Growth (%):

  • FY24A: 13.9
  • FY25A: 3.1
  • FY26E: (6.0)
  • FY27E: 26.3
  • FY28E: 19.8

• EPS (Reported) (RMB):

  • FY24A: 2.95
  • FY25A: 3.05
  • FY26E: 2.85
  • FY27E: 3.61
  • FY28E: 4.32

• P/E (x):

  • FY24A: 25.6
  • FY25A: 24.8
  • FY26E: 26.5
  • FY27E: 21.0
  • FY28E: 17.5

Earnings Revision

• Revenue (RMB mn):

  • New: 3,508 / 3,792 / 4,377
  • Old: 3,690 / 4,293 / 4,957
  • Diff (%): -4.92% / -11.66% / -11.71%

• Gross Profit (RMB mn):

  • New: 2,239 / 2,386 / 2,771
  • Old: 2,313 / 2,704 / 3,135
  • Diff (%): -3.20% / -11.75% / -11.60%

• Operating Profit (RMB mn):

  • New: 645 / 814 / 976
  • Old: 734 / 878 / 1,047
  • Diff (%): -12.10% / -7.25% / -6.78%

• Net Profit (RMB mn):

  • New: 536 / 677 / 811
  • Old: 610 / 730 / 870
  • Diff (%): -12.11% / -7.26% / -6.78%

• EPS (RMB):

  • New: 2.85 / 3.61 / 4.32
  • Old: 3.25 / 3.89 / 4.63
  • Diff (%): -12.11% / -7.26% / -6.78%

• Gross Margin (%):

  • New: 63.83% / 62.92% / 63.31%
  • Old: 62.70% / 62.98% / 63.24%
  • Diff (%): +1.13ppt / -0.06ppt / +0.07ppt

• Operating Margin (%):

  • New: 18.38% / 21.48% / 22.29%
  • Old: 19.88% / 20.46% / 21.11%
  • Diff (%): -1.5ppt / +1.02ppt / +1.18ppt

• Net Margin (%):

  • New: 15.28% / 17.86% / 18.54%
  • Old: 16.53% / 17.01% / 17.56%
  • Diff (%): -1.25ppt / +0.85ppt / +0.98ppt

Key Points and Outlook

• Overseas Growth: Overseas revenue reached RMB1,094 million, up 20.6% YoY, contributing 63% of total revenue. Growth was observed across APAC, EMEA, and the US, with each region growing by more than 20% YoY. Direct sales coverage expanded to 36.7% of total revenue, up 4.7ppts YoY. The US market, which accounts for a significant portion of overseas revenue, is expected to see rapid growth due to the acquisition of three product lines from CONMED, which will improve access to hospital and GPO channels.

• Domestic Pressures: Domestic revenue declined 3.6% YoY to RMB634 million. Tumor intervention revenue dropped ~40% due to delayed VBP implementation. GI revenue grew modestly at 2.3% YoY. The national VBP is expected to be implemented in early 2027, which could continue to pressure domestic growth through 2H26 and into 2027.

• VBP Impact: The 7th National VBP, announced on August 26, covers 23 GI intervention categories. Micro-Tech secured demand volume in 21 categories, ranking No.1 in 12 and No.2 in 5. The company holds dominant shares in hemostasis clips (49%) and cholangioscopes (62%), indicating strong market leadership. While VBP may cause short-term domestic revenue and margin pressure, past cycles suggest that leading players gain market share. Post-VBP, innovative products such as cholangioscopes and ERCP products are expected to see faster penetration.

• Investment Recommendation: The company is rated BUY, with a target price of RMB90.60, based on a 10-year DCF model (WACC: 10.7%, terminal growth rate: 2.0%). This is a 19.8% decrease from the previous target price of RMB97.38.

• Risks: Potential for deeper VBP price erosion and overseas growth underperformance are key risks.

Share Performance

• 1-month change: +4.4% (Absolute) / +1.8% (Relative)
• 3-month change: -6.9% (Absolute) / -3.6% (Relative)
• 6-month change: -8.3% (Absolute) / -3.6% (Relative)

Market and Financial Data

• Market Cap (RMB mn): 14,144.1
• Average 3-month Turnover (RMB mn): 152.3
• 52-week High/Low (RMB): 100.35 / 67.50
• Total Issued Shares (mn): 187.0

Shareholding Structure

• Shenzhen Zhongke Merchants: 22.2%
• Nanjing New weichuang: 19.6%
• Source: SSE

Valuation

• DCF Valuation (RMB mn): 17,020
• Equity Value (RMB mn): 17,020
• DCF per share (RMB): 90.60
• Terminal Value (RMB mn): 26,359
• Terminal Growth Rate (%): 2.0
• WACC (%): 10.7

Sensitivity Analysis

Analyst Certification

• The analyst certifies that all views expressed in the report accurately reflect personal views.
• No part of the analyst's compensation is related to the specific views in this report.
• The analyst has not traded in the stocks covered in the report within 30 days prior to the report's issue, nor will do so within 3 business days after the report's issue.

CMBIGM Ratings

• BUY: Potential return of over 15% over the next 12 months
• HOLD: Potential return of +15% to -10% over the next 12 months
• SELL: Potential loss of over 10% over the next 12 months
• NOT RATED: Not rated by CMBIGM
• OUTPERFORM: Industry expected to outperform the relevant market benchmark
• MARKET-PERFORM: Industry expected to perform in-line with the relevant market benchmark
• UNDERPERFORM: Industry expected to underperform the relevant market benchmark

Important Disclosures

• The report is for informational purposes only and does not constitute investment advice.
• Past performance does not indicate future results.
• The value of investments is uncertain and may fluctuate.
• CMBIGM is not liable for any loss or damage incurred from reliance on the report.
• The report is intended solely for the use of intended recipients and may not be reproduced or distributed without consent.

Regulatory Notes

• United Kingdom: Only for persons within Article 19(5) or Article 49(2) of the Financial Services and Markets Act 2000.
• United States: Intended for "major US institutional investors" only; not for general distribution.
• Singapore: Distributed by CMBI (Singapore) Pte. Limited (CMBISG), an Exempt Financial Adviser.