20260428-招银国际-南微医学-688029.SH-Robust_overseas_momentum_and_domestic_6页_1005kb

Summary of Micro-Tech (688029 CH)

Core Content and Key Information

Micro-Tech (688029 CH) has demonstrated strong performance in 2025 and continued momentum in the first quarter of 2026. The company reported a revenue of RMB3.2bn in 2025, representing a 15.5% year-over-year (YoY) increase, and an attributable net profit of RMB570mn, up 3.1% YoY. In 1Q26, revenue grew by 22.1% YoY to RMB854mn, slightly exceeding expectations and contributing to 24% of the full-year forecast, surpassing the historical average of 21%. However, attributable net profit declined 9.0% YoY to RMB146mn, primarily due to foreign exchange (FX) losses.

The company's overseas business has been the main driver of growth, with overseas revenue increasing by 40.9% YoY to RMB1.9bn in 2025. Excluding the contribution from subsidiary CME, the organic growth in overseas operations was around 21%. In 1Q26, overseas revenue grew 28.2% YoY, raising its revenue contribution from 60% in 2025 to 61% in 1Q26. The acquisition of CME and CONMED's GI endoscopic consumable product lines is expected to enhance Micro-Tech's direct sales capabilities in the US and European markets, strengthening its competitive position. Additionally, the launch of the Thailand manufacturing center in January 2026 is anticipated to improve global delivery efficiency and supply chain resilience.

The domestic market showed signs of recovery in 1Q26, with revenue growing 13.6% YoY to RMB1.25bn. Notably, GI product sales grew approximately 25% YoY. Despite ongoing Value-Based Pricing (VBP) in Guangdong and Zhejiang provinces, the marginal policy impact is believed to be weakening due to the rapid growth of innovative products. The company's domestic business is viewed as showing signs of bottoming out.

Innovative products, including the visualization business, contributed meaningful growth in 2025 with revenue increasing over 40% YoY and accounting for 8% of total revenue. In 1Q26, revenue from innovative products surged 65% YoY, raising their revenue share to 10.6%. With domestic channel inventory for single-use endoscopes largely digested and strong global growth, the visualization business is expected to maintain robust momentum in 2026E. The continued ramping of the innovation portfolio and overseas expansion are seen as effective offsets to domestic VBP pressure.

Financial Highlights

• Revenue Growth:

  • FY24A: RMB2,755mn (+14.3% YoY)
  • FY25A: RMB3,184mn (+15.5% YoY)
  • FY26E: RMB3,690mn (+15.9% YoY)
  • FY27E: RMB4,293mn (+16.4% YoY)
  • FY28E: RMB4,957mn (+15.5% YoY)

• Net Profit Growth:

  • FY24A: RMB553mn (+13.9% YoY)
  • FY25A: RMB570mn (+3.1% YoY)
  • FY26E: RMB610mn (+7.0% YoY)
  • FY27E: RMB730mn (+19.7% YoY)
  • FY28E: RMB870mn (+19.2% YoY)

• Earnings Per Share (EPS):

  • FY24A: RMB3.05
  • FY25A: RMB3.25
  • FY26E: RMB3.89
  • FY27E: RMB4.63

• Price-to-Earnings (P/E) Ratio:

  • FY24A: 24.8
  • FY25A: 23.3
  • FY26E: 19.5
  • FY27E: 16.4

• Net gearing (%):

  • FY24A: (30.2)
  • FY25A: (31.7)
  • FY26E: (35.0)
  • FY27E: (38.8)

Valuation and Investment Outlook

• Target Price: RMB97.38, raised from RMB92.13
• Current Price: RMB75.77
• Upside Potential: 28.5%
• DCF Valuation (RMB mn):
  • 2026E: 17,208
  • 2028E: 18,293
• Terminal Value: RMB29,301mn
• Terminal Growth Rate: 2.0%
• Weighted Average Cost of Capital (WACC): 10.7%

Key Financial Metrics

• Gross Margin:

  • FY24A: 62.98%
  • FY25A: 63.24%
  • FY26E: 62.70%
  • FY27E: 63.0%
  • FY28E: 63.2%

• Operating Margin:

  • FY24A: 20.46%
  • FY25A: 21.11%
  • FY26E: 19.88%
  • FY27E: 20.5%
  • FY28E: 21.1%

• Net Margin:

  • FY24A: 17.01%
  • FY25A: 17.56%
  • FY26E: 16.53%
  • FY27E: 16.6%
  • FY28E: 17.2%

Analyst Recommendations

• Rating: BUY (Maintain)
• Reason: The slight revenue growth beat in 1Q26 led to an upward revision of 2026E-2028E revenue forecasts. The updated target price is based on a 10-year DCF model with unchanged WACC and terminal growth assumptions.

Shareholding and Stock Data

• Market Cap: RMB14,168.4mn
• Average 3-month turnover: RMB123.1mn
• 52-week High/Low: RMB100.35/RMB56.99
• Total Issued Shares: 187.0mn

Shareholding Structure

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

Analyst Certification

The research analyst certifies that the views expressed in the report accurately reflect personal opinions and that no compensation was tied to the report's content. The analyst also confirms no recent or future trading in the stock, no affiliation with any Hong Kong-listed companies, and no financial interest in the companies covered.

CMBIGM Ratings

• BUY: Potential return of over 15% over next 12 months
• HOLD: Potential return of +15% to -10% over next 12 months
• SELL: Potential loss of over 10% over 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

• This report is not investment advice and is based on publicly available information.
• The information is subject to change and not guaranteed.
• CMBIGM is not a registered broker-dealer in the US, and the report is intended for major US institutional investors only.
• The report may not be distributed to others without prior written consent.