Orient: Home Respirators Growth Steady, Industry Leaders Drive Development

Orient recently published a research report stating that it is optimistic about the growth of demand for home respiratory therapy, the increase in the repurchase value of consumables, and industry opportunities arising from the expansion of international leaders. It suggests paying attention to: 1) companies with a complete layout of main units, masks, and accessories that can leverage device installation to expand consumable repurchases from existing patients; 2) independent brand companies with overseas registrations, channel coverage, and localized service capabilities that can extend product sales to long-term management of patients; 3) manufacturing companies deeply involved in the supply chains of international leaders, possessing technical advantages, yield rates, and scalable delivery capabilities in high-frequency consumables such as liquid silicone masks and precision structural components. Recommended investment targets are BMC Medical (301367.SZ, Buy) and MeHow Innovative (301363.SZ, Buy). Orient's main viewpoints are as follows: Event: In August 2026, ResMed announced its 2026 fiscal year annual report (corresponding to the calendar year from June 30, 2025, to June 30, 2026), achieving revenues of $5.65 billion (+10%) and a net profit of $1.52 billion (+9%). Demand remains resilient, and concerns over the potential impact of GLP-1 have diminished. In the first half of 2026, Eli Lilly's Zepbound sales reached $9.09 billion, a year-on-year increase of 60%, while GLP-1 weight loss drugs continue to be rapidly adopted. Meanwhile, ResMed's equipment revenue for the 2026 fiscal year grew by 7% at fixed exchange rates, driven mainly by increased demand and sales volume. The firm believes that the rapid penetration of GLP-1 and growth in PAP device sales occurring simultaneously indicates that previous market expectations regarding weight loss drugs replacing demand for home ventilators were overly pessimistic. Zepbound is currently mainly suitable for patients with moderate to severe obstructive sleep apnea related to obesity, and improving health conditions through weight loss takes time, meaning some patients still need to use PAP devices. The promotion of the drug may also raise awareness, screening rates, and diagnosis of OSA, making it more likely for GLP-1 to alter the treatment regimens of some patients, thereby increasing the demand for home ventilators instead of causing it to decline. The growth of consumables continues to outpace that of main units, highlighting the importance of repurchases from existing patients. During the 2024-2026 fiscal years, ResMed's equipment revenue is projected to grow by 7%, 9%, and 7% respectively at fixed exchange rates, while mask and other product revenues are expected to grow by 13%, 11%, and 12%, consistently outpacing equipment sales for three consecutive years. The firm believes that as the installed base of PAP devices continues to expand, the industry's growth impetus is gradually shifting from new equipment sales to long-term consumable repurchases from existing patients. Compared to main units, which have longer replacement cycles, consumables like masks, tubing, and filters are characterized by higher usage frequency and shorter update cycles, providing relatively stronger stability and continuance in revenue. Therefore, the focus of industry competition will shift from merely acquiring new patients to enhancing treatment adherence, improving wearing comfort, and establishing a continuous resupply service system, increasing the importance of each patient's lifetime value. Expansion of leaders drives upstream orders, with quality suppliers expected to benefit. In the 2026 fiscal year, ResMed's capital expenditure on property, plant, and equipment amounted to $160 million, a year-on-year increase of 74%; its non-GAAP gross margin increased by 2.4 percentage points to 62.4%, mainly due to improvements in productivity. The firm believes that ongoing investment by leaders in production and operational infrastructure supports upstream demand for liquid silicone components and precision structural parts, while the simultaneous improvement in gross margins indicates rising demands on suppliers for cost reduction, yield rates, and delivery efficiency. As international leaders continue to expand capital investment and improve production efficiency, competition among upstream suppliers will increasingly focus on cost control, product yield, delivery stability, and collaborative development capabilities. Companies with advantages in automated production and large-scale manufacturing are expected to secure a greater share of orders. Risk Warning Risks include lower than expected penetration rates for global sleep apnea diagnosis and treatment; adjustments in overseas medical insurance reimbursement policies and consumable resupply cycles; intensified industry competition leading to declines in product prices and profitability, among other risks.