Zhongtai Medical Device Sector 2026 Q3 Report Summary: Revenue steadily recovering, profit improvement broadening, balancing bottom-line defense with innovative overseas expansion and technology shift

Zhongtai released a research report stating that amid intensifying market volatility, it is advisable to balance bottom-line defense with growth elasticity, place greater emphasis on earnings certainty, medium- to long-term growth space, and the degree of controllable risk, and focus on four main themes: (1) high-quality leaders whose bottom is gradually being confirmed, with strong operational resilience, stable cash flow, and earnings expected to grow steadily; (2) the IVD sector, where policy expectations are marginally easing and fundamentals and valuations are expected to recover; (3) overseas expansion targets whose localized overseas operating systems are gradually maturing and which are entering a stage of sustained relatively rapid growth; (4) targets with prominent medical technology attributes and growth elasticity. Zhongtai's main views are as follows: Domestic negative factors continue to be digested, the device sector's revenue is steadily recovering, and the scope of profit improvement is further expanding In the first three quarters of 2026, listed medical device companies recorded revenue of RMB200.312 billion, up 8.22% year on year, and non-recurring net profit of RMB23.899 billion, up 10.92% year on year. Divergence among sub-sectors was pronounced. Revenue growth, from high to low, was low-value consumables (+18.45%), medical equipment (+9.60%), high-value consumables (+2.06%), and in vitro diagnostics (+1.83%); non-recurring net profit growth, from high to low, was low-value consumables (+70.37%), in vitro diagnostics (+60.63%), medical equipment (-2.03%), and high-value consumables (-3.25%). Among these, low-value consumables were still mainly driven by the joint volume-price resonance in gloves and a low base, while revenue of non-glove categories maintained growth; profit still faced pressure in the first three quarters but improved slightly in Q3. Medical equipment saw demand recovery coupled with volume ramp-up of new businesses, keeping revenue growth relatively fast; profit remained under pressure in the first three quarters but improved year on year in Q3. High-value consumables revenue remained steady, with volume ramp-up of innovative products and overseas expansion continuing to contribute incremental growth. In vitro diagnostics revenue stabilized marginally, and excluding ICL, routine IVD revenue and profit also continued to recover. 2026Q3 revenue continued to recover, and non-recurring net profit of all four major sub-sectors achieved positive growth In 2026Q3, the medical device sector's overall revenue grew 9.00% year on year, and non-recurring net profit grew 24.92% year on year. Revenue growth of the four core sub-sectors, from high to low, was low-value consumables (+20.75%), medical equipment (+8.40%), in vitro diagnostics (+4.99%), and high-value consumables (+2.56%); non-recurring net profit growth, from high to low, was in vitro diagnostics (+130.82%), low-value consumables (+75.86%), high-value consumables (+11.36%), and medical equipment (+4.73%). Low-value consumables continued to be driven by glove prosperity, while the high profit growth in in vitro diagnostics still benefited from the low base of ICL impairments; profit growth in high-value consumables and medical equipment turned from negative to positive, further expanding the scope of profitability improvement in the sector. High-value consumables: price reshaping has entered its latter half, and innovation ramp-up and globalization open up growth space Sector revenue remained steady, while profit continued to show divergence among individual companies. In the first three quarters of 2026, the high-value consumables sub-sector's revenue grew 2.06%, and non-recurring net profit fell 3.25% year on year; in 2026Q3, sector revenue grew 2.56%, and non-recurring net profit grew 11.36%. The single-quarter profit improvement was mainly driven by the gradual digestion of the impact of earlier centralized procurement, volume ramp-up of some innovative products, and marginal easing of expense and foreign exchange disturbances, but gross margin and net margin still declined slightly year on year, indicating that the sector has not yet formed a comprehensive recovery. On the policy front, the selected results of the national centralized procurement of drug-coated balloon consumables have been implemented successively since May 2026; the seventh batch of national high-value consumables centralized procurement focuses on digestive intervention consumables, and confirmation of agreed procurement volumes has officially begun; the renewal centralized procurement for cardiac electrophysiology is also progressing. Against the backdrop of normalized price governance, leaders with innovation iteration, cost control, and globalization capabilities are expected to gain share after price reshaping. Medical equipment: equipment demand is gradually recovering, new business ramp-up drives revenue growth, and profit recovery remains divergent In the first three quarters of 2026, the medical equipment sub-sector's revenue grew 9.60%, and non-recurring net profit fell 2.03% year on year; in 2026Q3, sector revenue grew 8.40%, and non-recurring net profit grew 4.73%. Revenue was mainly driven by growth at companies such as Shanghai United Imaging Healthcare, iRay Group, and Cofoe Medical Technology, with high-end imaging equipment, home medical devices, and new businesses such as silicon-based microdisplay backplanes jointly contributing incremental growth. On the profit side, some heavyweight companies faced profit pressure in the first three quarters, and combined with the impact of foreign exchange and expense investment, the sector's profit performance was weaker than revenue; in Q3, as revenue scale expanded, expense efficiency improved, and incremental technology business was released, non-recurring net profit returned to positive growth, but divergence among individual companies remained pronounced. Low-value consumables: glove prosperity continues, and non-glove categories begin profit recovery The joint volume-price resonance in gloves remained the main driver of the sector's high growth, while non-glove categories maintained revenue growth but profit recovery remained relatively weak. In the first three quarters of 2026, the low-value consumables sub-sector's revenue grew 18.45%, and non-recurring net profit grew 70.37%; in 2026Q3, sector revenue grew 20.75%, and non-recurring net profit grew 75.86%. The glove segment continued to benefit from price improvement, higher capacity utilization, and a low base. Excluding the three glove companies Intco Medical Technology, Blue Sail Medical, and Zhonghong Pulin Medical Products, the remaining sample's revenue grew 6.22% and non-recurring net profit fell 3.21% in the first three quarters; in 2026Q3, revenue grew 8.74% and non-recurring net profit grew 2.78%, indicating that non-glove categories continued to recover on the revenue side and improved marginally on the profit side, while some companies were still affected by centralized procurement price cuts, foreign exchange, and expense investment. Over the medium to long term, overseas markets remain the main growth driver for low-value consumables companies, and companies with cost, capacity, and customer stickiness advantages are more likely to achieve simultaneous revenue and profit growth. In vitro diagnostics: policy disturbances are gradually being digested, and innovative overseas expansion supports medium- to long-term recovery Revenue growth improved quarter by quarter. The high profit growth was partly due to the low base of ICL impairments, and routine IVD continued to recover after the impact of panel splitting weakened. In the first three quarters of 2026, the in vitro diagnostics sector's revenue grew 1.83% and non-recurring net profit grew 60.63%; in 2026Q3, revenue grew 4.99% and non-recurring net profit grew 130.82%. Profit was still affected by reduced or reversed provisions for COVID-related receivables at companies such as Dian Diagnostics Group and Guangzhou Kingmed Diagnostics Group. After uniformly excluding the four ICL samples Dian Diagnostics Group, Guangzhou Kingmed Diagnostics Group, Shanghai Labway Clinical Laboratory, and Guangdong Hybribio Biotech, revenue grew 4.26% and non-recurring net profit grew 11.33% in the first three quarters; in 2026Q3, revenue grew 7.78% and non-recurring net profit grew 70.05%. The relatively fast profit growth was mainly due to patent settlement expenses at Sinocare Inc. in the same period last year; excluding Sinocare Inc., revenue grew 7.56% and non-recurring net profit grew 51.33%, and routine IVD profitability continued to recover. On the price side, the subsequent implementation of the project approval guidelines for laboratory medical service price items may still put pressure on some reagent categories not yet included in centralized procurement, but draft for comment in Anhui, Jiangxi, Zhejiang, and other places show that the overall price reduction magnitude is milder than market expectations. Over the medium to long term, we are optimistic about the growth potential of IVD continuous innovation and overseas expansion. Pan-technology: policy, clinical, and industry progress resonate, and medical technology enters the commercialization validation stage In brain-computer interfaces, the standards system, financing, and registered clinical trials are advancing in parallel, with Neuralink, StairMed, NeuroXess, and Bo Ruikang continuing to make new progress; the payment pathway for surgical Siasun Robot&Automation is gradually being clarified, and domestic companies are achieving breakthroughs simultaneously in domestic commercialization and overseas clinical trials; the registration and review framework for AI healthcare has been further improved. In the technology transformation of traditional devices, related targets have adjusted since September due to market style rotation, but corporate industrialization processes are still advancing: Qingdao NovelBeam Technology's new endoscope products have entered small-batch trial production, isolators have obtained batch orders and begun small-batch delivery, and OCS is still in the engineering iteration stage, but the prototype has already attracted industry attention; iRay Group's silicon-based microdisplay backplane has entered batch delivery and formed incremental performance contribution; Shandong Linuo Pharmaceutical Packaging continues to advance glass substrate sampling and process validation. Market adjustments do not change the industrialization trend. Risk warnings: risk that product market promotion falls short of expectations; risk of policy changes; risk that industry data have been screened and classified to a certain extent and may deviate from the actual industry situation; risk that research report information is not updated in a timely manner, etc.