Overseas growth remained strong; domestic business expected to bottom out after VBP

（以下内容从招银国际《Overseas growth remained strong; domestic business expected to bottom out after VBP》研报附件原文摘录）
南微医学(688029)
Micro-Tech reported 9M26 revenue of RMB2.5bn (+5.7% YoY), accounting for72% of our previous FY26 forecast, modestly below the historical average of74%. Attributable net profit declined 18.3% YoY to RMB416mn on FX losses.Excluding RMB105mn of FX losses and related tax effects, 9M26 attributablenet profit would have increased 4.8% YoY to RMB503mn. For 3Q26, revenuedeclined 3.3% YoY to RMB788mn as the domestic business was under VBPpressure, while overseas sales maintained rapid growth. 3Q26 gross marginwas 62.5%, down 1.4ppt YoY, as overseas mix improvement was offset by FXand domestic price pressure. Looking ahead, we expect continued overseaspenetration and innovation should remain the main growth drivers. We believethe national VBP should largely clear domestic pricing risk over the next severalyears and the domestic business will bottom out in 2027E and return to growthin 2028E.
Overseas growth remains robust. 3Q26 overseas revenue increased over20% YoY to ~RMB590mn, or approximately 25% in constant currency,accounting for ~75% of total sales. Revenue from Americas increased 35%YoY in 3Q26, supported by expanding product coverage, and strongerchannel reach following the acquisition of three Conmed product lines.Revenue from Europe rose a solid 16% YoY, led by Italy and Spain, whileAPAC was held back by yen weakness. Innovative products also remainedstrong overseas, with overseas revenue from innovative products in 3Q26up 38% YoY.
Domestic business is expected to bottom out as 7th national VBPcompleted. 3Q26 domestic revenue fell 38.4% YoY to ~RMB200mn, mainlydue to channel de-stocking ahead of VBP implementation. We believe thechannel inventory has now been largely cleared. Importantly, the Companywon broadly in the 7th national VBP, in 21 categories in total, which shouldsupport further share consolidation. While near-term revenue and marginpressure is unavoidable, we think the national VBP materially reduced thedomestic policy overhang. In our view, domestic business may bottom outin 2027E as VBP-driven volume growth is expected to largely offset the ASPdecline. Form 2028E, innovative products should become a main driver tosupport domestic business to return to solid growth.
Maintain BUY. We cut FY27-28E attributable net profit toRMB600mn/RMB733mn to reflect the GPM pressure due to VBP. However,we roll forward our DCF valuation basis from FY26E-35E to FY27E-35E asmarket focus increasingly shifts to FY27E. WACC and terminal growthassumptions are unchanged. Therefore, we derive our TP of RMB93.52based on a 9-year DCF model. Risks: lower-than-expected volume growthfollowing VBP implementation, overseas expansion deceleration, FXvolatility.