China Medtech Q326 preview: Investor sentiment improving, earnings recovery remains selective

Our recent investor conversations suggest a sentiment recovery towards the China medtech sector, especially amid the relatively weak performance of broader China equities. On fundamentals, we forecast a median of 9%/6% YoY revenue/NP expansion among our covered A-share companies, compared with +11%/-19% YoY changes in Q226. Overall, we see a relatively stable China market in Q326 prior to the likely implementation of major policies in late 2026/Q127. That said, we expect sustained divergence across segments and companies in Q326 earnings. For medical equipment, we anticipate meaningful YoY top-line growth following improved procurement activities in China (up 6% in Q326 versus down 12% in both Q1/Q226) on strengthened funding support, though fierce price competition and rising raw material costs may pressure GPM. For medical consumables, the momentum for high-growth categories remains solid, while relatively commoditised categories may continue to be squeezed;