The Zhitong Finance App learned that Guotai Junan released a research report saying that since 2023H2, due to external industry factors, hospital procurement of medical equipment has slowed down, and the performance of related listed companies is under pressure, and the market already has full expectations. Hospitals increased procurement in early 2023, causing equipment companies to face varying degrees of high base pressure in 2024Q1. The bank expects bidding to resume quarterly, and delayed procurement demand is also expected to be released one after another. Combined with the low base effect of 2024H2, the medical equipment industry is expected to usher in good performance growth, and prosperity will increase quarterly. In addition, large-scale equipment renewal action plans have been introduced, which will help drive up demand for medical imaging and other equipment.

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Guotai Junan's views are as follows:

Large-scale equipment updates are beneficial to the development of the medical equipment industry.

On March 7, 2024, the State Council issued the “Action Plan to Promote Large-scale Equipment Renewal and Consumer Goods Trade-in”, which proposes to strengthen the construction of high-quality and efficient medical and health service systems, promote the iterative upgrading of medical equipment and information technology facilities in medical and health institutions, ① encourage qualified medical institutions to speed up the upgrading of medical equipment such as medical imaging, radiology, telemedicine, and surgical robots; ② promote the renovation and upgrading of medical institution wards. The bank believes that some domestic tertiary hospital equipment has been in use for a long time, that there is an urgent need for renewal, and that the policy is favorable to the growing prosperity of the medical equipment industry. In terms of segmented racing tracks, the policy is expected to potentially boost demand for medical equipment such as endoscopes, ultrasound, CT, MR, XR, RT, and surgical robots. At the same time, demand for equipment networking and interconnection is also increasing.

Fiscal and financial support promotes the release of demand, and follow-up on the amount and progress of financial support.

According to the content of the plan, eligible equipment renewal projects will provide financial and financial support, including inclusion in the scope of investment support within the central budget and the use of refinancing policy tools to guide financial institutions to strengthen support for equipment renewal, etc. A clear and active financial plan will help hospitals to fully release equipment renewal needs. In the future, it is still necessary to track the specific amount of financial support for the medical equipment industry. At the same time, the plan proposes simplifying preliminary approval procedures for technological transformation projects that do not use new land and mainly equipment updates, and it is expected that the time from policy response to listed companies' statements will also be shortened.

Support and encourage technical research and implementation of innovative achievements.

The plan proposes to focus on industrial infrastructure and stuck problems, promote the iteration of innovative products, and accelerate industrial application. The bank believes that ① will help shorten the gap in product performance between some medical devices and importers due to weak basic disciplines, such as coating processes, material processes, etc.; ② will help strengthen ties between universities and the industry, promote medical cooperation and innovation transformation. Various medical devices such as soft lenses and ultrasound all need to be iterated through continuous doctor feedback. Closer to clinical practice, it is also expected that the policy will accelerate the improvement of domestic equipment performance and domestic production alternative.

The medical device procurement side is expected to improve quarter by season, and the boom has quietly arrived.

Since 2023H2, due to external industry factors, hospital procurement of medical equipment has slowed down, and the performance of related listed companies has been under pressure, and the market already has full expectations. Hospitals increased procurement in early 2023, causing equipment companies to face varying degrees of high base pressure in 2024Q1. The bank expects bidding to resume quarterly, and delayed procurement demand is also expected to be released one after another. Combined with the low base effect of 2024H2, the medical equipment industry is expected to usher in good performance growth, and prosperity will increase quarterly.

Risk warning: Policy implementation progress falls short of expectations, and industry rectification efforts have increased the risk.