HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

JD Health International  / Equity Bottom-Up

<ul>
<li>JD Health's 23Q3 results were below expectations. Due to the high base of 22H2 (especially 22Q4), revenue growth could become negative in 23Q4, thus dragging down 2023 full year growth.</li>
<li>Considering the high base in 23H1, performance pressure could continue until 24H1. JD Health’s past high growth will be gone. Investors may need to get used to the lower-than-expected growth.</li>
<li>Share price of JD Health is now in the bottom range. Current valuation is attractive. Despite the performance headwind, P/S is expected to return to about 3 to 4.</li>
</ul>


JD Health's 23Q3 results were below expectations. Due to the high base of 22H2 (especially 22Q4), revenue growth could become negative in 23Q4, thus dragging down 2023 full year growth.
Considering the high base in 23H1, performance pressure could continue until 24H1. JD Health’s past high growth will be gone. Investors may need to get used to the lower-than-expected growth.
Share price of JD Health is now in the bottom range. Current valuation is attractive. Despite the performance headwind, P/S is expected to return to about 3 to 4.


JD Health (6618.HK) 23Q3 - Performance Decline Is Inevitable, but There Is Upside Room for Valuation

Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

<ul>
<li>JDH reported C3Q23 top line and non-IFRS operating profit that are 39% and 34% of our C2H23 estimates. We cut C2H23 top line, non-IFRS operating profit and IFRS net income.</li>
<li>We keep 2024 top line unchanged but cut non-IFRS operating profit by 31% as we believe JDH might need to invest to explore new growth opportunities;</li>
<li>We cut TP from US$65 to US$52 but maintain BUY.</li>
</ul>


JDH reported C3Q23 top line and non-IFRS operating profit that are 39% and 34% of our C2H23 estimates. We cut C2H23 top line, non-IFRS operating profit and IFRS net income.
We keep 2024 top line unchanged but cut non-IFRS operating profit by 31% as we believe JDH might need to invest to explore new growth opportunities;
We cut TP from US$65 to US$52 but maintain BUY.


[JD Health (6618 HK, BUY, TP HK$52) TP Change]: A COVID Hiccup but Environment Is Turning Positive

<ul>
<li>It is an indisputable fact that JD Health's revenue growth has slowed down. The core reason is the industry beta brought by mobile Internet demographic dividend/COVID-19 dividend has faded away.</li>
<li>JD Health's performance could be under pressure in 2H23. If revenue growth continues to show a downward trend, whether the current profit margin/profitability can be maintained is a question mark.</li>
<li>JD health is facing four major dilemmas, including both business and policy aspects. Long-term valuation outlook for JD Health is not optimistic. We advise investors to re-evaluate the Company. </li>
</ul>


It is an indisputable fact that JD Health's revenue growth has slowed down. The core reason is the industry beta brought by mobile Internet demographic dividend/COVID-19 dividend has faded away.
JD Health's performance could be under pressure in 2H23. If revenue growth continues to show a downward trend, whether the current profit margin/profitability can be maintained is a question mark.
JD health is facing four major dilemmas, including both business and policy aspects. Long-term valuation outlook for JD Health is not optimistic. We advise investors to re-evaluate the Company. 


JD Health (6618.HK) 23H1 - The Beautiful Story Is Over; It's Time to Face Reality

China/Asia TMT

Shawn Yang

<ul>
<li>JDHealth (JDH) reported C1H23 top line, non-IFRS operating profit and IFRS net income 9.3%, 17% and 162% above our estimates. </li>
<li>We believe that with years of tightening NDRL and the recent hardline anti-corruption campaign, </li>
<li>More and more pharmaceuticals and patients are looking for alternative channels, which bodes well for JDH in the long run; We raise TP from HK$57 to HK$65 and reiterate BUY</li>
</ul>


JDHealth (JDH) reported C1H23 top line, non-IFRS operating profit and IFRS net income 9.3%, 17% and 162% above our estimates. 
We believe that with years of tightening NDRL and the recent hardline anti-corruption campaign, 
More and more pharmaceuticals and patients are looking for alternative channels, which bodes well for JDH in the long run; We raise TP from HK$57 to HK$65 and reiterate BUY


[JD Health (6618 HK, BUY, TP HK$65) TP Change]: Benefit of Alternative Channel Starts to Show

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>JD Health reported 1H2023 results yesterday. 1H revenue increased 34.0% YoY to RMB27.1bn (vs consensus RMB27.5bn) and reported an OP of RMB943.9m (vs consensus RMB753.2m) vs RMB60.1m in 1H2022.</li>
<li>Though the company made OPM of 5.7% in 1Q2023, 1H2023 OPM was 3.5% in line with our analysis that OPM in excess of 2-3% may not be possible in LT.</li>
<li>There is very little upside for GPM to improve unless the company’s high-margin service business takes off at a higher rate which seems unrealistic to us.</li>
</ul>


JD Health reported 1H2023 results yesterday. 1H revenue increased 34.0% YoY to RMB27.1bn (vs consensus RMB27.5bn) and reported an OP of RMB943.9m (vs consensus RMB753.2m) vs RMB60.1m in 1H2022.
Though the company made OPM of 5.7% in 1Q2023, 1H2023 OPM was 3.5% in line with our analysis that OPM in excess of 2-3% may not be possible in LT.
There is very little upside for GPM to improve unless the company’s high-margin service business takes off at a higher rate which seems unrealistic to us.


JD Health 1H2023: Reports Operating Profits; Margin Upside Is Very Limited

China

JD Health International Inc. operates drug stores. The Company retails Chinese and Western medicines, nutrition products, health care products, and other products. JD Health International markets its products throughout China.

JD Health International (6618 HK)

JD Health (6618.HK) 23Q3 - Performance Decline Is Inevitable, but There Is Upside Room for Valuation

JD Health's 23H2 results won't be satisfactory, dragging down full year growth, which may not recover until 24H2. But stock price has priced in...

Xinyao (Criss) Wang

[JD Health (6618 HK, BUY, TP HK$52) TP Change]: A COVID Hiccup but Environment Is Turning Positive

JDH reported lower-than-expected Q3 results, leading to reductions in profit estimates and target price, but we maintain a buy rating due to...

Blue Lotus Research Institute

JD Health (6618.HK) 23H1 - The Beautiful Story Is Over; It's Time to Face Reality

We had anticipated JD Health's declining growth in previous insights, but 23Q2 performance was indeed ugly. JD Health's facing dilemmas in policies...

Xinyao (Criss) Wang

[JD Health (6618 HK, BUY, TP HK$65) TP Change]: Benefit of Alternative Channel Starts to Show

With years of tightening NDRL and the recent hardline anti-corruption campaign, more pharmaceuticals and patients are looking for alternative...

Blue Lotus Research Institute

JD Health 1H2023: Reports Operating Profits; Margin Upside Is Very Limited

Though JD Health made an OPM of 5.7% in 1Q2023, 1H2023 OPM was 3.5% in line with our analysis that OPM in excess of 2-3% may not be possible in the...

Shifara Samsudeen, ACMA, CGMA

JD Health (6618.HK) 23Q3 - Performance Decline Is Inevitable, but There Is Upside Room for Valuation

JD Health's 23H2 results won't be satisfactory, dragging down full year growth, which may not recover until 24H2. But stock price has priced in...

Xinyao (Criss) Wang

[JD Health (6618 HK, BUY, TP HK$52) TP Change]: A COVID Hiccup but Environment Is Turning Positive

​JDH reported lower-than-expected Q3 results, leading to reductions in profit estimates and target price, but we maintain a buy rating due to...

Blue Lotus Research Institute

JD Health (6618.HK) 23H1 - The Beautiful Story Is Over; It's Time to Face Reality

We had anticipated JD Health's declining growth in previous insights, but 23Q2 performance was indeed ugly. JD Health's facing dilemmas in policies...

Xinyao (Criss) Wang

[JD Health (6618 HK, BUY, TP HK$65) TP Change]: Benefit of Alternative Channel Starts to Show

With years of tightening NDRL and the recent hardline anti-corruption campaign, more pharmaceuticals and patients are looking for alternative...

Blue Lotus Research Institute

JD Health 1H2023: Reports Operating Profits; Margin Upside Is Very Limited

Though JD Health made an OPM of 5.7% in 1Q2023, 1H2023 OPM was 3.5% in line with our analysis that OPM in excess of 2-3% may not be possible in the...

Shifara Samsudeen, ACMA, CGMA

JDH reported lower-than-expected Q3 results, leading to reductions in profit estimates and target price, but we maintain a buy rating due to...