CICC released a research report stating that maintaining the JD Health (06618) “outperforming the industry” rating, considering the frequent influenza situation in various regions starting in 4Q23, it is expected to increase the 2023 profit forecast by 2% to 1.8 billion yuan. The 2024/2025 profit forecast remains unchanged, with a target price of HK$41.2. The bank expects the company's revenue side to achieve a year-on-year growth rate of about 15% in 2023.
The main views of CICC are as follows:
Overall growth is expected to be steady in 2023.
1-3Q23 achieved revenue of 38.696 billion yuan (+25.9% YoY). Considering the frequent occurrence of influenza in various regions starting in 4Q23, the bank expects or drives the release of corresponding drug and device categories. At the same time, the company's revenue side is expected to achieve a 15% year-on-year growth rate in 2023. It is estimated that 4Q23 corresponds to a year-on-year single-digit decline, and the annual dimension will still achieve steady growth under the high base effect. The bank believes that as costs are reduced and efficiency continues to be controlled on the cost side and interest income from cash in hand, there is room for continuous improvement in the company's net profit margin.
The number of active users is expected to continue to rise.
As of September 30, 2023, the company's annual active users reached 175 million, a net increase of 6.4 million compared to the end of 2Q23. According to estimates, the bank expects the overall customer unit price of the 1-3Q23 company to drop, but continued brand marketing investment and low price competition strategies are expected to speed up traffic acquisition and increase the number of daily active users, further consolidating the competitiveness of the existing market.
Focus on the impact of a high base on growth performance in 2024 after clearance.
During the 4Q22-1Q23 period, due to adjustments in epidemic prevention measures, residents' procurement demand for epidemic prevention and control materials and related drugs increased dramatically, driving the company's current revenue side to achieve high growth. As the impact of the high base gradually clears up in 1Q24, the bank suggests focusing on the endogenous growth performance of various categories in the subsequent quarters of 2024. Furthermore, in July 2023, the company launched the medical model “Beijing Medicine Thousand Investigations” to achieve AI upgrades for applications, products and solutions in different medical scenarios. The bank is expected to continue to help innovate telemedicine services in the future.