Morgan Stanley has released a research report indicating that JD HEALTH (06618) reported full-year results for the period ending last December. The company's fourth-quarter revenue increased 27% year-on-year, surpassing market expectations by 4%. Adjusted operating profit rose 246% annually, meeting forecasts. Adjusted net profit grew 30%, outperforming other revenue streams, though net profit for this year is projected to remain flat. The firm set a target price of HK$70 for the group with a "Market-Perform" rating.
Management believes the company's competitive moat is widening compared to rivals across various categories, particularly for pharmaceuticals with strict fulfillment standards. They also denied any plans for large-scale mergers and acquisitions of offline facilities, which should alleviate investor concerns about equity dilution and integration risks.
Morgan Stanley noted that, based on user scale, JD HEALTH had 218 million annual active users in 2025, representing a penetration rate of over 20% within JD Retail's user base, indicating room for deeper penetration. Additionally, artificial intelligence investment in 2026 may exceed last year's levels but will remain focused on areas with clear monetization pathways. Overall, increased operating expenses are expected to be offset by gross margin expansion, leading to a stable adjusted operating profit margin.
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