CICC has released a research report stating that, considering the continued volume expansion trend of original research categories and the strong demand for influenza-related products, it has raised its revenue forecasts for JD HEALTH (06618) for 2025 and 2026 by 2% to RMB 72.5 billion and RMB 81.7 billion, respectively. Simultaneously, factoring in the combined impact of improving gross margin trends and potential fluctuations in interest income, the firm has increased its non-IFRS net profit forecasts for 2025 and 2026 by 4% and 1% to RMB 6.5 billion and RMB 6.4 billion, respectively. It has also introduced initial forecasts for 2027 revenue of RMB 91.2 billion and a non-IFRS net profit of RMB 6.8 billion. Considering recent slight volatility in the sector's performance and based on a SOTP valuation, CICC maintains its target price of HK$71.4 (implying 23% upside potential) and an Outperform rating.
Looking at the performance quarter-by-quarter in 2025, the firm observed robust revenue performance from the company, with each of the first three quarters achieving approximately 25% year-on-year growth. According to disclosures at the end of Q3 2025, the company signed strategic cooperation agreements with pharmaceutical companies such as Eli Lilly, Innovent Biologics, and Bayer China during the quarter, continuously strengthening its business feature of being the first online platform for new drugs. Given the persistent trend of volume expansion for original drug categories throughout the year, coupled with the rising demand for winter influenza prevention and control starting from Q4 2025, the firm judges that the company is likely to achieve strong revenue performance in Q4 2025 as well. It is estimated that the company's full-year revenue growth for 2025 could approach 25% year-on-year.
The company achieved non-IFRS net profit margins of 10.6%, 9.7%, and 11.1% in Q1-Q3 2025, respectively, showing improvements to varying degrees year-on-year. The firm attributes this primarily to increased advertising and marketing budget investments from pharmaceutical and health supplement companies, which drove continuous improvement in gross margin levels. Furthermore, the company's expense investments during the year (such as in medical AI, and the omni-channel system layout including offline pharmacies + instant retail) were relatively controllable, thus consistently driving impressive profit performance. Although Q4 2025 is typically a season of higher investment, the firm expects that on a full-year basis, the company's operating profit margin is likely to show a stable and improving trend, reflecting the strong competitiveness of its business. On the other hand, considering the company's substantial cash on hand and the disclosure in its interim report that some cash is used for purchasing domestic and international wealth management products, the firm believes it is necessary to monitor the potential impact of interest rate cuts on interest income and its subsequent effect on non-IFRS net profit over the coming quarters.
Risk warnings include intensifying industry competition, regulatory tightening exceeding expectations, and a slower-than-expected recovery in healthcare consumption.
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