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.

Equity Bottom-Up

JD Health International  / Equity Bottom-Up

<ul>
<li>JD Health reported 2H2022 results. 2H revenue increased 55.5% YoY to RMB26.5bn (RMB24.2bn) while fall in GPM and an increase in fulfilment costs led to operating losses during the period.</li>
<li>Product revenues (JD Pharmacy) continues to account for a majority of JD Health’s revenues that generate lower GPM compared to Marketplace and other revenues.</li>
<li>JD Health’s share price has moved up over the last few months but further decline in GPM  could pull the share price down suggesting it could be a Good Short.</li>
</ul>


JD Health reported 2H2022 results. 2H revenue increased 55.5% YoY to RMB26.5bn (RMB24.2bn) while fall in GPM and an increase in fulfilment costs led to operating losses during the period.
Product revenues (JD Pharmacy) continues to account for a majority of JD Health’s revenues that generate lower GPM compared to Marketplace and other revenues.
JD Health’s share price has moved up over the last few months but further decline in GPM  could pull the share price down suggesting it could be a Good Short.


JD Health: Lower Margin Direct Sales Biz Weighs Down Profitability

China/Asia TMT

Shawn Yang

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>JDHealth (JDH) reported C2H22 top line, non-IFRS operating profit and IFRS net profit 9.2%, (25%) and (54%) versus our estimates, Annual active customers beat our estimate by 6.5%; </li>
<li>Gross margin, however, continued to deteriorate, mainly due to another all-time low (the 5th consecutive interim) of product gross margin. </li>
<li>The company however, showed strong ability in OPEX and working capital control; We raise TP from HK$39 to HK$44 and maintain SELL.</li>
</ul>


JDHealth (JDH) reported C2H22 top line, non-IFRS operating profit and IFRS net profit 9.2%, (25%) and (54%) versus our estimates, Annual active customers beat our estimate by 6.5%; 
Gross margin, however, continued to deteriorate, mainly due to another all-time low (the 5th consecutive interim) of product gross margin. 
The company however, showed strong ability in OPEX and working capital control; We raise TP from HK$39 to HK$44 and maintain SELL.


[JD Health (6618 HK) Target Price Change]: Strong Execution but Industry Glass Ceiling Remains

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Ping An Healthcare and Technology / Equity Bottom-Up

<ul>
<li>PAGD intends to switch from 2C model to 2B model and to reduce losses ASAP at the expense of revenue scale, so as to prove its profitability to the market. </li>
<li>B-End corporate customers with high quality and sufficient budget are limited. Once the growth of B-end corporate customers meets a bottleneck, its performance may face another decline.</li>
<li>Despite the improving financial performance in 2022, we still think that we need to further observe the effect of strategic transformation and future performance of PAGD before making judgments.</li>
</ul>


PAGD intends to switch from 2C model to 2B model and to reduce losses ASAP at the expense of revenue scale, so as to prove its profitability to the market. 
B-End corporate customers with high quality and sufficient budget are limited. Once the growth of B-end corporate customers meets a bottleneck, its performance may face another decline.
Despite the improving financial performance in 2022, we still think that we need to further observe the effect of strategic transformation and future performance of PAGD before making judgments.


Ping An Healthcare and Technology Company Limited (1833.HK)- To Turn Things Around or to Fail Again?

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of March 10th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight flows for China Mobile, Tencent, China Vanke, ICBC, CCB.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of March 10th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for China Mobile, Tencent, China Vanke, ICBC, CCB.


Hong Kong Connect Flows (Mar 10th): China Mobile, Tencent, China Vanke, ICBC, CCB

<ul>
<li>JD Health's dependence on direct sales business wouldn’t change. But the gross profit of prescription drugs is low. If JD Health increases its revenue proportion, overall gross margin would decline.</li>
<li>The business supporting JD Health's high growth in the future is more dependent on the second growth point, but we haven’t seen any new business with high certainty so far.</li>
<li>The essence of JD Health's business is “product sale e-commerce” rather than “a comprehensive online healthcare platform” at the current stage, which cannot support high valuation in our view.</li>
</ul>


JD Health's dependence on direct sales business wouldn’t change. But the gross profit of prescription drugs is low. If JD Health increases its revenue proportion, overall gross margin would decline.
The business supporting JD Health's high growth in the future is more dependent on the second growth point, but we haven’t seen any new business with high certainty so far.
The essence of JD Health's business is “product sale e-commerce” rather than “a comprehensive online healthcare platform” at the current stage, which cannot support high valuation in our view.


JD Health (6618.HK) - It's Time to Reassess the Business Prospects and Valuation

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.

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JD Health International (6618 HK)

JD Health: Lower Margin Direct Sales Biz Weighs Down Profitability

JDH's GPM has been on a declining trend due to lower margin direct sales biz . Online marketplace and healthcare services are key driver of...

Shifara Samsudeen, ACMA, CGMA

[JD Health (6618 HK) Target Price Change]: Strong Execution but Industry Glass Ceiling Remains

Gross margin continued to deteriorate. The company showed strong ability in OPEX and working capital control; We raise TP from HK$39 to HK$44 and...

Blue Lotus Research Institute

Ping An Healthcare and Technology Company Limited (1833.HK)- To Turn Things Around or to Fail Again?

PAGD's intention to improve profitability at the expense of revenue scale is obvious. Switching from 2C to 2B model is a double-edged sword....

Xinyao (Criss) Wang

Hong Kong Connect Flows (Mar 10th): China Mobile, Tencent, China Vanke, ICBC, CCB

We analyzed southbound Hong Kong connect flows in the past week and highlight flows for China Mobile, Tencent, China Vanke, ICBC, CCB.

Ke Yan, CFA, FRM

JD Health (6618.HK) - It's Time to Reassess the Business Prospects and Valuation

The essence of JD Health's business is “pharmaceutical e-commerce” rather than “a comprehensive online healthcare platform”. Without second growth...

Xinyao (Criss) Wang

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