HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

JD Health International  / Equity Bottom-Up

<ul>
<li>JD Health bucked the trend and grew in 2022H1. The Company has turned a profit first in front of its competitors Alibaba Health and Ping An Good Doctor.</li>
<li>The performance of the second growth point would determine whether JD Health can maintain good momentum under the challenges of policy risks and possible future bottlenecks of products revenue growth. </li>
<li>Hopefully, the smart healthcare solutions and digital health business or the pet healthcare business can achieve breakthroughs. Then, there’re more certainty in long-term performance and valuation growth of JD Health.</li>
</ul>


JD Health bucked the trend and grew in 2022H1. The Company has turned a profit first in front of its competitors Alibaba Health and Ping An Good Doctor.
The performance of the second growth point would determine whether JD Health can maintain good momentum under the challenges of policy risks and possible future bottlenecks of products revenue growth. 
Hopefully, the smart healthcare solutions and digital health business or the pet healthcare business can achieve breakthroughs. Then, there’re more certainty in long-term performance and valuation growth of JD Health.


JD Health (6618.HK) 2022H1 - A Second Growth Point Is Needed to Reassure Investment Logic

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 1H2022 results. Revenue increased 48.3% YoY to RMB20.2bn (vs consensus RMB19.4bn) while managed to report a small OP of RMB60m (0.3% of revenue) for the period.</li>
<li>Excluding share-based payment expenses, JD Health reported an OP of RMB1.0bn vs RMB564m in the same period a year ago, resulting in an OPM of 5.1% vs 4.1% in 1H2021.</li>
<li>The growth in annual active user account growth has declined during 1H2022, however, it was mainly due to decrease in marketing spend.</li>
</ul>


JD Health reported 1H2022 results. Revenue increased 48.3% YoY to RMB20.2bn (vs consensus RMB19.4bn) while managed to report a small OP of RMB60m (0.3% of revenue) for the period.
Excluding share-based payment expenses, JD Health reported an OP of RMB1.0bn vs RMB564m in the same period a year ago, resulting in an OPM of 5.1% vs 4.1% in 1H2021.
The growth in annual active user account growth has declined during 1H2022, however, it was mainly due to decrease in marketing spend.


JD Health: Slowdown in User Growth Is No Big Concern

Asia biased macro & technical analysis, Untying The Gordian Knot

Untying The Gordian Knot

Asia biased macro & technical analysis

A differentiated process with a primary focus on Asia. Technical Analysis as core and Macro drivers that could bring the view to fruition & changes that could make the idea fall apart. The objective is to be the best in class, hence corner shop.

Technical Analysis

<ul><li>Markets are treacherous, but none more than Hong Kong listed stocks.</li><li>The vicious short-covering rallies and an impulse selloff have become a hallmark of the last few weeks.</li><li>First, it was technology on news of ease in regulations, agreements with the US on accounting on a tiered classification of companies by Beijing or in case of Alibaba announcing making Hong Kong it's primary listing to make stock eligible for South Bound inflows.</li></ul>

Markets are treacherous, but none more than Hong Kong listed stocks.The vicious short-covering rallies and an impulse selloff have become a hallmark of the last few weeks.First, it was technology on news of ease in regulations, agreements with the US on accounting on a tiered classification of companies by Beijing or in case of Alibaba announcing making Hong Kong it's primary listing to make stock eligible for South Bound inflows.

Alibaba Health Information Tec / Equity Bottom-Up

<ul>
<li>On 22nd June, China released a draft rule that would prevent third-party e-commerce platforms from selling drugs directly to consumers online.</li>
<li>Alibaba Health’s share price is down more than 10% since the announcement of the draft rule, however, third-party e-commerce platforms accounts for about 10% of Ali Health’s revenues.</li>
<li>Pharmaceutical direct sales business has been generating lower GPM compared to JD Health’s direct biz, and the company’s margins have continued to deteriorate during the last 2-years.</li>
</ul>


On 22nd June, China released a draft rule that would prevent third-party e-commerce platforms from selling drugs directly to consumers online.
Alibaba Health’s share price is down more than 10% since the announcement of the draft rule, however, third-party e-commerce platforms accounts for about 10% of Ali Health’s revenues.
Pharmaceutical direct sales business has been generating lower GPM compared to JD Health’s direct biz, and the company’s margins have continued to deteriorate during the last 2-years.


Alibaba Health: New Digital Healthcare Policy to Have Less Impact but Tumbling Margins Is Worrying

Equity Capital Markets

Huayiwang Technology / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/huayiwang-technology-inc" target="_blank" data-smartkarma-citation="entities:35518:1" rel="noopener">Huayiwang Technology (1985554D HK)</a> is strong in its digital medical education solutions, which is the cornerstone business for the continuous expansion of other solution offerings and ecosystem.</li>
<li>HUAYIWANG charges service fees mainly from pharmaceutical companies, which could be a more sustainable profit model than charging from patients directly.</li>
<li>However, the increasing competition and potential risk of losing medical professionals could shake the foundations of HUAYIWANG's business. </li>
</ul>



Huayiwang Technology (1985554D HK) is strong in its digital medical education solutions, which is the cornerstone business for the continuous expansion of other solution offerings and ecosystem.
HUAYIWANG charges service fees mainly from pharmaceutical companies, which could be a more sustainable profit model than charging from patients directly.
However, the increasing competition and potential risk of losing medical professionals could shake the foundations of HUAYIWANG's business. 


Pre-IPO Huayiwang Technology - The Business Model Is Reasonable, but There Are Also Challenges

China

Ping An Healthcare and Technology Company Limited provides health care software solutions. The Company offers mobile platform for online consultation, hospital referral and appointment, health management, and wellness interaction services, as well as connects consumers and patients with health care resources. Ping An Healthcare and Technology serves customers in China.

Ping An Healthcare and Technology (1833 HK)

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Ping An Healthcare and Technology (1833 HK)

JD Health (6618.HK) 2022H1 - A Second Growth Point Is Needed to Reassure Investment Logic

JD Health has turned a profit in 22H1, but it needs a second growth point to "hedge" policy risk and future bottleneck of products revenue growth...

Xinyao (Criss) Wang

JD Health: Slowdown in User Growth Is No Big Concern

Annual active user growth has slowed down during 1H2022 which was mainly due to lower marketing spend. However, average revenue per active user...

Shifara Samsudeen, ACMA, CGMA

Longfor, AAC Technology, Ping An

Markets are treacherous, but none more than Hong Kong listed stocks. The vicious short-covering rallies and an impulse selloff have become a...

Untying The Gordian Knot

Alibaba Health: New Digital Healthcare Policy to Have Less Impact but Tumbling Margins Is Worrying

We expect the impact from the new draft rule on Digital healthcare platforms to be minimal on Ali Health. However, eroding margins is a concern and...

Shifara Samsudeen, ACMA, CGMA

Pre-IPO Huayiwang Technology - The Business Model Is Reasonable, but There Are Also Challenges

The business model of taking medical professional network as the foundation for expansion of other solution offerings/ecosystem is logical....

Xinyao (Criss) Wang

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