Investment Rating - The investment rating for JD Health (06618.HK) is "Outperform the Market" [1][3][12] Core Views - In H2 2024, JD Health achieved a revenue of 29.8 billion yuan, representing a year-on-year increase of 13%. The growth was driven by an increase in active user numbers and a wider range of product categories [1][8] - The company's non-IFRS net profit margin improved from 6.4% in the previous year to 7.2%, with operating profit margin rising from -1% to 2%, primarily due to improvements in gross margin and administrative expense ratios [2][8] - For 2025, the management plans to increase long-term strategic investments to capitalize on structural changes in the healthcare market, expecting significant revenue and profit improvements over the next three years [2][8] Revenue and Profit Forecast - Revenue forecasts for 2025 and 2026 are set at 65.7 billion yuan and 73.5 billion yuan, respectively, with adjustments of 2.9% and 3.7% upwards due to increased consumer online purchasing behavior [3][12] - Adjusted net profit for 2025 and 2026 is projected at 4.4 billion yuan and 4.9 billion yuan, with downward adjustments of 7.9% and 3.2% due to increased investments in front warehouses and AI [3][12] Operational Data - As of H2 2024, JD Health had 184 million annual active users, a 7% year-on-year increase, indicating a user penetration rate of 27% with significant growth potential [2][9] - The average transaction value decreased year-on-year, but this was offset by an increase in shopping frequency among users [9]

Summary of JD Health Conference Call Company Overview - **Company**: JD Health - **Year**: 2024 Key Points and Arguments User Growth and Engagement - JD Health achieved 183 million active user accounts in 2024, with an average of over 498,000 online consultations per day, maintaining this level for four consecutive years [2][3] - Direct sales revenue reached 48.8 billion RMB, a year-on-year increase of over 6.9%, with strong performance in surgical services and electric scissors [2][3] Market Position and Innovations - JD Health maintains its leadership in the pharmaceutical e-commerce sector, accelerating online channel development to meet growing user demand for flu medications and personal treatment [2][5] - The company innovated in internet medical services, providing a full process from online consultation to home check-ups and prescriptions, enhancing convenience [2][5] - JD Health is the first online healthcare platform to apply large language models (LLM) on a large scale, improving doctor communication and research efficiency [2][5][6] Financial Performance - Service revenue exceeded 9.36 billion RMB in 2024, a year-on-year increase of 18.9%, accounting for 16.1% of total revenue [2][10] - The gross margin increased by 17 basis points to 22.9%, reflecting supply chain optimization efforts [10][11] Retail and Insurance Services - JD Health launched online drug purchase services using personal medical insurance accounts in 80 cities, covering over 100 million people [3][12] - The company plans to expand online medical insurance payment services in 2025, enhancing user experience and recognition [23] Technological Advancements - JD Health introduced AI solutions to support hospital applications, optimizing patient care processes and clinical research [2][6] - The company is committed to AI technology development, with top-tier AI language models available for hospitals, medical institutions, and patients [20][21] Future Strategies - In 2025, JD Health will focus on strengthening B2C direct sales, online markets, and on-demand retail operations to solidify its position as a leading online healthcare platform [8][18] - The company aims to deepen hospital service skills and enhance home service models, while investing in technology applications to create real value for the healthcare industry [8][18] Industry Trends and Responses - The Chinese healthcare market is rapidly expanding, driven by an aging population and increasing health awareness among younger generations [22] - JD Health plans to address these changes by enriching product lines, optimizing channel experiences, and integrating online and offline resources [22] Competitive Landscape - JD Health will leverage insights into user needs to optimize its business model and enhance supply chain capabilities, ensuring sustainable competitive advantages [16] Collaboration and Partnerships - The company has engaged in innovative collaborations with firms like October, MSC Helium, and Pfizer in supply chain services, patient services, and academic marketing [9][19] Customer Experience and Trust - JD Health is focused on enhancing customer trust through competitive pricing strategies and comprehensive service offerings, including free prescription drug change services and 24/7 support [19] Additional Important Content - JD Health's commitment to continuous investment in AI and big data technologies aims to maintain its leadership position in the digital health sector [14][15] - The company is exploring new growth opportunities in the specialty drug market and enhancing its academic marketing platform to attract more medical companies [19]

Financial Performance - Revenue for the year ended December 31, 2024, was RMB 58,159,881,000, representing an 8.6% increase from RMB 53,529,941,000 in 2023[4] - Gross profit increased by 12.2% to RMB 13,308,577,000, up from RMB 11,865,336,000 in the previous year[4] - Operating profit surged by 132.9% to RMB 1,469,464,000, compared to RMB 630,848,000 in 2023[4] - Annual profit reached RMB 4,157,014,000, a 94.0% increase from RMB 2,142,880,000 in the prior year[4] - Revenue increased by 8.6% from RMB 53.5 billion in 2023 to RMB 58.2 billion in 2024, driven by a 6.9% increase in product sales from RMB 45.7 billion to RMB 48.8 billion[36] - Service revenue rose by 18.9% from RMB 7.9 billion in 2023 to RMB 9.4 billion in 2024, attributed to increased digital marketing service fees due to a higher number of advertisers[36] - Annual profit increased from RMB 2.1 billion in 2023 to RMB 4.2 billion in 2024[46] - Total revenue for 2024 was RMB 58.16 billion, an increase of 8.5% from RMB 53.53 billion in 2023[70] - Gross profit for 2024 was RMB 13.31 billion, representing a gross margin of 22.9%, compared to RMB 11.87 billion and a gross margin of 22.1% in 2023[70] - Annual profit for 2024 was RMB 4.16 billion, a significant increase of 94.2% from RMB 2.14 billion in 2023[71] User Engagement and Services - As of December 31, 2024, the annual active user count reached 183.6 million, with an average of over 490,000 online consultations per day throughout the year[17] - Daily online consultation volume at the company's internet hospital exceeded 490,000 by December 31, 2024[27] - The company has established the largest online team of licensed pharmacists and nutritionists in the country, enhancing personalized health consultation services[23] - JD Health's online medical services have expanded to include nearly 40 home healthcare services, enhancing user experience[10] - The company upgraded its instant delivery service, achieving delivery times as fast as 9 minutes for consumers nationwide[9] Product Development and Innovation - The company launched nearly 30 new specialty drugs online, reinforcing its position as the first station for new specialty drug launches[20] - The company has introduced 149 rapid testing products, covering over 1.5 billion people across 12 core cities[10] - The company launched 149 home testing service products across 12 cities, providing equivalent testing services to offline medical institutions[28] - The company is actively involved in the development of AI-driven products and solutions for healthcare, including smart health assistants and AI psychological companions[16] - The company has introduced AI health assistant products and smart doctor assistant services to enhance online healthcare service experiences[30] Strategic Partnerships and Market Position - Strategic partnerships were signed with brands like Swisse and GNC to enhance product co-creation and marketing efforts, improving brand influence and sales[21] - The company is focused on building a unified online entry point for users to access quality healthcare services efficiently[16] - The company aims to strengthen its advantages in the pharmaceutical health supply chain by enhancing cost, efficiency, and user experience[14] - The company is committed to driving "technology for the public" to ensure equitable healthcare access through innovative solutions[16] Financial Position and Cash Flow - Cash and cash equivalents rose from RMB 15.0 billion in 2023 to RMB 22.6 billion in 2024, reflecting a net increase of RMB 7.4 billion[51] - Operating cash flow for 2024 was RMB 4.3 billion, compared to RMB 4.6 billion in 2023, while investment activities generated a net cash inflow of RMB 3.1 billion[52] - The net cash used in investing activities in 2024 was RMB 3.1 billion, mainly due to the maturity of fixed deposits amounting to RMB 35 billion[56] - The net cash used in financing activities decreased from RMB 117.2 million in 2023 to RMB 45.6 million in 2024, primarily due to the absence of share repurchase payments in 2024[57] - The company had no outstanding borrowings as of December 31, 2024, indicating a strong financial position[68] Operational Efficiency - Operating costs increased by 7.6% from RMB 41.7 billion in 2023 to RMB 44.9 billion in 2024, primarily due to higher sales volumes of pharmaceutical and health products[37] - Fulfillment expenses increased by 14.1% from RMB 5.3 billion in 2023 to RMB 6.0 billion in 2024, with fulfillment expenses as a percentage of revenue rising from 9.9% to 10.4%[39] - R&D expenses grew by 8.5% from RMB 1.2 billion in 2023 to RMB 1.3 billion in 2024, maintaining a stable percentage of revenue at 2.3%[42] - General and administrative expenses decreased by 29.0% from RMB 2.0 billion in 2023 to RMB 1.4 billion in 2024, with the percentage of revenue dropping from 3.7% to 2.4%[43] Assets and Liabilities - Total assets increased to RMB 71,274,993 thousand in 2024 from RMB 64,288,300 thousand in 2023, representing a growth of approximately 15%[74] - Current assets increased to RMB 58,460,415 thousand in 2024, up from RMB 47,849,891 thousand in 2023, showing a growth of approximately 22%[74] - Non-current assets decreased to RMB 12,814,578 thousand in 2024 from RMB 16,438,409 thousand in 2023, a decline of about 22%[74] - Trade receivables rose to RMB 551,370 thousand in 2024 from RMB 347,962 thousand in 2023, an increase of about 58%[87] - Trade payables increased to RMB 10,423,314 thousand in 2024 from RMB 9,660,450 thousand in 2023, reflecting a growth of approximately 8%[88] Governance and Compliance - The audit committee has reviewed the audited consolidated financial statements for the year ending December 31, 2024[94] - The company has complied with all applicable provisions of the Corporate Governance Code during the reporting period[90] - No purchases, sales, or redemptions of the company's listed securities occurred during the reporting period[96] - The annual results announcement will be published on the Hong Kong Stock Exchange website and the company's website[101]

Summary of the Conference Call on JD Health Industry Overview - The overall online penetration rate for both prescription and non-prescription drugs in the internet healthcare industry remains low, indicating significant growth potential in the market [1][2][3] - The internet healthcare industry experienced a major turning point during the COVID-19 pandemic in 2020, leading to increased online sales of prescription drugs [2] Market Dynamics - The market size encompasses all health service-related sectors, including medical health infrastructure, consumer medical services, and drug retail [3] - JD Health and Alibaba Health primarily derive their revenue from drug and non-drug retail, with a projected growth rate in the industry at a high single-digit level over the next three years [3] Supply Chain Efficiency - Traditional supply chains involve a markup rate of approximately 65% to 90% from manufacturers to end-users, while direct procurement from manufacturers reduces this to 60% to 70% [4] - The most efficient internet self-operated platforms can achieve a markup rate as low as 10% to 12%, representing a significant efficiency improvement of 50% to 80% compared to traditional models [5] Business Models - JD Health's business model includes B2C self-operated sales, advertising revenue, and O2O (online-to-offline) services, with the self-operated model being the primary revenue source [7][8] - The company has seen a revenue increase of 13% year-on-year in its self-operated business, contributing to 85% of total revenue [10] User Engagement and Supply Side - The conversion rate from JD's main platform to JD Health is a key metric, with a focus on enhancing user experience and brand loyalty [9] - The number of third-party merchants on JD Health's platform has reached nearly 80,000, with a year-on-year growth rate of approximately 122% [12] O2O Business Development - JD Health's O2O service, "JD Buy Medicine," has expanded to cover over 490 cities, achieving delivery times as fast as 9 minutes [12][13] - The integration of real-time medical insurance settlement in O2O services is expected to enhance user trust in online purchasing [13] Financial Performance and Projections - The company anticipates a revenue growth rate of around 10% over the next three years, with a projected 12% growth in 2025 driven by GMV increases [20] - For Q3 2024, JD Health expects a year-on-year growth rate of 20% to 25% for prescription drugs, 10% to 15% for health products, and 5% to 10% for medical devices [22] Regulatory Environment - The introduction of a price comparison tool for insured pharmacies reflects the recognition of online platforms' pricing advantages by regulatory bodies [17] - The integration of online medical insurance payment systems is progressing, with JD Health already implementing these services in multiple cities [21] Conclusion - JD Health is positioned for continued growth in the internet healthcare sector, with a focus on enhancing supply chain efficiency, expanding its user base, and leveraging regulatory changes to boost sales [23]

Investment Rating - The report maintains a "Buy" rating for JD Health, with a target price not specified [4]. Core Viewpoints - JD Health has entered a strategic partnership with China Resources Sanjiu, aiming to set a benchmark in the pharmaceutical retail industry through comprehensive collaboration in areas such as digital marketing and corporate social responsibility [1]. - The company has demonstrated robust growth, with Q3 2024 revenue reaching 13.302 billion yuan, a year-on-year increase of 14.8%, and operating profit soaring by 216.0% to 552 million yuan [2]. - The integration of online medical insurance services is expected to enhance market share, with JD Health already providing online insurance payment services in 12 cities, covering over 1 billion people [2]. - During the Double Eleven shopping festival, JD Health saw significant growth in various health-related product categories, with a 140% increase in sales for products targeting the elderly [3]. - The company has set ambitious sales growth targets in collaboration with several health brands, aiming for a 300% increase over the next three years [3]. Summary by Sections Strategic Partnership - JD Health and China Resources Sanjiu have signed a strategic cooperation agreement to enhance pharmaceutical retail capabilities and drive high-quality industry development [1]. Financial Performance - For Q3 2024, JD Health reported revenues of 13.302 billion yuan, a 14.8% increase year-on-year, and an operating profit of 552 million yuan, reflecting a 216.0% growth [2]. Market Expansion - The company has expanded its online medical insurance services to 12 cities, with nearly 2000 retail pharmacies connected, potentially increasing user penetration [2]. Product Growth - JD Health experienced a significant increase in sales during the Double Eleven event, with a 7.2-fold increase in order volume and nearly tripling transaction value [3]. Strategic Goals - The company aims for a 300% sales increase in collaboration with various health brands over the next three years, reflecting a trend towards diversified health consumption [3].

Investment Rating - Maintain OUTPERFORM rating with a target price of HK$41.49 [1][2] - Current price is HK$27.30, indicating a significant upside potential [2] Core Views - Steady revenue growth in 24Q3 with revenue reaching CNY 13.30 billion (+14.8%) and net profit of CNY 930 million (+212.2%) [7] - Adjusted net profit margin improved to 10.0% (+1.8 percentage points) in 24Q3 [7] - For the first three quarters of 2024, revenue grew by 7.6% to CNY 41.65 billion, with net profit increasing by 59.4% to CNY 2.97 billion [8] - The company is expanding its online medical insurance settlement services, covering 12 cities and connecting with 2,000 designated retail pharmacies [8] Financial Performance - Revenue for 2024E and 2025E is projected to be CNY 57.40 billion and CNY 64.00 billion, with year-on-year growth rates of 7.2% and 11.5% respectively [9] - Adjusted net profit for 2024E and 2025E is expected to be CNY 4.34 billion and CNY 4.71 billion, with growth rates of 5.0% and 8.6% respectively [9] - Gross profit margin is forecasted to increase from 22.2% in 2023A to 24.0% in 2025E [6] Valuation - DCF valuation estimates the company's equity value at HKD 132.31 billion, corresponding to a share price of HKD 41.49 per share [9] - The valuation is based on a WACC of 8.4% and a perpetual growth rate of 2.0% [9] Operational Highlights - The company has launched over 100 at-home testing services and 27 home care services, covering 14 cities including Beijing, Shanghai, Guangzhou, and Shenzhen [8] - The company is benefiting from government subsidies for elderly-friendly products, which partially offset the impact of stricter regulations on certain medical devices [9] Market Performance - The stock has shown significant volatility over the past year, with a 12-month absolute return of -30.5% [4] - Relative to the MSCI China index, the stock underperformed by 38.4% over the past 12 months [4]

Investment Rating - The investment rating for JD Health (06618.HK) is maintained at "Buy" with a target price of 28.6 HKD [1]. Core Views - JD Health reported a revenue of 13.302 billion HKD for Q3 2024, representing a year-on-year growth of 14.8% from 11.585 billion HKD [1]. - The operating profit for Q3 2024 reached 552 million HKD, a significant increase of 216.0% year-on-year, with a Non-IFRS operating profit of 862 million HKD, up 15.7% [1]. - The company is expanding its online medical insurance services, having launched online payment services in 10 cities, and has connected nearly 2,000 retail pharmacies, covering over 100 million people [1]. Summary by Sections Financial Performance - For Q3 2024, JD Health achieved a revenue of 13.302 billion HKD, a 14.8% increase year-on-year, and an operating profit of 552 million HKD, which is a 216.0% increase year-on-year, resulting in an operating profit margin of 4.1%, up 2.6 percentage points [1]. Operational Developments - The company has introduced innovative service models and has launched online medical insurance payment services in 12 cities as of September 30, 2024, with a total of nearly 2,000 pharmacies connected [1]. - JD Health has also enhanced its online medical services by launching over 100 home testing services and 27 home care services across 14 cities, improving the one-stop service experience [1]. Market Position and Strategy - The company is expected to continue increasing its market share as consumer health awareness rises and online medical insurance services expand [1]. - During the Double Eleven shopping festival, JD Health saw significant growth in various health product categories, with a 140% year-on-year increase in sales for products targeting the elderly [1]. - Strategic partnerships with brands aim for a 300% increase in sales over the next three years, indicating a focus on diversifying health consumption [1]. Investment Outlook - The revenue forecasts for 2024-2026 have been adjusted to 58.5 billion, 64.7 billion, and 71.8 billion HKD respectively, with net profit estimates of 4.6 billion, 5.0 billion, and 6.1 billion HKD [1]. - The long-term outlook remains positive due to the company's strengthening position as a self-operated pharmaceutical e-commerce platform and its leading supply chain capabilities [1].

Investment Rating - The report maintains a **Buy** rating for JD Health with a target price of **HKD 33.00** [5] Core Views - JD Health's revenue growth is expected to remain moderate due to weak consumer sentiment, with 2H24 revenue growth projected at **10.2% YoY** and adjusted net profit at **RMB 1.67 billion**, a slight decline of **1.7% YoY** [3] - The report revised JD Health's revenue forecasts for 2024/2025/2026 to **RMB 57.5/62.2/66.2 billion** (previously RMB 57.8/62.6/66.7 billion) and non-IFRS net profit forecasts to **RMB 4.25/4.80/5.22 billion** (previously RMB 4.43/5.02/5.71 billion) [2] - The valuation method was adjusted to relative valuation, with a target non-IFRS PE of **20x for 2025**, higher than the peer average of **14.0x**, reflecting JD Health's market share gains in the pharmaceutical market [2] Revenue and Profit Forecasts - JD Health's 3Q24 revenue is expected to grow **12.0% YoY** to **RMB 12.98 billion**, slowing from **14.6% YoY** in 2Q24 [3] - The company's gross margin is expected to improve to **23.0/23.5/23.8%** for 2024/2025/2026, driven by operational leverage and higher service revenue contribution [8] - Non-IFRS net profit for 2024/2025/2026 is revised down by **-3.9/-4.4/-8.6%** to **RMB 4.25/4.80/5.22 billion**, mainly due to lower interest income expectations in a rate-cutting environment [8] Industry and Policy Drivers - JD Health's future valuation upside is driven by **consumer sentiment recovery** and **policy support**, such as the expansion of online medical insurance payment coverage in regions like Beijing and Guangdong [4] - As of September 24, the number of pharmacies covered by online medical insurance payments in Beijing increased to **490**, up from **350** in 1H24 [4] - Guangdong has expanded online medical insurance payment coverage to **1,300 retail pharmacies** across nine cities, with similar expansions in Yunnan and Sichuan [4] Financial Metrics - JD Health's revenue for 2024E/2025E/2026E is projected at **RMB 57.5/62.2/66.2 billion**, with YoY growth of **7.4/8.2/6.5%** [7] - Net profit attributable to shareholders is expected to grow **46.5/14.5/9.7%** to **RMB 3.14/3.59/3.94 billion** for 2024E/2025E/2026E [7] - ROE is forecasted to improve to **6.2/6.6/6.8%** for 2024E/2025E/2026E, while PE ratios are expected to decline to **25.3/22.2/20.4x** [7]

Financial Performance - JD Health's revenue for the first half of 2024 reached RMB 28.3 billion, a year-on-year increase of 4.6%[6] - JD Health's revenue increased by 4.6% to RMB 28.3 billion in the first half of 2024 compared to RMB 27.1 billion in the same period in 2023[17] - Revenue for the six months ended June 30, 2024, reached RMB 28,343,961 thousand, a 4.5% increase compared to RMB 27,110,336 thousand in the same period of 2023[80] - Total revenue for H1 2024 reached RMB 28,343,961 thousand, a 4.6% increase compared to RMB 27,110,336 thousand in H1 2023[92] - Gross profit increased to RMB 6,699,943 thousand in H1 2024, up 8.0% from RMB 6,203,000 thousand in H1 2023[80] - The company's gross profit margin rose to 23.6% in H1 2024 from 22.9% in H1 2023, driven by changes in revenue mix[19] - Net profit for the first half of 2024 was RMB 2,034.4 million, up from RMB 1,562.0 million in the same period last year[26] - Net profit attributable to the company's owners rose to RMB 2,037,182 thousand in H1 2024, a 30.5% increase from RMB 1,561,358 thousand in H1 2023[80] - Basic earnings per share grew to RMB 0.65 in H1 2024, up from RMB 0.50 in H1 2023[80] - Non-IFRS operating profit for the first half of 2024 was RMB 1,584.6 million, compared to RMB 1,681.5 million in the first half of 2023[28] - Total comprehensive income for the period reached RMB 2,223,586 thousand in H1 2024, compared to RMB 3,115,121 thousand in H1 2023[81] - Total comprehensive income for the first half of 2024 was RMB 2,226,390 thousand, compared to RMB 3,114,487 thousand in the same period of 2023[84] - Revenue from pharmaceutical and health product sales increased to RMB 23,909,769 thousand in H1 2024, up 3.2% from RMB 23,167,780 thousand in H1 2023[92] - Service revenue, including platform and advertising services, grew to RMB 4,434,192 thousand in H1 2024, a 12.5% increase from RMB 3,942,556 thousand in H1 2023[92] - Cost of goods sold increased to RMB 21,707,641 thousand in H1 2024, a 5.1% rise from RMB 20,661,015 thousand in H1 2023[95] - Logistics and warehousing expenses grew to RMB 2,031,921 thousand in H1 2024, up 19.7% from RMB 1,697,436 thousand in H1 2023[95] - Employee benefits expenses decreased to RMB 1,158,634 thousand in H1 2024, down 10.6% from RMB 1,295,313 thousand in H1 2023[95] - Net profit attributable to owners of the company increased to RMB 2,037,182 thousand in H1 2024, up 30.5% from RMB 1,561,358 thousand in H1 2023[97] - Basic earnings per share rose to RMB 0.65 in H1 2024, a 30% increase from RMB 0.50 in H1 2023[97] User and Merchant Growth - The company's annual active users reached 181 million as of June 30, 2024, with daily online consultations exceeding 480,000 in the first half of the year[6] - JD Health's platform hosted 80,000 merchants as of June 30, 2024, reflecting rapid growth in new and active third-party merchants[8] - The company's internet hospital handled over 480,000 daily online consultations as of June 30, 2024, with a multi-department consultation rate exceeding 20%[12] Product and Service Expansion - The company launched multiple new specialty drugs, including 0.01% atropine sulfate eye drops and Alzheimer's targeted drugs, during the reporting period[8] - JD Health signed strategic cooperation agreements with over ten medical device brands to explore growth potential in new product launches and marketing[8] - The company upgraded its elderly care services, offering over 30,000 brands and thousands of subcategories of senior-friendly products[8] - JD Health introduced innovative user service benefits, such as free replacement for expired products and 365-day replacement guarantees for medical devices[9] - The company's online nutritionist service team, consisting of nearly 1,000 professionals, achieved a 98% user satisfaction rate with over 95% of queries responded to within 30 seconds[9] - JD Health expanded its offline presence with the opening of two hearing centers, integrating online and offline services[8] - The company enhanced its supply chain capabilities, including cold chain delivery services, to improve user experience and cross-category consumption[8] - JD Health's "Jingdong Medicine Delivery" service achieved an average delivery time of 28 minutes, with the fastest being 9 minutes, covering over 490 cities and 150,000 partner pharmacies[10] - The company's skin specialty center established 4 departments and 49 expert studios, serving over 15 million patients[12] - The company launched a pilot program for medical insurance individual account payments in Beijing, with over 350 designated retail pharmacies connected to the platform[10] - JD Health's medical AI model "Jingyi Qianxun" was selected as a typical case of innovative technology application at CHIMA 2024[13] - The company partnered with Shandong Energy Development Service Group to establish 8 health stations equipped with smart medical devices for remote mining area employees[14] Expenses and Costs - Fulfillment expenses increased by 14.4% to RMB 2.9 billion in H1 2024, accounting for 10.4% of revenue, up from 9.5% in H1 2023[20] - Sales and marketing expenses increased by 17.5% from RMB 1.2 billion in the first half of 2023 to RMB 1.4 billion in the first half of 2024, accounting for 5.0% of revenue, up from 4.4% in the same period last year[21] - R&D expenses increased by 4.6% from RMB 616.9 million in the first half of 2023 to RMB 645.0 million in the first half of 2024, maintaining a stable 2.3% of revenue[22] - General and administrative expenses decreased by 21.9% from RMB 876.8 million in the first half of 2023 to RMB 685.1 million in the first half of 2024, accounting for 2.4% of revenue, down from 3.2%[23] - Income tax expenses increased by 50.4% from RMB 269.2 million in the first half of 2023 to RMB 405.0 million in the first half of 2024, mainly due to net growth in deferred tax[25] - Research and development expenses amounted to RMB 645,015 thousand in H1 2024, a 4.6% increase from RMB 616,863 thousand in H1 2023[80] - Financial income rose to RMB 989,512 thousand in H1 2024, a 5.7% increase from RMB 936,455 thousand in H1 2023[80] - Interest received in the first half of 2024 was RMB 916,394 thousand, nearly double the RMB 469,818 thousand received in the same period of 2023[86] Cash Flow and Financial Position - Cash and cash equivalents decreased to RMB 8.8 billion as of June 30, 2024, from RMB 15.0 billion as of December 31, 2023[30] - Net cash generated from operating activities was RMB 2,230.2 million in the first half of 2024, compared to RMB 368.1 million in the same period last year[31] - Net cash generated from operating activities for the six months ended June 30, 2024, was RMB 2.2 billion, primarily due to a profit of RMB 2.0 billion, adjusted for non-cash and non-operating items of RMB 0.4 billion and working capital adjustments[32] - Net cash used in investing activities for the six months ended June 30, 2024, was RMB 8.4 billion, mainly due to RMB 5.7 billion for purchasing time deposits and RMB 2.6 billion for financial assets measured at fair value[33] - Net cash used in financing activities for the six months ended June 30, 2024, was RMB 21.8 million, primarily due to lease principal payments of RMB 17.8 million[34] - Operating cash flow for the first half of 2024 reached RMB 2,230,154 thousand, a significant increase from RMB 368,079 thousand in the same period of 2023[86] - Net cash used in investing activities for the first half of 2024 was RMB 8,372,841 thousand, compared to RMB 7,240,181 thousand in the same period of 2023[86] - The company's cash and cash equivalents decreased by RMB 6,164,480 thousand in the first half of 2024, compared to a decrease of RMB 6,890,623 thousand in the same period of 2023[86] Equity and Shareholder Information - The company had no outstanding borrowings as of June 30, 2024, and thus no capital-to-debt ratio was presented[35] - The company terminated the acquisition of the remaining 51% equity in Tangshan Hongci Medical Management Co., Ltd., due to unmet conditions[36] - The number of full-time employees as of June 30, 2024, was 3,177, compared to 2,751 as of June 30, 2023[37] - Total employee compensation and benefits, including share-based payments, for the six months ended June 30, 2024, was RMB 1.2 billion, compared to RMB 1.3 billion for the same period in 2023[38] - The company has no significant contingent liabilities or guarantees as of June 30, 2024[40] - Liu Qiangdong holds a 68.50% equity interest in the company as of June 30, 2024[42] - JD Jiankang holds 2,149,253,732 shares, and JD.com fully owns JD Jiankang[43] - As of June 30, 2024, Mr. Liu Qiangdong holds approximately 71.5% of the voting rights in JD.com through shares exercisable at the shareholders' meeting[43] - Mr. Liu Qiangdong has the right to acquire up to 26,521,259 shares through the exercise of pre-IPO employee stock options, subject to conditions[43] - Mr. Liu Qiangdong beneficially owns 343,005,330 shares, representing 11.6% of the total shares and 71.5% of the total voting rights[45] - Max Smart Limited, a BVI company beneficially owned by Mr. Liu Qiangdong, holds 305,630,780 Class B ordinary shares[46] - Fortune Rising Holdings Limited holds 17,442,072 Class B ordinary shares, with Mr. Liu Qiangdong as the sole shareholder and director[46] - As of June 30, 2024, JD.com has 2,934,703,449 ordinary shares issued and outstanding[47] - Mr. Liu Qiangdong holds a 64.80% beneficial ownership in JD Logistics through 4,291,457,805 shares[48] - Mr. Liu Qiangdong holds a 100.00% beneficial ownership in China Logistics Property through 3,474,283,058 shares[48] - Mr. Jin Enlin has the right to acquire up to 666 shares of JD.com through restricted stock units under the JD.com equity incentive plan[48] - JD.com holds 4,192,271,100 shares of JD Logistics, representing 100% ownership through Jingdong Technology Group Corporation[50] - Liu Qiangdong holds approximately 71.5% of the voting rights in JD.com as of June 30, 2024[50] - JD.com owns 74.96% of JD Property, which directly holds 3,474,283,058 shares of China Logistics Assets[50] - JD Jiankang holds 2,149,253,732 shares, representing 67.39% of the total issued shares of 3,189,465,111 as of June 30, 2024[52] - The company has three equity incentive plans, with 4,421,362 new shares potentially issued under the post-IPO option and share award plans, representing approximately 0.14% of the weighted average issued share capital[53] - Under the pre-IPO employee equity incentive plan, 30,391,357 options remained unexercised as of June 30, 2024[55] - The maximum number of shares that can be issued under the post-IPO option plan is 312,708,211, not exceeding 10% of the shares issued at the listing date[57] - The overall cap for shares that can be issued under all option plans is 30% of the issued shares at any time[57] - No options have been granted, exercised, canceled, or lapsed under the post-IPO option plan as of June 30, 2024[57] - The post-IPO share award plan was adopted on November 23, 2020, with further details available in the prospectus[58] - The maximum number of shares available for issuance under the post-IPO share incentive plan is 312,708,211 shares, representing 10% of the company's issued share capital[60] - As of June 30, 2024, 284,908,211 new shares are available for issuance under the post-IPO share incentive plan, representing approximately 8.93% of the company's issued share capital[60] - The total number of shares available for granting under the post-IPO share incentive plan as of June 30, 2024 is 250,089,110 shares[59] - During the reporting period, 4,941,036 reward shares were granted to eligible participants under the post-IPO share incentive plan[59] - As of June 30, 2024, the total number of unvested reward shares to be settled by new shares under the post-IPO share incentive plan is 33,368,892 shares[61] - The fair value of the reward shares granted during the reporting period was determined based on the market value of the shares on the respective grant dates[62] - The company granted 226,000 reward shares to an executive director on April 1, 2024, with a market price of HK$27.70 per share on the grant date[63] - As of June 30, 2024, the total number of unvested reward shares to be settled by existing shares under the post-IPO share incentive plan is 6,823 shares[63] - The total net proceeds from the global offering, after the over-allotment option was fully exercised, amounted to approximately RMB 25.7 billion, which will be used for the purposes disclosed in the prospectus[66] - As of June 30, 2024, the company had utilized RMB 3,717 million of the net proceeds for business expansion, including the development of retail pharmacy business and online medical health services, user growth and engagement, and brand enhancement[67] - The company had RMB 7,408 million of net proceeds remaining unused as of June 30, 2024, with RMB 2,911 million allocated for potential investments, acquisitions, or strategic alliances, and RMB 579 million for working capital and general corporate purposes[67] - The company did not purchase, sell, or redeem any of its listed securities on the Hong Kong Stock Exchange during the six months ended June 30, 2024, and did not hold any treasury shares as of that date[68] - The company has maintained strict corporate governance practices and has complied with all applicable code provisions of the Corporate Governance Code as set out in Appendix C1 of the Listing Rules[69] - The Audit Committee, consisting of three members, reviewed the unaudited condensed consolidated financial statements for the six months ended June 30, 2024, and discussed accounting policies, practices, and internal controls with senior management and the company's auditor[71] - No interim dividend was recommended by the Board for the six months ended June 30, 2024[72] - Professor Liao Jiajie was appointed as an independent non-executive director, effective from August 15, 2024[75] - No other significant events affecting the company occurred between June 30, 2024, and the date of this report[76] Assets and Liabilities - Total assets increased to RMB 67,218,782 thousand as of June 30, 2024, compared to RMB 64,288,300 thousand as of December 31, 2023[82] - Inventory grew to RMB 5,680,513 thousand as of June 30, 2024, a 11.7% increase from RMB 5,084,574 thousand as of December 31, 2023[82] - Trade payables increased to RMB 10,982,183 thousand as of June 30, 2024, up 13.7% from RMB 9,660,450 thousand as of December 31, 2023[83] - Contract liabilities increased to RMB 468,224 thousand as of June 30, 2024, up 15.4% from RMB 405,604 thousand as of December 31, 2023[93] - Non-current financial assets increased to RMB 8,201,457 thousand as of June 30, 2024, compared to RMB 12,204,005 thousand as of December 31, 2023, with a significant decrease in fixed-term deposits from RMB 8,522,972 thousand to RMB 3,691,198 thousand[100] - The yield on amortized cost financial products held by the company ranged from 5.48% to 6.12% annually as of June 30, 2024, slightly higher than the range

Investment Rating - The report maintains a "Buy" rating for JD Health, with a target price of HKD 35.34 per share, indicating a potential upside from the current price of HKD 21.40 [3]. Core Views - JD Health reported a strong performance in H1 2024, achieving revenue of RMB 28.344 billion, a year-on-year increase of 4.6%. The pharmaceutical and health product sales segment generated RMB 23.910 billion, up 3.2%, while platform, advertising, and other services saw revenue of RMB 4.434 billion, growing by 12.5% [2][3]. - The company’s net profit attributable to shareholders reached RMB 2.037 billion, reflecting a significant year-on-year growth of 30.5%. The Non-IFRS net profit was RMB 2.644 billion, up 8.5%, with a Non-IFRS net profit margin improvement of 0.3 percentage points to 9.3% [2]. - JD Health is actively attracting third-party merchants, which has positively impacted its 3P business and advertising revenue. The number of platform merchants has increased to 80,000, and the JD Medicine delivery service now covers over 490 cities [2][3]. Financial Summary - Revenue projections for 2024 and 2025 are estimated at RMB 57.380 billion and RMB 62.651 billion, respectively, with expected year-on-year growth rates of 7.2% and 9.2% [5]. - The company’s EBITDA is forecasted to grow significantly, reaching RMB 2.245 billion in 2024 and RMB 2.977 billion in 2025 [5]. - The net profit attributable to shareholders is projected to be RMB 2.783 billion in 2024 and RMB 3.609 billion in 2025, with growth rates of 29.9% and 29.7% respectively [5].