Group 1: Market Performance - The CSI Hong Kong Stock Connect Medical Theme Index (932069) has risen by 2.27% as of August 18, 2025, with notable increases in constituent stocks such as JD Health (06618) up 9.88% and Yiyang Sunshine (02522) up 8.90% [1] - The Hong Kong Medical ETF (159366) has increased by 1.93%, reaching a latest price of 1.64 HKD, and has seen a cumulative increase of 8.71% over the past week as of August 15, 2025 [1] - The average daily trading volume of the Hong Kong Medical ETF over the past month is 311 million HKD, with the latest fund size reaching a record high of 2.93 billion HKD [1] Group 2: Company Performance - JD Health reported a 22.7% year-on-year increase in sales revenue for pharmaceuticals and health products, reaching 29.3 billion HKD in the first half of 2025, driven by an increase in annual purchasing users exceeding 200 million and higher average spending per user [2] - The platform, advertising, and other service revenues for JD Health grew by 34.4% to 5.96 billion HKD, attributed to sustained growth in advertising revenue and an expanding commission scale supported by transaction growth [2] - JD Health launched over 30 innovative drugs online in the first half of 2025 and has seen a significant increase in the number of merchants on its platform, exceeding 150,000 compared to over 100,000 at the end of 2024 [2] Group 3: Industry Trends - The global AI medical investment and financing landscape is thriving, with significant breakthroughs in AI medical research, including FDA approval for the first AI wearable treatment device and advancements in AI drug development [3] - The Hong Kong Medical ETF (159366) is noted for having the highest CXO content in the market, focusing on internet medical services, CXO, and medical devices, and closely tracks the CSI Hong Kong Stock Connect Medical Theme Index [3] - The CSI Hong Kong Stock Connect Medical Theme Index includes 50 listed companies involved in medical devices, medical services, and pharmaceutical sectors, reflecting the overall performance of the medical sector within the Hong Kong Stock Connect [3] Group 4: Index Composition - As of June 30, 2025, the top ten weighted stocks in the CSI Hong Kong Stock Connect Medical Theme Index include WuXi Biologics (02269) at 14.58% and JD Health (06618) at 10.83%, collectively accounting for 56.9% of the index [4]

Core Viewpoint - The report from Credit Lyonnais indicates that JD Health's performance in the first half of the year met expectations, with a year-on-year revenue growth of 24.5% to 35.3 billion yuan, and an adjusted EBIT increase of 57% to 2.5 billion yuan, driven by strong performance during the 618 shopping festival and robust user growth [1] Group 1 - JD Health's revenue for the first half of the year reached 35.3 billion yuan, reflecting a year-on-year growth of 24.5% [1] - Adjusted EBIT for the same period increased by 57% to 2.5 billion yuan, benefiting from the successful 618 shopping festival and significant user growth [1] - The growth in pharmaceutical sales was attributed to a shift in demand from hospitals to outpatient services [1] Group 2 - The company is expected to see a 16% year-on-year revenue growth in the second half of 2025, primarily driven by over 25% growth in pharmaceutical sales [1] - Sales of health supplements are anticipated to grow at a high double-digit percentage year-on-year [1] - Based on strong sales momentum, the profit forecasts for 2025 and 2026 have been raised by 15% and 13% respectively, with the target price increased from 56 HKD to 64 HKD, maintaining an "outperform" rating [1]

Core Viewpoint - Morgan Stanley has raised its revenue and net profit forecasts for JD Health for the years 2025 to 2027 based on the company's performance in the first half of the year [1] Revenue Forecast - Revenue forecasts have been increased by 1.7%, 2%, and 2.3% for the years 2025, 2026, and 2027 respectively, primarily due to the ongoing trend of online penetration in drug sales [1] Net Profit Forecast - Net profit forecasts have been raised by 14.7%, 14.5%, and 13% for the years 2025, 2026, and 2027 respectively, attributed to improvements in gross margin from product mix changes and effective cost control [1] Target Price Adjustment - The target price for JD Health has been increased from HKD 46 to HKD 52.5, while maintaining a rating of "in line with the market" [1]

Group 1 - Morgan Stanley has raised its revenue forecasts for JD Health for 2025, 2026, and 2027 by 1.7%, 2%, and 2.3% respectively, considering the continued online penetration trend in drug sales during the first half of the year [1] - Net profit forecasts have been increased by 14.7%, 14.5%, and 13% respectively, attributed to the improvement in gross margin from product mix transformation and cost control [1] - The target price for JD Health has been raised from HKD 46 to HKD 52.5, maintaining a rating of "in line with the market" [1]

Investment Rating - The report maintains an "Outperform" rating for JD Health International with a target price of HKD 68.14, reflecting a significant upward revision of 58.8% from previous estimates [2][21]. Core Insights - JD Health's revenue for H1 2025 reached RMB 35.29 billion, representing a year-on-year growth of 24.5%, driven by strong demand for pharmaceutical and health products [3][14]. - The company's gross margin improved to 25.2%, with operating profit increasing by 105.5% to RMB 2.13 billion, indicating robust profitability growth [4][15]. - The deployment of AI technology is enhancing operational efficiency and long-term competitiveness, with over 500 AI agents launched in JD Internet Hospital [4][16]. Financial Performance Summary - Revenue projections for FY25 and FY26 are set at RMB 70.4 billion and RMB 81.2 billion, respectively, with expected growth rates of 21.0% and 15.4% [5][18]. - Adjusted net profit is forecasted to be RMB 5.6 billion for FY25, reflecting a 15.9% increase year-on-year [7][20]. - The company anticipates a continued strong performance in H2 2025, with pharmaceutical sales expected to grow by 25% [5][18]. Valuation and Forecast - A DCF valuation approach estimates the company's equity value at HKD 218.0 billion, leading to a target share price of HKD 68.14 [8][21]. - The report highlights the advantages JD Health holds in both supply and demand sides of the market, positioning it as a leader in the integrated online-offline healthcare sector [5][17].

Core Viewpoint - The event "Doctors Have Light - 2025 Special Activity for Chinese Physician Day" organized by JD Health aims to honor medical professionals and promote respect for healthcare workers in society [1] Group 1: Event Overview - The event took place on August 17, coinciding with the eighth Chinese Physician Day, and featured 40 outstanding doctors from across the country [1] - The event recognized doctors who have made significant contributions in the field of internet healthcare, emphasizing the importance of innovative technology in expanding medical service accessibility [1] Group 2: Patient Stories and Impact - A story collection campaign titled "Thank You, My Treasure Doctor" was launched, engaging over 1.4 million people and resulting in more than 260,000 shared stories, highlighting the emotional connection between patients and doctors [2] - A patient shared her recovery journey after being treated for congenital hip dysplasia, illustrating the positive impact of medical care on patients' lives [3] Group 3: Internet Healthcare Development - Internet healthcare is becoming increasingly vital, providing convenient medical services that break geographical barriers, with JD Health reporting over 500,000 daily online consultations as of June 30 [4] - JD Health has established a comprehensive service model integrating medical testing, diagnosis, and medication, enhancing the quality and efficiency of online healthcare [4] Group 4: Recognition of Doctors - A total of 4,408 doctors were awarded the "Five-Year Veteran Doctor" honor, recognizing their commitment and contributions to internet healthcare [5] - The event featured stories from doctors who successfully managed complex medical cases through online consultations, demonstrating the effectiveness of internet healthcare in providing timely support [6] Group 5: Future Directions - JD Health plans to continue innovating healthcare service models, aiming to provide better platforms for doctors and more accessible healthcare services for patients, contributing to the implementation of the Healthy China strategy [6]

Core Insights - JD Health hosted a special event for the 2025 Chinese Physician Day, honoring 40 outstanding doctors and recognizing contributions in the field of internet healthcare [1] - The "Thank You, My Treasure Doctor" story collection campaign launched by JD Health has seen over 1.4 million interactions and more than 260,000 patient-doctor stories shared [1] - As of June 30, JD Health's internet hospital has achieved a daily average of over 500,000 online consultations, enhancing the quality and efficiency of online medical services [1] Company Developments - JD Health has established a five-specialty system focusing on dermatology, mental health, traditional Chinese medicine, oncology, and andrology to improve internet healthcare services [1] - An internal tradition at JD has been expanded to include doctors at JD Internet Hospital, with 4,408 doctors awarded the title of "Five-Year Veteran Doctor" in 2024 [2]

Core Viewpoint - In the first half of 2025, the company achieved revenue of 35.29 billion yuan, a year-on-year increase of 24.51%, and a Non-IFRS net profit of 3.57 billion yuan, a year-on-year increase of 35.04%, exceeding Bloomberg consensus expectations [1] - The company raised its revenue growth guidance for 2025 to 20% and Non-IFRS net profit growth guidance to 15% [1] - The current valuation remains at a moderate historical level, with potential for further expansion due to competitive landscape, high growth rates, and shareholder returns [2] Event Summary - On August 14, 2025, the company announced its mid-year performance, with revenue of 35.29 billion yuan and Non-IFRS net profit of 3.57 billion yuan, both exceeding Bloomberg consensus expectations [1] - The second quarter revenue growth was 23.67%, with adjusted net profit growth of 24.6% year-on-year [1] - The company’s GMV growth rate significantly outpaced the industry, attributed to its supply chain advantages and the shift of market share from offline pharmacies to online [1] Financial Performance - The company’s revenue growth for the first half of 2025 was driven by nearly 30% growth in pharmaceuticals, high-teens growth in health products, and low-teens growth in medical devices, with market share increasing in all three categories [1] - The net profit increase was influenced by stable interest income, better-than-expected revenue growth, and rising gross margins [1] - The company plans to invest approximately 300 million yuan in instant retail/pharmacy-related initiatives for the year, with cautious spending due to competition [1] Future Outlook - The company expects to maintain a steady dividend policy, with progress on tax identity changes in Hong Kong [1] - B2C health insurance contributions to growth are currently limited, but there is potential for future growth [1] - Revenue forecasts for 2025 and 2026 are projected at 69.79 billion yuan and 79.30 billion yuan, respectively, with Non-IFRS net profits of 5.52 billion yuan and 5.98 billion yuan [2]

Core Viewpoint - The company reported strong performance in 1H25, exceeding market expectations with a revenue of 35.29 billion yuan, a year-on-year increase of 24.5%, and a non-IFRS net profit of 3.57 billion yuan, up 35.0% year-on-year, driven by robust growth in the pharmaceutical category [1]. Business Performance - The company's revenue from product sales reached 29.33 billion yuan, a 22.7% year-on-year increase, while service revenue was 5.96 billion yuan, up 34.4% year-on-year, indicating strong overall performance [1]. - In 2Q25, the company achieved a revenue of 18.65 billion yuan, reflecting a 23.7% year-on-year growth, benefiting from the traffic generated by JD Group's instant retail activities [1]. - The active user count exceeded 200 million by the end of 1H25, marking a historical high [1]. Profitability - The gross margin for 1H25 was 25.2%, an increase of 1.6 percentage points year-on-year, attributed to the scaling of revenue and the dilution of procurement costs across various categories [2]. - The normalized operating profit margin, excluding interest income and treating stock incentive expenses as regular, was approximately 6.2%, up 2.6 percentage points year-on-year, indicating effective cost control [2]. Market Outlook - The company's stock performed strongly in 1H25, supported by a stable competitive landscape and the absence of overseas business exposure to tariff impacts [3]. - Despite a relatively high valuation, the company's strong growth potential is expected to provide fundamental support, with the possibility of valuation uplift in line with market sentiment [3]. - The profit forecasts for 2025 and 2026 have been raised by 30% and 21% respectively, to 4.51 billion yuan and 5.28 billion yuan, reflecting better-than-expected contributions from pharmaceutical collaborations [3]. Valuation Adjustment - The target price has been increased by 45% to 60.6 HKD, indicating a potential upside of 10.5% from the latest closing price, while maintaining an outperform rating [3].

Core Viewpoint - JD Health reported strong financial results for H1 2025, with significant year-on-year growth in revenue and profits, driven by robust drug sales and advertising revenue [1][2]. Financial Performance - In H1 2025, the company achieved revenue of 35.3 billion yuan, a year-on-year increase of 24.5% [1][2]. - Adjusted operating profit reached 2.5 billion yuan, reflecting a 57% year-on-year growth, while adjusted net profit was 3.6 billion yuan, up 35% year-on-year [1][2]. - The adjusted operating profit margin (OPM) was 7.0%, and the adjusted net profit margin was 10.1% [2]. User Growth and Service Expansion - The number of active users surpassed 200 million over the past 12 months, with daily online consultation volume exceeding 500,000 [2]. - The number of third-party merchants increased by over 50,000 compared to the end of 2024, totaling more than 150,000 [2]. - The "JD Buy Medicine Fast Delivery" service linked to over 200,000 pharmacies nationwide, and online medical insurance payment services expanded to cover nearly 200 million people [2]. AI and Medical Services - In February 2025, JD Health launched the JD Medical Inquiry model, becoming the first fully open-source model in the domestic medical industry [3]. - Over 80% of doctors in JD Health's internet hospital utilized AI services, with a satisfaction rate of 91% for AI nutritionist services [3]. - The AI JD series applications, including AI doctors, pharmacists, and nutritionists, have served over 50 million users by H1 2025 [3]. Profit Forecast and Investment Rating - Due to the strong performance in H1 2025, the company raised its profit forecasts, expecting revenues of 70 billion, 80.5 billion, and 91.1 billion yuan for 2025-2027, with adjusted net profits of 5.5 billion, 6.3 billion, and 7.7 billion yuan respectively [3]. - Corresponding adjusted P/E ratios are projected to be 29x, 26x, and 21x for the same period, maintaining a "Buy" rating [3].