ALI HEALTH(00241)2024-07-30 08:51Healthcare Sector Growth and Innovation - Revenue growth in the healthcare sector driven by increased adoption of "Internet + Healthcare" services, supported by national policies[9] - Significant investment in technological innovation to enhance digital healthcare services and operational capabilities[9] - Expansion of healthcare data integration and innovation, aligning with the national "Data Element ×" three-year action plan (2024–2026)[9] - Continued focus on regulatory compliance and industry standardization in the internet healthcare sector[9] - Strategic partnerships to deliver diversified and multi-level healthcare services to users[9] - The company partnered with Huadong Medicine and Pfizer to launch innovative solutions for type 2 diabetes and alopecia areata online[11] - The company collaborated with over 220,000 licensed physicians, pharmacists, and nutritionists, providing over 11,000 daily online consultations (excluding prescriptions) as of March 31, 2024[14] - Xiaolu TCM business had over 120,000 registered TCM physicians and 116 dispensing centers covering 28 provinces and municipalities[14] - The company's "Aidou·Rehabilitation Health Cabin" served over 50,000 people in rural areas as of March 31, 2024[17] - The company launched the Doctor U intelligent one-stop doctor-patient education platform, leveraging big model technology to optimize workflow efficiency[17] - The company expanded its "Little Deer Lamp" children's critical illness救助 platform, adding a leukemia-specific救助 program[17] Financial Performance and Revenue - Total revenue for the fiscal year ending March 31, 2024, was RMB 27,026.6 million, a slight increase of 1.0% year-over-year[19] - Net profit for the fiscal year ending March 31, 2024, reached RMB 883.1 million, a significant increase of 64.6% year-over-year[19] - Revenue from pharmaceutical self-operated business was RMB 23,739.2 million, a slight increase of 0.6% year-over-year[26] - The company's healthcare and digital services revenue reached RMB 957.8 million, a year-over-year increase of 2.6%, with daily online consultations (excluding prescriptions) growing to 11,045 sessions[29] - Revenue for the reporting period was RMB 27,026,555,000, an increase of RMB 263,539,000 or 1.0% compared to the same period last year, driven by steady growth in pharmaceutical self-operated business, pharmaceutical e-commerce platform business, and medical health and digital services business[41] - Pharmaceutical self-operated business revenue reached RMB 23,739,246,000, a year-on-year increase of 0.6%, attributed to an enriched product catalog and improved user experience[42] - Pharmaceutical e-commerce platform business revenue totaled RMB 2,329,471,000, a year-on-year increase of 4.1%, following the acquisition of advertising operations for Tmall Health category merchants[43] - Medical health and digital services business revenue was RMB 957,838,000, a year-on-year increase of 2.6%, supported by the expansion of digital services and increased retail terminal coverage[45] - Gross profit for the reporting period was RMB 5,895,321,000, an increase of RMB 193,987,000 or 3.4% compared to the same period last year, with a gross margin of 21.8%, up from 21.3% due to operational efficiency improvements[46] - Adjusted net profit for the reporting period was RMB 1,437,928,000, an increase of RMB 684,313,000 compared to the previous fiscal year, driven by growth in the pharmaceutical self-operated business user base, improved pricing and operational efficiency, and economies of scale[57] Leadership and Corporate Governance - Leadership changes, including the appointment of a new CEO, Shen Difan, effective November 28, 2023[5] - Board restructuring with new appointments and resignations, reflecting strategic realignment[5] - Commitment to corporate governance and risk management, as highlighted in the annual report[5] - Huang Jiaojiao was appointed as a non-executive director and member of the Remuneration Committee on May 15, 2023, replacing Li Faguang[98] - Shao Rong and Wu Yihong were appointed as independent non-executive directors and members of the Audit and Nomination Committees on August 11, 2023, replacing Luo Tong and Huang Jing'an[100] - Xu Haipeng was appointed as a non-executive director on October 19, 2023[100] - Shen Difan was appointed as CEO and authorized representative on November 28, 2023, replacing Zhu Shunyan[100] - Shao Rong was appointed as an independent director of Shanghai Yinuosi Biotechnology Co., Ltd. (A-share code: A06142) in December 2023[100] - Wu Yihong was appointed as an independent director and chair of the Audit Committee of MakeMyTrip Limited (NASDAQ: MMYT) on May 15, 2024[100] - The company has three independent non-executive directors, accounting for at least one-third of the board[103] - The board, Audit Committee, and Remuneration Committee fully comply with the relevant Listing Rules[103] - Directors' remuneration is determined based on the company's operating performance, individual performance, and comparable market statistics[105] Operational and Strategic Developments - Registered office and primary business locations in Bermuda, Hong Kong, and Beijing, supporting global operations[6] - Key banking relationships with institutions such as CITIC Bank International and HSBC, ensuring financial stability[7] - Annual active users of Tmall Health platform reached 300 million, with over 35,000 merchants served, a year-on-year increase of 28%[11] - The company completed the acquisition of advertising operation rights for Tmall Health category merchants from Alibaba Group for a total consideration of HKD 13.5 billion[11] - Ali Health's online self-operated stores accumulated a total of 77 million user members as of March 31, 2024[11] - The company upgraded its logistics network, enhancing next-day delivery services in key cities like Shanghai, Hangzhou, Suzhou, Wuxi, and Changzhou[11] - The company's online inventory units (SKUs) achieved double-digit growth during the reporting period[26] - The company's slow disease user DOT duration increased by 7.6% year-over-year[26] - The company's self-operated pharmaceutical business saw significant growth, with personal care, health, and massage equipment categories increasing by over 50% year-over-year, and medical devices (orthopedic supports) growing by 68.3%[28] - The company plans to continue optimizing operational efficiency and digital capabilities in its pharmaceutical e-commerce business, aiming to become the preferred platform for health consumption[38] - The company completed the acquisition of AJK Technology Holding Limited during the reporting period[74] - The company has no significant investments or capital asset plans as of the report date[75] Shareholder and Equity Information - The company issued 2,558,222,222 shares to Taobao Holding Limited as part of the consideration for acquiring AJK Technology Holding Limited, with no cash proceeds generated[88] - The company raised approximately HKD 10,000.0 million through a share placement in 2020, with net proceeds of HKD 9,964.2 million, used for developing healthcare products and digital infrastructure[89] - As of March 31, 2024, the company had utilized HKD 3,474.1 million of the net proceeds for healthcare product development and HKD 199.6 million for digital infrastructure, with remaining funds expected to be used by March 31, 2027[91] - The company's share premium account, amounting to approximately RMB 51,374,724,000, is available for distribution as fully paid bonus shares[94] - Alibaba Group holds a 63.83% stake in the company with 10,271,540,755 shares[137] - Perfect Advance Holding Limited owns 19.29% of the company with 3,103,816,661 shares[137] - Ali JK Nutritional Products Holding Limited holds 28.34% of the company with 4,560,785,407 shares[137] - Taobao Holding Limited owns 15.90% of the company with 2,558,222,222 shares[137] - The company issued 2,558,222,222 shares to Taobao Holding Limited as part of a share purchase agreement[139] - The total issued ordinary shares of the company as of March 31, 2024, are 16,091,736,264[139] - The company completed a share purchase agreement with Taobao Holding Limited for a total consideration of HKD 13.5 billion[141] - The company paid HKD 2 billion in cash and issued 2,558,222,222 shares to Taobao Holding Limited as part of the acquisition[141] - The company completed the acquisition of the target business, issuing 2,558,222,222 consideration shares at HK$4.50 per share, making the target company a wholly-owned subsidiary[143] Contracts and Agreements - The company entered into a lease agreement for a pharmaceutical logistics park in Hangzhou, with annual rent and property management fees capped at RMB 28.5 million, RMB 29.7 million, and RMB 30.9 million for the three-year term[144] - The company renewed its cloud computing service agreement with Alibaba Cloud, with an annual service fee cap of RMB 160 million for 2024 and RMB 170 million for 2025[147] - The company signed a renewed entrusted service framework agreement with Taobao Holding, with an annual service fee cap of RMB 200 million for 2024[150] - The company entered into a new three-year entrusted service agreement with Tmall entities, with annual service fee caps of RMB 215 million, RMB 230 million, and RMB 245 million for 2025-2027 respectively[150] - The company's service fee income from the 2024 and 2025-2027 delegated service agreements is expected to be a stable source of revenue growth, with the 2024 delegated service framework agreement generating a service fee of approximately RMB 311.0 million (compared to RMB 267.0 million in the same period last year)[153] - The annual service fee cap for the 2024 platform service framework agreement is RMB 600 million, with actual service fees amounting to RMB 311.0 million for the year ending March 31, 2024[153] - The annual service fee caps for the 2025-2027 platform service framework agreement are RMB 630 million, RMB 670 million, and RMB 710 million for the years ending March 31, 2025, 2026, and 2027, respectively[153] - The company expects to reach more customers and deepen its understanding of customer needs through the 2024 and 2025-2027 platform service framework agreements, promoting the circulation of pharmaceutical and health-related products[155] - The 2024 logistics service framework agreement has an annual service fee cap of RMB 420 million, with actual service fees amounting to RMB 175.1 million for the year ending March 31, 2024 (compared to RMB 225.2 million in the same period last year)[158] - The annual service fee caps for the 2025-2027 logistics service framework agreement are RMB 320 million, RMB 350 million, and RMB 380 million for the years ending March 31, 2025, 2026, and 2027, respectively[158] - The company aims to leverage Cainiao Group's logistics data platform and global distribution network to provide efficient and reliable domestic and international logistics services through the 2024 and 2025-2027 logistics service framework agreements[158] - The company renewed the Shared Services Agreement with Alibaba Holding, with an annual cap of RMB 549.5 million for services provided to the company and RMB 162 million for services provided to Alibaba Group[159] - The total service fees generated under the 2024 Shared Services Agreement were RMB 284.1 million for services provided to the company and RMB 0.4 million for services provided to Alibaba Group[159] - The company renewed the Shared Services Agreement with Alibaba Network, with annual caps of RMB 540 million, RMB 560 million, and RMB 580 million for services provided to the company over the next three years[160] - The company renewed the Framework Technical Services Agreement with Tmall, with an annual cap of RMB 1,400 million, and the total service fees generated were RMB 792.4 million[163] - The company renewed the Taobao Framework Technical Services Agreement, with an annual cap of RMB 620 million, and the total service fees generated were RMB 327.6 million[163] - The company renewed the Framework Technical Services Agreement with Taobao China, with annual caps of RMB 2,300 million, RMB 2,530 million, and RMB 2,783 million for the next three years[165] - The annual service fee cap under the 2024 Payment Service Framework Agreement is RMB 137 million, with actual service fees incurred during the reporting period amounting to RMB 75.4 million (compared to RMB 78.8 million in the same period last year)[167] - The 2025 Payment Service Framework Agreement, effective from April 1, 2024, to March 31, 2025, also has an annual service fee cap of RMB 137 million[167] - The Exclusive Service Framework Agreement has proposed annual fee caps of RMB 391 million, RMB 2,032 million, and RMB 2,641 million for the fiscal years ending March 31, 2024, 2025, and 2026, respectively, with actual service fees of RMB 239.5 million incurred during the reporting period[168] - The 2024 Advertising Service Framework Agreement has an annual service fee cap of RMB 2,220 million, with actual service fees of RMB 1,566.3 million incurred during the reporting period (compared to RMB 1,046.2 million in the same period last year)[170] - The 2025-2027 Marketing Promotion Service Framework Agreement sets annual service fee caps of RMB 2,400 million, RMB 2,640 million, and RMB 2,904 million for the fiscal years ending March 31, 2025, 2026, and 2027, respectively[170] - The company signed a renewed software service framework agreement with Taobao Group, with an annual service fee cap of RMB 140 million for 2024, and actual service fees generated amounted to RMB 98.3 million (compared to RMB 100.2 million in the same period last year)[171] - A new three-year software service framework agreement with Taobao China Group was established, with annual service fee caps of RMB 150 million, RMB 160 million, and RMB 170 million for 2025, 2026, and 2027 respectively[171] - The company expects the agreements with Taobao Group and Taobao China Group to enhance revenue generation, optimize resources, and expand market share in the healthcare sector[171] - A two-year service framework agreement with Koubei Shanghai was signed, with annual service fee caps of RMB 30 million for both 2024 and 2025, and actual service fees generated in the reporting period were RMB 5.3 million (compared to RMB 0.01 million in the same period last year)[173] - The agreement with Koubei Shanghai is expected to improve user experience, operational capabilities, and market share in the health and pharmaceutical industries[173] - A three-year equity settlement framework agreement with Alibaba Holding was established, with annual caps of RMB 35 million for both payable and receivable amounts related to equity incentives for 2025, 2026, and 2027[174] - The equity settlement framework agreement aims to retain employee incentives during internal transfers and allocate equity incentive costs appropriately between the company and Alibaba Holding[176] Risk Management and Compliance - The company has implemented internal control procedures to ensure fair and reasonable pricing for continuous connected transactions, with independent reviews by internal audit functions and confirmation by independent non-executive directors[176] - The company has established contractual arrangements to maintain effective control over its operating companies, Hongyun Jiukang and Ali Health Hebei, through its wholly-owned subsidiary, Ali Health Technology (China) Co., Ltd., ensuring full economic benefits despite foreign investment restrictions in China[177] - The VIE restructuring in April 2020 transferred 100% ownership of the operating companies to Beijing Jiukangbao Technology Co., Ltd., which is ultimately controlled by Chinese citizens and entities[179] - As of March 31, 2024, Hongyun Jiukang has a registered capital of RMB 40 million, while Ali Health Hebei has a registered capital of RMB 10 million[181] - Hongyun Jiukang owns 100% of several subsidiaries, including Ali Health (Hainan) Internet Hospital Co., Ltd. and Ali Health Technology (Guangzhou) Co., Ltd., all engaged in internet information services and related businesses[182][184] - The contractual arrangements include exclusive service agreements with a 20-year term, automatically renewable for one year, granting the foreign-owned enterprise exclusive rights to intellectual property developed during service provision[187] - Revenue from Hongyun Jiukang for the fiscal year ending March 31, 2024, was RMB 820.852 million, accounting for 3.04% of the group's total revenue[194] - Assets of Hongyun Jiukang as of March 31, 2024, were RMB 1.498 billion, representing 7.60% of the group's total assets[194] - Assets of Ali Health Hebei as of March 31, 2024, were RMB 81.401 million, accounting for 0.41% of the group's total assets[194] - The loan agreement stipulates a 20-year term for loans provided to registered owners, with repayment required upon maturity or at the discretion of the foreign-invested enterprise[188] - The equity pledge agreement requires registered owners to pledge all their equity in the relevant operating companies as collateral for the loans[190] - The shareholder voting rights agreement grants the foreign-invested enterprise the exclusive right to exercise voting rights on behalf of registered owners for 20 years, with automatic annual renewal unless otherwise notified[191] - The exclusive purchase right agreement allows the foreign-invested enterprise to purchase all or part of the equity and assets of the relevant operating companies at a price consistent with registered capital or net asset value[192] - The group's revenue and assets from operating companies under contractual arrangements have become a significant part of the group's total revenue and assets[193] - The group uses contractual arrangements to participate in restricted businesses due to limitations under Chinese laws and regulations on foreign investment in ICP and restricted businesses[196] - The company faces risks related to contractual arrangements in China, including potential penalties, unenforceable terms, and loss of control over restricted businesses[197] - The company may incur additional costs and resources to enforce contractual arrangements if operational companies fail to comply[197] - Potential conflicts of interest between the company