JD HEALTH(06618)2024-09-06 08:30Financial 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