JD HEALTH(06618) 华泰证券·2024-10-15 08:03Investment 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]