Investment Rating - Maintain BUY with a target price of HK$1.65, reflecting a 24.8% upside from the current price of HK$1.32 [18][9][25] Core Insights - Dingdang Health reported a revenue of RMB4,857 million for 2023, representing a year-on-year growth of 12.2%. The adjusted non-IFRS net loss was narrowed by 17.2% YoY to RMB107 million, indicating continuous economies of scale [2] - The company is expected to achieve steady revenue growth of 11.1% in 2024E, 12.2% in 2025E, and 13.2% in 2026E, driven by enhanced network scale, service capabilities, and increased online medicine purchasing [2] - Dingdang's operational efficiency improved significantly, with net operating cash outflow decreasing to RMB5 million in 2023 from RMB238 million in 2022, and fulfillment expenses as a percentage of revenue declining to 10.1% in 2023 from 12.7% in 2020 [2] - The promotion of "Internet + medical insurance" by local governments is expected to positively impact Dingdang's O2O medicine sale business, particularly in major revenue sources like Beijing and Shanghai [2] Financial Summary - Revenue growth from 2021A to 2023A was 65.1%, 17.7%, and 12.2% respectively, with projections of 11.1% for 2024E, 12.2% for 2025E, and 13.2% for 2026E [7][27] - Adjusted net profit is forecasted to improve from a loss of RMB107 million in 2023A to a loss of RMB53 million in 2024E, followed by profits of RMB14 million in 2025E and RMB95 million in 2026E [27][29] - The gross profit margin is expected to stabilize around 31.0% in 2024E, with gradual improvements to 33.0% by 2026E [10][27] Operational Developments - Dingdang is continuously investing in enhancing its network scale and service capabilities, including warehousing and cold-chain logistics [2] - The company has been granted access to online medical insurance in Shanghai, which is expected to enhance its competitive position in the market [2] - Local governments are expanding online medical insurance access to offline pharmacies, which Dingdang can leverage due to its extensive network [2]
叮当健康：Expect steady growth with policy tailwinds