Core Viewpoint - Mandi, a consumer healthcare arm backed by Alibaba Health, is spinning off from 3SBio and has filed for an IPO in Hong Kong, focusing on its leading minoxidil hair-loss products to attract investors [1]. Group 1: IPO Details - Mandi has not disclosed its fundraising target or listing timeline, and has appointed Huatai International as the sole sponsor for its listing [2]. - The capital raised from the IPO is expected to fund product expansion, refine the digital operating model, strengthen marketing, and support early-stage research and development [3]. Group 2: Ownership Structure - 3SBio currently holds an 87.16% stake in Mandi, while Alibaba Health owns 2.65% [3]. - The spin-off will allow 3SBio to completely exit its stake in Mandi through an in-specie distribution to existing shareholders, while Mandi will raise capital through a global offering of new shares [4]. Group 3: Financial Background - In November, Mandi closed a Series A financing round worth approximately US$50 million, led by Alibaba Health and other investors [5]. Group 4: Market Position - Mandi's flagship products, based on minoxidil, target Chinese consumers under 35 and have been the top seller in China's hair-loss drug market for 10 consecutive years, capturing a 57% market share in 2024 [6]. - Mandi is also developing clascoterone cream, an innovative acne treatment described as the world's first topical androgen receptor inhibitor for acne vulgaris [7].

Investment Rating - The report maintains a "Buy" rating for JD Health International (6618.HK) [1][21]. Core Insights - JD Health's share price has increased by 60% year-to-date, outperforming the Hang Seng Index and peers [1]. - The company is focusing on on-demand initiatives, market share growth, and disciplined capital allocation as key areas of interest [1][20]. - JD Health is expected to achieve 18% year-on-year topline growth for 2Q25, with a stable profit margin despite increased investments [20][24]. Summary by Sections On-Demand Initiatives - JD Health is rapidly expanding its preposition warehouses in tier-1 cities, targeting around 200 warehouses by the end of FY25 [2]. - The competition in the on-demand space remains disciplined, with JD Health focusing on quality and variety rather than aggressive sales volume increases [2][19]. - Higher investments and promotions are anticipated in the second half of FY25 to drive online-to-offline (O2O) growth [2][28]. Market Share and Growth - JD Health is gaining market share in the online drug category, with strong user engagement expected to drive traffic and transactions [3][19]. - The competitive landscape is evolving, with ongoing debates about B2C versus O2O competition in the pharmaceutical sector [3][19]. - The company is projected to outperform peers, with a diverging sales growth trend compared to competitors [21][27]. Financial Projections - Revenue forecasts for JD Health are set at RMB 58,159.9 million for FY24, increasing to RMB 88,638.8 million by FY27 [6][17]. - EBITDA is expected to grow significantly, with projections of RMB 1,684.2 million for FY24 and RMB 3,601.3 million for FY27 [6][17]. - The report anticipates a net profit of RMB 4,161.8 million for FY24, increasing to RMB 6,608.1 million by FY27 [17][39]. Capital Allocation - JD Health has over RMB 50 billion in net cash, representing approximately 50% of its market capitalization, which will be a focus in upcoming results [20][21]. - The company is expected to maintain a disciplined spending pattern while exploring opportunities for investments and shareholder returns [21][39].

Investment Rating - The investment rating for Alibaba Health (0241.HK) is Neutral with a 12-month target price of HK$4.10 per share, indicating a downside potential of 8.9% from the current price of HK$4.50 [2][9]. Core Insights - Alibaba Health's management expressed confidence in achieving or exceeding the FY26 guidance, which includes a 5%-10% year-over-year growth in topline revenue and a 10%-20% year-over-year growth in adjusted net profit [3][6]. - The potential for asset injection from the parent company is being considered, with a focus on business synergy and operational outcomes [7]. - The management is evaluating the expansion of its O2O (Online to Offline) business, contingent on the pace of investment from the parent company in on-demand delivery initiatives [8]. Summary by Sections Guidance and Latest Updates - Management is confident in delivering or exceeding the high-end of the FY26 guidance, which targets a 5%-10% year-over-year growth in topline revenue and a 10%-20% year-over-year growth in adjusted net profit [3][6]. Asset Injection Potential - The primary consideration for potential asset injection from the parent group is the existence of business synergy and improved operational outcomes. Two potential directions include the drugs and nutrition products business from Tmall International and the O2O business from Ele.me [7]. O2O Business Insights - Alibaba Health is monitoring the decision to enhance its O2O business based on the parent company's investment pace in on-demand delivery. Key factors for O2O business success include offline pharmacies, preposition warehouses, a rider fleet, and user mindshare, which is expected to be bolstered by Taobao's Shan Gou initiative [8].