Investment Rating - The report maintains an "Outperform" rating for AliHealth with a target price of HKD 5.42 per share [2][21]. Core Insights - The company reported a revenue of RMB 30.60 billion for FY3/25, reflecting a growth of 13.2%, and an adjusted net profit of RMB 1.95 billion, which is a 35.6% increase, leading to a net profit margin of 6.4% [3][15]. - The pharmaceutical self-operated business generated revenue of RMB 26.12 billion (+10.0%), while the e-commerce platform business saw a significant increase to RMB 3.59 billion (+54.0%) due to the consolidation of health advertising business [15][16]. - The second half of the fiscal year showed accelerated growth, with H2 revenue reaching RMB 16.32 billion (+16.0%), driven by the recovery of the pharmaceutical self-operated business [4][17]. Financial Performance Summary - Revenue and profit forecasts indicate steady growth, with FY26 revenue projected at RMB 33.42 billion (+9.2%) and FY27 at RMB 36.14 billion (+8.1%) [20]. - The gross margin for FY3/25 was reported at 24.3%, an increase of 2.5 percentage points, while the overall operating expense ratio remained stable at 19.5% [18][19]. - The company’s free cash flow is expected to grow significantly, with projections of RMB 1.88 billion for FY26 and RMB 2.20 billion for FY27 [10][12]. Valuation and Market Position - The DCF valuation method estimates the company's equity value at HKD 87.12 billion, corresponding to a target price of HKD 5.42 per share, based on a WACC of 8.3% and a perpetual growth rate of 3.5% [21][11]. - The report highlights the company's strategic focus on enhancing its online platform capabilities and expanding its product categories, which is expected to positively impact profitability [19][20].

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company has shown improvement in inventory management and continues to maintain high dividend payouts, with a proposed cash dividend of 0.02 CNY per share and a special dividend of 0.12 CNY, resulting in a total dividend payout ratio of 135% and a dividend yield of 8.75% [2][5] - The company is facing challenges with a decline in revenue and net profit due to sales pressure and inventory issues, but effective cash flow management has led to a positive operating cash flow [2][4] - The company is strategically optimizing its retail store structure and enhancing online sales through a combination of platform e-commerce, content e-commerce, and private domain operations [3][5] Summary by Sections Financial Overview - For FY2025, the company's revenue, net profit attributable to the parent, and operating cash flow were 270.13 billion CNY, 12.86 billion CNY, and 37.55 billion CNY, respectively, reflecting year-on-year changes of -6.6%, -41.9%, and +20.0% [2] - The gross profit margin decreased by 3.4 percentage points to 38.4%, while the net profit margin fell by 2.9 percentage points to 4.8% [4] Store and Sales Performance - The number of stores decreased by 18.3% to 5020, while the average sales area per store increased by 7.2% [3] - Revenue from the main brand and other brands saw declines of 6.1% and 9.9%, respectively, primarily due to weak consumer demand and reduced foot traffic [3] Online and Offline Strategy - The company has over 500 accounts on Douyin and WeChat video accounts, with more than 2,300 mini-program stores, indicating a strong online presence [3] - The company is focusing on enhancing retail experiences and has partnered with high-end brands to expand its product matrix [5] Future Outlook - Short-term improvements in inventory and online sales are expected to offset declines in offline traffic [5] - The company has adjusted its revenue forecasts for FY26-27 down to 263.85 billion CNY and 279.18 billion CNY, with net profit forecasts adjusted to 12.90 billion CNY and 14.52 billion CNY, respectively [5]

Core Viewpoint - The company experienced a mixed financial performance in 2024, with total revenue increasing by 3% but a significant decline in net profits, indicating challenges in certain business segments [1][2][3]. Financial Performance - In 2024, the company achieved total revenue of 11.397 billion yuan, with a net profit attributable to shareholders of 630 million yuan, reflecting a year-on-year decrease of 18% [1]. - The fourth quarter of 2024 saw total revenue of 3.001 billion yuan, with net losses reported at 960 million yuan, indicating a challenging market environment [1][3]. - For the first quarter of 2025, total revenue is projected at 2.212 billion yuan, with a slight increase of 1% year-on-year, and net profit expected to be 490 million yuan [1][4]. Business Segments - The B2B business segment is estimated to have stable growth, contributing to the overall revenue increase in 2024, with revenue of 11.352 billion yuan, also up 3% year-on-year [2]. - The SAAS business segment faced a significant decline, with revenue dropping by 42% to 45 million yuan in 2024, as the company refocused its efforts on the smart education sector [2][3]. - The gross profit margin for 2024 was reported at 8.6%, a slight increase of 0.2 percentage points, with B2B and SAAS margins at 8.58% and 10.40%, respectively [3]. Future Outlook - The company anticipates a recovery in B2B revenue in the first quarter of 2025, with improvements in order volumes and profitability expected from the adjustments made in the SAAS segment [4]. - The gross profit margin for the first quarter of 2025 is projected to be 9.7%, although this represents a decrease of 0.4 percentage points year-on-year [4]. - The company is focusing on optimizing its B2B customer structure and leveraging AI tools to enhance efficiency and profitability, with expectations for growth in the comprehensive procurement service platform [5]. Strategic Initiatives - The company is investing in the development of new stationery products, aiming to enhance product quality and emotional value through collaborations with premium IPs [5]. - There is an expectation for the SAAS business adjustments to yield positive contributions to profits in the near future [5]. - The company projects net profits of 200 million, 250 million, and 320 million yuan for the years 2025 to 2027, corresponding to price-to-earnings ratios of 25, 20, and 16 times, respectively [5].

Investment Rating - The investment rating for the company is "Accumulate" and maintained [7] Core Views - The company is expected to achieve total revenue of 11.397 billion yuan in 2024, with a year-on-year growth of 3%. However, the net profit attributable to the parent company is projected to decline by 18% to 63 million yuan, and the net profit after deducting non-recurring gains and losses is expected to decrease by 21% to 59 million yuan [2][4] - In Q4 2024, the company anticipates total revenue of 3.001 billion yuan, with a year-on-year decline of 10%. The net profit is expected to be a loss of 96 million yuan [2][4] - For Q1 2025, total revenue is projected to be 2.212 billion yuan, with a slight year-on-year increase of 1%. The net profit attributable to the parent company is expected to be 49 million yuan, showing a decrease of 1% [2][4] Summary by Sections Business Performance - The B2B business is estimated to achieve stable growth in 2024, contributing to a total revenue increase of 3%. The revenue from the B2B segment is expected to be 11.352 billion yuan, driven by digital transformation and the use of AI tools to optimize business processes [11] - The SAAS business is projected to generate 4.5 million yuan in revenue, a decrease of 42%, as the company focuses on the smart education sector [11] Profitability - The company's net profit for 2024 is expected to be 63 million yuan, with a net profit of 110 million yuan after excluding goodwill impairment [11] - The gross margin for 2024 is projected to be 8.6%, an increase of 0.2 percentage points. The gross margins for B2B and SAAS businesses are expected to be 8.58% and 10.40%, respectively [11] Future Outlook - In Q4 2024, the company anticipates revenue pressure across all business segments, leading to losses. The B2B revenue is expected to decline by 10%, while SAAS revenue is projected to drop by 52% [11] - For Q1 2025, the company expects a recovery in B2B revenue and positive profitability from the good vision business adjustments [11] - The company aims to optimize its B2B customer structure and enhance its MRO share, leveraging AI for cost reduction and efficiency improvements [11]