Core Viewpoint - HSBC is optimistic about JD Health due to strong growth in its pharmaceutical and health supplement businesses, particularly in innovative drugs, which account for approximately 30% of prescription drug sales and benefit from hospital patient flow migration [2][3]. Group 1: Business Growth - JD Health is leveraging two core business drivers: pharmaceuticals and health supplements, with a projected revenue growth of about 20% year-on-year in the second half of 2025 [3]. - The innovative drug segment is highlighted as a key growth area, benefiting from the trend of hospital prescriptions moving online [3]. Group 2: AI Implementation - The application of AI technology has resulted in a 10% improvement in cost efficiency and conversion rates for JD Health [6]. - The company utilizes vast amounts of real user dialogue data to train its AI models, enhancing their precision and effectiveness [6]. Group 3: Profitability and Investment - JD Health is actively expanding its offline presence, planning to open 200 self-operated pharmacies within the year, which is impacting its profit margins [8]. - The adjusted net profit margin for JD Health is expected to remain between 8-10% in the short term, with a forecasted drop to around 6% in the second half of 2025 [8][9]. - The company is implementing stricter cost controls to mitigate the impact on profit margins [9]. Group 4: Analyst Rating and Price Target - HSBC maintains a "buy" rating for JD Health and has slightly raised its target price from HKD 65.00 to HKD 66.00, indicating a potential upside of 7.4% [9].

Core Viewpoint - HSBC is optimistic about JD Health due to strong growth in its pharmaceutical and health supplement businesses, particularly in innovative drugs, which account for approximately 30% of prescription drug sales [1][3]. Group 1: Business Growth - JD Health is leveraging innovative drugs and AI as new growth engines beyond traditional e-commerce [3]. - The report predicts that JD Health's revenue will achieve approximately 20% year-on-year growth in the second half of 2025, driven by its core businesses [3]. - The innovative drug business is highlighted as a key growth area, benefiting from the migration of online traffic due to hospital prescription outflow [3]. Group 2: AI Implementation - AI technology has significantly improved JD Health's cost efficiency and conversion rate by 10 percentage points [4]. - The company utilizes vast amounts of real user dialogue data on its platform to train its AI models, enhancing precision and efficiency [4]. - Future investments in AI are expected to be "controllable" in scale [4]. Group 3: Profitability and Costs - JD Health is actively expanding offline, planning to open 200 self-operated pharmacies within the year, which is impacting short-term profit margins [5][6]. - The adjusted net profit margin for JD Health is projected to be around 10% in the first half of 2025, but is expected to remain between 8-10% in the short term [6]. - The report forecasts a non-IFRS net profit margin of approximately 8% in Q3 2025, potentially dropping to around 6% in the second half of 2025 [6]. Group 4: Cost Control Measures - The company is implementing "stricter cost control" measures, which are expected to buffer profit margins [7]. - HSBC maintains a "buy" rating for JD Health and has raised its target price from HKD 65.00 to HKD 66.00, indicating a potential upside of 7.4% [7].

Core Insights - JD Health is leveraging two main growth engines: innovative drugs and AI technology, aiming to reshape its growth narrative beyond traditional e-commerce [1] - The report from HSBC predicts a revenue growth of approximately 20% year-on-year in the second half of 2025, driven by the dual support of its core businesses [1] Innovative Drug Business - The innovative drug segment is highlighted as a key growth area, currently accounting for about 30% of JD Health's total prescription drug sales [1] - The growth rate of this segment is expected to continue increasing, primarily due to the shift of hospital prescriptions to online platforms [1] AI Technology Impact - AI technology has shown tangible results, improving cost efficiency and conversion rates by 10 percentage points [2] - The company utilizes vast amounts of real user dialogue data to train its AI models, enhancing their precision and efficiency [2] - Future investments in AI are planned to be "controllable" in scale [2] Offline Expansion and Profitability - JD Health is actively expanding offline, planning to open 200 self-operated pharmacies within the year, which is impacting short-term profit margins [3] - The adjusted net profit margin for the first half of 2025 is projected at 10%, but is expected to remain between 8-10% in the short term [3] - The report forecasts a Non-IFRS net profit margin of about 8% in Q3 2025, potentially dropping to around 6% in the second half of 2025 [3] - The company is implementing stricter cost control measures to buffer profit margins [3] Investment Rating - HSBC maintains a "buy" rating for JD Health, raising the target price from 65.00 HKD to 66.00 HKD, indicating a potential upside of 7.4% as of the report's publication date [3]