Core Viewpoint - Haitong International has given Alibaba Health (00241) an "Outperform" rating with a target price of HKD 5.42, citing benefits from increased online penetration, gradual connection of individual account medical insurance, and prescription outflow, leading to steady business growth [1] Financial Performance - For FY3/25, the company reported revenue of CNY 30.6 billion, a 13.2% increase, and adjusted net profit of CNY 1.95 billion, a 35.6% increase, resulting in a net profit margin of 6.4%, up by 1.1 percentage points [2] - The pharmaceutical self-operated business generated revenue of CNY 26.12 billion, a 10.0% increase, while the pharmaceutical e-commerce platform business saw revenue of CNY 3.59 billion, a significant 54.0% increase due to the consolidation of Alibaba Mama's health advertising business [2] Growth Acceleration - In the second half of the fiscal year, the company achieved revenue of CNY 16.32 billion, a 16.0% increase, driven by the pharmaceutical self-operated business, which grew by 13.9% compared to a 5.9% increase in the first half [3] - The growth in the second half is attributed to the increase in original research drugs related to chronic diseases and medical devices benefiting from national subsidies [3] Operational Efficiency - The company's gross margin for the fiscal year was 24.3%, an increase of 2.5 percentage points, with fulfillment, sales, management, and R&D expense ratios at 8.4%, 7.4%, 1.3%, and 2.4% respectively, maintaining an overall operating expense ratio of 19.5% [4] - The company has effectively optimized fulfillment and increased marketing investments to drive growth, with plans to reinvest part of the advertising revenue into merchant operations and consumer experience to enhance platform competitiveness [4]

Core Insights - JD Health's platform has seen a significant increase in sales of original research drugs and overseas health products, indicating a rising demand in the market [1] - JD Health assures consumers that it will maintain stable supply and will not raise prices, addressing concerns about potential price hikes [1] Supply Chain and Logistics - JD Health operates a supply chain network that covers 30 GSP drug warehouses across the country, ensuring over 90% of orders are delivered the next day [1] - The company is actively engaging with foreign trade enterprises in the medical device sector to enhance its supply capabilities [1]