Investment Rating - The investment rating for JD Health (06618.HK) is maintained at "Buy" with a target price of 28.6 HKD [1]. Core Views - JD Health reported a revenue of 13.302 billion HKD for Q3 2024, representing a year-on-year growth of 14.8% from 11.585 billion HKD [1]. - The operating profit for Q3 2024 reached 552 million HKD, a significant increase of 216.0% year-on-year, with a Non-IFRS operating profit of 862 million HKD, up 15.7% [1]. - The company is expanding its online medical insurance services, having launched online payment services in 10 cities, and has connected nearly 2,000 retail pharmacies, covering over 100 million people [1]. Summary by Sections Financial Performance - For Q3 2024, JD Health achieved a revenue of 13.302 billion HKD, a 14.8% increase year-on-year, and an operating profit of 552 million HKD, which is a 216.0% increase year-on-year, resulting in an operating profit margin of 4.1%, up 2.6 percentage points [1]. Operational Developments - The company has introduced innovative service models and has launched online medical insurance payment services in 12 cities as of September 30, 2024, with a total of nearly 2,000 pharmacies connected [1]. - JD Health has also enhanced its online medical services by launching over 100 home testing services and 27 home care services across 14 cities, improving the one-stop service experience [1]. Market Position and Strategy - The company is expected to continue increasing its market share as consumer health awareness rises and online medical insurance services expand [1]. - During the Double Eleven shopping festival, JD Health saw significant growth in various health product categories, with a 140% year-on-year increase in sales for products targeting the elderly [1]. - Strategic partnerships with brands aim for a 300% increase in sales over the next three years, indicating a focus on diversifying health consumption [1]. Investment Outlook - The revenue forecasts for 2024-2026 have been adjusted to 58.5 billion, 64.7 billion, and 71.8 billion HKD respectively, with net profit estimates of 4.6 billion, 5.0 billion, and 6.1 billion HKD [1]. - The long-term outlook remains positive due to the company's strengthening position as a self-operated pharmaceutical e-commerce platform and its leading supply chain capabilities [1].

Investment Rating - The report maintains a **Buy** rating for JD Health with a target price of **HKD 33.00** [5] Core Views - JD Health's revenue growth is expected to remain moderate due to weak consumer sentiment, with 2H24 revenue growth projected at **10.2% YoY** and adjusted net profit at **RMB 1.67 billion**, a slight decline of **1.7% YoY** [3] - The report revised JD Health's revenue forecasts for 2024/2025/2026 to **RMB 57.5/62.2/66.2 billion** (previously RMB 57.8/62.6/66.7 billion) and non-IFRS net profit forecasts to **RMB 4.25/4.80/5.22 billion** (previously RMB 4.43/5.02/5.71 billion) [2] - The valuation method was adjusted to relative valuation, with a target non-IFRS PE of **20x for 2025**, higher than the peer average of **14.0x**, reflecting JD Health's market share gains in the pharmaceutical market [2] Revenue and Profit Forecasts - JD Health's 3Q24 revenue is expected to grow **12.0% YoY** to **RMB 12.98 billion**, slowing from **14.6% YoY** in 2Q24 [3] - The company's gross margin is expected to improve to **23.0/23.5/23.8%** for 2024/2025/2026, driven by operational leverage and higher service revenue contribution [8] - Non-IFRS net profit for 2024/2025/2026 is revised down by **-3.9/-4.4/-8.6%** to **RMB 4.25/4.80/5.22 billion**, mainly due to lower interest income expectations in a rate-cutting environment [8] Industry and Policy Drivers - JD Health's future valuation upside is driven by **consumer sentiment recovery** and **policy support**, such as the expansion of online medical insurance payment coverage in regions like Beijing and Guangdong [4] - As of September 24, the number of pharmacies covered by online medical insurance payments in Beijing increased to **490**, up from **350** in 1H24 [4] - Guangdong has expanded online medical insurance payment coverage to **1,300 retail pharmacies** across nine cities, with similar expansions in Yunnan and Sichuan [4] Financial Metrics - JD Health's revenue for 2024E/2025E/2026E is projected at **RMB 57.5/62.2/66.2 billion**, with YoY growth of **7.4/8.2/6.5%** [7] - Net profit attributable to shareholders is expected to grow **46.5/14.5/9.7%** to **RMB 3.14/3.59/3.94 billion** for 2024E/2025E/2026E [7] - ROE is forecasted to improve to **6.2/6.6/6.8%** for 2024E/2025E/2026E, while PE ratios are expected to decline to **25.3/22.2/20.4x** [7]

Financial Performance - JD Health's revenue for the first half of 2024 reached RMB 28.3 billion, a year-on-year increase of 4.6%[6] - JD Health's revenue increased by 4.6% to RMB 28.3 billion in the first half of 2024 compared to RMB 27.1 billion in the same period in 2023[17] - Revenue for the six months ended June 30, 2024, reached RMB 28,343,961 thousand, a 4.5% increase compared to RMB 27,110,336 thousand in the same period of 2023[80] - Total revenue for H1 2024 reached RMB 28,343,961 thousand, a 4.6% increase compared to RMB 27,110,336 thousand in H1 2023[92] - Gross profit increased to RMB 6,699,943 thousand in H1 2024, up 8.0% from RMB 6,203,000 thousand in H1 2023[80] - The company's gross profit margin rose to 23.6% in H1 2024 from 22.9% in H1 2023, driven by changes in revenue mix[19] - Net profit for the first half of 2024 was RMB 2,034.4 million, up from RMB 1,562.0 million in the same period last year[26] - Net profit attributable to the company's owners rose to RMB 2,037,182 thousand in H1 2024, a 30.5% increase from RMB 1,561,358 thousand in H1 2023[80] - Basic earnings per share grew to RMB 0.65 in H1 2024, up from RMB 0.50 in H1 2023[80] - Non-IFRS operating profit for the first half of 2024 was RMB 1,584.6 million, compared to RMB 1,681.5 million in the first half of 2023[28] - Total comprehensive income for the period reached RMB 2,223,586 thousand in H1 2024, compared to RMB 3,115,121 thousand in H1 2023[81] - Total comprehensive income for the first half of 2024 was RMB 2,226,390 thousand, compared to RMB 3,114,487 thousand in the same period of 2023[84] - Revenue from pharmaceutical and health product sales increased to RMB 23,909,769 thousand in H1 2024, up 3.2% from RMB 23,167,780 thousand in H1 2023[92] - Service revenue, including platform and advertising services, grew to RMB 4,434,192 thousand in H1 2024, a 12.5% increase from RMB 3,942,556 thousand in H1 2023[92] - Cost of goods sold increased to RMB 21,707,641 thousand in H1 2024, a 5.1% rise from RMB 20,661,015 thousand in H1 2023[95] - Logistics and warehousing expenses grew to RMB 2,031,921 thousand in H1 2024, up 19.7% from RMB 1,697,436 thousand in H1 2023[95] - Employee benefits expenses decreased to RMB 1,158,634 thousand in H1 2024, down 10.6% from RMB 1,295,313 thousand in H1 2023[95] - Net profit attributable to owners of the company increased to RMB 2,037,182 thousand in H1 2024, up 30.5% from RMB 1,561,358 thousand in H1 2023[97] - Basic earnings per share rose to RMB 0.65 in H1 2024, a 30% increase from RMB 0.50 in H1 2023[97] User and Merchant Growth - The company's annual active users reached 181 million as of June 30, 2024, with daily online consultations exceeding 480,000 in the first half of the year[6] - JD Health's platform hosted 80,000 merchants as of June 30, 2024, reflecting rapid growth in new and active third-party merchants[8] - The company's internet hospital handled over 480,000 daily online consultations as of June 30, 2024, with a multi-department consultation rate exceeding 20%[12] Product and Service Expansion - The company launched multiple new specialty drugs, including 0.01% atropine sulfate eye drops and Alzheimer's targeted drugs, during the reporting period[8] - JD Health signed strategic cooperation agreements with over ten medical device brands to explore growth potential in new product launches and marketing[8] - The company upgraded its elderly care services, offering over 30,000 brands and thousands of subcategories of senior-friendly products[8] - JD Health introduced innovative user service benefits, such as free replacement for expired products and 365-day replacement guarantees for medical devices[9] - The company's online nutritionist service team, consisting of nearly 1,000 professionals, achieved a 98% user satisfaction rate with over 95% of queries responded to within 30 seconds[9] - JD Health expanded its offline presence with the opening of two hearing centers, integrating online and offline services[8] - The company enhanced its supply chain capabilities, including cold chain delivery services, to improve user experience and cross-category consumption[8] - JD Health's "Jingdong Medicine Delivery" service achieved an average delivery time of 28 minutes, with the fastest being 9 minutes, covering over 490 cities and 150,000 partner pharmacies[10] - The company's skin specialty center established 4 departments and 49 expert studios, serving over 15 million patients[12] - The company launched a pilot program for medical insurance individual account payments in Beijing, with over 350 designated retail pharmacies connected to the platform[10] - JD Health's medical AI model "Jingyi Qianxun" was selected as a typical case of innovative technology application at CHIMA 2024[13] - The company partnered with Shandong Energy Development Service Group to establish 8 health stations equipped with smart medical devices for remote mining area employees[14] Expenses and Costs - Fulfillment expenses increased by 14.4% to RMB 2.9 billion in H1 2024, accounting for 10.4% of revenue, up from 9.5% in H1 2023[20] - Sales and marketing expenses increased by 17.5% from RMB 1.2 billion in the first half of 2023 to RMB 1.4 billion in the first half of 2024, accounting for 5.0% of revenue, up from 4.4% in the same period last year[21] - R&D expenses increased by 4.6% from RMB 616.9 million in the first half of 2023 to RMB 645.0 million in the first half of 2024, maintaining a stable 2.3% of revenue[22] - General and administrative expenses decreased by 21.9% from RMB 876.8 million in the first half of 2023 to RMB 685.1 million in the first half of 2024, accounting for 2.4% of revenue, down from 3.2%[23] - Income tax expenses increased by 50.4% from RMB 269.2 million in the first half of 2023 to RMB 405.0 million in the first half of 2024, mainly due to net growth in deferred tax[25] - Research and development expenses amounted to RMB 645,015 thousand in H1 2024, a 4.6% increase from RMB 616,863 thousand in H1 2023[80] - Financial income rose to RMB 989,512 thousand in H1 2024, a 5.7% increase from RMB 936,455 thousand in H1 2023[80] - Interest received in the first half of 2024 was RMB 916,394 thousand, nearly double the RMB 469,818 thousand received in the same period of 2023[86] Cash Flow and Financial Position - Cash and cash equivalents decreased to RMB 8.8 billion as of June 30, 2024, from RMB 15.0 billion as of December 31, 2023[30] - Net cash generated from operating activities was RMB 2,230.2 million in the first half of 2024, compared to RMB 368.1 million in the same period last year[31] - Net cash generated from operating activities for the six months ended June 30, 2024, was RMB 2.2 billion, primarily due to a profit of RMB 2.0 billion, adjusted for non-cash and non-operating items of RMB 0.4 billion and working capital adjustments[32] - Net cash used in investing activities for the six months ended June 30, 2024, was RMB 8.4 billion, mainly due to RMB 5.7 billion for purchasing time deposits and RMB 2.6 billion for financial assets measured at fair value[33] - Net cash used in financing activities for the six months ended June 30, 2024, was RMB 21.8 million, primarily due to lease principal payments of RMB 17.8 million[34] - Operating cash flow for the first half of 2024 reached RMB 2,230,154 thousand, a significant increase from RMB 368,079 thousand in the same period of 2023[86] - Net cash used in investing activities for the first half of 2024 was RMB 8,372,841 thousand, compared to RMB 7,240,181 thousand in the same period of 2023[86] - The company's cash and cash equivalents decreased by RMB 6,164,480 thousand in the first half of 2024, compared to a decrease of RMB 6,890,623 thousand in the same period of 2023[86] Equity and Shareholder Information - The company had no outstanding borrowings as of June 30, 2024, and thus no capital-to-debt ratio was presented[35] - The company terminated the acquisition of the remaining 51% equity in Tangshan Hongci Medical Management Co., Ltd., due to unmet conditions[36] - The number of full-time employees as of June 30, 2024, was 3,177, compared to 2,751 as of June 30, 2023[37] - Total employee compensation and benefits, including share-based payments, for the six months ended June 30, 2024, was RMB 1.2 billion, compared to RMB 1.3 billion for the same period in 2023[38] - The company has no significant contingent liabilities or guarantees as of June 30, 2024[40] - Liu Qiangdong holds a 68.50% equity interest in the company as of June 30, 2024[42] - JD Jiankang holds 2,149,253,732 shares, and JD.com fully owns JD Jiankang[43] - As of June 30, 2024, Mr. Liu Qiangdong holds approximately 71.5% of the voting rights in JD.com through shares exercisable at the shareholders' meeting[43] - Mr. Liu Qiangdong has the right to acquire up to 26,521,259 shares through the exercise of pre-IPO employee stock options, subject to conditions[43] - Mr. Liu Qiangdong beneficially owns 343,005,330 shares, representing 11.6% of the total shares and 71.5% of the total voting rights[45] - Max Smart Limited, a BVI company beneficially owned by Mr. Liu Qiangdong, holds 305,630,780 Class B ordinary shares[46] - Fortune Rising Holdings Limited holds 17,442,072 Class B ordinary shares, with Mr. Liu Qiangdong as the sole shareholder and director[46] - As of June 30, 2024, JD.com has 2,934,703,449 ordinary shares issued and outstanding[47] - Mr. Liu Qiangdong holds a 64.80% beneficial ownership in JD Logistics through 4,291,457,805 shares[48] - Mr. Liu Qiangdong holds a 100.00% beneficial ownership in China Logistics Property through 3,474,283,058 shares[48] - Mr. Jin Enlin has the right to acquire up to 666 shares of JD.com through restricted stock units under the JD.com equity incentive plan[48] - JD.com holds 4,192,271,100 shares of JD Logistics, representing 100% ownership through Jingdong Technology Group Corporation[50] - Liu Qiangdong holds approximately 71.5% of the voting rights in JD.com as of June 30, 2024[50] - JD.com owns 74.96% of JD Property, which directly holds 3,474,283,058 shares of China Logistics Assets[50] - JD Jiankang holds 2,149,253,732 shares, representing 67.39% of the total issued shares of 3,189,465,111 as of June 30, 2024[52] - The company has three equity incentive plans, with 4,421,362 new shares potentially issued under the post-IPO option and share award plans, representing approximately 0.14% of the weighted average issued share capital[53] - Under the pre-IPO employee equity incentive plan, 30,391,357 options remained unexercised as of June 30, 2024[55] - The maximum number of shares that can be issued under the post-IPO option plan is 312,708,211, not exceeding 10% of the shares issued at the listing date[57] - The overall cap for shares that can be issued under all option plans is 30% of the issued shares at any time[57] - No options have been granted, exercised, canceled, or lapsed under the post-IPO option plan as of June 30, 2024[57] - The post-IPO share award plan was adopted on November 23, 2020, with further details available in the prospectus[58] - The maximum number of shares available for issuance under the post-IPO share incentive plan is 312,708,211 shares, representing 10% of the company's issued share capital[60] - As of June 30, 2024, 284,908,211 new shares are available for issuance under the post-IPO share incentive plan, representing approximately 8.93% of the company's issued share capital[60] - The total number of shares available for granting under the post-IPO share incentive plan as of June 30, 2024 is 250,089,110 shares[59] - During the reporting period, 4,941,036 reward shares were granted to eligible participants under the post-IPO share incentive plan[59] - As of June 30, 2024, the total number of unvested reward shares to be settled by new shares under the post-IPO share incentive plan is 33,368,892 shares[61] - The fair value of the reward shares granted during the reporting period was determined based on the market value of the shares on the respective grant dates[62] - The company granted 226,000 reward shares to an executive director on April 1, 2024, with a market price of HK$27.70 per share on the grant date[63] - As of June 30, 2024, the total number of unvested reward shares to be settled by existing shares under the post-IPO share incentive plan is 6,823 shares[63] - The total net proceeds from the global offering, after the over-allotment option was fully exercised, amounted to approximately RMB 25.7 billion, which will be used for the purposes disclosed in the prospectus[66] - As of June 30, 2024, the company had utilized RMB 3,717 million of the net proceeds for business expansion, including the development of retail pharmacy business and online medical health services, user growth and engagement, and brand enhancement[67] - The company had RMB 7,408 million of net proceeds remaining unused as of June 30, 2024, with RMB 2,911 million allocated for potential investments, acquisitions, or strategic alliances, and RMB 579 million for working capital and general corporate purposes[67] - The company did not purchase, sell, or redeem any of its listed securities on the Hong Kong Stock Exchange during the six months ended June 30, 2024, and did not hold any treasury shares as of that date[68] - The company has maintained strict corporate governance practices and has complied with all applicable code provisions of the Corporate Governance Code as set out in Appendix C1 of the Listing Rules[69] - The Audit Committee, consisting of three members, reviewed the unaudited condensed consolidated financial statements for the six months ended June 30, 2024, and discussed accounting policies, practices, and internal controls with senior management and the company's auditor[71] - No interim dividend was recommended by the Board for the six months ended June 30, 2024[72] - Professor Liao Jiajie was appointed as an independent non-executive director, effective from August 15, 2024[75] - No other significant events affecting the company occurred between June 30, 2024, and the date of this report[76] Assets and Liabilities - Total assets increased to RMB 67,218,782 thousand as of June 30, 2024, compared to RMB 64,288,300 thousand as of December 31, 2023[82] - Inventory grew to RMB 5,680,513 thousand as of June 30, 2024, a 11.7% increase from RMB 5,084,574 thousand as of December 31, 2023[82] - Trade payables increased to RMB 10,982,183 thousand as of June 30, 2024, up 13.7% from RMB 9,660,450 thousand as of December 31, 2023[83] - Contract liabilities increased to RMB 468,224 thousand as of June 30, 2024, up 15.4% from RMB 405,604 thousand as of December 31, 2023[93] - Non-current financial assets increased to RMB 8,201,457 thousand as of June 30, 2024, compared to RMB 12,204,005 thousand as of December 31, 2023, with a significant decrease in fixed-term deposits from RMB 8,522,972 thousand to RMB 3,691,198 thousand[100] - The yield on amortized cost financial products held by the company ranged from 5.48% to 6.12% annually as of June 30, 2024, slightly higher than the range

Investment Rating - The report maintains a "Buy" rating for JD Health, with a target price of HKD 35.34 per share, indicating a potential upside from the current price of HKD 21.40 [3]. Core Views - JD Health reported a strong performance in H1 2024, achieving revenue of RMB 28.344 billion, a year-on-year increase of 4.6%. The pharmaceutical and health product sales segment generated RMB 23.910 billion, up 3.2%, while platform, advertising, and other services saw revenue of RMB 4.434 billion, growing by 12.5% [2][3]. - The company’s net profit attributable to shareholders reached RMB 2.037 billion, reflecting a significant year-on-year growth of 30.5%. The Non-IFRS net profit was RMB 2.644 billion, up 8.5%, with a Non-IFRS net profit margin improvement of 0.3 percentage points to 9.3% [2]. - JD Health is actively attracting third-party merchants, which has positively impacted its 3P business and advertising revenue. The number of platform merchants has increased to 80,000, and the JD Medicine delivery service now covers over 490 cities [2][3]. Financial Summary - Revenue projections for 2024 and 2025 are estimated at RMB 57.380 billion and RMB 62.651 billion, respectively, with expected year-on-year growth rates of 7.2% and 9.2% [5]. - The company’s EBITDA is forecasted to grow significantly, reaching RMB 2.245 billion in 2024 and RMB 2.977 billion in 2025 [5]. - The net profit attributable to shareholders is projected to be RMB 2.783 billion in 2024 and RMB 3.609 billion in 2025, with growth rates of 29.9% and 29.7% respectively [5].

Investment Rating - The investment rating for JD Health (06618.HK) is "Buy" with a target price set at HKD 22.05, maintaining the rating [6]. Core Insights - JD Health reported a revenue of CNY 28.344 billion for the first half of 2024, representing a year-on-year growth of 4.6% compared to CNY 27.1 billion in the same period last year [1]. - The company's self-operated product revenue reached CNY 23.91 billion, growing by 3.2% year-on-year, while service revenue increased by 12.5% to CNY 4.43 billion [1][2]. - The gross profit margin improved by 0.7 percentage points to 23.6%, with a net profit of CNY 2.03 billion, marking a 30.2% increase year-on-year [1][2]. - The number of active users reached 181 million, with a net increase of 12 million users compared to the previous year [1][2]. Summary by Sections Financial Performance - For the first half of 2024, JD Health achieved a gross profit of CNY 6.7 billion, an increase of 8% year-on-year, with a net profit margin of 9.3% [2]. - The adjusted Non-IFRS net profit was CNY 2.64 billion, up 8.5% from CNY 2.44 billion in the same period last year [1][2]. Business Model and Growth Drivers - The company has established a mature operational model integrating self-operated, online platform, and instant retail services, which is expected to enhance user penetration and purchase frequency [2][3]. - The platform, advertising, and other services contributed CNY 4.43 billion in revenue, reflecting a 12.5% year-on-year growth, with over 80,000 third-party merchants onboard [2]. Market Expansion - JD Health has initiated online medical insurance drug purchasing services in multiple cities, which is anticipated to drive new traffic growth for the platform [3]. - The instant retail service "JD Buy Medicine" achieved an average delivery time of 28 minutes, covering over 490 cities and partnering with more than 150,000 pharmacies [3].

Investment Rating - The report maintains an "Outperform" rating for JD Health International (6618 HK) with a target price of HKD 41.49, reflecting a significant upside from the current price of HKD 23.15 [3][7]. Core Views - JD Health has demonstrated healthy revenue growth driven by increases in platform, advertising, and other service revenues, achieving CNY 28.34 billion in the first half of 2024, a 4.6% increase year-on-year [12][13]. - The integration of online medical insurance is expected to enhance online traffic and penetration rates, with over 350 designated pharmacies in Beijing connected to the JD platform as of the first half of 2024 [15][16]. - The company has established a closed loop of testing, consultation, and medication purchasing services, which is anticipated to drive innovation in pharmaceutical retail [16]. Financial Performance Summary - Revenue for 2024 is projected at CNY 57.4 billion, representing a year-on-year growth of 7.2%, while adjusted net profit is expected to reach CNY 4.34 billion, reflecting a growth of 4.9% [17][18]. - The gross margin for the first half of 2024 was reported at 23.6%, an increase of 0.8 percentage points, with net profit reaching CNY 2.03 billion, a 30.2% increase [14][18]. - The number of active users reached 180 million, a 7.2% increase, and the number of platform merchants grew to 80,000, a 122.2% increase [12][13]. Valuation and Forecast - The DCF valuation estimates the company's equity value at CNY 121.73 billion, corresponding to a share price of HKD 41.49, based on a WACC of 8.4% and a perpetual growth rate of 2.0% [17][18]. - The revenue forecast for 2025 is CNY 64.0 billion, with an expected growth rate of 11.5% [17].

Investment Rating - The investment rating for JD Health (06618.HK) is "Outperform the Market" [2][3][7] Core Views - JD Health's revenue growth is stable, with a 5% year-on-year increase in H1 2024, achieving a total revenue of 28.3 billion yuan. The growth is driven by a 3% increase in product revenue and a 12% increase in service revenue [1][5] - The company's non-IFRS net profit margin improved from 9.0% to 9.3% year-on-year, benefiting from increased other income, although adjusted operating profit margin decreased from 6.4% to 5.6% due to rising fulfillment and sales costs [1][5] - The growth in GMV is primarily driven by an increase in active buyers and purchase frequency, with 181 million annual active users as of H1 2024, representing a 7% year-on-year growth [1][5] Revenue and Profit Forecast - Revenue projections for JD Health from 2024 to 2026 are 57.4 billion, 63.8 billion, and 70.8 billion yuan, respectively, with adjustments of -7%, -11%, and -14% due to a weak consumption environment and regulatory impacts on certain product categories [2][7] - Adjusted net profit forecasts for the same period are 4.4 billion, 4.8 billion, and 5.0 billion yuan, with adjustments of +6%, -3%, and -13% [2][7] Financial Metrics - The company is expected to have a PE ratio of 14x for 2024, with a CAGR of 6% for adjusted net profit from 2024 to 2026 [2][7] - The target price is set between 31 and 33 HKD, indicating a potential upside of 45% to 54% from the current stock price of 21.45 HKD [2][7]

Financial Performance - For the six months ended June 30, 2024, JD Health reported revenue of RMB 28,343,961 thousand, representing a year-on-year increase of 4.6% compared to RMB 27,110,336 thousand in the same period of 2023[3]. - Gross profit for the same period was RMB 6,699,943 thousand, reflecting an 8.0% increase from RMB 6,203,000 thousand in the prior year[3]. - Operating profit increased by 17.7% to RMB 1,035,018 thousand, up from RMB 879,244 thousand year-on-year[3]. - Revenue increased by 4.6% from RMB 271 billion for the six months ended June 30, 2023, to RMB 283 billion for the six months ended June 30, 2024[15]. - Active user growth and increased online penetration in pharmaceutical and health product sales contributed to a 3.2% increase in product revenue from RMB 232 billion to RMB 239 billion[15]. - Service revenue from online platforms and digital marketing rose by 12.5% from RMB 39 billion to RMB 44 billion, driven by an increase in advertisers on the platform[15]. - Gross profit increased from RMB 62 billion to RMB 67 billion, with gross margin improving from 22.9% to 23.6% due to changes in revenue mix[17]. - Period profit increased from RMB 1.56 billion for the six months ended June 30, 2023, to RMB 2.03 billion for the six months ended June 30, 2024[24]. - The net profit attributable to the owners of the company for the six months ended June 30, 2024, was RMB 2.04 billion, up from RMB 1.56 billion in the same period of 2023, indicating a year-over-year increase of approximately 30.8%[37]. - Basic earnings per share for the six months ended June 30, 2024, were RMB 0.65, up from RMB 0.50 in the same period of 2023, representing a growth of 30%[46]. User Engagement and Services - The number of annual active users reached 181 million, with an average of over 480,000 online consultations per day during the first half of 2024[5]. - The online consultation volume for JD Health's internet hospital exceeded 480,000 daily consultations, serving over 15 million patients across various specialties[11]. - JD Health established the largest professional nutritionist online service team in China, with nearly 1,000 nutritionists, achieving a 98% user satisfaction rate[8]. - The company launched a pilot online medical insurance payment service in Beijing, with over 350 retail pharmacies connected to the JD platform by June 30, 2024[9]. - JD Health is expanding its home service offerings, including on-site nursing and home care services, to meet diverse health needs[11]. Strategic Initiatives and Partnerships - The company expanded its partnerships with leading pharmaceutical companies, launching several new specialty drugs on its platform during the reporting period[7]. - JD Health's platform now hosts 80,000 active third-party merchants, indicating significant growth in its marketplace[7]. - Strategic cooperation agreements were signed with over ten medical device brands to enhance product development and marketing efforts[7]. - The company continues to focus on expanding its "Internet + Healthcare" ecosystem, providing a range of medical and health products, internet medical services, and smart healthcare solutions in China[40]. Operational Efficiency - The average delivery time for the "JD Buy Medicine" service improved to 28 minutes, with the fastest delivery at 9 minutes, covering over 490 cities and more than 150,000 partner pharmacies[9]. - The company continues to strengthen its supply chain capabilities and expand its nationwide warehouse network and cold chain delivery services[6]. - JD Health's operating model combines self-operated, online platforms, and instant retail to enhance user experience and maintain competitive pricing[6]. Financial Management - Fulfillment expenses increased by 14.4% from RMB 2.6 billion for the six months ended June 30, 2023, to RMB 2.9 billion for the six months ending June 30, 2024, with fulfillment expenses as a percentage of revenue rising from 9.5% to 10.4%[18]. - Sales and marketing expenses rose by 17.5% from RMB 1.2 billion for the six months ended June 30, 2023, to RMB 1.4 billion for the six months ending June 30, 2024, with expenses as a percentage of revenue increasing from 4.4% to 5.0%[19]. - R&D expenses increased by 4.6% from RMB 616.9 million for the six months ended June 30, 2023, to RMB 645.0 million for the six months ending June 30, 2024, maintaining a stable percentage of revenue at 2.3%[20]. - General and administrative expenses decreased by 21.9% from RMB 876.8 million for the six months ended June 30, 2023, to RMB 685.1 million for the six months ending June 30, 2024, with expenses as a percentage of revenue declining from 3.2% to 2.4%[21]. - Financial income increased by 5.7% from RMB 936.5 million for the six months ended June 30, 2023, to RMB 989.5 million for the six months ending June 30, 2024, primarily due to increased interest income from bank balances and financial products[22]. - Income tax expenses rose by 50.4% from RMB 269.2 million for the six months ended June 30, 2023, to RMB 405.0 million for the six months ending June 30, 2024, mainly due to net growth in deferred tax[23]. Cash Flow and Investments - Operating cash flow for the six months ending June 30, 2024, was RMB 2.23 billion, compared to RMB 368.1 million for the same period in 2023[29]. - Cash and cash equivalents decreased to RMB 8.84 billion as of June 30, 2024, from RMB 11.90 billion as of June 30, 2023[29]. - For the six months ended June 30, 2024, net cash generated from operating activities was RMB 2.2 billion, primarily due to a profit of RMB 2.0 billion, adjusted for a net decrease of RMB 0.4 billion from non-cash and non-operating items[30]. - For the six months ended June 30, 2024, net cash used in investing activities was RMB 8.4 billion, mainly due to net cash payments of RMB 5.7 billion for time deposits and RMB 2.6 billion for financial assets measured at fair value[31]. - For the six months ended June 30, 2024, net cash used in financing activities was RMB 218 million, primarily due to lease payment principal of RMB 178 million[32]. - As of June 30, 2024, the company had no outstanding borrowings, indicating a capital debt ratio of 0%[32]. Corporate Governance - The company has adhered to the Corporate Governance Code and maintained high standards of corporate governance throughout the reporting period[50]. - The audit committee has reviewed the unaudited condensed consolidated financial statements for the six months ended June 30, 2024, ensuring compliance with accounting policies and internal controls[52]. - The company has not engaged in any purchase, sale, or redemption of its listed securities during the six months ended June 30, 2024[53]. - The board currently includes executive and non-executive directors, ensuring a diverse governance structure[59]. Future Plans and Appointments - The company plans to continue utilizing the raised funds for enhancing user growth and brand awareness, as well as for potential investments and acquisitions[55]. - Professor 廖家傑 has been appointed as an independent non-executive director effective from August 15, 2024[56]. - 廖教授 will receive an annual director's fee of RMB 338,000 and equity-based compensation[56]. - The board welcomes 廖教授's appointment, highlighting his extensive experience in gastroenterology and hepatology[57]. - The mid-term financial report for the six months ending June 30, 2024, will be published on the Hong Kong Stock Exchange and the company's website[58].

Financial Performance - JD Health reported revenue of RMB 53,529,941 thousand for 2023, a 14.0% increase from RMB 46,736,150 thousand in 2022[7] - Gross profit for 2023 was RMB 11,865,336 thousand, up 19.9% from RMB 9,891,508 thousand in the previous year[7] - The company achieved a net profit of RMB 2,142,880 thousand in 2023, compared to a profit of RMB 383,229 thousand in 2022, marking a significant turnaround[7] - The company reported a non-IFRS profit of RMB 4,135,439 thousand for 2023, a substantial increase from RMB 2,616,292 thousand in 2022[7] - Total revenue for 2023 reached RMB 53.5 billion, representing a year-on-year growth of 14.5%[14] - Self-operated sales revenue reached RMB 45.7 billion, a year-on-year increase of 13.1%[16] - Service revenue rose by 23.7% from RMB 6.4 billion in 2022 to RMB 7.9 billion in 2023, attributed to increased digital marketing service fees and commissions from third-party merchants[25] - Revenue increased by 14.5% from RMB 46.7 billion in 2022 to RMB 53.5 billion in 2023, driven by a 13.1% rise in sales of pharmaceutical and health products[25] Assets and Equity - Total assets increased to RMB 64,288,300 thousand in 2023 from RMB 61,277,296 thousand in 2022, reflecting a growth of 4.9%[8] - Equity attributable to owners of the company rose to RMB 49,355,752 thousand in 2023, up from RMB 44,780,248 thousand in 2022, indicating a growth of 11.8%[8] User Engagement and Services - The number of annual active users reached 172.3 million, with an average of over 450,000 online consultations per day in 2023[14] - The company launched the first domestic skin specialty internet hospital and upgraded its mental health service center in 2023[11] - The company opened multiple self-operated community stores in Beijing, offering a "24-hour prescription pickup" service and an average delivery time of 28 minutes for online orders[10] - The company has expanded its local "instant retail" business, enhancing its offline pharmacy network to cover more service scenarios[10] - Instant retail services expanded to over 480 cities, with more than 120,000 partnered offline pharmacies[18] Strategic Focus and Technology - The company emphasized its strategic focus on integrating online and offline health services to enhance user experience and meet evolving health demands[9] - JD Health aims to leverage disruptive technologies to further develop its healthcare services and expand its market presence in response to changing consumer needs[9] - The company introduced the medical large model "Jingyi Qianxun," which is based on health knowledge graphs and big data, to drive AI deployment in products and solutions[12] - JD Health has accelerated the application of medical AI models to improve online diagnosis quality and efficiency[19] Corporate Governance and Management - The company is committed to creating sustainable value for shareholders while fulfilling its corporate social responsibilities in the healthcare sector[9] - The company has a strong management team with extensive experience in finance and investment management, including key positions held by Deng Hui and other executives[52][53] - The board of directors includes a diverse group of experienced individuals, with the CEO having extensive experience in the healthcare and TMT sectors[47] - The company has established a remuneration committee to determine and recommend the remuneration policy for directors and senior management[89] Cash Flow and Investments - Cash and cash equivalents decreased from RMB 187 billion at the end of 2022 to RMB 150 billion at the end of 2023[36] - Net cash generated from operating activities for 2023 was RMB 4,604,778 thousand, down from RMB 5,905,149 thousand in 2022, a decline of approximately 22%[37] - Net cash used in investing activities increased to RMB 8,022,885 thousand in 2023 from RMB 4,235,541 thousand in 2022, reflecting a rise of about 89%[39] - The company made a cash investment of approximately RMB 668 million in Tangshan Hongci Medical Management Co., Ltd. in 2020 for a 49% stake, with plans to acquire the remaining 51%[42] Related Party Transactions - The company has established ongoing related party transactions with JD.com and its affiliates, including JD Technology[120] - Independent non-executive directors have confirmed that the ongoing related party transactions are conducted in the ordinary course of business and on normal commercial terms[138] - The company will review and ensure that the terms received from JD.com are fair and reasonable compared to market prices for similar services[136][137] Risk Management and Compliance - The company faces significant risks related to contractual arrangements, particularly if the Chinese government deems these arrangements non-compliant with foreign investment regulations[144] - The company is closely monitoring regulatory developments in China to mitigate risks associated with contractual arrangements[144] - The company has adopted an anti-corruption and whistleblowing policy to support compliance with relevant laws and regulations[192] - The company has complied with all relevant laws and regulations during the reporting period[62] Employee and Board Diversity - The current level of gender diversity on the board is 28.6%, with two out of seven directors being female[186] - The company has achieved a gender diversity ratio of 58.3% female and 41.7% male employees, emphasizing ongoing efforts to enhance gender representation[193] - The board's strategic goal is to become the most trusted health management company and the nation's chief health steward[188] Future Outlook and Strategy - The company aims to continue expanding its business base and strategic new categories in response to the "Healthy China" strategy and market trends[13] - The company is focused on expanding its market reach and developing new technologies to improve healthcare solutions[55] - The company plans to reallocate approximately RMB 7.7 billion from R&D to business expansion after a detailed assessment of its operational situation and business strategy[64]

Investment Rating - The report maintains a "Buy" rating for JD Health (06618 HK) [6] Core Views - JD Health achieved revenue of RMB 53 5 billion in 2023 a YoY increase of 14 5% with self-operated product revenue reaching RMB 456 5 billion (up 13 1%) and service revenue at RMB 78 8 billion (up 23 7%) [1] - The company's gross margin increased by 1 0 percentage points to 22 2% driven by product mix changes and annual profit surged 459 2% to RMB 2 14 billion [1] - Adjusted Non-IFRS net profit reached RMB 4 14 billion a YoY increase of 58 1% [1] - Annual active users grew to 172 million as of December 31 2023 a net increase of 18 million from the previous year [1] - Third-party merchants exceeded 50 000 a YoY growth of over 100% and daily online consultations surpassed 450 000 [1] Business Performance Self-operated Product Revenue - Self-operated product revenue reached RMB 456 5 billion in 2023 with prescription drugs non-prescription drugs and other categories accounting for 41% 29% and 30% respectively [2] - The company's diversified product matrix and digital marketing strategies are expected to drive cross-category purchases [2] Service Revenue - Service revenue grew 23 7% YoY to RMB 78 8 billion driven by increased advertising clients and higher commissions from third-party merchants [2] - The company is expanding its online and offline healthcare integration with daily online consultations exceeding 450 000 [2] Instant Retail and Offline Services - JD Health provides 24-hour instant retail services in over 480 cities and collaborates with more than 120 000 offline pharmacies [2] - The company has launched self-operated community pharmacies in Beijing and operates JD Health physical examination centers and hospitals [2] Financial Metrics - Gross profit increased 20 0% YoY to RMB 118 7 billion with a gross margin of 22 2% up 1 0 percentage point from 2022 [3] - Fulfillment expense ratio was 9 9% (up 0 2 percentage points) sales expense ratio was 5 0% (up 0 3 percentage points) and general and administrative expense ratio improved by 0 9 percentage points to 3 7% [3] - The R&D expense ratio remained stable at 2 3% [3] Future Outlook - Revenue forecasts for 2024 2025 and 2026 are adjusted to RMB 620 billion RMB 727 billion and RMB 854 billion respectively [4] - Adjusted net profit for 2024 2025 and 2026 is projected at RMB 41 billion RMB 48 billion and RMB 53 billion respectively [4] - The company is expected to strengthen its position as a leading self-operated pharmaceutical e-commerce platform with continued user penetration and industry-leading supply chain capabilities [4] Company Data - Total shares outstanding: 3 189 12 million [5] - Market capitalization: HKD 88 338 49 million [5] - Net asset value per share: HKD 17 09 [5] - Asset-liability ratio: 23 20% [5] - 52-week high/low: HKD 60 40/HKD 25 25 [5]