Event: Company Announces Third Quarter 2023 Results Announcement
reviews
1. Revenue is growing steadily, and the scale effect continues to increase. In the third quarter of 2023, the company achieved revenue of 11.585 billion yuan (+10.1%), operating profit of 175 million yuan (+126.1%), and adjusted operating profit of 745 million yuan (+13.8%). In the first three quarters of 2023, the company achieved total revenue of 38.696 billion yuan (+25.9%), adjusted operating profit of 2,426 billion yuan (+44.1%), adjusted operating profit margin of 6.3% (+0.79pp), and the scale effect continued to increase.
2. The user mentality is strengthened, and the experience is further optimized. As of September 30, 2023, the number of annual active users of the platform reached 175 million, an increase of about 121 million over the end of 2022. The brand power and user mentality of drug use are constantly being strengthened. Meanwhile, in the third quarter of 2023, JD Health joined forces with a number of pharmaceutical companies to launch new specialty drugs online, including ceyinine injection (insulin grenide risinatide injection) and alemine (baritinib tablets), etc., to enhance drug accessibility and patients' drug buying experience.
3. Closed loop of physical examination+diagnosis+health management, promotion of online and offline integration. In July 2023, the Beijing Yizhuang branch of the Jingdong Health Examination Center officially opened. Users can enjoy convenient consultation and professional medical consultation services after the medical examination, which is expected to become an entry point for new traffic. In the future, the company will continue to increase the content of health management services and promote the progress of integrated online and offline layout.
4. Policies promote the improvement of the Internet medical insurance payment system. In November 2023, the Shanxi Provincial Health Insurance Bureau issued the “Notice on Launching Medical Insurance Payment (Trial) Work for “Internet +” Medical Services. All Internet hospitals approved by the Health and Health Commission can apply for medical insurance payment services for “Internet +” medical services. Furthermore, in 2023, the Jiangxi Provincial Health Insurance Bureau and the Hunan Provincial Health Insurance Bureau also introduced policies to clarify the rules for electronic prescription circulation and medical insurance payments. At the 2023 Provincial Health Insurance System Key Work Promotion Conference, the Guangdong Provincial Health Insurance Administration included “comprehensive promotion of convenience service applications throughout the electronic prescription circulation process” as a priority task. Internet hospitals are expected to become an important entry point to meet the needs of patients with chronic diseases.
Profit forecast and valuation: We expect the company's revenue for 2023-2024 to be 528.63/66.229 billion yuan (previous value was 536.24/67.213 billion; adjustments are mainly due to the weakening demand for pharmaceuticals and health products related to the pandemic), with growth rates of 13%/25%, respectively. We expect the company to achieve adjusted net profit of 38.27/4.614 billion yuan in 2023-2024 (previous value was 36.01/4 445 million yuan. The adjustments are mainly due to our expectation that the company's gross margin will be optimized as categories increase and the frequency of user purchases increases. Also, considering the contribution of exchange rate fluctuations and rising financial income, the profit side forecast was raised). The growth rates were 47% and 20%, respectively. According to the absolute valuation method, we forecast that the company's current equity value is $231,689 billion, and the corresponding share price is HK$79.80 per share (based on WACC 8.7%, sustainable growth rate 2.0%, target price unchanged), maintaining a “superior to market” rating.
risks
Sales fell short of expected risks, and Internet-related policy risks.