Core views:
Incident: JD Health released 23Q3 operating data. In the first three quarters of 2023, the company achieved revenue of 38.748 billion yuan, a year-on-year increase of 25.37%; in 23Q3, JD Health achieved revenue of 11.585 billion yuan, a year-on-year increase of 10.1%; operating profit of 175 million yuan, an increase of 126.1%; and non-IFRS operating profit of 745 million yuan, an increase of 13.8% over the previous year.
Looking at the business situation, the number of users continues to grow, empowering brand merchants, and advancing the omni-channel layout. In the past 12 months up to September 30, 2023, the number of annual active users reached 175 million, an increase of 6.4 million from 168.6 million up to 23H1. Q3 The company cooperated with a number of pharmaceutical companies to launch the online launch of new specialty drugs, including the innovative drug for diabetes, ceyinine injection, and the innovative targeted drug alemine, etc., to continuously improve the one-stop experience of retail pharmaceutical+ services. In July, the Beijing Yizhuang branch of the JD Health Checkup Center officially opened to the public, opening up online and offline services. Furthermore, in July, the company launched the Beijing Medicine Thousand Inquiries Model. Currently, this model has become the technical foundation for JD Health, and is expected to continue to promote medical service innovation in the future. Looking at Q4, the peak consumption season of Double Eleven is driving an increase in the turnover of brand merchants. According to JD Health's official account, 35,000 new businesses were added to participate in the JD Health Double Eleven event for the first time. The turnover of more than 6,000 health brands doubled year on year, and the turnover of medical examination packages for middle-aged and elderly people increased 3 times year over year. Furthermore, due to the effects of mycoplasma pneumonia, etc., the turnover of drugs for respiratory diseases increased tenfold year-on-year during the Double Eleven period, and the turnover of drugs used for influenza increased sharply by 265% year-on-year.
Profit forecasts and investment advice. Assuming that the company's YAU increased 16% year over year to 179 million people in '23, and at the same time, per capita expenditure declined year over year due to scale growth and low price strategies, the company's revenue for 23/24 is estimated to be 52.81 billion yuan and 6438 billion yuan, respectively. Comparable companies include Ali Health, Safe, and Good Doctor. Referring to the valuation center of comparable companies and the current market environment, the company was given a 24-year 3 times PS valuation, corresponding to a reasonable value of HK$65.84 per share, maintaining a “buy” rating.
Risk warning. The direction of policy development is uncertain; market competition exceeds expectations; developing new categories and services has not achieved the expected benefits; platforms and O2O businesses face risks associated with third party merchants.