Citi released a research report stating that it maintained the “buy” rating of Alibaba Health (00241) and basically maintained the revenue forecast for Alibaba Health, but raised the net profit forecast for the 2025 and 2026 fiscal years by 91% and 81%, respectively, to reflect improved net profit margin guidelines. The target price was raised from HK$8 to HK$9.5 to reflect a faster than expected rate of profit margin improvement since FY2024.

According to the report, the company's management will guide the revenue for the 2025 fiscal year ending the end of March next year to increase 15%, and the net profit margin will expand to 5%. The bank said that since integrating Taobao's advertising business in January of this year, Alibaba Health has guided the company to further increase its gross margin, benefit from the improved product structure of its own business, and rapid growth in the e-commerce platform business.

The bank quoted Alibaba Health management as saying that the fulfillment fee rate will record a further decline as the company's efficiency increases, and will guide the industry to achieve double-digit growth in product transaction value (GMV), and is expected to gain more market share through the synergy generated by advertising integration. Management also stated that the buyback program will continue in FY2025.

Alibaba Health's management also expects the company's annual active users (AAU) and average revenue per user (ARPU) to grow in fiscal year 2025 as the number of its businesses increases and the user experience improves. It is also expected that the growth momentum of the nutritional supplements and medical device business will continue in the future.