After yesterday's trading, JD Health(06618.HK)Released the first annual performance report after listing. Affected by the better-than-expected performance, JD Health opened nearly 5% higher in early trading, then continued to rise, rising more than 9% at one point in intraday trading, and finally closed up 7.59% to HK $114.8, with a total market capitalization of HK $365.565 billion.

According to the annual report, JD Health's total income in 2020 was 19.38 billion yuan, an increase of more than 78 percent over the same period last year; the number of active users was nearly 90 million, with a net increase of more than 33.7 million a year; and the average daily number of online consultations exceeded 100000, five times that of 2019.

It is worth noting that the company made a profit of nearly 750 million yuan under non-international financial reporting standards (Non-IFRS), an increase of more than 117% over the same period last year.

Under non-IFRS, the company's reported earnings do not include share payments, changes in the fair value of convertible preferred shares, and one-time listing expenses.As these three expenses have no material impact on core operating results and business prospects, earnings under non-IFRS are more responsive to the company's actual operating conditions.

In the middle of 2020, with the increase of the equity value of the company, the fair value of JD Health's preferred shares in round An and B changed, resulting in a loss of 17.5 billion yuan. For this reason, the company recorded a loss of $17.2 billion under IFRS.

However, with JD Health's successful listing on December 8, 2020, all preferred shares have been converted into common shares at the conversion rate of 1:1, so the liabilities at fair value have been transferred to the company's equity as a whole.

The number of annual active users has increased significantly, continuously giving full play to the advantages of the supply chain.

Looking back at 2020, the increase in JD Health's total income was mainly due to the increase in proprietary retail income from 9.4 billion yuan in 2019 to 16.8 billion yuan.

Affected by the COVID-19 epidemic, the online purchase rate of drugs, medical devices and nourishing health care products has risen sharply, which has not only brought an increase in the number of active users, but also promoted the change of users' purchasing behavior.

In 2019, the penetration rate of online consultation services in China was only 6%, while the number of active users of all online consultation services increased significantly in mid-2020. According to Frost Sullivan, between 2019 and 2024,The compound annual growth rate of China's online consultation market will be more than 77%.

As of December 31, 2020JD Health has a total of 89.8 million annual active users. The average daily number of online consultations exceeds 100000, five times that of 2019.

At the same time, JD Health's supply chain advantage also gives full play to the scale effect of the platform, and the purchasing power and bargaining power maintain a great competitive advantage.

Through the cooperation with JD Logistics, Inc., JD Health's warehousing and performance capabilities are also in a leading position in the industry.

By the end of the year, JD Health had 14 special drug warehouses and more than 300 non-drug warehouses nationwide. In addition, based on the omni-channel layout, the O2O service "Jingdong Drug Emergency delivery" service has covered more than 300 cities across the country, providing users with next-day, same-day, 30-minute, 7-24-hour drug delivery service.

Using platform capability to empower Internet Medical Industry chain

In addition, the company's revenue from online platforms, digital marketing and other services has also increased significantly from 1.4 billion yuan in 19 years to 2.6 billion yuan.

JD Health's online platform and proprietary business form a benign complementarity, providing users with a richer range of products. As of December 31, 2020The retail pharmacy business has more than 20 million items (SKU), and the platform has more than 12000 third-party merchants.

Platform and digital service is the way for JD Health to open up his supply chain, technology, big data, resources and other core competencies while helping to improve public health. Empower the entire health industry, including the government, hospitals, and pharmaceutical companies.

On the government side, the company relies on its own digital intelligence and information technology to build a digital "healthy city" project with local governments to speed up the digital upgrading of the health industry; in hospitals, JD.com 's national leading cloud technology enables JD Health to improve hospital operation efficiency through infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS). For pharmaceutical companies, JD Health assists pharmaceutical companies to carry out digital transformation or carry out digital marketing jointly with pharmaceutical companies through their strong supply chain advantages and experience.

It is worth mentioning that through the open platform capability, JD Health helped many government units and enterprises return to work and production during the epidemic, and helped Peking University Shougang Hospital and other public hospitals urgently set up online consultation zones.

Conclusion

2020 is a year of explosive growth in the Internet medical industry.

Looking to the future, in terms of policy, with the release of the guidance on actively promoting Internet + 's Medical Services and Medical Insurance payment work in November 2020, the fast track of the development of the Internet medical industry has been further broadened; in terms of industrial environment, the digital upgrading of the large health industry is accelerating in the two dimensions of technology and service scene penetration.

According to Frost Sullivan, the size of China's large health market will exceed 21 trillion yuan by 2030 and maintain a high growth rate in the long run.

In the big healthy blue ocean, JD Health, who actively lays out the big healthy whole industrial chain, has shown extremely strong supply chain advantages in warehousing, logistics and other links, superimposed efforts to cultivate the medical field, the continuous accumulation of resources and service capacity, even in the increasingly fierce competition in the industry, JD Health's ability to maintain the leading position of the industry will not be shaken.