Online Consultation Struggles To Differentiate but E-Commerce Business the Key to Breakeven

We expect narrow-moat Alibaba Health, or AliHealth, to benefit from low saturation in healthcare e-commerce, leading to 30% year-on-year revenue growth for the next two years. The business is still in the early phase where it is focused on mass user adoption and should see robust growth in the near term. However, the business remains loss generating, and after seeing positive operating margins in fiscal first-half 2021, AliHealth returned to losses this year in fiscal first-half 2022. It hopes to break even by fiscal year 2025 as the platform scales up more users, leading to greater gross merchandise value, or GMV, and by cutting down on sales and marketing expenses. Given the low saturation for healthcare in e-commerce, we forecast AliHealth's GMV to continuously grow by double digits until its target breakeven date of fiscal year 2025 as well.