Company Reports

We expect narrow-moat JD Health to maintain a market leading position for healthcare e-commerce in the near and medium term. It holds about 40% market share, similar to its main rival AliHealth, which makes this niche industry dominated by mostly two competitors. Its business model is similar to AliHealth except with one key difference in that it has greater coverage and better next-day or same-day delivery efficiency than its rival. It has cold-chain capabilities for 300 cities and can meet next-day deadlines for 80% of its orders. We believe this key differentiation will allow it to maintain a leading market share due to the importance of timeliness and quality of goods when it comes to receiving pharmaceutical products.

JD Health's first-half revenue increased 16% year on year, driven by strength in prescription drugs that was slightly offset by weakness in health supplements. Operating margin improved 150 basis points year on year to 7.7% due to the favorable product mix.

JD Health's first-quarter 2026 revenue grew 17% year on year, as the platform continues to see greater demand from Chinese consumers. Adjusted operating margin rose by 210 basis points to 10%.

JD Health's second-half 2025 revenue increased 26% year on year, driven by transactions in prescription drugs and wellness products. Gross margin also improved 220 basis points year on year to 24.4%, due to the favorable product mix.

We expect narrow-moat JD Health to maintain a market leading position for healthcare e-commerce in the near and medium term. It holds about 40% market share, similar to its main rival AliHealth, which makes this niche industry dominated by mostly two competitors. Its business model is similar to AliHealth except with one key difference in that it has greater coverage and better next-day or same-day delivery efficiency than its rival. It has cold-chain capabilities for 300 cities and can meet next-day deadlines for 80% of its orders. We believe this key differentiation will allow it to maintain a leading market share due to the importance of timeliness and quality of goods when it comes to receiving pharmaceutical products.

We expect narrow-moat JD Health to maintain a market leading position for healthcare e-commerce in the near and medium term. It holds about 40% market share, similar to its main rival AliHealth, which makes this niche industry dominated by mostly two competitors. Its business model is similar to AliHealth except with one key difference in that it has greater coverage and better next-day or same-day delivery efficiency than its rival. It has cold-chain capabilities for 300 cities and can meet next-day deadlines for 80% of its orders. We believe this key differentiation will allow it to maintain a leading market share due to the importance of timeliness and quality of goods when it comes to receiving pharmaceutical products.

Both Alibaba Health and JD Health have lost 10% of their market valuations since news that artificial intelligence poses a threat to software-as-a-service.

JD Health's third-quarter 2025 revenue increased 29% year on year, in line with company forecasts that growth would reaccelerate in 2025. Adjusted operating margin expanded 150 basis points year on year to 8.0%.

JD Health's first-half revenue increased 25% year on year, driven by a larger market share footprint accompanied by robust weight loss, retail, and influenza drug sales.

We expect narrow-moat JD Health to maintain a market leading position for healthcare e-commerce in the near and medium term. It holds about 40% market share, similar to its main rival AliHealth, which makes this niche industry dominated by mostly two competitors. Its business model is similar to AliHealth except with one key difference in that it has greater coverage and better next-day or same-day delivery efficiency than its rival. It has cold-chain capabilities for 300 cities and can meet next-day deadlines for 80% of its orders. We believe this key differentiation will allow it to maintain a leading market share due to the importance of timeliness and quality of goods when it comes to receiving pharmaceutical products.

JD Health's first-quarter 2025 update indicates a 26% year-on-year increase in revenue, reaffirming its previous expectations that revenue growth would reaccelerate in 2025. Adjusted operating margin rose by 220 basis points to 7.9%.

We expect narrow-moat JD Health to maintain a market leading position for healthcare e-commerce in the near and medium term. It holds about 40% market share, similar to its main rival AliHealth, which makes this niche industry dominated by mostly two competitors. Its business model is similar to AliHealth except with one key difference in that it has greater coverage and better next-day or same-day delivery efficiency than its rival. It has cold-chain capabilities for 300 cities and can meet next-day deadlines for 80% of its orders. We believe this key differentiation will allow it to maintain a leading market share due to the importance of timeliness and quality of goods when it comes to receiving pharmaceutical products.

We expect narrow-moat JD Health to maintain a market leading position for healthcare e-commerce in the near and medium term. It holds about 40% market share, similar to its main rival AliHealth, which makes this niche industry dominated by mostly two competitors. Its business model is similar to AliHealth except with one key difference in that it has greater coverage and better next-day or same-day delivery efficiency than its rival. It has cold-chain capabilities for 300 cities and can meet next-day deadlines for 80% of its orders. We believe this key differentiation will allow it to maintain a leading market share due to the importance of timeliness and quality of goods when it comes to receiving pharmaceutical products.

JD Health's second-half 2024 revenue rose 9% year on year to CNY 29.8 billion and met our forecast, but shares fell 12% in the Hong Kong trading session as it guided for lower profitability in 2025 due to greater expected fulfillment and marketing expenses.

On the Hong Kong stock exchange, Alibaba Health and JD Health have pared back their share price losses after their initial 5% drops on the Trump tariff news.

We expect narrow-moat JD Health to maintain a market leading position for healthcare e-commerce in the near and medium term. It holds about 40% market share, similar to its main rival AliHealth, which makes this niche industry dominated by mostly two competitors. Its business model is similar to AliHealth except with one key difference in that it has greater coverage and better next-day or same-day delivery efficiency than its rival. It has cold-chain capabilities for 300 cities and can meet next-day deadlines for 80% of its orders. We believe this key differentiation will allow it to maintain a leading market share due to the importance of timeliness and quality of goods when it comes to receiving pharmaceutical products.

We maintain our HKD 45 fair value estimate for narrow-moat JD Health after the company reported first-half revenue of CNY 28.3 billion, representing 5% growth year on year. More importantly, second-quarter revenue grew 15%. We are encouraged by the second-quarter growth; it reflects the normalization of sales after revenue was flat year on year in the second half of 2023 as sales of pandemic-related items declined 70% after China lifted lockdown restrictions. We expect continued sales momentum after JD Health conservatively guided to 10%-15% sales growth year on year for the second half. We expect drugs to lead the growth at 20% year on year during the period, followed by healthcare items growing 10% and medical devices growing single digits.

We maintain our fair value estimate of HKD 45 per share for JD Health after the company provided a partial financial update on its first-quarter results. Revenue of CNY 13.27 billion, representing a 5% year-on-year decline, is slightly better than anticipated, given previous guidance of a high-single-digit decline. Non-IFRS operating income was CNY 754 million (adds back stock-based compensation), which declined 35% year on year and reflects a 5.7% operating margin. JD Health indicated that the first quarter of 2023 had a high base effect where pandemic-related purchases still accounted for a significant portion of transactions. It expects consumer behavior to normalize for the rest of the year and maintains that it still expects revenue to increase 20% year on year for the remainder of 2024. Despite the stock having struggled this year, we believe our narrow moat rating remains intact as JD Health owns logistics and has user-acquisition advantages over its competitors for healthcare e-commerce.

We expect narrow-moat JD Health to maintain a market leading position for healthcare e-commerce in the near and medium term. It holds about 40% market share, similar to its main rival AliHealth, which makes this niche industry dominated by mostly two competitors. Its business model is similar to AliHealth except with one key difference in that it has greater coverage and better next-day or same-day delivery efficiency than its rival. It has cold-chain capabilities for 300 cities and can meet next-day deadlines for 80% of its orders. We believe this key differentiation will allow it to maintain a leading market share due to the importance of timeliness and quality of goods when it comes to receiving pharmaceutical products.

We lower our fair value estimate for JD Health to HKD 45 per share from HKD 60 after it reported second-half 2023 revenue of CNY 26.4 billion, representing a 0.3% decline year over year, which was in line with our expectations. While we expected headwinds in the second half due to the reduced consumption of pandemic-related items, we now have new concerns over the long-term growth recovery, given the company’s soft revenue guidance in 2024 that was below our forecast. Previously, JD Health had indicated that revenue for categories unrelated to the pandemic is still positioned to grow about 30% year on year, but it now provided guidance of a high-single-digit decline in the first quarter of 2024—although recovering to a 20% year-on-year increase for the rest of 2024. This amounts to only a 13% revenue increase in 2024, due to demand recovering slower than expected. JD Health also expects the operating margin to decline 10 basis points in 2024 to about 1.2%, which is slightly disappointing, given it was 3.5% in the first half of 2023.