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Alibaba Health Information Technology Ltd 00241

Morningstar Rating
HKD 2.75 0.00 (0.00%)
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Company Report

Alibaba Health: Lowering Fair Value by 40% After Preliminary Guidance on Fiscal 2024 Revenue Decline

We lower our fair value estimate for Alibaba Health to HKD 4.00 per share from HKD 6.70 after the company held a management call and indicated that fiscal 2024 (ending March) revenue is expected to decline 5% year on year. Comparatively, this is worse than peer JD Health’s full-year 2023 revenue performance, which declined 0.3% year on year. In addition, Alibaba Health provided revenue guidance for fiscal 2025 and expects it to only increase 15% year on year. While headwinds were expected in the second half of 2023, given comments made by JD Health due to the reduced consumption of pandemic-related items, the decline was worse than we had anticipated. We also have new concerns over the long-term growth recovery, given that Alibaba Health's revenue guidance in 2025 is below our previous forecast of the mid-20s. The company provided other minor details, including that demand for medical devices and healthcare products remains strong. Alibaba Health also expects an incremental revenue stream coming in from its advertising business in the future.

Price vs Fair Value

00241 is trading at a 34% discount.
Price
HKD 2.66
Fair Value
HKD 4.00
Uncertainty
Very High
1-Star Price
HKD 5.00
5-Star Price
HKD 1.00
Economic Moat
Gdqzys
Capital Allocation
Sslxyrtdh

Bulls Say, Bears Say

Bulls

Healthcare spending looks set to increase to 10% of total expenditure in by 2025, which could lead to increased purchases.

Bears

There are still concerns from consumers over safety, and using products from healthcare e-commerce platforms is still viewed as a risk.

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News

Trading Information

Previous Close Price
HKD 2.75
Day Range
HKD 2.682.82
52-Week Range
HKD 2.595.82
Bid/Ask
HKD 2.74 / HKD 2.75
Market Cap
HKD 44.09 Bil
Volume/Avg
29.5 Mil / 38.9 Mil

Key Statistics

Price/Earnings (Normalized)
31.64
Price/Sales
1.16
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield

Company Profile

Alibaba Health is of one of China's leading e-commerce platform specializing in healthcare-related products, including prescription drugs, OTC drugs, traditional Chinese medicine, health foods, and so on. The company operates both a third-party B2C service, or 3P, and its own direct-to-consumer business, or 1P, with its own inventory, which can both be accessed by Alibaba’s Tmall app and Alipay. The company also provides online consultation services in a separate app called Yilu or “Dr. Deer”, although its e-commerce businesses remain its core competency in the long-term. E-commerce accounted for 97% of revenue in fiscal year 2022. We estimate that AliHealth holds about 45% of market share in the industry in terms of GMV. AliHealth is 63.74% owned by its parent company, Alibaba Group.
Sector
Healthcare
Industry
Pharmaceutical Retailers
Stock Style Box
Large Growth
Total Number of Employees
1,547

Competitors

Valuation

Metric
00241
03690
06618
Price/Earnings (Normalized)
31.6463.8918.57
Price/Book Value
2.174.231.46
Price/Sales
1.162.341.33
Price/Cash Flow
32.0515.9615.49
Price/Earnings
00241
03690
06618

Financial Strength

Metric
00241
03690
06618
Quick Ratio
2.641.403.93
Current Ratio
3.011.754.51
Interest Coverage
96.237.8167.13
Quick Ratio
00241
03690
06618

Profitability

Metric
00241
03690
06618
Return on Assets (Normalized)
5.00%3.06%6.57%
Return on Equity (Normalized)
6.89%5.79%8.49%
Return on Invested Capital (Normalized)
4.38%4.40%5.68%
Return on Assets
00241
03690
06618
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Economic Moat
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