Haitong International: JD Health (06618)'s 24-year revenue and profit exceeded expectations, optimistic about AI healthcare and O2O scenario construction

The Zhitong Finance App learned that Haitong International released a research report saying that JD Health (06618)'s revenue in 2024 slightly exceeded market expectations, and the profit side significantly exceeded market expectations. In 2024, the company achieved revenue of 58.2 billion yuan (+8.6%). With the exception of 1Q24, which had a high material base due to the pandemic, revenue for the last three quarters all achieved double-digit year-on-year growth (14.6% in 2Q, 14.8% in 3Q, 11.3% in 4Q). In the same period, the company achieved adjusted net profit of 4.8 billion yuan (+15.9%), which significantly exceeded market expectations. The net profit margin reached 8.2% (+0.5pp), mainly due to the release of scale effects. Relying on the company's strong supply chain, product selection and operation capabilities, JD Health is expected to become the first company in the industry to verify the commercial value of self-operated O2O.

According to Haitong International, the Internet medical industry will benefit from the promotion of online personal account health insurance policies, and its prosperity will continue to rise. By the end of 2024, JD Health has successively launched medical insurance payment services in 18 cities including Shanghai, Beijing, Guangzhou, Shenzhen, Foshan, Chengdu, Zhengzhou, Panyang, and Tianjin, connecting more than 3,000 designated medical insurance pharmacies across the country.

The bank believes that in the fourth quarter of the company, the three major categories of pharmaceuticals, devices, and health products all grew strongly, and 24Q4 achieved revenue of 16.5 billion yuan (+11.3%). Although 23Q4 has a certain influenza base, the company promoted the launch of new drugs and platform mentality, and achieved positive results of drug-led growth and steady growth of health products and devices. Reviewing the results of the past 12 quarters, the 24Q4 revenue scale has already surpassed the highest point of the 22Q4 epidemic (16 billion yuan). The bank expects the company's revenue side to be more certain in 2025, and the category market share is expected to continue to increase.

The bank also indicated that the current increase in the number of merchants has initially achieved results, and the “complete product”, “low price”, and “excellent quality” platform ecosystem has been further strengthened. In the company's revenue structure in 2024, ① product revenue was 48.8 billion yuan (+6.9%); ② platforms, advertising and other services were 9.4 billion yuan (+18.9%). Product revenue and service revenue accounted for 83.9% and 16.1% of total revenue, respectively. The rapid growth in service revenue is due to the growth in the number of digital marketing services and platform merchants. From 2022 to 2023, the number of company businesses exploded from more than 20,000 to more than 50,000, and further reached more than 100,000 in 2024. After 1-2 years of cultivation, the increase in the number of the company's merchants was initially realized on the service revenue side. Based on the trend of increasing number of platform merchants in 2024, the bank expects the scale of the platform to expand rapidly in the next 1-2 years, leading to the growth of high-margin businesses such as digital marketing.

The bank continues to be optimistic about platforms with a large number of sticky users and the construction of new AI scenarios in the medical field. By the end of 2024, the number of annual active users of the company had grown to 180 million (+6.6%), with an average annual daily online consultation volume of over 490,000 (+8.9%). The company has opened up its medical model “Beijing Medicine Thousand Investigations” to promote the deployment of AI technology in the industry with an open and transparent attitude, which is expected to accelerate the application of natural language models and intelligent devices in the medical field. Furthermore, the bank expects offline pharmacies to become one of the company's important grippers for expanding traffic and extending platform value in the future. In terms of self-operated offline pharmacies, by the end of 2024, the company had opened nearly 60 self-operated O2O stores in Beijing, which basically covered users in Beijing.