"Large Banks" Huizheng: Online drug purchase market share continues to expand, JD HEALTH target price raised to 77.5 yuan

HSBC Research published a report indicating that JD Health (06618.HK) and ALI HEALTH (00241.HK) achieved strong revenue growth last year, particularly with a 20% to 30% increase in pharmaceutical sales, significantly outperforming the overall national market growth of only 2%, reflecting the continued market share capture by online platforms from hospital channels. The report believes that the rebound in growth of some offline channels at the end of last year was mainly due to the consolidation of underperforming pharmacies, and there is no need for excessive concern, as the number of physical pharmacies has decreased by 16,000 in the first three quarters of 2025.

HSBC expects that the growth of online pharmaceutical sales will gradually return to normalization, with projected growth for JD Health and ALI HEALTH slowing to 18% and 13% respectively in 2026, compared to the 25% and 16% forecasted for 2025. However, the bank believes that the ongoing structural trend of prescription outflow will support healthy growth for online channels.

The bank maintains a "Buy" rating for JD Health, raising the target price from HKD 75.5 to HKD 77.5; ALI HEALTH is maintained at a "Hold" rating, with the target price raised from HKD 6 to HKD 6.5, representing a potential increase of about 6.5%. HSBC pointed out that ALI HEALTH's current valuation has largely reflected recent AI developments, leaving limited room for growth