Citi released a research report assigning a target price of HK$9 and a 'Buy/High Risk' rating to ALI HEALTH (00241).

ALI HEALTH announced its full-year results for the period ending March 31. Revenue increased by 12% year-on-year to RMB 34.255 billion, while net profit grew by 35% to RMB 1.936 billion. Adjusted net profit rose by 19% to RMB 2.326 billion, and the adjusted net profit margin improved by 40 basis points year-on-year to 6.8%. The overall performance was largely in line with Citi's expectations and fell within the range of the latest guidance provided by management during a preview conference call in April, which projected revenue growth of 10% to 15% and adjusted net profit growth of 10% to 20%. The group's gross profit margin slightly decreased from 24.3% in the previous fiscal year to 24%. However, benefiting from a reduction in the ratios of fulfillment and sales and administrative expenses, the operating profit margin recovered from 4.8% to 5.4%. The net profit margin also improved from 4.7% to 5.7%.

The report noted that ALI HEALTH's direct sales business outperformed expectations, with full-year revenue increasing by 14% year-on-year to RMB 29.7 billion, showing an acceleration in growth. The average revenue per user (ARPU) for paid members in the direct sales business grew by over 14% year-on-year. The cumulative number of paying users for chronic disease management expanded by 23% year-on-year, and the average duration of therapy (DOT) per user continued to extend. The number of stock-keeping units (SKUs) under the direct sales business surged by 79% year-on-year to 2.2 million. Additionally, revenue from the e-commerce platform business slightly increased by 1% year-on-year to RMB 3.6 billion. The number of merchants on the Tmall Health platform grew by 26% year-on-year to 47,500, and the number of online SKUs increased by 25.8% to 27.53 million. Revenue from the medical health and digital services business rose by 7.5% year-on-year to RMB 952 million.

The board of directors proposed a final dividend of 5.95 cents per share and a special dividend of 13.52 cents per share. This marks the company's first-ever dividend distribution, demonstrating its strong confidence in cash generation capabilities and capital returns. As of the end of March, the company's cash and bank deposits amounted to RMB 5.434 billion.