CICC has released a research report stating that, considering the company's continued improvement in overall profit output, it has raised its non-IFRS net profit forecasts for JD Health (06618) for 2026 and 2027 by 5% and 3%, to 67.3 billion yuan and 70.1 billion yuan, respectively.

The firm notes that the "siphoning effect" from the hard technology sector may have been marginally weakening since July. While the sector's valuation is expected to continue recovering over the medium term, short-term fluctuations remain. Based on a 2026 EV/non-IFRS EBIT multiple of 20x (the stock currently trades at 7x EV/non-IFRS EBIT), CICC maintains its target price of HK$66.2 (implying 67.5% upside) and an Outperform rating.

Key Viewpoints from CICC:

First-Half 2026 Performance Exceeds Expectations

The company's first-half 2026 revenue reached 40.89 billion yuan (+15.9% YoY), with non-IFRS net profit of 3.87 billion yuan (+8.5% YoY), corresponding to a margin of 9.5%. While revenue was broadly in line with forecasts, the profit side exceeded expectations, primarily driven by a favorable revenue mix that boosted gross margins.

Pharmaceuticals Segment Shines Amidst Divergent Revenue Growth

According to the announcement, first-half 2026 product revenue was 33.9 billion yuan (+15.6% YoY), while platform, advertising, and service revenue reached 6.98 billion yuan (+17.2% YoY). Based on the JD Health official WeChat account, user searches for "original research" drugs on the JD app increased by 200% year-on-year in the first half of 2026, driving related order volumes up by over 30%. CICC estimates that the company's pharmaceutical category performed well, while non-pharmaceutical segments (health supplements, medical devices) faced pressure. However, with regulatory actions for the health supplement category concluded, the firm suggests monitoring the recovery pace of non-pharmaceutical growth in the second half of the year.

Core Operating Profit Continues to Strengthen

The gross margin for the first half of 2026 improved to 26.1% (+0.9 ppts YoY), mainly due to better margins from product revenue. This overall steady progress contributed to a strong non-IFRS operating profit, which grew 40.3% year-on-year, with a corresponding margin of 8.5% (+1.5 ppts YoY). Core business profit output remains robust.

Strengthening Medical AI and Omnichannel Layout

According to the announcement, in the first half of 2026, the company further extended its AI capabilities to users, doctors, and hospitals. The AI doctor "Dawei" served nearly four times more users during the 618 shopping festival year-on-year, improving the "medical-examination-diagnosis-medication" service loop. Meanwhile, as of the end of the first half of 2026, the company's online drug purchase medical insurance coverage extended to 40 cities, and it has cumulatively established over 450 JD Health pharmacies across 10 cities in China, continuously strengthening its online and offline omnichannel layout.