CICC has released a research report indicating that, considering the volatile performance of the health supplements category and the company's investment pace in medical AI, it has cut its non-GAAP net profit forecasts for ALI HEALTH (00241) for FY2027 and FY2028 by 6.6% and 5.8%, to RMB 2.178 billion and RMB 2.421 billion, respectively.
Given the recent valuation fluctuations in the Hong Kong-listed internet healthcare sector, as well as the sentiment pressure from policy regulations on the health supplements industry during 2QFY27, the firm has lowered its target price by 30.8% to HK$4.5 based on a Sum-of-the-Parts (SOTP) valuation. This implies a 54% upside from the current share price, with the "Outperform" rating maintained. CICC projects that the company's 1HFY27 revenue could achieve a high single-digit year-on-year growth, with non-GAAP net profit expected to remain broadly flat.
Revenue growth across categories likely to diverge in 1HFY27
During 1HFY27, CICC observed tightened regulations on overseas health supplements, putting pressure on product sales across the industry, and it believes the health supplements category for the company has also been negatively impacted. On the other hand, given the continuously rising online penetration of patented drugs and innovative medicines, and the company's increasing collaborations in the innovative drug sector, CICC anticipates that the pharmaceutical category will sustain robust growth in the first half of the fiscal year. According to company disclosures, in July 2026 alone, it launched first-time collaborations for nine new drugs, continuously strengthening its platform data and service capabilities to facilitate patient connections and drug sales.
In summary, the firm expects the company's revenue for the first half of the fiscal year to achieve a high single-digit year-on-year growth rate and suggests monitoring the recovery progress of the health supplements category during 2HFY27.
Continued investment in medical AI lays groundwork for long-term competitiveness
Based on the previous annual report announcement, the company launched its medical vertical large model product, Hydrogen Ion, in May 2026 (calendar year), positioned as a medical AI assistant tool. It emphasizes unique advantages including low hallucination rates, low-latency responses, and full evidence-based traceability for multi-scenario services. In July, the company further announced an exclusive content partnership with the Journal of the American Medical Association (JAMA), becoming JAMA's sole medical AI partner in China. Considering this exclusive content partnership, the firm suggests monitoring the company's subsequent investment pace and profit output.
CICC believes that through sustained efforts in medical AI and engagement with professional physician communities, the company is likely to strengthen its brand image in professional areas such as pharmaceuticals and diagnostics, thereby solidifying its competitiveness for pharmaceutical partnerships and long-term development.
Risks: Slower-than-expected recovery in health supplements, intensifying industry competition, and higher-than-expected investment in new businesses.