CICC: Lowers Alibaba Health's (00241) target price by 30.8% to HK$4.5 to maintain “outperforming the industry” rating

The Zhitong Finance App learned that CICC released a research report stating that considering fluctuations in health care product performance and the company's medical AI investment pace, Alibaba Health's (00241) 2027FY and 2028FY non-GAAP net profit forecasts were lowered by 6.6%/5.8% to 2,178 billion yuan and 2,421 billion yuan. Considering recent valuation fluctuations in the Hong Kong stock Internet healthcare sector, and that the 2Q27FY period policy also brought some emotional suppression to the regulation of the health products industry, the bank lowered the company's target price by 30.8% to HK$4.5 based on SOTP, which has 54% room to rise compared to the current stock price, maintaining a “outperforming the industry” rating. The bank expects the company's 1H27FY revenue to achieve a high single-digit year-on-year growth rate, and non-GAAP net profit may remain basically flat.

CICC's main views are as follows:

1H27FY's revenue is expected to grow or diverge in various categories

During the 1H27FY period, the bank observed that overseas health products were becoming more strict, and sales of industry products were generally under pressure. The bank determined that the company's health products category was also negatively affected. On the other hand, considering that the overall level of online development of original research drugs and innovative drugs continues to increase, the company is also continuously increasing cooperation in the field of innovative drugs. The bank expects the company's drug category to continue to grow strongly in the first half of the fiscal year. According to the company's disclosure, in July 2026, the company launched and cooperated on 9 new drugs to continuously enhance the platform's data capabilities and service capabilities to achieve patient docking and drug sales. Taken together, the bank expects the company's revenue side to achieve a high single-digit year-on-year growth rate in the first half of the fiscal year, and suggests focusing on the progress of health product recovery during the 2H27FY period.

The layout of the AI field of continuous medicine establishes long-term development competitiveness

According to the previous annual report announcement, in May 2026, the company released hydrogen ions, a large-scale medical pendulum model product, to locate medical AI assistant tools, and emphasized that its unique advantages are multi-scenario services such as low illusion, low latency response, and full evidence-based traceability. The company further announced in July that it had reached an exclusive content cooperation with the Journal of the American Medical Association (JAMA), becoming JAMA's only medical AI partner in China. Considering the exclusive content cooperation project mentioned above, the bank suggests paying attention to the company's subsequent investment pace and profit-side output. The bank expects that through continued deployment in the field of medical AI and professional doctor groups, it may be expected to strengthen the company's brand image in medicine, diagnosis and treatment, etc., to establish cooperation and long-term development competitiveness with pharmaceutical companies.

Risk warning: The recovery of health products fell short of expectations, industry competition intensified, and investment in new businesses exceeded expectations.