Goldman Sachs: JD Health (06618) first quarter performance exceeded expectations, raising target price to 42.5 Hong Kong dollars.

Goldman Sachs released a research report stating that it has raised its revenue forecast for JD HEALTH (06618) for the years 2025 to 2027 by an average of 2% to reflect stronger-than-expected sales of drugs and nutritional products. Taking into account that some of the gross margin growth will be offset by investments in self-distribution plans, the net profit forecast has been raised by 1 to 3%. The target price has been raised from HK$37.8 to HK$42.5, maintaining a "buy" rating. In the first quarter of this year, JD HEALTH's revenue and profits both exceeded expectations, mainly driven by strong momentum in drug and nutritional product sales, as well as gross margin expansion. The bank reiterated its confidence in JD HEALTH's leading position in the industry, as the company has a strong supply chain capability and brand awareness. Management currently expects revenue to grow by double digits for the full year, with operating profit roughly flat year-on-year. The bank believes the guidance is relatively conservative considering the investments planned for the second half of the year, and also believes the group will expand its market share, especially in the drug category, benefiting from the growth of self-distribution.