Bank of America Securities: Expects Ali Health (00241) to exceed market expectations in this financial year, raising the target price to HK$6.56.

Bank of America Securities released a research report stating that it is expected that ALI HEALTH (00241) will exceed the market consensus for its financial performance by the end of next March. The bank raised the company's current fiscal year revenue growth forecast by 4 percentage points to 14%, and adjusted net profit growth forecast by 10 percentage points to 30%. The bank also raised ALI HEALTH's current fiscal year and next fiscal year adjusted net profit forecast by 8%, and increased the expected compound annual growth rate of free cash flow from 42% to 45% from fiscal year 2024 to fiscal year 2031. The target price for ALI HEALTH was raised from HK$5.5 to HK$6.56, with a reiterated "buy" rating. The bank pointed out that key drivers for ALI HEALTH's better-than-expected performance growth include good sales performance during the 618 shopping festival, the accelerated investment in fast e-commerce from its parent company Alibaba Group (09988), benefiting ALI HEALTH through increased traffic from Taobao and Tmall, increased traffic from younger user groups, cross-selling in B2C e-commerce, and increased advertising spending from more merchants. The bank also noted that the increasing online penetration rate of drug sales, rising advertising spending from merchants and drug brands, and higher profit margins for ALI HEALTH are also driving factors for performance growth.