Credit Suisse: Raises JD HEALTH (06618) target price to HK$74.57, maintains "Outperform" rating.

Macquarie released a research report stating that it has raised the target price for JD Health (06618) by 20%, from HK$62.14 to HK$74.57, while maintaining an "outperform" investment rating. Macquarie's profit forecasts for the company remain unchanged. Macquarie expects JD Health to have a good performance in the third quarter of 2025, with a projected 22% year-on-year revenue growth in the second half of the year. They anticipate that under the weakness of offline pharmacies, the company will continue to consolidate its position in the distribution channels of major healthcare products, further increase market share, and integrate the market. Macquarie expects the strong growth momentum of the company to continue in the second half of the year, benefiting from the direct launch of more new drugs and stronger advertising spending from merchants. They anticipate that the enhanced contribution from drug sales will impact the overall gross margin, and believe that the growth rates of related categories (drugs > supplements > devices) will not undergo significant changes. They believe that the company's supply chain capabilities and faster growing market revenue can offset this drag, and drive the group's gross margin expansion by 1.5 percentage points year-on-year to 23.7% in the second half of the year. Taking into account the company's cautious approach to expanding offline stores and the increase in expenses during the fourth quarter promotional period, Macquarie expects the adjusted net profit margin in the second half of the year to reach 8.1%, a year-on-year increase of 90 basis points.