PA GOODDOCTOR (01833) released a key signal in its 2025 annual report.

PA GOODDOCTOR's annual financial report in 2025 contains many interesting contents. The leading internet healthcare company listed on the Hong Kong Stock Exchange mentioned the following points in its financial report: total revenue for the year reached 5.468 billion yuan, a year-on-year increase of 13.7%; gross profit was 1.772 billion yuan, a year-on-year increase of 16.3%; gross profit margin reached 32.4%, a year-on-year increase of 0.7 percentage points; and net profit attributable to shareholders increased significantly by 366.1% year-on-year, with operating profit turning positive for the first time. Based on statistics, the gross profit margin of 32.41% in 2025 is a new high for PA GOODDOCTOR since 2018, when the data was 27.32%. Furthermore, since 2023, PA GOODDOCTOR has maintained a gross profit margin of over 30%. Gross profit margin is not the only criteria for investment decisions, nor is it a universal key, but it is the key to unlocking analysis. Comparative analysis of gross profit margin is often the first step in analyzing income statements, followed by analysis of operating expenses, asset impairments, and other factors. Gross profit margin is a key for analysis For the internet healthcare industry, the level of gross profit margin not only reflects a company's cost control ability but also its business model's sustainability and core competitiveness. A high gross profit margin means that a company has moved away from the "burning money for scale" model of growth and has the ability to achieve a profitable cycle through its own business activities. This is a core indicator for transitioning from a growth stock to a value stock. PA GOODDOCTOR's gross profit margin of 32.4% in 2025 is not only significantly better than most of its peers in the internet healthcare industry, but also maintains a positive trend of gross profit growth (16.3%) outperforming revenue growth (13.7%), showing a development pattern of both quantity and quality growth. From a financial perspective, for every 1 percentage point increase in gross profit margin, there is a gross profit increase of over 540 million yuan, directly translating into substantial growth in net profit. By 2025, the company's net profit margin rose from 1.7% to 6.9%, with an adjusted net profit margin of 7.6%. The steady increase in gross profit margin is the core support for this leap in profitability, demonstrating continuous improvement in the company's earnings quality and operational efficiency. Of particular note, the increase in gross profit margin is not the result of short-term cost compression, but is based on a triple force of business structure upgrade, technology cost reduction and efficiency improvement, and scale effect release, demonstrating strong sustainability. In the context of increased differentiation and profitability becoming a key competitive point in the internet healthcare industry, PA GOODDOCTOR's gross profit margin advantage is becoming a core barrier to its ability to navigate industry fluctuations and consolidate its leading position. As an example, in 2025, PA GOODDOCTOR's corporate health management business performance was outstanding and became the core engine driving the increase in gross profit margin. The business generated revenue of 1.306 billion yuan for the year, a year-on-year increase of 40.6%, far exceeding overall revenue growth, and accounting for 23.9% of total revenue, making it the top growth curve for the company. This business focuses on managing the health of corporate employees, providing integrated services such as health examinations, chronic disease management, and workplace medical services, with high average revenue per user, stable renewal rates, and significantly higher gross profit margins than traditional consumer-end businesses. Its rapid growth continues to elevate the overall profitability of the company and serves as the core driver for the increase in gross profit margin. As of the end of 2025, the company served over 6,700 paying corporate clients, an 83.1% increase from 2024, with a GMV of approximately 3.63 billion yuan in the corporate health management business, steadily increasing market penetration and customer stickiness. At the same time, the core synergy of the commercial insurance business has shown steady growth, serving as a solid foundation for stable gross profit. In 2025, the revenue of the commercial insurance synergistic business was 3.296 billion yuan, a year-on-year increase of 11.0%, leveraging the resources of Ping An Group to achieve deep coordination between insurance and medical services. This not only has the advantage of high stickiness and low customer acquisition costs but also builds a differentiated profit model through a product system of "commercial insurance + health protection delegation + medical and health services". With these two core businesses, one growing rapidly and the other providing stability, the company's revenue structure continues to optimize, breaking free from reliance on a single business and transitioning from a passive cost control strategy to an active upgrade approach, achieving a qualitative leap in growth quality. Compared to many companies in the industry that still rely on low-margin businesses such as pharmaceutical e-commerce, PA GOODDOCTOR's business structure has a competitive advantage - the rapid expansion of high-margin businesses not only opens up room for gross margin improvement but also enhances the stability and sustainability of the company's profitability, laying a solid foundation for long-term value growth. AI in all In the internet healthcare industry, technological innovation is the core driver of cost reduction and efficiency improvement, as well as the key to building a moat for gross profit. PA GOODDOCTOR fully applies artificial intelligence technology throughout its business processes, using technology to reduce costs and increase efficiency, laying a solid foundation for the continuous improvement of gross profit margin and creating a differentiating competitive advantage that is difficult to replicate. By 2025, the "Ping An Doctor AI" model has been deeply integrated into core processes such as consultation, follow-up, triage, and health record management. The results are immediate: AI doctors accurately diagnose over 11,300 diseases, with an accuracy rate of 95.1% in assisting with diagnosis and treatment; AI contributes to gross profit by about 4.5%, and AI helped reduce the cost per consultation by approximately 45% year-on-year in the fourth quarter of 2025. What does this mean? It means that what was previously a healthcare service heavily reliant on manpower and difficult to scale now has the possibility of industrialized replication. An AI family doctor can simultaneously serve thousands of users for daily health monitoring and refer to human doctors for intervention at high-risk points. This division of labor, with AI handling breadth and humans handling depth, not only significantly reduces marginal costs but also improves the continuity and accessibility of services. This technology-centric cost reduction and efficiency improvement model, distinct from traditional cost-cutting measures, is sustainable and replicable, solidifying the company's gross profit margin advantage, building a deep industry moat, and allowing the company to take a proactive position in industry competition. How should PA GOODDOCTOR be valued From the perspective of value investment, the continuous improvement of gross profit margin is often a leading indicator for stock price movement, and PA GOODDOCTOR is currently in a golden investment period with a steady increase in gross profit margin, accelerating profit release, and low valuation recovery. Its investment value combines certainty and growth potential. First, the certainty of earnings continues to strengthen. With operating profit turning positive in 2025, PA GOODDOCTOR has completely overcome the dilemma of "burning money for scale" and entered a phase of sustained profitability - this long-term trend based on business structure optimization and technological cost reduction has strong certainty, providing a solid guarantee for investment returns. Second, deep competitive barriers and significant competitive advantages. As the flagship of the Ping An Group's medical and elderly care ecosystem, the company leverages the resources of Ping An Group's 250 million personal finance clients to build a closed-loop ecosystem of "insurance + medical/health/elderly care", achieving medical-insurance data interoperability and service synergy. This ecological advantage is difficult for competitors to replicate. At the same time, the company has iteratively upgraded its "to online, to hospital, to home, to enterprise" comprehensive service network, cooperating with over 5,100 hospitals, over 240,000 pharmacies, and over 4,400 medical examination suppliers, continuously expanding the breadth and depth of services, further consolidating its leading position and providing support for the sustainability of high gross profit margins. Third, there is ample room for valuation. As of March 25, 2026, PA GOODDOCTOR's market capitalization is approximately 27.558 billion Hong Kong dollars, with a price-to-earnings ratio of 64.07 and a price-to-book ratio of 2.51. With the ongoing increase in gross profit margin and rapid profit growth, the company's valuation level will gradually approach that of industry leaders, creating a potential double play between valuation and profit growth with ample room for stock price appreciation. Fourth, the long-term growth logic is clear. Currently, the accelerating aging population, the explosion of demand for corporate health management, and the expansion of the commercial insurance market are unleashing three major dividends, providing broad growth opportunities for the internet healthcare industry. PA GOODDOCTOR, with high growth in its B2B business, increased user stickiness in its B2C segment, and continued emphasis on technological empowerment, is expected to maintain double-digit growth in revenue, gross profit, and net profit over the next 3-5 years, with tremendous potential for long-term growth. Following the release of PA GOODDOCTOR's performance, several brokerage firms including Citigroup and Bank of America Merrill Lynch have issued research reports predicting strong performance for the company in 2026. Citigroup, in particular, has set a target price of 18 Hong Kong dollars and recommended a "buy" rating. In assessing the current situation of PA GOODDOCTOR, the core investment logic is clear: The market should no longer view it as a "concept stock" that needs constant validation of its profit potential, but rather as a "growth value stock" entering a period of profit release. The leap in net profit margin resulting from the innovation of gross profit margin is the most solid financial foundation for this judgment. The strong profit generation capability will provide the company with ample "ammunition" to support its passage through the cycle and continued growth through AI healthcare research and development, expansion into the elderly care industry, and integration with Wuxi Online Offline Communication Information Technology Co., Ltd., among other new battlegrounds. Overall, PA GOODDOCTOR is well-positioned for sustained growth and profitability, with a clear path forward supported by strong financial performance, technological innovation, and strategic positioning within the industry.