JD HEALTH INTERNATIONAL(06618.HK)：SERVICES UPGRADED;DIGITAL HEALTHCARE ECOLOGY IMPROVING-格隆汇

机构：中金公司
研究员：Xipeng FENG/Shiyu CHEN/Weiying TU/Peng ZOU

　　What's new
　　For the JD.com 618 shopping festival, JD Health International launched three online diagnosis services: Experts Online, Ask JD Doctors, and JD Emergency Nighttime Services.[1]
　　Comments
　　JD Health has made comprehensive upgrades its medical services to meet medical inquiry demand in various scenarios. The firm introduced three online diagnosis services, namely Experts Online, Ask JD Doctors, and JD Emergency Nighttime Services, to meet users’ specific healthcare needs and online inquiry habits. According to the firm, Experts Online’s diagnosis services are provided by experts from 10 departments in Grade-A tertiary hospitals working in shifts. The JD Emergency Nighttime Services include telephone inquiries and a follow-up prescription and drug delivery service between 10:00 pm and 7:00 am. The “Ask JD Doctors” service enables users to directly select a doctor for a quick inquiry via telephone or video consultation. We believe these three services will optimize the user experience and help patients save time and money.
　　Focus on refinement and standardization to expand health services. In May, the General Office of the State Council issued a plan to improve public healthcare during the 14th Five-Year Plan Period. It intends to build a medical service model that integrates online and offline services and covers the whole medical treatment process[2]. Currently, there are still problems in public medical treatment, including difficulties in registration as well as medical diagnosis and obtaining prescription medication at night. The company has been meeting customers' specific needs by providing services with the same high quality as JD's self-operated stores. JD Health also actively develops internet diagnosis and treatment standards for specialist outpatient clinics, broadening its coverage of online medical services while further improving its digital healthcare ecology.
　　Online medical treatment regulation rules settled; optimistic about the company's long-term development. A document titled, The Internet Diagnosis and Treatment Rules (for Trial Implementation) was recently released. To provide safe diagnosis and drug purchase to the patients, it specifies the regulations for different aspects of internet diagnosis and online and offline treatment. According to the 2021 annual report, JD Health led the establishment of the JD Health Internet Medical Expert Committee. It also established medical quality control standards by pushing forward the development of internet specialist diagnosis and treatment standards and developed medication safety standards that are stricter than the industry average. We believe that policy emphasis on standardized development will favor the industry's long-term healthy development, benefiting leading companies with a comprehensive compliance mechanism in the long run.
　　Financials and valuation
　　We keep our 2022 and 2023 revenue forecasts of Rmb42.4bn (+38.1% YoY) and Rmb55.8bn (+31.8% YoY). We maintain our 2022 and 2023 attributable net profit forecasts at Rmb289mn and Rmb928mn. We also maintain an OUTPERFORM rating and a SOTP-based TP at HK$80.1, offering 44.3% upside.
　　Risks
　　Stricter-than-expected regulations; lower-than-expected user conversion rate; intensifying competition.