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Alibaba Health Information Technology Ltd 00241

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Alibaba Health’s Narrow Moat Is Intact Despite Increasing Concerns About Softer Long-Term Demand

Kai Wang

We expect narrow-moat Alibaba Health, or AliHealth, to benefit from low saturation in healthcare e-commerce. The business is still in the early phase where it is focused on mass user adoption and should see robust growth in the near term, and now is set to integrate advertising business into its platform to another incremental revenue stream. It also plans to add cloud-based AI to develop the platform into a one-stop shop for healthcare products, services, and digital hospital for its users.

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Price vs Fair Value

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00241 is trading at a 550% premium.
Price
HK$5.60
Fair Value
HK$8.00
Uncertainty
Very High
1-Star Price
HK$8.00
5-Star Price
HK$5.00
Economic Moat
Bsbnjcv
Capital Allocation
Khxzpzltn

Bulls Say, Bears Say

Bulls

Healthcare spending looks set to increase to 10% of total expenditure in by 2025, which could lead to increased purchases.

Bears

There are still concerns from consumers over safety, and using products from healthcare e-commerce platforms is still viewed as a risk.

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Trading Information

Previous Close Price
—
Day Range
—–—
52-Week Range
—–—
Bid/Ask
— / —
Market Cap
—
Volume/Avg
— / —

Key Statistics

Price/Earnings (Normalized)
50.10
Price/Sales
2.67
Dividend Yield (Trailing)
0.00%
Dividend Yield (Forward)
0.00%
Total Yield
0.13%

Company Profile

Alibaba Health is of one of China's leading e-commerce platform specializing in healthcare-related products, including prescription drugs, OTC drugs, traditional Chinese medicine, health foods, and so on. The company operates both a third-party B2C service, or 3P, and its own direct-to-consumer business, or 1P, with its own inventory, which can both be accessed by Alibaba’s Tmall app and Alipay. The company also provides online consultation services in a separate app called Yilu or “Dr. Deer”, although its e-commerce businesses remain its core competency in the long-term. E-commerce accounted for 97% of revenue in fiscal year 2022. We estimate that AliHealth holds about 45% of market share in the industry in terms of GMV. AliHealth is 63.74% owned by its parent company, Alibaba Group.
Sector
Healthcare
Industry
Pharmaceutical Retailers
Stock Style Box
Large Growth
Total Number of Employees
1,435
Website
https://www.alihealth.cn

Competitors

Valuation

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Metric
00241
03690
06618
Price/Earnings (Normalized)
 50.1063.2222.88
Price/Book Value
 5.847.621.97
Price/Sales
 2.674.041.84
Price/Cash Flow
 50.8826.4815.58
Price/Earnings
00241
03690
06618

Financial Strength

Metric
00241
03690
06618
Quick Ratio
 2.281.543.32
Current Ratio
 2.691.813.74
Interest Coverage
 78.2917.66143.49
Quick Ratio
00241
03690
06618

Profitability

Metric
00241
03690
06618
Return on Assets (Normalized)
 6.97%7.14%6.76%
Return on Equity (Normalized)
 9.72%13.40%8.68%
Return on Invested Capital (Normalized)
 6.34%9.89%5.50%
Return on Assets
00241
03690
06618

Pharmaceutical Retailers Industry Comparables

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1-Day Chart
Name
Price
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
Alibaba Health Information Technology Ltd ADR
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—Qzwysm$11.6 Bil
 Alibaba Health Information Technology Ltd
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 COSMOS Pharmaceutical Corp
CSMYF
—Fdpzyhb$4.0 Bil
 Tsuruha Holdings Inc
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—Zpzyhgy$3.1 Bil
 Redcare Pharmacy NV ADR
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—Drhqfmq$3.0 Bil
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