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The spin-off and listing of JD Health, the world’s “youngest” unicorn overtaking on curves, was approved
Reporter | Li Weiming
Edit | Deng Lingyao
On the evening of November 15, JD Group (09618.HK) announced on the Hong Kong Stock Exchange that JD Health had submitted a post-hearing data set to the Hong Kong Stock Exchange for the proposed spin-off, which means that it has successfully passed the hearing and is expected to become Hong Kong’s largest new stock after Ant Group suspended its listing.
With the approval of JD Health to go public, the Hong Kong Stock Market will usher in the first internet health care company with revenue in excess of RMB 10 billion. JD Health will also cooperate withAli health24 00241.HK） 、Ping a good doctor(01833.HK) Fight for the leadership position in the industry.
Affected by the approval of JD Health to go public, today (November 16) Hong Kong JD Group shares rose 5.63% to HK $ 368.0, a record high, with the latest total market value of HK $ 1.14 trillion.
After today’s market, Jingdong Group released its 2020 third quarter financial report, with revenue of 174.2 billion yuan, a year-on-year increase of 29.2%; net profit attributable to ordinary shareholders was 7.6 billion yuan. The number of active shoppers on JD.com reached 441.6 million, an increase of 32.1% year-on-year, and the growth rate reached a new record in the past three years.
JD Health’s revenue of 13.2 billion yuan in the first three quarters
JD Health is another great unicorn of JD Group, and it is also the third largest strategic independent company created by JD.com after JD Digital and JD Logistics. On the “Hurun 2020 World Unicorn List”, JD Health was awarded the “World’s Youngest Unicorn”.
According to the prospectus, JD Health’s total revenue from 2017 to 2019 was 5.553 billion yuan (RMB, same below), 8.169 billion yuan, and 10.842 billion yuan. In the first half of 2020, JD Health’s total revenue was approximately 8.77 billion yuan; From 2017 to 2020 In the first half of the year, the adjusted period earnings were 209 million yuan, 248 million yuan, 344 million yuan and 371 million yuan, respectively.
The main financial data of JD Health
Consulting firm Frost & Sullivan reported that, in terms of revenue in 2019, JD Health is the largest online healthcare platform in China and the largest online retail pharmacy in the country. In the first three quarters of 2020, JD Health’s total revenue was 13.2 billion yuan, an increase of 77.1% year-on-year; gross profit was 3.4 billion yuan, an increase of 66.3% year-on-year.
JD Health will be listed on the Hong Kong Stock Exchange soon, and many people will naturally compare Ali Health. Red Star Capital Bureau statistics for the fiscal year 2018 to 2020 found that Ali Health’s operating income was 2.443 million yuan, 5.096 million yuan and 9.597 million yuan; Adjusted period earnings were 8 million yuan, 122 million yuan, and 261 million yuan, respectively. . The business models of the two Internet giants are similar, but JD Health has higher revenues, while Ali Health’s earnings growth rate is faster.
JD Health’s core business is retail pharmacy and online health and medical services. The former provides high-quality traffic to the latter and the latter generates demand for the former. The strong synergy of the two major companies eventually formed a closed-loop “medicine and drug link” system by JD Health. The prospectus shows that the retail pharmacy business continues to be JD Health’s main source of revenue. From 2017 to 2019 and the first half of 2020, pharmaceutical and healthcare product sales accounted for 88.4%, 88.8%, 87.0% and 87.6% of JD Health’s total revenue, respectively.
Today, JD Health’s JD Pharmacy has more than 9,000 third-party merchants and 72.5 million active users on the platform, who can provide services to users in 200 cities across the country. JD Health’s online health and medical services primarily include online consultation, prescription refills, chronic disease management, family physicians, and consumer health and medical services. JD Health has also established its own doctors and teams of outside doctors. As of September 20, 2020, the platform has more than 65,000 doctors.
In the first half of 2020, JD Health had an average daily volume of online inquiries of approximately 90,000 times, almost 6 times that of the same period in 2019. As of June 30, 2020, more than 150 million users have used the platform from JD Health to buy drugs and health products or medical and health services.
Overtaking “rising star”
The healthcare industry has always been a meeting place for Internet companies. Tencent, Ali, and Baidu entered the market in 2014, while JD.com’s entry time was relatively late. He only started getting involved in pharmaceutical e-commerce in January 2016. JD.com was launched in May 2016. The pharmacy is officially launched.
Xin Lijun, Vice President of JD Group and Chief Executive Officer of JD Health, once said in a speech: “Although JD Health started late, it does not mean that it is slow to do so. You can better see the pattern and weaknesses of the industry if it is late”.
As a rising star in the industry, the speed of development of JD.com Health is astonishing: JD.com entered the retail pharmaceutical industry in 2016; JD.com and Taizhou signed a strategic cooperation agreement on “Healthy Taizhou” in July 2017; JD.com Internet Hospital was launched in December 2017, marking In March 2018, Yinchuan Jingdong Internet Hospital obtained a practice license from a medical institution.
By May 2019, JD Group announced the divestiture of its Pharmaceutical Retail and Wholesale, Internet Medical Services and Healthy Cities business segments, and formally established “JD Health”; In December 2019, “JD Healthy Heart Center” was launched, also the first line in the country. A specialized national medical center that integrates online and offline; In August 2020, JD Health launched a strategic product, JD Home Doctor, to provide users with combined family health services.
From the stand-alone and spin-off operation in May last year to the listing of the listing in September this year, JD Health was considered a “dark horse” in the medical and healthcare field. Among them, the new corona epidemic that broke out earlier this year unexpectedly accelerated the healthy development of JD.com. The epidemic has increased public demand for online health and medical services, and has also allowed “Internet + medicine and health” to truly enter the fast track of development.
JD Health was approved for inclusion
Compared to other publicly traded Internet + medical companies, the Red Star Capital Bureau found that many companies ushered in a major outbreak this year. The current market value of Ali Health is approximately HK $ 270 billion, and the market value of Ping An Good Doctor is approximately HK $ 120 billion.
Although JD.com Health has yet to be listed, its assessment is already surprising: In November 2019, JD.com Health completed a $ 1 billion funding round. Investors include CICC Capital, Baring Asia, etc., with a post-investment valuation of approximately $ 7 billion. ; In August 2020, JD Health completed a Series B financing of US $ 830 million. The investor is Hillhouse Capital. The post-investment valuation is close to $ 20 billion. In less than a year, JD Health’s valuation has skyrocketed nearly three times.
After listing or challenging Ali’s health
Companies in the field of Internet medicine have been questioned for a long time, the main reasons are: unclear business models, difficulty in achieving profitability, insufficient hematopoietic capacity and unsustainability. In this way, Ping An Good Doctor, formerly known as the “first internet health care stock”, the financial report shows a cumulative loss of 3.744 billion yuan from 2015 to 2019. However, Ping An Good Doctor, which has been “burning money” for many years, it continued to lose 213 million yuan in the first half of the year, and the profit target seems a long way off.
In the first half of 2020, JD.com’s health actions were frequent, most of them related to the fight against the epidemic, which also provided an opportunity for the outside world to observe the “delicacy” of medical services in JD.com Internet.
During the epidemic, JD Health urgently launched a variety of products, which not only guaranteed users’ online purchases across the country, but also provided services such as free online consultations, psychological consultations, and chronic disease renewal. From its launch in late January to April 30, JD Health’s free online consultation service has served more than 11 million users.
According to public reports, during the JD Health epidemic, the average volume of daily visits was 120,000. After epidemic prevention and control entered the normalization stage, JD Health’s online consultation volume remained at 100,000 per day.
During the “Double 11” period, Nov. 1 to Nov. 11, JD Health Online Hospitals Online Consultation Requests Increased 6 Times Year Over Year, Health Services Requests Increased More Than 3 Times year-over-year and cross-border drug transactions Turnover increased 15 times year-on-year, mask product turnover increased 17 times, and imported healthcare product turnover increased 270%.
Yang Delong, chief economist at Qianhai Kaiyuan, believes that JD.com’s performance has grown rapidly during the epidemic, and the main sub-brand “Jingdong Pharmacy” has become China’s largest online retail pharmacy in terms of revenue. Driven by the policies and development of the Internet, JD Health has a wider space for future development, which will increase investor optimism about JD’s health. From an industry perspective, the Internet medical industry is developing rapidly. It is a popular track and has a lot of room for future development.
According to stockbroker estimates, from a revenue, earnings and valuation perspective of JD Health, coupled with Hong Kong’s stock tradition of “speculating new”, the market value of JD Health is expected to is between 200 billion and 270 billion yuan after listing, which not only far exceeds that of Ping An. The current market value of Good Doctors may even challenge Ali Health, which may have a major impact on the Internet medical market.
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