CICC: Cuts ALI HEALTH (00241) target price by 30.8% to HK$4.5, maintains "Outperform" rating.

CICC released a research report stating that, taking into account the volatile performance of the health supplement category and the pace of the company's medical AI investment, it lowered its non-GAAP net profit forecasts for ALI HEALTH (00241) for FY2027 and FY2028 by 6.6%/5.8% to RMB2.178 billion and RMB2.421 billion. Considering recent valuation fluctuations in the Hong Kong internet healthcare sector and the certain sentiment pressure on the health supplement industry from regulatory policies during 2Q27FY, the firm lowered its target price for the company by 30.8% to HK$4.5 based on SOTP, implying 54% upside from the current share price, and maintained its "Outperform" rating. The firm expects the company's 1H27FY revenue to achieve high single-digit year-on-year growth, with non-GAAP net profit roughly flat. CICC's main views are as follows: It expects revenue growth across categories in 1H27FY may show divergence. During 1H27FY, the firm observed tightening regulation of overseas health supplements, with industry product sales generally under pressure, and it judges that the company's health supplement category was also negatively affected. On the other hand, considering the continued increase in the online penetration of original research drugs and innovative drugs, and the company's continuous expansion of cooperation in the innovative drug field, the firm expects the company's pharmaceutical category to continue strong growth in the first half of the fiscal year. According to company disclosures, in the single month of July 2026, the company launched first-time cooperation on 9 new drugs, continuously strengthening the platform's data capabilities and service capabilities to achieve patient connection and drug sales. Overall, the firm expects the company's revenue in the first half of the fiscal year to achieve high single-digit year-on-year growth, and suggests paying attention to the recovery progress of the health supplement category during 2H27FY. Continuous layout in the medical AI field lays the foundation for long-term development competitiveness. According to previous annual report announcements, the company launched the medical vertical large model product Hydrogen Ion in May 2026 of the calendar year, positioned as a medical AI assistant tool, and emphasized unique advantages such as low hallucination, low-latency response, and full-process evidence-based traceability across multiple scenarios. The company further announced in July that it reached an exclusive content cooperation with the Journal of the American Medical Association (JAMA), becoming JAMA's only medical AI partner in China. Considering the aforementioned exclusive content cooperation project, the firm suggests paying attention to the company's subsequent investment pace and profit-side output. The firm expects that through continuous layout in medical AI and the professional doctor community, the company may be able to strengthen its brand image in professional segments such as drugs and diagnosis and treatment, laying the foundation for pharmaceutical company cooperation and long-term development competitiveness. Risk warning: health supplement recovery falling short of expectations, intensifying industry competition, and new business investment exceeding expectations.