DA Davidson: AI Innovation and National Policies Propel China's Internet Healthcare Sector; Bullish on Alibaba Health (0241.HK) and Ping An Good Doctor (1833.HK)
AliHealth
Medical and Health Services Network Service Provider
PINGAN GOOD DOCTOR
Internet Medical Health Platform
BeOne
Developer of Molecular Targeted and Immune Anti-Tumor Drugs
Innovent
High-end Biologics Developer
Hansoh Pharma
Pharmaceutical Research, Production, and Sales
Sino Biopharm
Pharmaceutical R&D Developer
HUTCHMED
Biopharmaceutical Manufacturer
WuXi Biologics
Contract Research, Development and Manufacturing Organization (CRDMO) Service Provider
WuXi AppTec
New Drug R&D and Production Service Provider
According to the Zhisheng Finance APP, UOB Kay Hian released a research report stating that China's internet healthcare sector is entering a new phase. The driving forces include tech giants accelerating AI innovation and national policy support, such as Beijing's pilot program for online initial diagnosis. Despite facing profitability challenges, leading companies are leveraging AI ecosystems and innovative strategies to deploy long-term sustainable growth.
In terms of stock selection, the bank is optimistic about AliHealth (00241), maintaining a "Buy" rating and a target price of HK$7.8. It is expected that driven by the continuous growth momentum of innovative drugs and healthcare products, the deepening synergy with Alibaba-W (09988), and the increasing popularity of AI applications, AliHealth's revenue and adjusted net profit will achieve a compound annual growth rate of 13% and 24%, respectively, from fiscal year 2026 to 2028.
In addition, the bank is also optimistic about Ping An Good Doctor (01833), maintaining a "Buy" rating with a target price of HK$20. It is expected that driven by the deepening synergy with Ping An Group (02318) and the continuous empowerment of AI, the company's revenue and adjusted net profit will achieve a compound annual growth rate of 16% and 56% from 2025 to 2027.
At the same time, the bank maintains an "overweight" rating for the medical sector in China, favoring leading innovative pharmaceutical companies and Contract Research, Development, and Manufacturing Organizations (CRDMO). It also has a positive outlook on internet healthcare companies that can effectively utilize real-world data to optimize AI algorithms to improve service quality. The preferred stocks include BeOne Medicines (06160), Innovent Bio (01801), Hansoh Pharma (03692), Sino Biopharm (01177), HUTCHMED (00013), WuXi Biologics (02269), WuXi AppTec (02359), and AliHealth.