Alibaba Health Information Technology (0241.HK): H1FY27 preview: slower topline growth amid sector challenges

This is a UBS first-read note previewing Alibaba Health Information Technology's (0241.HK) H1FY27 results. We now forecast FY27 revenue growth of 7-10%, down from 10-15% previously, mainly reflecting slower growth in supplements and devices from sector challenges and a cutback in Ali Health's price discounts. We continue to model an adjusted net profit of Rmb1.9bn-2.3bn, as we expect the company to reinvest potential savings from smaller discounts into O2O fulfilment infrastructure. By product, we expect drugs to deliver high-teens percentage growth in FY27 driven by rising online penetration and blockbuster drugs such as GLP-1, while supplements and medical device growth should be muted, dragged by heightened regulatory scrutiny and the phase-out of consumer subsidies. On advertising, Ali Health is negotiating the renewal of its advertising contract with the Group (which expires end-Nov 2026), and management expects major terms to remain broadly unchanged. Management indicated no near