2 Best China Online Healthcare Stocks Right Now

China’s healthcare sector is huge, growing fast, and in desperate need of disruption. In terms of size, analysts expect healthcare spending in China to amount to around US$1 trillion by 2020 and US$2.3 trillion by 2030 – clearly a massive market.

What’s more, China’s healthcare sector is ripe for technological disruption as many doctor’s offices use outdated technology and practices. Although the average time spent on a doctor consultation is eight minutes, it takes around three hours for a doctor’s visit due to the waiting times and multiple inefficiencies.

There is also a doctor shortage in China. According to OECD Health Statistics 2017, China had around 1.8 practicing doctors per 1,000 people in 2015, versus around 2.7 for the US and around 3.4 for the OECD35 average. Due to the sector’s size, growth, and inefficiency, there is a big opportunity for healthcare technology.

With healthcare technology, companies use the internet to better share medical resources across different regions. Companies also use artificial intelligence (AI) to increase efficiency. According to a report by Frost & Sullivan, AI could cut costs by as much as 50% and improve healthcare outcomes by 30-40%.

I’ll take a look at two China healthcare tech stocks that I think will do big things in the sector: Ping An Healthcare and Technology (SEHK: 1833) and Alibaba Health Information Technology Ltd (SEHK: 241). These two are playing a leading role in revolutionising the sector and both will benefit from the growth in China’s healthcare technology.

Ping An Healthcare and Technology

Ping An Healthcare and Technology is the largest mobile medical app in terms of user scale in China. At the end of 2018, the company’s app and platform had 265 million registered users and 54.7 monthly active users.

Through its online services, Ping An Healthcare and Technology provides its users with access to thousands of doctors and medical personnel for online consultation services that the company supplements with AI technology. The company also serves as a platform that connects its users with thousands of hospitals to provide appointments, as well as inpatient and referral services.

Online consultation is a fast-growing industry. According to a Frost & Sullivan analysis, online consultation visits are expected to grow at a compound annual growth rate (CAGR) of 35% from 2016 to 2025. Meanwhile, the internet healthcare market is expected to rise by a CAGR of 27% over the same time period.

Due to the strong sector demand, Ping An Healthcare and Technology is growing fast. The company’s daily average consultations rose 58% year-on-year in the first half of 2018. Sales rose from RMB 448.6 million (US$63 million) in the first half of 2017 to RMB 1.12 billion in the first half of 2018.

Given its high growth rate, Ping An Healthcare and Technology isn’t profitable and its stock trades at a price-to-sales ratio of 10. Although its valuation is certainly high, it isn’t unreasonable if the company continues to grow and management captures the big opportunity ahead of it.

Alibaba Health Information Technology

As its name suggests, Alibaba Health Information Technology is partly owned by Alibaba Group (NYSE: BABA), and much of its assets were bought or spun off from Alibaba. Due to the M&A, Alibaba Health is one of China’s largest online pharmaceutical platforms with annual active consumers of over 130 million.

For the year ended March 2019, the platform had gross merchandise volume of RMB 59.5 billion and sales from the company’s pharmaceutical e-commerce platform business rose 296.8% year-on-year to RMB 690 million. Alibaba Health also owns a pharmaceutical self-operated business that comprises of B2C retail, and B2B centralised procurement distribution.

Alibaba Health has recently invested more in AI and hopes to launch internet-based, partly-AI powered medical services, intelligent medicine, and personal health management services in the future.

Foolish conclusion

Ping An Healthcare and Technology and Alibaba Health are two leaders in China’s fast-growing healthcare tech industry. Both use AI and the internet to offer a more competitive solution to connect patients with healthcare or pharmaceuticals.

If the market continues to judge the two stocks on growth only, the stocks have great upsides given how big China’s healthcare market is and how badly it needs to become more efficient.



想提早退休? 想提高每月的被動收入?


HK MoneyClub (www.hkmoneyclub.com)