Medlive Earnings: Strong Finish to 2023 as Client Base Grows 40% Year on Year

We maintain our fair value estimate for Medlive at HKD 10 per share after it reported second-half 2023 revenue of CNY 238 million, representing 31% year-on-year growth. More importantly, we are encouraged that its client base returned to growth and increased by 52 clients—a 40% year-on-year increase—which was a turnaround from the first half of 2023, where Medlive's client base declined from the end of 2022. The number of physicians on the platform also increased to 4.0 million from 3.7 million a year ago, and paid clicks increased to 9.7 million from 7.2 million. The number of healthcare products advertised on the platform also increased by 35% year on year to 386 from 284. We are positive about the increase in activity on the platform and believe it represents mitigation of policy headwinds, as antigraft measures in the healthcare sector earlier this year disincentivized many physicians from prescribing and purchasing new drugs on concerns of being questioned by the government. The number of new clients should reflect a renewed interest in drug development in the pharmaceutical sector. Given that Medlive receives 91% of its revenue from the business that facilitates targeted drug advertising, we think this should provide near-term tailwinds to the firm.