20221031-招银国际-昭衍新药-06127.HK-Accelerating_growth_momentum_driven_by_sustainable_research_model_supply_5页_1mb

Joinn Laboratories (6127 HK) Summary

Core Content and Key Highlights

Joinn Laboratories, listed on the Hong Kong Stock Exchange with ticker 6127 HK, has demonstrated strong financial performance and strategic growth in the third quarter of 2022 (3Q22), driven by its sustainable research model and expansion in the drug safety assessment (DSA) services market. The company's performance is underpinned by its position in the Chinese pharmaceutical R&D sector, where the demand for high-quality research animal models has been increasing.

Financial Performance (3Q22)

• Revenue: RMB500 million, up 55% YoY (35% for 1Q22, 52% for 2Q22).
• Attributable Net Income: RMB261 million, up 177% YoY (34% for 1Q22, 307% for 2Q22).
• Gross Profit Margin: 50.9%, up 2.9ppts YoY and 3.3ppts QoQ, indicating efficient cost management.
• New Orders: Increased by ~40% YoY in 3Q22, with a target of 40% YoY growth for full-year 2022.

Strategic Expansion

• Acquisition: In 1H22, Joinn acquired two leading suppliers of high-quality research models for RMB1.8 billion, adding over 20,000 non-human primates to its livestock.
• Facility Expansion:
  • Suzhou facilities: 8,000sq.m operational in Jan 2022, with another 20,000sq.m expected to be operational in 2H22.
  • Guangzhou facilities (Phase 1): 18,000sq.m, possibly completed by end-2022.
• Subsidiary Development: Joinn Yichuang, a subsidiary focused on drug screening, is constructing laboratories that may enhance DSA service synergies.

Earnings and Profitability

• Revenue Growth (FY20A to FY24E):

  • FY20A: RMB1,076 million
  • FY21A: RMB1,517 million
  • FY22E: RMB2,279 million (up 50.3% YoY)
  • FY23E: RMB3,099 million (up 35.9% YoY)
  • FY24E: RMB4,182 million (up 35.0% YoY)

• Attributable Net Profit (FY20A to FY24E):

  • FY20A: RMB313 million
  • FY21A: RMB558 million
  • FY22E: RMB902 million (up 61.7% YoY)
  • FY23E: RMB1,067 million (up 18.2% YoY)
  • FY24E: RMB1,360 million (up 27.5% YoY)

• EPS (Reported):

  • FY20A: RMB1.69
  • FY21A: RMB1.99
  • FY22E: RMB2.54

• P/E Ratio (FY20A to FY24E):

  • FY20A: 40.0
  • FY21A: 15.2
  • FY22E: 12.9
  • FY23E: 10.1

• ROE:

  • FY20A: 30.1%
  • FY21A: 13.3%
  • FY22E: 12.0%
  • FY23E: 13.0%
  • FY24E: 14.9%

• Net Gearing:

  • FY20A: -57.2%
  • FY22E: -26.3%
  • FY24E: -27.2%

Valuation and Investment Outlook

• Target Price (TP): Revised from HK$78.98 to HK$53.61, based on a 10-year DCF valuation (WACC: 10.9%, terminal growth rate: 3.0%).
• DCF Valuation (2022E to 2031E):
  • Equity value: RMB25,245 million
  • Price per share (HK$): HK$53.61
• Market Position: CMBIGM maintains a BUY rating, indicating potential return of over 15% over the next 12 months.
• Shareholding Structure:
  • Yuxia Feng & Zhiwen Zhou: 34.3%
  • HK investors: 18.5%

Stock Data

• Market Cap: HK$14,876.4 million
• Average 3-month Turnover (HK$ million): 37.8
• 52-week High/Low (HK$): 71.93 / 24.80
• Total Issued Shares (million): 535.1

Share Performance

• 1-month: -9.2%
• 3-month: -47.5%
• 6-month: -29.4%

Analyst Rating

• BUY (Maintained)
• Target Price: HK$53.61
• Current Price: HK$27.80
• Up/Downside: 92.8%

Key Information

• Joinn's growth is supported by its sustainable research model and efficient cost management.
• The company has enhanced its order fulfillment capabilities through strategic acquisitions.
• Facility expansions are expected to further support its growth in the DSA services market.
• Despite rising costs of experimental animal models, Joinn has maintained strong pricing power.
• Adjusted attributable net income growth (71% YoY in 9M22) outpaces revenue growth (49% YoY), highlighting improved margins.
• The company's share price has seen a decline in the short term, but the analyst remains optimistic about its long-term potential.

Conclusion

Joinn Laboratories is positioned to benefit from the growing demand for DSA services in China, supported by its strategic acquisitions and facility expansions. The company's financial performance has shown consistent growth, and its improved margins suggest effective cost control. While the stock has experienced short-term volatility, the analyst's BUY rating reflects confidence in its long-term growth prospects.