20230403-招银国际-昭衍新药-06127.HK-Taping_global_markets_for_sustainable_longterm_growth_5页

Joinn Laboratories (6127 HK) Summary

Core Content

Joinn Laboratories, listed on the Hong Kong Stock Exchange with ticker 6127 HK, reported strong financial results for 2022, exceeding expectations in several key metrics. The company demonstrated resilience in the face of challenges such as the ongoing price hikes in research models and the impact of the COVID-19 outbreaks in China.

Main Points

2022 Financial Highlights

• Revenue: RMB2,268 million, up 50% YoY.
• Attributable Net Income: RMB1,074 million, up 93% YoY, beating forecasts by 19%.
• Adjusted Attributable Net Income: RMB577 million, up 64% YoY, reflecting a net margin of 25.4% (up from 23.2% in 2021).
• Gross Profit Margin: Slightly decreased by 0.8ppt YoY to 46.7%, but the company managed to maintain efficient cost control.
• New Orders: Increased by 35% YoY to RMB3.8 billion, indicating healthy demand in the DSA services market in China.

Growth Prospects

• The company is expanding its order fulfillment capability by acquiring two leading suppliers of high-quality research models, adding over 20,000 models.
• It is positioned as a leader in the China DSA market and is focusing on new modalities such as CGT, ADC, bispecific antibodies, and PROTAC.
• CGT-related orders rose over 50% in 2022, showing strong interest in these areas.
• The company plans to expand its facilities in Suzhou and Guangzhou, with new animal rooms expected to be operational in 2023 and the Guangzhou facility in 2H23.

Global Opportunities

• Overseas orders increased by 60% YoY in 2022, showing potential for international expansion.
• The company aims to optimize Biomere's management structure to leverage its US network for attracting offshore DSA orders.
• Large foreign DSA service providers have faced supply constraints, which may benefit Joinn as a leading player in China.

Valuation and Recommendations

• Maintain BUY: The target price was reduced from HK$53.61 to HK$50.42 based on a 10-year DCF valuation.
• DCF Valuation: Total PV of equity is estimated at HK$50.42 per share, with a 65% upside from the current price of HK$30.55.
• Forecasted Growth:
  • Revenue: 32.9% / 35.0% / 33.0% YoY growth in FY23E, FY24E, and FY25E respectively.
  • Net Profit: 26.1% / 28.3% YoY growth in FY24E and FY25E.
• Earnings Per Share (EPS): Expected to grow to HK$2.52 and HK$3.23 in FY24E and FY25E, respectively.

Key Financial Metrics

Shareholding and Market Data

• Market Cap: HK$16,365 million.
• Average 3-Month Turnover (HK$ million): HK$37.9.
• 52-Week High/Low (HK$): 57.89 / 24.80.
• Total Issued Shares (mn): 535.7.
• Shareholding Structure:
  • Yuxia Feng & Zhiwen Zhou: 34.3%
  • HK Investors: 19.0%

Share Performance

Analyst Ratings

• CMBIGM Rating: BUY, indicating a potential return of over 15% over the next 12 months.
• Analyst Certification: The analyst certifies that the views expressed are their personal views and not influenced by compensation.
• Disclosure: The report contains important disclaimers and is not tailored for individual investors.

Financial Summary

Income Statement (RMB mn)

Balance Sheet (RMB mn)

Cash Flow (RMB mn)

Profitability

Conclusion

Joinn Laboratories is showing strong growth and a solid position in the China DSA market, with a focus on expanding its order fulfillment and exploring global opportunities. The company's financial performance in 2022 was robust, and its future growth forecasts are optimistic. The analyst recommends maintaining a BUY rating with a revised target price of HK$50.42.