20220901-招银国际-昭衍新药-06127.HK-Accelerating_growth_momentum_5页_1mb

Joinn Laboratories (6127 HK) Summary

Core Content and Key Highlights

Joinn Laboratories (6127 HK) reported strong financial performance in 1H22, with revenue and attributable net income of RMB777mn and RMB371mn, respectively, representing a 45% and 141% YoY increase. These figures accounted for 35% and 50% of full-year estimates. Revenue growth accelerated to 52% YoY in 2Q22, up from 35% in 1Q22, indicating improved performance. The company also signed over RMB2bn in new contracts, leading to RMB4.1bn in total orders, and aims for a 40% YoY growth in new orders for 2022.

Main Points

Financial Performance

• Revenue Growth:
  • 1H22: 45% YoY, 35% of full-year estimate
  • 2Q22: 52% YoY, up from 35% in 1Q22
• Net Income Growth:
  • 1H22: 141% YoY, 50% of full-year estimate
• Gross Margin:
  • 1H22: 1.6ppts lower than 1H21 but 1.1ppts higher than 2H21, reflecting efficient cost management
• Fair Gains from Biological Assets:
  • RMB131mn in 1H22, accounting for 30% of pre-tax profit (vs. 22% in 1H21)

Strategic Developments

• Acquisitions:
  • Acquired two leading suppliers of high-quality experiment models in 1H22, increasing the non-human primate livestock to over 20,000
• Market Position:
  • Established as a domestic leader in new modalities such as ADC and CGT
  • Participated in over 50% of CGT projects and 30% of ADC projects with IND applications to CDE in 1H22
  • CGT-related new orders doubled to ~RMB250mn in 1H22
• Workforce Expansion:
  • Increased total number of employees by 500 in 7M22, compared to a c.600 increase in full-year 2021

Facility Expansion

• Suzhou Facilities:
  • 8,000sq.m operational in Jan 2022, with 20,000sq.m animal rooms expected to be operational in 2H22
• Guangzhou Facilities:
  • Ph 1 (18,000sq.m) may be completed by end-2022
• Johnn Yichuang:
  • Construction of drug screening laboratories commenced, expected to provide synergies to DSA services

Investment and Valuation

• Target Price:
  • HK$78.98 (up from HK$76.70), based on a 10-year DCF valuation with a WACC of 10.9% and terminal growth rate of 3.0%
• Revenue and Net Profit Forecasts (FY22E–FY24E):
  • Revenue: RMB2,203mn / RMB3,080mn / RMB4,218mn
  • Net Profit: RMB815mn / RMB1,130mn / RMB1,520mn
• EPS Forecasts:
  • FY22E: RMB1.53 (vs. consensus RMB1.46)
  • FY23E: RMB2.12 (vs. consensus RMB1.87)
  • FY24E: RMB2.85 (vs. consensus RMB2.41)

Valuation Metrics

• P/E Ratio:
  • FY22E: 24.1 (vs. consensus 24.1)
  • FY23E: 17.4
  • FY24E: 13.0
• ROE:
  • FY22E: 11.0%
  • FY23E: 13.8%
  • FY24E: 16.6%
• Net Gearing:
  • FY22E: (26.3)%
  • FY23E: (24.4)%
  • FY24E: (25.9)%

Shareholding and Performance

• Shareholding Structure:
  • Yuxia Feng & Zhiwen Zhou: 34.4%
  • HK investors: 18.0%
• Share Performance:
  • 1-mth: -17.0%
  • 3-mth: -6.1%
  • 6-mth: -9.7%
• Market Cap: HK$22,436mn
• Average 3M T/O: HK$49.5mn

Key Information

• The company is maintaining a BUY rating with a target price of HK$78.98.
• Johnn's overseas subsidiary, Biomere, achieved a 30% YoY increase in new contracts, totaling ~RMB200mn in 1H22.
• Johnn's domestic BD team secured ~RMB150mn in new contracts from foreign clients, a 100% YoY increase.
• The company plans to roll out a new share-based compensation scheme and aims for a revenue CAGR of at least 35% from 2021 to 2024.
• The DCF valuation estimates show a projected equity value of RMB35,860mn, with a total PV of RMB32,447mn.

Analyst Certification and Ratings

• Analyst certification ensures that the views expressed reflect personal opinions and are not influenced by compensation.
• CMBIGM ratings:
  • BUY: Potential return of over 15% over next 12 months
  • HOLD: Potential return of +15% to -10%
  • SELL: Potential loss of over 10%
  • OUTPERFORM: Industry expected to outperform the market
  • MARKET-PERFORM: Industry expected to perform in-line with the market
  • UNDERPERFORM: Industry expected to underperform the market

Disclaimer

• This report is not tailored to individual investors and should not be relied upon for investment decisions without independent evaluation.
• CMBIGM is not a registered broker-dealer in the U.S. or Singapore, and the report is subject to legal and regulatory restrictions in these jurisdictions.
• The information is based on publicly available data and is not guaranteed for accuracy or completeness. Investors are advised to consult with a financial advisor before making any investment decisions.