JOINN LABORATORIES(6127.HK):PERFORMANCE UNDER PRESSURE DUE TO SHRINKING DOMESTIC DEMAND;DOWNGRADE TO HOLD
JOINN LABORATORIES(6127.HK):PERFORMANCE UNDER PRESSURE DUE TO SHRINKING DOMESTIC DEMAND;DOWNGRADE TO HOLD
Decline in backlogs despite stable new orders. In 1H24, Joinn secured new orders totaling RMB900m. However, as of 30 June 2024, its backlog decreased to RMB2.9bn, down from RMB3.38bn as of 31 March 2024, primarily due to some customers halting the execution of backlog orders. The company's overseas subsidiaries secured orders totaling RMB140m in 1H24. However, order intake at BIOMERE, its US subsidiary, also slowed due to capacity constraints.Joinn reported a 16% YoY decline in 1H24 revenue, with GPM dropping by 19ppts YoY. Additionally, a net loss in fair value of biological assets resulted in an attri.net loss of RMB170m in 1H24, compared to a net profit in 1H23. As of 30 June 2024, its backlogs stood at RMB2.9bn, down from RMB3.38bn as of 31 March 2024 due to the cessation of some orders. We believe Joinn's performance will remain under pressure due to shrinking domestic demand, leading to intensified competition and declining order prices. As a result, we cut TP to HK$7 from HK$23, based on a 10-y DCF model, with WACC increased to 13.3% and terminal growth reduced to 2.5%, reflecting the lower earnings projection and heightened competition. Downgrade to HOLD.
Joinn報告了1H24營業收入同比下降16%，GPm同比下降19個百分點。此外，生物資產公允價值淨虧損導致1H24淨利潤爲人民幣1.7億，相比1H23的淨利潤。截至2024年6月30日，其積壓訂單金額爲29億元，較2024年3月31日的33.8億元減少，原因是部分訂單停止。我們認爲，由於國內需求萎縮，導致競爭加劇和訂單價格下降，Joinn的業績將繼續面臨壓力。因此，我們將目標價從23港元降低至7港元，基於10年DCF模型，WACC上調至13.3%，終端增長率下調至2.5%，反映出較低的盈利預測和加劇的競爭。下調至持有。
Key Factors for Rating
評級的關鍵因素
Revenue decline and net loss in 1H24 due to intensified competition. Joinn reported 1H24 revenue of RMB849m, down 16% YoY, with GPM at 25%, compared to 44% in 1H23, reflecting intensified competition. Despite significant declines in revenue and GP, the company's selling and admin expenses increased, leading to a sharp rise in expense ratios. Combined with the RMB254m net loss from the fair value adjustment of biological assets (research models), Joinn recorded an attributable net loss of RMB170m in 1H24, compared to a net profit of RMB91m in 1H23.
由於競爭加劇，營收下降和淨虧損。Joinn報告1H24營業收入爲849百萬元，同比下降16%，GPm爲25%，而1H23爲44%，反映出競爭加劇。儘管營收和GP大幅下降，公司的銷售和管理費用增加，導致費用比率大幅上升。加上來自生物資產（研究模型）公允價值調整的淨損失2.54億元，Joinn在1H24 recorded錄得1.7億元的歸屬淨虧損，相比1H23的9100萬元的淨利潤。
Decline in backlogs despite stable new orders. In 1H24, Joinn secured new orders totaling RMB900m. However, as of 30 June 2024, its backlog decreased to RMB2.9bn, down from RMB3.38bn as of 31 March 2024, primarily due to some customers halting the execution of backlog orders. The company's overseas subsidiaries secured orders totaling RMB140m in 1H24. However, order intake at BIOMERE, its US subsidiary, also slowed due to capacity constraints.
積壓訂單減少，儘管新訂單穩定。在1H24，Joinn獲得了總額爲9000萬元的新訂單。但是，截至2024年6月30日，其積壓訂單從2024年3月31日的33.8億元減少至29億元，主要是由於一些客戶停止了積壓訂單的執行。該公司的海外子公司在1H24 secured獲得了總額爲1.4億元的訂單。然而，其美國子公司BIOMERE的訂單接收也因產能限制而放緩。
Weak industry demand persists. Although Joinn posted a NP of RMB102m in 2Q24, reversing the net loss in 1Q24, we believe the company's performance will remain to be under pressure due to shrinking demand, intensified competition, and declining order prices which may persist given the current financing situation in domestic market. Additionally, as a key indicator of industry demand trends, market prices for research models are unlikely to rebound and contribute significantly to Joinn's NP in the near term.
行業需求疲軟。雖然Joinn在2Q24錄得了1.02億元的NP，扭轉了1Q24的淨虧損，但我們認爲，由於需求萎縮、競爭加劇和訂單價格下降，公司的業績仍將面臨壓力，鑑於目前國內市場的融資形勢，這種情況可能持續存在。此外，作爲行業需求趨勢的重要指標，研究模型的市場價格不太可能反彈，並在短期內對Joinn的NP做出重大貢獻。
Key Risks for Rating
評級的主要風險
1) Intensified competition; 2) financing pressure within biotech industry; 3) price reductions of research models.
1）競爭加劇；2）生物技術行業內部融資壓力；3）研究模型價格下降。
Valuation
估值
We revised our TP to HK$7 from HK$23, based on a 10-year DCF valuation with WACC increased from 12.4% to 13.3% and terminal growth reduced from 3.5% to 2.5%, factoring in the lower earnings projection and intensified competition. Downgrade to HOLD.
我們將目標價從23港元調整爲7港元，基於10年DCF估值，WACC從12.4%調高至13.3%，終端增長率從3.5%降低至2.5%，考慮到較低的盈利預期和競爭加劇。下調至持有。
譯文內容由第三人軟體翻譯。
