等待更长的时间来实现恢复

Waiting longer for recovery to materialize Target PriceHK$10.36(Previous TPHK$14.41)Up/Downside24.6%Current PriceHK$8.31 Joinn reported 1Q24revenueof RMB325mn, down 12.1% YoY,andbookedattributable net loss of RMB272mn,asignificant downturn from anattributablenet profit of RMB188mn in 1Q23.The 1Q24 revenue accounted for 13.4% ofour full-year estimate, in line withits historical average. First quarter istypicallyalow season for Joinn.Therevenuedeclinewas due to persistently soft R&Dactivities inChina’s pharmaceutical industry,which has led to increasedcompetition andprice erosion. Thebottom linewasfurther impacted bytheRMB284mnfair value losses from biological assets, a non-operational,non-cash charge. Thelaboratory services,which representthe core business ofJoinn,incurred a net loss of RMB210mn. Jill WU, CFA(852) 3900 0842jillwu@cmbi.com.hk Benchen HUANG, CFAhuangbenchen@cmbi.com.hk Marginunder pressure,while demand showed early signs ofstabilization.Gross profit marginin 1Q24 shrank by 18.9ppt YoY and7.5pptQoQ to 32.8%,mainly due to price erosion.Considering theuncertainties of the recovery of R&D in the domestic pharmaceutical marketand the price erosion of newly signed orders, themgt. forecasts the 2024Erevenue to remain largely flattish, with continued pressure on profitability.Joinn’s new orders signed in 1Q24totaled~RMB400mn, representing adecline of ~30%YoY.However,mgt. indicateda notable increase in RFPs(request-for-proposals) in the quarter while the number of new projectsigned grew by ~ 20% YoY. As of 1Q24, the Company's backlog stood atRMB3.38bn, up2.4%compared with end-2023.Given Joinn hasremovedprojects with low execution certaintyfrom its backlog, the current backlogprovidesbetterpredictability of future performance, in our view.Notably,theoverseas markethasexhibited a stronger recovery momentumthanthedomestic market, with the number of new projects singedin 1Q24 increasingby 30%bothYoY and QoQ. Joinnplans to expand its laboratory capacity intheUS.Themgt.plans to double the capacity of Biomere, significantlyenhancing its service capabilities in USlocal market. Invest inanindustrial fund to consolidate resources.In Feb2024, Joinnannounced itsplan to investRMB300mnin an industrial investment fundwith specialized investment institutes,marking Joinn’sfirstattempt ofthiskind. Joinn aimstoleverage the investment fund toengage with early-stagehealthcarestartups,which may bring potential orders in the future.Meanwhile,mgt.indicated thatsuchinvestment will allowJoinntobuildabroadnetwork with early-stage companies withkeepingrisksreasonablycontrolled. Source: FactSet Maintain BUY.We revisedour TP to HK$10.36 from HK$14.41, based ona 10-yearDCF valuation with WACC of 12.9% and terminal growth of 2.0%,reflecting the lower earnings projection. We forecast Joinn’s revenue togrow-2.0%/ +13.2%/ +18.2% YoY and adjusted net income to grow-28.4%/+24.3%/ +47.4% YoY in 2024E/ 25E/ 26E, respectively. Disclosures& Disclaimers Analyst CertificationThe researchanalyst who is primary responsible for the content of this research report, in whole or in part, certifies that with respectto the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neitherthe analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to thedate of issueof this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3)serve as an officer of any of the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies covered in this report. CMBIGM RatingsBUY : Stock with potential return of over 15% over next 12 months: Stock with potential return of +15% to-10% over next 12 months: Stock withpotential loss of over 10% over next 12 months: Stock is not rated byCMBIGM HOLDSELLNOT RATED :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expectedto perform in-line with the relevant broad market benchmark over next 12 months:Industry expected to underperform the relevant broad market benchmark over next 12 months CMB InternationalGlobal MarketsLimited Address:45/F, Champion Tower, 3 Garden Road, Hong Kong, Tel: (852) 3900 0888 Fax: (852) 3900 0800CMB InternationalGlobal MarketsLimited (“CMBIGM”) is a wholly owned subsidiary of CMB International Capital Corporation Limited (a wholly ownedsubsidiary ofChina Merchants Bank) Important DisclosuresThere are risks involved