Investment Rating - The report maintains a BUY rating for Joinn Laboratories with a target price revised to HK$14.41 from HK$21.18, reflecting a potential upside of 57.1% from the current price of HK$9.17 [2][4]. Core Insights - Joinn Laboratories reported a revenue of RMB2,376 million for 2023, representing a 4.8% year-over-year increase, while attributable net income fell by 66.9% to RMB338 million due to fair value losses from biological assets [2]. - The company anticipates that revenue for 2024 will remain on par with 2023, facing continued pressure on profitability due to uncertainties in the R&D recovery of the domestic pharmaceutical market [2]. - Early signs of stabilizing client demand were noted, with a 20% year-over-year growth in contract booking volume in January-February 2024 [2]. - Joinn's overseas business saw a significant revenue increase of 51% year-over-year in 2023, driven by the performance of Biomere [2]. Financial Summary - For FY23, Joinn's revenue was RMB2,376 million, with a projected revenue of RMB2,425 million for FY24, indicating a modest growth of 2.0% [3][9]. - Adjusted net profit for FY23 was RMB481.6 million, with expectations of RMB436 million for FY24, reflecting a decline of 9.5% [3][9]. - The company’s gross profit margin is expected to decrease to 38.08% in FY24, with operating and net margins also projected to decline [5][12]. Operational Developments - Joinn has completed the construction of its Phase II facilities in Suzhou and is strategically planning the operational launch of these sites in line with market conditions [2]. - The company plans to hire an additional 100-200 staff in 2024 to support growth in emerging service areas, particularly clinical services [2]. Valuation Metrics - The report provides a DCF valuation with a WACC of 12.2% and a terminal growth rate of 2.0%, leading to a target price of HK$14.41 per share [7][4]. - The adjusted EPS for FY24 is projected at RMB0.58, with a P/E ratio of 15.5x for FY24 [3][12].
Recovery could be not earlier than 1H24