\u3000\u3000 Joinn Laboratories (China) Co.Ltd(603127) (603127)
Key investment points
Performance overview: in line with expectations, high growth continued
The performance express shows that the income in 2021 is 1.517 billion yuan (yoy40.99%), and the deduction of non net profit (including changes in fair value and financial management income, excluding Baike investment income, exchange gain and loss and interest) is 530 million yuan (yoy81.51%), which is in line with the median value of the forecast. Looking at the 2021q4 revenue of 661 million (yoy48.87%), deducting the net profit not attributable to the parent company of 313 million (yoy62.18%), we expect it to include higher changes in the fair value of biological assets.
The growth rate of local income may be higher, and the profit focuses on the price fluctuation of experimental animals and capital expenditure
The overall revenue of the company increased by 40.99%. Considering China’s higher prosperity and better market foundation, we expect China’s growth to be significantly higher than the average. From the profit side, the fluctuation of fair value in 2021q4 and the contribution of investment and financial management income account for a large proportion. Referring to the current price trend of laboratory animals and the company’s cash on hand (202109.30 cash 4.116 billion), we expect that these two items may still have a great impact on the company’s net profit after deduction from non parent company in 2022. We believe that it is difficult to ease the price trend of laboratory animals in the short term. It is conservatively expected that the fluctuation of the fair value of biological assets in 2022 may contribute more than 6000W of profits and about 100 million of financial income.
Orders continued to grow at a high rate, and the clinical outlook exceeded expectations
In 2021, the number of new orders signed by the company exceeded 2.8 billion yuan, and the number of orders on hand at the end of the year exceeded 2.9 billion yuan (yoy63%), accelerating the growth, with book-to-bill 1.5% 91, higher than that in 2020. Considering the company’s high order base and current production capacity delivery rhythm, we expect that the order growth may slow down in 2022. At the same time, considering the order execution cycle, China’s preclinical and clinical sectors are still in a very high boom stage, and the company continues to layout in terms of macromolecular new technologies and new platforms, which is expected to continue in 2022.
2022 capacity release, overseas is the focus
The company’s new 7500 square meters animal house in Suzhou in 2021 will ease the pressure on the company’s production capacity from 2022 to 2023, and the overseas 6000 square meters California production capacity will further boost the company’s overseas capacity-building. We believe that with the stabilization of the epidemic and the listing of the company’s H shares, 2022-2023 will be an important gateway for the company to open the overseas market.
Profit forecast and valuation
Considering the rhythm of the company’s production capacity, the execution cycle of orders in hand, the price trend of experimental animals and short-term capital expenditure, we predict that the company will maintain a high growth of 40% revenue and 30% profit CAGR + from 2021 to 2023, and continue to be optimistic about the high prosperity of local clinical and preclinical sectors. Based on the higher than expected performance of the price trend of biological assets, we raised the profit forecast for 2022 and 2023. It is estimated that the company’s EPS from 2021 to 2023 will be 1.46, 1.94 and 2.50 yuan respectively, corresponding to 50 times of PE in 2022 according to the closing price on February 24, 2022. Maintain the “buy” rating with reference to the valuation of comparable companies and industry status.
Risk tips
The volatility risk of short-term order execution and the risk of improper control of accounts receivable caused by the increase of large contracts.
