Joinn Lab (Joinn) reported substantially accelerated 3Q26 earnings, with revenue up 53.0% YoY (vs 1H26: 5.3% YoY) and net profit of lab and others business turning positive to RMB22mn, the first time since 4Q24. Joinn recorded RMB866mn fair-value gains of biological assets, indicating positive market pricing trend of non-human primates (NHPs). Importantly, new orders reached RMB1.4bn in 3Q26, up 126% YoY, suggesting rapid demand recovery in China. Mgmt. anticipated continued revenue growth through 2026 based on positive expectations for new bookings, and guided lab services to full-year profitability.
Continued demand rebound in China market. The non-clinical safety assessment services business of Joinn has been benefiting from recovering innovative-drug R&D demand in China in 9M26, which is expected to remain robust in 4Q26, per mgmt.. New orders reached RMB3.4bn in 9M26, up 109% YoY, including RMB1.4bn in 3Q26 (the highest quarterly bookings in company history), up 126% YoY. Generally, 50–60% of the prior year’s orders can be converted into revenue in the following year. Per mgmt., pricing contributed ~70% of 3Q26 order value growth, underscoring the growing customer pricing acceptance. Joinn is actively expanding capacities to better fulfill the rising demand. Suzhou site added 20k square meters lab last year, while Beijing site commissioned another 5k square meters in 2Q26. Utilization remains high but still below full capacity, well positioned to capture more opportunities.
An ample colony of NHPs to secure timely project delivery. Under the context of rapidly-recovering demand, NHP pricing in China has returned to historical highs amid NHP scarcity. Joinn strategically acquired two China-based leading suppliers of high-quality NHPs in 2022, making Joinn one of Chinese CROs with the richest NHP resources. Owned farms create a buffer against NHP shortages and support better availability for customer projects. This resource base also helps Joinn convert more of the demand upcycle into bookings and revenue on a timely manner. Joinn will consistently benefit from its rich and stable NHP supplies in the long run, in our view.
Significant margin improvement around the corner. We expect margins of Joinn to trend higher as strong bookings convert into revenue and better-priced orders replace legacy low-priced projects. As such, gross profit margin (GPM) began improving in 3Q26 by 16.5ppt YoY and 6.4ppt QoQ. Mgmt. expects a larger mix of such orders in 4Q26 and a more pronounced GPM recovery in 2027. NHP pricing recovery provides additional margin support, although discounted small-animal pricing limits upside. At current pricing, mgmt. indicated a GPM of around 35% and a 10–15% lab services net margin in the following years, both significantly higher than 2025 and 9M26.
Maintain BUY. We raise our TP from HK$8.57 to HK$30.00 based on a 10-year DCF valuation (WACC: 11.5%; terminal growth: 2.0%), reflecting the strong demand recovery. We now forecast Joinn’s revenue to grow 21.5%/ 29.3%/ 24.7% YoY and adj. net income to turn positive to RMB45mn in 2026E and grow 635.1%/ 58.5% YoY in 2027E/ 28E, respectively.