Joinn Laboratories'9M26 revenue/attributable net profit(NP)were RMB1,188/930mn(+20.6/+1051.9%YoY).The 3Q26 figures were RMB484/182mn(+53.0/+821.3%YoY).Top-line growth improved significantly YoY in 3Q26,while the sharp increase in attributable NP was mainly driven by asubstantial contribution from fair value changes in biological assets(net gain of RMB866mn in 9M26),alongside amarginal recovery in core operations(laboratory services and other businesses contributed apositive net profit of RMB15mn in 9M26).In 9M26,total order backlog reached c.RMB4.5bn(+80.0%YoY),with new order intake reaching c.RMB3.42bn(+109%YoY).Specifically,the 3Q26 new order intake stood at c.RMB1.40bn(+125.8%YoY vs.+98.0%YoY in 1H26),continuing to expand QoQ(vs.RMB0.91/1.11bn in 1Q26/2Q26),further enhancing earnings visibility.Considering positive recovery in domestic demand and ongoing overseas expansion,we remain optimistic about medium-to-long-term growth potential.Maintain BUY on both A-and H-shares.
Gross margin improved notably;cash flow further enhanced
The 9M26/3Q26 gross margins were 27.4/32.8%(+5.9/+16.5pp YoY),showing marked improvement.We attribute this primarily to economies of scale combined with revenue recognition from earlier higher-priced orders.The 9M26 sales/administrative/R&D expense ratios were 2.0/17.1/5.6%(-0.2/-4.6/-0.9pp YoY),as the company actively enhanced expense efficiency,driving down all three ratios YoY.The 9M26 net operating cash flow reached RMB853mn(+220.3%YoY),reflecting sustained strength in cash generation.
Core operations improving;core competitiveness strengthened
1)Non-clinical drug research services:Given recovering innovative drug industry sentiment and rising market demand,we estimate the segment revenue grew rapidly YoY in 9M26.The company reinforced core capabilities;order intake for antibody,small nucleic acid,peptide,and nucleic acid drugs grew substantially YoY in 1H26,while complex long-cycle trials(such as non-human primate reproductive toxicity and carcinogenicity tests)maintained asteady upward trend.Meanwhile,the company proactively deployed industrial applications for cutting-edge technologies like organoids/organ-on-a-chip,achieving initial implementation of liver organoid and skin-chip models.2)Other businesses:In clinical trial services,the company focused on high-entry-barrier,high-value-added frontier domains,landing multiple benchmark projects in gene therapy,stem/somatic cell therapy,and radiopharmaceuticals.
Earnings forecasts and valuation
Considering sustained rapid growth in new orders,we raise our 2026-2028 revenue forecasts.Factoring in fair value changes in biological assets,we project 2026/2027/2028 attributable NP at RMB1,139/1,157/1,327mn(+23/+49/+38%vs.our previous estimates).As adomestic leader in non-clinical safety evaluation,the company boasts solid technical strength and active overseas expansion,with continuous market share gains and strong order momentum.We value its A-/H-shares at 43/21x 2027E PE,above their peers'averages of 40/19x on Wind consensus,for our target prices of RMB66.39/HKD38.16(RMB/HKD=1.18;previous:RMB66.84/HKD37.54,based on 54/26x 2026E PE vs.peers at 61/40x,with target price upgrades mainly driven by higher earnings forecasts).
Risks:weaker downstream demand than we expect;talent attrition in R&D and technical roles;uncertainty in new business development.