FAST NEWS: Joinn Lab swings to the red on falling revenue

The Latest:

Joinn Laboratories (China) Co. Ltd. (6127.HK; 603127.SH), China’s leading non-clinical contract research organization (CRO), it expects to report a net loss of 136 million yuan ($18.7 million) to 184 million yuan in the first half of the year, reversing a net profit of 90.63 million yuan in the year-ago period.

Looking Up:

The company’s top-performing fund management business contributed a net profit of 49.6 million yuan to 54.82 million yuan, helping to offset losses from its core CRO business.

Take Note:

The company expects its revenue for the first half of the year to range from 719 million yuan to 973 million yuan, down 3.8% to 28.9% year-on-year, mainly due to declining demand from the pharmaceutical industry.

Digging Deeper:

During the Covid pandemic, lab monkeys that are one of Joinn’s main businesses were in short supply as companies rushed to develop Covid vaccines and drugs. The average price per monkey spiked from 15,000 yuan in the latter half of 2019 to nearly 200,000 yuan at the end of 2022, helping to pump up the value of Joinn’s biological assets. However, falling margins in tandem with falling lab monkey prices as the pandemic waned, coupled with growing competition that led to a major decline in profits from its laboratory services business, have undermined the company’s financial performance since last year.

Market Reaction:

Joinn’s Hong Kong-listed shares jumped on Thursday, closing up 11.3% at HK$7.37 by the midday break. The stock now trades near the lower end of its 52-week range.