Key takeaway

In 2025, JOINN Laboratories achieved revenue of 1.66 billion yuan, a decline attributed to the impact of previously low-priced orders, while net profit attributable to shareholders increased by 302.08% year-on-year, primarily due to a 476 million yuan increase in the fair value of biological assets. In 2025, the company's total value of newly signed orders reached 2.6 billion yuan, with a significant recovery in new signings in Q4. Order demand continues to be positive, with both volume and price showing recovery, a trend expected to continue into 2026. The company is steadily advancing new production capacity in Suzhou, Guangzhou, and other locations, and has adopted a diversified strategy to ensure stable supply of core experimental models. We believe that short-term gross margin is still affected by the recognition of previous low-priced orders, but ample orders in hand and core resource advantages are expected to drive a gradual marginal improvement in the company's fundamentals in 2026, further consolidating its leading position in non-clinical safety evaluation.

Event

JOINN Laboratories Releases 2025 Performance Report On March 30, the company released its 2025 performance report. For the full year 2025, the company achieved revenue of 1.658 billion yuan, a year-on-year decrease of 17.87%; gross profit was 343 million yuan, with a gross margin of 20.71%. Net profit attributable to shareholders was 298 million yuan, a year-on-year increase of 302.08%. As of December 31, 2025, orders in hand were approximately 2.6 billion yuan, a year-on-year increase of 18.18%. In Q4 alone, the company achieved revenue of 673 million yuan, a year-on-year decrease of 1.54%, and net profit attributable to shareholders of 217 million yuan, a year-on-year increase of 50.39%.

Revenue Performance Meets Expectations, Significant Recovery in Newly Signed Orders In 2025, the company achieved operating revenue of 1.658 billion yuan, a year-on-year decrease of 17.87%, mainly due to the lagged effect of the completion of previously low-priced orders; full-year gross profit was 343 million yuan, a year-on-year decrease of approximately 40.2%; gross margin was 20.71%, a year-on-year decrease of 7.72 percentage points. Net profit attributable to shareholders was 298 million yuan, a year-on-year increase of 302.08%. The significant growth in net profit attributable to shareholders was mainly due to a 476 million yuan gain from the change in fair value of biological assets resulting from the price recovery of non-human primate laboratory animals. Laboratory services and other businesses incurred a net loss of 164 million yuan. In Q4 alone, the company achieved revenue of 673 million yuan, a year-on-year decrease of 1.54%, and net profit attributable to shareholders of 217 million yuan, a year-on-year increase of 50.39%. As of the end of 2025, the company's orders in hand reached 2.6 billion yuan, a year-on-year increase of 18.18%. The total value of newly signed orders for the full year 2025 reached 2.6 billion yuan, a year-on-year increase of 41.3%. In the fourth quarter alone, newly signed orders amounted to 960 million yuan, representing significant year-on-year and quarter-on-quarter increases of 118.18% and 54.84% respectively, with both the price and quantity of newly signed orders showing recovery.

Core Capabilities Continue to Strengthen, Capacity Building Steadily Advances The company has continued to deepen its quality system development. In July 2025, the Suzhou facility obtained CMA certification from a medical device testing organization, marking the company's official qualification to conduct medical device biocompatibility and large animal experiments. This enables the company to solidify its technological moat and maintain a leading position in the rapidly growing markets of medical aesthetics, medical devices, and drug-device combination products. In terms of business capability building, the company continues to invest in areas such as drug evaluation technologies, organoid platforms, experimental model development, and intelligent applications. The number of non-clinical evaluation projects for new chemical entities and new biological entities undertaken by the company consistently ranks among the highest domestically. During 2025, the number of project signings in cutting-edge fields such as nucleic acids, antibodies, small nucleic acids, ADCs, and peptide drugs increased significantly year-on-year. Meanwhile, high-difficulty, long-cycle specialized evaluation projects, such as non-human primate reproductive toxicity and carcinogenicity studies, maintained a steady upward trend.

Regarding capacity support, the 20,000-square-meter Phase II facility in Suzhou has been gradually put into operation, adding capacity. The civil construction of the Guangzhou facility has been completed and accepted, with fit-out expected in 2026 and operation to commence in 2027. Additionally, the Beijing base is expected to add 5,000 square meters of capacity in 2026. The improvement of domestic and international qualifications and the orderly expansion of production capacity will further secure the company's long-term business delivery requirements.

2026 Outlook: New Order Signings Continue to Recover, Revenue and Profit Expected to Gradually Improve

As a leader in the preclinical CRO industry, the company's 2025 revenue and laboratory service profit were under some pressure due to the impact of previous industry competition on certain orders. However, in 2025, domestic innovation drug out-licensing deals repeatedly hit new highs, capital market investment and financing improved significantly, and demand showed signs of sustained recovery. This has driven a continuous recovery in the company's orders, both in terms of volume and price, with new order signings showing a positive trend, a momentum that continued into Q1 2026. As capacity utilization continues to rise and production remains at full capacity, the company’s revenue is expected to lead the growth in 2026, while profitability is expected to gradually improve starting from 2H26 as the mix of orders under execution shifts.

Financial Analysis: Period Expense Ratio Rises, Profit Margin Faces Short-Term Pressure In 2025, the company's sales expense ratio, administrative expense ratio, and R&D expense ratio were approximately 2.23%, 17.03%, and 5.27%, respectively, representing increases of +0.85, +2.70, and +0.67 percentage points compared to 2024. The absolute amounts of administrative and R&D expenses remained largely flat compared to 2024. The rise in expense ratios was primarily due to a weakening scale effect caused by a decline in the revenue base. The increase in the sales expense ratio resulted from the company's intensified marketing efforts and expansion of its sales team. The company's overall gross profit margin for 2025 was 20.71%, a year-on-year decrease of 7.72 percentage points. The short-term pressure on profitability was mainly due to declining order unit prices driven by intensified industry competition, as well as the lagged effect of completed orders predominantly being low-discount orders from earlier periods. The company's capital expenditure in 2025 was approximately RMB 144 million, a decrease compared to 2024, primarily allocated to the construction of the Guangzhou Zhaoyan Drug Non-Clinical Research Base.

Earnings forecast and investment rating

As a leading domestic preclinical CRO company, it is expected to continue benefiting from the subsequent recovery in industry demand. We forecast the company's revenue for 2026-2028 to be RMB 1.86 billion, RMB 2.13 billion, and RMB 2.56 billion, representing year-on-year growth of 12.0%, 14.9%, and 19.8%, respectively. Net profit attributable to shareholders is projected to be RMB 386 million, RMB 545 million, and RMB 657 million, with year-on-year growth of 29.6%, 44.4%, and 39.7%, respectively. This corresponds to P/E ratios of 64X, 45X, and 38X for 2026-2028. We maintain a "Buy" rating.

Risks:

Order volume growth falling short of expectations. If the momentum of domestic innovative drug R&D weakens or competition in the preclinical CRO industry intensifies, it could adversely affect the company's ability to secure new projects and orders.

Capacity expansion progress falling short of expectations . The company has a full order book, and continuous expansion of experimental facilities and technical teams is necessary to support performance growth. Fluctuations in the value of biological assets exceeding market expectations. The company holds a significant number of test monkeys; significant price volatility in monkeys could substantially impact the company's net profit.

Clinical services, model animal, and overseas business expansion falling short of expectations. The company needs to continuously expand its business, including entering new service areas, building new facilities, and establishing new technical capabilities. Poor execution could pressure the company's current and future performance growth.