The stock price has skyrocketed by over 50% within just five trading days. As the "sky-high monkey" market trend arrives, JOINN (ASX: 06127) has once again put on a show for the market with simultaneous surges in both trading volume and price. On July 15th, JOINN released its preliminary financial results for the first half of 2026. The data shows the company expects revenue of 6.69 to 7.39 billion yuan, representing a year-on-year increase of 0% to 10.5%. Meanwhile, its net profit attributable to shareholders is projected to be a substantial 6 to 9 billion yuan, soaring by 884.9% to 1377.4% year-on-year. The corresponding non-GAAP net profit is estimated between 5.61 and 8.42 billion yuan, with growth potentially exceeding 35 times.
On July 15th, JOINN's Hong Kong stock price opened higher and continued to climb, with an intraday maximum gain reaching 29.73%, pushing the share price to a high of HK$28.94. The following day, the stock price surged further to HK$29.98, coming within a hair's breadth of reclaiming the HK$30 threshold.
The Rise of the "Sky-High Monkey" and the "Monkey Maotai"
Each takeoff of the "sky-high monkey" market trend coincides with the sustained high level of enthusiasm for domestic innovative research and development. This year, a fundamental characteristic of the innovative drug sector has been the significant divergence between stock prices and underlying fundamentals. During this phase, stock prices within the innovative drug sector in both A-shares and H-shares have remained under pressure, with corresponding indices trending lower in a volatile pattern, and even leading companies have struggled to escape valuation compression.
In reality, the underlying weakness in the Hong Kong healthcare sector is the result of multiple factors converging, including capital flows, market sentiment, and geopolitical tensions. Regarding capital flows, in the first half of this year, the Hong Kong market saw strong performance in technology themes like AI computing power and semiconductors, which attracted a large amount of active capital within the market. In contrast, innovative drugs, being a long-cycle sector with infrequent catalysts, have faced a clear liquidity drain due to the siphoning effect of tech stocks in a market environment dominated by existing capital.
Secondly, the increasingly tense global geopolitical landscape has heightened uncertainty surrounding the Federal Reserve's monetary policy. Recent market expectations for delayed Fed rate cuts or even bets on hikes have directly contributed to a tightening of global liquidity. For interest rate-sensitive assets like innovative drug stocks, this undoubtedly directly suppresses their valuation levels.
However, on the fundamental front, data disclosed by the National Medical Products Administration (NMPA) shows that by the end of June 2026, a total of 38 Class 1 innovative drugs were approved for marketing domestically in the first half of the year, with 11 of them belonging to novel targets or mechanisms and all being independently developed by Chinese companies. Concurrently, in the first half of this year, the total value of out-licensing deals (BD) for Chinese innovative drugs reached $110 billion, setting a new historical record. Furthermore, at this year's ASCO annual meeting, Chinese research secured 94 spots in the oral presentation sessions, with 12 being Late-Breaking Abstracts (LBA), both figures reaching record highs.
These data points collectively validate the continuous improvement in the R&D capabilities and clinical efficiency of Chinese innovative drug companies, affirming the current upcycle in the domestic innovative pharmaceutical industry. This is precisely what underpins the key support for experimental primate prices. In fact, market speculation around "sky-high monkeys" began as early as last December. Market data indicated that the price for 3-5 year old cynomolgus monkeys had already risen to 140,000 yuan per animal, with supply failing to meet demand. This market price represented an increase of over 50% compared to the company's acquisition cost of 90,000 yuan per cynomolgus monkey in 2022.
Additionally, according to calculations by Founder Securities, the estimated annual supply of experimental primates for 2025-2027 is approximately 49,000 to 52,400, while the estimated annual demand ranges from 51,300 to 62,600. The firm believes that in the short term, the recovery in new drug R&D is driving increased usage of experimental primates, while significant improvement on the supply side is difficult in the near term, potentially leading to a widening supply-demand gap.
Impact on Financial Performance
The reason the upward primate cycle can directly impact JOINN's financial performance is due to a change in the accounting method for its biological assets (experimental primates) in its 2020 annual report. The method was switched from the "cost model" to the "fair value model." The consequence of this accounting policy change is that when the fair value of these biological assets experiences a sustained increase, the resulting unrealized gains are recognized in the current period's financial statements. In other words, the beginning and end of a period of surging primate prices have a direct impact on the company's net profit.
At this critical juncture of earnings disclosure, holding a stock of 50,000 experimental primates and leveraging this inventory advantage to drive a recovery in orders undoubtedly positions JOINN favorably within the CXO industry's recovery phase.
Shifting Sentiment Among Southbound Capital?
From a market perspective, riding the recent wave of gains following the earnings forecast, JOINN's Hong Kong stock price touched a high of HK$29.98, marking its highest level since January 2023. However, the path to this yearly high since January has not been smooth. Technically, after reaching a high on January 14th, the stock price quickly underwent a technical correction towards the middle Bollinger Band, subsequently oscillating between the middle and lower bands for two months until hitting a阶段性低点 of HK$14.99 on March 23rd.
In the following three months, JOINN's stock price experienced another "rollercoaster ride," but also established a double bottom pattern by June 9th, laying the technical groundwork for the subsequent main upward wave of the "sky-high monkey" trend. JOINN's volatile trend this year only showed signs of stabilizing after confirming the double bottom on June 9th and subsequently printing a series of small-bodied candlesticks. During this period of volatility, Southbound capital through Stock Connect once again became the main force absorbing selling pressure in the market.
However, a divergence emerged between the two main streams of Southbound capital: Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect. Looking over a longer timeframe of nearly 60 days, the top five sellers in JOINN's sell-side broker rankings were Shenzhen-Hong Kong Stock Connect, Citibank, UBS, Morgan Stanley, and BNP Paribas, with Shenzhen-Hong Kong Stock Connect being the largest seller, net selling a cumulative 2.5033 million shares. On the buy side, China Investment Corporation (Shanghai-HK Connect) was the largest buyer, net purchasing 5.9209 million shares.
This performance suggests, on one hand, that recent off-exchange holders of JOINN stock are primarily mainland retail investors via Stock Connect. On the other hand, it indicates a degree of divergence in the positioning strategies of the two Southbound capital channels regarding JOINN. However, based on shareholding ratios, China Investment Corporation (Shanghai-HK Connect) and China Creation (Shenzhen-HK Connect) remain the largest broker shareholders of JOINN, with ratios of 39.48% and 20.75% respectively.
After posting a massive candlestick with over 20% gains on July 15th, JOINN also experienced a significant pullback influenced by the broader declines in both A-share and H-share markets. This was primarily triggered by hawkish comments released on July 16th by Lorie Logan, the 2026 FOMC voting member and President of the Dallas Fed, which directly impacted the pricing logic for global growth assets.
In fact, the underlying rationale for the recent sharp decline in innovative drug stocks lies in the high correlation between the asset attributes of the sector and Federal Reserve monetary policy. If the market environment sustains higher interest rates going forward, the difficulty for innovative drug companies to obtain US dollar-denominated loans and equity financing will increase again in tandem. For unprofitable innovative drug firms that continuously burn cash on clinical trials and pipeline expansion, rising financing costs directly intensify operational pressures, thereby prompting accelerated selling of small and mid-cap biotech stocks.
Consequently, some market participants opted to lock in profits at the recent highs for short-term trading purposes. However, in the most recent broker trading data, both Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect executed net buy orders for JOINN. The logic behind this may be that, from a medium-to-long-term perspective, domestic innovative drug companies are relying on robust fundamentals to hedge against liquidity headwinds. For JOINN specifically, the maintenance of high primate prices during the innovative drug industry upcycle, or their continued improvement, may persistently enhance the company's fundamental strength, thereby effectively counteracting prevailing market panic sentiment.
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