This article only represents the author's own views.
As Covid subsides, China’s drugs services industry has been reverting to low-speed growth. But the pandemic is still having unforeseen ripple effects. One of the pharmaceutical research companies that posted healthy earnings during the Covid years took investors by surprise last Friday with a warning of plunging profits, derailed by moves during the pandemic to shore up its supply of lab monkeys. Joinn Laboratories (China) Co. Ltd. (6127.HK; 603127.SH), China’s leading non-clinical contract research organization (CRO), said first-half profits would fall between 70.4% and 80.4% from the same period a year earlier, as the value of its lab animals has slumped.
On the first trading day after the profit warning, the stock sank by the daily limit on the Shanghai exchange and closed 9.99% lower. The daily trading volume exceeded 300 million yuan ($41.75 million) for two straight days, far higher than the average daily turnover. Meanwhile, the Hong Kong stock market was suspended on the day of the announcement due to a typhoon. But once trading resumed, the company’s shares went into a tailspin for two trading days, with a cumulative loss of more than 5%. Investors dumped the stock even though the company issued an upbeat revenue forecast for the half year. It predicted revenues would rise between 25.3% and 35.3% year on year, to between 973 million yuan and 1.05 billion yuan.