Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company is expected to achieve revenue and profit growth exceeding 85% and 260% respectively in 2024, driven by the strong development of the ADC industry and the company's leading position in the global ADC outsourcing market [2][3] - The company has a robust project pipeline with 681 drug discovery projects and 92 overall projects, indicating strong future revenue contributions from commercialized projects [3] - The global ADC market is projected to grow from $13.2 billion in 2024 to $66.2 billion by 2030, with the company expected to maintain a growth rate exceeding the industry average [3] Financial Summary - Total revenue is projected to grow from 2,124 million RMB in 2023 to 7,273 million RMB in 2026, reflecting a compound annual growth rate (CAGR) of 85.1% [3] - Net profit is expected to increase from 284 million RMB in 2023 to 2,054 million RMB in 2026, with a CAGR of 28.2% [3] - The gross margin is anticipated to improve from 26.3% in 2023 to 37.5% in 2026, indicating enhanced operational efficiency [3] Market Position and Strategy - The company has established a comprehensive production layout in Wuxi, enhancing its capacity to meet growing demand in the ADC sector [3] - The company has successfully commercialized one project and has eight ongoing PPQ projects, which are expected to contribute significantly to future revenues [3] - The company aims to enhance its global capacity with new production lines in Singapore expected to be operational by the end of 2025 [3]

Investment Rating - The report maintains a "Buy" rating for WuXi XDC (2268 HK) [1][8] Core Views - WuXi XDC's 2024 revenue and adjusted net profit are estimated at RMB 3.93 billion and RMB 1.11 billion, respectively, exceeding previous expectations [2] - The company's global competitiveness in ADC CRDMO is strong, with robust demand and orderly capacity expansion [1][2] - The report expects continued high growth in overseas revenue and orders in 2H24, driven by the company's leading position in the ADC CRDMO field [2] Performance and Growth - Revenue and adjusted net profit for 2024 are projected to grow by 85% and 170% YoY, respectively [1] - The company has 12 Phase III projects, with 9 entering the PPQ stage, and more projects are expected to advance to PPQ in 2H24 [2] - Commercial production for some projects is anticipated to begin in 2025, further driving revenue growth [2] ADC Market Demand - ADC CRDMO demand is expected to grow significantly as ADC molecules progress to late-stage clinical trials and commercialization [3] - Three ADC drugs are under FDA review, and four have submitted applications in China, with approvals expected within the next year [3] - MNCs are actively conducting global registration trials, increasing demand for late-stage clinical production [3] Capacity Expansion and Margin Improvement - The XBCM2 production line, with an annual capacity of 60 batches of 2,000L antibody intermediates and 80 batches of 1,000L conjugated drug substances, was launched in December 2024 [4] - Additional capacity expansions, including XDP3 in Wuxi and Singapore, are expected to be completed by 2025-2026, further supporting commercial production and improving gross margins [4] Financial Forecasts and Valuation - Adjusted net profit forecasts for 2024-2026 are revised to RMB 1.11 billion, RMB 1.51 billion, and RMB 1.83 billion, respectively, reflecting an 11%, 5%, and 2% increase from previous estimates [5][13] - The target price is raised to HKD 43.55, based on a 1.14x PEG ratio for 2025, reflecting a 25% premium due to the company's strong competitive position in the global ADC industry [5][15] Financial Metrics - Revenue for 2024E is projected at RMB 3.93 billion, with a YoY growth of 85.08% [7] - Net profit for 2024E is estimated at RMB 1.05 billion, a 269.84% YoY increase [7] - ROE is expected to improve to 17.53% in 2024E, up from 8.18% in 2023 [7]

Investment Rating and Valuation - The report gives a "Buy" rating for the company with a target price of HKD 31.25 per share based on a DCF valuation model [2] - The current market price is HKD 26.50, indicating a potential upside of 17.9% to the target price [3] Core Investment Thesis - The company is a global leader in the XDC CRDMO (Contract Research, Development, and Manufacturing Organization) sector, benefiting from the explosive growth of the ADC/XDC market [1] - The global ADC market surpassed $10 billion in 2023, driven by the success of HER2 ADC drugs like Enhertu, which has rewritten the standard of care for breast cancer [1] - The company's revenue, gross profit, and net profit grew by 67.6%, 133.4%, and 175.5% YoY in 1H24, respectively, showcasing its strong growth momentum [1] Industry Overview - The ADC/XDC market is experiencing rapid growth, with 7 M&A deals exceeding $1 billion in the past year, indicating strong capital market activity [1] - The complexity of ADC/XDC drug development, which combines large and small molecules, has led to a high outsourcing rate, benefiting CRDMO providers like the company [1] - The global ADC market is expected to grow from $10 billion in 2023 to $30 billion by 2028, driven by the increasing adoption of ADC drugs in cancer treatment [93] Company Strengths - The company is one of the few global players with end-to-end capabilities in XDC CRDMO, covering R&D, manufacturing, and commercialization [1] - Its "Empower, Follow, and Win the Molecule" strategy has enhanced customer stickiness, with 41 projects transitioning from early to late-stage development in 1H24 [1] - The company has a strong customer base, with the number of clients growing from 345 in 2022 to 419 in 2024, reflecting its expanding market reach [1] Capacity Expansion and Future Growth - The company is expanding its production capacity in Wuxi, Changzhou, and Shanghai, which will help reduce reliance on external suppliers and improve gross margins [1] - A new production facility in Singapore is expected to be operational by the end of 2025, catering to the growing demand for overseas orders [1] - The company plans to replace externally sourced antibodies, linkers, and payloads with in-house production, further boosting profitability [1] Financial Performance and Projections - Revenue is projected to grow by 57.5%, 44.0%, and 32.6% in 2024, 2025, and 2026, reaching RMB 3.34 billion, RMB 4.82 billion, and RMB 6.38 billion, respectively [2] - Net profit is expected to grow by 152%, 45%, and 37% in the same period, reaching RMB 715 million, RMB 1.04 billion, and RMB 1.42 billion, respectively [2] - The company's ROE is forecasted to increase from 11.63% in 2024 to 16.61% in 2026, reflecting improving profitability and operational efficiency [5] Competitive Advantages - The company has a leading position in the global XDC CRDMO market, ranking second globally and first in China by revenue in 2022 [147] - Its proprietary WuXiDAR4 technology platform enables precise control over drug-to-antibody ratios (DAR), reducing manufacturing costs and improving product homogeneity [172] - The company has a robust pipeline with 564 ADC projects and 141 XDC projects as of 1H24, providing a strong foundation for future growth [173]

Investment Rating - The report initiates coverage on WuXi AppTec (2268.HK) with a "Buy" rating and a target price of HKD 35, indicating a potential upside of 33% from the current price of HKD 26.4 [2][10]. Core Insights - The ADC market is experiencing rapid growth, with a projected compound annual growth rate (CAGR) of 30% from USD 7.9 billion in 2022 to USD 64.7 billion by 2030, significantly outpacing the overall biopharmaceutical market [10][11]. - WuXi AppTec is positioned as a leading global ADC outsourcing service provider, benefiting from a high outsourcing rate of approximately 70% in the ADC sector, compared to 34% in the biopharmaceutical sector [10][11]. - The company has a robust project pipeline with 167 projects as of June 30, 2024, including 91 preclinical projects and 12 in Phase 3, indicating strong revenue growth potential [10][71]. Summary by Sections Company Overview - WuXi AppTec was established in 2013 and has grown into a leading integrated research, development, and manufacturing platform for bioconjugates, ranking second globally in ADC outsourcing services by revenue [25][34]. Market Analysis - The ADC market is expected to grow from USD 7.9 billion in 2022 to USD 64.7 billion by 2030, with China’s market projected to reach RMB 66.2 billion, reflecting a CAGR of 72.8% [10][11]. - The global ADC outsourcing market is projected to expand from USD 1.5 billion in 2022 to USD 11 billion by 2030, with a CAGR of approximately 28% [10][15]. Financial Projections - Revenue forecasts for WuXi AppTec are RMB 3.4 billion in 2024, RMB 4.9 billion in 2025, and RMB 6.7 billion in 2026, with adjusted net profits expected to reach RMB 820 million, RMB 1.12 billion, and RMB 1.53 billion respectively [4][87]. - The company’s revenue CAGR from 2020 to 2023 was 180%, with a 68% year-over-year growth in the first half of 2024 [87][95]. Operational Efficiency - WuXi AppTec has reduced the average development timeline from 24-30 months to 13-15 months for projects moving from antibody DNA sequence to IND submission, significantly enhancing operational efficiency [35][66]. - The company operates three facilities within a 200 km radius in China, facilitating coordinated development and production, which further reduces costs and time [66][71]. Client Base and Growth Strategy - The client base has expanded to 419 as of June 30, 2024, with 13 of the top 20 global pharmaceutical companies contributing to 29% of revenue [80][84]. - The "Empower, Follow, and Win Molecules" strategy is expected to drive continuous revenue growth as projects advance through clinical phases [71][75].

Financial Performance - Revenue for the six months ended June 30, 2024, increased by 67.6% to RMB 1,665.2 million compared to RMB 993.5 million in the same period of 2023[7]. - Gross profit rose by 133.4% to RMB 535.3 million, with a gross margin of 32.1%, up from 23.1% in the previous year[7]. - Net profit attributable to the company's owners surged by 175.5% to RMB 488.2 million, with a net profit margin of 29.3%, compared to 17.8% in the prior year[7]. - Adjusted net profit attributable to the company's owners increased by 146.6% to RMB 533.6 million, with an adjusted net profit margin of 32.0%, up from 21.8%[7]. - Revenue for the six months ended June 30, 2024, increased by 67.6% year-on-year to RMB 1,665.2 million[12]. - Gross profit for the same period rose by 133.4% year-on-year to RMB 535.3 million[12]. - Net profit attributable to the company's owners increased by 175.5% year-on-year to RMB 488.2 million[12]. - Adjusted net profit for the six months ended June 30, 2024, grew by 146.6% year-on-year to RMB 533.6 million[12]. - The company recorded a net other income of RMB 40.4 million for the six months ended June 30, 2024, primarily due to foreign exchange gains[60]. - The company reported a total comprehensive income of RMB 488,788 thousand for the six months ended June 30, 2024[124]. Operational Growth - The total number of new signed comprehensive projects increased from 17 as of June 30, 2023, to 26 as of June 30, 2024[12]. - Ongoing IND post-projects rose from 43 as of June 30, 2023, to 76 as of June 30, 2024[12]. - The total number of ongoing comprehensive projects increased from 110 as of June 30, 2023, to 167 as of June 30, 2024[12]. - The total number of drug discovery projects executed since inception increased from 350 as of June 30, 2023, to 538 as of June 30, 2024[13]. - The company expanded its workforce to 1,496 full-time employees as of June 30, 2024, a 72.2% increase year-on-year[12]. - The company has increased its drug discovery projects to a total of 538, up from 350 as of June 30, 2023, representing a growth of 54%[19]. - As of June 30, 2024, the company has 138 preclinical and phase I process development projects, an increase of 44 projects from 94 on June 30, 2023, marking a growth of 47%[20]. - The company has expanded its late-stage development and process validation projects to 29, up from 16 as of June 30, 2023, which is an 81% increase[21]. Strategic Initiatives - The company is a leading CRDMO focused on the global ADC and broader bioconjugate drug market, ranked as the second largest in the world based on 2022 revenue[10]. - The company aims to enhance its platform and drive the development of the bioconjugate drug industry, benefiting global biopharmaceutical partners and patients[10]. - The strategy of "Empower, Follow, and Win Molecules" is employed to meet the needs of clients and partners in developing bioconjugate drugs[10]. - Winning clients in the CMC stage is identified as a key growth driver for the company's future[10]. - The company is constructing a new production line in Wuxi, expected to start operations in Q4 2024, enhancing its capacity for mAb intermediates and bioconjugate drug substance and drug product[23]. - The new facility in Singapore is on track to begin GMP-compliant operations by the end of 2025 or early 2026, with plans for four production lines[24]. - The company is expanding its production capabilities for conjugated antibodies in Wuxi and building new facilities in Singapore to meet increasing demand[22]. Market Position and Demand - The global ADC drug market is projected to grow from USD 7.9 billion in 2022 to USD 64.7 billion by 2030, with a compound annual growth rate (CAGR) of 30.0%[39]. - Revenue from North America increased to RMB 823.2 million, accounting for 49.4% of total revenue, up from 37.0% in the previous period[47]. - Revenue from Europe rose to RMB 310.2 million, representing 18.7% of total revenue, compared to 23.1% previously[47]. - The number of customers grew significantly from 169 to 309 within a six-month period, indicating strong market demand[1]. - 13 out of the top 20 global pharmaceutical companies are collaborating with the company on ADC or XDC projects, contributing to 28.9% of total revenue[1]. Financial Management - The company has achieved a 100% delivery success rate from its expanded production facility in Wuxi, contributing to a robust supply chain[23]. - The company aims to reduce greenhouse gas emissions intensity by 50% by 2030, based on 2021 levels[36]. - The company plans to establish a series of forward contracts to manage currency risk associated with foreign currency transactions[80]. - The company is adopting hedge accounting for derivatives to mitigate the impact of foreign exchange rate fluctuations on profit and loss[80]. - The company reported a significant increase in share-based compensation expenses, rising to RMB 45,391,000 in the first half of 2024 from RMB 31,780,000 in 2023[82]. Corporate Governance and Compliance - The audit committee and independent auditor confirmed that the interim results and report comply with applicable accounting standards, laws, and regulations[89]. - The board is responsible for assessing and determining the nature and extent of risks the group is willing to take to achieve strategic objectives, maintaining effective risk management and internal control systems[90]. - The company has implemented anti-bribery and anti-corruption policies, strictly prohibiting any improper payments by employees or representatives[90]. - The compliance office has established a reporting mechanism to handle complaints against directors, senior management, employees, customers, and other business partners[91]. - The board confirmed that there were no changes in director information that needed to be disclosed as of June 30, 2024[87]. Shareholder Information - As of June 30, 2024, the company has issued a total of 1,198,215,456 shares[96]. - Dr. Li Jun Cai holds 32,455,840 shares, representing approximately 2.71% of the company's issued share capital[95]. - WuXi Biologics held 600,000,000 shares, representing 50.07% of the total issued shares as of June 30, 2024[98]. - The company has granted stock options with a total of 77,023,246 shares, of which 610,956 have been exercised and 1,045,438 have been canceled[105]. - The company has a total of 44,863,246 shares granted at an exercise price of RMB 1.868 on January 6, 2023, with 832,610 shares exercised[105]. Future Outlook - The company plans to continue expanding its CRDMO services, focusing on bioconjugates and monoclonal antibodies[127]. - The company is actively investing in new product development, with a focus on expanding its ADC capabilities through XDC technology[193]. - WuXi Biologics is exploring market expansion opportunities in regions such as Europe and Asia, aiming for a C% increase in market share by 2025[193]. - The company announced plans for strategic acquisitions to enhance its service offerings and technological capabilities, targeting D potential companies in the biotech sector[193].

Investment Rating - The investment rating for WuXi AppTec (02268.HK) is "Outperform the Market" [3][10]. Core Insights - The company reported strong growth in revenue and profit for the first half of 2024, with a main business revenue of 1.665 billion yuan (+67.6%) and a net profit attributable to shareholders of 488 million yuan (+175.5%) [4][10]. - The gross margin improved to 32.15% (+9.1 percentage points) and the net margin reached 28.72% (+11.5 percentage points), indicating significant enhancement in profitability [4][10]. - The number of ongoing projects increased to 705 (+23.7% compared to the end of 2023), with a total order amount of 842 million USD (+104.9%) [7][10]. - The company is expanding its production capacity globally, with significant developments in its Wuxi, Shanghai, and Singapore bases [9][10]. Summary by Sections Financial Performance - In H1 2024, the company achieved a main business revenue of 1.665 billion yuan, a year-on-year increase of 67.6%, and a net profit of 488 million yuan, up 175.5% [4][10]. - Non-IFRS adjusted net profit was 534 million yuan (+146.6%) [4]. - The gross margin was 32.15% (+9.1 percentage points) and the net margin was 28.72% (+11.5 percentage points) [4]. Order and Client Growth - The total number of ongoing projects reached 705, an increase of 23.7% from the end of 2023, with 167 integrated projects [7][10]. - The company secured 26 new projects in H1 2024, and the total order amount was 842 million USD, reflecting a growth of 104.9% [7][10]. - The number of clients increased to 419, with 13 clients being among the top 20 global pharmaceutical companies [7][10]. Technological Advancements - The company developed over 11,000 conjugated molecules in H1 2024, including more than 1,800 payload linkers and 1,200 protein molecules [9]. - The self-developed technology has evolved from WuXi DAR4 to WuXi DARX, now supporting various conjugation forms [9]. Capacity Expansion - The Wuxi base achieved a full-process "one-stop" production capability, and additional production lines are under construction [9][10]. - The Shanghai base is expanding its discovery and process development laboratories to meet increasing R&D demands [9][10]. - The Singapore base is under construction and is expected to be operational by late 2025 to early 2026 [9][10].

Investment Rating - The report maintains a "Buy" rating for WuXi AppTec (2268 HK) with a target price raised to HKD 44.00, indicating a potential upside of 138.9% from the current closing price of HKD 18.42 [1][6]. Core Insights - The company's 1H24 performance exceeded expectations, with revenue and adjusted net profit increasing by 68% and 147% year-on-year, reaching RMB 1.67 billion and RMB 530 million respectively. The gross margin improved significantly by 9 percentage points to 32.1% due to enhanced operational efficiency and optimized procurement strategies [1][2]. - WuXi AppTec secured 26 new comprehensive projects, bringing the total to 167, including 29 Phase II or III projects and 9 projects nearing submission. The company anticipates a BLA submission in the U.S. within this year and the initiation of CMO projects starting next year [1][2]. - The North American revenue contribution rose to 49% in 1H24, up from 40% for the entire year of 2023, with expectations that North America will contribute over 40% of total revenue for the year [1][2]. Financial Forecast Adjustments - Revenue forecasts for 2024-2026 have been raised to RMB 34.0 billion, RMB 51.4 billion, and RMB 68.3 billion respectively, while adjusted net profit forecasts have been increased to RMB 9.3 billion, RMB 14.2 billion, and RMB 19.2 billion [2][3]. - The report reflects a downward adjustment of the perpetual growth rate to 2% due to uncertainties in the competitive landscape, while the DCF valuation model continues to be applied [2][3]. Financial Data Summary - For 2024E, the projected revenue is RMB 3.402 billion with an adjusted net profit of RMB 934 million, reflecting a net profit margin of 27.4% [3][7]. - The company is expected to see significant growth in revenue and profitability over the next few years, with projections indicating a revenue increase to RMB 6.827 billion and an adjusted net profit of RMB 1.922 billion by 2026E [3][7].

Investment Rating - The report maintains an "Outperform" rating for WuXi XDC Cayman (2268 HK) with a target price of HKD 33.45, indicating a potential upside from the current price of HKD 18.56 [3][7]. Core Insights - The company reported strong revenue and profit growth in H1 2024, with operating revenue reaching RMB 1.665 billion (+67.6%), a gross profit margin of 32.1% (+9.0 percentage points), and a net profit attributable to the parent company of RMB 489 million (+175.5%) [4][20]. - The revenue growth is attributed to an increase in the total number of projects, more projects entering later development stages, and enhanced production capacity to meet rising customer demand for CRDMO services [5][21]. - The order backlog as of H1 2024 was USD 842 million, reflecting a year-on-year increase of 105.0%, indicating robust demand and effective capacity expansion plans [5][21]. Financial Summary - Revenue projections for 2024-2026 are RMB 3.434 billion, RMB 4.831 billion, and RMB 6.382 billion, with year-on-year growth rates of 62%, 41%, and 32% respectively [7][22]. - Net profit attributable to shareholders is expected to be RMB 828 million, RMB 1.147 billion, and RMB 1.554 billion for the same period, with growth rates of 192%, 39%, and 35% respectively [7][22]. - The adjusted net profit is projected to be RMB 922 million, RMB 1.250 billion, and RMB 1.680 billion, with growth rates of 124%, 36%, and 34% [7][22]. Market Position and Client Base - The company has established partnerships with 13 of the top 20 pharmaceutical companies globally, contributing to 28.9% of its revenue in H1 2024 [5][21]. - The number of drug discovery projects reached 538, with 111 new projects added in H1 2024, showcasing the company's expanding project pipeline [5][21]. Capacity Expansion - The company is on track to enhance its production capacity, with new facilities expected to begin operations in late 2024 and early 2026 [5][21]. - The workforce has increased to 1,496 employees, a year-on-year growth of 72.2%, supporting the company's expansion efforts [5][21].

Investment Rating - The investment rating for WuXi AppTec (02268.HK) is "Buy" (maintained) [2] Core Views - The company has shown impressive performance in H1 2024, with revenue reaching 1.7 billion HKD, a year-on-year increase of 65.05%, and a net profit of 488 million HKD, up 175.50% year-on-year. The adjusted net profit was 534 million HKD, reflecting a growth of 146.63% [5] - The total unfulfilled orders amounted to 842 million USD, representing a year-on-year growth of approximately 105.0%, which is expected to support the company's future performance [5] - The company is positioned as a leader in the global antibody-drug conjugate (ADC) CRDMO services market, with an upward revision of profit forecasts for 2024-2026 [5] Summary by Sections Financial Performance - In H1 2024, the company achieved revenue of 1.7 billion HKD, a 65.05% increase year-on-year, and a net profit of 488 million HKD, up 175.50% year-on-year. The adjusted net profit was 534 million HKD, reflecting a growth of 146.63% [5] - The number of clients served reached 419, with 13 out of the top 20 global pharmaceutical companies collaborating with the company [5] Order and Project Growth - The company has a total of 167 projects, a 51.8% increase year-on-year, with 26 new projects signed. There are 138 preclinical and phase I projects, and 29 phase II and later projects, including 9 PPQ projects expected to submit BLA in 2024 and beyond [6] - The strategy of "Empower, Follow, and Win Molecules" has successfully driven rapid project growth [6] Global Capacity Expansion - The company has established three operational bases in Wuxi, Changzhou, and Shanghai, creating a concentrated product R&D and supply chain system. The Wuxi base has achieved a significant milestone in "one-stop" production for ADCs, simplifying the supply chain and significantly shortening production cycles [7] - The new Singapore production base is expected to commence operations in 2026, further enhancing global capacity [7] Revenue Breakdown - In H1 2024, revenue from North America, China, Europe, and other regions was 790 million HKD, 488 million HKD, 295 million HKD, and 93 million HKD, respectively, with year-on-year growth rates of 172.19%, 3.57%, 38.07%, and 392.73% [7]

Investment Rating - The report maintains a "Buy" rating for WuXi AppTec (02268.HK) [1] Core Views - The company reported strong performance in the first half of 2024, with revenue of 1.665 billion yuan (+67.6% YoY) and net profit of 488 million yuan (+175.5% YoY), exceeding expectations [3] - The North American market showed remarkable growth, with revenue of 823 million yuan (+123.9% YoY), accounting for 49.4% of total revenue [3] - The company has a robust pipeline with a total of 167 projects (+52% YoY) and a backlog of orders amounting to 842 million USD (+105.0% YoY), indicating strong future growth potential [4] Revenue and Profit Forecast - Revenue projections for 2024-2026 have been revised upwards to 34.02 billion yuan, 48.07 billion yuan, and 63.12 billion yuan respectively, with net profit estimates adjusted to 8.32 billion yuan, 11.87 billion yuan, and 15.82 billion yuan [4][9] - The current price-to-earnings (P/E) ratios are projected at 24, 17, and 13 times for 2024, 2025, and 2026 respectively [4] Financial Performance - The company achieved a gross margin of 32.1% (+9 percentage points) and a net margin of 29.3% (+11.5 percentage points) in the first half of 2024 [3] - The earnings per share (EPS) for 2024 is projected to be 0.69 yuan, increasing to 1.32 yuan by 2026 [9] Market Position - WuXi AppTec is positioned as a leading player in the ADC CRDMO sector, benefiting from a scarcity of global capacity and limited customer choices [3][4] - The company is expanding its production capabilities, with new facilities expected to come online in 2024 and 2025, enhancing its operational capacity [4]