WuXi AppTec First Quarterly 2025 Results April 29, 2025 603259.SH / 2359.HK 1 Forward-Looking Statements This presentation may contain certain statements that are or may be forward looking, which can be recognized by the use of words such as "expects", "plans", "will", "estimates", "projects", "intends", or words of similar meaning. Such forward-looking statements are not historical facts, but instead are predictions about future events based on our beliefs, development strategy, business plan as well as as ...

Financial Data and Key Metrics Changes - Revenue from continuing operations grew 23.1% year over year to RMB9.39 billion, while total revenue achieved RMB9.65 billion, representing a 21% year over year growth [9] - Adjusted non-IFRS net profit grew 40% year over year to RMB2.68 billion, with a record backlog for continuing operations of RMB52.33 billion, growing 47.1% year over year [9][10] - Adjusted IFRS gross profit margin reached 41.9%, with net profit attributable to the owners of the company increasing by 89.1% year over year [26][27] Business Line Data and Key Metrics Changes - Wuxi Chemistry's CRDMO business revenue grew 32.9% year over year to RMB7.39 billion, with adjusted non-IFRS gross profit margin improving 4.2 percentage points year over year to 47.5% [11][12] - Small molecule DNM business revenue grew 13.8% year over year to RMB3.85 billion, with both Changzhou and Taishin API manufacturing sites passing FDA inspections [13] - Tides business achieved RMB2.24 billion revenue in the first quarter, representing a strong growth of 187.6% year over year [14] Market Data and Key Metrics Changes - Revenue from the U.S. market grew 28.4% year over year, while revenue from Europe grew 26.2% year over year; however, China showed a slight decline [10] - Revenue generated from clinical CRO and SMO business was down 2.2% year over year to RMB0.61 billion, attributed to market price impact [21][22] Company Strategy and Development Direction - The company will continue to focus on the CRDMO business model with an emphasis on operational efficiency and exceptional services [29] - Full year guidance is maintained, expecting revenue from continuing operations to resume double-digit growth of 10% to 15% year over year, targeting total revenue of RMB41.5 billion to RMB43 billion [30] - The company plans to accelerate global D and M capacity expansion, with CapEx expected to reach RMB7 billion to RMB8 billion [30] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining full year guidance despite external uncertainties, emphasizing the importance of operational resilience [30][31] - The company is committed to rewarding shareholders with a proposed 30% annual cash dividend payout ratio and additional one-time special cash dividend [31][32] Other Important Information - The company has successfully supported about 40% of successful out-licensing deals from Chinese biotech since 2022 [20] - The total amount of cash dividends and share repurchases is expected to exceed RMB6 billion, accounting for more than 60% of the company's net profit attributable to owners in 2024 [32] Q&A Session Summary Question: What are the key drivers behind the robust growth in Tides? - The growth is attributed to both strong demand and capacity ramping up from a low base last year [37] Question: How does the company view the impact of tariffs on business segments? - Tariffs are seen as a systemic challenge, with less than 10% of total revenue coming from exports to the U.S. [45][46] Question: What is the projected CapEx for 2025 and its allocation? - Projected CapEx is RMB7 billion to RMB8 billion, primarily for expanding D and M manufacturing capacity in various locations [50][54] Question: How does the company plan to address pricing pressures in testing and biology segments? - The company aims to focus on contracts with higher margins and differentiate its services to improve margins gradually [68] Question: What is the expected contribution from late-stage D and M projects in the next few years? - Specific numbers are difficult to provide, but the CRDMO business model is expected to sustain growth through a strong pipeline [71]

Financial Data and Key Metrics Changes - In Q1 2025, revenue from continuing operations grew 23.1% year over year to RMB 9.39 billion, while total revenue reached RMB 9.65 billion, representing a 21% year over year growth [9] - Adjusted non-IFRS net profit increased 40% year over year to RMB 2.68 billion, with a record backlog for continuing operations of RMB 52.33 billion, growing 47.1% year over year [9][10] - Adjusted IFRS gross profit margin reached 41.9%, with net profit attributable to owners increasing by 89.1% year over year [25][26] Business Line Data and Key Metrics Changes - Wuxi Chemistry's CRDMO business revenue grew 32.9% year over year to RMB 7.39 billion, with adjusted non-IFRS gross profit margin improving by 4.2 percentage points to 47.5% [11][12] - Small molecule DNM business revenue grew 13.8% year over year to RMB 3.85 billion, with both Changzhou and Taishin API manufacturing sites passing FDA inspections [13] - Tides business achieved revenue of RMB 2.24 billion in Q1, representing a strong growth of 187.6% year over year [14] Market Data and Key Metrics Changes - Revenue from the U.S. market grew 28.4% year over year, while revenue from Europe grew 26.2% year over year; however, China showed a slight decline [10] - Revenue from Wuxi Testing decreased by 4% year over year to RMB 1.29 billion, with lab testing revenue down 4.9% due to market pricing impacts [18][19] Company Strategy and Development Direction - The company will continue to focus on the CRDMO business model with an emphasis on operational efficiency and exceptional services [29] - Full year guidance remains at 10% to 15% revenue growth, targeting total revenue of RMB 41.5 billion to RMB 43 billion [30] - The company plans to accelerate global D and M capacity expansion, with CapEx expected to reach RMB 7 billion to RMB 8 billion [30] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining full year guidance despite external uncertainties, emphasizing the resilience of the management team [29][30] - The company is closely monitoring changes in the global macro environment and will communicate any changes in guidance promptly [30][31] Other Important Information - The Board of Directors proposed maintaining a 30% annual cash dividend payout ratio, totaling approximately RMB 2.8 billion, along with a one-time special cash dividend of RMB 1 billion [31] - The company announced plans to repurchase and cancel RMB 1 billion worth of A shares in 2025 [32] Q&A Session Summary Question: What are the key drivers behind the robust growth in Tides? - Management indicated that the strong growth in Tides was due to both capacity ramp-up and a relatively low base from the previous year [37] Question: How does the company view the impact of tariffs on business segments? - Management acknowledged that tariffs are a systemic challenge affecting global operations, but emphasized efforts to optimize and diversify the supply chain to mitigate impacts [44][46] Question: What is the projected CapEx for 2025 and its allocation? - The projected CapEx is RMB 7 billion to RMB 8 billion, primarily focused on expanding D and M manufacturing capacity in various geographies [50][54] Question: How does the company plan to improve profit margins? - Management stated that continuous focus on operational efficiency and process development excellence will help improve margins, despite potential pressures from new capacity ramp-up [78][81]

Financial Data and Key Metrics Changes - Revenue from continuing operations grew 23.1% year over year to RMB9.39 billion, while total revenue achieved RMB9.65 billion, representing a 21% year over year growth [9] - Adjusted non-IFRS net profit grew 40% year over year to RMB2.68 billion, with a record backlog for continuing operations of RMB52.33 billion, growing 47.1% year over year [9][10] - Adjusted IFRS gross profit margin reached 41.9%, with net profit attributable to the owners of the company increasing by 89.1% year over year [26][27] Business Line Data and Key Metrics Changes - Wuxi Chemistry's CRDMO business revenue grew 32.9% year over year to RMB7.39 billion, with adjusted non-IFRS gross profit margin improving 4.2 percentage points year over year to 47.5% [11][12] - Small molecule DNM business revenue grew 13.8% year over year to RMB3.85 billion, with both Changzhou and Taishin API manufacturing sites passing FDA inspections [13] - Tides business achieved RMB2.24 billion revenue in the first quarter, representing a strong growth of 187.6% year over year [14] Market Data and Key Metrics Changes - Revenue from the U.S. market grew 28.4% year over year, while revenue from Europe grew 26.2% year over year; however, China showed a slight decline [10] - Revenue generated from clinical CRO and SMO business was down 2.2% year over year to RMB0.61 billion, attributed to market price impact [21][22] Company Strategy and Development Direction - The company will continue to focus on the CRDMO business model with an emphasis on operational efficiency and exceptional services [29] - Full year guidance is maintained, expecting revenue from continuing operations to resume double-digit growth of 10% to 15% year over year, targeting total revenue of RMB41.5 billion to RMB43 billion [30] - The company plans to accelerate global D and M capacity expansion, with CapEx expected to reach RMB7 billion to RMB8 billion [30] Management Comments on Operating Environment and Future Outlook - Management acknowledges the dynamic and complex global environment, emphasizing the need for operational resilience [29] - Despite external uncertainties, the company maintains confidence in its business model and operational capabilities [30] - The management team is committed to enhancing shareholder value through dividends and share repurchase plans [31][32] Other Important Information - The company plans to maintain a 30% annual cash dividend payout ratio of net profit, totaling approximately RMB2.8 billion, along with a one-time special cash dividend of RMB1 billion [31] - The company will repurchase and cancel RMB1 billion worth of A shares when appropriate in 2025 [32] Q&A Session Summary Question: What are the key drivers behind the robust growth in Tides? - The growth is attributed to both strong demand and capacity ramping up from a low base last year [37] Question: How does the company view the impact of tariffs on business segments? - Tariffs are seen as a systemic challenge, with less than 10% of total revenue coming from exports to the U.S. [45][46] Question: What is the expected CapEx distribution for 2025? - CapEx will focus on expanding new modality and small molecule capacities in China, Singapore, and the U.S., with over 70% allocated to D and M manufacturing capacity expansion [54] Question: How does the company plan to address pricing pressures in testing and biology segments? - The company aims to focus on contracts with higher margins and differentiation strategies to improve margins gradually [68] Question: What is the expected revenue contribution from late-stage D and M projects? - Specific numbers are difficult to provide, but the company expects sustained growth from its CRDMO business model [71]

Financial Performance - The company's operating revenue for Q1 2025 reached RMB 9.65 billion, representing a 20.96% increase compared to RMB 7.98 billion in the same period last year[14]. - Net profit attributable to shareholders was RMB 3.67 billion, up 89.06% from RMB 1.94 billion year-on-year[14]. - Basic earnings per share rose to RMB 1.29, a 92.54% increase from RMB 0.67 in the same period last year[14]. - The company reported a backlog of orders for ongoing operations amounting to RMB 52.33 billion, a year-on-year increase of 47.1%[24]. - The company reported a total comprehensive income of ¥3,833,942,277.47 for Q1 2025, compared to ¥1,745,131,836.43 in Q1 2024, an increase of approximately 119%[47]. Cash Flow and Assets - The net cash flow from operating activities increased by 41.57% to RMB 3.20 billion, compared to RMB 2.26 billion in the previous year[14]. - The company achieved a net cash flow from operating activities of RMB 4.16 billion, reflecting strong profit growth and stable cash inflow[22]. - Cash and cash equivalents increased to RMB 24.85 billion from RMB 18.32 billion, representing a significant rise of approximately 35.5%[39]. - The total assets at the end of the reporting period were RMB 84.51 billion, reflecting a 5.21% increase from RMB 80.33 billion at the end of the previous year[16]. - The total liabilities as of March 31, 2025, amounted to ¥21,733,326,335.92, slightly up from ¥21,240,210,773.18 as of December 31, 2024[41]. Business Segments and Growth - Revenue from the chemistry business (WuXi Chemistry) was RMB 73.9 billion, up 32.9% year-on-year, with over 460,000 new compounds synthesized in the past 12 months[24]. - The TIDES business (oligonucleotides and peptides) saw revenue growth of 187.6%, with a backlog increase of 105.5%[24]. - Revenue from the testing business (WuXi Testing) was RMB 12.9 billion, with a slight decline of 4.04% year-on-year due to market price factors[25]. - Revenue from the biology business (WuXi Biology) increased by 8.2%, supported by a strong pipeline and new customer acquisition[25]. - The company plans to expand its peptide production capacity, expecting the total volume of peptide solid-phase synthesis reactors to exceed 100,000L by the end of 2025[24]. Shareholder Information - The company reported a total of 243,477 common stock shareholders, with 243,419 being A-share holders and 58 H-share holders[35]. - The top ten shareholders collectively hold 56.4% of the shares, with HKSCC Nominees Limited being the largest shareholder at 13.40%[31]. - The company has a significant presence of foreign institutional investors, with multiple entities holding over 1% of the shares[31]. Research and Development - The company continues to enhance its CRDMO business model to improve research and development efficiency for clients[12]. - The company is committed to maintaining the highest international quality regulatory standards in its operations[12]. - Research and development expenses for Q1 2025 were ¥224,408,414.09, down from ¥306,402,572.33 in Q1 2024, a decrease of about 27%[45].

Financial Performance - In 2024, the company's revenue reached RMB 39,241.4 million, a decrease of 2.7% compared to RMB 40,340.8 million in 2023[12] - The net profit attributable to the parent company was RMB 9,352.6 million, down 12.5% from RMB 10,690.2 million in the previous year[12] - The company achieved operating revenue of RMB 39,241.4 million, a decrease of 2.7% year-on-year, with net profit attributable to shareholders at RMB 9,352.6 million, down 12.5%[14] - The adjusted net profit attributable to the parent company for the year ended December 31, 2024, was RMB 10,582.5 million, slightly down from RMB 10,854.6 million in 2023, with an adjusted gross profit of RMB 16,326.3 million, down from RMB 16,937.8 million, resulting in an adjusted gross margin of 41.6%[39] - The gross profit for 2023 was RMB 16,372,472 thousand, with a gross margin of 40.6%, up from 36.9% in 2022[97] Assets and Liabilities - The total assets increased to RMB 80,325.8 million, up from RMB 73,669.3 million in 2023, reflecting a growth of 9.0%[13] - The total liabilities increased to RMB 21,240.2 million, up from RMB 18,151.9 million in 2023[13] - Total liabilities rose to RMB 21,240.2 million as of December 31, 2024, from RMB 18,151.9 million in 2023, with a debt-to-asset ratio of 26.4%[33] - The company reported a decrease in goodwill to RMB 972.4 million as of December 31, 2024, down 46.6% from RMB 1,820.9 million in 2023, primarily due to reclassification to assets held for sale[40] Cash Flow and Financial Position - The company reported a cash and cash equivalents balance of RMB 13,434.3 million, significantly higher than RMB 10,001.0 million in the previous year[13] - Cash generated from operating activities was RMB 11,986.8 million, a decrease of 5.2% year-on-year, but excluding COVID-19 commercialization projects, it increased by RMB 2,100 million, or 22.1%[31] - The company reported a free cash flow of RMB 7,983.3 million for the year ended December 31, 2024, compared to RMB 7,124.7 million in 2023[31] - The company experienced a significant increase in tax receivables, which rose to RMB 87.2 million as of December 31, 2024, compared to RMB 17.5 million in 2023, marking a 397.4% increase[40] Business Growth and Market Position - The company achieved a record high of RMB 49.31 billion in backlog orders, representing a 47.0% year-on-year increase[9] - The company expects a revenue growth of 10-15% for its continuing operations in 2025[9] - The company anticipates a return to double-digit growth in continuing operations revenue in 2025, projecting a year-on-year increase of 10% to 15%[19] - Revenue from the top 20 global pharmaceutical companies reached RMB 16.64 billion, with a year-on-year growth of 24.1% excluding COVID-19 commercialization projects[14] - The chemical business generated revenue of RMB 29,052.4 million, with a year-on-year growth of 11.2% when excluding COVID-19 projects[16] Operational Efficiency and Strategic Initiatives - The company aims to enhance operational efficiency and expand globally to meet increasing customer innovation demands[9] - The company plans to enhance its production capacity, with the total volume of small molecule API reactors expected to exceed 4,000 kL by the end of 2025[58] - The company has doubled its oral formulation capacity at its Swiss facility during 2024[58] - The company is expanding its capabilities in various innovative technologies, including continuous flow purification and new drug formulation techniques[54] - The company aims to strengthen its global capabilities and scale to better empower pharmaceutical innovation[54] Governance and Management - The board consists of 12 members, including 5 executive directors, 2 non-executive directors, and 5 independent non-executive directors[101] - The company has a strong governance structure with a diverse board of directors and experienced management team, ensuring effective oversight and strategic direction[132] - The company has established a comprehensive internal control system to ensure compliance with laws and regulations, although risks remain due to the number of subsidiaries[88] - The company is committed to ensuring that the compensation for non-independent directors and senior management aligns with contractual terms and is fair and reasonable[181] - The company has received annual written confirmations of independence from all independent non-executive directors, affirming their status as independent individuals[150] Risks and Challenges - The company faces risks from potential declines in demand for pharmaceutical R&D services due to market trends or budget adjustments by clients[85] - Regulatory changes in the pharmaceutical R&D services industry may pose risks if the company cannot adapt its strategies accordingly[86] - The company faces intensified competition in the pharmaceutical R&D services market, particularly from large international pharmaceutical companies and new market entrants[87] Shareholder Returns and Incentives - A cash dividend of RMB 9.8974 per 10 shares was approved for distribution to shareholders listed on the register as of June 25, 2024[65] - The company decided to terminate the 2023 H-share incentive trust plan and plans to repurchase and cancel 15,467,500 H-shares[67] - The 2024 H-share incentive trust plan was approved, with a total of HKD 1 billion used to purchase 27,478,428 H-shares, accounting for approximately 0.94% of the total issued share capital[68]

Investment Rating - The report maintains a "Buy" rating for the company and raises the target price to HKD 90 and RMB 93, indicating a potential upside of +38% and +45% respectively [3][5][9]. Core Insights - The acceleration in new order signings, along with an additional special dividend and A-share buyback, are the major positive surprises that have driven the company's stock price up [3][8]. - For 2024, the company achieved a revenue of RMB 39.24 billion, a decrease of 2.7% YoY, but a growth of 5.2% YoY when excluding COVID-19 commercialization projects [8][10]. - The company reported a Non-IFRS adjusted net profit of RMB 10.58 billion for 2024, down 2.5% YoY, with a net profit margin of 27% [8][10]. Revenue and Growth Drivers - The small molecule D&M revenue and TIDES business remain the main drivers of revenue growth, with TIDES revenue growing by 67.9% YoY and small molecule D&M revenue increasing by 16.1% YoY [3][8]. - The company expects TIDES business to maintain over 60% YoY revenue growth in 2025, with total revenue projected to reach RMB 41.5-43 billion, representing a 10%-15% YoY increase [8][9]. Financial Performance - In Q4 2024, the company achieved a revenue of RMB 11.54 billion, a 6.9% increase YoY, and a Non-IFRS adjusted net profit of RMB 3.24 billion, up 20.4% YoY [10][12]. - The company ended 2024 with a backlog of orders amounting to RMB 49.31 billion, a 47% increase YoY, indicating strong execution and international competitiveness [8][10]. Shareholder Returns - The company plans to distribute an additional special dividend of RMB 1 billion and conduct a RMB 1 billion A-share buyback in 2025, which is expected to positively impact stock performance [8][9]. - The management also announced a H-share incentive trust plan for 2025, with an allocation of HKD 1.5-2.5 billion, depending on revenue targets [8][9].

Financial Performance - For the fiscal year ending December 31, 2024, the company reported a revenue of RMB 39,241.4 million, a decrease of 2.7% compared to RMB 40,340.8 million in 2023[2]. - The net profit attributable to the parent company was RMB 9,352.6 million, down 12.5% from RMB 10,690.2 million in the previous year[2]. - Gross profit for the reporting period was RMB 16,016.1 million, a decrease of 2.2% year-on-year, with a gross margin of 40.8%[17]. - The adjusted net profit attributable to the parent company for the year ended December 31, 2024, was RMB 9,352.6 million, a decrease of 12.5% from RMB 10,690.2 million in 2023[41]. - The adjusted gross profit for the year ended December 31, 2024, was RMB 16,326.3 million, down 3.6% from RMB 16,937.8 million in 2023, with a gross margin of 41.6% compared to 42.0% in the previous year[41]. - The company reported a total comprehensive income of RMB 9,654,674 thousand for the year, down from RMB 10,884,792 thousand in the previous year[139]. - Basic earnings per share for the year was RMB 3.88, compared to RMB 3.83 for the previous year, indicating a marginal increase[137]. Customer and Market Insights - The company had approximately 6,000 active customers by the end of 2024, with 5,500 in continuing operations and 1,000 new customers added during the year[7]. - Revenue from the top 20 global pharmaceutical companies amounted to RMB 16.64 billion, with a year-on-year growth of 24.1% excluding COVID-19 commercialization projects[7]. - Revenue from U.S. customers was RMB 25.02 billion, a 7.7% increase excluding COVID-19 commercialization projects, while revenue from European customers grew by 14.4% to RMB 5.23 billion[7]. - The company has approximately 6,000 active clients as of the end of 2024, covering all of the top 20 global pharmaceutical companies[67]. Business Segments Performance - The company’s revenue from its chemistry business was RMB 29,052.4 million, a slight decrease of 0.4% from RMB 29,171.5 million in 2023[10]. - The testing business achieved revenue of RMB 56.7 billion, with TIDES business revenue reaching RMB 58.0 billion, a year-on-year increase of 70.1%[13]. - Clinical CRO and SMO business revenue was RMB 18.1 billion, a year-on-year increase of 2.8%, with SMO business growing by 15.4%[13]. - WuXi Biology generated revenue of RMB 25.4 billion, remaining stable year-on-year, with expectations for a 10%-15% growth in 2025[14]. Cash Flow and Investments - For the fiscal year ending December 31, 2024, the net cash generated from operating activities was RMB 11,986.8 million, a decrease of 5.2% compared to RMB 12,641.2 million for the fiscal year ending December 31, 2023[29]. - The net cash used in investing activities for the fiscal year ending December 31, 2024, was RMB (5,098.0) million, a decrease of 25.2% from RMB (6,817.0) million in the previous year, primarily due to timing differences in capital expenditures[29]. - The company made additional investments of RMB 12.2 million in joint ventures and associates during the reporting period to enhance synergies and expand its customer base[48]. - New investments outside of joint ventures and associates totaled RMB 372.1 million, with significant changes in the fair value of investments reported[50]. Dividends and Shareholder Returns - The company plans to distribute a final dividend of RMB 9.8169 per 10 shares, totaling RMB 2,835,113,437.82[3]. - A special dividend of RMB 3.5000 per 10 shares is proposed for 2025, amounting to RMB 1,010,797,403.70[4]. - The proposed cash dividend for 2024 is RMB 9.8169 per 10 shares, compared to RMB 9.8974 per 10 shares in 2023, indicating a slight decrease in the dividend payout[173]. Financial Position and Liabilities - As of December 31, 2024, total liabilities amounted to RMB 21,240.2 million, an increase from RMB 18,151.9 million as of December 31, 2023, with a debt-to-asset ratio of 26.4% compared to 24.6% in the previous year[32]. - The company reported a significant reduction in current bank borrowings, which decreased by 65.6% to RMB 1,278.6 million in 2024 from RMB 3,721.6 million in 2023[45]. - The total amount of liabilities related to derivative financial instruments decreased by 59.7% to RMB 202.0 million in 2024 from RMB 501.9 million in 2023[45]. Strategic Initiatives and Future Outlook - The company aims to enhance its capabilities and scale globally to empower pharmaceutical innovation[63]. - The company is focused on attracting and retaining top talent by reforming its reward and incentive systems, providing real promotion opportunities, and offering competitive compensation packages[97]. - The company will continue to invest heavily in new drug development technologies, focusing on various new molecular types such as peptides, oligonucleotides, PROTACs, and conjugated drugs[95]. - The overall revenue forecast for 2025 is projected to be between RMB 415 billion and RMB 430 billion[14]. Risks and Challenges - The company faces risks from a potential decline in demand for pharmaceutical R&D services, which could negatively impact its business if industry growth slows or outsourcing ratios decrease[101]. - The company is exposed to regulatory risks due to the highly regulated nature of the pharmaceutical R&D services industry, requiring timely adjustments to its business strategies[102]. - The company acknowledges the increasing competition in the global pharmaceutical R&D services market, which may weaken its competitive advantages if not addressed[104].

Investment Rating - The report maintains a "Neutral" rating for WuXi AppTec (2359 HK) with a target price raised to HKD 48.00 [3][11]. Core Insights - WuXi AppTec's revenue for the first three quarters of 2024 decreased by 6.2% year-on-year to RMB 27.70 billion, but excluding COVID-19 project revenue, it increased by 4.6% [1]. - The company's net profit attributable to shareholders fell by 19.1% year-on-year to RMB 6.53 billion, with Non-IFRS adjusted net profit down 10.1% to RMB 6.68 billion, although the decline was less severe than in the first half of the year [1]. - The chemical business showed signs of recovery in the third quarter, leading to slightly better-than-expected performance [1]. - The TIDES business revenue surged by 71.0% year-on-year in the first three quarters, driven by increased demand for weight-loss drug development [1]. Financial Summary - Total revenue for 2022 was RMB 39.36 billion, with a projected revenue of RMB 40.13 billion for 2024, and expected growth to RMB 49.35 billion by 2026 [2][8]. - Shareholder net profit for 2022 was RMB 8.81 billion, with a forecast of RMB 9.98 billion for 2024 and RMB 11.94 billion for 2026 [2][8]. - The company’s earnings per share (EPS) is projected to be RMB 3.43 in 2024, increasing to RMB 4.11 by 2026 [2][8]. Revenue Forecasts - The revenue forecast for the chemical business in 2024 has been raised to RMB 29.17 billion, with expectations of double-digit growth in 2025-2026 [1]. - TIDES business revenue is expected to grow by 60% year-on-year to RMB 5.21 billion in 2024, with further increases projected for 2025 and 2026 [1]. Market and Legislative Environment - The U.S. Biologics Bill is unlikely to be legislated within the year, but uncertainties remain as both the House and Senate versions have passed [1].

Financial Performance - The company reported a revenue of RMB 17,240.9 million for the first half of 2024, a decrease of 8.6% compared to RMB 18,871.3 million in the same period of 2023[10]. - Gross profit for the period was RMB 6,700.9 million, down 11.3% from RMB 7,555.7 million year-on-year, resulting in a gross margin of 38.9%[10]. - Net profit attributable to the parent company was RMB 4,239.8 million, reflecting a 20.2% decline from RMB 5,313.1 million in the previous year[10]. - Total revenue for the first half of 2024 was RMB 17,240.9 million, a decrease of 8.6% compared to RMB 18,871.3 million in the same period of 2023[12]. - WuXi Chemistry reported revenue of RMB 12,209.9 million, down 9.3% year-over-year, with a 2.1% increase excluding COVID-19 commercialization projects[13]. - WuXi Testing generated revenue of RMB 3,018.4 million, a decline of 2.4% year-over-year, with laboratory analysis and testing services down 5.4%[15]. - WuXi Biology achieved revenue of RMB 1,168.9 million, a decrease of 5.2% year-over-year, but new molecular-related business grew by 8.1%[16]. - WuXi ATU's revenue was RMB 575 million, down 19.4% year-over-year, primarily due to early-stage commercialization projects and order delays[17]. - Net profit decreased from RMB 5,356.9 million for the six months ended June 30, 2023, to RMB 4,280.8 million for the six months ended June 30, 2024, a year-on-year decrease of 20.1%[22]. - The company reported a total comprehensive income of RMB 4,295,580 thousand, compared to RMB 4,843,228 thousand for the same period last year, indicating a decrease of 11.34%[170]. Customer Base and Market Position - The company maintained a customer base of over 6,000 and added more than 500 new clients during the reporting period[11]. - Revenue from the top 20 global pharmaceutical companies reached RMB 6.59 billion, with an 11.9% increase when excluding COVID-19 projects[11]. - Revenue from U.S. clients was RMB 10.71 billion, a decrease of 1.2% year-on-year when excluding COVID-19 projects[11]. - Revenue from European clients increased by 5.3% to RMB 2.22 billion, while revenue from Chinese clients grew by 2.8% to RMB 3.40 billion[11]. - The company has a global leading "integrated, end-to-end" new drug development service platform, benefiting from the rapid growth of the global drug development outsourcing market[45]. - The company has a large and loyal customer base, covering all of the top 20 global pharmaceutical companies, contributing to a steady increase in both new and existing customers[49]. Financial Position and Assets - Total assets as of June 30, 2024, were RMB 74,397.3 million, a 1.0% increase from RMB 73,669.3 million at the end of 2023[10]. - The company's debt-to-asset ratio increased to 25.9% from 24.6% in the previous period[10]. - Total liabilities as of June 30, 2024, were RMB 19,302.6 million, up from RMB 18,151.9 million as of December 31, 2023, with a debt-to-asset ratio of 25.9%[26]. - The company had total bank borrowings of RMB 5,811.6 million, with RMB 2,919.3 million due within one year[27]. - The company's total assets as of June 30, 2024, included RMB 4,971.0 million in fixed deposits, representing a 32.2% increase from RMB 3,761.4 million at the end of 2023[35]. - The total assets as of June 30, 2024, were RMB 55,094,761 thousand, showing a strong asset base for future growth[176]. Cash Flow and Investments - Net cash generated from operating activities was RMB 4,738.8 million, a decrease of 11.3% compared to the same period in 2023, primarily due to increased payments for production preparations[23]. - Net cash used in investing activities increased by 33.5% to RMB 1,745.9 million, mainly due to increased investments in short-term deposits[24]. - Net cash used in financing activities increased by 32.5% to RMB 3,463.1 million, primarily due to increased payments for A-share repurchases[25]. - The company reported a significant increase in cash received from the sale of financial assets, totaling RMB 2,143,349 thousand, compared to RMB 556,086 thousand in the previous year, representing a growth of 285.5%[177]. - The net cash used in financing activities for the six months ended June 30, 2024, was RMB (2,526,288) thousand, compared to RMB (2,649,084) thousand for the same period in 2023[178]. Research and Development - Research and development expenses for the period were RMB 636,309 thousand, slightly reduced from RMB 667,045 thousand in the previous year[170]. - The company continues to enhance its capabilities in drug formulation, expanding from oral formulations to sterile injectable formulations[46]. - The company is developing multiple new drug candidates and innovative technologies in the fields of peptide drugs, oligonucleotides, and precision medicine[46]. - The company has established a comprehensive high-potency drug research and production capability, providing end-to-end services from active pharmaceutical ingredients to formulations[46]. Shareholder and Incentive Plans - The company approved a cash dividend of RMB 9.8974 per 10 shares for shareholders listed on June 25, 2024[53]. - The company plans to terminate the 2023 H-share incentive trust plan and intends to repurchase and cancel 15,467,500 H-shares[55]. - The company has adopted the 2024 H-share incentive trust plan, approved at the 2023 annual general meeting on June 12, 2024[56]. - The company has implemented various employee incentive plans since 2015 to attract and retain skilled personnel for future development and expansion[110]. - The company’s stock option plans are designed to align employee interests with company performance and shareholder value[109]. Regulatory and Compliance - The company maintained compliance with relevant laws and regulations during the reporting period[164]. - The pharmaceutical R&D services industry is highly regulated, and changes in regulations could adversely affect the company's operations if it fails to adapt its business strategy accordingly[68]. - The company emphasizes compliance and has established internal control systems; however, insufficient oversight of subsidiaries could lead to operational challenges[70]. Market Outlook and Strategy - The company expects 2024 revenue to reach RMB 38.3 billion to RMB 40.5 billion, with a projected growth rate of 2.7% to 8.6% excluding COVID-19 projects[18]. - The global pharmaceutical R&D production service industry is expected to maintain rapid growth, driven by increasing outsourcing by large pharmaceutical companies and rising demand from small and medium-sized pharmaceutical companies[57]. - The company plans to continue expanding its market presence and investing in new product development, focusing on innovative drug research and development[176].