Summary of WuXi AppTec (603259 CH / 2359 HK) Earnings Call Company Overview - **Company**: WuXi AppTec - **Industry**: Pharmaceuticals - **Date of Report**: 20 March 2025 Key Financial Highlights - **2024 Revenue**: RMB 39.2 billion, down 2.7% year-on-year (up 5.2% excluding COVID-19 revenue) [2][3] - **Adjusted Non-IFRS Net Profit for 2024**: RMB 10.6 billion, down 2.5% year-on-year [2] - **4Q24 Performance**: Revenue grew 6.9% and adjusted non-IFRS net profit grew 20.4% [2] - **2025 Revenue Guidance**: Expected growth of 10-15% from continuing operations [2] - **Market Performance**: A/H-share prices increased by 24% and 28% respectively since the beginning of 2025 [2] Growth Projections - **2025-2027 Revenue CAGR**: Expected at 11.1% with a solid order booking of RMB 49.3 billion, up 47% year-on-year [3][19] - **2025-2027 Net Profit CAGR**: Expected at 12.1% [3][19] - **2025 Capex**: Projected to be RMB 7-8 billion to expand CDMO capacity, particularly overseas [3][21] Valuation and Target Prices - **Target Price for A-shares**: Raised to RMB 90.00 from RMB 82.50, implying approximately 29% upside [4][9] - **Target Price for H-shares**: Raised to HKD 83.70 from HKD 76.70, implying approximately 16% upside [4][9] - **Current PE Multiple**: A/H-shares trade at a 19x 2025e PE multiple, nearly 1 standard deviation below historical levels [2] Market Dynamics and Risks - **Geographical Revenue Breakdown**: North America expected to maintain over 60% revenue share in 2025-27, with China and Europe at nearly 20% and 15% respectively [19] - **Risks**: Potential impacts from US tariffs and restrictions on the China pharmaceutical supply chain need close monitoring [3][29] Strategic Initiatives - **Capacity Expansion**: Significant investments in both domestic and international facilities, including new capacities in Singapore, the US, and Switzerland [21] - **Product Development**: Focus on late-stage revenue from chemical drug and peptide projects, with an expected improvement in net profit margins [3] Shareholder Returns - **Payout Strategy**: Potential for better payouts to shareholders through dividends and share repurchases [4][36] Conclusion - **Investment Recommendation**: Maintain Buy rating on A/H shares due to strong growth momentum in peptide and oligonucleotide businesses, despite potential risks from external factors [4][36]

Summary of WuXi AppTec Co Ltd Conference Call Company Overview - **Company**: WuXi AppTec Co Ltd - **Industry**: Healthcare, specifically in the Asia Pacific region Key Financial Results - **2024 Revenue**: Rmb39.2 billion, a decrease of 2.7% year-over-year, but a growth of 5.2% year-over-year excluding Covid-related revenue [2][11] - **Adjusted Net Profit**: Rmb10.6 billion, down 2.5% year-over-year, with a record-high adjusted net profit margin (NPM) of 27.0% [2][11] - **4Q24 Performance**: Revenue of Rmb11.5 billion, an increase of 6.5% year-over-year, and adjusted net income of Rmb3.2 billion, up 27% year-over-year [2][11] Growth Drivers - **Key Growth Areas**: - Drug Manufacturing (D&M) revenue increased by 12% - Therapeutic Indications and Drug Evaluation Services (TIDEs) revenue surged by 70% - **Testing Services**: Remained weak, while Biology services showed a turnaround in 4Q24 [2][11] Guidance and Future Outlook - **2025 Revenue Guidance**: Expected growth of 10-15% in continuing operations, projecting revenue between Rmb41.5 billion and Rmb43 billion [3][10] - **Capital Expenditure**: Anticipated to rise to Rmb7-8 billion for global D&M capacity expansion, with free cash flow expected to remain healthy at Rmb4-5 billion [3][10] Shareholder Returns - **Dividends**: Declared a final dividend with a 30% payout and a special dividend of Rmb0.35 per share (~10% yield) [4] - **Share Buyback**: Announced a Rmb1 billion A-share buyback [4] Market Position and Valuation - **Stock Rating**: Overweight with a price target of HK$74.30, representing a 14% upside from the closing price of HK$65.45 on March 17, 2025 [7] - **Market Capitalization**: Approximately Rmb185.4 billion [7] Risks and Considerations - **Upside Risks**: Potential inflection of Fed rates leading to increased biotech funding, favorable government policies, and margin expansion through operational efficiency [16] - **Downside Risks**: Talent turnover, margin pressure from US operations, global competition, and geopolitical risks [16] Conclusion - The results and guidance from WuXi AppTec reinforce a strong fundamental outlook, with significant growth potential driven by a robust backlog and strategic capacity expansions [10]

Investment Rating - The investment rating for the company is "Buy" indicating an expected return of over 10% relative to the CSI 300 index in the next six months [5][14]. Core Insights - The company reported a revenue of 39.241 billion RMB in 2024, a decrease of 2.73% year-on-year, while the net profit attributable to shareholders was 9.450 billion RMB, down 1.63% year-on-year. However, the net profit after deducting non-recurring items increased by 2.47% to 9.988 billion RMB [1]. - The company’s order backlog significantly increased to 49.31 billion RMB, representing a year-on-year growth of 47.0%, indicating strong customer demand [9]. - The company is expected to achieve double-digit growth in revenue from its ongoing operations in 2025, driven by a robust pipeline and increasing outsourcing in the pharmaceutical R&D sector [11]. Summary by Sections Financial Performance - In Q4 2024, the company achieved a revenue of 11.539 billion RMB, a year-on-year increase of 6.85%, and a net profit of 2.917 billion RMB, which is a substantial increase of 90.64% year-on-year [1]. - The chemical business generated revenue of 29.05 billion RMB, with a year-on-year growth of 11.2% when excluding specific commercial production projects [2]. Business Segments - The small molecule CRDMO business maintained strong performance, with the small molecule drug discovery segment delivering over 460,000 new compounds, a 10% increase year-on-year [2]. - The TIDES business (oligonucleotides and peptides) experienced rapid growth, achieving revenue of 5.8 billion RMB, a year-on-year increase of 70.1%, with a backlog growth of 103.9% [2]. Customer Base and Demand - Revenue from the top 20 global pharmaceutical companies reached 16.64 billion RMB, a year-on-year increase of 24.1% [4]. - The company has approximately 6,000 active clients, with 5,500 in ongoing operations, and added about 1,000 new clients throughout the year [9]. Market Outlook - The global pharmaceutical R&D investment is projected to grow from 260.6 billion USD in 2023 to 359.2 billion USD by 2028, with an annual growth rate of approximately 6.6% [10]. - The outsourcing rate in pharmaceutical R&D is expected to rise from 49.2% in 2023 to 58.2% in 2028, indicating a favorable environment for the company’s services [10].

Investment Rating - The investment rating for the company is "Buy" (maintained) [7] Core Views - The company reported a revenue of 39.24 billion yuan for 2024, a year-on-year decline of 2.7%. Excluding specific commercial production projects, revenue grew by 5.2%. The net profit attributable to shareholders was 9.45 billion yuan, down 1.6% year-on-year, while the net profit after deducting non-recurring items was 9.99 billion yuan, an increase of 2.5% year-on-year. Revenue and profit showed steady quarterly growth throughout 2024, achieving annual guidance, with both revenue and profit reaching historical highs in the fourth quarter [5][13] Summary by Sections Financial Performance - In 2024, the company achieved a revenue of 39.24 billion yuan, down 2.7% year-on-year, but grew by 5.2% when excluding specific projects. The net profit attributable to shareholders was 9.45 billion yuan, a decrease of 1.6%, while the net profit after non-recurring items was 9.99 billion yuan, an increase of 2.5%. The company’s revenue and profit increased steadily each quarter, with the fourth quarter setting historical records for both metrics [5][13] Business Development - The company’s integrated CRDMO service platform is showing collaborative effects, continuously empowering clients. In 2024, the chemical business generated revenue of 29.05 billion yuan, down 0.4%, but grew by 11.2% when excluding specific projects. The company signed a share sale agreement related to medical device testing business in the U.S. at the end of 2024, with the testing business generating revenue of 5.67 billion yuan, down 4.8% [14] Customer Growth and Orders - As of the end of 2024, the company had approximately 6,000 active clients, adding about 1,000 new clients in the year. The backlog of orders reached 49.31 billion yuan, a year-on-year increase of 47.0%. To meet the rapidly growing downstream demand, the company is expanding its production capacity, including the operation of the Taixing API production base and steady capacity increases in Changzhou and Taixing [15] Future Projections - The company expects revenues of 42.64 billion yuan, 47.67 billion yuan, and 55.06 billion yuan for 2025, 2026, and 2027, respectively, with growth rates of 8.67%, 11.78%, and 15.51%. The net profit attributable to shareholders is projected to be 10.99 billion yuan, 12.87 billion yuan, and 15.07 billion yuan for the same years, with corresponding growth rates of 16.26%, 17.16%, and 17.10% [16][17]

Investment Rating - The report maintains a "Buy" rating for the company, expecting a relative performance increase of over 15% against the benchmark index in the next 6 to 12 months [3][13]. Core Insights - The company has shown a gradual recovery in its business operations, with a significant increase in backlog orders, which are expected to drive revenue growth of 10%-15% in 2025. The TIDES business continues to perform strongly, contributing to overall revenue stability [5]. - In 2024, the company reported a slight decline in revenue to 39.24 billion yuan, down 2.73% year-on-year, but excluding COVID-19 related projects, revenue increased by 5.20%. The net profit attributable to the parent company was 9.45 billion yuan, a decrease of 1.63% year-on-year [5]. - The company’s gross margin for 2024 was 41.48%, with a net profit margin of 24.38%, indicating stable profitability despite slight revenue declines [5]. Financial Summary - Revenue projections for 2025-2027 are 42.33 billion, 48.38 billion, and 57.11 billion yuan, reflecting year-on-year growth rates of 7.86%, 14.29%, and 18.05% respectively [5][12]. - The net profit attributable to the parent company is forecasted to be 11.16 billion, 13.30 billion, and 16.01 billion yuan for 2025-2027, with growth rates of 18.10%, 19.14%, and 20.43% respectively [5][12]. - The company’s P/E ratio is projected to decrease from 21.39 in 2025 to 12.62 by 2027, indicating an improving valuation over time [5][12]. Business Segments Performance - The TIDES business segment achieved a revenue of 5.80 billion yuan in 2024, marking a robust growth of 70.1% year-on-year, with backlog orders increasing by 103.9% [5]. - The chemical business segment reported a revenue of 29.05 billion yuan, with a growth rate of approximately 11.2% when excluding COVID-19 related revenues [5]. - The testing business segment saw a revenue of 5.67 billion yuan, with a slight decline of 4.8%, while the clinical CRO and SMO services grew by 2.8% [5]. Order Backlog - The company’s order backlog reached 49.31 billion yuan, representing a significant increase of 47.0% year-on-year, indicating strong future revenue potential [5]. Conclusion - The company's integrated, end-to-end strategy is expected to solidify its competitive advantages and drive long-term growth, justifying the "Buy" rating [5].

Investment Rating - The report maintains a "Buy" rating for the company [5][3]. Core Views - The company achieved a revenue of RMB 39.241 billion in 2024, a decrease of 2.73%, but a 5.2% increase when excluding specific commercial production projects. The net profit attributable to shareholders was RMB 9.450 billion, down 1.63%, while the net profit excluding non-recurring items was RMB 9.988 billion, up 2.47% [5][3]. - The chemical business generated revenue of RMB 29.052 billion, a slight decrease of 0.41%, while the TIDES business (oligonucleotides and peptides) saw significant growth, with revenue reaching RMB 5.800 billion, a year-on-year increase of 70.1% [2][3]. - The company is expected to continue high capital expenditure, with projections for 2025 reaching RMB 7-8 billion, and is expanding production capacity across various bases [2][3]. Summary by Sections Financial Performance - In Q4, the company reported a revenue of RMB 11.539 billion and a net profit of RMB 2.917 billion, with a net profit excluding non-recurring items of RMB 3.306 billion [5][3]. - The chemical business's gross margin was 46.39%, while the testing and biological businesses had gross margins of 32.73% and 37.70%, respectively [2][3]. Business Segments - The TIDES business backlog grew by 103.9% year-on-year by the end of 2024, indicating strong demand and future revenue potential [2][3]. - The company is actively investing in production capacity, with the new API production base in Taixing expected to commence operations in 2024, and further expansions planned for 2025 and beyond [2][3]. Future Projections - Revenue forecasts for 2025, 2026, and 2027 are projected at RMB 42.613 billion, RMB 48.603 billion, and RMB 54.890 billion, respectively, with expected growth rates of 8.6%, 14.1%, and 12.9% [3][5]. - Net profit forecasts for the same years are RMB 11.137 billion, RMB 12.940 billion, and RMB 14.906 billion, with growth rates of 17.8%, 16.2%, and 15.2% [3][5].

Investment Rating - The investment rating for WuXi AppTec (药明康德) is "Buy" (maintained) [1] Core Insights - The company has shown a steady growth in backlog orders, indicating a recovery trend for the industry leader [1] - In 2024, the company achieved revenue of 39.241 billion yuan, a year-on-year decline of 2.73%, but a 5.2% increase when excluding COVID-19 commercialization projects [4] - The net profit attributable to shareholders was 9.450 billion yuan, down 1.63% year-on-year, with an adjusted Non-IFRS net profit of 10.58 billion yuan, a decline of 2.5% [4] - The net profit margin reached a historical high of 27.0% [4] - For Q4 2024, the company reported revenue of 11.539 billion yuan, a year-on-year increase of 6.85% and a quarter-on-quarter increase of 10.31% [4] - The backlog of orders as of the end of 2024 was 49.31 billion yuan, a year-on-year increase of 47.0% [4] - The company maintains profit forecasts for 2025-2027, expecting net profits of 11.297 billion yuan, 12.858 billion yuan, and 15.493 billion yuan respectively, with corresponding EPS of 3.91 yuan, 4.45 yuan, and 5.36 yuan [4] Financial Performance Summary - In 2024, the chemical business generated revenue of 29.05 billion yuan, a slight decline of 0.4%, but an 11.2% increase when excluding COVID-19 projects [5] - The TIDES business achieved revenue of 5.8 billion yuan, a significant year-on-year growth of 70.1% [5] - The clinical business reported revenue of 5.67 billion yuan, down 4.8% year-on-year, while the SMO business grew by 15.4% [6] - The company is focusing on building capabilities related to new molecular types, with related business revenue increasing by 18.7% [6] - The financial summary indicates a projected revenue growth of 8.0% in 2025, 15.3% in 2026, and 17.9% in 2027 [8]

Investment Rating - The investment rating for WuXi AppTec (603259.SH) is "Buy" (maintained) [1] Core Views - The company has shown a steady growth in backlog orders, indicating a recovery trend for the industry leader [1] - In 2024, the company achieved a revenue of 39.241 billion yuan, a year-on-year decline of 2.73%, but a 5.2% increase when excluding COVID-19 commercialization projects [4] - The net profit attributable to the parent company was 9.450 billion yuan, down 1.63% year-on-year, with an adjusted Non-IFRS net profit of 10.58 billion yuan, a decrease of 2.5% [4] - The net profit margin reached a historical high of 27.0% [4] - For Q4 2024, the company reported a revenue of 11.539 billion yuan, a year-on-year increase of 6.85% and a quarter-on-quarter increase of 10.31% [4] - The backlog orders as of the end of 2024 amounted to 49.31 billion yuan, a year-on-year increase of 47.0% [4] - The company maintains profit forecasts for 2025-2027, expecting net profits of 11.297 billion yuan, 12.858 billion yuan, and 15.493 billion yuan respectively, with corresponding EPS of 3.91 yuan, 4.45 yuan, and 5.36 yuan [4] Financial Performance Summary - In 2024, the chemical business generated revenue of 29.05 billion yuan, a year-on-year decline of 0.4%, but an 11.2% increase when excluding COVID-19 projects [5] - The TIDES business achieved revenue of 5.80 billion yuan, a year-on-year growth of 70.1%, with backlog orders increasing by 103.9% [5] - Clinical business revenue was 5.67 billion yuan, down 4.8% year-on-year, while the SMO business saw a 15.4% increase [6] - The company is focusing on building capabilities related to new molecular types, with related business revenue growing by 18.7% [6] Valuation Metrics - The total market capitalization is 202.159 billion yuan, with a circulating market capitalization of 175.064 billion yuan [1] - The current stock price is 70.00 yuan, with a PE ratio of 17.9 for 2025, 15.7 for 2026, and 13.0 for 2027 [4][8] - The projected revenue growth rates for 2025-2027 are 8.0%, 15.3%, and 17.9% respectively [8]

Investment Rating - The investment rating for WuXi AppTec (603259) is "Outperform the Market" and is maintained [2][13]. Core Insights - In 2024, WuXi AppTec reported a revenue of 39.24 billion yuan, a year-on-year decrease of 2.7%. Excluding COVID-19 commercialization projects, revenue increased by 5.2%. The net profit attributable to shareholders was 9.45 billion yuan, down 1.6% year-on-year, while the adjusted net profit was 10.58 billion yuan, a decrease of 2.5% year-on-year, with an adjusted net profit margin of 27.0%, reaching a historical high [6][13]. - The fourth quarter of 2024 saw a revenue of 11.54 billion yuan, a year-on-year increase of 6.9%, and an adjusted net profit of 3.24 billion yuan, up 20.4% year-on-year [6][13]. Business Segment Performance Chemical Business - Revenue reached 29.05 billion yuan, with an 11.2% year-on-year increase when excluding specific commercialization projects. The small molecule D&M business generated 17.87 billion yuan, with a 6.4% year-on-year increase [6][10]. - The TIDES business (oligonucleotides and peptides) experienced rapid growth, with revenue of 5.80 billion yuan, a 70.1% increase year-on-year, and a backlog of orders growing by 103.9% [6][10]. Testing Business - Revenue was 5.67 billion yuan, down 4.8%. Laboratory analysis and testing services generated 3.86 billion yuan, reflecting an 8.0% year-on-year decline [7][10]. Biological Business - Revenue was 2.54 billion yuan, remaining stable year-on-year. Non-tumor business revenue grew by 29.9% [10][11]. Financial Data and Forecast - For 2024, the total revenue is projected at 39.24 billion yuan, with a forecasted increase to 43.58 billion yuan in 2025, representing an 11.1% year-on-year growth [8][11]. - The net profit for 2024 is expected to be 9.45 billion yuan, increasing to 11.27 billion yuan in 2025, reflecting a 19.2% year-on-year growth [8][11]. Customer and Order Growth - By the end of 2024, the company had approximately 6,000 active customers, with a backlog of orders amounting to 49.31 billion yuan, a 47.0% year-on-year increase [13].

Investment Rating - The report maintains a "Buy" rating for both A-shares and H-shares of WuXi AppTec, with current prices at 69.68 CNY and 72.35 HKD respectively [5]. Core Insights - WuXi AppTec's revenue for 2024 was 39.241 billion CNY, a decrease of 2.73% year-on-year, but a 5.2% increase when excluding COVID-19 commercialization projects. The net profit attributable to shareholders was 9.45 billion CNY, down 1.63% year-on-year, while the net profit excluding non-recurring items grew by 2.47% to 9.988 billion CNY, aligning with expectations [1]. - The company experienced a continuous improvement in performance, with Q4 2024 revenue reaching 11.54 billion CNY, a quarter-on-quarter increase of 10.31%, and net profit of 2.92 billion CNY, up 27.22% quarter-on-quarter. The growth in profit is attributed to a 0.68 percentage point increase in gross margin to 43.46%, foreign exchange gains from a rising USD, and investment income from the reduction of Wuxi XDC [1]. - As of the end of 2024, the company's order backlog reached 49.31 billion CNY, a year-on-year increase of 47%, indicating robust development and future revenue support [1]. Revenue and Profitability - The chemical business achieved revenue of 29.05 billion CNY in 2024, with an 11.2% year-on-year increase when excluding specific projects. Q4 alone saw a revenue of 8.96 billion CNY, a 13% year-on-year growth. The small molecule D&M business generated 17.87 billion CNY, with a 6.4% increase when excluding COVID-19 projects, and the TIDES business grew by 70.1% to 5.8 billion CNY, with a 103.9% increase in related order backlog [2]. - The report projects net profit for 2025-2027 to be 10.978 billion CNY, 12.516 billion CNY, and 14.147 billion CNY respectively, reflecting year-on-year growth rates of 16.16%, 14.01%, and 13.03% [3]. Valuation Metrics - The projected P/E ratios for A-shares are 18, 16, and 14 for 2025, 2026, and 2027 respectively, while for H-shares, the ratios are 18, 15, and 14 [3]. - The report indicates that the company is a leading one-stop CXO provider with stable performance, supported by rapid growth in TIDES-related business and capacity [3].