Core Viewpoint - Morgan Stanley continues to favor WuXi AppTec (02359) as the top pick in China's CXO industry, highlighting its position as the largest contract research and manufacturing organization in China and expressing optimism about its business fundamentals [1] Group 1: Company Performance - WuXi AppTec is recognized as the largest contract research and development organization in China, indicating strong market presence [1] - The competition in the small molecule CRDMO sector is relatively mild, suggesting a favorable operating environment for WuXi AppTec [1] - The growth momentum in WuXi TIDES business remains robust, contributing positively to the company's outlook [1] Group 2: Market Impact - Morgan Stanley maintains an "overweight" rating for WuXi AppTec with a target price of HKD 138 [1] - The recent announcement by former President Trump regarding a 100% tariff on imported brand-name and patented drugs starting October 1 is not expected to directly impact WuXi AppTec and similar Chinese CDMO companies, as clients typically bear the tariff costs [1] - WuXi AppTec is expanding its production capacity in the U.S. to meet client demands for localized production, which may mitigate potential impacts from the tariff policy [1]

Group 1 - The core viewpoint of the articles highlights the performance and financial metrics of WuXi AppTec, indicating a significant increase in stock price and revenue growth [1][2]. - As of September 29, WuXi AppTec's stock price rose by 2.01% to 104.99 CNY per share, with a market capitalization of 309.87 billion CNY [1]. - The company has experienced a year-to-date stock price increase of 96.76%, while it has seen a decline of 3.40% over the last five trading days [1]. Group 2 - WuXi AppTec's revenue for the first half of 2025 reached 20.799 billion CNY, representing a year-on-year growth of 20.64%, while the net profit attributable to shareholders increased by 101.92% to 8.561 billion CNY [2]. - The company has distributed a total of 14.06 billion CNY in dividends since its A-share listing, with 10.406 billion CNY distributed in the last three years [3]. - As of June 30, 2025, the second-largest shareholder is Hong Kong Central Clearing Limited, holding 302 million shares, an increase of 56.02 million shares from the previous period [3].

该行表示，基于生物学与化学业务前景好过预期，将药明康德2026至2027年收入预测分别上调0.2%及 0.3%，并因研发项目价值提升及生产效率改善调高毛利率预测，相应将每股盈利预测上调0.4%及 0.8%，目标价从123港元上调至130.7港元，重申"买入"评级。 美银证券发表研究报告指，药明康德日前举行投资者日，公司于肿瘤药研发领域自2021年以来在整体活 跃客户(包括药物发现及临床前阶段客户)中的市场份额始终保持在33%，非肿瘤体内药理业务收入今年 上半年亦增长42%。行业价格竞争加剧下，临床前新订单价值仍按年增长14.5%。药明化学业务截至上 半年服务约2550名客户，管理层预期今年收入增长将超过20%。 ...

Core Viewpoint - Morgan Stanley's research report indicates that the recent announcement by U.S. President Trump to impose a 100% tariff on imported branded and patented drugs starting October 1 will not directly impact Chinese CDMO companies like WuXi AppTec, as clients typically bear the tariff costs [1] Group 1: Company Analysis - WuXi AppTec is recognized as the largest contract research and manufacturing organization in China, with strong business fundamentals [1] - The company is expanding its production capacity in the U.S. to meet client demands for localized manufacturing [1] - Morgan Stanley maintains an "Overweight" rating on WuXi AppTec, with a target price of HKD 138 [1] Group 2: Industry Insights - The competition in the small molecule CRDMO sector is relatively mild, which bodes well for WuXi AppTec's growth prospects [1] - The growth momentum for WuXi TIDES business remains strong, indicating a positive outlook for the company's future performance [1]

Market Overview - Global markets showed mixed performance, with the Hang Seng Index down 1.35% and the S&P 500 up 0.59% year-to-date performance for the Hang Seng Index stands at 30.25% [1][2] - The Chinese stock market saw declines, particularly in the technology, healthcare, and consumer discretionary sectors, while essential consumer goods, energy, and financials experienced gains [3] Industry Insights - The Chinese pharmaceutical industry is witnessing a recovery in domestic innovation research and development demand, with the MSCI China Healthcare Index up 74.0% since early 2025, outperforming the MSCI China Index by 37.3% [4] - The demand for early-stage research is showing positive signs, supported by a resurgence in capital market financing and a favorable environment for biotech innovation [9] - The CXO industry is expected to see performance recovery in the second half of 2025 due to increased demand for early-stage research and development [4][9] Company Analysis - WuXi AppTec (药明康德) is maintaining a strong growth trajectory in its TIDES business, with plans to expand peptide production capacity significantly by the end of 2025 [8] - The company reported a 14.5% year-on-year increase in new orders for preclinical services in the first half of 2025, with a notable 19.9% increase from U.S. clients [9] - WuXi AppTec's management is confident in maintaining resilient profitability, with adjusted gross and net profit margins reaching historical highs of 44.5% and 30.4% respectively in the first half of 2025 [10]

Core Insights - The article highlights the significant advancements in Alzheimer's disease research over the past 25 years, showcasing the emergence of disease-modifying therapies and blood tests for diagnosis [1][4] - It emphasizes the resilience and growth of WuXi AppTec, a leading company in the biopharmaceutical industry, which has successfully navigated industry cycles and maintained strong performance [4][9] Industry Trends - The global CRO (Contract Research Organization) market is expected to see a pivotal shift, with CRO services projected to exceed 50% of new drug development by 2024, and further increase to over 65% by 2034 [8] - The overall investment in global new drug development is anticipated to grow at a compound annual growth rate (CAGR) of approximately 6%, with the pharmaceutical R&D services market expected to outpace this growth [10] Company Performance - WuXi AppTec has demonstrated exceptional growth, with its continuous operating business orders surpassing 50 billion yuan for the first time in the first half of 2025, reflecting a CAGR of 38% since 2018 [16][18] - The company’s unique CRDMO (Contract Research, Development, and Manufacturing Organization) model has been a key driver of its sustainable growth, enhancing client efficiency and securing long-term business opportunities [15][21] Operational Excellence - WuXi AppTec's operational efficiency has significantly improved, with the utilization rate of its facilities increasing from 60% in 2020 to 72% currently, effectively adding capacity equivalent to eight new facilities [25] - The company has implemented advanced digital systems that enhance operational precision, reducing human error rates and improving project throughput [27][30] Long-term Value Creation - The company has shown a revenue CAGR of 24% since 2018, significantly outperforming the NBI industry benchmark index, which reflects global new drug development trends [31] - WuXi AppTec's ability to deliver long-term value is underscored by its strong growth trajectory and operational efficiencies, positioning it as a robust platform company in the biopharmaceutical sector [33]

Summary of WuXi AppTec Investor Day and Related Insights Company Overview - **Company**: WuXi AppTec - **Industry**: Contract Development and Manufacturing Organization (CDMO) - **Market Position**: Largest CDMO in China with a 28% market share in the total outsourcing market as of 2022 and a 16% global market share in small-molecule new drug projects under clinical development [doc id='8'][doc id='15'] Key Insights from the Investor Day - **Impact of US Pharma Tariff**: The recently announced 100% tariff on branded drug imports by the US is not expected to directly impact WuXi AppTec, as CDMO customers typically bear the tariff costs. The company is expanding its US manufacturing capacity to meet local demand [doc id='2'][doc id='5'] - **R&D Capabilities**: Management highlighted WuXi AppTec's strong R&D capabilities, operational efficiency, and cost-effectiveness, although specific future growth targets were not provided [doc id='2'] - **Emerging Modalities**: The company is expanding its capabilities in emerging modalities such as peptides, oligonucleotides, and complex conjugates, which are crucial for future growth [doc id='2'] Financial Performance and Growth Drivers - **TIDES Business Growth**: WuXi AppTec's TIDES business (focused on peptides and oligonucleotides) is projected to surpass RMB 10 billion in revenue by 2025, with over 80% year-over-year revenue growth [doc id='6'] - **Project Contributions**: "R" stage projects contribute approximately 70% of new customers, with a 40% penetration rate in the small molecule "R" stage market. The average molecular weight of drug candidates has increased by 14% over the past five years [doc id='5'] - **Operational Excellence**: The company has implemented a sophisticated operational excellence program, achieving a gross margin of 45% and a net profit margin of 30%. Facility utilization has improved from 60% to 72%, and new plant ramp-up times have been reduced from two years to two months [doc id='7'] Strategic Initiatives - **Global Expansion**: WuXi AppTec is focusing on global expansion, with over 85% of capital expenditure directed towards high-demand, late-stage development and manufacturing capabilities. Major projects in the US and Singapore are part of this strategy [doc id='7'] - **Geopolitical Risk Mitigation**: The expansion into the US is also a strategic move to mitigate geopolitical risks and meet client demand for localized supply chains [doc id='7'] Valuation and Price Target - **Price Target**: The price target for WuXi AppTec is set at RMB 138.00 for June 2026, based on a discounted cash flow (DCF) valuation with a terminal growth rate of 3.0% and a weighted average cost of capital (WACC) of 9.8% [doc id='9'] - **Valuation Metrics**: The DCF analysis indicates an equity value per share of RMB 138, with significant upside potential from current levels [doc id='10'] Risks and Considerations - **Downside Risks**: Key risks include geopolitical tensions, competition from overseas CDMOs, product development failures, and potential losses in biotech investments [doc id='12'][doc id='19'] - **Upside Risks**: Potential improvements in the geopolitical environment, earlier-than-expected biotech funding growth, and faster project growth could positively impact the company's performance [doc id='13'] Conclusion WuXi AppTec remains a strong player in the CDMO space, with robust growth prospects driven by its operational excellence, expanding capabilities in emerging modalities, and strategic global expansion efforts. The recent US pharma tariff is not expected to hinder its growth trajectory, making it a compelling investment opportunity in the healthcare sector.

Summary of Wuxi Apptec 2025 Investor Day Takeaways Company Overview - **Company**: Wuxi Apptec - **Industry**: Pharmaceutical R&D services - **Market Position**: Largest chemical drug contract research, development, and manufacturing organization (CRDMO) in China - **Public Listing**: Listed on both the Shanghai Stock Exchange and Hong Kong Stock Exchange since 2018 [11][26] Key Financial Guidance - **2025 Revenue Guidance**: Rmb42.5-43.5 billion, with an improving non-IFRS net profit margin [2][5] - **Revenue Growth**: Expected recovery in global R&D demand, particularly following Fed rate cuts [2] Growth Drivers - **TIDES Growth**: TIDES remains a key driver for Wuxi Chemistry, with a revenue target of +80% YoY for 2025 [3] - **Wuxi Chemistry Revenue Target**: Projected to grow over 20% YoY, indicating a strong operational performance [3] - **Operational Efficiency**: Enhanced efficiency through in-house developed software, reducing new plant ramp-up time from 22.6 months to 2.4 months and increasing utilization rates to 72% in H125 from 60% in 2020 [3] Market Opportunities - **Global Licensed Synthetic Drugs**: Wuxi Apptec serviced 29% (62) of the global licensed synthetic drugs in 2024-H125, achieving a 100% project retention rate [2] - **New Plant Operations**: Plans to operate the first plant in Singapore by January 2027 and a US site by late 2026 for solid oral formulation drug products [3] R&D Demand Recovery - **Preclinical Services Growth**: New orders for preclinical services grew 14.5% YoY in H125, with the EU leading at +30.7%, followed by the US at +19.9% and China at +11.6% [4] - **Long-term Growth Potential**: Strong growth in complicated modalities is expected to fuel Wuxi Apptec's growth in the long term [4] Valuation and Investment Rating - **Price Target**: HK$136.10, implying a 24.1x 2026E PE [5] - **Current Price**: HK$109.20 as of September 24, 2025 [7] - **Investment Rating**: Buy rated, with a forecast stock return of 26.2% [10] Financial Metrics Overview - **Revenue Projections**: Expected revenues to grow from Rmb39.355 billion in 2022 to Rmb43.979 billion in 2025E [6] - **Net Earnings**: Projected net earnings to increase from Rmb8.814 billion in 2022 to Rmb15.284 billion in 2025E [6] - **EBIT Margin**: Expected to improve from 25.1% in 2022 to 35.5% in 2025E [6] Risks and Considerations - **Key Risks**: Potential project delays or failures, geopolitical issues, and lower-than-expected R&D spending by pharmaceutical companies [12] Upcoming Catalysts - **Catalyst Date**: October 31, 2025, with a focus on Q325 results, TIDES growth, and recovery signals in domestic CRO services [14]

Investment Rating - The report maintains a "Buy" rating for WuXi AppTec (603259 CH) and slightly raises the target price to RMB 118.79, reflecting positive signals from the recovery in global early-stage research demand [8][3]. Core Insights - The TIDES business continues to show strong momentum with rapid capacity expansion and a rich pipeline of projects. The company plans to expand its peptide capacity to over 100,000 L by the end of 2025, significantly up from 41,000 L by the end of 2024 [8]. - Early-stage research is showing signs of recovery, which is expected to drive growth in early-stage business revenue, accounting for about one-third of the company's total revenue [8]. - The company's refined operations are helping maintain resilient profitability amid macro uncertainties and global capacity expansion [8]. Financial Summary - For FY23A, the sales revenue is reported at RMB 40,341 million, with a year-on-year growth of 2.5%. The adjusted net profit is RMB 10,854 million, reflecting a 15.5% increase [2]. - The forecast for FY25E sales revenue is RMB 43,981 million, with a projected growth of 12.1%, and adjusted net profit is expected to reach RMB 12,296 million, a 16.2% increase [2][9]. - The adjusted earnings per share for FY25E is projected at RMB 4.17, with a corresponding adjusted P/E ratio of 24.7 [2][9]. Market Performance - The current market capitalization of WuXi AppTec is approximately RMB 296,944.9 million, with a 52-week price range of RMB 112.00 to RMB 47.60 [3][4]. - The stock has shown strong performance with a 56.7% absolute return over the past three months [5]. Shareholder Structure - Major shareholders include Li Ge and his concerted parties holding 24.0% and Hong Kong investors holding 20.1% [4].

Core Viewpoint - Zhaoyin International forecasts that WuXi AppTec (02359) will experience a continuous operating revenue growth of 16%/15.9%/15.8% for the years 2025/26/27, with adjusted net profit growth of 16.2%/17.6%/16.4% respectively [1] Group 1 - The TIDES business is showing strong development momentum, with rapid capacity expansion and a rich pipeline reserve [1] - Early-stage research is showing further signs of recovery, which is expected to drive growth in early-stage business revenue that accounts for approximately one-third of the company's total revenue [1] - Refined operations are helping the company maintain resilient profitability amid macro uncertainties and global capacity expansion [1]