Investment Rating - The report maintains a "Neutral" rating for WuXi Biologics (2269 HK) with a target price adjusted to HKD 10.20 from HKD 13.00 [2][4][11]. Core Views - The company's performance in the first half of 2024 was below expectations, with revenue increasing by only 1.0% year-on-year to RMB 8.57 billion. Excluding COVID-related projects, revenue growth was 7.7%. Shareholder net profit decreased by 33.9% to RMB 1.50 billion, reflecting a 20.7% decline in adjusted net profit to RMB 2.25 billion [1][2]. - The report highlights challenges in the domestic market, with revenue from China declining by 20.9% to RMB 1.42 billion. The absence of significant prepayment transactions, which contributed approximately RMB 300 million in gross profit in the previous year, further impacted profitability [1][2]. - The report anticipates continued challenges in the short term, leading to downward adjustments in revenue and profit forecasts for 2024-2026. Revenue estimates were reduced by 2.9%, 9.8%, and 12.9%, while shareholder net profit forecasts were cut by 14.6%, 18.4%, and 20.8% for the same periods [2][3]. Summary by Sections Financial Performance - For the first half of 2024, total revenue was RMB 8.57 billion, with a 1.0% year-on-year increase. Adjusted net profit was RMB 2.25 billion, down 20.7% year-on-year [1]. - The company signed 61 new projects in the first half, with 52 being lower-fee preclinical projects, indicating a slower revenue recovery [2][3]. Revenue and Profit Forecasts - Revenue forecasts for 2024, 2025, and 2026 have been adjusted to RMB 17.448 billion, RMB 19.320 billion, and RMB 21.230 billion, respectively, reflecting a downward adjustment of 2.9%, 9.8%, and 12.9% [3][7]. - Shareholder net profit forecasts for the same years are now RMB 3.132 billion, RMB 4.005 billion, and RMB 4.617 billion, with reductions of 14.6%, 18.4%, and 20.8% [3][7]. Market Conditions - The report notes that the recovery of the Chinese market is slower than expected, with significant challenges in financing for the healthcare sector affecting demand for research outsourcing services [2][3]. - The U.S. market, which accounted for 58.4% of revenue in the first half, is also under scrutiny due to potential impacts from the U.S. Biologics Safety Act [2][3].

Investment Rating - The report maintains a "Buy" rating for WuXi Biologics [1][2] Core Views - WuXi Biologics reported a revenue of 8.574 billion RMB for the first half of 2024, a year-on-year increase of 1.0%, with non-COVID revenue growth at 7.7%. The net profit attributable to shareholders was 1.499 billion RMB, a decline of 33.9% year-on-year, while adjusted net profit was 2.545 billion RMB, down 13.0% year-on-year [1] - The company has seen a rapid increase in new projects, with 61 new projects signed in the first half of 2024, approximately half of which are from the United States. The total number of projects reached 742 [1] - The company is actively expanding its global production capacity, with significant developments in its Ireland, Hangzhou, Singapore, and Cranbury facilities [1] - Customer retention remains high, with a total unfulfilled order amount of 20.11 billion USD as of the first half of 2024, indicating strong future revenue potential [1] Summary by Sections Financial Performance - Revenue for the first half of 2024 was 8.574 billion RMB, with a 1.0% increase year-on-year. Non-COVID revenue grew by 7.7%. The net profit attributable to shareholders was 1.499 billion RMB, down 33.9% year-on-year, while adjusted net profit was 2.545 billion RMB, a decrease of 13.0% [1] - Forecasted revenues for 2024-2026 are 18.014 billion RMB, 20.256 billion RMB, and 22.833 billion RMB, with growth rates of 5.7%, 12.4%, and 12.7% respectively [2] Project Development - The company signed 61 new projects in the first half of 2024, with about half from the U.S. The total number of projects reached 742, with significant contributions expected from late-stage clinical and commercial projects [1] - The company’s Ireland facility is seeing strong commercial demand, with plans for further capacity expansion [1] Capacity Expansion - The Ireland facility's MFG6 Phase I has completed its first PPQ, with Phase II expected to commence production this year. The Hangzhou facility is installing three 5000-liter single-use bioreactors, expected to be GMP compliant by the end of 2024 [1] - The company plans to invest approximately 4.8 billion RMB in capital expenditures for 2024, primarily for facility expansions in the U.S. and other regions [1] Customer Retention and Future Orders - Customer retention remains high, with a total unfulfilled order amount of 20.11 billion USD, indicating a strong pipeline for future revenue [1] - Recent agreements, such as the acquisition of a client by Merck for a significant upfront payment, highlight the company's strong position in the market [1]

Investment Rating - The report maintains a "Hold" rating for WuXi Biologics (2269.HK) and lowers the target price to HKD 18.5 from HKD 20 [2][8]. Core Views - The company's 1H24 revenue is broadly in line with expectations, but the adjusted net profit is below expectations due to lower gross margins and higher SG&A expenses. The company maintains its guidance for 2024, expecting high single-digit growth in both revenue and adjusted net profit [2][8]. - The report highlights that the preclinical revenue is growing the fastest, with a 9.2% YoY increase, driven by a recovery in early-stage biopharma financing in Europe and the US. The late-stage clinical revenue also shows a positive trend with an 11.7% YoY increase [2][8]. - The impact of the Biosecurity Act on new project signings has been limited, primarily affecting client decision-making timelines rather than the number of new projects [2][8]. Summary by Sections Financial Performance - 1H24 revenue was RMB 85.7 billion, a 1% increase YoY, while adjusted net profit was RMB 22.5 billion, down 20.7% YoY. The gross margin was 39.1%, down 2.9 percentage points YoY [2][10]. - The company reported a net profit margin of 26.2%, down 7.2 percentage points YoY, attributed to declining gross margins and increased SG&A expenses [2][10]. Revenue Breakdown - By revenue type, preclinical revenue grew 9.2% YoY, while early clinical revenue saw a slight decline. Late-stage clinical revenue recorded an 11.7% increase YoY [2][10]. - The report anticipates accelerated growth in all clinical stages in the second half of the year, with significant contributions expected from new project signings [2][10]. Market Outlook - The company expects to achieve a revenue growth of approximately 5% for the full year 2024, with a target adjusted net profit margin that may face challenges due to overseas operational costs [2][10]. - The report notes that North America remains the fastest-growing region for revenue, with a 27.5% YoY increase, while China experienced a decline of 20.9% YoY [2][10].

Investment Rating - The report maintains a "Buy" rating for WuXi Bio, reflecting a potential upside in the stock price despite geopolitical uncertainties [1]. Core Insights - WuXi Bio reported a revenue of RMB 8.57 billion for the first half of fiscal year 2024, representing a year-on-year growth of 1.0%. The adjusted net profit attributable to the parent company was RMB 2.25 billion, a decline of 20.7% year-on-year [1]. - The company has confirmed its full-year guidance for 2024, expecting both revenue and adjusted net profit to achieve high single-digit growth [1]. - Strong demand from overseas clients is evident, with 61 new integrated projects added in the first half of 2024, including 52 preclinical and 5 I/II clinical projects [1]. - The bioconjugate business has emerged as a significant growth driver, with WuXi XDC's revenue increasing by 68% and adjusted net profit soaring by 147% in the first half of 2024 [1]. Summary by Sections Financial Performance - Revenue for FY 2024 is projected at RMB 17.86 billion, with a year-on-year growth rate of 4.9% [2]. - Adjusted net profit for FY 2024 is estimated at RMB 4.51 billion, reflecting a decline of 4.1% year-on-year [2]. - The company’s earnings per share (adjusted) for FY 2024 is expected to be RMB 1.09, with a projected P/E ratio of 8.8x [2][8]. Market Dynamics - North America accounted for 58.4% of total revenue in the first half of 2024, with a year-on-year growth of 27.5%, primarily driven by U.S. clients [1]. - The total order backlog remained stable at USD 20.11 billion, with a 4% growth over three years [1]. Valuation - The target price has been adjusted from HKD 18.32 to HKD 13.58, indicating a potential decline of 30.6% from the current price of HKD 10.40 [2]. - The report utilizes a 10-year DCF model with a WACC of 10.95% and a terminal growth rate of 2.0% [1][9].

Investment Rating - Maintain BUY with a target price of HK$13.58, down from the previous target price of HK$18.32, indicating a potential upside of 30.6% from the current price of HK$10.40 [2][3]. Core Insights - WuXi Biologics reported a revenue of RMB8.57 billion for 1H24, reflecting a 1.0% year-over-year increase, while adjusted attributable net income decreased by 20.7% year-over-year to RMB2.25 billion [2]. - The company added 61 integrated projects in 1H24, the second-highest in its history, indicating strong demand recovery from overseas customers, particularly in North America where revenue grew by 27.5% year-over-year [2]. - The bioconjugate business, WuXi XDC, saw a significant revenue increase of 68% year-over-year in 1H24, with adjusted net profit surging by 147% year-over-year [2]. - Despite geopolitical uncertainties, management has reaffirmed its full-year guidance for 2024, expecting high-single-digit growth in both revenue and adjusted attributable net income [2]. Financial Summary - For FY24E, revenue is projected at RMB17.863 billion, with a year-over-year growth of 4.9%, while adjusted net profit is expected to decrease by 4.1% to RMB4.508 billion [3][7]. - The company’s revenue growth is forecasted to accelerate in FY25E and FY26E, with expected increases of 11.7% and 12.7% respectively [3][7]. - The adjusted EPS for FY24E is estimated at RMB1.09, with a consensus EPS of RMB0.92 for the same period [3][8]. Valuation Metrics - The adjusted P/E ratio is projected to be 8.8x for FY24E, decreasing to 7.0x by FY26E, indicating a potentially undervalued stock [3][11]. - The DCF valuation suggests a terminal value of RMB87.569 billion, with a WACC of 10.95% and a terminal growth rate of 2.0% [9].

Financial Data and Key Metrics Changes - The company's revenue for the first half of 2024 was approximately RMB 8.5 billion, reflecting a modest 1% increase year-over-year. Excluding COVID-related revenue from the previous year, non-COVID revenue grew by about 7.7% [25][26] - Adjusted net profit decreased by approximately 13% due to timing issues related to milestone revenues, with a significant deal expected to contribute in Q3 instead of Q2 [6][32] - Adjusted gross profit margin was 44.4%, maintaining a leading position in the industry despite a 2.6 percentage point compression compared to the previous year [30][36] Business Line Data and Key Metrics Changes - The early phase program revenue grew by more than 20%, indicating a strong recovery in R&D activities [9] - Late-phase and commercial manufacturing revenue grew by 11.7% excluding COVID, representing over 40% of the total portfolio during the reporting period [26] - The company added 61 new projects in the first half of 2024, with over 30 projects coming from the U.S., demonstrating strong demand in that market [13][14] Market Data and Key Metrics Changes - North America accounted for more than 58% of revenue, growing by 27%, while European revenue saw a decline of 27% due to high COVID revenue in the previous year [10][11] - Revenue from China dropped to around 16% to 17% of total revenue, attributed to market weakness and the acquisition of top assets by U.S. and European companies [12] - The rest of the world, particularly Japan and Korea, showed strong growth, indicating a shift in focus for the company [12] Company Strategy and Development Direction - The company aims to build parallel supply chains for R&D and manufacturing across three regions, focusing on maintaining a strong presence in China while expanding in the U.S. and Europe [43] - The "Win the Molecule" strategy has proven effective, with the company winning nine new programs, including four in late phases [14][15] - The company is optimistic about future growth, particularly in the ADC and bispecific platforms, which are expected to contribute significantly to revenue [27][54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience despite geopolitical challenges and biotech funding issues, highlighting a strong project pipeline and backlog [7][19] - The company anticipates stronger growth in the second half of 2024, driven by R&D and manufacturing activities [10][26] - Management remains bullish on the Chinese market in the long term, citing unmet medical needs as a growth opportunity [12] Other Important Information - The company has a strong balance sheet with RMB 9.5 billion in cash and only RMB 2.2 billion in debt, indicating solid financial health [40] - The company is focused on improving operational efficiencies and maintaining positive free cash flow despite a working capital outflow in the first half [41] - The recent Curon MSD deal is expected to be a significant milestone for the company, potentially leading to hundreds of millions in milestone payments and royalties [45][46] Q&A Session Summary Question: What is the outlook for the BIOSECURE Act? - Management indicated that the impact of the BIOSECURE Act on projects funded by the U.S. government may be limited, with a grandfather period allowing projects to continue through 2032 [41][42] Question: How is the company navigating geopolitical uncertainties? - The company is working closely with global clients to clarify its business model and mitigate potential impacts from geopolitical challenges [42] Question: What are the expectations for the new manufacturing facilities? - Management expects the new facilities in Ireland, Germany, and the U.S. to achieve breakeven and profitability in the near future, with ongoing improvements in operations [44][48]

| --- | --- | --- | |-------|--------------------------------------------------------------------------------------------------|-------| | | Global Premier CRDMO: | | | | Enabling Global Partners and Delivering Sustainable Growth August 2024 2024 Interim Results | | | | | | | | | | | | Stock Code: 2269.HK | | Forward-Looking Statements This presentation may contain certain "forward-looking statements" which are not historical facts, but instead are predictions about future events based on our beliefs as wel ...

Core Viewpoint - WuXi Biologics reported a modest revenue increase of 1.0% YoY, with significant growth in non-COVID related revenue, indicating resilience and strategic execution in a challenging macroeconomic environment [1][2][4]. Financial Highlights - Revenue for the first half of 2024 was RMB 8,574.2 million, reflecting a 1.0% increase YoY [2][5]. - Non-COVID revenue grew by 7.7% YoY, with late-phase and commercial manufacturing revenue increasing by 11.7% [2][6]. - Gross profit was RMB 3,350.0 million, with a gross profit margin of 39.1%, down from 41.9% in the previous year [5][6]. - EBITDA was RMB 2,805.9 million, with an EBITDA margin of 32.7%, compared to 38.0% in 1H 2023 [6]. - Net profit attributable to owners of the company was RMB 1,499.1 million, representing a YoY decline of 33.9% [5][6]. Business Highlights - The company added 61 new integrated projects in 1H 2024, a significant increase from 46 in the same period last year, indicating strong client engagement [2][3]. - Total integrated projects reached 742, one of the largest portfolios of complex biologics, including various advanced therapeutic platforms [3][7]. - The backlog remained stable at US$20.1 billion, providing visibility for future revenue opportunities [3][4]. Technology and Innovation - WuXi Biologics utilizes advanced proprietary technology platforms, including WuXiBody™, TCE platform, and WuXiUP™, which have been recognized for their effectiveness in drug development [3][4]. - The company has achieved a 100% success rate in passing pre-approval inspections from EMA and FDA, underscoring its commitment to quality [3][4]. Management and Strategy - The management team emphasizes the importance of a unified quality system and a strong talent pool, with over 4,200 scientists contributing to the company's success [4][8]. - The company is committed to enhancing its R&D and manufacturing efficiencies while expanding its global presence [4][8]. ESG Commitment - WuXi Biologics integrates Environmental, Social, and Governance (ESG) responsibilities into its business strategy, aiming to be a leader in sustainability within the CRDMO sector [8].

[2024 Interim Results Announcement](index=1&type=section&id=中期業績公告) [Financial Highlights](index=1&type=section&id=財務摘要) In H1 2024, the company's revenue slightly increased by 1.0% to RMB 8.57 billion, but gross profit, net profit, and EPS significantly declined, with gross margin falling from 41.9% to 39.1% and net profit attributable to owners decreasing by 33.9%; no interim dividend was declared | Metric | H1 2024 (RMB million) | H1 2023 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Revenue | 8,574.2 | 8,492.0 | 1.0% | | Gross Profit | 3,350.0 | 3,560.6 | (5.9%) | | Gross Margin | 39.1% | 41.9% | -2.8pp | | Net Profit | 1,780.3 | 2,337.9 | (23.9%) | | Net Profit Attributable to Owners | 1,499.1 | 2,266.7 | (33.9%) | | Adjusted Net Profit Attributable to Owners | 2,250.3 | 2,838.3 | (20.7%) | | Basic Earnings Per Share (RMB) | 0.37 | 0.55 | (32.7%) | - The Board has resolved not to declare any interim dividend for the six months ended June 30, 2024[2](index=2&type=chunk) [Management Discussion and Analysis](index=2&type=section&id=管理層討論及分析) Despite industry challenges, the company maintained robust business growth through its unique CRDMO platform and "follow-the-molecule and win-the-molecule" strategy, with increasing project numbers, strong non-COVID business, and planned global capacity expansion, while profitability faced pressure from product mix shifts and new facility ramp-up, remaining confident in future growth and monitoring the Biosecure Act [Business Review](index=2&type=section&id=業務回顧) [Overall Performance](index=2&type=section&id=整體業績) - Despite challenges, the Group's business developed steadily, with the total number of integrated projects increasing to **742**, including **359** preclinical and **311** early-stage clinical projects[3](index=3&type=chunk) | Development Stage | Number of Projects | | :--- | :--- | | Preclinical Development | 359 | | Early-Stage (Phase I & II) Clinical Development | 311 | | Late-Stage (Phase III) Clinical Development | 56 | | Commercial Manufacturing | 16 | | **Total** | **742** | - Non-COVID revenue increased by **7.7%** year-on-year, and non-COVID late-stage clinical and commercial manufacturing project revenue increased by **11.7%** year-on-year[5](index=5&type=chunk) | Order Type | Amount (USD) | | :--- | :--- | | Unfulfilled Service Orders | 13.00 billion | | Unfulfilled Potential Milestone Payment Orders | 7.105 billion | | **Total Unfulfilled Orders** | **20.105 billion** | | **Unfulfilled Orders within Three Years** | **3.642 billion** | [CRDMO Platform — Research (R)](index=4&type=section&id=CRDMO平台%20—%20研究(R)) - The Group provides comprehensive solutions in drug research and discovery (R), possessing multiple industry-leading technology platforms, including the bispecific antibody platform WuXiBody™ (with approximately **50** collaborations achieved), multispecific antibody platform SDArBodY™, and T-cell engager (TCE) platform[6](index=6&type=chunk) - Strategic collaborations with global leading pharmaceutical companies like GSK, BioNTech, and Medigene accelerate new biologics technology development, strengthening client trust and driving pipeline growth[7](index=7&type=chunk) [CRDMO Platform — Development (D)](index=5&type=section&id=CRDMO平台%20—%20開發(D)) - In the development (D) segment, the Group has enabled over **550** IND filings and continuously iterates its technology platforms to accelerate development and manufacturing[8](index=8&type=chunk) - Core technology platforms include WuXia™ cell line development, WuXiUP™ continuous manufacturing, WuXiUI™ ultra-high intensification fed-batch culture, and WuXiHigh™ high-concentration formulation development, which significantly improve production efficiency, product quality, and reduce costs[8](index=8&type=chunk)[9](index=9&type=chunk) [CRDMO Platform — Manufacturing (M)](index=7&type=section&id=CRDMO平台%20—%20生產(M)) - In the manufacturing (M) segment, late-stage clinical and non-COVID commercial projects steadily grew to **72**, with **4** new "win-the-molecule" projects added[10](index=10&type=chunk) - During the reporting period, global manufacturing success rate was approximately **98%**, and drug substance and drug product PPQ (Process Performance Qualification) project success rates exceeded **97%**, laying a solid foundation for commercial manufacturing growth[10](index=10&type=chunk) [New Business Drivers](index=8&type=section&id=新業務驅動) - New business platforms such as the Microbial Platform, WuXi XDC (ADC and Bioconjugate CRDMO), and WuXi Vaccines (Vaccine CRDMO) are flourishing, becoming significant drivers of the Group's growth[11](index=11&type=chunk) - WuXi XDC has secured **167** ADC and other bioconjugate projects, with **29** in Phase II/III[11](index=11&type=chunk) [Quality](index=9&type=section&id=質量) - Since 2017, the Group has successfully completed **37** regulatory inspections by various authorities, including the US FDA and EU EMA, without major findings, and over **1,400** global client GMP audits[12](index=12&type=chunk) [ESG](index=9&type=section&id=ESG) - The Group demonstrates outstanding ESG performance, earning multiple international recognitions including inclusion in the Dow Jones Sustainability World Index, MSCI ESG rating of **AAA**, EcoVadis Platinum rating, and CDP Water Security A and Climate Change A- ratings[13](index=13&type=chunk) [Regional Operations](index=10&type=section&id=區域運營) - The Hangzhou, China site added three **5,000-liter** single-use bioreactors, increasing total capacity to **23,000 liters**[14](index=14&type=chunk) - Phase I of the MFG6 facility at the Ireland, Europe site completed its first PPQ project, Phase II is progressing as planned with nearly all 2025 capacity reserved, and the Germany site will construct a second pre-filled syringe filling line[14](index=14&type=chunk) - The Boston, US research service center has opened, and the New Jersey manufacturing facility is nearing GMP-ready status[15](index=15&type=chunk) - The Singapore site has officially commenced construction, with engineering progress on schedule[15](index=15&type=chunk) [WBS (WuXi Biologics Lean Operation Management System)](index=11&type=section&id=WBS（藥明生物精益運營管理系統）) - By implementing approximately **60** WBS improvement projects, the Group achieved significant cost savings, inventory reduction, labor hour savings, and quality enhancements during the reporting period[16](index=16&type=chunk) [Future Outlook](index=12&type=section&id=未來展望) - Despite macroeconomic uncertainties, the Group remains confident in business growth, leveraging its CRDMO business model and "follow-the-molecule and win-the-molecule" strategy[17](index=17&type=chunk) - Regarding the proposed US Biosecure Act, the company reiterates that its business does not involve human genomics or collect human genomic data, firmly believing it poses no national security risk to any country, and will closely monitor the legislative process to ensure compliant operations[17](index=17&type=chunk) [Financial Review](index=13&type=section&id=財務回顧) [Revenue Analysis](index=13&type=section&id=收益) - Total revenue for H1 2024 was **RMB 8.574 billion**, a slight year-on-year increase of **1.0%**, primarily driven by non-COVID business, especially rapidly developing technology platforms like ADC and bispecific antibodies[18](index=18&type=chunk) | Region | H1 2024 Revenue (RMB million) | Share | H1 2023 Revenue (RMB million) | Share | | :--- | :--- | :--- | :--- | :--- | | North America | 5,009.7 | 58.4% | 3,927.9 | 46.3% | | Europe | 1,863.0 | 21.7% | 2,551.6 | 30.0% | | China | 1,417.9 | 16.6% | 1,792.5 | 21.1% | | Others | 283.6 | 3.3% | 220.0 | 2.6% | | Stage | H1 2024 Revenue (RMB million) | Share | | :--- | :--- | :--- | | Pre-IND Services | 3,068.0 | 35.8% | | Early-Stage (Phase I/II) Clinical Development | 1,893.0 | 22.1% | | Late-Stage (Phase III) & Commercialization | 3,434.4 | 40.0% | | Others | 178.8 | 2.1% | | Business Segment | H1 2024 Revenue (RMB million) | Share | | :--- | :--- | :--- | | Biologics | 6,961.6 | 81.2% | | XDC | 1,612.6 | 18.8% | [Cost and Profit Analysis](index=15&type=section&id=毛利及毛利率) - Cost of sales increased by **5.9%** year-on-year to **RMB 5.224 billion**[24](index=24&type=chunk) - Gross profit decreased by **5.9%** year-on-year to **RMB 3.350 billion**, with gross margin falling from **41.9%** to **39.1%**[25](index=25&type=chunk) - The decline in gross margin was primarily due to (i) the absence of high-margin significant discovery service transactions present in the prior period, (ii) slightly lower utilization rates at China facilities due to COVID-19 project cancellations, and (iii) the ramp-up impact of new facilities in Ireland, Germany, and the US[25](index=25&type=chunk)[26](index=26&type=chunk) - Net profit decreased by **23.9%** year-on-year to **RMB 1.780 billion**, with net profit margin falling from **27.5%** to **20.8%**, mainly due to reduced gross profit, increased selling, marketing, and administrative expenses, and net foreign exchange losses[35](index=35&type=chunk) [Expense Analysis](index=17&type=section&id=銷售及營銷開支) - Selling and marketing expenses increased by **111.7%** year-on-year to **RMB 223 million**, primarily for expanding regional presence and market promotion[30](index=30&type=chunk) - Administrative expenses increased by **13.7%** year-on-year to **RMB 773 million**, supporting business expansion and the establishment of independent functions post-WuXi XDC's listing[31](index=31&type=chunk) - Research and development expenses were **RMB 344 million**, consistent with the prior period, reflecting continued investment in innovative technology platforms[32](index=32&type=chunk) [Balance Sheet Analysis](index=19&type=section&id=物業、廠房及設備) - Property, plant, and equipment balance increased by **3.2%** to **RMB 28.259 billion**, reflecting continuous investment in global facility construction[37](index=37&type=chunk) - Inventories increased by **11.1%** to **RMB 1.963 billion**, primarily due to stock preparation for European entity ramp-up and WuXi XDC business expansion[43](index=43&type=chunk) - Trade and other payables decreased by **20.9%** to **RMB 2.180 billion**, mainly due to the payment of 2023 annual bonuses and reduced payables for facility construction[47](index=47&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=流動性及資金來源) - As of June 30, 2024, total bank balances, cash, and time deposits were **RMB 9.494 billion**, a **5.2%** decrease from the beginning of the year[50](index=50&type=chunk) - As of June 30, 2024, total borrowings were approximately **RMB 2.157 billion**, largely consistent with the beginning of the year[52](index=52&type=chunk) - The gearing ratio (interest-bearing borrowings/total equity) was **4.8%**, consistent with **4.9%** at the end of 2023, maintaining a healthy level[56](index=56&type=chunk) [Non-IFRS Measures](index=24&type=section&id=非國際財務報告準則指標) | Metric (RMB million) | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net Profit | 1,780.3 | 2,337.9 | | **Adjusted Net Profit** | **2,544.8** | **2,925.6** | | **Adjusted Net Profit Attributable to Owners** | **2,250.3** | **2,838.3** | | Adjusted Net Profit Margin | 29.7% | 34.5% | | Metric (RMB million) | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) | 2,805.9 | 3,230.6 | | **Adjusted EBITDA** | **3,570.4** | **3,818.3** | | Adjusted EBITDA Margin | 41.6% | 45.0% | [Other Information](index=26&type=section&id=其他信息) [Employees and Remuneration Policy](index=26&type=section&id=僱員及薪酬政策) - As of the end of the reporting period, the Group had a total of **12,435** employees, including approximately **4,200** research personnel, with an overall talent retention rate of approximately **94%**[60](index=60&type=chunk) [Interim Dividend](index=27&type=section&id=中期股息) - The Board resolved not to declare any interim dividend for the six months ended June 30, 2024[61](index=61&type=chunk) [Corporate Governance and Compliance](index=27&type=section&id=遵守企業管治守則) - During the reporting period, the company complied with all code provisions of the Corporate Governance Code, except for a deviation from code provision F.2.2 where some directors were unable to attend the annual general meeting due to other commitments[62](index=62&type=chunk) - All directors confirmed compliance with the Model Code for Securities Transactions by Directors and the company's written guidelines during the reporting period[63](index=63&type=chunk) [Use of Proceeds from Placing](index=28&type=section&id=配售所得款項用途) - Regarding the net proceeds of approximately **RMB 10.9 billion** from the February 2021 placing, as of June 30, 2024, approximately **RMB 9.16 billion** has been utilized, with approximately **RMB 1.74 billion** remaining unutilized, primarily for acquiring additional manufacturing capacity and investing in mRNA-related technologies[64](index=64&type=chunk)[65](index=65&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=29&type=section&id=購買、出售或贖回本公司上市證券) - During the reporting period, the company repurchased a total of **76,909,000** shares on the Stock Exchange for a total purchase price of approximately **HKD 1.355 billion**[66](index=66&type=chunk)[67](index=67&type=chunk) [Condensed Consolidated Financial Statements](index=31&type=section&id=簡明綜合財務報表) The financial statements detail the Group's H1 2024 financial performance and period-end financial position, with the income statement reflecting stable revenue but declining profit due to lower gross margin and increased expenses, while the balance sheet shows steady total asset growth driven by fixed asset investments and a stable liability structure, indicating a robust overall financial position [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=32&type=section&id=簡明綜合損益及其他全面收益表) | Item (RMB thousand) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Revenue | 8,574,214 | 8,492,046 | | Gross Profit | 3,349,951 | 3,560,634 | | Profit Before Tax | 2,008,377 | 2,528,976 | | Profit for the Period | 1,780,310 | 2,337,860 | | Profit Attributable to Owners of the Company | 1,499,080 | 2,266,675 | [Condensed Consolidated Statement of Financial Position](index=34&type=section&id=簡明綜合財務狀況表) | Item (RMB thousand) | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | **Non-current Assets** | **36,288,978** | **35,377,477** | | Property, Plant and Equipment | 28,258,954 | 27,377,643 | | **Current Assets** | **19,816,741** | **21,198,249** | | Bank Balances and Cash | 9,153,528 | 9,669,839 | | **Total Assets** | **56,105,719** | **56,575,726** | | **Current Liabilities** | **6,808,244** | **7,636,020** | | **Non-current Liabilities** | **4,656,660** | **4,921,824** | | **Total Liabilities** | **11,464,904** | **12,557,844** | | **Total Equity** | **44,640,815** | **44,017,882** | [Notes to the Condensed Consolidated Financial Statements](index=36&type=section&id=簡明綜合財務報表附註) - The financial statements are prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting," with accounting policies consistent with the 2023 annual report[76](index=76&type=chunk)[77](index=77&type=chunk) - Operating segments are primarily divided into Biologics and XDC, with external sales revenue for H1 2024 being **RMB 6.962 billion** for the Biologics segment and **RMB 1.613 billion** for the XDC segment[84](index=84&type=chunk) - As of June 30, 2024, trade receivables aging shows **RMB 3.418 billion** as not overdue, accounting for approximately **59.7%** of the total[102](index=102&type=chunk)

Core Viewpoint - WuXi Biologics has been recognized for its sustainability efforts by being included in the FTSE4Good Index Series for the fourth consecutive year, highlighting its commitment to Environmental, Social, and Governance (ESG) practices [1][3][6] Group 1: Sustainability Achievements - The company has made significant progress in sustainable development, aligning with the United Nations Sustainable Development Goals, and has received various accolades from ESG rating agencies, including a "AAA" rating from MSCI ESG Ratings and a Platinum Medal from EcoVadis [2][5] - WuXi Biologics' ESG score in 2024 ranked in the top 7% of its industry, reflecting substantial improvements in its overall ESG performance [6] Group 2: Company Overview - WuXi Biologics is a leading global Contract Research, Development and Manufacturing Organization (CRDMO) that provides end-to-end solutions for the discovery, development, and manufacturing of biologics [4][7] - The company employs over 12,000 skilled professionals across multiple countries, including China, the United States, Ireland, Germany, and Singapore, and is currently supporting 698 integrated client projects, with 24 in commercial manufacturing as of December 31, 2023 [7] Group 3: Leadership and Strategy - The CEO of WuXi Biologics, Dr. Chris Chen, emphasized the company's commitment to sustainability as a cornerstone of business growth and the effectiveness of its comprehensive ESG strategy [3][5] - An ESG committee led by the CEO has been established to guide the implementation of the company's ESG strategy, reinforcing its dedication to sustainability [5]