Zhi Tong Cai Jing·2026-01-14 06:34Core Viewpoint - The report from Citi highlights that for the Chinese healthcare sector, profit delivery will be more important than valuation expansion by 2026, with WuXi AppTec (603259) expected to outperform its peers [1] Group 1: Company Performance - WuXi AppTec is identified as the top pick in the Chinese CRO/CDMO industry, maintaining a "buy" rating with a target price of HKD 143.4 [1] - The company anticipates a revenue growth of 9% in Q4 2025, with a Non-IFRS year-on-year growth of 36%, exceeding market expectations by 2% and 3% respectively [1] - The strong performance is attributed to the integrated CRDMO model and robust growth in the TIDES business, alongside China's competitive position in the global small molecule supply chain [1] Group 2: Market Position and Growth - The valuation of the Chinese healthcare sector has significantly recovered over the past year, leading to a focus on profit realization as the main driver for stock prices in 2026 [1] - WuXi AppTec shows stronger visibility in profit growth compared to peers, with a 41% year-on-year increase in order reserves for the first three quarters of 2025, significantly above the global average of approximately 14% [1] - The company is expected to continue leading in order growth rates compared to global peers in 2026 [1] Group 3: Financial Metrics - WuXi AppTec's return on equity (ROE) is projected to be 24% in 2025, significantly higher than the 6% to 16% range of global peers, indicating a strong competitive advantage in the global pharmaceutical outsourcing market [2] - The earnings forecast for WuXi AppTec from 2025 to 2027 remains unchanged, with confidence in achieving high double-digit growth in adjusted Non-IFRS net profit for 2026, exceeding market expectations by approximately 15% [2]