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].
药明生物：1H24经调整净利低于预期；维持24年全年指引