Zhao Yin Guo Ji·2024-09-12 03:00Investment Rating - The report maintains a "Buy" rating for WuXi AppTec (603259 CH) and raises the target price to RMB 61.89, reflecting reduced uncertainty regarding the Biosecurity Act and growth in backlog orders [1][3]. Core Insights - The passage of the Biosecurity Act by the U.S. House of Representatives is expected to have a limited impact on WuXi AppTec's U.S. business, as it may only affect a small portion of government-funded projects. The company's backlog orders have shown strong growth, indicating a potential recovery in profitability [1][8]. - As of June, the company's backlog reached RMB 43.1 billion, a year-on-year increase of 33.2%, excluding COVID-19 commercialization projects. The new signed orders in the first half of 2024 grew by approximately 25% [1][10]. - The peptide business (TIDES) has been a significant growth driver, with a revenue increase of 57.2% year-on-year in the first half of 2024 and a backlog increase of 147% [1][10]. Financial Summary - For FY24E, the expected revenue is RMB 38.558 billion, a decrease of 4.4% year-on-year. Revenue is projected to grow by 10.9% in FY25E and 13.2% in FY26E [2][15]. - Adjusted net profit for FY24E is expected to be RMB 9.947 billion, reflecting an 8.4% decrease year-on-year, with growth of 11.5% and 14.4% anticipated in FY25E and FY26E, respectively [2][15]. - The adjusted earnings per share (EPS) for FY24E is projected at RMB 3.42, with subsequent increases to RMB 3.81 in FY25E and RMB 4.36 in FY26E [2][15]. Market Position - WuXi AppTec is recognized as the largest chemical drug Contract Research and Development Organization (CRDMO) globally, with a significant market share compared to competitors like Lonza and Catalent [10][11]. - The report indicates that U.S. pharmaceutical companies will continue to rely heavily on Chinese chemical drug CDMO firms for capacity supply in the medium term [11][12].