Investment Rating - The report initiates coverage on WuXi AppTec (2268.HK) with a "Buy" rating and a target price of HKD 35, indicating a potential upside of 33% from the current price of HKD 26.4 [2][10]. Core Insights - The ADC market is experiencing rapid growth, with a projected compound annual growth rate (CAGR) of 30% from USD 7.9 billion in 2022 to USD 64.7 billion by 2030, significantly outpacing the overall biopharmaceutical market [10][11]. - WuXi AppTec is positioned as a leading global ADC outsourcing service provider, benefiting from a high outsourcing rate of approximately 70% in the ADC sector, compared to 34% in the biopharmaceutical sector [10][11]. - The company has a robust project pipeline with 167 projects as of June 30, 2024, including 91 preclinical projects and 12 in Phase 3, indicating strong revenue growth potential [10][71]. Summary by Sections Company Overview - WuXi AppTec was established in 2013 and has grown into a leading integrated research, development, and manufacturing platform for bioconjugates, ranking second globally in ADC outsourcing services by revenue [25][34]. Market Analysis - The ADC market is expected to grow from USD 7.9 billion in 2022 to USD 64.7 billion by 2030, with China’s market projected to reach RMB 66.2 billion, reflecting a CAGR of 72.8% [10][11]. - The global ADC outsourcing market is projected to expand from USD 1.5 billion in 2022 to USD 11 billion by 2030, with a CAGR of approximately 28% [10][15]. Financial Projections - Revenue forecasts for WuXi AppTec are RMB 3.4 billion in 2024, RMB 4.9 billion in 2025, and RMB 6.7 billion in 2026, with adjusted net profits expected to reach RMB 820 million, RMB 1.12 billion, and RMB 1.53 billion respectively [4][87]. - The company’s revenue CAGR from 2020 to 2023 was 180%, with a 68% year-over-year growth in the first half of 2024 [87][95]. Operational Efficiency - WuXi AppTec has reduced the average development timeline from 24-30 months to 13-15 months for projects moving from antibody DNA sequence to IND submission, significantly enhancing operational efficiency [35][66]. - The company operates three facilities within a 200 km radius in China, facilitating coordinated development and production, which further reduces costs and time [66][71]. Client Base and Growth Strategy - The client base has expanded to 419 as of June 30, 2024, with 13 of the top 20 global pharmaceutical companies contributing to 29% of revenue [80][84]. - The "Empower, Follow, and Win Molecules" strategy is expected to drive continuous revenue growth as projects advance through clinical phases [71][75].
药明合联：全球领先ADC外包服务商有望持续受益