WuXi AppTec(SH:603259) Huafu Securities·2026-01-18 12:35Investment Rating - The industry rating is "Outperform the Market" indicating that the overall return of the industry is expected to exceed the market benchmark index by more than 5% in the next 6 months [69]. Core Insights - The report highlights a strong recovery in investment and financing activities in the CXO sector, with significant increases in both primary and secondary market financing in the biotech industry [4][18][23]. - The JPM conference revealed that many CXO companies expressed optimism for 2026, driven by project structure optimization, improved operational efficiency, and sustained customer demand [4][28]. - The report emphasizes the importance of technological innovation in the pharmaceutical sector for 2026, with a focus on innovative drugs and medical devices [5]. Summary by Sections Investment and Financing Trends - Since September 2025, overseas primary market financing has shown strong recovery, with a total of $8.72 billion in Q4 2025, a year-on-year decrease of 2.4% but a quarter-on-quarter increase of 21% [4][18]. - In January 2026, the total financing amount reached $3.34 billion, indicating a significant recovery compared to previous months [4][18]. - The secondary market for biotech also saw a robust recovery, with Q4 2025 financing totaling $19.28 billion, a year-on-year increase of 111% and a quarter-on-quarter increase of 149.5% [23][26]. Market Performance Review - During the week of January 12-16, 2026, the CITIC Pharmaceutical Index fell by 0.72%, underperforming the CSI 300 Index by 0.2 percentage points, ranking 16th among CITIC's primary industry classifications [3][32]. - The pharmaceutical sector has shown a year-to-date increase of 6.9% in 2026, outperforming the CSI 300 Index by 4.7 percentage points, ranking 7th among industry classifications [3][32]. - The top-performing stocks during this week included Baolait (up 48.8%), Hualan Biological (up 32.7%), and Tianzhihang (up 27.7%) [47]. Company Highlights from JPM Conference - WuXi AppTec reported a revenue of 45.5 billion yuan in 2025, a year-on-year increase of 21.4%, and a net profit of 15 billion yuan, up 41.3% [30]. - WuXi Biologics achieved significant growth with a revenue increase driven by its dual antibody business, which saw a year-on-year growth of 120% [30]. - Lonza expects a revenue growth of 20-21% in 2025, with a core EBITDA margin of 30-31% [30]. Investment Strategy - The report suggests focusing on innovative drugs, particularly those with revenue realization and unexpected business development outcomes, as well as cutting-edge technology platforms like gene therapy and CAR-T [5]. - In the medical device sector, attention should be given to equipment replenishment and bidding, particularly in surgical robots and endoscopes [5].