Investment Rating - Maintain BUY rating for WuXi Biologics with a target price of HK$18.32, down from HK$39.65, reflecting geopolitical uncertainties [2][3]. Core Insights - WuXi Biologics reported 2023 revenue of RMB17.03 billion, an increase of 11.6% year-over-year, while attributable net income decreased by 23.1% to RMB3.40 billion [2]. - Excluding COVID-related revenue, total revenue would have increased by 37.7% year-over-year, with late-stage and CMO project revenue surging by 101.7% [2]. - The company anticipates total revenue growth of 5-10% year-over-year and non-COVID revenue growth of 8-14% for 2024 [2]. - The backlog stood at US$20.59 billion at the end of 2023, with a 6.4% year-over-year increase in backlog within three years [2]. Revenue and Profitability - Revenue from the European market grew by 101.9% year-over-year, contributing 30.2% to total revenue, indicating a strong demand from clients [2][3]. - Non-COVID revenue from Europe, North America, and other regions (excluding China) grew by 172.4%, 20.2%, and 37.7% year-over-year, respectively [2]. - Non-COVID revenue in China slightly declined by 1.2% year-over-year due to biotech funding constraints [2]. Financial Projections - Revenue projections for 2024E, 2025E, and 2026E are RMB17.91 billion, RMB20.35 billion, and RMB23.19 billion, respectively, with year-over-year growth rates of 5.2%, 13.6%, and 13.9% [3][7]. - Adjusted net profit is expected to increase to RMB5.05 billion, RMB5.78 billion, and RMB6.59 billion for 2024E, 2025E, and 2026E, with growth rates of 7.5%, 14.5%, and 13.9% [3][7]. Share Buyback - WuXi Biologics initiated a share repurchase plan valued at up to US$600 million, with 34.8 million H-shares repurchased by the end of 2023 [2][3]. - The company has the capacity to repurchase shares valued at approximately US$346 million, representing about 4.6% of its latest market capitalization [2].
Expand overseas capacity to mitigate risks