[WuXi AppTec 2025 Half-Year Performance Forecast](index=1&type=section&id=WuXi%20AppTec%20(Beijing)%20Co.%2C%20Ltd.%202025%20Half-Year%20Performance%20Forecast) WuXi AppTec provides its preliminary financial outlook for the first half of 2025, detailing expected changes in key performance indicators [Current Period Performance Forecast](index=1&type=section&id=I.%20Current%20Period%20Performance%20Forecast) The company anticipates year-over-year growth in H1 2025 operating revenue, net profit excluding non-recurring gains/losses, and adjusted non-IFRS net profit, while net profit attributable to shareholders is expected to decline by 36%-39% due to significant non-recurring gains in the prior year Key Financial Indicators for H1 2025 Performance Forecast | Item | Current Period (2025H1) | Prior Period (2024H1) | Change | | :--- | :--- | :--- | :--- | | **Operating Revenue** | RMB 6,333.0436 million - RMB 6,501.1775 million | RMB 5,604.4634 million | Growth 13%–16% | | **Net Profit Attributable to Shareholders** | RMB 679.1758 million - RMB 712.5779 million | RMB 1,113.4030 million | Decline 36%–39% | | **Net Profit Excluding Non-Recurring Gains/Losses** | RMB 624.2831 million - RMB 647.5772 million | RMB 465.8829 million | Growth 34%–39% | | **Adjusted Non-IFRS Net Profit** | RMB 731.6822 million - RMB 766.1955 million | RMB 690.2662 million | Growth 6%–11% | | **Basic Earnings Per Share** | RMB 0.3858 - RMB 0.4048/share | RMB 0.6282/share | - | - The company estimates H1 2025 non-recurring gains/losses attributable to shareholders to be approximately **RMB 60 million to RMB 70 million**, primarily comprising government subsidies, fair value changes in financial assets, and wealth management product gains/losses[7](index=7&type=chunk) - The company uses **adjusted non-IFRS net profit** as a supplementary financial metric, excluding the impact of share-based payments, exchange gains/losses, equity investment gains/losses, convertible bond-related gains/losses, and other incidental or non-operating items, to better assess core business performance[8](index=8&type=chunk) [Communication with Accounting Firm](index=3&type=section&id=II.%20Communication%20with%20Accounting%20Firm) This performance forecast has not been audited or pre-audited by an accounting firm - This performance forecast has not been audited or pre-audited by an accounting firm[10](index=10&type=chunk) [Explanation of Performance Changes](index=3&type=section&id=III.%20Explanation%20of%20Performance%20Changes) Performance changes are primarily driven by robust core business growth and a significant year-over-year decrease in non-recurring gains/losses, impacting net profit attributable to shareholders - The company steadfastly implements its core strategy of **'full-process, integrated, internationalized, multi-therapy'**, driven by customer needs, deepening global presence, and strengthening technology platforms to achieve sustained core business growth[11](index=11&type=chunk) - Non-recurring gains/losses for the reporting period are estimated at **RMB 60 million to RMB 70 million**, a significant year-over-year decrease of approximately **RMB 580 million** compared to **RMB 647.5201 million** in the prior period (primarily from the disposal of PROTEOLOGIX, INC. equity), which is the main reason for the decline in net profit attributable to shareholders[11](index=11&type=chunk) - Despite the decline in net profit attributable to shareholders, core operating indicators show strong performance, with Q2 2025 operating revenue growing by **13.11%**, net profit excluding non-recurring gains/losses by **23.33%**, and adjusted non-IFRS net profit by **13.67%** based on the forecast median[11](index=11&type=chunk) [Other Relevant Information](index=3&type=section&id=IV.%20Other%20Relevant%20Information) The company advises investors that this performance forecast is a preliminary, unaudited estimate by the finance department, with detailed financial data to be disclosed in the 2025 half-year report on the Shenzhen and Hong Kong stock exchanges, urging caution regarding investment risks - This performance forecast data represents a preliminary, unaudited estimate by the company's finance department[13](index=13&type=chunk) - Detailed H1 2025 performance data will be disclosed in the official reports published by the company on the Shenzhen Stock Exchange and Hong Kong Stock Exchange[14](index=14&type=chunk) [Reference Documents](index=4&type=section&id=V.%20Reference%20Documents) Reference documents for this announcement include the Board of Directors' explanation regarding the performance forecast and other documents required by the Shenzhen Stock Exchange - Reference documents include: - Board of Directors' explanation regarding the current period's performance forecast - Other documents required by the Shenzhen Stock Exchange[15](index=15&type=chunk)

Investment Rating - The report upgrades Tigermed-A to Buy from Sell, with target prices increased to Rmb67/HK$73 from Rmb34/HK$37 [3][10] - WuXi AppTec and WuXi Bio are identified as top picks in the CDMO sector, expected to report beats in 1H25 [10][11] Core Insights - The CXO sector in China's healthcare is gaining attention due to improving fundamentals, attractive valuations, and growth in orders backlog [1] - WuXi AppTec is projected to beat its FY25 guidance, supported by strong growth in orders backlog and strategic disposals [2][11] - Tigermed is expected to benefit from innovative drug development and increasing out-licensing activities, leading to stronger revenue growth [3][10] Summary by Sections Top Picks in CDMO Sector - WuXi AppTec and WuXi Bio are favored for their potential to outperform in 1H25, with Tigermed-A also upgraded due to increased clinical trial activities [10] 1H25 Results Preview - WuXi AppTec's 1H25 results are expected to exceed consensus, driven by strong TIDES business and asset disposals [11] - WuXi Biologics and WuXi XDC are also anticipated to report revenue beats [11] Backlog vs. Revenue Growth - WuXi AppTec's backlog growth accelerated to 47% year-on-year in 1Q25, indicating potential revenue growth acceleration [5][48] - Tigermed's backlog grew 12% year-on-year in 2025, suggesting a positive revenue outlook [34] Global Biotech Funding - Overseas innovative drugs' primary market financing rose 28% year-on-year in 2024, with expectations for recovery in 2H25 [44] Company-Specific Insights - WuXi AppTec's management projects revenue to reach Rmb41.5-43.0 billion in 2025, with a focus on profitability improvements [47] - Tigermed is positioned as a key beneficiary of China's drug innovation, with expected revenue growth driven by clinical trial activities [3][10]

Core Viewpoint - The CRO (Contract Research Organization) sector is experiencing a significant upward trend, driven by the strong performance forecast of WuXi AppTec, which is expected to see substantial revenue and profit growth in the first half of 2025 [1][3]. Financial Performance - WuXi AppTec anticipates revenue of approximately RMB 20.8 billion for the first half of 2025, representing a year-on-year increase of about 20.6% [3]. - The company expects a net profit attributable to shareholders of around RMB 8.56 billion, reflecting a year-on-year growth of approximately 101.9%, which includes investment income from the sale of equity in an associate [3]. - The adjusted Non-IFRS net profit is projected to be about RMB 6.31 billion, up 44.4% year-on-year, while the net profit excluding non-recurring items is expected to be around RMB 5.58 billion, a 26.5% increase [3]. Business Segments - The chemical business remains the primary revenue source for WuXi AppTec, accounting for over 70% of total revenue in recent years [4]. - The company has successfully supported the approval of multiple new drugs by the FDA and other regulatory bodies, indicating strong performance in its chemical business [4]. - The GLP-1 (glucagon-like peptide-1) drug development area is highlighted as a significant growth opportunity, with the number of clinical candidates increasing substantially [5]. Industry Trends - The Chinese pharmaceutical industry is transitioning from generic drug production to innovative drug development, which is driving demand for CRO services [2][6]. - The total licensing-out transaction amount for innovative drug companies reached USD 45.5 billion in the first five months of the year, nearing the total for the previous year [6]. - The regulatory environment is supportive of innovative drug development, with new measures introduced to enhance the quality of innovation in the pharmaceutical sector [6]. Strategic Moves - WuXi AppTec is optimizing its CGT (cell and gene therapy) business by divesting certain assets to mitigate potential risks associated with regulatory changes [7]. - The global cell and gene therapy market is projected to grow significantly, indicating a favorable environment for WuXi AppTec's strategic focus in this area [7]. Market Dynamics - The CRO sector is expected to benefit from a rebound in investment and financing within the healthcare sector, with a notable increase in financing events and amounts [8]. - However, the industry faces intense competition, with the number of qualified clinical trial institutions in China increasing significantly, leading to price pressures [8]. - Despite challenges, the demand for medical outsourcing services is recovering, and companies with global service capabilities are well-positioned to capitalize on this trend [8].

Market Overview - The market atmosphere is positive with US stocks rising and A-shares showing strength, while Hong Kong stocks experienced a slight pullback due to bank stocks [1] - The market is less concerned about tariffs as outcomes are continuously delayed or modified, with a recent report indicating that the US plans to expand copper import tariffs to include semi-finished products [1] Investment Opportunities - Goldman Sachs has raised its forecast for Asian stock markets, citing a more favorable macro environment and increased certainty in tariff policies, raising the MSCI Asia Pacific index target by 3% to 700 points, indicating a potential 9% return [2] - The China Securities Association has released new measures to enhance self-regulation and promote high-quality development in the securities industry, which may open new revenue channels for brokerages [2] Securities Industry Performance - The securities industry is experiencing a surge in performance, with a significant increase in IPO applications in the first half of the year, totaling 177 applications, a 510.3% increase year-on-year [3] - Smaller securities firms are seeing substantial gains, with companies like Zhongzhou Securities and Guolian Minsheng rising over 47% and 15% respectively [3] Insurance Sector Developments - The Ministry of Finance has issued a notice to optimize performance assessments for state-owned insurance companies, allowing for a more flexible investment strategy that could lead to increased A-share investments [4] - Major insurance companies like Sunshine Insurance and China Pacific Insurance have seen stock price increases following this announcement [4] CXO Sector Growth - WuXi AppTec reported a revenue of approximately RMB 20.8 billion for the first half of the year, a year-on-year increase of about 20.64%, with a projected annual revenue of RMB 41.5 billion to RMB 43 billion [5] - Other companies in the CXO sector, such as Kanglong Huacheng and WuXi Biologics, also reported significant stock price increases [6] Semiconductor Industry Insights - The domestic photolithography machine sector is witnessing positive changes, with advancements in immersion DUV and i-line technology, indicating a strong demand for domestic production [8] - Companies like SMIC and Hua Hong Semiconductor are positioned to benefit from the growing domestic semiconductor market [9] Shipping Industry Developments - Derxiang Shipping reported a 38.5% increase in revenue for the first quarter, driven by a rise in average freight rates [10] - The company is expanding its service network and has plans for new vessel orders, enhancing its competitive position in the market [12]

Group 1 - The U.S. FDA has announced multiple reforms, including accelerated approvals and the integration of AI, amidst a cooling global biopharmaceutical investment environment, leading to a slowdown in decision-making among pharmaceutical companies and a temporary downturn in the global CRO industry [5][9] - In contrast, the Asia-Pacific market, particularly China, is experiencing growth, with a reported nearly 6% year-on-year decline in revenue for 13 listed CRO companies in China, while net profit surged by 105% [5][6] - The global CRO market is projected to exceed $80 billion by 2024, benefiting from the increasing number of innovative drugs [6][7] Group 2 - The demand for CRO services is expected to grow in key research areas such as cell and gene therapy, metabolic diseases, and rare diseases, driven by unmet clinical needs and regulatory changes [8][9] - The FDA's recent reforms, including the gradual elimination of animal testing and the introduction of AI in drug evaluation, are expected to impact the CRO industry significantly [12][11] - The clinical trial landscape in the Asia-Pacific region has seen a rapid increase, with the proportion of global clinical trials conducted in this region rising from 44% in 2019 to 55% by the end of 2023 [15][16] Group 3 - The CRO industry faces challenges in 2025 due to increased complexity in experimental design and stricter regulatory requirements, particularly in cell and gene therapy [9][11] - The need for innovative trial designs and remote smart clinical trial models is becoming essential, especially for rare diseases and chronic conditions like obesity and type 2 diabetes [11][9] - The demand for end-to-end services from CROs is rising, as biotech companies prioritize efficiency and integrated solutions [17][19] Group 4 - The Asia-Pacific market is becoming a focal point for global pharmaceutical companies, with China emerging as a significant growth engine for innovative drug development [14][15] - The trend of mixed outsourcing models is gaining traction, allowing companies to tailor their outsourcing strategies based on specific project needs [19][18] - The collaboration between CROs and AI companies is expected to enhance clinical data capabilities and address the evolving demands of the industry [18][17]

Market Overview - The Hong Kong stock market showed a volatile upward trend in the morning, with the Hang Seng Index and the Hang Seng China Enterprises Index both rising over 1% at one point. By the close, the Hang Seng Index increased by 0.46% to 24139.57 points, with a total trading volume of 3239.5 billion HKD. For the week, the Hang Seng Index rose by 0.93% [1] - The current dollar index is under pressure due to crowded short positions and cooling interest rate cut expectations, which poses risks to the Hong Kong market. The fundamentals and sentiment indicators for Hong Kong stocks are weakening, with increased competition in the food delivery sector and a weakening AI narrative affecting the Hang Seng Technology Index [1] Blue Chip Performance - WuXi AppTec (02359) led the blue-chip stocks, closing up 10.46% at 88.15 HKD, contributing 4.53 points to the Hang Seng Index. The company issued a profit warning, expecting a revenue of approximately 20.799 billion RMB for the first half of 2025, a year-on-year increase of about 20.64%, and a net profit of 8.561 billion RMB, a year-on-year increase of about 101.92% [2][5] - Other blue-chip stocks included WuXi Biologics (02269) up 3.7%, Hong Kong Exchanges and Clearing (00388) up 2.95%, while China Merchants Bank (03968) and China Resources Mixc Lifestyle (01209) saw declines [2] Sector Highlights - Large technology stocks mostly rose, with Alibaba up 1.84% and Meituan up 1.18%. The biopharmaceutical sector saw significant gains, particularly in the CRO segment, with multiple stocks rising over 10% following WuXi AppTec's positive earnings forecast [3] - Brokerage stocks experienced a collective surge, with South China Financial (00619) up 100.89%, and Zhongzhou Securities (01375) up 47.47%, driven by expectations of virtual asset licenses [3][4] Cryptocurrency and Regulatory Developments - The Hong Kong Special Administrative Region's "Stablecoin Regulation" will take effect on August 1, 2025, allowing certain brokerages to provide virtual asset trading services to professional investors. This has generated significant market interest and may enhance the pricing attractiveness of the securities sector [4] - Bitcoin prices surged over 6%, reaching a new high of 117,919 USD, with other cryptocurrencies also rising. The U.S. House of Representatives has designated the week of July 14 as "Cryptocurrency Week" to discuss new regulatory frameworks [6] Steel and Semiconductor Sectors - The steel sector saw early gains, with Chongqing Steel (01053) up 4.08% and Maanshan Steel (00323) up 3.74%. Analysts suggest that ongoing "anti-involution" policies may improve the supply-demand dynamics in the steel industry [7] - Semiconductor stocks were active, with Hua Hong Semiconductor (01347) up 4.12% and SMIC (00981) up 2.22%. TSMC reported a revenue of 263.71 billion NTD for June, a decrease of 17.7% month-on-month but a 26.9% increase year-on-year [8] Notable Stock Movements - Xirui (02507) reached a new high, closing up 14.01% at 48 HKD, driven by developments in the general aviation sector [9] - NIO-SW (09866) rose 5.98% to 29.25 HKD following the announcement of its new product launch [11] - Gold stocks, particularly Laopu Gold (06181), faced significant declines, dropping 11.42% after a recent high [13][14]

Market Overview - The Hong Kong stock market experienced a pullback after an initial rise, with the Hang Seng Index closing up by 0.46%, the Hang Seng China Enterprises Index up by 0.22%, and the Hang Seng Tech Index up by 0.61% [1][2]. Sector Performance - The financial sector showed strong performance, particularly Chinese brokerage stocks, with notable gains in insurance stocks. However, most domestic bank stocks fell in the afternoon [2][6]. - Steel stocks saw significant increases, with companies like Aowei Holdings rising over 16% and Zhaogang Group-W up over 15%. Goldman Sachs noted that the central government's focus on reducing excessive competition could lead to improved profitability in the steel industry [8][10]. - The biopharmaceutical sector also performed well, with companies like Kelaiying rising over 13% and WuXi AppTec up over 10%. Analysts expect a positive investment environment for innovative drug-related assets [8]. Individual Stock Movements - Major technology stocks had mixed results, with Alibaba and Meituan both rising over 1%, while Kuaishou fell over 2% [5][6]. - Among financial stocks, Zhongzhou Securities surged by 47.47%, followed by Xingzheng International up 24.21%, and Guolian Minsheng up 15.40% [7]. - In the education sector, stocks like Tianli International Holdings and Minsheng Education fell over 3% [11]. Capital Flows - Southbound funds recorded a net inflow of HKD 1.744 billion, with the Shanghai-Hong Kong Stock Connect showing a net outflow of HKD 2.197 billion and the Shenzhen-Hong Kong Stock Connect a net inflow of HKD 3.941 billion [14]. Future Outlook - Goldman Sachs is optimistic about Asian stock markets, citing increased certainty in tariff policies and a loose monetary environment as positive factors for the region's stock markets [15].

Core Viewpoint - The healthcare ETF, Taikang (159760), has shown a strong performance with a 1.51% increase, marking three consecutive days of gains, driven by significant rises in key stocks such as WuXi AppTec and Kelun Pharmaceutical [1][2]. Group 1: ETF Performance - As of July 11, 2025, the Taikang healthcare ETF reached a new high of 82.42 million yuan, the highest in three months [2]. - The index it tracks, the National Public Health and Healthcare Index (980016), rose by 1.45% [1]. Group 2: Company Performance - WuXi AppTec (603259) reported an expected adjusted net profit of approximately 6.315 billion yuan for the first half of the year, a year-on-year increase of about 44.43% [2]. - The company anticipates a net profit attributable to shareholders of approximately 8.561 billion yuan, reflecting a year-on-year growth of about 101.92% [2]. - Basic earnings per share are projected to be around 3.01 yuan, up approximately 106.16% year-on-year [2]. Group 3: Policy and Market Trends - The National Healthcare Security Administration has initiated a new round of adjustments to the national medical insurance drug catalog, indicating a favorable policy environment for innovative drugs [3]. - China ranks first globally in the number of original drugs developed by its enterprises, with increasing foreign capital investment in Chinese innovative drugs [3]. - The healthcare sector is expected to benefit from a comprehensive policy support system, enhancing the global market position of domestic innovative drugs [3]. Group 4: Index Composition - As of May 30, 2025, the top ten weighted stocks in the National Public Health and Healthcare Index accounted for 52.46% of the index, including major players like Hengrui Medicine and Mindray Medical [4].

Group 1 - The ChiNext Index (399006) has shown a positive performance with a rise of 1.16%, highlighting the strength of key stocks such as Dongfang Caifu, which increased by 4.6%, and Mindray Medical, which rose by 1.8% [1] - The ChiNext ETF (159915) has gained significant attention, with its latest scale exceeding 84 billion, making it the largest among similar ETFs, and it has seen a net subscription of 1.11 million shares [1] - The report from Everbright Securities indicates that the second half of the year may see sustained corporate profit recovery, driven by improved domestic demand, favorable policies, and the rise of emerging industries such as artificial intelligence and robotics [2][3] Group 2 - The ChiNext Index is characterized by a high proportion of high-tech enterprises, strong R&D investment, and significant growth potential, reflecting China's economic transformation and upgrade [3] - The ChiNext ETF (159915) maintains a low fee structure, with management and custody fees at 20 basis points per year, aligning with the brand's low-cost philosophy [4] - Related products include the ChiNext ETF and its various linked funds, indicating a range of investment options for investors [5]

Core Insights - The report highlights the ongoing discussions between U.S. Secretary of State Marco Rubio and Chinese Foreign Minister Wang Yi, indicating potential diplomatic engagement ahead of a summit between the two nations [8][13] - OPEC+ is reportedly considering pausing further production increases starting in October to prevent a decline in oil prices, following a recent increase in production that has led to oversupply concerns [8][13] - The Hong Kong Monetary Authority has intervened in the currency market for the fourth time in two weeks, purchasing approximately HKD 13.3 billion to maintain the currency peg [8][13] - China's excavator sales surged over 20% year-on-year in the first half of the year, suggesting a stabilization in the construction industry [8][13] Market Performance - The Shanghai Composite Index rose by 0.48% to close at 3509.68 points, reaching a nine-month high during the trading session [1] - The Hang Seng Index increased by 0.57% to close at 24028.37 points, while the Hang Seng Tech Index fell by 0.29% [1][5] - The trading volume in the Hong Kong market was approximately HKD 246.73 billion [1] Company-Specific Developments - Rui Ming Technology is planning to issue H-shares overseas and list on the Hong Kong Stock Exchange, with a projected net profit increase of 53.64% to 77.9% for the first half of the year [12] - WuXi AppTec anticipates a net profit of approximately RMB 8.561 billion for the first half of the year, representing a growth of about 102% [14] - NIO's new vehicle model, the L90, is set to be delivered next month, with a starting price of approximately RMB 279,900 [14]