Summary of WuXi XDC (2268.HK) Earnings Call Company Overview - **Company**: WuXi XDC - **Ticker**: 2268.HK - **Market Cap**: HK$69.6 billion / $8.9 billion - **Industry**: Healthcare Services, specifically focused on antibody-drug conjugates (ADC) and bioconjugates Key Financial Highlights - **1H25 Revenue**: Rmb2.7 billion, up 62% year-over-year - **1H25 Net Profit**: Rmb746 million, up 53% year-over-year - **Net Margin**: Improved to 27.6% from 26.4% in FY24 - **Gross Margin**: Increased to 36.1% from 30.6% in FY24 - **Full-Year Revenue Guidance**: Raised to +45% year-over-year from +35% previously, implying +33% year-over-year or 18% half-over-half in 2H25 - **New Order Growth**: +48% in 1H25, indicating strong industry momentum in ADC [1][2][22] Client and Project Growth - **Total Clients**: Increased to 563 from 499 in 2024 - **Total Projects**: Reached 225, up from 194 at the end of 2024 - **Newly Signed iCMC Projects**: 37, compared to 27 in 2H24 - **Top 20 Global Pharma Clients**: 13 out of 20 are now clients, consistent with 2H24 [2][13] Operational Insights - **Backlog**: Increased to US$1,329 million from US$991 million at the end of 2024 - **Capacity Expansion**: - DP3 achieved GMP release in July 2025 - DP5 under construction, expected GMP release in 2027 - Singapore site mechanical completion achieved in June 2025, with GMP operations expected in 1H26 - **Capex Budget**: Raised to Rmb1.56 billion for FY25, with Rmb900 million allocated to Singapore and Rmb450 million to WuXi site [15][18] Market Position and Strategy - **Market Leadership**: Maintained No.1 position in IND approvals with ~22% market share by revenue - **Emerging Modalities**: Focus on ADC + I/O combinations and novel XDC modalities, with significant growth in non-ADC projects [13][15] - **Investment in Proprietary Platforms**: Continued investment in platforms like WuXi DARx and WuXiTecan to enhance client offerings [15] Risks and Considerations - **Legislative Risks**: Potential impacts from the proposed BIOSECURE bill - **Market Competition**: Increasing competition from global peers - **Geopolitical Uncertainties**: Risks associated with geopolitical factors affecting operations - **Manufacturing Capacity Expansion Delays**: Risks related to the timely expansion of manufacturing capabilities [21][22] Valuation and Rating - **Price Target**: HK$55.7, based on a 12-month forward P/E of 31x - **Current Price**: HK$58.10, indicating a downside of 4.1% - **Rating**: Neutral, reflecting a cautious outlook due to uncertainties in the market [20][21] Conclusion WuXi XDC demonstrates strong financial performance and growth in client base and project backlog, positioning itself as a leader in the ADC market. However, it faces potential risks from legislative changes and increasing competition, warranting a neutral investment rating.