Summary of WuXi XDC (2268.HK) Conference Call Company Overview - **Company**: WuXi XDC - **Ticker**: 2268.HK - **Industry**: Contract Research and Development Manufacturing Organization (CRDMO) focused on antibody-drug conjugates (ADCs) and bioconjugates Key Financial Highlights - **1H25 Revenue Growth**: +60% year-over-year (y/y), exceeding Goldman Sachs' estimate of +50% y/y [1] - **Net Profit Growth**: Over +50% y/y, resulting in a net profit margin (NPM) of 27%, compared to 29% in 1H24 and 24% in 2H24 [1] - **Backlog**: As of year-end 2024, backlog reached US$991 million, a +71% y/y increase from US$579 million in 1H24 [5][6] - **New Orders**: New orders for 2H24 are projected to reach US$476 million, with a y/y growth of 47% [5][6] Strategic Insights - **Capacity Expansion**: New capacity in Singapore is expected to come online by the end of 2025, which may impact order intake and pricing strategy [5][9] - **Emerging Modalities**: WuXi XDC is positioned to capture growth in emerging modalities such as RDCs and PDCs, with a focus on differentiating its platform [5] - **Commercial Strategy**: Management anticipates that current commercial projects may start contributing revenue from 2026, with a more significant impact expected from 2027 [5] Market Position and Risks - **China Biotech Licensing**: WuXi XDC is benefiting from a surge in biotech licensing in China, servicing 60% of large-scale deals (>US$1 billion) and leading in IND approvals globally in 2024 [5] - **Legislative Risks**: Potential risks include the impact of the proposed BIOSECURE bill, which could affect federal-funded projects and WuXi's revenue from the U.S. and China [7][8] - **Competitive Landscape**: Increasing competition from global peers and geopolitical uncertainties pose risks to WuXi XDC's market position [7][8] Valuation and Price Target - **12-Month Price Target**: HK$49.30, based on a 12-month forward P/E of 31x [10] - **Market Capitalization**: HK$59.2 billion (approximately US$7.5 billion) [10] Conclusion WuXi XDC is experiencing robust growth driven by strong demand in the ADC and bioconjugate markets, with significant order backlog and new order growth. However, the company faces potential risks from legislative changes and increasing competition. The strategic expansion of capacity and focus on emerging modalities may provide further growth opportunities.