Summary of WuXi AppTec Conference Call Company Overview - WuXi AppTec is a leading global provider in the small molecule Contract Research, Development, and Manufacturing Organization (CRDMO) sector, with a revenue scale exceeding 40 billion yuan and a market share of approximately 8%-9% globally, which is expected to double in the future [2][29]. Financial Performance - The company is projected to achieve revenues of 42.5 to 43.5 billion yuan in 2025, reflecting a mid-double-digit growth rate, with an adjusted net profit margin expected to improve [2][9]. - The adjusted net profit margin reached 30% in the first half of 2025, driven by revenue structure optimization and cost reduction efforts [2][11]. - Capital expenditures are anticipated to be between 7 to 8 billion yuan in 2025, focusing on overseas markets and new molecular businesses, particularly peptides [2][10]. Business Segments - The chemical segment continues to be the core revenue and profit source, with its revenue share increasing to nearly 80% by 2024 and expected to rise further in 2025 [2][15]. - The small molecule CLDMO integrated business model covers the entire chain from drug discovery to commercial production, with early R&D contributing 20% of revenue, small molecule CDMO accounting for 62%, and rapidly growing peptide business reaching 20% [2][16]. Market Dynamics - The company has maintained a growth trajectory despite geopolitical risks, such as US-China tariffs, which have had limited actual impact on operations [2][7][13]. - The peptide business is a key growth driver, with expected revenue growth exceeding 80% in 2025, supported by demand for GLP-1 class products [2][19]. Operational Challenges - The testing business has faced challenges due to intense domestic competition, leading to a decline in revenue and gross margins [2][20][21]. - The clinical CRO and SMO sectors are experiencing significant competitive pressure, particularly in the CRO space, which has seen a 15% decline in revenue [2][23]. Future Outlook - WuXi AppTec is expected to continue its upward trajectory, with a strong order backlog and anticipated revenue growth of over 30% in 2025 [2][27]. - The company is well-positioned to capitalize on the global small molecule CMO market, with significant capital investments planned to enhance production capacity [2][31][32]. Key Risks - Geopolitical risks, particularly related to tariffs and regulations affecting Chinese suppliers, remain a concern but are being managed effectively [2][6][7]. - The company’s personnel size is expected to shrink in 2025 due to business divestitures, yet it will maintain the largest technical team globally [2][14]. Conclusion - WuXi AppTec is poised for robust growth driven by its strategic focus on high-demand sectors, effective management of geopolitical risks, and a strong operational foundation, making it a key player in the CRDMO industry [2][32].

Investment Rating - The report maintains a rating of "Accumulate" for WuXi AppTec (603259) with a target price of 93.84 CNY, up from the previous forecast of 71.82 CNY [1][11]. Core Views - The report highlights strong growth in backlog orders and a significant increase in peptide business, indicating a positive long-term growth outlook for the company [1][11]. - The company is expected to achieve a revenue of 39.24 billion CNY in 2024, reflecting a decrease of 2.7% year-on-year, while the net profit attributable to the parent company is projected at 9.45 billion CNY, down 1.6% [2][11]. - The report notes that the fourth quarter of 2024 is expected to show a revenue of 11.54 billion CNY, representing a 6.9% increase, with an adjusted net profit of 3.234 billion CNY, up 20.3% [11]. Financial Summary - Revenue and Profit Forecasts: - 2023A: Revenue 40.34 billion CNY, Net Profit 9.607 billion CNY - 2024A: Revenue 39.241 billion CNY, Net Profit 9.450 billion CNY - 2025E: Revenue 42.602 billion CNY, Net Profit 11.778 billion CNY - 2026E: Revenue 47.327 billion CNY, Net Profit 12.846 billion CNY - 2027E: Revenue 52.801 billion CNY, Net Profit 14.749 billion CNY [2][13]. - Earnings Per Share (EPS) Forecasts: - 2023A: 3.33 CNY - 2024A: 3.27 CNY - 2025E: 4.08 CNY - 2026E: 4.45 CNY - 2027E: 5.11 CNY [2][13]. - Return on Equity (ROE) Forecasts: - 2023A: 17.4% - 2024A: 16.1% - 2025E: 17.5% - 2026E: 16.8% - 2027E: 17.0% [2][13]. Market Data - The stock has a 52-week price range of 36.87 to 69.68 CNY, with a total market capitalization of 201.235 billion CNY [3][11]. - The company has a net asset value per share of 20.30 CNY and a price-to-book ratio of 3.4 [4][11]. Business Performance - The report indicates that the chemical business is expected to grow by 11.2% in 2024, excluding the impact of COVID-19 commercialization orders, with an adjusted gross margin of 46.4% [11]. - The peptide business (TIDES) is projected to achieve a revenue of 5.8 billion CNY in 2024, marking a 70.1% increase, with backlog orders growing by 103.9% [11].