Core Viewpoint - WuXi AppTec has reported a strong performance in Q3 2025, with revenue and net profit both increasing, while also announcing a strategic focus on its CRDMO (Contract Research, Development, and Manufacturing) core business by divesting its clinical operations [1][2][5]. Financial Performance - For the first three quarters of 2025, the company achieved revenue of 32.86 billion yuan, a year-on-year increase of 18.6%, and a non-GAAP net profit attributable to shareholders of 9.52 billion yuan, up 42.5% [2][3]. - In Q3 alone, revenue reached 12.06 billion yuan, reflecting a 15.3% year-on-year growth, while non-GAAP net profit surged by 73.8% to 3.94 billion yuan [2][3]. Business Segments - The chemical business was the largest contributor to revenue, generating 25.98 billion yuan, a 29.3% increase year-on-year, driven by strong performance in small molecule drug discovery and development [4][5]. - The company reported a backlog of orders in its continuing operations amounting to 59.88 billion yuan, a 41.2% increase year-on-year, indicating robust demand [4]. Strategic Moves - WuXi AppTec announced the sale of its clinical research subsidiaries, Shanghai Kande Hongyi Medical Research Co., Ltd. and Shanghai WuXi Jishi Pharmaceutical Technology Co., Ltd., to Hillhouse Capital for a base price of 2.8 billion yuan [7][10]. - The divestiture is part of the company's strategy to concentrate on its CRDMO business model, which is expected to enhance its global capabilities and operational efficiency [12]. Operational Efficiency - The company has focused on optimizing production processes and improving operational efficiency, which has contributed to increased profitability and capacity utilization [5][6].

Financial Data and Key Metrics Changes - The company's total revenue reached RMB32.86 billion, with revenue from continuing operations growing 22.5% year over year to RMB32.45 billion [7] - Adjusted non-IFRS net profit increased by 43.4% to RMB10.54 billion, with a net profit margin of 32.1% [7][27] - The backlog for continuing operations reached a record RMB59.88 billion, growing 41.2% year over year [8] Business Line Data and Key Metrics Changes - Chemistry's CRDMO revenue grew 29.3% to RMB25.98 billion, with an adjusted non-IFRS gross profit margin improving by 5.8 percentage points to 51.3% [11] - Small molecule DNM business revenue increased by 14.1% to RMB14.24 billion [13] - WuXi Tides revenue surged 121.1% to RMB7.84 billion, with a backlog growth of 17.1% [14] Market Data and Key Metrics Changes - Revenue from the U.S. region grew 31.9%, while Europe saw a 13.5% increase, and revenue from Japan, Korea, and the rest of the world grew 9.2% [10] - Revenue from China remained relatively flat, indicating a diversified revenue stream [10] Company Strategy and Development Direction - The company is focusing on enhancing core capabilities and expanding capacity to meet customer demand [7] - An agreement was signed to sell 100% of the equity of its China-based clinical research service business, which will be classified as a discontinued operation [32][33] - The company raised its full-year guidance for continuing operations revenue growth to 17% to 18% [37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in customer demand for enabling services and the resilience of the CRDMO business model [36] - The company expects to improve adjusted non-IFRS net profit margins in 2025 and anticipates free cash flow to increase [37][38] Other Important Information - The company has implemented a total of RMB6.88 billion in cash dividends and share repurchases, representing over 70% of net profit in 2024 [38] - The company is actively advancing global capacity expansion, with CapEx payments reaching RMB3.57 billion in the first three quarters [30] Q&A Session Summary Question: What is driving the backlog growth, particularly in small molecules and Tides business? - Management noted that the backlog has reached a historical high, driven by small molecule DNM and Tides business, with a year-over-year growth of approximately 30% [44][45] Question: What is the outlook for margins moving forward? - The company indicated that margin growth is driven by continuous optimization of manufacturing processes and an increase in late-phase and commercial projects [50][51] Question: How do U.S. customers view the new legislative proposals regarding biotechnology? - Management stated that they are closely monitoring legislative changes and have not seen a significant shift in customer demand patterns [54][58] Question: What is the impact of the disposal of the clinical research service business on margins? - The margin mix is expected to improve following the divestiture of the clinical CRO business, enhancing the overall margin of the WuXi testing business [110] Question: How will the company utilize the cash from the recent transactions? - The cash will be used to support global growth and capacity building initiatives [112]

Core Viewpoint - The company, WuXi AppTec, reported strong financial performance for the first three quarters of 2025, with significant growth in various business segments, particularly in the CRDMO (Contract Research, Development, and Manufacturing) model, and announced a strategic asset sale to focus on core operations [1][26][29]. Financial Performance - As of September 30, 2025, the company had a backlog of orders amounting to RMB 59.88 billion, representing a year-on-year increase of 41.2% [5]. - The total revenue for the first three quarters of 2025 reached RMB 32.45 billion, with a year-on-year growth of 18.6% [5]. - Revenue from continuous operations grew by 22.5%, with chemical business revenue at RMB 25.98 billion, up 29.3% year-on-year [5][6]. Business Segments - The small molecule drug discovery segment delivered over 430,000 new compounds in the past year, with 250 molecules transitioning from research to development in the first three quarters of 2025 [6]. - The small molecule development and manufacturing (D&M) segment reported revenue of RMB 14.24 billion, a 14.1% increase year-on-year, with a total of 3,430 molecules in the pipeline [6]. - The TIDES (oligonucleotide and peptide) business saw revenue of RMB 7.84 billion, a remarkable growth of 121.1% year-on-year, with a 17.1% increase in backlog orders [7]. Strategic Decisions - The company announced the sale of 100% equity in two subsidiaries for a base price of RMB 2.8 billion to streamline operations and focus on its CRDMO business model [26][29]. - The board of directors approved the asset sale on October 24, 2025, with a unanimous vote, indicating strong internal support for the strategic shift [22][30]. Market Position - WuXi AppTec maintains a strong reputation in the global pharmaceutical R&D industry, adhering to the highest international quality standards and continuously optimizing its integrated CRDMO service model [2][3]. - The company has established a robust client base across various regions, including the US, Europe, and China, with significant revenue contributions from these markets [5].

Core Insights - WuXi AppTec (603259.SH) reported a revenue of RMB 32.857 billion for the first three quarters of 2025, representing a year-on-year growth of 18.61% [1] - The net profit attributable to shareholders reached RMB 12.076 billion, showing a significant increase of 84.84% year-on-year [1] - The net profit after deducting non-recurring gains and losses was RMB 9.522 billion, up by 42.51% year-on-year [1] Group 1: Chemical Business - The chemical business generated revenue of RMB 25.98 billion, reflecting a year-on-year growth of 29.3% [1] - The small molecule drug discovery ("R") business has successfully synthesized and delivered over 430,000 new compounds to clients in the past twelve months [1] - In the first three quarters of 2025, the company converted 250 molecules from research to development [1] Group 2: Small Molecule Development and Manufacturing (D&M) - The small molecule D&M business achieved revenue of RMB 14.24 billion, with a year-on-year increase of 14.1% [2] - A total of 621 new molecules were added to the small molecule D&M pipeline in the first three quarters of 2025, bringing the total to 3,430, which includes 80 commercial projects and 87 Phase III clinical projects [2] - The company successfully passed FDA inspections at its Changzhou and Taixing API bases with zero defects in March 2025 [2] Group 3: TIDES Business - The TIDES business (oligonucleotides and peptides) experienced rapid growth, with revenue reaching RMB 7.84 billion, a year-on-year increase of 121.1% [3] - As of September 2025, TIDES' order backlog grew by 17.1% year-on-year [3] - The number of clients served in TIDES D&M increased by 12%, and the number of molecules served rose by 34% [3]

Core Viewpoint - WuXi AppTec (02359) reported strong interim results for the six months ending June 30, 2025, with significant revenue and profit growth, leading to a positive market reaction with a share price increase of over 4% [1] Group 1: Financial Performance - The company achieved a revenue of 20.799 billion RMB, representing a year-on-year increase of 20.6% [1] - Gross profit reached 9.112 billion RMB, up 36% year-on-year [1] - Net profit attributable to shareholders was 8.287 billion RMB, marking a substantial increase of 95.5% year-on-year [1] - Basic earnings per share were reported at 2.92 RMB, with an interim dividend proposed at 3.5 RMB per 10 shares [1] Group 2: Order Backlog and Revenue Sources - As of June 30, 2025, the company had a backlog of orders amounting to 56.69 billion RMB, which is a 37.2% increase year-on-year [1] - Revenue from ongoing operations was 20.41 billion RMB, with contributions from various regions: - Revenue from U.S. clients was 14.03 billion RMB, up 38.4% year-on-year [1] - Revenue from European clients was 2.33 billion RMB, increasing by 9.2% [1] - Revenue from Chinese clients was 3.15 billion RMB, down 5.2% [1] - Revenue from other regions was 0.90 billion RMB, up 7.6% [1] Group 3: Business Segments - The chemical business generated revenue of 16.3 billion RMB, reflecting a year-on-year growth of 33.5% [2] - The small molecule drug discovery (R) business has been a key driver, with over 440,000 new compounds successfully synthesized and delivered to clients in the past twelve months [2] - The company has implemented a "follow the customer" and "follow the molecule" strategy, establishing strong partnerships with global clients, which supports the ongoing growth of its CRDMO business [2]

Investment Rating - The investment rating for the company is "Outperform the Market" [5][3][29] Core Views - The company's revenue has shown a quarter-on-quarter increase, with rapid growth in new molecular business. The overall revenue for 2024 is 39.241 billion yuan, a decrease of 2.7%, but a 5.2% increase when excluding COVID-19 commercialization projects. The net profit attributable to the parent company is 9.450 billion yuan, down 1.6%, while the adjusted Non-IFRS net profit is 10.58 billion yuan, down 2.5% [6][3][5] - The CRDMO business model is driving growth, with revenue from chemical, testing, and biological services at 29.052 billion yuan (-0.4%, with an 11.2% increase excluding COVID-19 projects), 5.671 billion yuan (-13.3%), and 2.544 billion yuan (-0.3%) respectively [16][5] Summary by Sections Financial Performance - In Q4 2024, the company achieved a single-quarter revenue of 11.539 billion yuan (+6.9%) and a net profit of 2.917 billion yuan (+90.6%). The adjusted Non-IFRS net profit for the same quarter was 3.240 billion yuan (+20.4%) [6][3][5] - The gross profit margin for 2024 is 41.48% (+0.3pp), and the net profit margin is 24.38% (+0.3pp) [11][5] Business Segments - The small molecule CRO/CDMO business has shown strong growth, with over 460,000 new compounds synthesized and delivered in 2024 (+10%). The small molecule D&M business generated revenue of 17.87 billion yuan, with a 6.4% increase when excluding specific commercialization projects [23][5] - The TIDES business has also experienced rapid growth, achieving revenue of 5.80 billion yuan (+70.1%) and a 103.9% increase in orders on hand by the end of 2024 [23][5] Future Outlook - The company maintains a solid industry position, with steady quarterly performance improvements expected. The profit forecasts for 2025-2027 are adjusted upwards, with net profits projected at 11.162 billion yuan, 12.732 billion yuan, and 14.506 billion yuan respectively, reflecting year-on-year growth rates of 18.11%, 14.07%, and 13.93% [3][5][4]