2025-08-27 01:12Summary of Asymchem (6821.HK) Earnings Call Company Overview - Company: Asymchem (6821.HK) - Industry: Small molecule Contract Development and Manufacturing Organization (CDMO) - Rating: Buy - Price Target: HK$96.60 (12-month target) - Current Price: HK$91.40 - Upside Potential: 5.7% for H shares, 24.4% for A shares Key Financial Highlights - 2Q25 Revenue: Rmb1.65 billion, representing a year-over-year increase of 27.5% and a quarter-over-quarter growth of 6.9% [2][3] - Recurring Net Profit: Rmb261 million, up 34.3% year-over-year, with gross margin improving to 44.2% [2] - Backlog: Total backlog reached US$1.09 billion as of 1H25, consistent with US$1.05 billion at the end of 2024 [2] - Full-Year Revenue Guidance: Raised to 13-15% growth, indicating 2H25 growth of 7-11% on a higher base [2] Regional Performance - Europe Revenue Growth: Surged by 210.4% year-over-year in 1H25, driven by enhanced business development efforts [2] Capacity Expansion - Peptide Capacity: Expansion from 30kL in 1H25 to 44kL by year-end, aligning with competitors like WuXi AppTec [2] - Capex Increase: Management revised capex upward from previously higher than Rmb1.13 billion for 2024 to support capacity expansion [2] Market Reaction - Share Price Decline: Despite solid 2Q25 results, Asymchem's share price fell by 7-8% on August 26, attributed to a flat backlog and profit-taking among investors [3] Emerging Business Segment - Sales Growth: Emerging business segment sales reached Rmb430 million, up 33% year-over-year, with a gross margin of 49.8% [18] - Order Backlog: Grew 40% year-over-year in 1H25, with expectations for further margin improvement [18] Risks and Challenges - Key Risks: Include loss of key clients, pricing pressure, regulatory risks, rising labor costs, and exposure to US-China trade tensions [22] Valuation and Forecasts - Revised Profit Estimates: FY25e-27e net profit estimates increased by 1.0%, 3.5%, and 2.4% respectively, reflecting growth and margin improvements [18] - Valuation Metrics: Target prices based on a 2027 discounted P/E with an exit P/E of 22x, and a projected EPS CAGR of 15% from 2025 to 2027 [22] Conclusion - Asymchem is well-positioned to capitalize on the growing trend of global CDMO outsourcing to China, supported by its technology leadership and established relationships with major biopharma companies [21]