2025-10-27 12:06Summary of WuXi AppTec Co. (2359.HK) Earnings Call Company Overview - Company: WuXi AppTec Co. (2359.HK) - Industry: Healthcare Services, specifically focusing on clinical research and contract development manufacturing Key Financial Highlights - 3Q25 Revenue: Rmb12.1 billion, representing a 15.3% year-over-year increase (vs. guidance of Rmb11.5 billion) and 19.7% growth for continuing operations [1] - TIDES Business Growth: Grew 91% year-over-year, contributing 23% of total revenue [1] - Adjusted Non-IFRS Net Profit: Rmb4.2 billion, up 42% year-over-year, exceeding guidance of Rmb3.4 billion [1] - Gross Margin: Improved to 49.8%, compared to guidance of 45.0%, driven by operational efficiency and higher-margin projects [1] - FY25 Revenue Guidance: Raised to Rmb43.5-44.0 billion from Rmb42.5-43.5 billion, with expected revenue growth for continuing operations adjusted to 17-18% year-over-year [1] Order Dynamics and Backlog - New Order Growth: Continued strong momentum with a 37% year-over-year increase in new orders for continuing operations [2] - Backlog: Increased to Rmb59.9 billion, up 41.2% year-over-year [2] - TIDES Backlog Growth: Grew by 17.1% year-over-year in the first nine months, moderating from 48.8% in the first half of the year [2] - Future Insights Expected: Management to provide insights on order growth drivers beyond peptides/GLP-1, trends in US/EU demand, and developments in small molecule CDMO pipelines [2] Capital Expenditure and Free Cash Flow - 3Q25 Capex: Rmb1.47 billion, with a total of Rmb3.57 billion for the first nine months [3] - Full Year Capex Budget: Lowered to Rmb5.5-6 billion from Rmb7-8 billion due to longer settlement cycles [3] - Free Cash Flow Guidance: Raised to Rmb8-8.5 billion from Rmb5-6 billion [3] Strategic Moves - Disposal of Clinical CRO Business: Agreement signed to divest 100% of the China-based clinical research services business for Rmb2.8 billion, which accounted for 3.5% of total revenue and 0.7% of net profit in 9M25 [4] - Focus on Core Operations: This divestiture follows previous disposals, indicating a strategic shift towards core operations [4] Market Valuation and Risks - 12-Month Target Price: HK$109.6 based on a forward P/E of 18x [9] - A-Share Target Price: Rmb105.6, derived from the H-share target price [10] - Downside Risks: Include potential legislative changes, pricing pressures, regulatory risks, and slower-than-expected business ramp-up [9] Additional Insights - Investor Focus Areas: Anticipated discussions on early-stage project recovery, geopolitical risks, and further asset disposal plans during the upcoming earnings call [8] This summary encapsulates the key financial metrics, strategic decisions, and market outlook for WuXi AppTec Co., providing a comprehensive overview for potential investors and stakeholders.