WuXi AppTec(603259)2025-03-23 15:39Summary of WuXi AppTec (603259 CH / 2359 HK) Earnings Call Company Overview - Company: WuXi AppTec - Industry: Pharmaceuticals - Date of Report: 20 March 2025 Key Financial Highlights - 2024 Revenue: RMB 39.2 billion, down 2.7% year-on-year (up 5.2% excluding COVID-19 revenue) [2][3] - Adjusted Non-IFRS Net Profit for 2024: RMB 10.6 billion, down 2.5% year-on-year [2] - 4Q24 Performance: Revenue grew 6.9% and adjusted non-IFRS net profit grew 20.4% [2] - 2025 Revenue Guidance: Expected growth of 10-15% from continuing operations [2] - Market Performance: A/H-share prices increased by 24% and 28% respectively since the beginning of 2025 [2] Growth Projections - 2025-2027 Revenue CAGR: Expected at 11.1% with a solid order booking of RMB 49.3 billion, up 47% year-on-year [3][19] - 2025-2027 Net Profit CAGR: Expected at 12.1% [3][19] - 2025 Capex: Projected to be RMB 7-8 billion to expand CDMO capacity, particularly overseas [3][21] Valuation and Target Prices - Target Price for A-shares: Raised to RMB 90.00 from RMB 82.50, implying approximately 29% upside [4][9] - Target Price for H-shares: Raised to HKD 83.70 from HKD 76.70, implying approximately 16% upside [4][9] - Current PE Multiple: A/H-shares trade at a 19x 2025e PE multiple, nearly 1 standard deviation below historical levels [2] Market Dynamics and Risks - Geographical Revenue Breakdown: North America expected to maintain over 60% revenue share in 2025-27, with China and Europe at nearly 20% and 15% respectively [19] - Risks: Potential impacts from US tariffs and restrictions on the China pharmaceutical supply chain need close monitoring [3][29] Strategic Initiatives - Capacity Expansion: Significant investments in both domestic and international facilities, including new capacities in Singapore, the US, and Switzerland [21] - Product Development: Focus on late-stage revenue from chemical drug and peptide projects, with an expected improvement in net profit margins [3] Shareholder Returns - Payout Strategy: Potential for better payouts to shareholders through dividends and share repurchases [4][36] Conclusion - Investment Recommendation: Maintain Buy rating on A/H shares due to strong growth momentum in peptide and oligonucleotide businesses, despite potential risks from external factors [4][36]