20250319-招银国际-药明康德-603259.SH-Strengthened_earnings_certainty_drives_valuation_recovery_6页_996kb

WuXi AppTec (603259 CH) Summary

Core Content

WuXi AppTec reported a year-over-year revenue decline of 2.73% in FY24, reaching RMB39.2bn, with a 2.5% decrease in adjusted non-IFRS net profit to RMB10.6bn. However, the company demonstrated encouraging earnings improvement in 4Q24, achieving positive revenue and profit growth. The TIDES business was the primary growth engine, with full-year revenue increasing by 70.1% YoY. The company's backlog grew significantly to RMB49.3bn, up 47% YoY, with TIDES backlog rising by 103.9% YoY. Management has a positive outlook for 2025, forecasting 10–15% YoY revenue growth in continuing operations and further improvement in adjusted non-IFRS net profit margin.

Key Financial Highlights

• Revenue:
  • FY23A: RMB40,341m
  • FY24A: RMB39,241m
  • FY25E: RMB43,367m (+10.5% YoY)
  • FY26E: RMB49,961m (+15.2% YoY)
  • FY27E: RMB58,103m (+16.3% YoY)
• Adjusted Non-IFRS Net Profit:
  • FY23A: RMB10,854m
  • FY24A: RMB10,583m
  • FY25E: RMB11,823m (+11.7% YoY)
  • FY26E: RMB14,075m (+19.0% YoY)
  • FY27E: RMB16,339m (+16.1% YoY)
• EPS (Adjusted):
  • FY23A: RMB3.67
  • FY24A: RMB3.67
  • FY25E: RMB4.09
  • FY26E: RMB4.87
  • FY27E: RMB5.66
• Consensus EPS:
  • FY25E: RMB3.79
  • FY26E: RMB4.20
  • FY27E: RMB4.63

Key Metrics and Outlook

• Target Price: RMB94.05 (Previously RMB78.51)
• Price Performance (12-mth):
  • Absolute: 35.0% upside
  • Current Price: RMB69.68
• Growth Forecasts:
  • Revenue growth for 2025E: 14.4% / 15.2% / 16.3% YoY
  • Adjusted non-IFRS net profit growth for 2025E: 11.7% / 19.0% / 16.1% YoY
• Earnings Recovery: The improved performance and robust order book are driving valuation recovery.

TIDES Business

• TIDES revenue in 2024 increased by 70.1% YoY, with a backlog growth of 103.9% YoY.
• The company is expanding polypeptide manufacturing capacity to exceed 100k liters by late 2025, with management anticipating over 60% YoY revenue growth in 2025.
• Underlying demand for polypeptide manufacturing remains strong in the market.

Shareholder Returns

• In 2024, the company completed RMB4.0bn in share repurchases and cancellations and maintained a dividend payout ratio of 30%.
• A one-time special dividend of RMB1.0bn and a 2025 interim dividend were announced.
• Plans to repurchase RMB1.0bn of A-shares in 2025.

Valuation and DCF Model

• DCF Valuation (RMB mn):
  • 2025E: RMB253,364
  • Terminal Value: RMB364,875
  • Terminal Growth Rate: 2.0%
  • WACC: 9.42%
• Equity Value: RMB271,610m
• Price per Share: RMB94.05
• Valuation Ratios:
  • P/E (Adjusted): 17.0 / 14.3 / 12.3
  • P/B: 3.0 / 2.6 / 2.3
  • P/CFPS: 13.2 / 12.9 / 11.3

Profitability

• Gross Margin: 44.73% / 45.12% / 45.37%
• Operating Margin: 31.17% / 31.50% / 31.75%
• Adj. Net Profit Margin: 27.26% / 28.17% / 28.12%
• ROE: 20.2% / 19.5% / 19.8%

Financial Health

• Net Debt to Equity: -0.1 / -0.2 / -0.2 (2025E: -0.3)
• Current Ratio: 2.7 / 3.1 / 3.6
• Working Capital Efficiency:
  • Receivable turnover days: 65.0
  • Inventory turnover days: 80.6
  • Payable turnover days: 74.6

Analyst Ratings

• CMBIGM Rating: BUY
• Outperformance Potential: Over 15% return in next 12 months
• Reasons for Buy Rating:
  • Strong order growth and backlog expansion
  • Positive revenue and profit growth outlook
  • Enhanced shareholder returns
  • Commitment to expanding TIDES and polypeptide capacity

Analyst Information

• Jill WU, CFA: (852) 3900 0842, jillwu@cmbi.com.hk
• Benchen HUANG, CFA: huangbenchen@cmbi.com.hk

Disclaimer

• The report is for informational purposes only and not tailored to individual investors.
• CMBIGM does not guarantee accuracy, completeness, or timeliness of the information.
• Investment decisions should be made with the guidance of a professional financial advisor.
• The company may have investment banking relationships with the entities mentioned, which could lead to conflicts of interest.