20211102-招银国际-药明康德-603259.SH-Raised_full-year_guidance_post_strong_quarterly_results_4页_841kb

WuXi AppTec (603259 CH) Summary

Core Content Overview

WuXi AppTec, a leading contract research and manufacturing organization (CRO/CDMO), has demonstrated strong performance in its financial results for the third quarter and nine months of 2021. The company raised its full-year 2021 revenue growth guidance to 36–38% YoY, supported by solid growth in the first nine months and anticipated strong customer demand. This guidance is consistent with its historical growth trajectory and indicates continued expansion in key business segments.

Key Financial Highlights

• 3Q21 Revenue: RMB5,985 million (up 31% YoY)
• 3Q21 Net Profit: RMB887 million (up 36% YoY)
• 9M21 Revenue: RMB16,521 million (up 40% YoY)
• 9M21 Net Profit: RMB3,562 million (up 50% YoY)
• Recurring Net Profit (9M21): RMB3,106 million (up 88% YoY)
• Staff Growth: Increased by 29.4% YoY to 33,305 employees, with 1,666 in the US and 308 in the EU

Business Segment Performance

• CDMO Services:
  • 3Q21 revenue up 32% YoY to RMB2,035 million
  • 9M21 revenue up 52% YoY to RMB2,277 million
  • Project count reached 1,548 in 3Q21 (up 36% YoY), with 77 oligo & peptide drug CDMO projects (up 97% YoY)
• Clinical CRO Services:
  • 3Q21 revenue up 33% YoY to RMB419 million
  • 9M21 revenue up 47% YoY to RMB1,152 million
  • Recovered from the negative impact of the pandemic in 2020

New Capabilities Development

• Cell & Gene Therapy (WuXi ATU):
  • 3Q21 revenue up 15% YoY to RMB283 million
  • 9M21 revenue declined slightly by 5% YoY to RMB1,152 million
  • Driven by 223% YoY growth in the China market
• New Modalities (Oligo, Cancer Vaccine, PROTAC, etc.):
  • 9M21 revenue up 56% YoY, indicating emerging growth drivers

Financial Outlook and Valuation

• Revenue Growth Projections:
  • FY21E: 37% YoY
  • FY22E: 33% YoY
  • FY23E: 31% YoY
• Adjusted Non-IFRS Net Profit Growth:
  • FY21E: 43% YoY
  • FY22E: 29% YoY
  • FY23E: 34% YoY
• Target Price (TP): RMB167.38 (maintained)
• Current Price: RMB130.18
• TP Upside: +28.57%
• 10-Year DCF-based TP: RMB167.38
• WACC: 9.74%
• Terminal Growth Rate: 3%

Analyst Recommendation

• Ratings: BUY (maintained)
• Reasoning: The company is expected to deliver high-quality earnings growth in 2021, with minimal contribution from COVID-19 related projects, indicating a strong recovery and sustainable growth.

Share Performance

• 1-Month Return: -9.7%
• 3-Month Return: -8.0%
• 6-Month Return: 4.3%
• 12-Month Return: 46.9%

Market and Shareholding Information

• Market Cap: RMB383,376 million
• Shareholding Structure:
  • Management: 25.07%
  • A-share public shareholders: 61.38%
  • H-share public shareholders: 13.55%

Key Financial Ratios

Cash Flow Summary

• Net Cash from Operating Activities:
  • FY19A: RMB2,916 million
  • FY20A: RMB3,974 million
  • FY21E: RMB5,125 million
  • FY22E: RMB6,511 million
  • FY23E: RMB8,480 million
• Net Cash from Investing Activities:
  • FY19A: RMB-4,975 million
  • FY20A: RMB-8,776 million
  • FY21E: RMB-7,000 million
  • FY22E: RMB-5,000 million
  • FY23E: RMB-5,000 million
• Net Cash from Financing Activities:
  • FY19A: RMB1,558 million
  • FY20A: RMB9,888 million
  • FY21E: RMB-1,640 million
  • FY22E: RMB-2,047 million
  • FY23E: RMB-2,722 million

Balance Sheet Overview

• Total Net Assets:
  • FY19A: RMB17,410 million
  • FY20A: RMB32,718 million
  • FY21E: RMB36,406 million
  • FY22E: RMB41,057 million
  • FY23E: RMB47,296 million
• Shareholders’ Equity:
  • FY19A: RMB17,312 million
  • FY20A: RMB32,494 million
  • FY21E: RMB36,148 million
  • FY22E: RMB40,757 million
  • FY23E: RMB46,940 million

Conclusion

WuXi AppTec is experiencing strong growth in its CDMO and clinical CRO segments, supported by a diverse and expanding service portfolio. The company has a solid financial position with consistent revenue and profit growth, and its long-term outlook remains positive. The BUY rating is maintained, with a target price of RMB167.38, indicating a 28.57% upside from the current price. The company is well-positioned to continue its growth trajectory, driven by its expanding capabilities and strong market demand.