20260325-招银国际-药明合联-02268.HK-Ambitious_capacity_expansion_to_continue_6页_658kb

WuXi XDC (2268 HK) Summary

Core Content

WuXi XDC, a leading CDMO (Contract Development and Manufacturing Organization) in the global pharmaceutical industry, reported strong financial results for 2025. The company achieved a 46.7% YoY revenue growth and a 69.9% YoY increase in adjusted attributable net profit, slightly exceeding revenue forecasts but underperforming on the adjusted net profit side.

As of the end of 2025, WuXi XDC's backlog surged by 50.3% to $1.49bn, while newly signed orders increased by 41% to $1.33bn, demonstrating continued strong demand for its services. The company anticipates revenue growth of more than 40% YoY in 2026, with GPM (Gross Profit Margin) expected to remain flat or stable compared to 2025.

Main Points

Business Growth and Pipeline

• Conjugated drug R&D and manufacturing demand showed strong momentum in 2025.
• WuXi XDC signed 70 new iCMC projects, up 32% YoY, with 22 projects transferred from external sources, reflecting growing customer trust.
• Novel XDC projects accounted for nearly 50% of newly signed projects, showing the company's active engagement in cutting-edge drug development.
• PPQ (Process Validation) projects increased by 125% to 18, indicating strong potential for future commercialization.

Capacity Expansion

• WuXi XDC acquired BioDlink (1875.HK) in January 2026, enhancing its ADC DS and DP capacities.
• BioDlink's DP capacity of 8 million vials exceeds WuXi XDC's current DP3 facility.
• A new payload-linker site in Jiangyin is under construction with five times the capacity of the existing WuXi site.
• WuXi XDC's Singapore site is expected to achieve GMP release in 1H26, while its US site is in the site-selection phase.
• The company plans to invest RMB8.0bn in Capex between 2026 and 2030, with RMB3.1bn allocated for 2026, representing a 158% YoY increase in Capex.

Financial Projections

• Revenue is projected to grow at 36.2% / 31.7% / 29.9% YoY for 2026E/27E/28E.
• Adjusted net profit is expected to increase by 34.5% / 31.7% / 32.5% YoY for the same periods.
• Adjusted EPS is forecasted at 1.54 / 2.03 / 2.69 RMB for 2026E/27E/28E.
• The P/E (Adjusted) is expected to decrease from 42.1 in FY25A to 32.1 / 24.3 / 18.4 in FY26E/27E/28E, indicating a potential decline in valuation as growth slows.

Valuation and Investment Recommendation

• The DCF-based target price (TP) has been reduced from HK$88.0 to HK$82.0, reflecting updated forecasts.
• The current price is HK$56.15, with a 46.0% upside to the new TP.
• The analyst maintains a BUY rating, citing the company's positive long-term growth outlook.

Key Information

Shareholding

• WuXi Biologics holds 50.5% of shares.
• WuXi AppTec holds 18.6% of shares.

Stock Performance

• Market Cap: HK$70,636.3 million.
• Average 3-month total return: HK$269.9 million.
• 52-week High/Low: HK$85.10 / HK$28.85.
• Total issued shares: 1,258.0 million.

Financial Highlights (2023A–2028E)

Capital Structure

• Total assets are projected to increase from RMB14,435 million (2025A) to RMB26,285 million (2028E).
• Total liabilities are expected to grow from RMB3,710 million (2025A) to RMB6,629 million (2028E).
• Net debt to equity is expected to decrease from 0.6 (2025A) to 0.4 (2028E).

Growth and Profitability

• Revenue growth is expected to slow from 46.7% (2025A) to 36.2% (2026E).
• Gross margin is forecasted to increase slightly from 36.0% (2025A) to 37.5% (2028E).
• Operating margin is expected to stabilize around 30.5% for 2026E–2028E.
• Adj. net profit margin is expected to remain stable at 26.2% for 2026E–2028E.

DCF Valuation (HK$ billion)

Analyst Recommendations and Ratings

• Rating: BUY (Maintained)
• Target Price: HK$82.00
• Previous Target Price: HK$88.00
• Potential Return: 46.0% upside from current price.

Sensitivity Analysis

Risk and Disclaimer

• This report is not individually tailored and should not be used for investment decisions without professional advice.
• Past performance does not guarantee future results.
• The value of investments is uncertain and may fluctuate.
• No liability is accepted for any loss, damage, or expense incurred from relying on this report.
• The information is based on public data and is not guaranteed for accuracy or completeness.
• CMBIGM is not a registered broker-dealer in the U.S. and not subject to U.S. rules on research independence.

Analyst Certification

• The research analyst certifies that the views expressed accurately reflect personal views and are not related to compensation.
• The analyst did not trade in the stock within 30 days prior to the report and will not trade within 3 business days after the report.

CMBIG Ratings

• BUY: Potential return of over 15% over the next 12 months.
• OUTPERFORM: Industry expected to outperform the relevant market benchmark.
• NOT RATED: Stock is not rated by CMBIGM.

Contact Information

• CMB International Global Markets Limited
  • Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong
  • Tel: (852) 3900 0888
  • Fax: (852) 3900 0800

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