20210816-招银国际-药明康德-603259.SH-Strong_recovery_continued_4页_977kb

报告摘要

WuXi AppTec (603259 CH) Company Update Summary

Core Content

WuXi AppTec reported strong performance in 1H21, with revenue reaching RMB10.54bn, a 46% YoY increase, and a 14% share of the global innovative small molecule drug pipeline. The company's CDMO services, which account for 34% of total revenue, saw the most significant growth at 67% YoY, driven by a robust "win the molecule" strategy. The company also reported substantial increases in attributable net profit (88% YoY) and adjusted non-IFRS net profit (68% YoY), reaching RMB2,127mn and RMB2,448mn, respectively.

Main Points

Revenue Growth

1H21 Revenue: RMB10.54bn (+46% YoY), contributing to 47% of the full-year estimate.
Segment Growth:
- CDMO Services: RMB3,599mn (+67% YoY), representing 34% of total revenue.
- China-based Lab Services: RMB11,778mn (+45% YoY).
- Clinical Research & Other CRO Services: RMB1,672mn (+57% YoY).
- US-based Lab Services: RMB1,394mn (-16% YoY), due to pandemic impact and client delays.

Market Position

The company's share of the global innovative small molecule drug pipeline increased from 11.5% in 2019 to 14% as of Jun 2021.
4 pipeline molecules went commercial in 1H21, including one full CMC project (HutchMed's Savolitinib).
WuXi AppTec is scaling up the production of two novel small molecules for treating COVID-19 infections for major MNCs.
After forming a joint venture with WuXi Biologics, the ADC CDMO client base increased by 57% YoY.

Incentive Schemes

A HK$2bn H share award and trust scheme was proposed to achieve above 34% YoY revenue growth in 2021.
A Shareholder Alignment Incentive (SAI) scheme for senior management was initiated, with a total incentive amount of up to HK$7.5bn.
The incentive pools are tied to H-share price milestones: HK$170, HK$187, HK$204, and HK$238.

Investment and Valuation

The company's diversified investment portfolio is expected to generate significant investment gains over the long term.
The 10-year DCF-based target price was revised to RMB168.06, with a WACC of 9.74% and a terminal growth rate of 3.0%.
Current price is RMB138.74, with a 20.64% upside to the target price.

Key Financial Highlights

Metric	FY19A	FY20A	FY21E	FY22E	FY23E
Revenue (RMB mn)	12,872	16,535	22,774	30,179	39,452
YoY growth (%)	34%	28%	38%	33%	31%
Net Income (RMB mn)	1,855	2,960	5,221	6,584	8,832
YoY growth (%)	-18.0%	59.6%	76.4%	26.1%	34.1%
Adj Non-IFRS Net Income	2,407	3,565	5,084	6,534	8,736
YoY growth (%)	38.2%	48.1%	42.6%	28.5%	33.7%
EPS (RMB)	0.81	1.27	1.77	2.23	2.99
Change (%)	-49%	56%	39%	13%	34%
Consensus EPS (RMB)	N/A	N/A	1.56	2.03	2.66
P/E (x)	170.65	109.10	78.47	62.22	46.38
P/B (x)	18.18	9.87	11.25	9.98	8.66
ROE (%)	10.98	9.13	14.43	16.14	18.79
Net Gearing (%)	0.68	Net Cash	Net Cash	Net Cash	Net Cash

Valuation and Performance

Target Price: RMB167.38 (Previously: RMB224.01).
12-month Price Performance: As per Bloomberg, the stock has shown mixed performance with a 1-month decline of 13.9%, a 3-month increase of 8.7%, and a 6-month decline of 10.0%.
Earnings Revisions: CMBIS revised its adjusted Non-IFRS net profit forecasts for FY21E to FY23E by 8%/3%/3% respectively, with expected YoY growth of 43%/29%/34%.

Risk-Adjusted DCF Valuation

Year	EBIT (RMB mn)	EBIT*(1-tax rate) (RMB mn)	+ D&A (RMB mn)	- Change in working capital (RMB mn)	- Capx (RMB mn)	FCFF (RMB mn)
2021E	6,280	5,317	1,145	-307	-7,000	-845
2022E	7,867	6,687	1,543	-919	-5,000	2,311
2023E	10,529	8,950	1,747	-1,094	-5,000	4,602
2024E	14,214	12,082	2,358	-1,477	-3,500	9,463
2025E	19,047	16,190	3,160	-1,979	-3,500	13,870
2026E	25,333	21,533	4,202	-2,633	-3,500	19,602
2027E	33,439	28,423	5,547	-3,475	-3,500	26,995
2028E	43,805	37,234	7,267	-4,552	-3,500	36,449
2029E	56,947	48,405	9,446	-5,918	-3,500	48,433
2030E	73,461	62,442	12,186	-7,634	-3,500	63,494
Terminal Value (RMB mn)	383,053	-	-	-	-	-
Equity Value (RMB mn)	494,215	-	-	-	-	-

Analyst Ratings

CMBIS Rating: BUY
Potential Return: Over 15% over next 12 months

Analyst Certification

The research analyst certifies that the views expressed reflect personal opinions and that there are no conflicts of interest affecting the report's objectivity. The analyst also confirms that no trading in the covered stocks occurred within 30 days prior to the report's issue and that no trading will occur within 3 business days after.

Important Disclosures

This report is for informational purposes only and should not be used as investment advice.
CMBIS is not liable for any losses incurred from reliance on the information.
The report is intended for distribution to specific investors and may not be reproduced or shared without written consent.
The report is subject to change and may contain different assumptions and analytical methods.