20230324-招银国际-药明生物-02269.HK-Stronger_competency_for_a_brighter_future_5页_1mb

WuXi Biologics (2269 HK) Summary

Core Financial Performance

WuXi Biologics reported a strong financial performance in 2022, with revenue reaching RMB15.3bn, representing a 48.4% YoY increase, and attributable adjusted net income of RMB4.9bn, also growing by 48.5% YoY. Notably, non-COVID revenue increased by 62.8% YoY to RMB12.0bn, which accounted for 78.5% of total revenue. The adjusted gross profit margin remained stable at 50.0% in 2022, compared to 50.6% in 2021, reflecting the company's efficient operations and cost management.

Pipeline and Market Position

• Total integrated projects increased to 588 as of Dec 2022, up from 480 in Dec 2021.
• Phase 3 and commercial stage projects totaled 37 and 17, respectively, with 11 non-COVID commercial stage projects.
• WuXi Bio added 136 new integrated projects in 2022, with 50% from the North American market.
• The company ranked No.2 in the global biologics outsourcing market by revenue in 2022 with a market share of 12.8%, while the top 6 players collectively held 65.6% of the market.

Capacity Expansion and Strategic Moves

• WuXi Bio significantly expanded its manufacturing capacity in 2022 with the GMP release of MFG7 in Ireland and MFG8 in Shijiazhuang, each with 48kL capacity.
• Total capacity reached 262kL as of end-2022, up from 154kL in end-2021.
• The company plans to add 120kL capacity in Singapore by 2026, further enhancing its global manufacturing footprint.
• Capital expenditure (Capex) in 2022 was RMB5.4bn, with an expectation to maintain RMB6.0bn in Capex over the next two years.

Financial Forecasts and Valuation

• Revenue growth is forecasted at 30.3% in 2023E, 29.9% in 2024E, and 30.4% in 2025E, with a CAGR of 30% from 2022 to 2025.
• Adjusted net income is expected to grow by 25.3% in 2023E, 27.2% in 2024E, and 27.0% in 2025E, with a CAGR of 26-27%.
• The target price has been revised to HK$81.93, down from HK$96.55, based on a 10-year DCF model with a WACC of 10.17% and a terminal growth rate of 3.0%.
• Adjusted P/E is forecasted to decline from 36.5x in 2022A to 18.3x in 2025E, indicating a potential undervaluation relative to earnings.

Key Financial Metrics

Shareholding and Market Data

• Market Cap: HK$208,219.5 million
• Total Issued Shares: 4,172.7 million
• 52-Week High/Low: HK$83.25 / HK$35.50
• Shareholding Structure:
  • WuXi Biologics Holdings: 13.8%
  • JP Morgan: 7.0%

Analyst Recommendation

• Maintain BUY rating
• Target Price: HK$81.93
• Current Price: HK$50.70
• Upside/Downside: 61.6%

Valuation Summary

Conclusion

WuXi Biologics continues to demonstrate strong growth and market leadership in the global biologics CRDMO sector. The company's expansion in manufacturing capacity, diversified client base, and robust project pipeline are key drivers of its performance. Despite a revised target price, the BUY recommendation reflects confidence in its future growth prospects and ability to maintain profitability. The company's global expansion strategy and efficiency improvements are expected to support its sustainable growth trajectory and enhance its competitive position in the industry.