20231205-招银国际-药明生物-02269.HK-A_transition_year_in_2023_5页_1mb

Summary of WuXi Biologics (2269 HK) Equity Research Update

December 2023

Key Points

• Company Update: Management held a conference call on December 5, 2023, to review business developments amid a challenging environment. 2023 revenue growth was revised downward to ~10% YoY, with adj. net profit expected to decline by a single-digit percentage, contrasting with previous guidance. Non-COVID revenue growth is strong at 36%+ YoY in 2023.
• Guidance Downward Factors: Revisions attributed to slowed CDO project growth due to global biotech funding softness and regulatory delays delaying CMO revenue from MNC clients.
• Future Outlook (2024E-2025E): Revenue and adj. net profit projected to grow at 15.4% and 29.0% YoY respectively. Long-term growth targets aim for a compound annual growth rate 2x the industry average, with revenue and profit rising to teens and ~30% YoY in 2024E/2025E.
• CMO Business: Projects have increased moderately, with a focus on expanding global market share to 10-15% by 2025E. The Ireland site is expected to breakeven one year ahead of schedule and is highly booked for 2025E.
• Valuation and Rating: Maintain BUY; target price revised to HK$44.66 (down 34.7% from prior estimate), reflecting slower 2023-25E guidance and global uncertainties. Financial forecasts include revenue growth of 10.2% in 2023E and adjusted net profit decline, but strong projections for fellow years.

Conclusion

WuXi Biologics faces near-term challenges but maintains confidence in long-term growth through CMO expansion and global capabilities, supported by a cautious buy recommendation based on revised targets.