20240731-招银国际-药明康德-603259.SH-Impressive_order_growth_despite_geopolitical_uncertainties_6页_1mb

WuXi AppTec (603259 CH) 2024 H1 Performance and Growth Outlook Summary

WuXi AppTec reported H1 2024 financial results, with revenue of RMB17.24bn, down 8.6% YoY, and attributable adjusted non-IFRS net profit of RMB4.37bn, down 14.2% YoY. These figures aligned with historical ranges, with revenue and net profit covering 45.3% and 46.0% of 2024 full-year estimates, respectively. The company's non-COVID D&M revenue saw a slight YoY decline of 2.7%, following a high base in H1 2023. Notably, backlog excluding COVID-19 commercial projects increased by 33.2% YoY, reaching RMB43.1bn as of June 2024, indicating strong customer demand despite geopolitical uncertainties. Management revised 2024 revenue guidance to RMB38.3-40.5bn, projecting 2.7% to 8.6% YoY growth for non-COVID segments, with stable net profit margin expectations.

Strong order growth was highlighted, with new orders up ~25% YoY, and over 80% of backlog expected to convert to revenue within 18 months, alleviating concerns about early bookings. The TIDES business, a major growth driver, saw revenue of RMB2.08bn in H1 2024, up 57.2% YoY, with significant capacity expansion to 32,000 liters. Backlog surged 147% YoY, with a new peptide production facility operational since January 2024. Management anticipates TIDES revenue growth exceeding 60% YoY in 2024 and maintaining strong momentum in 2025. Model projections suggest TIDES revenue could reach RMB8.6bn in 2025, contributing ~20% to total revenue compared to ~4% in 2022.

Analysts recommend "Buy" with a target price of RMB54.27 per share, up from RMB53.23, based on a 10-year DCF model. Forecasts for 2024E/25E/26E show revenue growth of -4.4%/+10.9%/+10.8% YoY and adjusted non-IFRS net income growth of -8.3%/+11.6%/+12.1% YoY. Valuation factors include a WACC of 10.38%, terminal growth of 2.0%, and sensitivity analysis emphasizing geopolitical risks.

The company maintains a solid market position, with key metrics like net profit margin and ROE showing resilience, though profits faced YoY declines in H1 2024. Future growth hinges on TIDES expansion and diversified pharmaceutical client engagements, supporting a positive outlook for FY25 revenue and earnings growth.