WuXi AppTec (603259 CH/2359 HK) A/H: Buy/Buy: Strong backlog with improved global capacity

Research evidence excerpt

26 August 2025

Equity Research Report

WuXi AppTec (603259 CH/2359 HK)

Equities

Pharmaceuticals

A/H: Buy/Buy: Strong backlog with improved global

capacity

China

◆ 1H25 results beat our expectations on strong margin with

revenue mix improvement

◆ Capacity globalisation to derisk geopolitical uncertainties

◆ Maintain Buy rating on WuXi AppTec A/H and raise target

price to RMB127.00/HKD124.00 from RMB90.00/HKD83.70

Solid growth in 1H25 continues to beat our expectation: We maintain our Buy

rating on WuXi AppTec (A/H) following the announcement of strong 1H25 results.

WuXi AppTec’s 1H25 adjusted non-IFRS net profit (adjusted NP) grew 44% y-o-y,

beating our expectation mainly on higher-than-expected GPM expansion driven by

efficiency improvements and growing revenue from large-scale commercial projects.

We are turning more optimistic on WuXi AppTec’s growth prospects and margin and

raise our 2025-27e adjusted NP estimates and target price to factor in: (1) the strong

growth momentum of the backlog, and (2) margin expansion by operational optimisation

and improved revenue from commercial projects. Driven by the strong results and the

going global trend of the healthcare sector, WuXi AppTec’s A/H-share prices have

rebounded 71% YTD and 83% YTD, respectively (CSI 300 up 11% YTD and HSI up

26%). WuXi AppTec’s A/H shares are trading at a 1.6x/1.7x 2025e PEG (based on

adjusted NP), below China A/H-share peer group’s average 1.8x PEG, and we think

the shares are undervalued for the strong market positioning and comprehensive

competitiveness of WuXi AppTec. We think the solid growth of new order bookings

and the trend of margin improvement can serve as potential near-term catalysts.

Raising our 2025-27e earnings estimates: We raise our 2025-27e adjusted NP

estimates by 9-11% mainly because: (1) we raise our 2025-27e revenue estimates by

1-3% to factor in solid order booking, especially for the WuXi TIDEs business, which

grew 48.8% in 1H25, and (2) we raise our 2025-27e GPM estimates by 30-257ppt to

factor in the continuous optimisation of WuXi AppTec’s production processes and

improved revenue mix.

Faster capacity globalisation to derisk geopolitical uncertainties: We expect

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