WuXi AppTec (603259 CH/2359 HK) [Correction] A/H: Buy/Buy: Growth and profit margin beat in 1Q; lifting growth outlook amid geopolitical concerns

Research evidence excerpt

29 April 2026

Equity Research Report

WuXi AppTec (603259 CH/2359 HK)

Equities

Pharmaceuticals

[Correction] A/H: Buy/Buy: Growth and profit margin beat

in 1Q; lifting growth outlook amid geopolitical concerns

China

◆ Solid growth trend for chemical drug CDMO, supported by

small molecule GLP-1 drugs

◆ 5.4ppt adjusted GPM expansion y-o-y for WuXi Chemistry

driven by the Tides segment and FX hedging

◆ Maintain Buy on WuXi AppTec-A/H and raise target prices to

RMB142.00/HKD162.50 (from RMB131.50/HKD136.60)

Small molecule CDMO business beats our and market expectation: WuXi AppTec

released its 1Q26 results, with continuing operation revenue and adjusted net profit up

39.4% and 71.7% y-o-y, respectively. The small molecule CDMO business revenue grew

80.1% y-o-y in the first quarter, beating our and the market’s expectation. The company

maintains 18-22% y-o-y revenue growth guidance for its continuing operation business in

2026 (source: company data), leaving room for guidance improvement in 1H26. We are

increasingly optimistic about WuXi AppTec’s growth prospects following these strong

results and raise our 2026-28 adjusted net profit estimates to factor in: (1) the solid growth

of small molecule CDMO business; and (2) resilient margins with an improved revenue

mix. WuXi AppTec’s A/H-share price have outperformed the market YTD (up 11%/28%,

respectively vs. CSI 300/HSI up 3%/1%), driven by solid fundamentals. Trading at c1 SD

below historical average PE valuation, we think WuXi AppTec’s A/H-shares are still

undervalued and the solid growth of small molecule CDMO business could serve as a

potential near-term catalyst.

Estimate revisions: We raise our 2026-28 adjusted net profit estimates by 5-6%, mainly

because: (1) we raise our 2026-28 revenue estimates by 2% to factor in higher-thanexpected growth in the small molecule CDMO business; and (2) we raise our 2026-28

GPM estimates by 163-170 bp to reflect the improved margin profile in 1Q26, with a

higher proportion of commercial stage revenue and a lean operational strategy.

Uncertainty remains on U.S. tariff and Biosecure Act: Although policy risks

related to U.S.…