WuXi AppTec (603259 CH/2359 HK) A/H: Buy/Buy: Margin expansion trend continues

Research evidence excerpt

28 October 2025

Equity Research Report

WuXi AppTec (603259 CH/2359 HK)

Equities

Pharmaceuticals

A/H: Buy/Buy: Margin expansion trend continues

China

◆ 3Q25 results beat our expectations on margin expansion

A: MAINTAIN BUY

◆ Divestment of clinical CRO & SMO should improve focus on

CDMO business

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

prices to RMB137.0/HKD133.9 from RMB127.0/HKD124.0

TARGET PRICE (CNY)

PREVIOUS TARGET (CNY)

137.00

127.00

SHARE PRICE (CNY)

UPSIDE/DOWNSIDE

103.81

+32.0%

3Q25 results beat our expectation with guidance up: We maintain our Buy rating on

WuXi AppTec (A/H) following the announcement of solid 3Q25 results. WuXi AppTec’s

3Q25 adjusted non-IFRS net profit (adjusted NP) grew 42% y-o-y, beating our expectation

mainly on further gross profit margin expansion (50.4% in 3Q25 vs. 44.4% for 1H25)

and the company also raised its 2025 revenue growth guidance to 17-18% (from 13-17%)

for its continuing operation business (source: results briefing). We are turning more

optimistic on WuXi AppTec’s growth prospects and margin and raise our 2025-27

adjusted NP estimates and target prices to factor in: (1) strong trend of backlog addition;

and (2) improved GPM driven by operational optimisation and scale effect. Driven by the

solid fundamentals and improved sentiment in China healthcare sector, WuXi AppTec’s

A/H-share prices have rebounded 93% and 101% YTD, respectively (CSI 300 up 18%

YTD and HSI up 30%). Trading at c1SD below historical average PE valuation, we think

WuXi AppTec’s A/H-share is undervalued and the strong trend of new order bookings

can serve as a potential near-term catalyst.

(as of 24 Oct 2025)

Strategic focus on the CDMO business with the sale of clinical CRO & SMO

business units: On 26 October, WuXi AppTec announced it would sell its clinical

CRO & SMO business units to Hillhouse capital for RMB2.8bn. These units reported

revenue and NP of RMB1.17bn and RMB86m at 9M25, accounting for 3.5% of WuXi

AppTec’s revenue and 0.7% NP for the period. We think the divestment could help

WuXi AppTec to focus on its drug discovery and lab testing businesses, which are

…