Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

RiskRisk RewardReward– WuXi -XDCWuXiCaymanXDCInc. (2268.HK)Cayman Inc. (2268.HK)

Global CDMO Player Driven by Strong Outsourcing Demand in the ADC Market

PRICE TARGET HK$80.00 OVERWEIGHT THESIS

Base-case, derived from discounted cash flow (DCF) methodology, consistent with the ▪A leading CDMO player specializing

method we apply for other CDMO companies, to factor in XDC's current development stage in ADCs and other bioconjugates, with

amid growth cycle and growth potential over the medium to long run. We assume a WACC 22.2% market share (no.2) in 2024 to 1H25.

of 10% (in line with the WACC we adopt for WuXi AppTec), a terminal growth rate of 5% and ▪Gained global attention triggered by the

HKD/RMB of 0.92. successful launch of blockbuster product

Enhertu, plus high outsourcing rate of the HK$78.88

antibody–drug conjugate category (>70%).

Consensus Price Target Distribution HK$25.60 HK$107.03 integrated platform with MS PT ▪Distinctive

Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates extensive multidisciplinary expertise and

strategically located facilities.

▪We project a robust adjusted net profit

CAGR of 35% in 2025-28, much higher than

RISK REWARD CHART that of global peers.

▪We rate the shares OW relative to our

HKD coverage to reflect our view of WuXi XDC's

high earnings growth and visibility, margins

HK$120.00HK$120.00(+104.08%)HK$120.00(+104.08%)(+104.08%) expansion potential and industry leadership.

Consensus Rating Distribution

90 100%Overweight

HK$80.00HK$80.00(+36.05%)HK$80.00(+36.05%)(+36.05%) 0% Equal-weight

0% Underweight

60 HK$58.80HK$58.80HK$58.80

MS Rating

Source: Refinitiv, Morgan Stanley Research

HK$26.00HK$26.00(-55.78%)HK$26.00(-55.78%)(-55.78%) Risk Reward Themes