在充满挑战的环境中稳定的第一季度业绩

Steady1Qperformance amid challenging environment Target PriceRMB53.23(Previous TPRMB67.53)Up/Downside21.9%Current PriceRMB43.67 WuXiAppTec reported 1Q24 revenue of RMB7,982mn, down 11.0% YoY,attributablerecurring netprofitof RMB2,034mn, up 7.3% YoY,and attributableadjusted non-IFRS netprofitof RMB1,913mn, down 18.3% YoY. 1Q24 revenue/ adjusted Non-IFRS net income accounted for 20.4%/ 16.8%of our 2024full-year estimates, both moderately lower thanhistorical ranges. Non-IFRS grossprofit margindeterioratedby 2.3ppt to 38.7% while non-IFRS net profit margindecreasedby 2.1ppt to 24.0%in 1Q24,due tothe decline in CDMO revenuefrom COVIDcommercialprojects, pricingerosion,ramp-upsof new facilities inits Testing and Biology segments, andescalatingcostsin its ATU segment.Non-COVID D&M revenue (in WuXi Chemistry segment) showed positivegrowth in 1Q24,up 1.2% YoY.Despite a challenging start of 2024,mgt.hasupheldits revenue guidance of RMB38.3-40.5bnfor 2024,projectinggrowth of2.7% to 8.6% YoY,excluding revenues fromCOVID-19commercial projects.Furthermore,mgt. reiteratedthattheadjusted non-IFRS netprofitmarginwouldbe align withthe 2023level. Jill WU, CFA(852) 3900 0842jillwu@cmbi.com.hk Benchen HUANG, CFAhuangbenchen@cmbi.com.hk TIDES business continued to serve asa significantgrowthdriver. In1Q24, TIDES revenue delivered impressive growth of43.1%YoY withsubstantial110%YoY growth in backlog.Both revenue and backlogmaintained astrongmomentumfrom ahigh base in 2023.Mgt. expects 60%revenue growth fortheTIDES business in 2024. Moreover,the additional22k-liter solid-phase peptide synthesizers commenced operation in Jan2024,enhancingthe total capacity to 32kliters.Plans are in progress toexpandnew peptide production capacity in Taixing,Jiangsu,to meet robustcustomer demand. Shareholding Structure Moderate recovery in clinical CRO&SMO business. In 1Q24, revenuefrom the Clinical CRO&SMO segment grew by 11.0% YoY, with SMOrevenueincreasingby 26.4%YoY.The growth aligns with the upwardtrends reported byseveral domestic clinical CRO&SMO companies in2023and1Q24.The demand in China's clinical stage pharmaceutical R&D isexpected to leadthe recovery, mirroring the recovery pattern observed inoverseas markets since1Q23. Solidcustomer relationships amid uncertainty. WiXi AppTec addedover300 new clients in 1Q24,consistent withthe level seen in1Q23.Encouragingly, revenue from global Top 20 pharmaceutical companiesreachedRMB2.7bn (~34% of total revenue), indicating a YoYincrease of4.2%excluding COVID-19 commercial projects.However,mgt. admittedthat thedraft of theBiosecureActhasstarted impactingWuXi ATUinacquiringnew clients and ordersin the US market. Source: FactSet Maintain BUY.To factor in the uncertainties from geopolitical risks, we cutour TP from RMB67.53to RMB53.23(based on a 10-year DCF model withWACC of 10.73% and terminal growth of 2.0%). We forecast revenue togrow by-5.6%/ +10.0%/ +12.5% YoY and adjusted non-IFRS net income togrow by-12.4%/ +10.5%/ +16.4% YoY in 2024E/ 25E/ 26E, respectively. Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content ofthis research report, in whole or in part, certifies that with respect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer;and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in thecode of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to thedate of issue of this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3) serve as an officer of any of the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies covered in this report. CMBIGM RatingsBUY : Stock with potential return of over 15% over next 12 months: Stock with potential return of +15% to-10% over next 12 months: Stock with potential loss of over 10% over next 12 months: Stock is not rated byCMBIGM HOLDNOTRATED SELL :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expected to perform in-line with the relevant broad marketbenchmark over next 12 months:Industry expected to underperform the relevant broad market benchmark over next 12 months CMB InternationalGlobal MarketsLimited Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong, Tel:(852) 3900 0888 Fax: (852) 3900 0800CMB InternationalGlobal MarketsLimited (“CMBIGM”) is a wholly owned subsidiary of CMB International Capital Corporation Limited (a wholly