对小型分子D&M业务的需求不断增长

Rising demandforsmallmolecule D&Mbusiness Target PriceRMB123.35(Previous TPRMB118.79)Up/Downside15.7%Current PriceRMB106.64 WuXi AppTecreported strong 3Q25 results,with revenue increasing by 15.3%YoY (including 19.7% YoY growth for continuing operations) and adj. non-IFRSnet profit surging by 42.0% YoY.Revenue from continuing operationsin 9M25accounted for 73.8%of ourfull-yearforecast, in line with historical average of72%, whileadj. non-IFRS net profitin 9M25 represented 85.7% of ourfull-yearforecast,significant higher than the historical average of 72%. WuXi AppTecdelivered strong operational execution, despite ongoing macro uncertainties. Assuch, mgmt.furtherraised its full-year guidance for 2025, expectingtotal revenuetobe RMB43.5-44.0bn(previously:RMB42.5-43.5bn)with revenue fromcontinuing operations to grow by 17-18% (previously:13-17%). Mgmt. continuedto expectadj. non-IFRS net profit margin to expand in 2025. China Healthcare Jill WU, CFA(852) 3900 0842jillwu@cmbi.com.hk Benchen HUANG, CFAhuangbenchen@cmbi.com.hk Encouragingdemandgrowthin small molecule D&M business.As ofSept 2025, WuXi AppTec’s backlog from continuing operations reached RMB59.88bn witha strong YoY growth of 41.2%, acceleratedfrom37.2% YoYasofJun 2025. In contrast, backlog forTIDES services grew by 17.1% YoY asat end-Sept 2025, slowing from 48.8% YoYseenas atend-Jun 2025. Thedivergence underscored the small molecule D&M business as a primarygrowth driverfor backlogin 3Q25. With that, mgmt. expected acceleratedrevenue growth forthissegmentin 2026. Mgmt.noted that the Company’spipeline included multiple promising productstargeting areas such as GLP-1, PCSK9, pain, neurology, and autoimmune diseases. Given that smallmolecule D&M accounted for 46% of total revenue in 2024,we believeitwillbecome a key driver forthe Company’s overallgrowth. To meet the risingcustomerdemand,WuXi AppTec is actively expanding manufacturingcapacity in China, Singapore,the US, and Switzerland. Early-stage demand showing more signs of recovery,though a fullrebound will take time.In the Chemistry segment, revenue from drugdiscoveryservices declined 2.0% YoY in 3Q25, though sequential QoQimprovementswere seen. Notably, the safety assessmentservicesposted5.9% YoYand 13.2% QoQrevenuegrowth in 3Q25, a significant reboundfrom the 7.8% declinein 2Q25, suggesting a recovery in client demand andimproved pricing dynamics.Within the Biology segment, revenue grew 5.9%YoY in the quarter, consistent with the pace observed in 1H25. Mgmt.indicated that early signs ofdemand recovery are emerging, supported by arebound in China’s capital markets, robust global BD activity, and US interestrate cuts. However, a broad-based industry recovery will still take time.Giventhehigh sensitivity to macroeconomic conditions, we believe early-stagebusinesseswithin WuXi AppTecshouldhave relatively highvisibility over thenext two years, as market conditions normalize. Source: FactSet MaintainBUY.We raiseour DCF-based TP from RMB118.79to RMB123.35(WACC: 9.39%, terminal growth: 2.00%;both unchanged), to factor in ourimprovedoutlook onthemacro environment. We nowexpect revenuetogrowby 12.8%/ 10.7%/ 14.2% YoY(for continuing operations: 18.0%/ 15.0%/14.2% YoY)and adjusted non-IFRS net profit to grow by 19.6%/ 10.2%/13.3% YoY in 2025E/ 26E/ 27E, respectively. Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content of this research report, in whole or in part, certifies thatwith 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 the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt inor traded in the stock(s) covered in this research report within 30 calendar days prior to the date 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 coveredin 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 HOLDSELLNOT RATED :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expected to perform in-line with the relevant broad market benchmark over next 12 months:Industry expected to underperform therelevant broad market benchmark