Strong earnings growth with strategicacquisition to enhance capacity

Strong earnings growth with strategicacquisition to enhance capacity WuXi XDCissued a positive profit alert on its 2025 financial performance,expecting revenue to increase by atleast 45% YoY andnet profit to grow bymorethan 38% YoY. Notably,the Company expectedadjusted net profit before interestincome and expensesto rise by more than 45% YoY andby over 65% YoYin2025if excluding the impact of foreign exchange fluctuations.In 2025, WuXi XDCsigned a record-high 70 new integratedprojects,up by32% YoY. PPQprojectssurged by 125% YoY to reach 18, indicating strongpotentialforcommercialmanufacturing. To address growing client demand,WuXi XDC announced a cashoffer to acquire at least 60% interestsinBioDlink(东曜药业,1875HK,NR),marking a critical step infurtherstrengthening its manufacturingcapacity. Target PriceHK$88.00(Previous TPHK$74.00)Up/Downside20.7%Current PriceHK$72.90 China HealthcareBenchen HUANG, CFAhuangbenchen@cmbi.com.hk Jill WU, CFA(852) 3900 0842jillwu@cmbi.com.hk Global demand for XDC drug R&D and manufacturingcontinuestogrowrapidly.In 2025, WuXi XDCsigned a record-high 70 new integratedprojects,up 32% YoY. Among these 70 projects, clients from China and the USwerethe primary sources. Additionally, 22 of these projects were transferred fromexternal parties, highlighting WuXi XDC’s increasing client trust in the globalXDC CDMO industry. Furthermore, novel modalitiesXDC drugs contributedsignificantly among the 70 newly signed projects, with bispecific ADCsaccounted for~20%, dual-payload ADCs for~5%, and other types of XDCsfor~17%, demonstrating WuXi XDC’s active collaboration with clients incutting-edge areas of conjugated drug R&Ds. Moreover, PPQ-stage contractsin 2025 increased by 125% YoY to18, signaling stronggrowth potential incommercial-stage business.Based on the strong“D-end”enablingcapabilities and encouraging commercial business trends, mgmt. of WuXiXDCexpects that, by 2030, 20% of the Company’s revenue will come fromnovelXDCprojects and another 20%from commercial-stage projects.Acquisition ofBioDlinkset to strengthenproduction capacity.WuXi Stock Data XDC plans to acquire at least 60%interests inBioDlinkthrough a cash tenderoffer at HK$4.00 per share, representing a 99% premium overthelastclosingpriceofBioDlinkon 24 Dec 2025.BioDlinkis a leading domesticADC CDMOservice providerwith CDMO-related revenue of RMB207mn in 2024. Beyondexpanding WuXi XDC’s client base, the acquisition willrapidly enhance theCompany’s drug production capacityto meet strong demandin the moment,particularly for ADC DS and DP, which are currently in short supply.BioDlinkoperates two mAbfacilities withcapacities of 500–2,000L/batch, three DSfacilities capable of producing over 800kgADC DS annually, and three DPfacilities withan annual capacity exceeding 8mn vials (for comparison, WuXiXDC’sDP3 facility has an annual capacity of 8 mn vials).MaintainBUY.We raiseourtarget price to HK$88.0to reflecttheenhanced Source: FactSet global competitiveness and positive demand outlookfor WuXi XDC.Weforecast WuXi XDC’srevenue to grow by 45.7%/ 36.6%/ 31.7% YoY andadjusted net income toincrease by 34.9%/ 38.4%/ 32.9% YoY in 2025E/ 26E/27E, respectively.As the tender offer forBioDlinkis still ongoing, we have notyet incorporated anyfinancial impacts from consolidating BioDlink. Disclosures& Disclaimers Analyst CertificationThe research analyst whois primary responsible for the content of this 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 analystnor his/her associates (as defined in the code 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 monthsHOLD: Stock with potential return of +15% to-10% over next 12 monthsSELL: Stock with potentialloss of over 10% over next 12 monthsNOT RATED: Stock is not rated byCMBIGM :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expected to performin-line with the relevant broad market benchmark over next 12 months:Industry expected to underperform the relevant broad market benchmark over next 12 months