Resilient demand amid macro uncertainties

WuXi Biologics (2269 HK) Resilient demand amid macro uncertainties Target PriceHK$39.00(Previous TPHK$35.60)Up/Downside17.7%Current PriceHK$33.14 WuXi Bio reported financial results for 2025, withrevenue increasing by16.7%YoYandadj. attributable net profitrising by17.9% YoY. Revenue and adj. netprofit exceeded our estimates by 1.2% and 9.6%, respectively. Backlog grew by28.3% YoY to reach US$23.7bn by the end of 2025, marking the secondconsecutive year of accelerated growth. Mgmt. initiated guidance for 2026,projecting a revenue growth of 13% to 17%,noting this figure would be evenhigher excluding the potential impact of FX fluctuations. China Healthcare Jill WU, CFA(852) 3900 0842jillwu@cmbi.com.hk Resilient global demand for WuXi Bio’s high-quality service.In 2025,the Company added 209 new projects, representing asolid38.4% YoYincrease. Among these, 186 were pre-clinical projects, up 42% YoY, whichclearly reflects the strong appetite for early-stage R&D services from globalclients. More importantly, the Company's bi-& multi-specific antibody andXDC businesses continued to serve as critical growth engines.Bolstered bythree potentially blockbustercommercial projectsin the pipeline, revenuefrom bi-& multi-specifics skyrocketed by 120% YoY in 2025, contributingnearly 20% of the total revenue. Similarly, XDC segment maintained its rapidgrowth momentum, with revenue increasing by 46.7% YoYalongside arecord-breaking 70 newly signed projects.Furthermore,the PhIII andcommercial businesses resumed strong growth, posting a 26.4%YoYrevenue increase in 2025 (vsa3.2% declinein 2024).WuXi Biocompleteda record-high 28 PPQ projects,with another 34 already scheduled for 2026,signaling robust future growth potential for its manufacturingbusiness. Toaccommodatethe increasing demand,WuXi Bio aims to expand itsmanufacturing capacity from the current 300k liters to 370kliters by 2029. Benchen HUANG, CFAhuangbenchen@cmbi.com.hk Robust operations to hedge against macroheadwinds.WhileMgmt.cautioned about potential negative impacts from FX fluctuations in 2026, weanticipate the Company will leverage its robust operational efficiency tooffsetthese headwinds through three key avenues:1)High-marginmilestone revenue: leveraging its formidable early-stage R&D capabilities,the Company's“R”services generated US$150mn in upfront and milestonepayments in 2025, significantly boostingoverall profitability.We expect suchrevenueto continue making a substantial contribution to the bottom line in2026. 2)Improvingcapacity utilization: driven by the continuousprogressofPhIII andPPQ projects, the utilization rates of both existing and newly addedcapacities are expected to rise steadily. Notably, Ireland and the US sitescontributed US$230mn in revenue in 2025, highlighting the Company'sexceptional overseas operations.3)Continuous efficiency gains from WBS:In 2025, WuXi Bio Business System (WBS) helped improvetheGPM by1.5ppts. As a managerialphilosophy embedded indaily operations, WBS issetto continuously drive margin improvements moving forward, in our view. Source: FactSet Maintain BUY.To reflectan improved growth visibility,we raise our DCF-based TP from HK$35.6 to HK$39.00 (WACC: 9.32%, terminal growth: 2.00%,both unchanged). We forecast WuXi Bio’s revenue to grow by 14.6%/ 16.3%/15.0% YoY and adj. attributable net profit to increase by 18.7%/ 17.4%/ 13.6%YoY in 2026E/ 27E/ 28E, respectively. Disclosures& Disclaimers Analyst CertificationTheresearch analyst who is primary responsible for the content of this research report, in whole or in part, certifies that withrespect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect hisor 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 confirmsthat 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 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 potential loss 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 perform in-line with the relevant broad market benchmark ov