UOB Kay Hian
Date of Report: July 30, 2025

WuXi AppTec Surges on Robust 1H25 Results: Strong Growth in CRDMO Services and TIDES Business Drives Upbeat Forecast

Overview: Exceptional Performance Fuels Bullish Outlook

WuXi AppTec (2359 HK), a global leader in CRO/CDMO services, has delivered a stellar set of results for the first half of 2025, significantly outperforming market expectations. Driven by surging demand in the biopharmaceutical sector and impressive expansion in the TIDES segment, the company has upgraded its revenue growth outlook and rewarded shareholders with enhanced dividends and a share buyback program.
Key highlights include:

• Recommendation upgraded to BUY
• Target price raised to HK\$146.00 (from HK\$70.00), implying a 30.7% upside from the current share price of HK\$111.70
• Market cap: HK\$311.5 billion (US\$39.7 billion)
• Share price near 52-week high of HK\$112 (low: HK\$28.3)
• Management team holds 20.6% ownership

1H25 Financial Results: Significant Outperformance

WuXi AppTec reported robust financials for 1H25, highlighted by strong revenue and earnings growth, improved margins, and continued operational efficiency.

The company announced an interim cash dividend of Rmb3.50 per 10 shares for 1H25, underlining its commitment to shareholder returns.

Segment Performance: Chemistry and TIDES Lead Growth

WuXi AppTec’s diverse service portfolio saw varying performance across divisions:

• WuXi Chemistry: Delivered Rmb16.3b revenue (78.4% of total), up 33.5% YoY. The TIDES (oligo and peptide) business was the standout, with revenue surging 141.6% YoY to Rmb5.03b (30.9% of the segment).
• WuXi Testing: Revenue declined 1.2% YoY, reflecting intense price competition.
• WuXi Biology: Revenue grew 7.1% YoY to Rmb1.25b, as new modality drug discovery services contributed over 30% to the segment.
• Discontinued Operations: Revenue fell as the company exited loss-making cell and gene therapy businesses, positively impacting margins.

Geographic Trends: US Market Drives Expansion

• United States: Remains the largest market, contributing Rmb14.3b (69% of total revenue), with revenue up 33.2% YoY.
• China: Second-largest market, accounting for Rmb3.19b (15%). Revenue declined 5.3% YoY.

With the exclusion of underperforming business lines and higher utilization of production capacity, profit margins are expected to improve further in the second half of 2025.

Upgraded Guidance: Accelerating Growth Projections

WuXi AppTec raised its 2025 revenue growth target for continuing operations to 13-17% (up from 10-15%), buoyed by a 37.2% YoY increase in backlog to Rmb56.69b as of end-June 2025. The company also revised its free cash flow forecast for 2025 to Rmb5.6b (previously Rmb4b-5b).

Strategic Initiatives: Global Expansion and Risk Mitigation

• Geopolitical Risk Management: The company is accelerating global capacity expansion, with unchanged capex guidance of Rmb7.0b-8.0b for 2025. Plans include boosting development and manufacturing in the US, Switzerland, and Singapore.
• TIDES Capacity Expansion: Solid Phase Peptide Synthesiser reactor volume will increase from 41,000 litres (2024) to over 100,000 litres (2025) to meet rising demand.
• Shareholder Rewards: A 30% annual cash dividend ratio is upheld, with an interim dividend of Rmb0.35/share (Rmb1.0b total) and an additional Rmb1.0b A-share repurchase program in 2025.

Financial Projections: Strong Growth and Healthy Margins Ahead

WuXi AppTec’s outlook remains robust, with upward revisions to revenue and margin assumptions. The company now forecasts a 14.8% revenue CAGR for 2025-27 (up from 8.5%), and adjusted earnings CAGR of 22.1% over the same period.

Key Risks and Valuation

• Risks: Geopolitical uncertainties and intensifying market competition remain the key risks to watch.
• Valuation: The upgraded target price of HK\$146.00 (A-share target: Rmb132.90) is based on 23.5x 2026F PE or 1x PEG, reflecting robust growth expectations.

Conclusion: WuXi AppTec Well-Positioned for Sustained Growth

With a clear focus on high-growth segments, strategic international expansion, and a commitment to operational excellence, WuXi AppTec stands out as a prime beneficiary of rising global biopharmaceutical investment. The company’s strong balance sheet, improving margins, and ongoing shareholder rewards further reinforce its appeal to investors seeking exposure to the fast-growing CRDMO sector.

Disclosure and Analyst Certification

This article is based on a research report issued by UOB Kay Hian. The report was prepared independently by named analysts, who certify that their views are unbiased and not influenced by compensation or business activities related to the covered companies. The information provided is for general information purposes and does not constitute investment advice. For further details on analyst certifications and country-specific disclosures, please refer to the original research publication.