【行业研究报告】药明康德-Non-COVID business to maintain solid growth

22Mar2023
CMBInternationalGlobalMarkets|EquityResearch|CompanyUpdate
WuXiAppTec(603259CH)
Non-COVIDbusinesstomaintainsolidgrowth
Strongearningsgrowthin2022.WuXiAppTecreported2022revenueof
RMB39.4bn,up72%YoY,attributablerecurringnetincomeofRMB8.3bn,up
103%YoY,andattributableadjustednon-IFRSnetincomeofRMB9.4bn,up83%
YoY.TheCompanydeliveredresilientgrowthdespiteCOVID-19impactsthrough
2022,withrevenueincreasingby71%/66%/78%/72%YoYfor1Q/2Q/3Q/4Q,
respectively.Consideringthehighrevenuebaseof2022,managementguided
positiverevenuegrowthof5-7%YoYfor2023E,andreiterateditsrevenueCAGR
targetofover34%in2021-24E.Specificallyfor2023E,managementexpected
revenueofWuXiChemistry,excludingthecommercial-stageCOVID-19project,
tomaintainasolidgrowthmomentumat36-38%YoY,thecombinedrevenueof
WuXiTesting,WuXiBiology,andWuXiATUtoincreaseby20-23%YoYand
revenueofDDSUtodeclinemorethan20%duetoproactivepipelineadjustment
tomeetthechangingR&DneedsofChineseclients.
Non-COVIDprojectstofuelsustainablegrowth.WuXiChemistry’srevenue
increasedby105%YoYin2022,mainlydrivenbythe173%YoYrevenue
increasedby105%YoYin2022,mainlydrivenbythe173%YoYrevenue
growthfromitschemicalCDMOservices.Excludingcommercial-stageCOVID-
19projects,WuXiChemistrysegmentdeliveredimpressivegrowthof40%YoY
in2022.Basedonourroughestimates,revenuefromtheCOVID-19projects
couldaccountfor~20%ofWuXiAppTec’stotalrevenuein2022.Wethinkthe
solidgrowthofWuXiAppTec’sbusinessreflectedtherobustdemandfromthe
Company’sextensiveandbalancedclientbaseamidthetemporarily
challengingfinancingenvironment.
Years’ofinvestmentturningnewmodalitiesservicesintonewdrivers.
Revenueofnewmodalities-relatedservices(TIDES,mainlyincludingoligo
andpeptides)jumpedby158%YoYin2022toRMB2.0bn,represented~16%
ofchemicalCDMOrevenue(excludingthecommercial-stageCOVID-19
projects).Moreover,revenuefromnewmodalitieswithinWuXiBiology
segmentexperiencedstrongYoYgrowthof90%,contributing22.5%of
segmentrevenuein2022(vs14.6%in2021).TheCompanyhasbuiltthe
largestdrugdiscoveryteamintheworld,functioningasacriticalproject
sourceforitsdownstreamservices,suchasCDMOandclinicalCRO.More
synergiesamongitsvariousbusinesssegmentsareyettobereleased.
Consistentglobalizationefforts.WuXiAppTecspentRMB10.0bninCapex
in2022andplanstoinvestRMB8-9bnin2023Etofurtherenhanceitsglobal
network.Inoverseasmarket,theCompanyisconstructinglarge-scaledrug
productmanufacturingfacilitiesintheUSaswellasfull-suiteR&Dand
manufacturingsitesinSingaporewithatotalinvestmentofUS$1.4bninnext
10years.Itsfast-growingglobalnetworkwillenabletheCompanytobetter
meetthegrowinganddiversifiedclientdemandintheever-changingmarket.
MaintainBUY.OurTPofRMB121.52isbasedona10-yearDCFmodelwith
WACCof11.57%andterminalgrowthof3.0%.WeforecastWuXiAppTec’s
revenuetogrowby6.9%/30.9%/26.6%YoYandadjustednon-IFRSnet
incometogrowby13.5%/31.2%/25.8%YoYin2023E/24E/25E,
respectively.