【行业研究报告】药明生物-Stronger competency for a brighter future

24Mar202324Mar2023CMBInternationalGlobalMarkets|EquityResearch|CompanyUpdateWuXiBiologics(2269HK)StrongercompetencyforabrighterfutureWuXiBioreported2022revenueofRMB15.3bn,up48.4%YoY,andattributableadjustednetincomeofRMB4.9bn,up48.5%YoY.Non-COVIDrevenuegrewby62.8%YoYtoRMB12.0bn,accountingfor78.5%oftotalrevenuein2022.Adjustedgrossprofitmarginwasmaintainedatastablelevelof50.0%in2022,vs50.6%in2021,despitethenewly-operationalcapacityduring2022,indicatingahighutilizationofexistingfacilities,successfulintegrationofacquiredfacilities,efficientramp-upofnewcapacitiesandefficiencyimprovementfromthedeploymentofWBS(WuXiBiologicsBusinessSystem).Drivenbythecontinuouslygrowingpipeline,totalbacklogsreachedUS$20.6bnasofDec2022,increasingby51.3%YoY.Itwasquiteanimpressivegrowthconsideringtheveryhighbasein2021.WuXiBiomanagementexpecteda30%YoYgrowthforrevenueand26%YoYgrowthforadjustednetincomein2023E.Lookingintoalongerterm,managementanticipatedrevenuetogrowataCAGRof30%andadjustednetincomeat26-27%over2022-25E,indicatingtheirconfidenceinWuXiBio’sgrowthvisibility.StrongpipelineexpansiondemonstratingstrongercompetencyinglobalbiologicsCRDMOmarket.WuXiBio’spipelinecontained588integratedprojectsasofDec2022(vs480asofDec2021),including37inphase3and17incommercialstage(ofwhich11werenon-COVIDprojects).TheCompanyadded136newintegratedprojectsin2022,comparedwith138in2021andlessthan60eachyearin2017/18/19.Amongthe136newprojects,50%werefromNorthAmericamarket.WethinkthesolidincreaseofintegratedprojectswellshowcasedWuXiBio’shighmarketrecognitionandclienttrustamidthetemporaryfinancingshortageanduncertaingeopoliticalenvironment.AccordingtodataprovidedbytheCompany,WuXiBiorankedNo.2inglobalbiologicsoutsourcingmarketbyrevenuein2022,withamarketshareof12.8%,whileTop6playersaggregatelytook65.6%marketshare.WeseethoseleadingbiologicsCDMOstofurthergainmarketshareinthefuturegiventhenatureofmarketcompetition.Newproductionsitesonlinetosupportsustainablegrowth.2022markedabigleapinmanufacturingcapacityforWuXiBio.MFG7inIrelandandMFG8inShijiazhuang,eachwithacapacityof48kL,wereGMPreleaseinDecandOct2022respectively.Thisledtoatotalcapacityto262kLasofend-2022,vs154kLasofend-2021.Intermsofglobalization,WuXiBioannouncedplantobuildCRDMOfacilitiesinSingapore,bringinganother120kLcapacityby2026.Tosupportcapacityexpansion,theCompanyinvestedRMB5.4bninCapexin2022andexpectedtomaintainCapexatRMB6.0bninnexttwoyears.Awell-establishedglobalnetworkwillenableWuXiBiotobettermeetthediversifieddemandofglobalclientsandmitigatepotentialgeopoliticalrisks.MaintainBUY.WerevisedourTPfromHK$96.55toHK$81.93,basedona10-yearDCFmodel(WACC:10.17%,terminalgrowthrate:3.0%).WeforecastWuXiBiotogrowrevenueby30.3%/29.9%/30.4%YoYandadjustednetincomeby25.3%/27.2%/27.0%YoYin2023E/24E/25E,respectively.TargetPriceHK$81.93(PreviousTPHK$96.55)Up/Downside61.6%CurrentPriceHK$50.70ChinaHealthcareJillWU,CFA(852)39000842jillwu@cmbi.com.hkBenchenHUANG,CFAhuangbenchen@cmbi.com.hkStockDataMktCap(HK$mn)208,219.5Avg3mthst/o(HK$mn)60.652wHigh/Low(HK$)83.25/35.50TotalIssuedShares(mn)4172.7Source:FactSetShareholdingStructureWuXiBiologicsHoldings13.8%JPMorgan7.0%Source:HKExSharePerformanceAbsoluteRelative1-mth-9.1%-5.2%3-mth-4.7%-4.3%6-mth4.7%-3.0%Source:FactSet12-mthPricePerformanceSource:FactSetEarningsSummary(YE31Dec)FY21AFY22AFY23EFY24EFY25ERevenue(RMBmn)10,29015,26919,89025,84433,693YoYgrowth(%)83.348.430.329.930.4Adjustednetprofit(RMBmn)3,3164,9256,1737,8509,970EPS(Adjusted)(RMB)0.791.181.461.862.36ConsensusEPS(RMB)nana1.491.983.09AdjustedP/E(x)54.236.529.523.218.3Source:Companydata,Bloomberg,CMBIGMestimates