- 1Q21 earnings beat. WuXi AppTec reported 1Q21 revenue of RMB4.95bn (+55% YoY), accounting for 30% of our full-year estimate. Such strong growth was mainly driven by business recovery from the COVID-19 pandemic. By segment, revenue from CDMO services surged 100% YoY in 1Q21 while China-based lab service and clinical research & other services registered 49% and 57% YoY growth, respectively. Due to COVID pandemic, US-based laboratory services decreased 15% YoY, accounting for 7% of total revenue. Attributable net profit and adjusted non-IFRS net profit grew by 395%/ 64% YoY to RMB1,500mn/ RMB943mn, respectively. The strong bottom line growth was mainly due to fast revenue growth and significant increase in investment income and fair value gains.
- China-based laboratory services maintained global leading position. In 1Q21, China-based laboratory services contributed 52% of total revenue, which remained the Company’s largest source of revenue. WuXi AppTec maintained its global leading position in small molecule drug discovery services and chemistry fee-for-service (FFS) achieved 58%+ revenue growth in 1Q21. Thanks to capacity expansion, drug safety assessment services achieved ~114% YoY revenue growth. In addition, WuXi AppTec continued to expand its success-based projects with a total of 207 ongoing projects, including 2 projects in Ph3, 11 projects in Ph2 and 57 in Ph1.
- CDMO revenue surged. In 1Q21, CDMO revenue rallied 100% YoY to RMB1,695mn, accounting for 34% of the total revenue. The growth was driven by WuXi STA (subsidiary of WuXi AppTec)’s world-leading development capability, expanding manufacturing capacity and growing number of projects. In 1Q21, WuXi STA added 169 new molecules into its pipeline. WuXi STA is working on 1,348 projects, including 28 commercial projects and 46 projects in Ph3. The Company has approximately 14% global market share in terms of clinical stage innovative small molecule project number. In order to seize the large opportunity in ADC area, WuXi STA and WuXi Biologics established a JV focused on ADCs and other drug conjugates, providing end-to-end CDMO services incl. payloads/linkers, antibodies, finished conjugated drug products.
Maintain BUY. We revised up adjusted Non-IFRS net profit of FY21/22/23E by 3%/3%/3%, and forecast the adjusted Non-IFRS net profit to grow 32%/35%/33% YoY in FY21E/22E/23E respectively. Moreover, WuXi AppTec’s diversified investment portfolio will bring significant investment gains over the long term. We lifted our new DCF-based TP to RMB224.01 (WACC: 9.34%, Terminal growth: 4.0%).
