Jefferies Sustains "Buy" Rating on WUXI APPTEC with HK$138 Target

Stock News03-25

Jefferies has reaffirmed its "Buy" rating on WUXI APPTEC (02359), setting a target price of HK$138 based on a discounted cash flow valuation model. The target price for Wuxi Apptec Co.,Ltd. (603259.SH) remains at RMB 135. Management projects 2026 revenue to reach RMB 51.3 billion to RMB 53 billion, with revenue from continuing operations growing 18% to 22% year-over-year. The adjusted non-IFRS net profit margin is expected to remain stable, while capital expenditure is forecast between RMB 6.5 billion and RMB 7.5 billion, higher than the RMB 5.5 billion planned for 2025. TIDES business capacity is set to expand to 130,000 liters by 2026, up from 100,000 liters at the end of last year. Management expressed confidence in achieving 30% to 40% revenue growth for the TIDES segment. The 2026 guidance exceeds market expectations, reflecting the company's strong commitment to capital expenditure and capacity expansion. In 2025, WUXI APPTEC reported revenue of RMB 45.5 billion, a 16% increase year-over-year, with revenue from continuing operations rising 21%. Adjusted net profit reached RMB 15 billion, up 41%. Gross margin expanded by 6.2 percentage points to 47%, driven primarily by robust expansion in the chemical business segment. Chemical business revenue grew 26% to RMB 36.5 billion, with small molecule drug discovery, development, and manufacturing revenue reaching RMB 19.9 billion, an 11% increase. TIDES business revenue surged 96% to RMB 11.4 billion. Testing and biology business revenues increased by 4.7% and 5.2%, respectively. As of the end of 2025, the company's backlog for continuing operations stood at RMB 58 billion, up 29% year-over-year, with TIDES backlog growth accelerating from 17% in the third quarter to 20%. Management noted double-digit growth in early-stage business orders. U.S. capacity expansion is progressing smoothly, with the Middletown, Delaware facility expected to provide solid dosage and injectable manufacturing capacity by 2027. The total dividend payout ratio for 2025 was approximately 35%, with the company targeting a 30% final dividend payout ratio and an interim dividend of RMB 1 billion for 2026.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment