To navigate macro uncertainties with a good start in 1Q25

PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG: RESP CMBR <GO> OR http://www.cmbi.com.hk 1 MN 30 Apr 2025 CMB International Global Markets | Equity Research | Company Update WuXi AppTec (603259 CH) To navigate macro uncertainties with a good start in 1Q25 WuXi AppTec reported impressive 1Q25 financial results. Revenue increased by 21.0% YoY to RMB9.65bn, with revenue from continuing operations rising by 23.1% YoY to RMB9.39bn. Adjusted non-IFRS net profit surged by 40.0% YoY to RMB2.68bn. Both revenue and net profit continued the quarterly improvement trend seen throughout 2024, which further accelerated significantly in 1Q25. As of the end of 1Q25, the Company’s backlog grew by 47.1% YoY to RMB52.33bn. Despite ongoing macro uncertainties, mgmt. has reaffirmed its full-year guidance, projecting a 10–15% YoY increase in revenue from continuing operations and expansion in the adjusted non-IFRS net profit margin.  TIDES business gained momentum with strong growth. WuXi AppTec’s TIDES business experienced strong growth 1Q25, with revenue soaring 187.6% YoY to RMB2.24bn, an acceleration from the 70.1% growth in 2024. According to mgmt., the growth was driven by the ramp-up of new capacities and contributions from oral GLP-1 programs. TIDES backlog more than doubled, increasing by 105.5% YoY as of 1Q25, providing a solid foundation for sustained growth. The Company remains on track to expand its peptide capacity to over 100k liters by the end of 2025. Hence, Mgmt. continued to expect TIDES revenue to grow more than 60% YoY in 2025.  Early-stage business remained under pressure with signs of moderate recovery. Revenue from Biology segment grew 8.2% YoY in 1Q25, marking a second consecutive quarter of positive growth, indicating a recovery in client demand for drug discovery services. In Chemistry segment, small-molecule drug discovery revenue declined 7.1% YoY, an improvement from the 28.7% YoY drop in 2024. Testing segment remained affected by pricing pressure. Lab testing revenue slid 4.9% YoY (vs. -8.0% YoY in 2024), with safety assessment revenue falling 7.8% YoY (vs. -13.0% YoY in 2024). Mgmt. noted that pricing appeared to have reached a trough, although a meaningful recovery will still take time.  Strengthening shareholder returns amid market uncertainties. WuXi AppTec’s Board of Directors has proposed a series of shareholder return initiatives, including maintaining a 30% annual cash dividend payout ratio, issuing a one-time RMB1bn special dividend in 2025, introducing the interim dividend plan in 2025, and repurchasing and cancelling RMB1bn A-shares (announced on March 17). In addition, the Company announced a second RMB1bn A-share repurchase and cancellation plan on April 8, which has now commenced. Combined, the proposed dividends and share repurchase programs total nearly RMB6bn, equivalent to 62% of 2024 attributable net profit, underscoring WuXi AppTec’s strong com