机构:招银国际
研究员:Jill WU/Benchen HUANG
TIDES business continued to serve as a significant growth driver. In 1Q24, TIDES revenue delivered impressive growth of 43.1% YoY with substantial 110% YoY growth in backlog. Both revenue and backlog maintained a strong momentum from a high base in 2023. Mgt. expects 60% revenue growth for the TIDES business in 2024. Moreover, the additional 22k-liter solid-phase peptide synthesizers commenced operation in Jan 2024, enhancing the total capacity to 32k liters. Plans are in progress to expand new peptide production capacity in Taixing, Jiangsu, to meet robust customer demand.
Moderate recovery in clinical CRO&SMO business. In 1Q24, revenue from the Clinical CRO&SMO segment grew by 11.0% YoY, with SMO revenue increasing by 26.4% YoY. The growth aligns with the upward trends reported by several domestic clinical CRO&SMO companies in 2023 and 1Q24. The demand in China's clinical stage pharmaceutical R&D is expected to lead the recovery, mirroring the recovery pattern observed in overseas markets since1Q23.
Solid customer relationships amid uncertainty. WiXi AppTec added over 300 new clients in 1Q24, consistent with the level seen in 1Q23. Encouragingly, revenue from global Top 20 pharmaceutical companies reached RMB2.7bn (~34% of total revenue), indicating a YoY increase of 4.2% excluding COVID-19 commercial projects. However, mgt. admitted that the draft of the Biosecure Act has started impacting WuXi ATU in acquiring new clients and orders in the US market.
Maintain BUY. To factor in the uncertainties from geopolitical risks, we cut our TP from RMB67.53 to RMB53.23 (based on a 10-year DCF model with WACC of 10.73% and terminal growth of 2.0%). We forecast revenue to grow by -5.6%/ +10.0%/ +12.5% YoY and adjusted non-IFRS net income to grow by -12.4%/ +10.5%/ +16.4% YoY in 2024E/ 25E/ 26E, respectively.