WuXi AppTec reported better-than-expected 1H25 results, with revenue increasing by 20.6% YoY (including 24.2% YoY growth for continuing operations) and adj. non-IFRS net profit surging by 44.4% YoY. Revenue from continuing operations and adj. non-IFRS net profit accounted for 47.5% and 54.4%, respectively, of our full-year forecasts, both higher than the historical ranges.

WuXi AppTec delivered strong operational execution, despite ongoing macro uncertainties. As such, mgmt. raised its full-year guidance for 2025, expecting revenue of continuing operations to grow by 13-17% (vs prior guidance of 10- 15%) and adj. non-IFRS net profit margin to expand in 2025.

Robust commercial demand drives CDMO outperformance. The robust

demand for late-stage clinical and commercial manufacturing has been a key growth driver for the global CXO industry in the post-COVID era. As a global leader in the chemical drug CDMO sector, WuXi AppTec has substantially benefited from this trend. In 1H25, its TIDES revenue surged by 141.6% YoY thanks to faster-than-expected manufacturing capacity ramp-up. Mgmt raised its full-year guidance for TIDEs revenue growth from 60% to 80%. Revenue from small molecule D&M grew by 17.5% YoY, marking a notable rebound from the negative growth seen in 2023/2024. In addition, the volatilities in US- China tariffs seemed to have limited impact to the Company’s first half operation, in our view. Despite ongoing volatility in the global macro environment, we believe that the sustained demand for commercial drug manufacturing is likely to continue, supporting the growth of leading CDMO players like WuXi AppTec.

Expanding global capacity to support long-term growth. As of end-1H25,

WuXi AppTec’s backlog impressively grew by 37.2% YoY, with backlog of TIDES increasing even more strongly at 48.8% YoY. The mgmt. reiterated their plan to increase the Company’s peptide capacity to over 100k liters by the end of 2025 to support the demand from both existing commercial projects and growing pipelines. At the same time, capacity expansion efforts are underway at multiple sites, including Changzhou (China), Singapore, the US and Switzerland. WuXi AppTec has reaffirmed its capex target of RMB7- 8bn in 2025, and anticipated possible increases in capex in the coming years.

Recovery in early-stage R&D still takes time. While revenue from early-

stage R&D services showed sequential improvements in 1H25 over 2024, mgmt. viewed that a meaningful recovery in early-stage R&D demand will take time. Early-stage R&D services contribute ~30% of the Company’s total revenue. The global biotech financing usually serves as an early indicator of early-stage R&D demand.

Maintain BUY. We raise our DCF-based TP from RMB77.22 to RMB116.56 (WACC: 9.42%, terminal growth: 2.00%; both unchanged), to factor in the upgraded guidance and the improved macro environment such as the US- China tariff. We now expect revenue from continuing operations to grow by 16.0%/ 15.9%/ 15.8% YoY and adjusted non-IFRS net profit to grow by 16.2%/ 17.6%/ 16.4% YoY in 2025E/ 26E/ 27E, respectively.