WuXi AppTec (WXAT) delivered another strong quarter: 3Q26 revenue rose 38.0% YoY, with continuing-operations revenue up 43.5% YoY, while adj. non- IFRS net profit increased 61.3% YoY. Notably, backlog as of end-3Q26 reached RMB76.74bn, up 36.4% YoY, accelerating from 25.2% YoY as of end-2Q26. Per mgmt., 9M26 new bookings increased over 60% YoY, providing further fundamental support for earnings outlook. Once again, mgmt. raised 2026 revenue guidance to RMB61.0–61.9bn from RMB58.5–60.5bn and continuingoperations growth to 40–42% YoY from 35–39% YoY. Mgmt. maintained its stable adj. non-IFRS net-margin outlook, and narrowed capex guidance to RMB8.0–8.5bn from RMB7.5–8.5bn.

Continuously exceptional growth and pipeline expansion within WuXi Chemistry. WuXi Chemistry remained the principal growth engine for WXAT, with 3Q26 revenue up 48.6% YoY. Small-molecule D&M revenue grew 54.5% YoY, moderating from 72.7% in 1H26 but still benefiting from high-quality molecule inflows, pipeline progression into later stages and proactive capacity deployment. Mgmt. expects Small-molecule D&M revenue to grow over 50% YoY in 2026. TIDES revenue rose 51.6% YoY, accelerating from 44.3% in 1H26 and leading mgmt. to guide up TIDES growth to ~47% in 2026. The segment added eight Phase III or commercial projects in 3Q26, bringing 9M26 additions to 23, the highest in Company’s history. The start of the new Changzhou site underscores mgmt's confidence in sustained demand. Overall, WXAT now has 20 plants for small molecules and peptide projects at various stages of design preparation, construction or launch readiness.

Broad-based acceleration of early-stage services. WuXi Testing's 3Q26 revenue grew 32.7% YoY, versus 31.5% in 1H26, underpinned by robust safety-assessment revenue growth of 40.6% in 9M26. WuXi Biology revenue rose 14.4% YoY in 3Q26, improving from 11.2% in 1H26. Small-molecule drug discovery within Chemistry grew 16.8% YoY, sharply above 1H26's 5.6% YoY. Together, these trends indicate improving early-stage R&D demand, with AIDD customers and new modalities providing incremental opportunities for WXAT as global biotech funding continues to recover.

Normal volatility of quarterly margins. Although 3Q26 GPM and NPM declined sequentially from 2Q26, 9M26 GPM/ adj. NPM still expanded 7.6ppt/ 8.3ppt YoY, respectively. Quarterly fluctuations are normal in our view, given the project mix, delivery schedules of key projects, new-capacity ramp-up and FX movements. Mgmt. aims to share part of its efficiency gains with customers and employees rather than maximizing near-term margins. We therefore view the sequential margin moderation in 3Q26 as normal quarterly volatility, with profitability remaining resilient.

Maintain BUY. To factor in the strong momentum of Chemistry segment, we raise our earnings forecasts, expecting revenue to grow by 35.1%/ 18.7%/ 15.7% YoY (for continuing operations: 41.4%/ 18.7%/ 15.7% YoY) and adj. net profit to grow by 68.4%/ 18.8%/ 14.4% YoY in 2026E/ 27E/ 28E, respectively. Hence, we raise our DCF-based TP from RMB170.00 to RMB190.00 (WACC: 9.39%, terminal growth: 2.00%; both unchanged).