Fundamentals Have Turned Positive and WuXi Biologics(02269.HK) is about to "Set Sail"?
$WUXI BIO(02269.HK$ is a global leader in biologics CRDMO (integrated business model from drug discovery to commercial production), with services covering the whole cycle of biologics development. With the accelerated aging of the population and the continued impact of epidemics, the biologics industry has a bright future. CITIC Securities analyzes the investment value of WuXi Biologics from two perspectives: the future prospects of the biologics industry and the company's intrinsic competitiveness, and expects WuXi Biologics to have a target price of HK$$$$67 (current price of HK50) in 23 years, giving it a "buy" rating.
The biologics CDMO industry is still growing and will continue to do well in the long term.
(1) Global healthcare investment and financing has bottomed out and rebounded in phases. 2022 Q1 saw a decline in financing volume, but industry deals, M&A data rose in 2022Q2/Q3, proving that innovation in the biopharmaceutical industry remains vibrant.
(2) The overall balance of supply and demand for biologics production capacity, while globally competitive high-quality production capacity is always in a relatively scarce state; if potential large varieties of Alzheimer's disease (AD) therapeutic drugs can be marketed and successfully released, it is expected that a large amount of production capacity will be occupied, and there may even be an imbalance between supply and demand for production capacity.
(3) International geopolitical concerns about the impact of industry chain cooperation are gradually easing. WuXi's Wuxi subsidiary has been removed from the UVL list and its Shanghai subsidiary has completed end-user visits, and China's CDMO industry is deeply embedded in the global biopharmaceutical industry chain.
WuXi Biologicals has obvious advantages as a leading company, and its performance is expected to maintain high growth.
(1) The company has abundant orders in hand and strong certainty of medium-term performance growth.
(2) The company has completed the construction of platform, industrialization and internationalization, and has obvious leading advantages.
(3) As the company's Follow-the-Molecule and Win-the-Molecule strategies continue to advance and global production capacity is built, future projects in the pipeline will gradually advance, which is expected to give a sustained boost to the company's long-term performance.
The medical and health care industry is in a period of significant opportunity for development and has a bright future. As the leader of this track, WuXi Biologics has strong strength and obvious advantages, and is a scarce investment target in the market. Considering the company's higher organic growth rate and scarcity as a global integrated biopharmaceutical CRDMO leader, CITIC Securities has given the company a PE valuation of 41 times in 2023, corresponding to a target price of HK67 (current price of HK50). First-time coverage, "Buy" rating.
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