"Investor Network" Xiang Jinjing

Editor Hu Shan

To set another record, this is the best way to describe Wuxi Apptec's performance in the first half of the year.

According to Wuxi Apptec, in the first half of 2022, the company's operating income was 17.756 billion yuan, an increase of 68.52 percent over the same period last year; the net profit was 4.636 billion yuan, up 73.29 percent; the net profit after deducting 3.85 billion yuan was 3.85 billion yuan, an increase of 81 percent over the same period last year; and the adjusted net profit of Non-IFRS was 4.3 billion yuan, an increase of 75.68 percent over the same period last year.

No matter the net profit of homing, deducting non-net profit and adjusted Non-IFRS net profit, the growth exceeded the growth rate of income in the same period, which means that Wuxi Apptec continued to optimize the efficiency of operation and management and improve the utilization rate of production capacity while maintaining rapid income growth.

It is worth mentioning that, based on confidence that rapid growth will still be achieved in the second half of this year, Wuxi Apptec raised his annual income growth target for 2022 from 65 per cent to 68-72 per cent.

Revenue in the future single quarter is expected to exceed 10 billion yuan.

In the first half of this year, Wuxi Apptec's performance growth accelerated significantly, and both the revenue end and the profit end once again set a new record for a single quarter.

Dr. Li GE, Chairman and CEO of Wuxi Apptec, said: "the company achieved record performance growth in the first half of 2022, with operating revenue up 68.5% year-on-year and adjusted Non-IFRS homing net profit up 75.7% year-on-year. Our performance in the first half of 2022 proves once again that our unique CRDMO and CTDMO business models can continue to drive the company's rapid growth and enable us to better serve our customers. "

For the single quarter of this year, Wuxi Apptec's revenue in the first quarter was 8.474 billion yuan, an increase of 71.18 percent over the same period last year, the net profit of returning home was 1.643 billion yuan, up 9.54 percent over the same period last year, and the net profit of non-returning mothers was 1.714 billion yuan, an increase of 106.52 percent over the same period last year. According to this estimate, the company's revenue in the second quarter was 9.282 billion yuan, the net profit was 2.993 billion yuan, and the non-return net profit was 2.136 billion yuan, an increase of 9.54%, 82.17% and 24.62%, respectively.

According to Wuxi Apptec's financial reports over the years, the company has maintained 17 consecutive quarters of month-on-month growth in sales revenue from the first quarter of 2018 to 2022 (except due to the COVID-19 epidemic in the first quarter of 2020). From this point of view, in the next two quarters, the company's single-quarter revenue is expected to exceed 10 billion yuan.

If you look at the plate, the business that makes the greatest contribution to Wuxi Apptec's performance is still the chemical business. Driven by the integrated CRDMO model, the chemical business (WuXi Chemistry) has a strong demand for orders and strong endogenous growth. The revenue of the business was 12.974 billion yuan, an increase of 101.9% over the same period last year. The adjusted gross profit of Non-IFRS was 5.314 billion yuan, an increase of 94.3% over the same period last year, and the gross profit margin was 41.0%. Excluding COVID-19 's commercialization project, revenue from the chemical business sector increased by 36.8% compared with the same period last year.

In the face of the growing demand for services, the chemical business sector continues to accelerate capacity construction. In June, the company's second high-live API production workshop was officially put into operation; in July, another new oligonucleotide and polypeptide production building was officially put into operation; in the same period, the new large-scale continuous production workshop was officially put into operation, and the company's large-scale production capacity and mobile chemical platform capacity were further enhanced.

From the perspective of the current number of process R & D and production pipeline molecules in the chemical business plate, a total of 473 molecules have been added by the first half of 2022, including 1627 preclinical and clinical phase I, 288 clinical phase II, 52 clinical phase III and 43 commercial projects. If the synthetic compounds at the small molecular drug discovery end are added, 180000 compounds have been synthesized in the first half of the year, and 340000 compounds have been synthesized in the past 12 months, of which more than 5000 are synthetic compounds of 100g or more. It also indicates that Wuxi Apptec's unique drug discovery ability is bringing a steady stream of molecular projects to his small molecule CDMO pipeline. It is believed that this is also Wuxi Apptec's confidence in raising the annual revenue guidelines.

The testing business (WuXi Testing) has also continued its high growth momentum. Among them, the revenue from laboratory analysis and testing services increased strongly by 1.89 billion yuan, up 34.6% from the same period last year; the income from drug safety evaluation increased by 53% over the same period last year, maintaining and expanding the leading position of Asia-Pacific safety assessment business; and due to the impact of COVID-19 's epidemic, clinical CRO and SMO income was 720 million yuan, an increase of 1.7% over the same period last year.

In biology business (WuXi Biology), Wuxi Apptec has the largest discovery biology enabling platform in the world. In the first half of the year, the revenue of the business was 1.091 billion yuan, an increase of 18.5 percent over the same period last year. The adjusted gross profit of Non-IFRS was 444 million yuan, an increase of 30.7 percent over the same period last year, and the gross profit margin was 40.7 percent.

The revenue of the cell and gene therapy CTDMO business (WuXi ATU) reached 620 million yuan in the first half of the year, an increase of 35.7% over the same period last year. Relying on the integrated CTDMO platform, Wuxi Apptec's cell and gene therapy pipeline continues to expand. At the end of June 2022, Wuxi Apptec provided development and production services for 67 cell and gene therapy projects, and 30 TESSA ™projects are under customer evaluation.

The ability and scale of global operation are constantly improving.

In the face of the sudden O'Micron epidemic in Shanghai in the second quarter, the company implemented the business continuity plan in a timely and efficient manner, giving full play to the advantages of global layout and the coverage of the whole industry chain. To ensure the continuous operation of each base and the health and safety of employees. Since June 1, the company has actively promoted the resumption of work and production, ensured the smooth delivery of customer R & D and production projects, and continued to expand business cooperation. The company further raised its annual revenue growth target for 2022 from 65% to 68-72%, and we are full of confidence in achieving strong growth in the future. " Dr. Li GE said.

The main reasons for Wuxi Apptec's substantial increase in performance in the first half of the year include the rapid growth of overseas business, the high stickiness of regular customers, the continued strength of the global "long-tail customer" strategy, and the unique positioning across the drug development value chain.

In terms of overseas business, Wuxi Apptec gives full play to the advantages of global layout and the layout of the whole industry chain, ensures business continuity through global linkage in a timely manner, helps customers to continuously promote the process of new drug research and development, and is widely recognized by customers. During the reporting period, the income of customers from the United States was 11.909 billion yuan, an increase of 104 percent over the same period last year.

A large, diverse and loyal customer base is also Wuxi Apptec's magic weapon to win. He maintains strong customer stickiness through continuous expansion of new customers and high-quality and efficient service. Wuxi Apptec's income from existing customers reached 17.366 billion yuan during the reporting period, an increase of 79 percent over the same period last year.

In the first half of the year, Wuxi Apptec's revenue from the top 20 pharmaceutical companies in the world was 7.856 billion yuan, up 165% from the same period last year, while revenue from all other customers was 9.9 billion yuan, up 31% from the same period last year. The company's unique positioning across the drug development value chain promotes the company's strategy of "following customers" and "following molecules", and strengthens the synergy of various business units. The contribution income of customers who use the services of multiple business departments of the company is 15.744 billion yuan, an increase of 82% over the same period last year.

From the perspective of regional distribution, income from the United States, China and Europe is 11.909 billion yuan, 3.175 billion yuan and 1.853 billion yuan respectively, an increase of 104%, 27% and 24% respectively over the same period last year. American customers have driven more revenue growth.

Remarkably, on July 19, Wuxi Apptec announced plans to establish a R & D and production base in Singapore, and expects to invest a total of S $2 billion (US $1.43 billion) in the construction of the new base over the next decade. The base will provide integrated services for small molecular, cellular and gene therapy drug discovery, process development, commercial production and laboratory testing.

Singapore has a fast-growing biomedical cluster and an ecological chain of life sciences industry, and has a rich reserve of professionals in the fields of biomedicine and biotechnology. Biomedicine has become one of the main drivers of Singapore's economic growth, and the output value of the industry has tripled in the past 20 years. At the same time, the Singapore Economic Development Board actively provides adequate preferential policy support to overseas pharmaceutical companies. At present, multinational pharmaceutical giants such as Amgen Inc, Merck, GSK, Pfizer Inc and Novartis have set up regional headquarters or manufacturing centers in Singapore to produce biological agents, APIs and finished drugs for the global market.

Wuxi Apptec said that the establishment of the Singapore base will further consolidate Wuxi Apptec's global operation network and form a linkage with bases in Asia, Europe and North America to meet the growing needs of customers. continue to strengthen communication and cooperation with global partners.

Many organizations are optimistic about the future development.

China Merchants reported that Yao Mingkang de was not afraid of the Omicron epidemic in Shanghai, gave full play to the advantages of global layout and the coverage of the whole industry chain, maintained rapid growth, and actively promoted the resumption of work and production in Shanghai since June 1. "We raise our profit forecast and expect the 2022-2024 return net profit to be 81.9 / 11.94 billion yuan, corresponding to the corresponding PE of 37max 31max 25X."

In addition, Shen Wan Hongyuan research newspaper believes that Wuxi Apptec's China News business is growing at a high speed. "We have upgraded our earnings forecasts and investment ratings. They believe that the company, as the leader of CXO, continues to grow at a high speed and raises its annual growth forecast, raising its profit forecast for this year's return net profit to 8.956 billion yuan, maintaining the 23-24 year return net profit forecast of 106.25 yuan and 13.619 billion yuan, respectively, and the corresponding PE for 22-24 years is 34pm.

At the same time, Wuxi Apptec has always been the target of heavy positions for institutional investors in the capital market. According to Wind, as of the end of June 2022, a total of 619 fund products owned by more than 100 institutions held Wuxi Apptec shares.

Among them, China Europe Medical and Health Fund holds the largest number of shares, reaching 61.2279 million shares, with a market capitalization of more than 6.2 billion yuan. The manager, Glenn, a star fund manager in the pharmaceutical industry, increased his stake in the company by 1.9003 million shares in the second quarter and currently accounts for about 2.4 per cent of the company's outstanding shares. At the end of the first half of the year, Wuxi Apptec remained the second largest stock in the fund, accounting for 8.96 per cent of the fund's net asset value.

In terms of other shareholders, China Life Insurance's insurance products are among the top 10 shareholders of Wuxi Apptec, with 52.9884 million shares, while Hong Kong Securities Clearing Limited increased its holdings by 26.202748 million shares.

For the growth and future of the plate, Yinhua Fund Li Xiaoxing said that innovation is the future of the development of China's pharmaceutical industry. With the increased risk of investment in innovative drugs and the continuous improvement of the outsourcing rate, CRO/CDMO is still the strongest and most certain sector for the growth of the pharmaceutical sector, and continues to be optimistic about the stable and sustainable growth of the pharmaceutical sector. In addition, with the economic recovery in the third quarter, strong demand, optional medical beauty, medical services, and so on, it is expected that there will be good excess income in the third quarter. (produced by thinking Finance) ■