HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>WuXi Bio's 24H1 performance is disappointing. Since XDC has become new growth driver for WuXi Bio, why continue to invest in WuXi Bio instead of directly investing in WuXi XDC?</li>
<li>Production capacity expansion is aggressive, with high personnel salaries/cost pressure. Without sustained growth in high-margin orders, WuXi Bio's profitability will continue to decline. Gross margin may not bounce back quickly.</li>
<li>The mid-to-late stage order increment in US would be dominated by Japanese/Korean CXO. Without a definitive long-term logic, valuation cannot return to previous highs. Any rebound is difficult to sustain.</li>
</ul>


WuXi Bio's 24H1 performance is disappointing. Since XDC has become new growth driver for WuXi Bio, why continue to invest in WuXi Bio instead of directly investing in WuXi XDC?
Production capacity expansion is aggressive, with high personnel salaries/cost pressure. Without sustained growth in high-margin orders, WuXi Bio's profitability will continue to decline. Gross margin may not bounce back quickly.
The mid-to-late stage order increment in US would be dominated by Japanese/Korean CXO. Without a definitive long-term logic, valuation cannot return to previous highs. Any rebound is difficult to sustain.


Wuxi Biologics (2269.HK) 24H1 - The Best Semi-Annual Report for the Next Three Years?

<ul>
<li>Li Ge has begun increasing his holdings, but we’re not sure whether this move is really confident about the prospects of WuXi Bio, or another buy low sell high/capital operation.</li>
<li>The actual situation of WuXi Bio is not necessarily optimistic. Due to geopolitical risks, WuXi Bio has to start striving for more domestic orders. However, price reduction seems inevitable.</li>
<li>Although WuXi Bio released optimistic expectations for 2024 project number/outlook, there may be another announcement of lower-than-expected performance in the future,which would be a devastating blow to investors’ confidence/management's credibility.</li>
</ul>


Li Ge has begun increasing his holdings, but we’re not sure whether this move is really confident about the prospects of WuXi Bio, or another buy low sell high/capital operation.
The actual situation of WuXi Bio is not necessarily optimistic. Due to geopolitical risks, WuXi Bio has to start striving for more domestic orders. However, price reduction seems inevitable.
Although WuXi Bio released optimistic expectations for 2024 project number/outlook, there may be another announcement of lower-than-expected performance in the future,which would be a devastating blow to investors’ confidence/management's credibility.


Wuxi Biologics (2269.HK) - The Latest Updates Related to 2024 Performance Worth the Attention

<ul>
<li>According to WuXi Bio’s management, the Company’s growth in 23H1 would be challenging. That is to say, investors don’t need to expect too much from the semi-annual report.</li>
<li>Based on "hedge logic" of CXO, AD drugs cannot bring about the prosperity of entire CXO industry as COVID-19 vaccines/drugs did.But WuXi Bio would be beneficiary if receiving large orders.</li>
<li>We are not sure where the bottom of share price is, because shareholders could continue to reduce their holdings and CXO’s valuation has not reached the inflection point.</li>
</ul>


According to WuXi Bio’s management, the Company’s growth in 23H1 would be challenging. That is to say, investors don’t need to expect too much from the semi-annual report.
Based on "hedge logic" of CXO, AD drugs cannot bring about the prosperity of entire CXO industry as COVID-19 vaccines/drugs did.But WuXi Bio would be beneficiary if receiving large orders.
We are not sure where the bottom of share price is, because shareholders could continue to reduce their holdings and CXO’s valuation has not reached the inflection point.


Wuxi Biologics (2269.HK) - Some New Business Updates and the Outlook

<ul>
<li>WuXi Bio’s profit was disappointing.The 41 new orders added last December were small orders, which cannot contribute decent revenue/profits.The goal of gross margin to reach 45% by 2026 seems challenging.</li>
<li>The management has become more cautious in its guidance for 2024. 2024H1’s performance could be disappointing. The key is to see whether the performance in 2024 full-year would meet expectations.</li>
<li>Due to BIOSECURE Act, foreign CXOs are planning to seize WuXi Bio’s market share. We are not sure whether Europe (the US’s ally), will follow suit and enact similar legislation.</li>
</ul>


WuXi Bio’s profit was disappointing.The 41 new orders added last December were small orders, which cannot contribute decent revenue/profits.The goal of gross margin to reach 45% by 2026 seems challenging.
The management has become more cautious in its guidance for 2024. 2024H1’s performance could be disappointing. The key is to see whether the performance in 2024 full-year would meet expectations.
Due to BIOSECURE Act, foreign CXOs are planning to seize WuXi Bio’s market share. We are not sure whether Europe (the US’s ally), will follow suit and enact similar legislation.


Wuxi Biologics (2269.HK) - The Crisis Is Not Over

<ul>
<li>WuXi Bio’s optimism about new orders failed to generated expected surge in its stock price. Many investors raised great doubts about the credibility and professionalism in communication of WuXi Bio.</li>
<li>It’s easy/cost-effective for WuXi Bio to “adjust” order number. However, it’s more difficult to inflate revenue/cash flow. We have to wait for future financial results to know the real situation.</li>
<li>XBI is essentially “a bond”.Recent surge of XBI is driven by the expectations of Fed's rate cut + US soft landing, rather than virtual improvement of external environment.Much remains unclear.  </li>
</ul>


WuXi Bio’s optimism about new orders failed to generated expected surge in its stock price. Many investors raised great doubts about the credibility and professionalism in communication of WuXi Bio.
It’s easy/cost-effective for WuXi Bio to “adjust” order number. However, it’s more difficult to inflate revenue/cash flow. We have to wait for future financial results to know the real situation.
XBI is essentially “a bond”.Recent surge of XBI is driven by the expectations of Fed's rate cut + US soft landing, rather than virtual improvement of external environment.Much remains unclear.  


Wuxi Biologics (2269.HK) - Dramatic Changes in Management Forecasts Fail to Bring Back Confidence

China

WuXi Biologics (Cayman) Inc. is a leading open-access R&D capability and technology platform company serving the pharmaceutical, biotechnology, and medical device industries, with operations in China, U.S., and Iceland.  We provide a broad and integrated portfolio of laboratory and manufacturing services throughout the drug and medical device R&D process.  Our services are designed to help our global partners in shortening the cycle and lowering the cost of drug and medical device R&D through cost-effective and efficient solutions. 

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Wuxi Biologics (2269 HK)