Healthy growth amid challenging environment_股票频道

（以下内容从招银国际《Healthy growth amid challenging environment》研报附件原文摘录）
药明康德(603259)
Healthy earnings growth in 1Q23. WuXi AppTec reported 1Q23 revenue ofRMB8,964mn, up 6% YoY. It posted attributable recurring net income ofRMB1,869mn, up 9% YoY, and attributable adjusted non-IFRS net income ofRMB2,342mn, up 14% YoY. 1Q23 revenue / adjusted Non-IFRS net incomeaccounted for 21%/ 22% of our 2023 full-year estimates, which were also in linewith its historical range. Non-IFRS gross profit margin (GPM) improved by 3.2pptto 41.0% while non-IFRS net profit margin increased by 1.9ppt to 26.1% in 1Q23,driven by the continuously improved operating efficiency and output peremployee. Non-COVID business saw resilient growth in 1Q23 with D&M revenue(in WuXi Chemistry segment) up 30% YoY. Given the high revenue base of 2022,management reiterated 5-7% YoY and 12-14% YoY growth target for its revenueand non-IFRS gross profit respectively in 2023E.
Global healthcare funding slow-down remains a key factor to bewatched. According to VBDATA, global/ China healthcare funding decreasedby 41%/ 57% YoY in 1Q23, following the decline of 43%/ 54% YoY in 2022.Although some small- to mid-sized pharmaceutical companies were forced tore-assess their R&D spending, R&D demand from top-tier biotech companiesand big pharma companies remained at relatively healthy levels, in our view.We believe top CXO players such as WuXi AppTec will be less impacted bythe demand cycle thanks to its superior client mix and strong bargainingpower to clients. In fact, WuXi AppTec’s 1Q23 revenue from biotech clientssurged by 53% YoY, with over 310 new clients added in the quarter.
New modalities services turning into new growth drivers. Revenue ofnew modalities-related services in WuXi Chemistry segment grew by 44%YoY to RMB540mn in 1Q23, representing ~9.6% (vs ~10.4% in 2022) ofsegment revenue (excluding COVID-19 commercial projects). Moreover, newmodalities revenue of WuXi Biology segment delivered a 40% YoY growth in1Q23, representing 25.3% (vs 22.5% in 2022) of segment revenue. TheCompany has built the largest drug discovery team in the world, functioningas a critical project source for its downstream services. More synergiesamong its various business segments are yet to be released.
WuXi ATU and DDSU saw encouraging progress despite businessadjustments. Pipeline of WuXi ATU included eight projects in Ph3 as of1Q23, with two in BLA review stage and another two in BLA preparationstage. Management expect to see commercial demand rise in 2H23E withanticipated BLA approvals. With the adjustment of Lingang site, managementindicated GPM of WuXi ATU to turn positive for full-year 2023E. Additionally,a customer of DDSU segment obtained marketing approval for a new COVIDdrug in Mar 2023, which may contribute additional royalty income.
Maintain BUY. We cut TP from RMB121.52 to RMB 110.69, based on a 10-year DCF model with WACC of 11.57% and terminal growth of 3.0%, to reflectuncertainties in healthcare funding. We forecast WuXi AppTec’s revenue togrow by 5.8%/ 28.8%/ 25.8% YoY and adjusted non-IFRS net income to growby 9.3%/ 27.4%/ 24.4% YoY in 2023E/ 24E/ 25E, respectively.