CICC released a research report stating that due to WUXI BIO's (02269) smooth project progress and improved operational efficiency, the firm has raised its 2025/2026 net profit attributable to shareholders forecasts by 5.5%/1.6% to RMB 4.21/4.71 billion, and increased adjusted profit forecasts by 2.5%/4.1% to RMB 5.11/5.58 billion. The firm maintains its outperform rating, with current stock price corresponding to 2025/2026 adjusted P/E ratios of 21.7x/19.6x. Given the recent upward shift in pharmaceutical sector valuation, CICC has raised the target price by 10.8% to HK$36, corresponding to 2025/2026 adjusted P/E ratios of 26.3x/23.7x, representing 20.9% upside potential from current stock price.

CICC's key viewpoints are as follows:

**1H25 Performance Exceeds Expectations** The company announced 1H25 results: revenue of RMB 9.95 billion, up 16.1% year-over-year, with continuing operations revenue up 20.2%; gross margin of 42.7%, up 3.6 percentage points year-over-year; adjusted EBITDA of RMB 4.31 billion, up 20.6% year-over-year, corresponding to a margin of 43.3%; adjusted net profit of RMB 2.84 billion, up 11.6% year-over-year, corresponding to a margin of 28.5%. Results exceeded expectations, mainly due to smooth project progress, commercial project ramp-up, and improved operational efficiency. The company raised its 2025 revenue growth guidance to 14%-16%, while indicating steady improvement in profitability and significant free cash flow growth.

**CRDMO Business Model in Full Swing** In 1H25: 1) R: As of 1H25, the company has cumulatively enabled over 50 molecular projects, with rights to receive potential milestone payments and 3-10% sales royalties, with potential milestone payment orders reaching $9 billion. 2) Preclinical stage: revenue of RMB 4.15 billion, up 35.2% year-over-year, mainly driven by research services and preclinical development project revenue conversion. 3) Clinical Phase III + commercialization stage: revenue of RMB 4.29 billion, up 24.9% year-over-year, with growth primarily benefiting from early-stage project advancement and continued commercial project volume growth. As of 1H25, the company has 67 clinical Phase III projects and 24 commercial projects, with 25 PPQ projects scheduled for 2025.

**Project Quantity and Orders Remain at Historical Highs, Adding Certainty to Performance Growth** 1) Project quantity: 86 new projects signed in 1H25, with over 70% being bispecific antibodies, multispecific antibodies, and ADCs, demonstrating the company's complex molecule technology capabilities. 2) Winning molecules: 9 obtained in 1H25, including 2 clinical Phase III projects, with most coming from the United States. 3) Orders: As of 1H25, unfulfilled orders within 3 years totaled approximately $4.2 billion, with total unfulfilled orders reaching $20.3 billion. According to calculations, new order amounts reached new highs since 2023, with order growth mainly benefiting from late-stage clinical project advancement, commercial project ramp-up, and early-stage project clinical progress.

**Global Capacity Construction Progressing Orderly** 1H25 capital expenditure was approximately RMB 1.9 billion, with the company expecting full-year capital expenditure of about RMB 5.3 billion. 1) Singapore: Modular biologics (DP) production facility started construction, with modular drug substance (DS) production facility in design phase. 2) Ireland: MFG6.2 completed first engineering batch and PPQ production, MFG7 completed second 12kL scale PPQ production. 3) United States: MFG11 construction continues to advance, capable of providing end-to-end R-D-M services. 4) China: Hangzhou 15kL drug substance production line completed first commercial project PPQ production, Chengdu microbial commercialization base officially started construction.