WuXi AppTec Co., Ltd. Class H ((HK:2359)) has held its Q2 earnings call. Read on for the main highlights of the call.
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WuXi AppTec’s recent earnings call painted a predominantly positive picture, showcasing significant growth in revenue and profits. The company reported record growth figures and an increase in full-year guidance, driven by strong performance in its TIDES business. Despite challenges such as a decline in China revenue and flat performance in the testing segment, the overall sentiment remained optimistic, suggesting a robust performance outlook.
Record Revenue and Profit Growth
WuXi AppTec reported impressive financial results for the first half of 2025, with total revenue reaching RMB 20.80 billion. This marks a 24.2% year-over-year increase in revenue from continuing operations. The company’s adjusted non-IFRS net profit saw a remarkable growth of 44.4% year-over-year, amounting to RMB 6.31 billion.
Increased Full-Year Revenue Guidance
The company has raised its full-year revenue growth guidance by 2 to 3 percentage points, now expecting a growth range of 13% to 17%. This adjustment reflects WuXi AppTec’s confidence in its ongoing business momentum and market opportunities.
Strong Backlog Growth
WuXi AppTec achieved a record backlog of RMB 56.69 billion, representing a substantial 37.2% year-over-year growth. This backlog growth underscores the company’s strong pipeline and future revenue potential.
TIDES Business Surge
The TIDES business was a standout performer, achieving revenue of RMB 5.03 billion in the first half of the year. This represents an impressive 141% year-over-year growth, highlighting the segment’s significant contribution to the company’s overall success.
Sustainability Milestones
WuXi AppTec reached significant sustainability milestones, achieving the highest AAA rating from MSCI. Additionally, the company’s emissions reduction targets were validated by the Science Based Targets initiative (SBTi), emphasizing its commitment to sustainable practices.
Cash Flow and Dividend Distribution
Operating cash flow grew by 49.1% year-over-year, reaching RMB 7.07 billion. The company also distributed around RMB 3.84 billion in cash dividends, reflecting its strong cash generation and shareholder return strategy.
Decline in China Revenue
Despite the overall positive performance, the company experienced a decline in revenue from China. Specific figures were not provided, but this remains a point of concern for the company moving forward.
Flat Testing Revenue
WuXi Testing revenue slightly declined to RMB 2.69 billion in the first half of the year, with lab testing services revenue remaining almost flat year-over-year. This indicates challenges in the testing segment that the company needs to address.
Challenges in Early-Stage Demand
The company noted that demand in early-stage projects has stabilized but is not increasing, due to ongoing challenges in biotech funding. This presents a potential hurdle for future growth in this area.
Impact of Market Pricing on Margins
The adjusted non-IFRS gross profit margin in the testing business declined due to market pricing impacts. This highlights the competitive pressures the company faces in maintaining its profitability.
Forward-Looking Guidance
WuXi AppTec’s management provided an optimistic outlook for the fiscal year 2025, raising full-year revenue growth guidance to a range of 13% to 17%. The company plans further capacity expansion with an expected CapEx of RMB 7 billion to RMB 8 billion, indicating continued investment in growth and innovation.
In conclusion, WuXi AppTec’s earnings call reflected a strong performance with record growth in key areas and an optimistic outlook for the future. Despite some challenges, particularly in the China market and testing segment, the company’s increased guidance and strategic initiatives suggest a promising trajectory ahead.