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Company Profile WuXi Apptec Co., Ltd. is a China-based investment holding company principally engaged in the provision of new drug research and development （R&D）， production and supporting services, as well as related technology platform services. The Company is mainly engaged in the discovery, development and production of small molecule drugs, cell therapies and gene therapies, as well as providing testing services for medical devices. The Company mainly conducts its businesses through four segments, including China-based Laboratory Services segment, Contract Manufacturing organization/contract development and manufacturing organization services （CMO/CDMO services） segment, US-based Laboratory Services segment and Clinical Research segment. （Source: Reuters）　　Event　　WuXi Apptec Co., Ltd. （“WuXi Apptec”/ the company） announced its third-quarter financial results of 2022.　　In the reporting period, the company achieved CNY 28.40 billion in revenue, up 71.87% year on year （YoY）； it reported its net income attributable to shareholders at CNY 7.38 billion, a surge of 107.12% from a year ago; it hit CNY 6.23 billion in net income deducting non-recurring items, 100.64% higher than it was a year ago; it reported net operating cash flow at CNY 7.71 billion, skyrocketing 142.38% from a year prior.　　CommentsThe performance in Q3 sustained high growth.　　In Q3 alone, WuXi Apptec achieved CNY 10.64 billion in revenue, a 77.76% increase from a year ago; its net income attributable to shareholders soared 209.11% to CNY　　2.74 billion; it turned in CNY 2.38 billion in net income deducting non-recurring items, up 143.31% YoY.　　Overall, the company saw an accelerated performance recovery in Q3. Looking ahead, the company will very likely revise up its full-year growth target range to 70%~72% from 68%~72%. WuXi Chemistry sustained eye-catching performance.　　It achieved CNY 20.82 billion in revenue in the first three quarters, up 106.6% from the previous year, with small molecule drugs discovery services contributing 5.39 billion, up 36.2%YoY, and technique development and manufacturing services contributing CNY 15.42 billion, a surge of 152.2% from a year earlier.WuXi Testing from Q1 to Q3 made CNY 4.18 billion in revenue, 25.3% higher than a year earlier, with laboratory analysis and testing services accounting for CNY 3.04 billion, a year-on-year increase of 35.2%, clinical CRO and SMO taking up CNY 1.14 billion, up 4.6%YoY.WuXi Biology in the first nine months reported CNY 1.78 billion in revenue, up 24.9% from a year ago, with the single-quarter growth at roughly 36.6% in Q3, showing an appreciable recovery momentum. WuXi ATU bagged CNY 922 million in revenue in the first three quarters, up 25.2% from a year earlier, and the single-quarter growth was 8.4% in Q3WuXi DDSU saw a decline of 27.9% from a year earlier to report a revenue of CNY 672 million. Improvements were seen in expenses.　　The comprehensive gross margin in the first three quarters was 37.12%, up 0.14 percentage points from a year ago.　　The selling/ administrative/ R&D expense rate stood at 1.96%/ 7.18%/ 3.84%, 1.05 percentage points/ 1.93 percentage points/ 0.06 percentage points lower than it was a year ago.　　It reported its financial expenses at CNY-469 million, CNY 515 million less than a year earlier, mainly due to increased income from exchange gains.　　Earnings forecast and investment recommendation As a leading player in CRO in China, the company has obvious strengths in the entire industry chain, customer resources, quality and efficiency.　　In the short term, as orders are growing for small molecule drugs for COVID-19, the company is expected to grow rapidly in revenue and profit in 2022.　　Looking forward, WuXi Chemistry and other businesses are expected to maintain rapid growth. Meanwhile, the company actively develops potential businesses, and WuXi DDSU, WuXi testing as well as WuXi ATU are set to become important growth drivers, which will bring in more resilience to its future growth.　　We update our earnings forecasts for the company and estimate the its EPS at CNY 3.28, CNY 3.48 and CNY4.47 for 2022, 2023 and 2024, respectively, implying a PE ratio of 24.7X, 23.3X, and 18.1X, respectively, based on the closing price on November 2nd.　　Remain “Buy”。　　Potential risks　　Poorer-than-expected performance; less-than-expected new orders; fluctuations in investment returns.【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。

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