WuXi AppTec's net profit in the first half of the year decreased by 20% year-on-year, with expected annual revenue of 38.3-40.5 billion, maintaining positive growth | Financial Report Watch

On the evening of July 29th, WuXi AppTec released its 2024 interim report, showing a decrease in both operating income and attributable net profit during the reporting period.

The report shows that in the first half of 2024, the company achieved operating income of RMB 17.241 billion, a year-on-year decrease of 8.64%; the net profit attributable to shareholders of the listed company was RMB 4.24 billion, a year-on-year decrease of 20.20%.

The net profit after deducting non-recurring gains and losses was RMB 4.414 billion, a year-on-year decrease of 8.33%. The gross profit margin was 39.36%, a decrease of 1.16 percentage points from the same period last year's 40.52%.

Based on the first quarter financial report and the interim report, WuXi AppTec's revenue in the second quarter was RMB 9.261 billion, an increase of 16% quarter-on-quarter, but a decrease of 6.5% year-on-year; the adjusted Non-IFRS net profit attributable to owners in the second quarter was RMB 2.46 billion, an increase of 28.5% quarter-on-quarter, but a decrease of 10.6% year-on-year.

Dr. Li Ge, Chairman and CEO of WuXi AppTec, stated: "Despite external challenges, the company's revenue and profit in the second quarter of 2024 steadily increased as planned, with a backlog of orders reaching RMB 43.1 billion, excluding new crown commercial projects, a year-on-year increase of 33.2%."

WuXi AppTec expects to achieve annual revenue of RMB 38.3-40.5 billion in 2024, maintaining positive growth after excluding specific commercial production projects (expected growth rate of 2.7%-8.6%), free cash flow of RMB 4-5 billion, and adjusted non-IFRS net profit margin remaining similar to last year.

Main Chemical Business Revenue Down 9.34% in the First Half of the Year

Revenue situation of WuXi AppTec's various business segments:

WuXi Chemistry achieved revenue of RMB 12.21 billion, a year-on-year decrease of 9.34%;

WuXi Testing achieved revenue of RMB 3.018 billion, a year-on-year decrease of 2.35%;

WuXi Biology achieved revenue of RMB 1.169 billion, a year-on-year decrease of 5.17%;

WuXi ATU achieved revenue of RMB 0.575 billion, a year-on-year decrease of 19.43%;

WuXi DDSU achieved revenue of RMB 0.257 billion, a year-on-year decrease of 24.80%.

In terms of the chemical business, WuXi AppTec stated that the small molecule process research and production business decreased by 2.7% year-on-year on the basis of strong growth of over 50% in the same period last year, and is expected to maintain positive growth for the whole year. The TIDES business maintained high-speed growth, with revenue reaching RMB 2.08 billion in the first half of the year, a strong year-on-year growth of 57.2%:

• The small molecule drug discovery ("R", Research) business serves as downstream continuous drainage. In the past twelve months, the company successfully synthesized and delivered over 450,000 new compounds for customers, a 7% year-on-year increase. The company implements the strategies of "following customers" and "following molecules", establishing trusted cooperative relationships with global customers, laying a solid foundation for the continuous growth of the company's CRDMO business. The number of molecules converted from R to D&M continues to grow.
• The small molecule process research and production ("D" and "M", Development and Manufacturing) business remains strong. The revenue of small molecule D&M services reached RMB 7.39 billion. Excluding specific commercial production projects, it decreased by 2.7% year-on-year on the basis of strong growth of over 50% in the same period last year, and is expected to maintain positive growth for the whole year. The small molecule CDMO pipeline continues to expand. By the first half of 2024, the company has added 644 new molecules. As of the end of June 2024, the total number of small molecule D&M pipelines reached 3,319, including 67 commercial projects, 74 Phase III clinical projects, 353 Phase II clinical projects, and 2,825 preclinical and Phase I projects. Among them, a total of 14 new commercial and Phase III clinical projects were added during the reporting period. In May 2024, the research and production base in Singapore officially started construction.
• The TIDES business (mainly oligonucleotides and peptides) maintains high-speed growth. The revenue of the TIDES business reached RMB 2.08 billion, a strong year-on-year growth of 57.2%. As of the end of June 2024, the in-hand orders for TIDES grew by 147% year-on-year. The number of TIDES D&M service customers reached 151, a 25% year-on-year increase, and the number of serviced molecules reached 288, a 39% year-on-year increase. In January 2024, the overall volume of peptide solid-phase synthesis reactors increased to 32,000L.

Income Decline from U.S. Customers, Growth in Europe

In the first half of 2024, while maintaining the existing base of over 6,000 large active customers, the company added over 500 new customers. As of the end of June 2024, the in-hand orders amounted to RMB 43.10 billion, a 33.2% year-on-year growth excluding specific commercial production projects.

During the reporting period, revenue from the top 20 global pharmaceutical companies reached RMB 6.59 billion, an 11.9% year-on-year growth excluding specific commercial production projects The revenue from American clients amounted to RMB 10.71 billion, a year-on-year decrease of 1.2% excluding specific commercial production projects; revenue from European clients reached RMB 2.22 billion, a year-on-year increase of 5.3%; revenue from Chinese clients was RMB 3.40 billion, a year-on-year increase of 2.8%; revenue from clients in other regions was RMB 0.91 billion, a year-on-year decrease of 17.4%.

In terms of expenses, in the first half of the year, WuXi AppTec's sales expenses were RMB 0.358 billion, a year-on-year increase of 1.15%; management expenses were RMB 1.212 billion, a year-on-year decrease of 4.76%; research and development expenses were RMB 0.636 billion, a year-on-year decrease of 4.61%; financial expenses were negative RMB 0.603 billion, mainly due to the increase in income from the company's foreign exchange hedging business