Zhongtai International has released a research report indicating it has raised its target price for WuXi AppTec (02359) to HK$216, based on an adjusted DCF model, while maintaining a "Buy" rating. The company's first-half 2026 revenue surged 38.9% year-on-year to RMB 28.9 billion, with net profit attributable to shareholders climbing 33.7% to RMB 11.08 billion. Adjusted Non-IFRS net profit attributable to shareholders soared 83.2% to RMB 11.57 billion, significantly exceeding expectations.

Driven by the strong first-half revenue and profitability, along with a rapid increase in order backlog, the firm has raised its 2026-2028E revenue forecasts by 13.5%, 11.8%, and 15.5%, respectively, and its net profit attributable to shareholders forecasts by 38.0%, 28.7%, and 34.0%. Zhongtai International's key points are as follows.

First-Half 2026 Performance Significantly Exceeds Expectations

In the first half of 2026, the company's revenue increased 38.9% year-on-year to RMB 28.9 billion, and net profit attributable to shareholders rose 33.7% to RMB 11.08 billion. Adjusted Non-IFRS net profit, which reflects core business profitability, surged 83.2% to RMB 11.57 billion, far exceeding forecasts. On a quarterly basis, second-quarter revenue alone grew 32.4% quarter-on-quarter to RMB 16.46 billion, markedly outperforming the first quarter. The company's main business segments—chemistry, testing, and biology—saw revenue increases of 53.3%, 31.5%, and 11.2%, respectively, in the first half. Within the chemistry segment, driven by rising demand for GLP-1 receptor agonists, the TIDES business (oligonucleotides and peptides) experienced a staggering 44.3% year-on-year revenue surge, leading the segment's significant growth. In the testing business, drug safety evaluation revenue grew 42.8% year-on-year, while the drug metabolism and pharmacokinetics business further solidified its industry-leading position through continuous improvements in scientific research and service capabilities. For the biology business, rapid growth in new clients across nucleic acid, conjugated antibody, and peptide fields fueled revenue increases. Additionally, due to improved capacity utilization, gross margin expanded by 9.4 percentage points compared to the same period last year, contributing to profits that substantially exceeded estimates.

Rapid Revenue Expansion Across Major Global Regions, Order Backlog Continues to Grow

In the first half of 2026, the company's global business expanded rapidly, with revenue from the United States, China, and Europe increasing by 61.5%, 30.9%, and 10.0% year-on-year, respectively. The order backlog from continuing operations grew 25.2% year-on-year to RMB 66.43 billion, maintaining a fast growth trajectory.

Risk Factors

(1) If Sino-U.S. relations experience unexpected changes, the company's stock price may fluctuate significantly. (2) If clients reduce research and development spending, the company's performance could be adversely affected.