Business Summary:

WuXi Biologics (stock code: 2269.HK), a Hong Kong-listed company, is a leading global open-access biologics technology platform offering end-to-end solutions to empower organizations to discover, develop, and manufacture biologics from concept to commercial manufacturing .

The company will transit from a global leading CDMO (contract development and manufacturing organization) to a commercial CMO (contract manufacturing organization). Total estimated capacity for biopharmaceutical production planned in China, Ireland, the U.S., Germany, and Singapore is expected to exceed 430,000 liters after 2023.

Business Summary and Prospect:

For the twelve months ended December 2020, the revenue rose 40.9% year on year to RMB5.612 billion. The net profit amounted to RMB 1.689 billion, up 66.6% yearly. Earning per share was RMB 0.43; increased by 59.3%. Gross profit margin increased from 41.6% to 45.1%.  No dividend was issued.

Global customers and partners supported by the group's “Win-the-Molecule” strategy, particularly those pursuing COVID-19 treatments and vaccines boosted the group's strong growth.

As of  31 December 2020, the total number of on-going integrated projects was 361, including 190 pre-clinical projects, 137 early-phase projects (101 in phase I and 36 in phase II), 32 late-phase projects, and 2 commercial manufacturing projects.   The group's total backlog soared sharply by 122.0% yearly from US$5,102 million to US$11,324 million.

Risk:

Firstly, Wuxi Biologics ranks the highest P/E (ratio: 296) and ranks the second highest P/B (ratio: 24.56); just behind Cansionbio-B (stock code: 6185).  Secondly, placing of new shares, and substantial shareholder cutting shares occasionally occur, which will affect the stock price performance.

Technical Analysis:

The stock prices hit historic high of $128.9 on 16 February, 2021. The price  dropped by 39.7% to recent-low of $77.7 on 9 Mar 2021.  It is suggested to buy at the price around $85. The target price for medium term is $100. Cut-loss price will be $75.0.

References

www.hkex.com.hk

www.etnet.com.hk

www.afe-solutions.com

I, Gary Tam, am a licensed person under the Securities and Futures Commission. Until the date this commentary was published, neither I and/or my affiliates are the beneficiary of the securities mentioned herein or are entitled to any financial interests in relation thereto.