HK Stock Market Move | Wuxi XDC (02268) rose nearly 8% approaching its historical high. The demand for ADC CDMO is booming and the company's production capacity is actively expanding.

WUXI XDC (02268) rose nearly 8% in early trading, reaching a high of 33.6 Hong Kong dollars, approaching its historical high of 34 Hong Kong dollars. As of the time of writing, it is up 6.26% to 33.1 Hong Kong dollars, with a turnover of 87.3544 million Hong Kong dollars. Huatai previously released a research report stating that despite the impact of geopolitical factors, demand for WUXI XDC remains strong in the interim performance. The company's revenue in 1H24 was 1.67 billion yuan, a year-on-year increase of 67.6%. At the same time, the total order backlog reached 842 million US dollars, an increase of approximately 45.5% from the end of 23, and the number of phase III and PPQ projects has significantly increased. In terms of the ADC industry, according to Pharmaceutical Cube, there are 7 domestic and foreign ADCs in the NDA stage. We expect that they will be gradually approved for listing from the end of 2024 to 2025, which will drive CMO demand. The initiation and promotion of global phase III clinical trials of multiple ADCs, such as Lu Kang Sha Tuo Zu monoclonal antibody, will stimulate the growth of late-stage clinical production demand. The bank pointed out that in response to rapid demand expansion, the company has significantly increased the upper limit of its related transactions with WUXI BIO for 2024-2025 to approximately double the original limit to ensure sufficient production capacity. In addition, the company's own production capacity is being constructed in an orderly manner, and we expect that as new production capacity in Wuxi and Singapore come online gradually, the company's gross profit margin is expected to further improve.