UBS: WuXi AppTec (02359) Q3 profit exceeded expectations, target price raised to 138.4 Hong Kong dollars.

UBS released a research report stating that it has raised its earnings forecast for WuXi AppTec (02359) by 23.4% for this year, and by 0.3% to 0.9% for the years 2029 to 2028. The target price for the stock has been raised from 136.1 Hong Kong dollars to 138.4 Hong Kong dollars, with a "buy" rating. In the third quarter, WuXi AppTec's revenue increased by 15% year-on-year to 12.1 billion RMB, exceeding the bank's and market's estimates of 11.4 billion RMB and 11.5 billion RMB; net profit increased by 53% year-on-year to 3.5 billion RMB, higher than the bank's and market's estimates of 3.3 billion RMB and 3.1 billion RMB. Non-IFRS net profit increased by 42% year-on-year to 4.2 billion RMB, and the adjusted non-IFRS gross margin increased by 6.1 percentage points to 44.5% year-on-year. The continuous operating order backlog at the end of the third quarter increased by 41% year-on-year to 59.9 billion RMB. The company also announced the divestiture of the clinical contract research organization/site management organization business, with an initial transaction price of 2.8 billion RMB. The bank believes that this divestiture is beneficial for WuXi AppTec, as the company can focus on its core contract research, development, and manufacturing organization business and its global expansion.