WuXi AppTec H1 revenue up 39%, Zhongtai lifts target to HK$216

WuXi AppTec reported H1 2026 revenue of 28.9 billion yuan, up 38.9 percent, with adjusted net profit surging 83.2 percent to 11.6 billion yuan.

"The first-half results significantly exceeded expectations, driven by strong TIDES demand and improved capacity utilization," Zhongtai International analysts wrote in a research note, raising the target price to HK$216 and maintaining a Buy rating.

Chemistry revenue rose 53.3 percent, testing gained 31.5 percent, and biology grew 11.2 percent. TIDES revenue jumped 44.3 percent on GLP-1 receptor agonist demand. Drug safety evaluation revenue climbed 42.8 percent. Gross margin improved 9.4 percentage points to 53.2 percent, with the testing division's margin surging 13.3 points to 37.7 percent. US revenue climbed 61.5 percent, China gained 30.9 percent, and Europe rose 10.0 percent.

The earnings beat and record backlog of 66.4 billion yuan, up 25.2 percent year-over-year, come as WuXi AppTec secured a preliminary injunction from a US federal court against the Defense Department's 1260H list designation. H-shares closed at HK$192.3, up more than 7 percent on the day and gaining over 97 percent year-to-date. A-shares rose 8.5 percent to 154.82 yuan, up 73.5 percent year-to-date, with total market capitalization exceeding 460 billion yuan.

Zhongtai raised its 2026-2028 revenue forecasts by 13.5 percent, 11.8 percent, and 15.5 percent respectively, and net profit forecasts by 38.0 percent, 28.7 percent, and 34.0 percent. The brokerage cited Q2 revenue of 16.5 billion yuan, up 32.4 percent quarter-over-quarter, as evidence of accelerating momentum.

The company also raised its full-year 2026 revenue guidance to 58.5-60.5 billion yuan, up from 51.3-53 billion yuan, implying 35-39 percent growth for continuing operations. Jefferies lifted its A-share target to 165 yuan and H-share target to HK$210, while CICC raised its targets to 167 yuan and HK$211 respectively.

The preliminary injunction, granted by Chief Judge James E. Boasberg, found the Defense Department's listing decision "likely constitutes arbitrary and capricious administrative action." The court required only $1 in security and denied the Defense Department's request to stay the injunction pending appeal. WuXi AppTec has over 1,000 US clients, with US revenue accounting for approximately 70 percent of 2025 sales.

Zhongtai flagged two risks: unexpected changes in US-China relations could cause significant stock volatility, and reduced client R&D spending could hurt results. The guidance raise shows management expects demand for its CRDMO services to remain strong through year-end. Investors will watch for the Defense Department's appeal decision and the court's merits ruling, which could determine whether the 1260H designation is permanently vacated.

This article is for informational purposes only and does not constitute investment advice.