Key Takeaways:
WuXi AppTec won a US court injunction blocking the Pentagon's 1260H designation, as H1 revenue jumped 38.93 percent to 28.9 billion yuan.
Chief Judge James E. Boasberg of the US District Court for the District of Columbia said the listing decision "likely constitutes arbitrary and capricious administrative action," granting the company's motion for a preliminary injunction on Aug. 7.
The court required only $1 in security and denied the Defense Department's request to stay the injunction pending appeal. WuXi AppTec's H1 net profit rose 29.43 percent to 11.08 billion yuan, with gross margin improving to 53.2 percent from 43.8 percent a year earlier. Order backlog reached a record 66.43 billion yuan, up 25.2 percent year over year.
The company raised full-year revenue guidance to 58.5-60.5 billion yuan from 51.3-53 billion, implying 35 percent to 39 percent growth for continuing operations. A-shares surged 8.49 percent to 154.82 yuan, extending year-to-date gains to 73.53 percent, while H-shares climbed over 7 percent to HK$192.3.
The injunction shields WuXi AppTec from immediate adverse effects of the 1260H designation while the judicial process challenging it proceeds. The Pentagon listed the company on June 8, and WuXi AppTec filed suit on June 11, arguing the classification lacked legal and factual basis. The Pentagon's rationale centered on indirect ownership connections to China's State-owned Assets Supervision and Administration Commission and alleged affiliations with the People's Liberation Army, which the company denies.
The ruling does not prevent the Defense Department from redesignating WuXi AppTec based on new grounds, provided those grounds accurately describe the evidence. Whether the department appeals, whether the court formally vacates the listing after a merits hearing, and whether the department relists the company remain open questions.
Jefferies raised its A-share price target to 165 yuan and H-share target to HK$210, lifting 2026 and 2027 revenue forecasts by about 19 percent to 20 percent and EPS forecasts by about 39 percent. CICC raised its A-share target by 28.5 percent to 167 yuan and H-share target by 42.6 percent to HK$211, citing the CRDMO model's momentum and improved capacity efficiency.
US clients account for roughly 70 percent of WuXi AppTec's 2025 revenue, with first-half US revenue rising to 22.28 billion yuan from 14.24 billion yuan. The company declared an interim dividend of 0.51 yuan per share.
The guidance raise signals management expects demand to keep accelerating, and the injunction removes a near-term regulatory overhang. Investors will watch whether the Defense Department appeals and how the court rules on the merits in coming months.
This article is for informational purposes only and does not constitute investment advice.
