- Wuxi XDC announced a share buyback program of up to $100 million.
- The company stated its shares are undervalued by the market.
- The stock opened 2.15% higher on the news to HKD54.55.
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Wuxi XDC to Buy Back $100 Million in Shares, Stock Jumps 2%
Wuxi XDC (2268.HK) will repurchase up to $100 million of its own stock, saying the shares are undervalued and prompting a more than 2% jump in early trading.
"The current trading price of the Shares does not reflect their intrinsic value or the actual business prospects of the Company," the company said in a statement, calling it a "good opportunity" for the purchase.
The buyback, equivalent to about 1.3% of the company's market capitalization, will be funded by internal resources. The announcement pushed the stock 2.15% higher to HKD54.55 in pre-market trading, with HKD1.07 million worth of shares changing hands.
The move signals management's confidence in the contract research, development, and manufacturing organization (CRDMO). The buyback is aimed at boosting investor confidence and providing support for the stock price. The company believes the repurchase program is in the best interests of shareholders.
The shares will be purchased in the open market by a professional trustee appointed by the company. The company did not specify a timeframe for the completion of the buyback program, stating it will be conducted "from time to time."
The buyback authorization follows a period of volatility for Chinese biotech and healthcare stocks, which have faced headwinds from geopolitical tensions and domestic healthcare reforms. Wuxi XDC, a subsidiary of WuXi AppTec, is a leading global CRDMO focused on antibody-drug conjugates (ADCs) and the broader biologics market. The company listed on the Hong Kong Stock Exchange in November 2023.
J.P. Morgan recently identified Wuxi XDC as a top pick in the sector, citing the potential for accelerated commercialization of innovative drugs in China. The buyback could be seen as a move to capitalize on the positive long-term outlook for the company and the broader innovative drug market.
The share repurchase program could help offset some of the selling pressure and establish a floor for the stock price. Investors will be watching the execution of the buyback and for further signs of a recovery in the sector. The company's next earnings report will be a key catalyst to watch.
This article is for informational purposes only and does not constitute investment advice.
