The drug services giant has forecast a jump in revenue for the first half and a doubling of net profit, after U.S. policy concerns abated
Key Takeaways:
- The projected results put the company on track to meet its target of returning continuing operations to double-digit growth this year
- WuXi AppTec’s business in peptides and other synthesized molecules nearly tripled in the first quarter, with the potential to become a key growth engine.
Shares in China’s pharmaceutical sector enjoyed a sharp rise this year, but the overall rally masked a divergent performance by two parts of the industry.
Companies focused on pioneering research did especially well on the stock market, with the Hang Seng innovative drug index rising more than 60% so far this year, while providers of generalized pharmaceutical services struggled to keep pace.
That is, until WuXi AppTec Co. Ltd. (2359.HK; 603259.SH) released a better-than-expected projection for its first-half earnings last week, sparking renewed investor enthusiasm for the outsourcing partners that offer a range of pharmaceutical services.
After the market closed on July 10, WuXi AppTec released a revenue forecast of 20.80 billion yuan ($2.9 billion) for the six months to the end of June, a year-on-year rise of 20.64%. Revenue from continuing operations was projected to rise 24.24%. Net profit for the half year was forecast to double to 8.56 billion yuan. Even after deducting a one-off windfall of 3.21 billion yuan …