Co. recently provided an operational update of 4Q21E in a virtual investor conference on Jan 10, 2022
Mgmt. reiterates FY21E revenue guidance in the growth range of 36-38%, and highlighted growth is expected to accelerate in FY22E
We lifted FY22E earnings by 4% to reflect the sanguine guidance and upgraded SOTP-based TP to HKD266. Reiterate BUY
　　Strong business momentum continued in 4Q21E
　　WuXi Chemistry sees sustained new project growth (+206 new molecules into CRDMO pipelines in 4Q21 vs. +169/+172/+185 in 1Q/2Q/3Q21). This is driven by growing active customer base (~1,600+ new active customers to total of ~5,700+ in 2021, o/w +~300 new customers in 4Q21) and strong customer loyalty (~86% customer using multiple services across Co.’s one-stop-shop platform). We continue to see robust trend in CDMO given commercial CDMO pipeline has grown to 42 projects in FY21 (vs. 28 in FY20), which supports our forecast of ~40% CDMO CAGR over FY21E/22E. WuXi ATU, its’ CGT arm, is expected to see a rebound from a stagnant FY21E due to COVID-19 disruptions. This is underpinned by 4 projects now under BLA preparation stage and increased global capacity (two new sites, in Philadelphia site and Shanghai Lin-gang, which commenced operation in 4Q21).
　　Robust fundraising supports strong CXO demand
　　According to VBdata and our proprietary analysis, we founded venture capital (~USD56bn in FY21 excl. IPO/SPAC) continued to flow into global biotech startups. Despite tightening liquidity ahead, we believe these venture fundraising will continue to fuel the innovation and push up CXO demand in the next 1-2 years. Co. guided CAPEX of RMB6.5bn-7bn in FY21E and stated they will continue to aggressively build capacities and capabilities in FY22E across each of its business units globally to meet strong demands. We also believe Co. is well-capitalized to pursue M&A opportunities given decreased valuation of global CXO candidates.
　　Reiterate BUY and SOTP-based TP up to HKD266
　　We upgraded SOTP-based TP to HKD266 from HKD250. Stock has fallen ~35% from its 52wk high due to bearish sentiment rather than an adverse change in fundamentals. We think the correction offers a good entry point for longer-term investors. Reiterate BUY on Co.’s leading CRO/CDMO platform, and its robust growth outlook.