What's new
　　Wuxi AppTec preannounced its 2021 results, estimating that its revenue, attributable net profit, recurring attributable net profit and adjusted non- IFRS net profit rose 38.5%, 72.19%, 70.38% and 41.08% YoY to Rmb22.9bn, Rmb5.1bn, Rmb4.06bn and Rmb5.13bn. The results slightly beat our expectations, as CRDMO (contract research organization + contract development and manufacturing organization) business booked strong orders and drove accelerating revenue growth.
　　Comments
　　Main businesses rapidly growing; uptrend continuing. 1) Wuxi　Chemistry: Revenue rose 46.93% YoY to Rmb14.09bn, with that of small- molecule drug discovery service up 43.24% and development & manufacturing services up 49.94%. The firm expects 2022 revenue growth of chemical business to double YoY.
　　Non-recurring gains rising YoY. 1) The fair value gains of non-current financial assets and investment income declined by Rmb131mn YoY to Rmb1.66bn. 2) The non-cash fair value loss on the derivative instrument portion of the H share convertible bonds narrowed Rmb349mn YoY to Rmb1.0bn. 3) The firm completed the transfer of its small molecule payload and linker business and relevant assets to WuXi XDC (Changzhou) with a net disposal gain of about Rmb274mn.
　　Valuation and recommendation
　　Considering strong demand of main business, we raise 2021-2023 NI forecast 2.2%, 15.1% and 7.0% to Rmb5.1bn, Rmb6.65bn and Rmb8.29bn. A-shares and H-shares are trading at 41.7x and 38.9x 2022e P/E. Considering recent systemic changes in the segment, we maintain OUTPERFORM for A-shares and H-shares, and maintain TP of Rmb110 (48.9x 2022e P/E with 17.2% upside) and HK$120.0 (45.5x 2022e P/E with 18.0% upside).
　　Risks
　　Fluctuations in orders; foreign exchange fluctuations; investment loss and/or loss from fair value change.