WuXi AppTec reported a YoY revenue decline of 2.73%, to RMB39.2bn, and a 2.5% decrease in adjusted non-IFRS net profit, to RMB10.6bn. However, earnings showed encouraging improvement throughout 2024, resulting in a positive revenue and profit growth in 4Q24. The TIDES business remained the primary growth engine, with full-year revenue up by 70.1% YoY. The Company's backlog as of year-end 2024 expanded significantly, growing 47% YoY to RMB49.3bn. Notably, TIDES backlog experienced a substantial 103.9% YoY increase in 2024. Fuelled by robust order book, management offered a positive outlook for 2025, forecasting 10-15% YoY revenue growth in continuing operations and further enhancement of the adjusted non-IFRS net profit margin.

Strong order growth bolsters future revenue visibility. WuXi AppTec's backlog at end-2024 grew by a significant 47% YoY, reaching RMB49.3bn. This represents an acceleration from the 35.2% growth seen at the end of 3Q24. Positive trends were evident across segments. CDMO business secured 25 new Ph3 and commercial projects in 2024 (vs 20 added in 2023). Biology segment returned to positive revenue growth in 4Q24, posting YoY and QoQ increases of 9.3% and 9.2%, respectively, signaling an improving trend in early-stage R&D demand. Furthermore, revenue from Top20 global pharma clients rose by 24.1% YoY (excl. COVID related projects), expediting from the 23.1% growth in 9M24. These metrics underscore the increasing visibility of the Company's future revenue. Given the positive outlook for future demand, the Company plans to boost capex by 75%-100% YoY in 2025 to RMB7-8bn.

TIDES business sustains strong growth trajectory. TIDES revenue in 2024 climbed 70.1% YoY, with backlog expanded by 103.9% YoY. Underlying demand for polypeptide manufacturing remains robust in the market. The Company's polypeptide capacity reached 41k liters by end-2024, with plans for a further increase exceeding 100k liters by late 2025, demonstrating WuXi AppTec’s commitment to meeting the growing customer demand. Mgmt anticipates TIDES revenue growth of over 60% YoY in 2025.

Ongoing commitment to shareholder returns. Amidst macroeconomic uncertainties in 2024, WuXi AppTec strengthened its commitment to shareholder returns. The Company completed RMB4.0bn in share repurchases and cancellations in 2024 and maintained a dividend payout ratio of 30% for the year. To further enhance returns, mgmt announced a one- time special dividend of RMB1.0bn, alongside a 2025 interim dividend. Mgmt also indicated plans to repurchase RMB1.0bn of A-shares in 2025.

Maintain BUY. We raise our TP from RMB78.51 to RMB94.05 (based on a 10-year DCF model with WACC of 9.42% and terminal growth of 2.0%), to factor in the earnings recovery. We forecast the continuing operation revenue to grow by 14.4%/ 15.2%/ 16.3% YoY and adjusted non-IFRS net income to grow by 11.7%/ 19.0%/ +16.1% YoY in 2025E/ 26E/ 27E, respectively. Our 2025E/ 26E/ 27E forecasts of adjusted non-IFRS profit are 6.9%/ 14.9%/ 19.6% higher than consensus.