Wuxi Biologics Exceeds Revenue Expectations in First Half of the Year
Wuxi Biologics experiences surge in shares after reporting impressive first-half revenue growth. Despite decline in net profit, company remains confident in future growth.
Shares rise as revenue growth surpasses company's guidance
Wuxi Biologics, a leading biotechnology company, experienced a surge in its shares on Thursday following the announcement of its impressive first-half revenue growth. The stock climbed to 44.95 Hong Kong dollars ($5.73), reaching its highest intraday level in over a month. Despite this positive development, the stock remains down 25% year to date.
In a recent statement released after the market closed on Wednesday, Wuxi Biologics revealed that its revenue had increased by 18% to 8.49 billion yuan ($1.17 billion). This growth was primarily driven by the success of the company's non-Covid projects. However, there was an 11% decline in first-half net profit, which amounted to CNY2.27 billion. Furthermore, the gross margin dropped from 47% to 42% compared to the previous year.
The decline in net profit can be attributed to several factors. These include a decrease in gross profit margin, increased selling and marketing expenses, as well as fair value losses on investments due to capital-market volatility. The lower gross margin was mainly a result of low-utilization rates for new facilities at overseas sites and a reduced number of new projects due to the biotech funding slowdown in China.
Citi, in its research note, highlighted that the revenue growth exceeded the company's guidance, while the net profit was consistent with market consensus.
Looking ahead, Wuxi Biologics expects continued steady capital investment in research and design for innovative biologics within the industry. The company is confident that commercial manufacturing will be the primary driver of its future growth.