2024H1 revenue remained steady, and profit declined year over year. 2024H1 achieved revenue of 8.574 billion yuan (+1.0%, excluding revenue from COVID-19 projects), net profit of 1.499 billion yuan (-33.9%) to mother, and 2.54 billion yuan (-13.0%) of adjusted IFRS net profit. The cost structure remains stable, with 2024H1 sales expenses ratio 2.6% (+1.4pp), management expenses ratio 9.0% (+1.0pp), and financial expenses ratio 0.8% (-0.1pp).

The “follow and win” strategy continues to advance, and on-hand orders remain at an all-time high. In the first half of 2024, the company signed 61 new projects (+32.6%), including 9 “winning elements” projects. As of June 30, 2024, the company had 78 “winning molecule” projects, with on-hand orders of $20.105 billion, which is roughly the same as the same period last year. The number of projects has grown steadily. As of June 30, 2024, the total number of ongoing projects reached 742 (+21.0%), and the biological R&D pipeline has been fully expanded, including 316 monoclonal antibody projects (+13.7%), 123 bispecific antibody and multi-specific antibody projects (+17.1%), 167 antibody-conjugated drug projects (+51.8%), 76 fusion protein projects (+13.4%), 37 other protein projects (+21.1%), and 23 vaccine projects (+21.1%).

Upgrading the global strategic layout to promote international business expansion. In the first half of 2024, the company made strategic investments around the world. 1) New Jersey, USA: Increase 2000L stock solution production capacity and strengthen clinical formulation and stock solution production capacity. 2) Dundalk, Ireland: Successful completion of the first PPQ project. 3) Hangzhou, China: The MFG20 facility was officially completed, and three sets of 5,000 liter disposable bioreactors were introduced. 4) Wuxi, China: DP2 and DP5 facilities successfully completed FDA pre-market inspections for the first time in the first half of this year.

The layout upgrade of the global strategy has further strengthened the company's position as the world's leading biopharmaceutical CDMO service provider.

Accelerate breakthroughs in drug discovery technology and production technology. Significant progress was made across all technology platforms in the first half of 2024. 1) CD3/wuxibodyTM and WuxiupTM platforms: The CN201 molecule, which is potentially the best-in-class CD3xCD19 antibody, was successfully constructed and produced. 2) Next generation production process platform wuxiUiTM: increases protein production by 3-6 times, further improving production efficiency and cost efficiency.

Risk warning: geopolitical risk; risk of declining prosperity; increased risk of industry competition.

Investment advice: The “follow and win” strategy continues to advance, with on-hand orders remaining high, maintaining the 2024-2026 profit forecast. Net profit to mother is expected to be 3.823/4.483/5.321 billion yuan in 2024-2026, with a year-on-year growth rate of 12.4%/17.3%/18.7%. The company's global production capacity layout has been gradually improved, laying a solid foundation for performance growth and maintaining a “superior to the market” rating.