Core financial performance was outstanding, and non-IFRS profit growth was strong. In the first quarter of 2025, the company achieved operating income of 9.655 billion yuan (+21.0%), net profit attributable to mother of 3.672 billion yuan (+89.1%), and net profit not attributable to mother of 2.329 billion yuan (+14.5% YoY). The sale of shares of Yao WUXI XDC and the disposal and settlement business contributed 1.406 billion yuan in investment income, which included non-recurring profit and loss, and boosted the net profit growth rate.
The profitability of the company's core business continued to increase, and the company achieved adjusted non-IFRS net profit of 2.678 billion yuan (+40.0%) in the first quarter of 2025. Cash flow from operating activities is 3.195 billion yuan (+41.6%), the quality of operations is steady, and financial management capabilities are constantly improving.
Chemical business: CRDMO drives continued business growth, and TIDES continued to perform well. The company's chemical business revenue for the first quarter of 2025 was 7.391 billion yuan (+32.9%). 1) 75 molecules were converted from R to D; 2) Small molecule D&M earned 3.85 billion yuan (+13.8%), adding a total of 203 molecules. The total volume of small molecule API reactors is expected to exceed 4,000 kL by the end of 2025; 3) The TIDES business maintained rapid growth, achieving revenue of 2.24 billion yuan (+187.6%). TIDES on-hand orders increased 105.5% year-on-year, and the total volume of peptide solid phase synthesis reactors is expected to increase to over 100 kL by the end of 2025.
Testing business: The security assessment business is under pressure, and the advantages of SMO are prominent. In the first quarter of 2025, the revenue from the laboratory analysis and testing business was 0.88 billion yuan (-4.9%), of which the revenue from the drug safety evaluation business decreased 7.8% year on year. Clinical CRO&SMO business revenue was 0.41 billion yuan, down 2.2% year on year due to market price factors. Among them, SMO's revenue increased 5.5% year over year, maintaining the leading position in the Chinese industry.
Biology business: Synergies between internal and external platforms have been released, and the new molecular business is leading the growth. Biology business revenue for the first quarter of 2025 was 0.61 billion yuan (+8.2%). In-vitro comprehensive screening platform revenue increased 28.9% year over year, and in vivo pharmacology revenue increased 9.4% year over year. New molecular drug discovery services continued to perform well, contributing more than 30% of revenue.
The global layout is deepening, and there are sufficient orders in hand. In the first quarter of 2025, revenue from US customers was 6.38 billion yuan (+28.4%), revenue from European customers was 1.3 billion yuan (+26.2%), and revenue from Chinese customers was 1.53 billion yuan (-1.3%). As of March 31, 2025, the company's ongoing operations had orders of 52.33 billion yuan (+47.1%).
Risk warning: geopolitical risk; risk of declining prosperity; increased risk of industry competition.
Investment advice: TIDES business is growing rapidly, capacity construction is speeding up, and maintaining the “superior to the market” rating.
With the integrated advantages of CRDMO, the company's TIDES business has entered a cash out period. Maintaining the profit forecast, net profit for 2025-2027 is expected to be 11.162/12.732/14.506 billion yuan, a year-on-year growth rate of 18.11%/14.07%/13.93%. The current stock price corresponds to PE = 15.3/13.4/11.7x.
