Wuxi XDC's 1H revenue and adjusted earnings both grew 37%; Nomura reiterates Buy and HKD82.60 target price

Overview

This report provides a quick review of Wuxi XDC's 1H26 results. Nomura considers the results satisfactory: revenue and adjusted earnings maintained high growth, gross margin improved, and the project pipeline and orders continued to increase. Despite the drag on reported earnings from FX losses and BioDlink acquisition-related expenses, the firm reiterates its Buy rating and HKD82.60 target price.

Core views

Wuxi XDC announced its 1H26 results on the evening of August 24, 2026. Revenue increased 37.0% YoY to RMB3.7bn, broadly in line with Bloomberg consensus but slightly below Nomura's RMB3.8bn forecast; the difference mainly reflected Nomura's previous expectation of a higher revenue contribution from BioDlink. Excluding BioDlink, the company's organic business revenue reached RMB3.56bn, up 32% YoY and in line with Nomura's forecast. At constant exchange rates, total revenue grew 41.5%, while organic business revenue grew 36.2%, indicating that FX movements suppressed reported growth. By business segment, pre-IND revenue increased 37% YoY to RMB1.5bn, while post-IND revenue rose 35% YoY to RMB2.2bn, with both businesses maintaining rapid expansion. By region, US revenue increased 21% YoY to RMB1.7bn, China revenue grew 65% to RMB799mn, and Europe revenue rose 50% to RMB909mn. Growth in China and Europe outpaced that in the US and represented important drivers of 1H growth. In terms of profitability, gross margin increased from 36.1% in 1H25 to 37.0% in 1H26. Management disclosed that the gross margin of the organic business rose further to 37.6%, with the improvement primarily driven by economies of scale and enhanced operating efficiency. Reported earnings were RMB819mn, up 9.9% YoY, above Nomura's RMB747mn forecast but below Bloomberg consensus of RMB891mn. Reported earnings growth was significantly slower than revenue growth, mainly due to an approximately RMB198mn negative FX impact and RMB27mn in one-off transaction costs following the acquisition of BioDlink. Excluding the relevant non-recurring effects, management-reported non-IFRS adjusted profit attributable to shareholders increased 37% YoY to RMB1.027bn, in line with revenue growth; the corresponding margin was 27.8%, up 0.1ppt YoY. The organic business's adjusted margin rose 1.2ppts to 28.9%, indicating that the improvement in core business operating efficiency was stronger than suggested by the consolidated figures. The business pipeline continued to expand. As of the end of 1H26, the company had 328 iCMC projects, up from 252 at the end of FY25; the report also listed 51 newly signed projects and 25 projects won in 1H26. The service order backlog increased from USD1.49bn at the end of FY25 to USD2.0bn; based on Nomura's calculations, new orders in 1H26 totaled USD1.038bn, up 43% YoY. The company also had two commercial-stage projects, including one from BioDlink, and 21 projects at the PPQ stage, including 10 from BioDlink. These figures are the main basis for the report's view that the foundation for future growth remains solid and also demonstrate that BioDlink has contributed to the late-stage project pipeline. Nomura described the results as satisfactory and believes the company sustained high growth despite some FX headwinds. It therefore reiterates its Buy rating and HKD82.60 target price. The target price is based on a DCF model with a WACC assumption of 10.3%; the main text cites a terminal growth rate of 4.0%, while the valuation methodology appendix cites 4.5%. Based on FY26F fully diluted EPS of RMB1.38, the company currently trades at 46.5x FY26F fully diluted P/E; its closing price on August 24, 2026, was HKD69.80. The outlook will depend on progress in key projects, BioDlink integration, operations at the Singapore base, margin changes, and market demand. Particular attention should be paid to the impact on margins once depreciation begins at the Singapore base and whether the order and project pipelines can continue to convert into revenue. Downside risks to the target price explicitly identified in the report include geopolitical tensions, failure to secure commercial-stage projects, declining appeal of the ADC technology platform, and intensifying competition.

Analysis framework

The report first compares actual revenue with Nomura's forecast and Bloomberg consensus, then excludes BioDlink's contribution and uses a constant-currency basis to identify the underlying growth of the organic business. It subsequently breaks down revenue by development stage and region and combines gross margin, reported earnings, and non-IFRS adjusted earnings to explain the impact of FX movements and one-off acquisition costs. Finally, it assesses the sustainability of growth using project count, order backlog, new orders, and the late-stage project pipeline, and derives the target price using a DCF model.

Methodology notes

• Valuation MethodologyDCF Discounted Cash Flow

  DCF valuation

  The report calculates the HKD82.60 target price by discounting the company's future cash flows, using a WACC of 10.3%. The main text cites a terminal growth rate of 4.0%, while the valuation methodology appendix cites 4.5%.

• Event-Driven Analysis and Behavioral FinanceExpectation Gap/Expectation Management

  Comparison of actual results with institutional forecasts and market consensus

  The report compares revenue and earnings with Nomura's forecasts and Bloomberg consensus to determine which aspects exceeded or fell short of expectations and explains the sources of the differences.

• Company Fundamentals and Financial Framework

  Constant-currency and acquisition contribution exclusion analysis

  The report discloses both constant-currency growth and organic business performance excluding BioDlink to distinguish the respective effects of FX movements, acquisition consolidation, and core business growth on the results.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Wuxi XDC (2268 HK)

  The primary company covered in this report, with 1H26 revenue, adjusted earnings, project pipeline, and orders all maintaining growth.

  Strengths

  Solid organic business growth, improving gross and adjusted margins, and expanding order backlog and late-stage project pipeline.

  Weaknesses

  Reported earnings are affected by FX losses, one-off acquisition costs, and future depreciation at the Singapore base.

  Comparison

  Revenue was broadly in line with Bloomberg consensus but slightly below Nomura's forecast; reported earnings were above Nomura's forecast but below Bloomberg consensus.

  Risks

  Geopolitical tensions, failure to secure commercial-stage projects, declining appeal of the ADC technology platform, and intensifying competition.

• BioDlink (1875 HK, Not rated)

  Acquired and consolidated into Wuxi XDC's results, contributing revenue, one commercial-stage project, and 10 PPQ-stage projects.

  Strengths

  Contributes to the combined commercial-stage and PPQ-stage project pipeline.

  Weaknesses

  Actual revenue contribution was lower than Nomura's previous estimate, and the acquisition generated RMB27mn in one-off transaction costs.

  Comparison

  The report presents Wuxi XDC's organic business separately from the consolidated figures including BioDlink.

  Risks

  Progress in BioDlink's integration is an item the report explicitly calls for monitoring.

Key data

• 1H26 revenueRMB3.7bnUp 37.0% YoY, broadly in line with Bloomberg consensus and below Nomura's RMB3.8bn forecast
• Organic business revenueRMB3.56bnUp 32% YoY excluding BioDlink, in line with Nomura's forecast
• Constant-currency revenue growth41.5%Constant-currency growth of the organic business was 36.2%
• pre-IND revenueRMB1.5bnUp 37% YoY
• post-IND revenueRMB2.2bnUp 35% YoY
• US revenueRMB1.7bnUp 21% YoY
• China revenueRMB799mnUp 65% YoY
• Europe revenueRMB909mnUp 50% YoY
• 1H26 gross margin37.0%36.1% in 1H25; organic business gross margin was 37.6%
• 1H26 reported earningsRMB819mnUp 9.9% YoY, above Nomura's RMB747mn forecast and below Bloomberg consensus of RMB891mn
• Negative FX impactApproximately RMB198mnWeighed on 1H26 reported earnings growth
• BioDlink one-off transaction costsRMB27mnOne-off costs incurred following completion of the acquisition
• Non-IFRS adjusted profit attributable to shareholdersRMB1.027bnUp 37% YoY, with a margin of 27.8%, up 0.1ppt YoY
• Organic business adjusted margin28.9%Up 1.2ppts YoY
• iCMC projects328As of the end of 1H26, versus 252 at the end of FY25
• Service order backlogUSD2.0bnUSD1.49bn at the end of FY25
• 1H26 new ordersUSD1.038bnUp 43% YoY based on Nomura's calculations
• Commercial-stage projects2Including 1 from BioDlink
• PPQ-stage projects21Including 10 from BioDlink
• FY26F fully diluted EPSRMB1.38Currently trading at 46.5x FY26F fully diluted P/E

Impact & implications

The report believes that simultaneous growth in revenue, adjusted earnings, project count, and order backlog indicates that core business demand and the foundation for future revenue remain solid; economies of scale and efficiency improvements are lifting the organic business margin. On the other hand, FX volatility, BioDlink integration costs, and the commencement of depreciation at the Singapore base may put short-term pressure on consolidated earnings and margins, making project conversion and cost absorption key factors to monitor.

Risks

• Geopolitical tensions may hinder achievement of the target price.
• The company may fail to secure commercial-stage projects.
• The appeal of the ADC technology platform may decline.
• Industry competition may intensify further.

What to watch

• Track the latest progress of a key project.
• Monitor BioDlink's integration.
• Monitor the performance of the recently commissioned Singapore base.
• Observe margin trends after depreciation begins at the Singapore base.
• Track changes in market demand and their impact on projects and orders.