WuXi Biologics Earnings and Guidance In Line; FVE Lowered to HKD 77, Shares Cheap

No-moat WuXi Biologics reported full-year earnings and guidance for 2023 that was in line with our expectations. We lower our fair value estimate to HKD 77 (from HKD 90) to reflect lower long-term gross profit margins as we now believe a larger share of the company’s long-term business will be handled by facilities outside of China, which have higher operating costs. We think shares are undervalued by 35%, and this is our top pick among Chinese healthcare names.