HSBC raises MEDLIVE's target price to 14 yuan, business execution remains on track

HSBC Global Research Report pointed out that WuXi AppTec (02192.HK) had smooth business progress in the first half of the year, with the number of its medical products increasing by approximately 32% year-on-year, and is expected to achieve an annual growth target of 30% for the whole year. HSBC's revenue forecast remains largely unchanged, expecting a year-on-year growth of 29% for the fiscal year 2025. Additionally, due to an unexpected rise in the company's profit margin in the first half of the year, HSBC has raised its profit margin assumptions and increased its adjusted net profit forecasts for 2025 to 2027 by 6% to 21%.

Considering the bank's latest cost of equity (CoE) and exchange rate estimates, as well as the number of new shares and updated financial assumptions, HSBC has raised its target price based on DCF from HKD 13.5 to HKD 14, implying about a 3% downside, maintaining a "Hold" rating, and believes that the current valuation of 29 times the estimated price-to-earnings ratio for 2025 is reasonable.

HSBC believes that artificial intelligence tools enable WuXi AppTec to better understand physician user behavior, thereby improving targeting efficiency; facilitating the production of medical knowledge content; and providing analysis to better showcase the performance of its precision marketing products. HSBC believes that with new product innovations, WuXi AppTec can further enhance usage rates and user stickiness, which will be beneficial for its digital marketing business in the long term