In major news on Hong Kong stocks, shares of WuXi AppTec Co., Ltd. (HK:2359) fell by 7.5% on Tuesday after the company gave disappointing revenue guidance for 2024, amidst worries regarding potential U.S. sanctions. The company expects 2024 revenue in the range of ¥38.3 billion to ¥40.5 billion, compared to revenue of ¥40.34 billion reported in 2023. The Hong Kong-listed shares of WuXi AppTec reached their lowest level in over a month, extending the year-to-date loss to 47.3%.
WuXi AppTec offers an extensive array of research and development as well as manufacturing services to support the pharmaceutical and healthcare industries.
Insights from the 2023 Results
In WuXi AppTec’s 2023 annual results, the net profit attributable to owners increased by 21% to ¥10.69 billion, compared to last year. The gross profit margin expanded to 40.6% from 36.9% in 2022. Moreover, free cash flow surged to ¥7.12 billion from ¥264 million a year ago.
Speaking of shareholder returns, the company opted to uphold a 30% payout ratio and distribute approximately ¥9.8 cash dividend for every 10 shares, totaling ¥2.88 billion.
Moving ahead, the company expects its 2024 free cash flow to remain positive and come in the range of ¥4 billion to ¥5 billion, which will comfortably cover its cash dividends.
What is the WuXi AppTec Share Price Forecast?
WuXi AppTec’s shares have experienced volatility lately due to growing concerns regarding a U.S. bill that threatens to restrict Chinese biotech firms from accessing federal contracts. These potential bans do pose a threat to the company’s sales, considering it generated 65% of its sales from the U.S. in 2023. Nonetheless, the company assured its investors that it is not a threat to any country.
As per the consensus rating on TipRanks, 2359 stock has received a Strong Buy rating, supported by four Buys and one Hold recommendation. The WuXi AppTec share price forecast stands at HK$113.55, signifying a potential upside of 165.6% from the current level.
