Key Takeaways:
WuXi AppTec (02359.HK) rose 4.56 percent to a record HKD206.4 after a US judge blocked its inclusion on a Pentagon list of companies allegedly supporting Beijing's military.
"WuXi AppTec is now essentially too big to ban," said Tony Ren, head of Asia Healthcare Research at Macquarie Securities, calling the company the world's largest peptide drug manufacturer. Peptide drugs include GLP-1 therapies as well as treatments for metabolism, autoimmune diseases and cardiovascular conditions.
The stock touched HKD207 intraday with turnover of HKD851 million on 4.19 million shares, and has more than doubled this year after first-half results beat estimates. A US federal judge earlier this month barred the Pentagon from including the company on its list of firms allegedly tied to China's military, according to Reuters. Peers rallied, with Asymchem up 7.43 percent, GenScript 5.06 percent, Pharmaron 4.58 percent, WuXi XDC 3.87 percent and WuXi Biologics 3.59 percent.
The ruling removes a regulatory overhang that had weighed on the contract research, development and manufacturing sector, which analysts expect to benefit from the global boom in GLP-1 obesity drugs and AI-driven drug discovery. Linda Shu, head of China Healthcare Research at HSBC Qianhai Securities, said the market broadly expects AI applications in drug discovery to further boost demand for CRDMO services. AllianceBernstein said WuXi AppTec's fundamentals remain strong and it is one of the asset manager's major holdings. Bank of America Securities raised price targets for WuXi AppTec and peers, citing strong biotech financing in China's CXO sector.
The Pentagon expanded its blacklist to 188 companies in June, reflecting concern that China's military could tap the private sector for advancements. E-commerce giant Alibaba Group (9988.HK) sued in June seeking removal, while drone maker DJI won a fresh chance to escape the list after a US appeals court ordered a lower court to reconsider its designation. The legal wins echo Xiaomi's removal from a similar list in May 2021 after a US court ruling.
For WuXi AppTec, the court decision removes the threat of a broader ban on buying its products through third parties that takes effect in 2027, clearing a path for institutional investors who had shied away from the stock. The company's platform serves more than 6,000 customers across 30 countries, giving it a scale that analysts say makes a full US ban impractical.
This article is for informational purposes only and does not constitute investment advice.
