WuXi Biologics Reports Strong Growth and Progress on UVL Removal; Shares Attractive

No-moat WuXi Biologics posted in-line earnings for the first half of 2022, with revenue growing 64% year on year and operating profit (including cost of sales and expenses for selling, administrative, and research and development) growing 44% year on year. The total backlog grew to CNY 18.5 billion, or 35% higher than six months ago, mostly driven by growth in the service backlog beyond three years. Additionally, the company reported progress on removing its WuXi facilities from the Unverified List, or UVL, which we view as incrementally positive for sentiment.