WuXi AppTec, a leading pharmaceutical company based in Shanghai, experienced a sharp decline in its Hong Kong-listed shares following the announcement of underwhelming third-quarter results. The company also revealed plans to terminate its H-share award scheme and repurchase shares.
As of early Tuesday, WuXi AppTec’s H-shares plummeted 8.1% to 93.4 Hong Kong dollars (US$11.94), reaching a low of HK$92.8 earlier in the session. Simultaneously, its Shanghai-listed shares saw a 4.6% drop, settling at 86.36 yuan.
In the third quarter, the Shanghai-based company reported a net profit of 2.76 billion yuan (US$377.4 million), reflecting a modest increase of 0.8% compared to the previous year. Additionally, third-quarter revenue rose by 0.3% to CNY10.67 billion.
Acknowledging the lackluster performance growth, the company’s management has proposed terminating its 2023 H-share incentive plan and repurchasing 15.47 million H-shares. This decision comes as WuXi AppTec’s anticipated levels of progress have not been met.
With regards to future projections, the company now anticipates a growth rate of 2%-3% in revenue for 2023, as opposed to its previous estimate of 5%-7%. This is primarily attributed to lower-than-expected demand for early-stage drug discovery services.
Jialin Zhang, an analyst from Nomura, expressed disappointment in WuXi AppTec’s deceleration in topline figures and adjusted guidance for 2023, stating that it not only affects the company but also has implications for the sector in the short term.