WuXi XDC Cayman Inc (2268.HK) Q1 2024 Earnings Report

WuXi XDC Cayman Inc delivered a strong QQ1 2024 topline, underscoring continued demand for antibody drug conjugates (ADC) and related bioconjugates in its contract development and manufacturing organization (CDMO) framework. Revenue reached RMB 832.60 million, up 70.76% year-over-year and 47.31% quarter-over-quarter, with gross profit of RMB 267.67 million and a gross margin of 32.15%. Operating income was RMB 192.56 million, yielding an operating margin of 23.13%, while net income posted RMB 244.11 million for a net margin of 29.32%. EBITDA stood at RMB 217.62 million, with an EBITDA margin of 26.14%. Earnings per share (EPS) were RMB 0.19, up materially from the prior-year period (growth of ~177% YoY). The quarterly results reflect favorable product mix, pricing realignment where applicable, and disciplined operating expense management (R&D RMB 23.80 million; SG&A RMB 51.31 million; total operating expenses RMB 75.11 million). The company benefited from a substantial non-operating line item (totalOtherIncomeExpensesNet RMB 88.30 million) which contributed to pre-tax profitability, followed by a tax expense RMB 36.74 million and net income RMB 244.11 million. On the cash flow front, operating cash flow was negative at RMB -112.33 million, driven by working capital dynamics and a sizeable non-cash item (-RMB 404.62 million) within other non-cash items, resulting in negative free cash flow of RMB -373.25 million for the quarter. Investing activities consumed RMB -260.92 million in capex, with financing activities contributing RMB 23.38 million; foreign exchange effects added RMB 10.72 million. The consolidated balance sheet shows total assets RMB 7.27 billion and total liabilities RMB 1.28 billion, with cash and cash equivalents of RMB 3.48 billion. However, there is a noted inconsistency between cash flow ending cash (negative RMB 0.29 billion) and cash on the balance sheet (positive RMB 3.48 billion), suggesting potential reporting alignment issues that warrant clarification. Net debt remains negative (net debt memo: RMB -3.43 billion), signaling a liquidity surplus when viewed against liabilities, though the reported “preferredStock” balance and related equity items require closer review for capital structure clarity. Management commentary in QQ1 emphasized ongoing investments in core ADC/bioconjugate capabilities, anticipated pipeline progression, and geographic expansion, balanced against near-term profitability and liquidity considerations. Given the early stage of broader ADC/CDMO scale-up, investors should monitor execution of the R&D program, manufacturing throughput, and regulatory milestones that could influence longer-term margin trajectory and cash generation.