CLSA has released a research report stating that, looking ahead to 2026, it believes profit delivery will be more important than valuation expansion for the Chinese healthcare sector, forecasting that WUXI APPTEC (02359) is poised to outperform its peers. The firm has named WUXI APPTEC as its top pick in China's CRO (Contract Research Organization) / CDMO (Contract Development and Manufacturing Organization) industry. CLSA maintains its "Outperform" rating on WUXI APPTEC with a target price of HK$143.4. WUXI APPTEC issued a positive profit alert, expecting to record a 9% revenue growth in the fourth quarter of 2025, with Non-IFRS earnings growing 36% year-on-year, exceeding market consensus estimates by 2% and 3% respectively. The report attributes this earnings beat primarily to the company's robust integrated "Contract Research, Development and Manufacturing Organization" (CRDMO) model, strong growth in its TIDES (oligonucleotides and peptides) business, and China's competitiveness in the global small molecule supply chain. With valuations in the Chinese healthcare sector having significantly recovered over the past year, the firm believes stock price drivers in 2026 will depend more on profit realization than on further valuation expansion. Compared to its peers, WUXI APPTEC possesses stronger visibility for profit growth: its order backlog for the first three quarters of 2025 grew 41% year-on-year, far exceeding the global average of approximately 14%, maintaining strong momentum even against a backdrop of persistent geopolitical risks. CLSA anticipates that WUXI APPTEC's order growth rate will continue to lead its global peers in 2026. Beyond robust order growth, WUXI APPTEC has also consistently demonstrated a higher Return on Equity (ROE) than global peers from 2023 to 2025, indicating a solid moat in the global pharmaceutical outsourcing market (consensus forecast ROE for 2025 is 24%, compared to approximately 6-16% for global peers). The firm maintains its earnings forecasts for WUXI APPTEC for 2025 to 2027 and is confident that the company will achieve high double-digit growth in its adjusted Non-IFRS net profit in 2026, outperforming market expectations by about 15%.