Laurence Tam: Good morning. Good evening, everyone. Welcome to the second half earnings call for WuXi AppTec, the leading CDMO in China. My name is Laurence Tam, China healthcare analyst at Morgan Stanley. First, I want to congratulate management for another strong quarter. This represents 2 consecutive quarters of beating consensus estimates. The company also reported a substantial rise in backlog driven by its chemistry and in particular, its TIDES business. Investors may have noticed from the company's PPT that AppTec raised its full year revenue growth guidance by 2 to 3 percentage points to a range of 13% to 17% full year revenue growth. With that, let me introduce AppTec's management team, who will be presenting today. First, we have Mr. Minzhang Chen, Co-CEO; and Mr. Steve Yang, Co-CEO; Ms. Florence Shi, CFO; Mr. Howard Wu, General Counsel; Ms. Min Han, the Board Secretary; and Mr. Ruijia Tang, IR Director. Now let me turn it over to Ruijia. Please, Ruijia.

Ruijia Tang: Okay. Thank you, Laurence, and thank you to all the investors and analysts for joining today's earnings call. We're sharing our 2025 interim results presentation, which you can also find on our website. During today's call, we will make forward-looking statements. Although we believe that our predictions are reasonable, future events are uncertain, and our forward-looking statements may turn out to be incorrect. Accordingly, you are strongly cautioned that reliance on any forward-looking statements involve known and unknown risks and uncertainties. In addition, to supplement the company's consolidated financial statements presented in accordance with IFRS, we provide adjusted non-IFRS financial data. We believe the adjusted financial measures are useful for understanding and assessing our core business performance, and we believe that investors may benefit from referring to these adjusted financial measures by eliminating the impact of certain unusual or/and nonrecurring items that are not indicative of the performance of our core business. However, these adjusted measures are not intended to be considered in isolation or as a substitute for the financial information under IFRS. All IP rights and other rights pertaining to the information and materials presented are owned by WuXi AppTec. Audio recording, video recording and disclosure of such materials by any means without the prior consent of WuXi AppTec is prohibited. This call does not intend to provide a complete statement of relevant matters. For relevant information, please refer to the company's disclosure, documents and information on the Shanghai Stock Exchange, Stock Exchange of Hong Kong and company's website. In today's call, there will be a Q&A session after our presentation. Please kindly share with us your name and institution before asking questions. With that, please allow me to introduce our Co-CEO, Dr. Minzhang Chen, to present our 2025 interim results. Minzhang, please.

Minzhang Chen: Thanks, Ruijia. Good morning, and good evening, everyone. Thank you for joining our first half 2025 earnings call. We will begin on Slide #5. In the second quarter and the first half of 2025, our revenue and profit achieved strong growth. For the first half, the company's total revenue achieved RMB 20.80 billion, of which the revenue from continuing operations grew 24.2% year-over-year to RMB 20.4 billion (sic) [ 20.4% ]. The adjusted non-IFRS net profit grew 44.4% year-over-year to RMB 6.31 billion, with non-IFRS net profit margin further improved to 30.4%. Our first half revenue and net profit both reached record highs for the same period. Next slide, please. The company remains focused on enhancing our core capabilities, expanding capacity to better meet customer needs with the continuous capacity expansion by the end of June, we achieved a record backlog for continuing operations of RMB 56.69 billion, growing 37.2% year-over-year. Next slide. Slide 7 shows our revenue streams of continuing operations from customers worldwide. Revenue by region is based on the country or region where our customers' parent company is based, of which revenue generated from the U.S. companies grew 38.4% year-over-year; revenue from European companies grew 9.2% year-over-year; and the revenue from Japan, Korea and other regions grew 7.6% year-over-year. And the China experienced some decline. This diversified revenue streams demonstrate our capabilities to enable global healthcare innovations, which will also ensure the stability and the resilience of our financial performance. Next slide. As an enabler of innovation and a trusted partner and the contributor to the global pharmaceutical and life science industry, the company actively advanced sustainability and has been extensively recognized by global rating agencies. The company has achieved the highest AAA rating from MSCI for the first time, which is the first Asia-listed company in the life science industry to reach this milestone. In addition, the company's near-term emissions reduction targets have been validated by SBTi, which marks an important milestone in the company's journey towards sustainability. Our accomplishments have also been acknowledged by major global rating agencies, including Ecovadis, CDP, UNGC, Sustainalytics and the FTSE4Good. As we continue to advance our sustainability strategy, we embrace our commitment to the social responsibility -- to social responsibilities. Okay, now let's move on to the segment performance and the please turn to Page10. WuXi Chemistry's CRDMO business model drives continuous growth. In the first half, WuXi Chemistry revenue grew 33.5% year-over-year to RMB 16.3 billion, with continued optimization of production process and improvement in capacity efficiency driven by the growth of late-stage clinical and commercial projects. Our first half adjusted non-IFRS gross profit margin improved 5.2 percentage points year-over-year to 49%. Our Small Molecule Drug Discovery, R business continues to generate downstream opportunities. In the past 12 months, we have successfully synthesized and delivered over 440,000 new compounds to customers. Meanwhile, 158 molecules were converted from R to D in the first half. As we continue to strengthen the capabilities of our integrated CRDMO platform, we constantly enhance the internal conversion of molecules at different stages. Our small molecule D&M business remains strong, and a small molecule CDMO pipeline continue to expand. In the first half, small molecule D&M business revenue grew 17.5% year-over-year to RMB 8.68 billion. Meanwhile, the company continued to build small molecule capacity. In March, both our Changzhou and Taixing API manufacturing sites successfully passed FDA on-site inspections with no single observation. The total reactor volume of small molecule manufacturing capacity will exceed 4 million liters by end of this year. WuXi TIDES, our new modality business, sustained rapid growth. With the ramping up of new capacity released sequentially each quarter last year, WuXi TIDES achieved RMB 5.03 billion revenue in the first half, representing a strong growth of 141%, 121.6% year-over-year. By the end of June, TIDES' backlog grew 48.8% year-on-year. The number of TIDES D&M customers increased 12% year-over-year, while the numbers of TIDES D&M molecules increased 16% year-over-year. We continue to build peptide capacity in Taixing. The total volume of solid-phase peptide synthesizers will exceed 100,000 liters by end of this year. Next page, please. Driven by Follow the Molecule and the Win the Molecule strategies, WuXi Chemistry's small molecule CRDMO pipeline efficiently converts and captures high-quality molecules, delivering sustainable growth. This is also a testimony to our customers' full confidence in our technical capabilities, service efficiency and quality system. In our stage, over the past 12 months, we have delivered more than 440,000 new compounds, very significant in its scale. At the same time, the complexity of this compound continue to increase, demonstrating the ongoing demand from early-stage R&D customers for high-quality services. We continue to enhance the synergy between R and the D, strengthening the conversion of molecules from R to D phase and the new compound synthesized in the R stage continue to generate opportunities for our small molecule D&M services. In D&M stage, we added 412 molecules to our pipeline in the first half, including 158 molecules converted from R to D. Currently, our small molecule D&M pipeline has exceeded 3,400 molecules, including 76 commercial products, 84 in Phase III, 368 in Phase II and 2,081 in Phase I and the preclinical. In the commercial and Phase III stages, we added 8 projects in the first half. As these late-stage pipelines grow, the complexity and the quality of the molecules we support continue to improve, and our collaboration with customers is deepening. Together, these factors will drive sustained business growth in the future. Now I will hand over to co-CEO, Dr. Steve Yang to talk about WuXi Testing and WuXi Biology. Steve, please?

Qing Yang: Thank you, Minzhang. Please turn to Slide #12. WuXi Testing revenue slightly declined to RMB 2.69 billion in the first half of the year. In the second quarter, our lab testing revenue reached RMB 1 billion, growing 5.5% year-over-year and 13.2% quarter-over- quarter, of which drug safety evaluation services revenue grew 3.4% year-over-year and 10.2% quarter-over-quarter. For the first half, revenue of the lab testing services reached RMB 1.89 billion, almost flat year-over-year. Due to market impact, the first half adjusted non-IFRS gross profit margin declined as pricing gradually reflected in revenue, along with backlog conversion. Drug safety evaluation services revenue were down 2.2% year-over-year, maintaining an industry-leading position in Asia Pacific. We are committed to actively enable customers' global licensing effort. In particular, we have supported approximately 40% of successful out-licensing deals from Chinese biotech companies since 2012. New modality business continued to develop while we maintain our leadership position in areas, including nucleic acid, conjugate and MRI and multi-specific antibodies and peptides. During the first half, the Suzhou facility has successfully passed 4 consecutive FDA on-site inspections. Revenue generated from clinical CRO and SMO business were down 4.7% year-over-year to RMB 0.8 billion in the first half due to market pricing impact. The SMO business revenue grew 1.5% year-over-year, maintained our industry-leading position in China. In the first half, our clinical CRO business enabled customers to obtain 12 IND approvals and the submission for 2 IND filings -- 2 NDA filings. Our SMO business supported 61 new drug approvals for customers. SMO team has supported 317 new drug approvals in total over the past decade, maintained significant advantages in multiple therapeutic areas. Let's turn to Slide 13, please. WuXi Biology followed the science and continued to strengthen the drug discovery capabilities in emerging areas. We generate downstream opportunities for our CRDMO model by continuously contributing more than 20% of new customers. Through platform integration and cross-regional collaboration and comprehensive service transformation, we'll enable our customers in drug discovery across the wide range of modalities and therapeutic areas. WuXi Biology revenue reached RMB 1.25 billion in the first half of the year, a year-over-year increase of 7.1%. Due to market pricing impact, the first half adjusted non-IFRS gross profit margin was down 0.7 points to 36.4%. We accelerate the advancement of our in vitro integrated screening technology offering and in vivo pharmacology capabilities, driving continued rapid year-over-year revenue growth. The constantly improved competitive advantage in therapeutic areas beyond oncology has laid a solid foundation for sustainable growth throughout the year. Our new modality drug discovery services continue to perform well, contributed to more than 30% of our WuXi Biology's total revenue. Now I would like to turn the call to our CFO, Florence Shi, to discuss our financial performance. Florence, please?

Ming Shi: Thank you, Steve. Let's turn to Slide 15. We are going to recap on the company's financials as the best second quarter and the first half in our history. We delivered robust more than double-digit growth in both revenue and profit. This was driven by the gradual release of new production capacity since the second quarter of last year, which timely supported the growing demand from late-stage clinical and commercial projects. Meanwhile, the company consistently developed and leveraged new technologies and capabilities, optimized production process and improved production and operating efficiency. In the first half, our adjusted non-IFRS gross profit reached RMB 9.26 billion with the adjusted non-IFRS gross profit margin further expanded from 41.6% in 2024 to now 44.5%. Our adjusted non-IFRS net profit reached RMB 6.31 billion, with the adjusted non-IFRS net profit margin further improved from 27% in 2024 to now 30.4%. The net profit after deducting nonrecurring items was RMB 5.58 billion, growing 26.5% year-on-year. The growth rate was lower than that of adjusted non-IFRS net profit mainly due to the impact of exchange rate fluctuations on the book value of U.S. dollar-denominated net assets across different quarters. Our net profit attributable to the owners of the company was RMB 8.56 billion, marking an increase of 101.9% year-over-year. This included an investment income of RMB 3.2 billion from the partial sale of shares in an associated company. Hence, this growth rate outpaced that of our adjusted non-IFRS net profit. We continue to enhance our management capabilities and resilience, which has enabled us to achieve strong performance in first half despite external uncertainties. Moreover, following multiple share repurchases and cancellations, our diluted earnings per share reached RMB 2.99, growing 106.2% year-over-year. Building on profit growth, this helped to further enhance our earnings per share performance. Please turn to Slide #16. With the continued business growth, particularly the rapid growth in late-stage clinical and commercial projects, combined with the company's improved operating efficiency and financial management capabilities, our first half operating cash flow achieved RMB 7.07 billion, growing 49.1% year-over-year. Again, this fully demonstrates the sustainable business growth momentum brought by our high-quality molecules and the projects. We continue to accelerate global capacity expansion as planned with CapEx reaching RMB 2.1 billion in the first half. As construction progress, CapEx spending will continue to increase in the following quarters, and we maintain our full year CapEx forecast at RMB 7 billion to RMB 8 billion. Now I would like to hand over to Minzhang to share the company outlook. Minzhang, please.

Minzhang Chen: Please turn to Slide 18. As we are facing a very dynamic and complex global macro environment with many uncertainties, this sets even higher standards for the management team. The company will continue to focus on the CRDMO business model with an emphasis on the O for operations. As we continue to focus on our unique integrated CRDMO core business, we are accelerating the global expansion and the capacity building, leveraging our customers' ongoing demand for enabling services. We provide highly efficient and exceptional services benefiting patients worldwide and driving long-term growth. At the same time, the company is promoting lean management and operations, continuously improving production and operational efficiency and making every effort to reduce the potential impact of external uncertainties. With confidence in customers' ongoing demand for enabling services, our CRDMO business model and the management execution, the company has raised the full year guidance despite external uncertainties. We expect continuing operations revenue to resume double-digit growth in 2025 with its year-over-year growth rate raised to 13% to 17%, up from the prior 10% to 15%. Correspondingly, the company expects full year total revenue of RMB 42.5 billion to RMB 43.5 billion, up from the prior RMB 41.5 billion to RMB 43 billion. As we focus on the core CRDMO business and the continuously improved production and operating efficiency, the company is confident and expect to further improve the adjusted non-IFRS net profit margin in 2025. As we are accelerating our global expansion and the capacity construction, CapEx is expected to reach RMB 7 billion to RMB 8 billion in 2025. And together with business growth and efficiency improvement, free cash flow is expected to increase from RMB 4 billion to RMB 5 billion to RMB 5 billion to RMB 6 billion. The company will closely monitor the changes and the developments in the global macro environment, and we'll communicate any changes in a timely manner. Next page, please. While continuously enhancing our capacity and capabilities, the company remains committed to rewarding shareholders and actively upholding the company's value. In the first half of 2025, the company distributed a total of RMB 3.84 billion in cash dividends, including RMB 2.83 billion for the 2024 annual cash dividend and RMB 1.01 billion for the 2025 special cash dividend. Meanwhile, the company also completed the repurchase and cancellation of RMB 1 billion worth of A-shares in the first half. An additional previously announced RMB 1 billion worth of A-share repurchase and cancellation plan is currently being executed with approximately RMB 0.5 billion worth of A-shares repurchased as of now. Moreover, the company's Board of Directors approved WuXi AppTec's first interim dividend plan, distributing RMB 3.5 cash dividend for every 10 shares to shareholders, which is approximately RMB 1 billion in total. The cash dividends, together with the share repurchases and cancellations mentioned above, will amount to nearly RMB 7 billion in total, which accounts for more than 70% of the company's net profit attributable to the owners of the company in 2024. In times of uncertainties and challenges, our continued business growth relies heavily on our management team with strong capabilities and determinations. The company will continue to retain top talent and further enhance the resilience of business operations under management. In the first half, the company has completed the acquisition of HKD 2.5 billion worth of H-share for the purpose of the 2025 H-share Incentive Trust Plan. According to the plan approved by the Annual General Meeting, upon achieving RMB 42 billion revenue, no more than HKD 1.5 billion worth of H-shares will be granted. And upon reaching RMB 43 billion revenue and above, a total of HKD 2.5 billion worth of H-shares will be granted. This aims to continuously attract and retain top talent, strengthen the collective capabilities of management team and enhance the resilience of the company's business operations and management. With this, there will be no dilution to existing shareholders. Thanks for your attention, and we'll now open for questions.

Laurence Tam: Thanks, Dr. Chen. This is Laurence from MS. So let me just go over the format for Q&A. [Operator Instructions] We have lots of questions, so I apologize if we can't get to all of them. First, let me ask 2 questions. My first question is AppTec's second quarter revenue and earnings both vastly exceeded expectations. What are the key drivers for that? And have you noticed customers front-loading their orders due to worries about tariffs? So that's my first question. My second question is the company raised its full year guidance. What are some considerations for that? And if revenue growth in the first half was over 20%, this higher guidance would imply a single-digit revenue growth for the second half. So is there room for higher growth in the second half? So that's my second question.

Ming Shi: Let me first answer one by one, okay. So first of all, I appreciate you recognize that our first half outperformed the performance. But I think this outperform the first half performance was not driven by any like customer request to accelerate shipments because of the tariff concerns. It purely reflects our high efficient execution, not only on the project deliveries, but also on our new capacity validation. And the ramp-up schedule is smoother and quicker than what we expected. So that's why this operational momentum led us to raise full year guidance, even there is still a lot of uncertainty -- external uncertainties in the second half. And your second question is about the second half performance, right? So actually, if you observed, since second quarter last year, we went through a very quick capacity ramp-up phase, which results in a sequential growth of nearly 30% in the second half of last year compared to the second half of first year. This is a really a historical high sequential growth. However, today, our capacity is approaching full utilization in the first half of this year and the validation of new capacity will require some time. So even with this limited capacity expansion, we still guide and expect business revenue in the second half to achieve near double-digit growth both sequentially and year-on-year. Also, as a reminder, discontinued operations contributed around like RMB 800 million revenue last -- second half of last year. These divestitures have already been fully completed. So there will be no further contributions from discontinued operations going forward. So I also recommend all the investors to focus on our continuous business operations growth momentum. Hopefully, that answers your questions.

Laurence Tam: Yes. So now let's move on to investors from other sell-side analysts and investors. So first, let me ask 2 questions from Ziyi Chen of Goldman Sachs. So Ziyi wanted to know, firstly, in the first quarter, management mentioned new order growth was around 25%. And based on his calculation, second order new order -- second quarter new order growth would look slower. Is that the case? If yes, how should we interpret it? So the first question is on backlog. And the second question is, excluding TIDES, which still saw a very robust growth, the rest of the small molecules business in D&M grew only 20% plus in the second quarter. What has been the key driver? And is there any color on what has been the contribution from oral GLP-1 products?

Ming Shi: I will take the first question, and Minzhang can take the second question. So actually, there is some U.S. dollar depreciation in first half. So if we exclude foreign exchange impact, actually, our new orders signed in Q2 still increased by, promptly, like 12% year- over-year. Sequentially, compared with first quarter, our new order intake actually grew over -- close to 35% compared to first quarter. So I think it's still a very strong growth momentum on our new order intake.

Minzhang Chen: All right. I will comment on the small molecule revenue growth in D&M. So we have a very strong and big pipeline, CRDMO pipeline, as I mentioned in the presentation. So we have -- currently, we have over 200 late phase and commercial projects. So many of the projects, especially in commercial project, contributed to revenue growth. Of course, the oral GLP, GLP-1 small molecule is a key driver in the Q2 and the first half small molecule D&M revenue.

Laurence Tam: Okay. Great. So the next question will come from Michael Luo of CLSA. So let me ask these questions one by one. So his first question is, how should we think about the margin improvement in the second half? Should we assume that second half adjusted non- IFRS net profit margin would be similar to the first half?

Ming Shi: Yes. I think if you look at our first half margin contribution, I think our large late-stage and commercial order actually significantly improved the equipment utilization and the production yields. So we've increased the proportion of large late stage and commercial order delivery, it will further expand our margin. And also at the same time, as I mentioned, we complete some divestiture of discontinued business. Those businesses, if you look at the historical margin, they are loss-making business. So the divestiture will also expand our margin as well. But I also want to remind everyone, we also need to manage a very large, new capacity ramping up progress. But I have the confidence our team always have the very excellent execution. But at the same time, we are keeping watching out the uncertainty of the U.S. dollar depreciation trend.

Laurence Tam: Okay. And his second question is on top of GLP-1 or TIDES, is there any other potential blockbuster CMO project in AppTec's portfolio that we could expect in the future? So any color would be very helpful.

Minzhang Chen: Okay. Yes, this -- as I mentioned again, we have -- yes, we have quite a few actually. Very -- the projects with great potential, for example, PCSK9, for example, pain medicines, for example, the autoimmune program. So we do have quite a few, very promising, big potential projects in the pipeline. But go back to -- I mentioned earlier, we have a very -- we have a unique CRDMO business model, and we have a strong pipeline. So this CRDMO business model allows a lot of molecules convert internally from our R to D to M. So this allows us to be involved in all those projects at a very early stage and work with many of our customers on the pipelines. So this -- no matter what will be the next big product, we have a very good chance we will be involved very early and has an opportunity to working on it. So I think, yes, in short, yes, we have those big potential molecules in the pipeline. But this actually is a result of our unique CRDMO business model. Thank you.

Laurence Tam: And his last question is, although global biotech funding in the first half was weak, a few U.S. clinical CROs mentioned in their second quarter earnings call that they have seen a marginal demand recovery from their biotech clients in the second quarter. How should we think about the early-stage projects demand in the second quarter versus the first quarter and second half outlook on early- stage demand?

Qing Yang: Yes. We also noticed those increase from the clinical CROs. Now they are usually representing clinical stage business, our early stages in discovery and the lab-based service. So the short answer is our early-stage service from discovery and preclinical are still in a stabilized patent. We haven't seen a sharp increase. That being said, because of our differentiated capability in new modality in many of the high-demand therapeutic area, we still have robust demand and new orders. We do notice that the funding situation overall, based on third-party public source, remain challenging. So we anticipate that this period of uncertainty on early-stage biotech funding will continue for some period of time. That being said, we believe we continue to maintain a strong market position regarding those attracting the continued interest of biotech companies overseas.

Laurence Tam: Okay. Great. So our next question comes from Chen Chen of UBS. The question is China biopharma out-licensing is currently hot and trending up. Are there any cases that your China customers out-licensed a drug candidate and the overseas partner continues to ask the CRDMO for ex-China markets? And do you think that this China BD momentum could benefit you in the longer term?

Qing Yang: The short answer is yes, yes, it has benefited us now in the near term and the short term, and it has benefited us in the past. As I mentioned earlier, for the last 3 years, we have enabled 40% of such collaborations. And this demonstrated our differentiated capability and also high quality and those high quality are clearly recognized by the multinational pharmaceutical companies that -- and oversee companies that license those products as they are -- as part of their due diligence, they think high-quality preclinical and discovery data is essential for their due diligence efforts. For your question, Laurence, going forward, we anticipate those trends will continue, and that will attract more and more China-based biotech companies and customers elsewhere to use our service. It will also help us convert overseas customers that otherwise haven't tried our preclinical testing service or discovery service in the past and then give them another chance, a different perspective to get to know our platform. Some have done that and are very pleased to see what they have experienced, and they are now actually start working with us. And finally, we do anticipate those strong demand, not only benefit from our discovery service and the preclinical service, some of those products are actually manufactured in our CRDMO platform on Minzhang's team. As those products continue running global clinical trials, moving along the pipeline, they will also drive demand for our CRDMO D&M business, first in development and hopefully, in manufacturing in late stage, even commercialization.

Laurence Tam: Great. So our next questions come from CMBI, Mr. Huang Benchen. His first question is on the impact of tariffs. Do we see any changes in customer behavior in placing orders to AppTec and other China-based CDMO companies?

Ming Shi: We haven't seen the significant changes because the tariff is still a systematic challenge in the current global trading environment, and it's moving pieces, right? And also the global pharmaceutical supply chain is highly complex. So as an enabling service provider, our shipping destination determined by our clients, global footprints, the customers, they are responsible for clearance and tax reporting by the customers. So our focus still remains on delivering the high quality in enabling services. In this evolving and uncertain external environment, we prioritize the certainty of client demand for our enabling services. Our sustainable growth from the competitive advantages of our uniquely integrated CRDMO business model as well as our capabilities in quality, speed and efficiency, not just from the price competition alone.

Laurence Tam: Okay. And his second question is, can you talk about the reasons why the U.S. regional growth outpaced other regions? The out- licensing deals from Chinese companies contribute to the growth in the U.S. market.

Qing Yang: Maybe I will start on the second half of your question. The out-licensing deals originated from Chinese biotech companies. First of all, those Chinese biotech companies use our service, they were booked as revenues from China. So the short answer, it doesn't. And secondly, many of the work they work with us happens. There is a phasing element. Those work done in discovery and preclinical done certainly sometime before they have clinical data and announcing out-licensing. So there isn't a direct, within the quarter or within a short time difference, conversion. And to answer your question, the strong driver of the business growth in the United States, driven by our CRDMO business is U.S. customers, particularly large multinational customers. Obviously, Minzhang can elaborate more, that as he has already nicely demonstrated in his presentation.

Minzhang Chen: I guess, the major -- like I said, right now, the major contribution to the revenue growth is from late-phase and commercial projects and the few high potential projects that I mentioned earlier, in addition to the GLP-1 small molecule, they are all from multinational companies that are headquartered in the U.S. So that's why the U.S. region has a strong growth in revenue in CRDMO business.

Laurence Tam: Great. And the next question comes from Citigroup's Zoe Bian. What is your latest TIDES' revenue growth guidance in 2025? And is there any color on 2026?

Minzhang Chen: Yes. We think we had a strong revenue growth from TIDES for the past 2 years. And we think this year will be somewhere -- growth will be somewhere 80%. And we will give you the growth -- the guidance for the growth next year at a later time, yes.

Laurence Tam: Okay. That's very positive. So the next question comes from David Shang of Jefferies. He would like to know your CapEx in 2026 and TIDES' business capacity expansion plan in 2026.

Minzhang Chen: Let me just comment on the TIDES CapEx expansion plan. So most of the TIDES expansion plan actually will be completed this year, 2025. So we will focus on the process validation and the ramping up and start using the new facility next year 2026. In addition to that, all our current capacity for the TIDES is in China. So we are actually in the process of building a new plant, a TIDES new plant in Singapore as part of our Singapore manufacturing site. Yes, Florence, please.

Ming Shi: Yes. Company-wise, as Minzhang just mentioned, not only the TIDES capacity expansion, our company also look for the overall more global footprints and the CapEx expansions. So with the new capacity planning and also the current capacity expansion approaching to the late stage of construction, I believe the CapEx spending will be gradually increased year-over-year. But the exact number, we will give to the investors along with our annual outlook early next year because that depends on the order schedule planning and also the payment schedule finalized this year.

Laurence Tam: Okay. The next question comes from Megan Zona of Boston Partners. Our competitors of the testing business discounting prices to win share? And what is driving the pricing impact?

Qing Yang: Our competitors for testing business obviously have a different market segment. Those overseas, which is a significant part of our business, have also been more aggressive in pricing. But we believe that we still have highly differentiated capabilities, and we continue to maintain not only competitive pricing, but maintain good margin. Now for China domestic market, you may have heard of word called [ evolution ] where there has been a very fierce price competition and discounting. We realize and recognize and also communicate to our customers that premium high-quality service does require substantial investment in people, facility and the quality system. So we have maintained a very competitive but still premium pricing to demonstrate our differentiation. So the impact on our margin, which particularly result in those price competition from 2024 was reflected in our gross profit margin decline. We have adjusted our strategy to stabilize that and anticipating that they will gradually recover in the next period.

Laurence Tam: Great. Thanks. So the next question will come from Wanhua Wu at CICC. So he has 3 questions. The first is, reasons for the increase in gross profit margin and future expectations and room for improvement.

Ming Shi: I think everyone noticed the gross margin is mainly driven by our CDMO late stage and commercial large orders. With the increased proportion of this order delivery, I believe the margin expansion momentum will be there. And at the same time, for the bottom line, we also have the divested business, which is a loss-making business. So second half, these businesses' revenue won't be there anymore. So that helped us to improve the overall company's bottom line as well. But at the same time, I think we are still working very hard to manage the new capacity ramping up. Of course, I have the confidence to our operation team and also I think the -- another uncertainty is about the U.S. dollar depreciation trend. So we need to continuously monitor that one.

Laurence Tam: Great. And second question is what is the impact of exchange rate fluctuations? And how should we expect overall gross profit margins?

Ming Shi: I think the expectation, I just give to everyone just now. For FX, it's very hard to do the forecast, right? That's the uncertainty. Every company should watch out very closely. But if you just look at the first half performance, the [ MOR ] rate, I mean the average U.S. dollar RMB FX rate is pretty close first half versus last first half. So there is not much impact from the FX benefit or loss for the first half performance. Second half, I think currently, the FX between U.S. dollar and RMB still fluctuates between the reasonable range like 7.1 to 7.2. If it's still in the reasonable range, and we have the high confidence to deliver our performance. Of course, if we see any unreasonable or very significant dynamics changes, we will keep -- report to the investors if there's any big changes.

Laurence Tam: Okay. And his last question is considering your raised cash flow guidance, what is the future repurchase and capital allocation plan?

Ming Shi: Yes, I think we keep evaluating the most optimal capital deployment, right? Normally, we look through the 3 dimensions. One is our global footprint capacity to meet expanding customer needs, how much we need to expand for our CapEx. And at the same time to maintain the sustainable growth, we need to keep attract and retain the critical talents. And also the shareholder returns is also very important for us. So if I walk you through our capital deployment first half this year, that demonstrates our strategy evaluating from these 3 dimensions. You will notice that we have already completed RMB 3.8 billion cash dividend distribution in first half, which is actually much earlier than the previous years. RMB 1 billion A-share repurchase and cancellation has already been completed. Another round of RMB 1 billion A-share repurchase has already completed in halfway. Yesterday, Board also approved our first RMB 1 billion interim cash dividend. We repurchased HKD 2.5 billion shares from the secondary open market, which is not going to dilute any investors' interest for our 2025 ESOP program. If you add them all together, we spent more than RMB 9 billion in total to return shareholders, retain our critical talent, while we also expect to spend RMB 7 billion to RMB 8 billion for CapEx payment this year to accelerate our global capacity expansion. So I hope everyone appreciates the efforts from the company.

Laurence Tam: Our next question comes from Daniel Yen of GSAM. His question is, can management break down the different components of TIDES' growth. So basically, customer numbers grew by 12%; molecule numbers, up 16%. So what were the other moving parts?

Minzhang Chen: Okay. So I don't know exactly the question, but I'll try to answer. So we have the TIDES business. So we mainly have a 4-part -- 2 big part: one is oligo business; other one is peptide business. The oligo we have from discovery all the way to development manufacturing, same as peptide discovery and development. So we experienced the strong growth in all these sections in TIDES business. But of course, for the development, peptide -- is part of a DNA of peptide, which we are working on GLP-1 product, which has the strongest growth. And it's also major revenue -- contribute the major revenue to the TIDES business. But all other sections all have strong growth as well.

Laurence Tam: Great. So our last question is from [indiscernible] at Kochi Management. Can you give a little bit perspective on what is happening in the China biopharma market today? Activity seems to be very robust. What has changed in 2025, leading to this heightened activity?

Qing Yang: Well, let me try to give a little bit of micro view. So first of all, we have seen, like everyone else, continued increasing very robust demand for out-licensing transactions and collaboration announced between Chinese biopharma, pharma and biotech with global Western-based biotech and pharma companies. That demonstrated the quality of the research and the authenticity of the data and most important, the differentiation of those products. And those has been very positive for the sector in terms of both the sentiment equally important on the upfront cash payment and potential milestone payment. Secondly, we have noticed certainly a strong interest in capital markets, particularly from Hong Kong Stock Exchange with many biotech companies eager for potential raising capital through the Hong Kong market. And that -- and elsewhere. And that is also promising for the sector because as long as they have more and more capital, that will fuel continued demand for our service and service for the sector. And finally, from macro environment and the policy, there has been some encouraging signs from policies regarding reimbursement and -- at a macro level. And those are still in the early stage, but at least the government recognized the importance of the sector and there are at least various announcements or signals of a support policy for the sector. The ecosystem is quite vibrant and with lots of buzz and also, again, driven particularly by the strong interest on global collaboration.

Laurence Tam: Great. Thank you very much. With that, let me turn it over to management for closing remarks.

Minzhang Chen: All right. Thank you all for joining today's earnings call. The company will continue to focus on our unique CRDMO business model, enhancing our core capability, expanding capacity and improving operating efficiency. This enables us to provide higher efficient and exceptional services to our global customers, better supporting them in bringing innovative therapies to patients around the world. This, as a result, will drive the company's long-term growth and create sustained value for our shareholders. Thank you all.

Ruijia Tang: Thank you.

Ming Shi: Thank you.

Laurence Tam: Thanks, everyone.

Qing Yang: Thank you.