China CDMOs: Opportunities after recent correction

Small-molecule / peptide CDMOs appear better positioned than biologics, supported by stronger revenue growth, improving backlog coverage, and less dependence on early-stage biotech funding (global biotech funding recovered in 1H26 before moderating again in 3Q26). Among major players, WuXi AppTec has continued to gain share globally, reaching 64% share in the SM/peptide peer group in 1H26 from 58% last year. WuXi AppTec is still our top pick: high revenue share, high growth, low valuation. Despite its global leadership in peptides revenue and capacity, and higher growth rate than peers (20%+ CAGR until 2030E), it trades at a discounted 1-year forward PE of 16X (vs. CDMO average 20-30X). The Biosecure Act overhang is overblown in our view, as even the worst-case scenario of Apptec losing the DoD lawsuit would not result in material loss of commercial business. Asymchem: peptide business growing as expected;