3/29/22

Kingworld Medicines Sees 2021 Profit Soar 159% to RMB30.3 Million

HONG KONG, Mar 30, 2022 - (ACN Newswire) - Kingworld Medicines Group Limited (stock code: 01110.HK), a leading omni-channel enterprise providing world-famous greater health products, announced today its audited consolidated results for the year ended 31 December 2021. Although the Group faced many uncertainties in 2021, it managed to achieve a significant recovery and growth. Revenue increased by 13.7% to approximately RMB847.4 million. Profit attributable to owners of the Company increased by 159% to approximately RMB30.3 million. Basic earnings per share increased by 162% to approximately RMB5 cents. The Board recommends the payment of a final dividend of HK2.39 cents per share for the year ended 31 December 2021 (2020: HK0.65 cents).

Pharmaceutical product distribution has been one of the Group's key businesses for many years. In 2021, the sales revenue of Nin Jiom Pei Pa Koa, Nim Jiom Pei Pa Candies and Kingworld Imada Red Flower Oil achieved a year-on-year increase of 85%, 14% and 29%, respectively.

In respect of pharmaceutical product distribution business, the Group continued to optimize its channel network layout and made structural adjustments. Based on Market Sales Traceability Management System (SMART) statistics, the Group implemented the "one-product, one-city and one-strategy" policy. Correspondingly, the Group firmly cultivated existing geographical markets and entered counties that have high potential. As at the end of 2021, the Group has entered partnerships with more than 2,900 chain store operators, covering 88,886 chain pharmacies, representing a year-on-year increase of 10%. The partnerships also covered 92,826 individual pharmacies and 29,090 primary medical institutions, representing a year-on-year increase of 13% and 31% respectively.

The Group also distributes well-known healthcare products sourced from all over the world, including the Culturelle probiotic product series, which is a leading brand in the probiotics product market in the United States, and the Carmex lipstick series. In 2021, Culturelle continued to be the leading product among similar products in the market, and the Group further introduced new Culturelle products such as Culturelle probiotic products for women into the Hong Kong market. Currently, algae oil is gradually replacing fish oil as the new favourite in the market. The Group consequently approached Life's DHA, a pioneer of algae oil, and obtained the right to operate its flagship store. This product is expected to become another pillar healthcare product of the Group.

The Group has also strengthened both offline and online business ties, which, in the former include Watsons, Mannings, CRcare and CS, while in the later the Group has consolidated its presence in key platforms such as Tmall, JD.com, Kaola and Nicomama. In 2021, the Group has built B2C e-commerce retail stores and formed 13 stores in six platforms. Home of Kingworld Health, the Group's overseas flagship store, is one of the first group of pharmaceutical flagship stores to recieive authorization from Tmall International, which is one of the first national cross-border pharmaceutical e-commerce pilot platforms. The first batch of cross-border pharmaceutical products [to enter the Chinese market] included dozens of well-known Hong Kong medicines, such as Nim Jiom, Wong To Yick, KAWAI, Weisen-U, Eu Yan Sang and more. Currently, there are 36 brands and 89 SKUs available on Home of Kingworld Health.

The Group's medical devices segment, Dong Di Xin, performed well in 2021. Dong Di Xin has continued to facilitate the semi-automation of production lines. Businesses involved in various types of medical device products under Dong Di Xin have gradually developed in a balanced manner, and among all these products, the two profitable anchor products, handheld therapeutic devices and professional therapeutic devices, have demonstrated a much stronger sales growth . In the domestic market, the medical device products of Dong Di Xin covered more than 20 key cities across the country, and successfully entered over 80 Class A hospitals and numerous outpatient and rehabilitation physiotherapy institutions in China. In overseas markets, Dong Di Xin achieved balanced development in several key markets including America, Europe and Asia Pacific region. During the review year, it also achieved a strategic partnership with a renowned international sport rehabilitation device producer.

In regard to the Group's investment project, construction of the foundation for Longde Health Industrial Park has been completed, and the on-ground construction is progressing as scheduled. According to the plan, the Park will have a total project land area of 10,000 square meters and a total planned construction area of 58,336 square meters. The Park will consist of four core sectors, including the research and development center of the Group, Shenzhen Health Industry Technology Innovation Center, the domestic development center for the Shenzhen-Hong Kong Loop Chinese Medicine Technology Innovation Park, and the national logistics and distribution center of the Group. Several biopharmaceutical producers and research units have expressed interest in possibly establishing a presence in Longde Health Industrial Park in the future.

In 2021, the Group began negotiations for the acquisition of Innopharma S.A. of France ("Innopharma"). Trademarks recognized by the Group and Innopharma were registered in three European countries. The Group plans to complete the acquisition in 2022, with internal funding. It is expected that the acquisition of Innopharma will help the Group to understand and analyse the European market more quickly, enable the Group to promptly introduce quality health food and daily care products to Europe, and facilitate the exploration of more investment opportunities. Moreover, the acquisition will help the Group to start OEM label production and commence an export business in the future. Reciprocally, Innopharma may be able to take up the role of registration agent and manage the sales consultation business for the Group's proprietary traditional Chinese medicine and healthcare products in Europe.

It is worth noting that the Group established a Hong Kong joint venture called Fat Chi Medicine Company Limited in March 2021. The company will officially operate the Foci series of products in the Hong Kong and Macau markets.

To encourage key employees to grow with the enterprise, the Group granted a total of 1,556,000 shares under the share award scheme to 73 selected participants from the functional departments, sales department and marketing department on 21 January 2022.

Mr. Zhao Li Sheng, Chairman of the Board and Executive Director of Kingworld Medicines Group Limited, said, "It is only through the collective effort of our employees that Kingworld Medicines has been able to continuously grow for more than 20 years. Their efforts have also enabled the Group to maintain a leading position in the omni-channel supply chain market of greater health products, spanning pharmaceutical products to healthcare products and medical devices. In the future, the Group will continue to focus on the medical and healthcare industry, introduce healthcare products from high-quality domestic and foreign brands, and increase its penetration of existing markets. At the same time, the Group will leverage Longde Health Industrial Park to build a scientific research platform, cooperate with domestic and foreign strategic partners, and gradually nurture the Group's product research and development capabilities. In addition, the Group will seek investments or merger and acquisition opportunities for projects or products and brands, so as to generate synergies and expand in overseas markets.

"Under multiple expansion strategies across product lines, business segments and geographical coverage, Kingworld Medicines Group has a promising outlook for the future, and expects to create valueable returns for shareholders."


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