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Strengthening Sales Strategy and Channel Coverage

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Source: Kingworld medicine
Date:2019.03.28

Financial Highlights (audited)

(RMB’000)

For the Year Ended 31 December

2018

2017

Change

Revenue

1,078,843

1,031,488

+4.6%

Gross Profit Margin

28.9%

31.3%

-2.4ppt

Profit Attributable to Owners of the Company

41,005

51,060

-19.7%

Basic Earnings per Share (RMB cents)

6.60

8.20

-19.5%

 

(28 March 2019, Hong Kong) – Kingworld Medicines Group Limited (“Kingworld Medicines” or the “Group”, stock code: 01110.HK), a globally leading and well-known omni-channel enterprise with a complete supply chain in the greater health products and services industry in China, has announced its audited annual results for the year ended 31 December 2018 (the “Year Under Review”).

 

For the Year Under Review, the Group continued to monitor changes in the macro environment. Consequently, the Group gradually implemented strategies for channel optimization of medicines, bolstered efforts at online and offline business expansion, actively introduced high-quality products and expedited the pace of financial investment, with the goal of strengthening its leading position as a globally leading and well-known omni-channel services provider with a complete supply chain, spanning the greater health products and services industry in China. For the Year Under Review, the Group’s total revenue increased by 4.6% to approximately RMB1.079 billion as compared to the same period last year. Owing to the impact of the Renminbi (“RMB”) exchange rate, the annual profit attributable to owners of the Company decreased by 19.7% to approximately RMB 41.0 million as compared to the same period last year. Basic earnings per share decreased by 19.5% to approximately RMB6.6 cents as compared to 2017. The Board has proposed the payment of a final dividend of HKD2.25 cents per share for the year ended 31 December 2018. For the Year Under Review, revenue from the pharmaceutical products segment amounted to approximately RMB621.3 million, representing an increase of 8.0% against the same period last year and accounting for 57.6% of the Group’s total revenue. Revenue from the healthcare products segment was approximately RMB252.6 million, representing an increase of 2.3% against the same period last year and accounting for 23.4% of the Group’s total revenue. Revenue from the medical devices segment amounted to approximately RMB204.9 million, representing a decrease of 2.1% against the same period last year and accounting for 19.0% of the Group’s total revenue.


 

Mr. Zhao Li Sheng, Chairman of the Board and Executive Director of Kingworld Medicines, said, “For the Year Under Review, China has continued to broaden reforms on the medical and health system, actively implementing the ‘Healthy China’ strategy and supporting the continuous development of the Chinese medicine industry. Meanwhile, the Government has also been vigorously promoting the development of the Guangdong-Hong Kong-Macao Greater Bay Area, and fostering closer cooperation between China and Hong Kong pharmaceutical industry sectors to encourage their long-term development. The Group has been introducing high-quality medicines and healthcare products from China and overseas, as well as continuing to strengthen its business in the realm of the greater health services, consolidating its leading position in the country as a globally leading and renowned omni-channel services provider that possesses a complete supply chain, spanning the greater health products and services industry in China.”

 

For the Year Under Review, the Group collaborated with its close strategic partner of two decades, Nin Jiom Chuan Bei Pei Pa Koa (“Nin Jiom”) (京都念慈菴蜜煉川貝枇杷膏), to implement an “optimization of channels" strategy. The coordinated efforts of the Group and Nin Jiom has managed to standardize channel management, fostering orderly marketing strategies across different downstream distribution channels. Although revenue from Nin Jiom products were down during the reform period in 2017, the Group persisted in efforts to more precisely optimize and restructure channel management, as well as actively expanded the untapped county. As a result, the annual sales of the Nin Jiom product series increased steadily in 2018. For the year ended 31 December 2018, sales revenue from the Nin Jiom Chuan Bei Pei Pa Koa grew significantly by 25.6% to approximately RMB555.1 million as compared to the same period last year, while the revenue from the sales of Nin Jiom Herbal Candies increased by 21.7% to approximately RMB 36.3 million as compared to the same period last year.

 

The Group has actively optimized the channel layout of another star product, Taiko Seirogan (喇叭牌正露丸), as well as standardized channel management to facilitate orderly sales and maintained the channel price structure. As a result of these efforts, it helped our downstream distributors and cooperative partners to enjoy greater efficiency. The Group acts as the agency and distributor of various well-known external use medicated oil products, including the Mentholatum (曼秀雷敦) series, Flying Eagle Wood Lok Medicated Oil (飛鷹活絡油), Hoe Hin White Flower Embrocation (和興白花油) and Kingworld Imada Red Flower Oil (金活依馬打正紅花油). The Group formulated specific market strategies for each of the external use medicated oil product, forged ties with online merchants, integrated online and offline promotion channels and sponsored various sporting events, as well as hastened work on boosting the coverage of products to consumers and end users.

 

For the Year Under Review, the Culturelle probiotics product series from Hong Kong and Macao market brought remarkable results, sales increased significantly by 41.9% as compared to the same period last year. The distribution channels of Culturelle in Hong Kong and Macao market rapidly increased to about 1,600 retail outlets, covering Mannings, Watsons, SaSa, Colourmix, CR Care, HealthPlus, Eugene Baby, Yue Hwa Chinese Products, AEON Stores and HKTV Mall as well as a number of pharmacies and dispensaries. According to AC Nielsen’s report, the sales volume of the Culturelle probiotics product series ranked as the “No. 1” probiotics brand in Hong Kong in 2018.

 

With increasing demand from the Chinese mother and child market, the Lifeline Care maternal and infant fish oil nutrients series – the top-selling fish oil brand in Norway with standards higher than EU’s stringent standards, has become another major new product of the Group after Culturelle. In addition, the Group has continued to enrich the categories of the “Global Slimming” product series, including the Tilman Plant Diet Tea series from Belgium and Zuccari Slimming series, a concentrated slimming 100% pineapple juice from Italy. For the Year Under Review, talks were organized across cities in China that attracted thousands of participants. The Group also used maternal and infant KOLs, slimming KOLs, Baidu SEO, mother-infant vertical media platform Q&As, and placed advertorials about maternal and infant topics on various major social media platforms, which successfully reach millions of fans.

 

For the Year Under Review, Yuen Tai Pharmaceuticals Limited (遠大製藥廠有限公司), a connected person of the Company, successfully obtained the Certificate for Manufacturer (Good Manufacturing Practice in respect of Proprietary Chinese Medicines), these products are including “Fengbao Jianfu Capsules (鳳寶牌健婦膠囊)” and “Pu Ji Kang Gan Granules (普濟抗感顆粒)”, which confirmed that its productions comply with the Good Manufacturing Practices (GMP) in respect of the manufacturing and quality control of Chinese patented medicines. Presently, only 18 pharmaceutical companies in Hong Kong have obtained the certification as a licensed manufacturer of Chinese patented medicines, and the Group is the agent of medicines manufactured by four of these pharmaceutical companies. After years of dedicated promotional efforts by the Group, these products have become popular household healthcare products renowned for their high-quality, and this success, in turn has illustrated the clear vision of the Group in selecting quality products for creating healthy life for consumers.

 

For the Year Under Review, the Group has continued to introduce overseas best-selling products. In the second quarter of 2018, the Group introduced the widely popular CARMEX healing lip balm series, which is an over 80-year-old brand of lip balm from the United States. The Group became the exclusive distributor of this globally leading product in the Greater China Region (excluding Taiwan). The CARMEX healing lip balm series restocked in the third quarter of 2018. The Group organized a series of brand promotion activities, covering various channels that have been extended to several regional cities in China, which include large retail chain stores such as Watsons and Mannings, and will also extend to cosmetic and convenience stores in the future.

 

Mr. Zhao concluded, “The signing of ‘Consensus of Guangdong-Hong Kong-Macao Greater Bay Area Health Cooperation’ by the three regions, which will strengthen the development of areas such as quality medical services and Chinese medicine. The Group will foster the development of the Chinese pharmaceutical industry in Shenzhen and Hong Kong, and thereby further strengthen the industry in the Guangdong-Hong Kong-Macao Greater Bay Area. In the future, the prime tasks of the Group will be focus on bolstering its product categories, sales capabilities and brand power in order to reinforce its core competitiveness in a methodical manner. Meanwhile, the Group will continue to build a new retail ecosystem to integrate online and offline operations and develop complete omni-channel supply chain operation services. The Group will also speed up the introduction of a diverse range of products, including pharmaceutical and healthcare products, health and slimming products, daily cosmetics and personal care products, as well as medical devices. At the same time, it will seek to position its products as leading brands in their respective segment. In this way, the Group aims to deepen and consolidate its position as an omni-channel services provider offering a complete supply chain in the greater health products and services industry. In addition, the Group will closely monitor various risks and changes in the external market, and adjust its financial management measures in a timely manner so as to create greater value for shareholders and stakeholders. Kingworld Medicines will continue to adhere to its corporate mission of ‘offer help to people, benefit the world’, utilize its brand advantages, actively participate in social advancement and give back to the community.”

 

 

About Kingworld Medicines Group Limited

Kingworld Medicines Group is a globally leading and well-known omni-channel enterprise with a complete supply chain in the greater health products and services industry in China. It provides high-end logistics management service, B2C trading service and data service to major leading pharmaceutical and healthcare product suppliers, manufacturers and distributors, and is a pharmaceutical and healthcare product supply chain management service enterprise integrated with logistics, product and information flow. The Group’s business in the greater health industry includes: (i) an agent and distributor high-quality and well-known pharmaceutical products from overseas, including the star product series of Nin Jiom (京都念慈菴) product series from Hong Kong and Taiko Seirogan (喇叭牌正露丸) from Japan; (ii) actively introducing high-quality and well-known healthcare products from overseas into the China market, such as the star product Culturelle (康萃樂) probiotics product series from the United States, Lifeline Care maternal and infant fish oil nutrient product series from Norway, “Global Slimming” product series and medicated oils for external use; and (iii) research and development, manufacturing and production of medical devices. In terms of total import value, Kingworld Medicines Group was among the Top 100 Import Enterprises of Pharmaceutical and Healthcare Product for six consecutive years from 2009 to 2014, and, in 2013, it was one of the Top 5 Sales Enterprises of Chinese Patent Medicine in China and also ranked among the Shenzhen Top 500 Enterprises in 2018. The Group manages a portfolio of over 60 kinds of medicines and healthcare products manufactured in Hong Kong, Japan, the United States, Australia, Europe, Canada, Singapore and Mainland China, and has a sales network covered more than 200,000 OTC retail pharmacies in China and has a business footprint that covers more than 34 provinces and cities across the country (including Hong Kong and Macao regions).