Continues to Diversify Product Mix and Expand Coverage of Health Business Segment
HONG KONG — Kingworld Medicines Group Limited (“Kingworld Medicines” or the “Group”, stock code: 1110), a distributor of renowned branded imported pharmaceutical and healthcare products in the PRC, has announced its unaudited interim results for the six months ended 30 June 2017(the “Period”).
During the period, benefiting from the increase in sales of its core products including Nin Jiom Chuan Bei Pei Pa Koa and Nin Jiom Chuan Bei Pei Pa Candies series and Culturelle probiotic series, together with the Group continuously strengthened network expansion both online and offline, revenue increased by approximately 22.0% to RMB509.1 million and gross profit increased by 8.8% to RMB149 million. Profit attributable to owners of the company increased by 10.1% to approximately RMB22.1 million and basic earnings per share increased by 18.7% to approximately RMB3.56 cents. The board of directors of the Company did not recommend payment of an interim dividend for the six months ended 30 June 2017.
Mr. Zhao Li Sheng , Chairman and Executive Director of Kingworld Medicines, said, “the rising healthcare awareness among the public and the change in spectrum of disease have led to an increasing attention to the healthcare industry. Meanwhile, factors such as the acceleration of urbanization across the world and the continuous improvement of healthcare system in different countries have shown a trend of continuous growth. Pharmaceutical industry is a strategic emerging industry in the PRC with promising future, and is also one of the focuses in the “Made in China 2025″ initiative. With the PRC’s unprecedented emphasis, the position of pharmaceutical industry has been strengthening continuously. These positive factors have brought more favourable opportunities to the development of Kingworld Medicines.” During the period, the Group persistently deepened distribution network with diversity and enhanced brand influence. Thus, both sales revenue and profits of the Group increased.”
The Group is steadfastly executing the strategy of maintaining a diversified product mix, and managed a portfolio of over 60 branded products which are manufactured in different places in the world. Leading products include Nin Jiom Chuan Bei Pei Pa Koa and Nin Jiom Chuan Bei Pei Pa Candies; Taiko Seirogan; the “External Use Medication Categories,” which includes Kingworld Imada Red Flower Oil, Flying Eagle Wood Lok Medicated Oil, Hoe Hin White Flower Embrocation and Mentholatum Ointment; and the “New Mother & Child Wellness Product” , such as the Culturelle probiotic series from the USA, BRAINSTRONG Prenatal DHA, FATBLASTER slimming coconut water from Australia, BLACKMORES fish oil, FUYUNHON body care products from Australia and Lifeline Care serial products of maternal and infant fish oil nutrients from Norway. Through developing diversified sales channels and platforms, the Group has consolidated its market share of products and achieved good sales growth. Among the different products, Nin Jiom Chuan Bei Pei Pa Koa remained to be the focus business of the Group, accounted for 42.6% of the total sales of the Group, while the Culturelle probiotic products from USA and Taiko Seirogan accounted for 19.8% and 9.6% respectively.
During the period, the Group’s business focus continued to be sales and marketing of Nin Jiom Chuan Bei Pei Pa Koa and Nin Jiom Chuan Bei Pei Pa Candies series. The Group strengthened cooperation with regional chains, reached young consumer groups using new media, held various public welfare activities such as campus singing contests and product tasting, in doing so consolidated restorative growth of sales in first and second tier cities and accelerated sales coverage in third and fourth tier cities in China, restored to normal supply of products to meet huge market demand, and all those efforts led to resumption of growth in product sales during the period.
Regarding the Group’s online and offline marketing strategy and adherence to the terminal market strategy, the Culturelle probiotic series from the USA became the second largest product series of the Group. During the period, sales of the Culturelle probiotic series approximately doubled as compared with the corresponding period last year. During the period, the Group further enhanced its products and sales networks, with 24 subsidiaries and 17 branch offices in 34 provincial administrative regions (Hong Kong and Macau), availing products to customers in more than 341 cities.
As for Taiko Seirogan, the Group organized different charitable events and sales events during the review period to promote the product line to target consumers to enhance their recognition and influence of the brand. At the same time, by carrying out diversified on-site promotional campaigns, combined with donation of supplies and sponsorship of city marathon, community events, charitable events, etc., the Group developed and enhanced brand recognition of external use medicines such as Kingworld Imada Red Flower Oil, Flying Eagle Wood Lok
Medicated Oil, Hoe Hin White Flower Embrocation and Mentholatum Ointment. During the period, sales of Taiko Seirogan surged by 71.9% as compared with the corresponding period last year, and the 100-pill package recorded a growth of 93.1% in sales revenue.
The Group’s other products such as “Maternal and child product series”, FATBLASTER coconut water, BRAINSTRONG Prenatal DHA and FUYUNHON body care products, also recorded positive sales. Moreover, thanks to effective marketing and promotion and product operation strategies, rapid sales growth was achieved for Lifeline Care fish oil nutrients from Norway, of which the Group secured the exclusive agency right in Greater China last year. Brand promotion efforts and interactive consumer activities mounted during the reporting period boosted sales of the Group’s new product Hoe Hin White Flower Embrocation, with sales up by 54.7% as compared with the corresponding period last year. The latest addition has enhanced the External Use Medication Series that included such as Kingworld Imada Red Flower Oil and Flying Eagle Wood Lok Medicated Oil, boosting the Group’s product combination and giving consumers more choices of health brands.
In recent years, the global pharmaceutical industry has been booming at the support of national policy and advancing Internet technology changing consumption habits. In China, for example, the Internet+ pharmaceutical industry and cross-border e-commerce platforms have grown rapidly and consistently. Boasting a diverse health products portfolio, an expanding online sales network, and strengthened control and sales promotion efforts, sales of the cross-border e-commerce business increased by 92.4% during the period under review. The Group commenced the development of new Qianhai cross-border e-commerce platform during the period and will launch the Qianhai cross-border e-commerce platform for Kingworld Health Family products in the future.
For the six months ended 30 June 2017, the business and revenue of experienced steady growth and for over two years the results undertaking as agreed by the Group and Dong Di Xin.About the Group’s acquisition in 2015 of equity interest of Dong Hua Tong Investments Limited at a consideration of HK50.0 million to hold indirect interest in Miquel Alimentacio (a leading corporation in Spain in food distribution and wholesale, brand operation and management of supply chain) and Manassen Foods Australia (a large food company). The projects operated smoothly during the period under review. Furthermore, other investment projects of the Group made good progress during the period, helping the Group enrich its investment portfolio, expanding revenue sources and achieving the goals of its multi-domain operations strategy.
Looking ahead, capitalising on its rich supplier resources overseas and strong distribution and promotion capabilities in the Greater China region, the Group will continue to accelerate procurement and development of quality new products and advance business development to consolidate its advantageous position in the macro-health segment. Also, it will continue to carry out the strategy of integrated operation and regional market management to increase market penetration of its products. It will also optimise and integrate sales channels to promote growth of both its traditional products and new health products. In addition, the Group will continue to push forward with investment and M&A projects guided by its macro-health concept and forge closer strategic cooperation with associated companies.
Mr. Zhao Li Sheng said, “The first half year marked the kick off the Group’s “fourth five-year strategy,” to help the Group perfect its industrial layout, optimise channel management and boost sales, in particular, speed up omni-channel layout and sales of new products in the Culturelle probiotics series. The Group will strengthen internal data establishment, commence a data platform management model and continue to build a self-operated e-commerce platform to meet the increasing demand of e-commerce business. On top of developing its business, the Group will also adhere to its ‘to serve the community and to heal the souls’ motto in promoting charity in China, helping to establish a ‘Healthy China’ by applying our strengths and taking actions and making everybody healthy.”