In the first half of the year, Zhende Medical made a big profit by selling masks, protective clothing and other epidemic prevention protective supplies, and became popular in the capital market. However, only after this sudden growth fades can a company's background color be reflected.
Source | "City World" ID: ishijie2018
Author | Lei Yanpeng Editor | Liu Xiaoying
In a special period, a listed company in the medical dressing industry in Zhejiang was particularly eye-catching.
In 2020, protective products such as masks became the hottest products in the world. The stock price and performance of Zhende Medical (603301.SH) have both soared, becoming popular in the capital market. Its stock price opened at 15.11 yuan on January 2 and closed at 78.06 yuan on August 24, up 4.2 times.
In the first half of this year, relying on the significant increase in sales of masks, protective clothing and other products, the net profit of Zhende Medical increased by 15.4 times.
has been busy for many years in the past, but it has not been much better than this year's 6 months.
6 net profit of 1 billion
In April this year, Lu Jianguo, who was nearly 50 years old, was selected as "Shaoxing Good People" and "Zhejiang Good People". The reason for the selection of
is that in this "war" against the epidemic without gunpowder, as the chairman and general manager of Zhende Medical , Lu Jianguo led the company to overcome the complex and severe production situation. In just over twenty days, all order tasks that were 100 times higher than usual were completed on time, and more than 100 million medical masks were sent to medical institutions across the country in full.
A few months ago, various channels were hard to find. Zhende Medical allocated production capacity, and employees of protective supplies production workshop worked overtime during the Spring Festival, completing a hundred times the order volume in a short period of time.
In terms of production capacity, in the first half of the year, the demand for protective products exploded globally, and the production capacity of Zhende Medical is constantly expanding.
2/7, Zhende Medical said that the company's daily production of masks is 700,000 to 800,000; on July 10, Zhende Medical told the city that the daily production capacity of flat masks has increased to more than 8 million, and the daily production capacity of KN95 masks is more than 1 million; on August 6, the secretary of the board of directors said on the interactive platform that the daily production capacity of flat masks has reached about 10 million.
production capacity has been continuously improved, bringing explosive growth in performance.
In the first half of 2020, Zhende Medical achieved operating income of 3.82 billion yuan, a year-on-year increase of 401.24%; net profit attributable to shareholders of listed companies was 989 million yuan, a year-on-year increase of 1544.74%; net profit after deducting non-operating items was 984 million yuan, a year-on-year increase of 3104.26%; net sales profit margin increased from 8.17% to 28.91%. All core financial indicators have set a record high in history.
From 2014 to 2019, the total net profit of Zhende Medical in the past six years was only 593 million yuan. In other words, in the first half of this year, 396 million yuan was more profitable than in the past six years. The main reason for the growth of
's performance is inseparable from the significant increase in the sales of epidemic prevention protective products (masks, protective clothing, isolation clothing products).
From previous years, epidemic prevention protection products are insignificant in the Zhende Medical product lineup, because the revenue share of epidemic prevention protection products is really small.
Zhende Medical mentioned in the announcement that in 2018, protective products such as masks achieved sales revenue of 54.25 million yuan, accounting for 3.83% of the company's main business revenue; in the first three quarters of 2019, sales revenue was 51.88 million yuan, accounting for only 4.07%.
But now, the situation is completely different.
In the first half of the year, the sales revenue of Zhende Medical 's epidemic prevention protective supplies exceeded 2.648 billion yuan, and the proportion of main business revenue increased significantly to 69.43%. This is like an extra who has no lines yet, and instantly becomes the absolute male lead and female lead. If the epidemic prevention protective supplies are excluded, Zhende Medical achieved main business revenue of 1.166 billion yuan during the reporting period, an increase of 61.62% over the same period last year. Although the increase is not small, it is not particularly exaggerated in special circumstances.
Zhende Medical said that the company has established over the years the omni-channel advantages of the domestic market hospital line, pharmacy retail line, and e-commerce line and a good business cooperation system for international customers, combined with the company's supply capacity during this epidemic, has played a role in performance growth.
In terms of its impact on the industry, the epidemic has caused many industries to stagnate.However, it also brings development opportunities to some industries and enterprises. Zhende Medical is a typical example of benefiting from this crisis. Why is
export greater than domestic sales?
Whether in a normal year or in this special period of the first half of the year, the main market of Zhende Medical is actually overseas.
From the first half of the year, Zhende Medical 's overseas sales were 2.469 billion yuan, accounting for 64.74% of the main business revenue; domestic sales were 1.345 billion yuan, accounting for 35.26%, and the export share was much higher than domestic sales. Why is
exported much larger than domestic sales? Because Zhende Medical started with exports.
Since the 1990s, with the continuous increase in labor costs in developed countries, large multinational medical device companies have gradually transferred the production links of traditional wound care products (such as gauze, bandages) in medical dressings to Asia, South America and other regions and countries, retaining the R&D and marketing links, and selling them under independent brands.
Relying on its manpower cost advantages and industrial chain advantages, China has undertaken this wave of industrial transfer, and gradually a group of medical dressing manufacturers engaged in OEM production (OEM) and export-oriented for international large medical dressing brands.
Nowadays, the "three giants" of medical dressing production and export - Ogilvy Medical , Wenjian Medical, and Zhende Medical are all born, developed and strengthened in this process.
52 sewing machines and 264 old textile machines. Exports are completely dependent on foreign trade companies. This is the Zhende Medical at that time.
After becoming his boss, Lu Jianguo began to carry out major reforms.
Lu Jianguo, who only has a high school education, is very visionary. He believes that only by independent exports can one build a bigger enterprise, and only by opening up the domestic market can one build an independent brand. Therefore, without giving up the channel of foreign trade companies, Zhende Medical established the export department and the domestic sales department, recruiting college students to do foreign trade, and sending employees to Shanghai Foreign Studies University for further studies. At the same time, continuously enrich the production line.
In 2003, during the fight against SARS, the company's popularity increased a lot. Afterwards, a series of production expansion and acquisitions were carried out. By 2017, Zhende Medical's revenue reached 1.306 billion yuan.
In April 2018, Lu Jianguo led Zhende Medical to be listed on the main board of the Shanghai Stock Exchange, and Lu Jianguo and his wife Shen Zhenfang are the actual controllers of the company. As of June 30, 2020, the two held a total of 49.57% of the company's shares. At the same time, Lu Jianguo is the chairman and general manager of the company, and Shen Zhenfang is the vice chairman.
As of the end of 2019, Zhende Medical 's main product line covers modern wound dressings, surgical sensor control products, traditional wound care products, and pressure treatment and fixation products. It also has been laid out in the fields of cleaning and disinfection, ostomy care, sports rehabilitation and other fields.
In China, Zhende Medical sells the company's own brand products through a combination of distribution and direct sales.
As of the end of June, on the hospital line, Zhende Medical products have covered more than 4,900 hospitals in all provinces, cities and autonomous regions across the country, an increase of about 900 from the beginning of the period, including 730 Grade A hospitals, an increase of more than 200 from the beginning of the period; in the pharmacy retail line, the coverage rate of the top 100 chain pharmacies in the country has reached 95%, with about 60,000 pharmacies, an increase of about 10,000 from the beginning of the period.
During the epidemic, online channels also contributed to the domestic sales revenue of Zhende Medical . During the reporting period, the sales revenue of e-commerce platforms was 114 million yuan, an increase of 1317.49% over the same period last year, of which the sales revenue of epidemic prevention protective supplies reached 100 million yuan, accounting for 87.72%.
is overseas, Zhende Medical is an order-based production and sales model, which mainly adopts the OEM model to cooperate with overseas medical device brands, that is, the company conducts OEM production based on the technical specifications and quality standards provided by overseas brands, and overseas brands sell in the international market with their brands.
To put it bluntly, the export business of Zhende Medical is to process it for foreign brand manufacturers.
Zhende Medical has covered many countries and regions in six continents around the world (Europe, North America, South America, Asia, Africa and Oceania) in the international market. Although
accounts for a large proportion, in terms of profitability, export sales are far inferior to domestic sales.
The gross profit margin overseas is significantly lower than that in China. It is precisely because of the OEM overseas, there is no brand premium, and domestic sales are under their own brand. There is no way to do this. Since it is a medical dressing company that relies on OEM processing and export, it has to withstand the reality of low profits. How long can
"highlight" last?
On July 20, an investor asked on the interactive platform: If the number of mask orders decreases, does the company have new investment plans to make up for it? Zhende Medical Secretary of the Board replied: At present, the company's mask orders are relatively full, and investment plans will be disclosed.
Judging from the data, the orders are indeed quite "full". As of June 30, the contract liabilities of Zhende Medical reached 2.054 billion yuan, an increase of 152 times compared with 13 million yuan in the same period last year, and the proportion of total assets increased from 0.66% to 30.65%. The main reason is that the orders for protective products have increased significantly, and the balance of prepayments has also increased significantly.
In the first half of the year, Zhende Medical made a big profit by selling masks, protective clothing and other epidemic prevention protective supplies, and became popular in the capital market. However, how long can this kind of encounter performance last? It is a big question. After all, the epidemic will eventually pass.
Zhende Medical also told the city that there is uncertainty as to whether the company's sales of epidemic prevention protective supplies will continue to increase significantly in the future.
sells masks not a long-term solution, and you have to return to the regular business after all.
In recent years, the overall performance of Zhende Medical has not been stable, and the export business that started with has long been weak. Taking 2018 as an example, the overseas sales revenue of Zhende Medical only increased by 2.42%, lower than the overall growth rate of industry exports.
From the perspective of sales proportion, the trend of shrinking overseas revenue is also more obvious. In 2014, overseas revenue accounted for 83.74% of main business revenue, and by 2019, it had shrunk to 67.73%.
From the perspective of industry, China is the world's largest exporter of medical dressings, and can be called the "world factory" in this sub-sector. However, due to factors such as economic situation and tariffs, coupled with the increase in domestic production and transportation costs, the cost-effectiveness advantage is weakening. At the same time, the OEM army of ASEAN countries such as Vietnam and Thailand have joined the competition.
In 2012, the export volume of medical dressings in China increased by only 1.0%, and negative growth occurred in 2015. The former high growth no longer exists, and the overall growth rate is slowing down. Therefore, major export companies have turned their vision back to the domestic market.
In 2014, Lu Jianguo formulated two development directions for Zhende Medical : high-end dressings and the domestic market.
Domestic medical dressings are generally mid- and low-end, and the high-end market is occupied by multinational giants. Whether at home or abroad, they are facing competitive pressure from large foreign brands.
Judging from the changes in the gross profit margin of Zhende Medical , the high-end process is long and hindered. From 2015 to 2019, the gross sales profit margin of Zhende Medical was 29.90%, 31.70%, 29.59%, 31.36%, and 32.07%, respectively, with little change. Compared with the Ogilvy Medical , which is also mainly export-oriented, it does not have obvious advantages.
In recent years, the growth of domestic market demand has eased the pressure of weak exports and insufficient high-end to a certain extent. However, competition in the domestic market is becoming increasingly fierce. Although the domestic market capacity is large, the entry threshold is low. Domestic medical dressings are mainly traditional wound care products, and the product homogeneity is serious. Domestic companies mostly compete at low prices in the low-end market.
In addition, due to the long-term focus on OEM exports, domestic brands have low influence, and medical dressing export companies such as Ogilvy Medical and Wenjian Medical are also increasing their efforts to develop the domestic market. At the same time, foreign brands are also focusing on the Chinese market and implementing localization strategies for the Chinese market.
For Zhende Medical , the performance brought by the epidemic is short-lived after all, and the challenges faced in the future are lasting.
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