Vincent Medical Announces Strong Turnaround for 1H2023

23rd August 2023

Vincent Medical Holdings Limited (“Vincent Medical” or the “Company”, together with its subsidiaries, the “Group”, stock code: 1612), a China-rooted, global-focused medical device and solutions provider, is pleased to announce its interim results for the six months ended 30 June 2023 (“1H2023” or, “the Period”).

During the Period, the Group managed to capitalize on its established market presence and achieved organic growth. Supported by the steady demand for its respiratory products, particularly the inspired product line, along with growing contributions from the Imaging Disposable Products segment, revenue for the Period increased by 28.7% year-on-year (“YoY”) from HK$280.7 million to HK$361.2 million.

Due to the decrease in allowance for inventories, improvement in operating efficiency and depreciation of RMB, gross profit margin increased from 13.1% to 32.9%, driving gross profit for the Period to increase by 223.0% YoY from HK$36.8 million to HK$118.8 million. Profit attributable to owners of the Company reached HK$27.1 million (1H2022: loss amounted to HK$44.4 million), achieving a strong financial turnaround for the Period.

To reward its shareholders for their unequivocal support, the Board has resolved to declare an interim dividend of HK$1.25 cents per share (1H2022: Nil), representing a dividend payout ratio of 30.7%.

Respiratory products segment
During the Period, the respiratory products segment showed strong performance, reporting a revenue of HK$155.6 million, which accounted for 43.1% of the Group’s total revenue. This represented a 27.5% increase, mainly driven by the remarkable 44.9% growth in sales from the inspired respiratory devices and their dedicated disposables. The Group continued to invest in clinical education and provided comprehensive product training and support to its business partners to drive product adoption and increase disposable sales. Hence, revenue from inspired respiratory products for the Period reached HK$127.4 million (1H2022: HK$88.0 million).

Segment gross profit margin also improved significantly to 37.8% (1H2022: 33.0%), highlighting the growing operational efficiency.

Imaging disposable products segment
The Group manufactures and sells imaging disposable products on an OEM basis to one of the world’s leading solutions providers of diagnostic imaging. As a trusted partner, the Group supports its customer in the design and manufacturing of various contrast media injectors and disposable components, and remains an integral part of its growth strategy worldwide. Supported by the deepening collaboration with the customer, as well as the resumption of routine medical imaging diagnostic services across the globe, there was an increase in demand for imaging disposables, leading to an expanding contribution from the segment.

During the Period, segment revenue increased by 35.8% to HK$125.7 million (1H2022: HK$92.6 million), accounting for 34.8% of the Group’s total revenue. Segment gross margin remained steady at 30.4% (1H2022: 31.3%).

Orthopaedic and rehabilitation products segment
The orthopaedic and rehabilitation product segment demonstrated its resilience during the Period, as its revenue experienced only a slight decrease, from HK$35.2 million to HK$35.0 million, accounting for 9.7% of the Group’s total revenue. Despite the modest drop in revenue, segment gross margin strengthened significantly from 24.0% to 37.0%, primarily attributable to price increases and favorable movement in foreign exchange rates.

Looking ahead, the Group will ride on the high customer stickiness of its imaging disposable products segment, as well as the growing healthcare and wellness opportunities, to further diversify its business and deliver sustainable revenue growth. Despite facing challenges in the overall economic environment, the Group remains cautiously optimistic for the rest of 2023, as it continues to navigate a mix of headwinds in the macroeconomic environment.

To achieve long-term margin and earnings expansion, the Group is committed to investing in infrastructure. The Group intends to build a new production facility in Kaiping City, one of the key cities within the Guangdong-Hong Kong-Macao Greater Bay Area, and the new facility is expected to commence operations in 2025. The addition of the new manufacturing and research and development facility will diversify the Group’s production bases, alleviate capacity constraints, which in turn, allow quicker sales intake and yield greater automation that would empower the Group to deliver cost efficiency in the long-run, thus laying a solid foundation for future financial performance.

Mr. Choi Man Shing, Chairman of Vincent Medical, said, “We are delighted with the positive results for the first half, with recovering business performance from our respiratory products segment, and steady growth from our imaging disposable products segment. As we march forward, we believe we also need better tools, higher efficiency, and bigger capacity to support our collaboration demand, our inspiredTM development, as well as our new business ventures in IoT and wellness. ”

“As a China-rooted, global-focused medical solutions provider, we will continue to drive product development and registration, as well as strengthening our client relationships to boost product penetration. In addition, we will also strive to realize opportunities in contract R&D and manufacturing, allowing us to go hand-in-hand with our partners.”