[中报]稳健医疗:2021年半年度报告（英文版）
原标题:稳健医疗:2021年半年度报告（英文版） Stock code: 300888 Winner Medical Co., Ltd. Semi-annual Report To enhance your health, life and well-being Section 1 Important Notes, Contents, and Definitions The Board of Directors, the Board of Supervisors and directors, supervisors and senior management of the Company hereby guarantee that the statement in this Semi-annual Report is true, accurate and complete without false or misleading information or major omission and that they will assume all the legal liabilities, individually and jointly. Li Jianquan, the head of the Company, Fang Xiuyuan, the head of accounting work, and Wu Kezhen, the head of accounting body (accountant in charge), guarantee the authenticity, accuracy, and completeness of the financial report in this semi-annual reporting period. All directors of the Company personally attended the board meeting for reviewing this report. The forward-looking contents in this report, such as the future development strategy and performance planning, are the goals sets by the Company, which are planned matters. The achievement of the goals depends on many factors, including market change, which is uncertain. So these contents are not the Company’s profit forecast for the next year and do not constitute a substantial commitment of the Company to investors and related parties. Investors and related parties should be fully aware of related risks and understand the differences among plans, forecasts, and commitments. Investors are asked to beware of investment risks! The main risks that the Company may face in the future are described in the “12. Risks and countermeasures” in “Section 3 Management Discussion and Analysis” of this report. Investors are asked to read the entire section carefully. The Company does not plan to distribute cash dividends, transfer shares or increase the share capital of the common reserve fund. Contents Section 1 Important Notes, Contents, and Definitions ...................................................................................................................... 2 Section 2 Company Profile and Major Financial Indicators .............................................................................................................. 7 Section 3 Management Discussion and Analysis ............................................................................................................................ 11 Section 4 Corporate Governance .................................................................................................................................................. 72 Section 5 Environmental Protection and Social Responsibility ....................................................................................................... 74 Section 6 Important Issues ........................................................................................................................................................... 80 Section 7 Changes in Shares and Shareholders.............................................................................................................................. 88 Section 8 Preferred Shares-related Information .............................................................................................................................. 96 Section 9 Bond-related Information.............................................................................................................................................. 97 Section 10 Financial Statements ................................................................................................................................................... 98 Document Catalog (1) Financial statements containing the signatures and seals of the person in charge of the Company, the person in charge of accounting work, and the person in charge of the accounting body (accountant in charge). (2) The originals of all company documents and announcements publicly disclosed during the reporting period. (3) The place where the documents are available for inspection: the Securities Department of the Company. Definitions Term Refers to Definition Company, Winner Medical Refers to Winner Medical Co., Ltd. Winner Group Refers to Winner Group Limited, a controlling shareholder of the Company Sequoia Xinyuan Refers to Beijing Sequoia Xinyuan Equity Investment Center (L.P.), a shareholder of the Company Kangsheng Investment Refers to Shenzhen Kangsheng Investment Partnership (L.P.), a shareholder of the Company Kangxin Investment Refers to Shenzhen Kangxin Investment Partnership (L.P.), a shareholder of the Company SCGC Refers to Shenzhen Capital Group Co., Ltd., a shareholder of the Company Kanglong Investment Refers to Shenzhen Kanglong Investment Partnership (L.P.), a shareholder of the Company Kangli Investment Refers to Shenzhen Kangli Investment Partnership (L.P.), a shareholder of the Company Winner Medical (Chongyang) Refers to Winner Medical (Chongyang) Co., Ltd., a wholly-owned subsidiary of the Company Winner Medical (Jiayu) Refers to Winner Medical (Jiayu) Co., Ltd., a wholly-owned subsidiary of the Company Winner Medical (Jingmen) Refers to Winner Medical (Jingmen) Co., Ltd., a wholly-owned subsidiary of the Company Winner Medical (Yichang) Refers to Yichang Winner Medical Textile Co., Ltd., a wholly-owned subsidiary of the Company Winner Medical (Huanggang) Refers to Winner Medical (Huanggang) Co., Ltd., a wholly-owned subsidiary of the Company Winner Medical (Tianmen) Refers to Winner Medical (Tianmen) Co., Ltd., a wholly-owned subsidiary of the Company Shenzhen Purcotton Refers to Shenzhen Purcotton Technology Co., Ltd., a wholly-owned subsidiary of the Company Guangzhou Purcotton Refers to Guangzhou Purcotton Medical Technology Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton Beijing Purcotton Refers to Beijing Purcotton Technology Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton Shanghai Purcotton Refers to Shanghai Purcotton Technology Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton Qianhai Purcotton Refers to Shenzhen Qianhai Purcotton E-Commerce Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton Purunderwear Refers to Shenzhen Purunderwear Sci-Tech Innovation Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton Winner (Huanggang) Cotton Refers to Winner (Huanggang) Cotton Processing & Trading Co., Ltd., a wholly-owned subsidiary of Winner Medical (Huanggang) Winner Medical Malaysia Refers to Winner Medical Malaysia Sdn. Bhd., a subsidiary controlled by the Company Winner Medical (Hong Kong) Refers to Winner Medical (Hong Kong) Ltd., a subsidiary controlled by the Company Winner Medical (Heyuan) Refers to Winner Medical (Heyuan) Co., Ltd., a wholly-owned subsidiary of the Company Winner Medical (Wuhan) Refers to Winner Medical (Wuhan) Co., Ltd., a wholly-owned subsidiary of the Company Pure HB (Shanghai) Refers to Pure HB (Shanghai) Co., Ltd., a wholly-owned subsidiary of the Company PureH2B Refers to Shenzhen PureH2B Technology Co., Ltd., a wholly-owned subsidiary of the Company Chengdu Wenjian Likang Refers to Chengdu Wenjian Likang Medical Products Co., Ltd., a wholly-owned subsidiary of the Company Tmall Refers to An integrated online Business-to-Consumer (B2C) shopping platform (www.tmall.com) under Alibaba Group JD.com Refers to Beijing Jingdong Century Trading Co., Ltd. (JD.com, Inc.), a company listed on U.S. exchanges with an integrated online B2C shopping platform (www.jd.com) Key Client Refers to Corporate clients with bulk purchase or customized purchase needs regarding Purcotton business Galaxy Real Estate Refers to Shenzhen Galaxy Real Estate Development Co., Ltd. Reporting period Refers to The first half of 2021, from January 1, 2021 to June 30, 2021 yuan Refers to CNY 10,000 yuan Refers to CNY 10,000 yuan Section 2 Company Profile and Major Financial Indicators I. Company Profile Stock abbreviation Winner Medical Stock code 300888 Stock exchange Shenzhen Stock Exchange Company name in Chinese Winner Medical Co., Ltd. Chinese abbreviation of the company (if any) Winner Medical Company name in foreign language (if any) Winner Medical Co., Ltd. Company short name in foreign language (if any) Winner Medical Legal representative of the company Li Jianquan II. Contact Person and Contact Information Secretary to the Board of Directors Securities affairs representative Name Chen Huixuan Wei Na, Liu Yanxiang Contact address F42, Building 2, Huilong Business Center, Shenzhen North Railway Station Area, Minzhi Subdistrict, Longhua District, Shenzhen City F42, Building 2, Huilong Business Center, Shenzhen North Railway Station Area, Minzhi Subdistrict, Longhua District, Shenzhen City Tel 0755-28066858 0755-28066858 Fax 0755-28134688 0755-28134688 [email protected] [email protected] III. Other Information 1. Company contact Whether the registered and office addresses and their post codes, official website, and email of the Company were changed during the reporting period √Applicable □ Not applicable Registered address of the Company F42, Building 2, Huilong Business Center, Shenzhen North Railway Station Area, Minzhi Subdistrict, Longhua District, Shenzhen City; Winner Industrial Park, No.660 Bulong Road, Longhua New District, Shenzhen City Postal code of the Company’s registered address 518131 Office address of the Company F42, Building 2, Huilong Business Center, Shenzhen North Railway Station Area, Minzhi Subdistrict, Longhua District, Shenzhen City Postal code of the Company’s office address 518131 Website http://www.winnermedical.cn, http://www.winnermedical.com [email protected] Date of inquiry on the designated website for disclosure of interim announcements (if any) April 20, 2021 Query index of the designated website for disclosure of interim announcements (if any) http://www.cninfo.com.cn/new/index 2. Information disclosure and keeping place Whether information disclosure and the place where the semi-annual report is kept were changed during the reporting period □ Applicable √ Not applicable The newspapers selected by the Company for information disclosure, the websites designated by the China Securities Regulatory Commission (CSRC) for publishing the semi-annual report, and the place where the semi-annual report is kept were not changed during the reporting period. See the 2020 Annual Report for details. 3. Change of registration Whether the registration status was changed during the reporting period □ Applicable √ Not applicable There were no changes in the Company’s registration during the reporting period. See the 2020 Annual Report for details. IV Main Accounting Data and Financial Indicators Whether the Company needs to retroactively adjust or restate the accounting data of the previous years □Yes √No Current reporting period Same period last year Increase/decrease the reporting period compared to the previous year Revenue (yuan) 4,059,865,654.92 4,179,778,883.27 -2.87% Net profits attributable to shareholders of listed companies (yuan) 761,038,730.24 1,032,218,689.91 -26.27% Net profits attributable to shareholders of the listed company after deduction of non-recurring profits and losses (yuan) 627,255,609.19 1,022,971,049.47 -38.68% Net cash flow from operating activities (yuan) 197,604,865.77 2,473,405,982.25 -92.01%Note 1 Basic EPS (yuan/share) 1.7844 2.7417 -34.92% Diluted EPS (yuan/share) 1.7715 2.7417 -35.39% Weighted average return on net assets 7.06% 28.33% -21.27%Note 2 End of the reporting period End of the previous year Increase/decrease at the end of the reporting period compared to the end of the previous year Total assets (yuan) 13,112,976,247.91 13,002,251,764.44 0.85% Net assets attributable to shareholders of listed companies (yuan) 10,518,676,503.69 10,453,934,045.43 0.62% Note 1: (1) Cash received from the sales of goods and services decreased by 1,548 million yuan during the reporting period compared with the same period of the previous year, mainly due to the decrease in advance payments from customers. In the same period of last year, the Company adopted a credit policy of 100% advance payment for protection products, and the credit policy returned to the normal level during the reporting period. (2) The increase of 899 million yuan in cash paid for operating activities in this reporting period was mainly due to the better performance and the higher provision for various taxes in the previous year, resulting in an increase of 403 million yuan in various taxes paid after remittance in this reporting period compared with the same period of the previous year. In addition, the higher provision for performance bonuses in the previous year led to an increase of 160 million yuan in employee compensation paid in this reporting period compared with the same period of the previous year. (3) The above two points were the main reasons for the decrease of 2,276 million yuan in net cash flow from operating activities in this reporting period compared with the same period of the previous year, a decrease of 92.01% year-on-year. Note 2: -21.27% is the level of difference not the rate of change. V. Differences in Accounting Data Under Domestic and Foreign Accounting Standards 1. The difference between net profits and net assets in financial statements disclosed according to the International Accounting Standards (IAS) and Chinese Accounting Standards simultaneously □ Applicable √ Not applicable No difference between net profits and net assets in financial statements disclosed according to the International Accounting Standards (IAS) and Chinese Accounting Standards during the reporting period. 2. The difference between net profits and net assets in financial statements disclosed according to the Overseas Accounting Standards (IAS) and Chinese Accounting Standards simultaneously □ Applicable √ Not applicable No difference between net profits and net assets in financial statements disclosed according to the Overseas Accounting Standards and Chinese Accounting Standards during the reporting period. VI. Non-Recurring Profit and Loss Items and Amount √Applicable □ Not applicable Unit: yuan Item Amount Description Profits and losses on the disposal of non-current assets (including the write-off part of the provision for asset impairment) (7,991,363.76) Government subsidies included into the current profits and losses, except those government subsidies, which are closely related to the business of a company and enjoyed in accordance with a certain standard quota or quantity of the state 86,791,122.28 In addition to the effective hedging business related to the company's normal business operations, the profit and loss from fair value changes arising from holding tradable financial assets, derivative financial assets, tradable financial liabilities, and derivative financial liabilities, as well as the investment income from disposal of tradable financial assets and derivative financial assets, tradable financial liabilities, derivative financial liabilities, and other debt investments 79,825,882.59 Income and expenditure other than those mentioned above 1,756,948.93 Less: Amount affected by income tax 26,599,643.40 Amount of minority shareholders' equity affected (after tax) (174.41) Total 133,783,121.05 -- Explain the non-recurrent profit and loss items defined by the Company according to the Interpretative Announcement No. 1 on Information Disclosure of Public Securities Issuing Companies - Non-recurrent Profits and Losses and defined from the non-recurrent profit and loss items enumerated in the Interpretative Announcement No. 1 on Information Disclosure of Public Securities Issuing Companies - Non-recurrent Profits and Losses □ Applicable √ Not applicable No definition of non-recurrent profit and loss items defined and enumerated in the Interpretative Announcement No. 1 on Information Disclosure of Public Securities Issuing Companies - Non-recurrent Profits and Losses as non-recurrent profit and loss items during the reporting period. Section 3 Management Discussion and Analysis I. Main Business of the Company During Reporting Period (I) Main business of the Company during reporting period Winner Medical is a health enterprise developing both medical and consumption products under its three brands: Winner, Purcotton, and PureH2B. Specifically, the Company has been adhering to the core business principle of “Quality before profit, brand before speed, social value before corporate value”. Through continuous innovation and expansion of industrial boundaries, the Company has developed from a single manufacturer of medical consumables into a large medical health enterprise covering wound care, infection prevention, personal care, home care, maternal and child care, home textile and clothing and other fields. Medical Wound care consumables Non-woven consumer goods Textile consumer goods Infection protection Disinfection and cleaning Beauty products and perfumes Health & personal care Home sports Cotton tissues Sanitary pads Wet tissues etc. Baby supplies Baby clothing Adult clothing 1. Medical consumables section Winner Medical is a benchmarking enterprise in the domestic medical consumables industry. Its main product lines cover wound care, infection prevention and disinfection and cleaning. The specific products include high-end wound dressing products, traditional wound care and dressing products, infection control products in operating room, disease prevention products and disinfection and cleaning products for body surface cleaning. The Company is one of the earliest medical consumables enterprises in China to establish a full industrial chain covering cotton procurement, R&D, production, and direct export. The Company’s products have been certified by the EU CE certification, the US FDA certification and the Japanese Ministry of Health, Labour and Welfare certification, and exported to Europe, America, Japan and other countries. In 2005, “Winner” brand entered the domestic hospital and drugstore market. With its excellent product quality and service, Winner Medical gradually established a good brand and reputation in domestic hospitals and drugstores. Since the outbreak of COVID-19 in 2020, the “Winner” brand epidemic prevention products have entered the hospital and the civilian market. Thanks to its public commitment not to increase prices and the quality of its products, it has won the unanimous praise at home and abroad, from government units and the public, and the brand reputation and popularity have been greatly improved. In terms of products, Winner Medical focuses on market demand, is close to clinical and terminal, is driven by R&D and innovation, and constantly improves product layout. Its business scope extends from sales of single wound care products such as cotton gauze to sales of integrated solutions of wound care, infection prevention, disinfection and cleaning. Disposable operating room consumables can more effectively reduce nosocomial infection than reusable medical products. With more attention of the state and hospitals to nosocomial infection and residents’ attention to personal health environment, disposable operating room consumables are gradually accepted by the domestic market. Winner Medical’s medical dressing product line has been expanded from traditional dressing products mainly focusing on gauze products to high-end dressing products, such as silica gel foam dressing, hydrocolloid dressing, super absorbent pad, negative pressure drainage products, etc., which are mainly applied to chronic wound healing scenes such as diabetes, large-area burns and wounds. The Company’s technical level in the field of high-end dressings has been in the forefront of the industry, and is expected to become the core products for the development of Winner Medical. 2. Healthy Consumer Goods Section Purcotton is a healthy life brand with "Medical background/Purcotton philosophy/Quality in our DNA "as its core competitiveness, which starts with pure cotton spunlace non-woven fabric and takes “medicine close to life, Purcotton care for health” as its brand proposition. Its products include pure cotton tissue, sanitary pads with pure cotton surface, pure cotton wet tissues and other non-woven consumer goods, as well as baby supplies, baby clothing, baby products, adult clothing and other textile consumer goods. Purcotton advocates the life concept of “comfort, health, environmental protection”, replacing chemical fiber with cotton and keeping away from chemical stimulation. It provides overall solutions for different life scenes, having a good user reputation and formed a fully differentiated brand image in the field of consumer goods with strong brand appeal. In terms of products, with excellent quality control ability and technology research and development ability, the Company continues to introduce medical grade quality consumer goods. Cotton is the main raw material of core products of Purcotton, which adopts global high-quality cotton to control product quality and safety from the source. According to the high standard of medical consumables, all kinds of pollution sources are strictly controlled in the production process. Disposable underwear, newborn baby clothes and other close-fitting clothing are packaged with medical grade sterilization to further ensure the safety and environmental protection of the products. Purcotton products cover multiple consumer groups, such as mothers and infants, children and adults, and span multiple product lines, such as high-end pure cotton tissues, female care, baby care, adult clothing, home textile products, etc. In July 2019, the Company launched the “PureH2B” brand, aiming to build a one-stop retail platform covering beauty makeup, personal care, sports and other healthy and beautiful life needs. As of June 30, 2020, “PureH2B” has sold products through 9 offline stores, online official websites and Wechat mini programs, and its business is still at the initial stage. (II) Main Products and Purposes Its health product system covers: wound care products, infection prevention products, disinfection & cleaning products under its medical consumables section; the non-woven consumer goods and textile consumer goods under its healthy consumer goods section; and pure cotton spunlace non-woven fabric, an industry intermediate product. The main categories and images of some products under the Company's medical consumables section are as follows: Product Class Product Category Main Purpose Product Image of Some Products Wound care products Traditional wound care and wound dressing products For absorbing wound exudate, dressing wounds, and sports protection Gauze sheets, non-woven sheets, gauze bandage, dressing change kits, etc. High-end wound dressing products For creating a moisture balance at the wound interface to optimize its benefits for wound healing, reduce the frequency of dressing replacement, and reduce secondary damage Silicone dressings, alginate dressings, etc. Infection prevention products Operating room infection control products For preventing infections in the operating room Surgical packs, surgical gowns, etc. Disease prevention and control products For occupational protection of medical staff and patient isolation Masks, protective clothing, isolation gowns, etc. Disinfection & cleaning products Disinfection & cleaning products For wound cleaning and disinfection, and daily cleaning Cotton swabs, cotton pads, cotton balls, alcohol cotton pads, disinfectant, etc. As the important guarantee for medical staff’s occupational protection and patient isolation protection, disease protection and control products such as masks and protective clothing play an indispensable role in coping with major health incidents and improving public health. The main categories and images of some products under the company's healthy consumer goods section are as follows: Class Product Category Product Image of Some Products Non-woven consumer goods Cotton tissues Wet tissues Sanitary pads Other non-woven consumer goods Cotton swabs, makeup cotton pads, disposable underwear, etc. Textile consumer goods Baby supplies Baby's bath towels, handkerchiefs, and quilts, etc. Baby clothing Baby's leisure wear, outing costume, underwear, footwear, etc. Adult clothing Adult's leisure wear, outing costume, underwear, footwear, etc. Other textile consumer goods Bedding, bathroom accessories, etc. The purposes and images of the Company's pure cotton spunlace non-woven fabric are as follow: Class Main Purpose Image Pure cotton spunlace non-woven fabric With 100% quality cotton as raw materials, the fabric is made with the pure cotton spunlace non-woven fabric technology. It can be used in fields such as personal care, home care, medical equipment, and industrial wipes. (III) Main Operating Modes 1. Procurement mode The Company has established a complete procurement management system, which mainly includes the Procurement Control Process, Procurement Price Management Process, New Supplier Selection and Review Control Process, Supplier Performance Appraisal Management Process, and the Company also has made a Qualified Supplier Directory. According to the Company's regulations, purchase applications shall be submitted by requiring departments based on customer orders, sales plans, and production plans. The purchasing department shall strictly follow the purchasing management regulations after analyzing the purchasing requirements and the raw material market. The procurement of key bulk raw materials (such as cotton and veil) is implemented in a unified manner according to the Company's rules on its strategic procurement. The Company implements a strict supplier management system to ensure product quality and stable product supply. The Company has set a supplier directory and a perfect update and elimination mechanism to dynamically manage existing suppliers and new suppliers, which enables the Company to preferentially cooperate with the suppliers with the highest assessment results. For new suppliers, the Company has made strict selection criteria and supplier development and process management systems, including on-site inspection on suppliers; for suppliers with poor or even unqualified annual performance, the Company will add them to the key watch list or eliminate them. Generally, the Company will sign an annual framework agreement with a supplier to specify the cooperation content and the annual cooperation arrangement, and specific procurement contracts will be signed separately. 2. Production mode The Company formulates production plans according to customers' POs and requirements, its annual sales plans, and monthly rolling sales plans. Based on its own production capacity and demand fluctuations, the Company adopts the production strategies of Make to Order (MTO) and Made to Stock (MTS). 3. Sales mode The Company sells products through multiple channels. The main sales channels are shown in the following figure: Online channels Medical consumables Pure cotton spunlace non-woven fabric Healthy consumer goods Offline channels Offline channels Offline channels Online channels Direct selling to domestic and foreign customers Third-party B2C platforms, such as Tmall, JD.com and Amazon Domestic sales Overseas sales Winner's own brand at hospitals Winner's own brand at OTC drugstores OEM mode Winner's own brand sales E-commerce platforms Real stores Self-operated flagship stores at Tmall and JD.com Warehousing by e-commerce platforms, such as JingDong self-run stores and Tmall Supermarket Official website, APP and Wechat mini program of PurCotton Directly operated and franchised chain stores Supermarket sales Bulk purchase by key accounts or customization business 4. Marketing mode The Company is developing its products under the Winner, Purcotton, and PureH2B brands a coordinated way. With 30 years of experience in the production of medical supplies, Winner is a leading medical consumables brand in the Chinese market and a brand with a global vision. With “To enhance your health, life and well-being” as its vision and industry-leading product quality as the cornerstone of its brand value, the product marketing and promotion for the brand rely more on its brand reputation. With pure cotton products as its label, Purcotton ad opts unique, differentiated strategies to build its brand. By integrating multiple promotion channels such as directly-sales stores, brand roadshows, celebrity endorsements, event sponsorship, new media, and advertising, Purcotton keeps conveying to consumers its proposition of “medicine close to life, Purcotton care for health” and its vision of “Purcotton Changes the World”, which helps deepen the meaning of Purcotton brand and increase its brand awareness and loyalty. PureH2B offers consumers selected products that are high-quality, healthy, and beautiful from around the world through its paid membership system. It offers its members products with extremely competitive prices and a series of excellent offline services such as beauty salons, free makeup, and seminars. With “Love, protect and enjoy nature” as its brand vision, and “Influence the mainstream consumption attitude with “inner health brings outer beauty” philosophy, and attract mainstream consumers with natural products” as its mission, PureH2B is bringing consumers a new all-round digital retail experience. (IV) Main Driving Factors of Performance 1. Medical consumables industry and consumer goods industry will keep growing rapidly As the global demand for healthcare of aging population increases, resident income continues to grow, and medical and healthcare improve, the global medical consumables market is showing a steady growth trend. The COVID-19 pandemic has made global consumers pay more attention to health and personal protection. In China, especially, most families choose to wear masks when they take public transport and are in public places, so the demand for masks is expected to increase significantly compared with that before the pandemic. After the COVID-19 pandemic outbreak, as the government, medical workers, and consumers in China pay greater attention to protection and quality, the use rate of disposable medical consumables and disposable surgical packs will get higher; on the other hand, as the Chinese government attaches importance to the medical consumables industry, the supervision over the industry are continuously strengthened while the reserves of medical consumables are increasing. Therefore, companies that do not comply with laws and regulations will surely be eliminated. In addition, China's medical dressings are changing from traditional dressings to high-end dressings, and they are expected to replace imported dressings step by step. The medical consumables market in China is growing rapidly, creating a good external environment for enterprise development. In recent years, the total retail sales of consumer goods in China has been rising rapidly, showing an obvious trend of consumption upgrading. Consumers' demand for green, healthy, and environmentally friendly products is increasing, bringing good opportunities in the consumer goods industry. 2. The Company‘s ability to innovate and its foresight enable it to lead the market and seize opportunities In terms of technological innovation, the Company's pure cotton spunlace non-woven fabric is a kind of pioneering fabric in the industry, with breakthrough significance. The Company innovatively applies the fabric in healthy consumer goods and medical consumables. In terms of product innovation, the Company keeps introducing new products based on medical consumables and healthy consumer goods, to increase loyalty of existing customers and to win new customers. In addition, the Company keeps exploring new areas based on its R&D advantages. For example, the innovative application of pure cotton spunlace non-woven fabrics in infection prevention products such as medical protective clothing, surgical gowns, and isolation gowns, which has not only alleviated the shortage of raw materials during the pandemic but also improved the breathability and comfort of anti-pandemic products, allowing them to be more environmentally friendly. As for high-end wound dressings, the Company keeps tackling obstacles to enrich its high-end dressing products. With a top-down innovation system established, the Company is able to grasp the trend of market development in a timely manner to develop new products and constantly promote its self-innovation. 3. High-quality products and precise brand positioning enhance brand value The Company is one of the earliest medical consumables enterprises in China to establish a full industrial chain covering cotton procurement, R&D, production, and direct export. The Company is one of the early companies that established a medical-grade quality management system in the industry, and has passed the ISO13485 Medical Devices Quality Management System Certification. Its product quality complies with the European, American, Japanese, and Chinese standards. Winner Medical enjoys a high brand reputation and recognition. In 2020, Winner Medical was praised by the Joint Prevention and Control Mechanism of the State Council as a well-deserved “ordnance factory” in fighting the pandemic. Its wholly-owned subsidiary Winner Medical (Huanggang) was awarded the title of “National Advanced Unit for Fighting the COVID-19 Pandemic” by the CPC Central Committee and the State Council. It is also the only enterprise awarded the title in Hubei Province. In May 2021, Winner Medical was selected by the Federation of Shenzhen Industries as the “Benchmarking Enterprise in China’s Medical Consumables Sector” and at the same time recognized as an “International Renowned Brand” by the United Nations Industrial Development Organization. Winner Medical has expanded its business from the medical field to the consumer goods field, which has also increased the brand value of its consumer products. Purcotton is committed to fulfilling consumers’ demand for high-quality products which are “comfortable, healthy, and environmentally friendly”. Constantly winning recognition from consumers since its launch in 2009, Purcotton has rapidly grown into a top brand of maternal and child products on Tmall, and has gained greater market shares in the field of maternal and child consumer products. In October 2019, Purcotton won the reputation of “70 Brand of the 70th Anniversary of the Founding of New China” sponsored by CCTV. In January 2021, Purcotton was honored as one of the “Shenzhen Top Brands” by Federation of Shenzhen Industries. In April 2021, Purcotton was included into the list of the second “Shenzhen Top 100 Brands” announced by Shenzhen Quality City Promotion Association. In conclusion, with high brand value, the Winner and Purcotton brands will help the Company enhance customer loyalty, stabilize product prices, and expand its market share in the fierce competitive market, thereby ensuring its sustainable and stable profitability. (V) The Industry in Which We Operate 1. Industry definition According to the Classification Rules of Medical Devices (2015) (Order No. 15 of the China Food and Drug Administration) and the Classification Catalogue of Medical Devices (Notice No. 104 of the China Food and Drug Administration in 2017), the medical dressings produced and sold by the Company belong to the nursing and protective devices in medical devices. According to the Industry Classification of National Economy (GB/T4754-2017) and the Industry Classification Guidelines for Listed Companies (revised in 2012), the industry of the Company is special equipment manufacturing industry (C35) in manufacturing industry (C). The products of the Company's healthy consumer goods include pure cotton tissues, sanitary pads with pure cotton surface, cotton wet tissues and other non-woven consumer goods, baby supplies, baby clothing, adult clothing and other textile consumer goods. According to the Industry Classification of National Economy (GB/T4754-2017) and the Industry Classification Guidelines for Listed Companies (revised in 2012), the consumer goods operated by the Company mainly belong to the textile industry (C17) and the textile and apparel industry (C1 8) in the manufacturing industry (C). 2. Development of the industry (1) Development of medical consumables industry at home and abroad Medical consumables refer to the medical and health materials used in the process of clinical diagnosis and nursing, testing and repair. With a wide variety of models and wide application, they are important materials for medical institutions to carry out daily medical and nursing work. From the perspective of value, medical consumables can be divided into high-value medical consumables and low-value medical consumables. Size of medical consumables market in China from 2015 to 2025 (100 million yuan) Data source: China Medical Consumables Market Conditions and Investment Prospect Survey Report 2021-2026, China Medical Device Blue Book , Chinese Medicine, IBM Report Size of low-value medical consumables market in China from 2015 to 2025 (100 million yuan) Data source: China Medical Device Blue Book, Chinese Medicine, Magna Information Centre, IBM Report Compared with high-value medical consumables, low-value medical consumables are mainly injection and punching, medical dressings and medical polymers, with low entry threshold and fierce market competition. Due to the wide application and benefit from the improvement of people’s living standards and the continuous growth of medical demand in China, the market space of low-value medical consumables is huge, and will continue to maintain high-speed growth in the future. According to the research and analysis of IBM, it is estimated that the market scale of low-value medical consumables in China will reach 221.3 billion yuan by 2025. ① Market development of operating room infection control products Due to the growth of the number of surgical operations and the strengthening of infection control measures, the market of operating room infection control products is growing continuously. According to the statistics of CMI, the market size of operating room infection control products is expected to reach USD 3.688 billion in 2026, with an average annual compound growth rate of 4.9%. Operating room infection control products can be divided into reusable products and disposable products. The change from reusable products to disposable products is the development trend of the industry. The main reasons include: on the one hand, compared with reusable products, disposable surgical infection control products can significantly reduce the risk of cross infection. According to Coherent, disposable operating room infection control products can reduce the risk of cross infection during surgery by 60%. The Guide to Operating Room Nursing Practice compiled by the Operating Room Professional Committee of Chinese Nursing Association also recommends the use of disposable aseptic products in the operating room. On the other hand, disposable operating room infection control products also have advantages in convenience and cost compared with reusable products, which makes the （未完）  |