[中报]稳健医疗(300888):2024年半年度报告（英文版）
原标题:稳健医疗:2024年半年度报告（英文版） There is no change in the Company’s registered address, office address and postal code, company website and email during the reporting period, as shown in 2023 annual report. 2024 Semiannual Report 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 name and URL of the stock exchange website and media 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 2023 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 2023 Annual Report for details. 4. Other Relevant Information Whether other relevant information was changed during the reporting period √Applicable □ Not applicable The Company held its 18th Meeting of the Third Board of Directors on December 19, 2023 and the 1st Extraordinary General Meeting of Shareholders in 2024 on January 8, 2024. During these meetings, the Board approved the Proposal on the Repurchase and Cancellation of Remaining Shares in the Special Securities Account, as well as the Proposal on the Amendment of the Articles of Association of the Company and Change of Business Registration. Specifically, the Company reallocated 6,094,659 shares remaining in the repurchase account - after excluding the Phase I Employee Stock Purchase Plan - (including the reserved portion) from the original purpose of “Supporting Employee Stock Purchase or Equity Incentives” to “Reducing the Company’s Registered Capital Through Cancellation”. Following this cancellation, the total share capital of the Company decreased from 594,387,367 shares to 588,292,708 shares. For more details, please refer to the Announcement on the Notification to Creditors on the Cancellation of the Remaining Repurchased Shares and the Reduction of the Registered Capital (Announcement No. 2024-002), which was disclosed on the CNINF on January 8, 2024. The Company held its 23rd Meeting of the Third Board of Directors on July 26, 2024 and the 2nd Extraordinary General Meeting of Shareholders in 2024 on August 12, 2024. During these meetings, the Board approved the Proposal on the Cancellation of the Remaining Shares in the Repurchase of Dedicated Securities Accounts, as well as the Proposal on the Amendment of the Articles of Association of the Company and Change of Business Registration. Specifically, the Company reallocated 5,962,900 shares in the repurchase account from the original purpose of “Supporting Employee Stock Purchase or Equity Incentives” to “Reducing the Company’s Registered Capital Through Cancellation”. Following this cancellation, the total share capital of the Company decreased from 588,292,708 shares to 582,329,808 shares. For more details, please refer to the Announcement on the Notification to Creditors Regarding the Cancellation of All Repurchased Shares and the Reduction of the Registered Capital (Announcement No. 2024-050), which was disclosed on the CNINF on August 13, 2024. 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 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. 2024 Semiannual Report VI. Non-Recurring Profit and Loss Items and Amount √Applicable □ Not applicable Unit: yuan 2024 Semiannual Report VI. Non-Recurring Profit and Loss Items and Amount √Applicable □ Not applicable Unit: yuan Profits and losses on the disposal of non-current assets (including the write-off part -2,531,199.34 of the provision for asset impairment) Government grants recognized in the current period’s profit or loss (excluding grants which are closely related to the Company’s regular business operations, aligned with 16,329,769.68 national policies, meeting specific criteria, and have a continuous impact on the Company’s profit or loss) Gains and losses from changes in the fair value of financial assets and liabilities held by non-financial corporations, and that from the disposal of financial assets and 48,692,022.79 liabilities, excluding effective hedging operations related to the Company’s regular business operations Other profit and loss items that are consistent with the definition of non-recurring profit and loss: □ Applicable √ Not applicable There was no other profit and loss items that are consistent with the definition of non-recurring profit and loss. Explanation on defining the non-recurring profit and loss items enumerated in the Interpretative Announcement No. 1 on Information Disclosure of Public Securities Issuing Companies - Non-recurring Profits and Losses as recurring profit and loss items □ Applicable √ Not applicable No definition of 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” as recurring profit and loss items during the reporting period. 2024 Semiannual Report Section Ⅲ Management Discussion and Analysis I. Main Business of the Company during Reporting Period Winner Medical is a health enterprise that develops both medical and consumption products under its brands of “Winner” and “Purcotton”. The Company has consistently adhered to the core operating principles of “quality over profit, brand over speed, and social value over corporate value”. With the evolution of domestic and international markets, the Company has transformed from a sole manufacturer of medical consumables into a diverse enterprise. It now includes traditional wound care and dressings, advanced wound care, operating room consumables, wet and dry cotton tissues, sanitary napkins, as well as infant and children’s apparel and products, demonstrating its commitment to the health and wellness sectors. Traditional wound care and Medical cotton, gauze, bandages, etc. wound dressing products Advanced wound care Silicone dressings, alginate dressings, superabsorbent dressing products dressings etc. Operating room Surgical gloves, surgical packs, surgical gowns, etc. consumables Medical consumables Winner Medical Infection protection Masks, protective clothing, isolation gowns, etc. Oral and nasal cavity, medical beauty, personal care, Health & personal care nursing care, etc. Other products Injection and puncture products, test kits, etc. Winner Cotton tissues, wet tissues etc. Wet and dry cotton tissues Sanitary napkins Sanitary napkins, disposable period panties etc. Other non-woven products Facial mask, makeup cotton, cotton diapers etc. Purcotton Healthy consumer goods Baby clothing and supplies Baby’s leisure wear, bath towels and quilts etc. Adult apparel Adult’s leisure wear, outing costume, underwear etc. Other woven products Bedding, toiletries, etc. 1. Medical Consumables Section Winner Medical is a benchmarking enterprise in the domestic medical consumables industry. Its primary product lines include traditional 2. Healthy Consumer Goods Section Purcotton originated from the development of pure cotton spunlace non-woven fabric, positioning itself as a brand pursuing “medicine close to life, Purcotton care for health”. Its core competitive advantage combines “Medical background, Purcotton philosophy, Quality in our DNA”, making it a health-centric lifestyle brand. The product lineup includes wet and dry cotton tissues, sanitary napkins, infant and children’s apparel and products, adult apparel, and various nonwoven and woven products. Purcotton promotes a lifestyle centered around comfort, health, and environmental friendliness, opting for cotton instead of synthetic fibers to avoid chemical irritation. It provides comprehensive solutions for various everyday situations, boasts a strong reputation among users, and has established a distinct 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. The main raw material of the core products of Purcotton is high-quality cotton sourced worldwide to control product quality and safety from the source. All kinds of pollution sources are strictly controlled in the production process, following the high standard of medical consumables. Disposable underwear, newborn baby clothes and other close-fitting clothing are packaged with medical grade sterilization to further ensure the safety and environmental compatibility of the products. Purcotton products cover multiple consumer scenarios, such as mothers and infants, children and adults, and span multiple product lines, such as high-end pure cotton tissues, female care, baby care, home textile products and apparel. 2024 Semiannual Report (1) Main Products and Purposes The product categories of the medical consumables segment are divided into traditional wound care and wound dressing, high-end wound dressing, operating room consumables, infection protection, health and personal care and other products; the product categories of the healthy consumer goods segment are divided into wet and dry cotton tissues, sanitary napkins, other nonwoven products, baby clothing and supplies, adult apparel and other textile products. The main categories and images of some products under the Company’s medical consumables section are as follows: 2024 Semiannual Report (1) Main Products and Purposes The product categories of the medical consumables segment are divided into traditional wound care and wound dressing, high-end wound dressing, operating room consumables, infection protection, health and personal care and other products; the product categories of the healthy consumer goods segment are divided into wet and dry cotton tissues, sanitary napkins, other nonwoven products, baby clothing and supplies, adult apparel and other textile products. The main categories and images of some products under the Company’s medical consumables section are as follows: Medical sterile-grade wound care Medical gauze sheets available in multiple specifications Traditional wound care For absorbing wound exudate, and wound dressing dressing wounds, and sports Medical cotton, gauze, bandages, etc. products protection 2024 Semiannual Report (2) Main Operating Modes ① Procurement mode The Company promotes digital platform management and has established a robust procurement management system, procurement process, and risk control platform. Procurement is driven by planning, with procurement plans and strategies formulated in line with annual, quarterly, and monthly demands. Different modes of procurement are implemented according to the types of materials required, including strategic procurement, bidding procurement, centralized procurement, and separate procurement, among other models. Purchasing needs are integrated with R&D, product specifications, and quality standards to establish technical benchmarks. The purchasing strategies formulated encompass plans, supplier selection, commercial negotiations, and order allocation plans based on supplier performance evaluations. In pursuing a sustainable supply chain ecosystem, our collaborative suppliers are dedicated to achieving low carbon emissions, cost-effectiveness, transparency, and social responsibility across product development, manufacturing, procurement, and other areas. 1) Responsible Purchasing The Company mandates that purchasing requirements be generated by the demand department based on customer orders, sales plans, and production schedules to fulfill production and sales needs. The Group’s supply chain then devises tailored purchasing strategies for different procurement types, including strategic, bidding, centralized, and decentralized purchasing. For instance, strategic procurement rules are uniformly applied to formulate purchasing strategies and plans for bulk raw materials like cotton and cotton yarn. Centralized purchasing strategies for materials or categories conducive to group-wide adaptability and scale effects are employed. To ensure the effective implementation of the Group’s procurement strategy, the Company adopts a system that visualizes the entire procurement process and facilitates supervision and management. This includes demand assessment, sourcing, quotation, price comparison, contract signing, purchase order issuance and approval, receipt, warehousing, reconciliation, payment processing, etc. This ensures that the procurement process adheres strictly to the principles of fairness, openness, and impartiality outlined in the procurement management system. 2) Procurement Control Process The Company has established several key control points in the procurement process to ensure clear responsibilities and rigorous approvals, guaranteeing reliable product quality and stable supply. These controls include the development and approval of the annual procurement plan, procurement strategy guidelines, hierarchical classification management of purchasing, order allocation management process, comprehensive bidding management process for non-commercial groups, a price approval process, and a procurement approval process for strategic materials such as cotton and cotton yarn. Additionally, procurement reviews and other related steps are included in this framework. Meanwhile, by signing the Integrity Commitment Agreement, the Company works with suppliers to resist corruption, create an open, transparent, self- disciplined, and mutual trust cooperation mechanism, advocate the procurement principle of openness, transparency, and quality priority, and create a sustainable supply chain ecosystem with suppliers. 3) Hierarchical Classification Management of Supply Resources Based on the Company’s development goals and commodity planning requirements, reserve resources from at least two or more suppliers. For critical materials or services, we establish a framework that encourages competition among multiple suppliers, ensuring supply stability and mitigating risks. At the same time, we follow the Company’s supplier evaluation criteria to select vendors to meet our requirements, aiming for a mutually beneficial cooperation model with suppliers. Using the supplier evaluation system and considering their overall capabilities, suppliers are regularly graded and categorized. These assessments inform the development of cooperation programs and order allocation, focusing on cost control, improving efficiency, and reducing supply risks. 4) Supplier Management Process I Admission assessment: New suppliers undergo validation following the Supplier Admission Assessment Specification. Suppliers are evaluated I. In the production mode of Make to Order MTO, products are produced according to the customer’s original product design; procurement is performed according to the BOM for the accepted order. Therefore, inventory remains almost zero. For OEM customer orders, as the market constantly reduces the delivery cycle, it is common now to combine MTO & MTS production modes. II. In the production mode of Make to Stock MTS, products are not customized for specific customers, and are usually delivered to different customers; production plans are formulated according to market demand and existing inventory. Safe inventory is determined for such products according to the production cycle and the frequency of demand to ensure that products are available when the customer places an order. III. In the mode of Engineer to Order, specific design requirements from a single customer can be met, usually for small production lots; in the production process, the value mainly lies in product and packaging design work. Support for custom design is an important part of this production mode. Inventory remains almost zero. IV. In the Assemble to Order mode, the components required to produce finished products are stocked in advance. When the customer places an order, products can be assembled quickly to meet flexible delivery demands. Common materials are stocked in advance to maintain balance between rapid delivery and inventory. 2024 Semiannual Report ③ Sales mode The Company sells products through multiple channels. The main sales channels are shown in the following figure: Third-party B2C platforms, such as Tmall, JD.com and Online channels Amazon Hospitals Medical consumables Domestic sales Pharmacy/convenience stores Government and enterprise platform Offline channels Private brand Overseas sales OEM/ODM sales Winner Tmall, JD.com and other traditional e-commerce platforms E-commerce TikTok, Kuaishou and other interest e-commerce Online channels platforms platforms Official shopping mall and Wechat mini programs of Purcotton Healthy consumer goods Directly operated and franchised chain stores Offline channels Real stores Supermarkets, convenience stores and beauty stores ④ Marketing mode The Company is developing its products under Winner Medical and Purcotton in a coordinated way. With “caring for health and life, making a better world” as its vision, Winner Medical takes industry-leading product technology and rigorous product quality as the cornerstone of its brand value, while its marketing strategies heavily rely on brand reputation and consumer word-of-mouth. Purcotton, known for its pure cotton products, uses distinct strategies to strengthen its brand. By integrating various 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 “changing the world with pure cotton”. This approach not only helps enriches the meaning of Purcotton brand but also boosts awareness and loyalty among consumers. (3) Main Driving Factors of Performance ① Medical consumables industry and consumer goods industry will keep growing rapidly comprehensive solutions through a strategy of “internal growth + external growth”. In the retail sector, the Company continuously introduces consumers’ favorite home personal health care products, fostering a sense of health guardianship and companionship. 2024 Semiannual Report Guided by its vision of “changing the world with pure cotton”, Purcotton advocates a lifestyle centered around pure cotton, emphasizing comfort, health, and environmentally friendliness in all aspects of daily life. The brand aims to convey values of “reassurance, happiness and sustainability” to consumers. Sticking to the “cotton fiber only” principle in its operation, Purcotton aims to develop recyclable and renewable resources. The company aims to gradually replace chemical fibers with natural fibers, maximizing the value and environmental benefits of cotton fibers, while pursuing a path of low carbon, environmental friendliness and sustainable development. The visions and business philosophies regarding the Company’s two brands are focused on human health, environmental protection, and improving the quality of life, which are in line with humans’ sustainable development strategy. Adhering to core business principles “quality over profit, brand over speed, social value over corporate value”, the Company consistently delivers superior solutions and service experiences to customers and users while actively contributing to community development, showcasing its social responsibility. By adhering to core business principles of “hard work, self-criticism, exploration and innovation, and sustainable development”, the Company consistently provides superior solutions and service experiences to customers. At the same time, it actively contributes to community development, demonstrating its commitment to social responsibility. At the organizational level, we prioritize building process-oriented structures while establishing an integrated organization to support cohesive business operations. We focus on enhancing organizational efficiency and capacity to elevate business value in the long term. Our team incentives aim to bolster market competitiveness through fixed salary enhancements and the implementation of performance-based bonus-sharing systems. We incentivize business ownership and growth, retaining core leaders through equity incentive plans. Regarding talent, we embrace a culture centered on the principles of “high-quality, high-efficiency, high-performance and high-return”, fostering an environment conducive to the rapid growth of individuals. We aim to remove barriers to the development of top-tier talent and continually fortify our business partner mechanism. 2. Advantages of R&D and Innovation The silicone gel foam dressing and foam dressings successfully developed and launched by the Company have been awarded China’s registration certificate for Class II and Class III medical devices respectively. Building on the successful research and mass production of several core foundational materials, the Company has enhanced its technical framework for the second-generation high-end wet wound dressing product line. The silicone gel foam dressings have been upgraded to their fourth generation and successfully launched. Additionally, the hydrophilic fiber dressings have obtained CE registration in compliance with the latest EU MDR regulations, while the medical hydrogel wound dressings have achieved mass production and have been successfully launched. The Company independently developed the pure cotton spunlace non-woven fabric technology in 2005 and has built a complete technology cluster based on the technology, obtaining patent licenses in more than 30 countries and regions including the United States, Europe, and Japan. The Company focused on the development of core basic materials for the application of operating room consumables such as surgical gowns, isolation gowns, surgical towels and wipes. This effort aims to enhance the comfort of the products, reduce the cost of production of the products, and further enhance the market competitiveness of the products. The Company was invited to participate in the formulation of many national standards and industry standards, including the performance requirements of pure cotton non-woven surgical dressings, and technical specifications for contact layer dressings and masks for children. In the area of production and research, since its establishment, the Company has been attaching great importance to scientific and technological innovation and cooperation. It has carried out industry–university–research (IUR) projects with many universities and research institutes, including Hong Kong Polytechnic University, Hong Kong Research Institute of Textiles and Apparel, Wuhan Textile University, and Soochow University. In January 2022, the Company and Huazhong Agricultural University jointly established the Cotton Research Institute and appointed Academician Zhang Xianlong as the Chief Cotton Scientist of Purcotton to cooperate in research and development. The research institute relies on biological breeding technology to cultivate cotton strains that are exclusive to cotton, and to discover cotton strains that are specialized for spunlace non-woven fabrics. In June 2023, the Company and Wuhan Textile University jointly built a comprehensive technological innovation platform for advanced fiber materials in Hubei Province. This initiative aims to facilitate industrial incubation, and complete the in vitro and in vivo biological evaluation of a new series of artificial blood vessels with high patency rate early, aiming to break the monopoly of artificial blood vessels abroad, and promote domestic alternatives. In November 2023, the Company’s bionic artificial cornea project was successfully designated as a major scientific and technological research project in Shenzhen, in collaboration with the Southern University of Science and Technology. Venturing into the research of high-value medical bionic implant materials and expanding the and wound dressing products, the Company has also developed representative high-end wet dressings like silicone foam dressings, hydrocolloid dressings, super absorbent pads and scar treatment strips for chronic wounds that are difficult to heal, which further enrich its products. For the clinical use scenarios, the Company is committed to changing from selling single products to providing customers with integrated solutions. Its infection protection products include dozens of surgical packs for various sections, such as heart and brain, abdominal cavity, urology, reproduction, facial features, and limbs. In terms of protective products, the Company has successfully developed and marketed biodegradable masks, cotton-lined masks and other products, providing solutions for the environmental attributes of mask products and greatly enhancing the comfort of mask products. In the field of home care, the Company provides professional products for clinical use such as medical surgical masks, saline cleaning pads, hydrocolloid band-aids and medical masks to consumers through portable, sterilized packages. etc., applying these professional healthcare products and services in daily home care. 2024 Semiannual Report (2) Healthy consumer goods The Company’s healthy consumer goods consist of nonwoven consumer goods and textile consumer goods. Nonwoven consumer products mainly include wet and dry cotton tissues, sanitary napkins, etc.; textile consumer products mainly include baby clothing and supplies, adult apparel and other textile products. Cotton fiber has ten prominent advantages, including natural, safe, comfortable, naturally degradable, high output ratio, drought-resistant, salt and alkali-resistant, environmentally friendly, time-honored, and great economic and social value. The Company takes the lead in proposing the innovative concept of replacing chemical fibers with cotton and getting rid of chemical stimulation, aiming to provide consumers with healthy, comfortable and environmentally friendly consumer goods. Among all, cotton tissue is the pioneering product in the industry, which can partially replace household paper. Pure cotton tissues are made of degradable cotton after physical processing. There is less chemical stimulation and the tissues can be reused. The tissues are more comfortable, safe, and environmentally friendly, so consumer acceptance of the tissues has been significantly improved. For pure cotton wet tissues and sanitary napkins with pure cotton surface, cotton materials are innovatively used in the parts of these products that contact human skin to replace traditional chemical fiber and effectively reduce chemical irritation, so they are popular in the markets of baby and female consumers. Due to the excellent breathability and softness of gauze fabrics, the Company’s apparel and textile consumer products such as gauze children’s apparel, household apparel, bedding and bath towels are getting more popular. 5. Brand Advantages (1) Brand advantages in the field of medical consumables As a leading enterprise in the medical consumables sector, the Company’s core strategy revolves around “leading products with operational excellence”. Through global exhibitions, the Stable Academy’s sense control training courses, operating room management forums, wound training programs, and other initiatives, the “Winner Medical” brand has gained widespread recognition in the medical industry. Both domestically and internationally, customers trust the Company’s business philosophy and product quality. The Company’s medical consumables are sold to 110 countries, mainly developed countries and regions such as Europe, Japan and the United States, and the products under its brand Winner are mainly sold to developing countries and regions such as Asia, Africa, and Latin America. The Company provides services for world-renowned medical supplying companies such as M?lnlycke, Lohmann, and PAUL HARTMANN. The products of “Winner Medical” brands have covered all public and most private hospitals in Hong Kong. (2) Brand advantages in the field of healthy consumer goods Purcotton is a wholly-owned subsidiary of Winner Medical, focusing on natural cotton as its primary raw material and adheres to the principle of “quality first”. The Company is committed to continuous innovation to provide consumers with comfortable, healthy, and environmentally friendly all-cotton products across various categories. This commitment has garnered the recognition and trust of over 56 million members. Upholding the brand philosophy of “peace of mind, happiness, and sustainability”, Purcotton has innovatively developed three core products - 100% cotton tissues, Nice Princess sanitary napkins, and BBNice cotton diapers - starting from a single cotton flower. This initiative has expanded into diverse categories, including personal care, household cleaning, infant care, clothing, and lifestyle products, creating a strong identity for “new Chinese products” that are recognized for their high quality. Purcotton has established a formidable reputation in the maternal and infant sector as well as the daily necessities market, effectively creating competitive barriers and enhancing product value. 6. Advantages of Sales Channels (1) Advantages of online channels In terms of online channels, the Company’s “Winner Medical” and “Purcotton” have completed the deployment of mainstream third-party e- commerce platforms, including Tmall, JD.com, Pinduoduo, Vipshop and Amazon. With the huge user traffic gathered, its sales have covered most online shopping consumer groups, and the sales data indicated that the sales of its products rank among the top in the relevant product of 150,000 square meters, specializes in producing pure cotton spunlace non-woven fabrics, cotton soft towels, medical dressings, and medical protection products. It serves as a key domestic production base for pure cotton spunlace non-woven fabrics and medical gauze. Established in 2001, Winner Medical (Jiayu) covers an area of 93,000 square meters and owns disposable travel, cleaning and disinfecting and beauty care product series based on cotton. Winner Medical (Chongyang) was established in 2001 and covers an area of 140,000 square meters, and is the main force in the production of gauze wound dressings and disposable surgical combination kits, etc. Winner Medical (Huanggang), established in 2005 and covering an area of 550,000 square meters, is the primary site for the production of pure cotton spunlace non-woven fabric, cotton tissues, sanitary napkins and masks, and advanced dressing products. Established in 2017, Winner Medical (Wuhan) covers a combined area of approximately 467,000 square meters in Phase I and Phase II, introducing electron beam sterilization and international modern cotton spunlace production lines. In January 2022, the Company acquired an industrial land of nearly 15,000 square meters located in Guanlan Street, Longhua District. In the future, the land will be built into an industrial base for medical biological and infection control protection in the Guangdong-Hong Kong-Macao Greater Bay Area, which will be used for scientific research innovation and industrial production of medical biology, high-end medical dressings and medical infection control protection products. In 2022, the Company acquired three companies, i.e. Longterm Medical, Winner Guilin, and Winner Medical (Hunan), to solidify the key foundation for building the capability of a one-stop medical consumables solution. Through continuous construction and improvement, the daily management system within the factory was optimized through lean management, standardization, automation, digitalization and greening. In the future, the Company will continue to combine the construction of smart factories, boldly explore and practice in the areas of intelligent manufacturing and intelligent logistics, and gradually realize the excellence of smart manufacturing. 2024 Semiannual Report III. Analysis of Main Business 1. Business Analysis Winner Medical focuses on two main sectors: medical consumables and healthy consumer goods. Having shaken off the impact of the public health emergencies, we envision 2024 as the dawn of a new era for Winner Medical. Guided by our three core operational principles - prioritizing quality over profit, brand over speed, and social value over corporate value - we remain committed to our strategic directive of “leading products with operational excellence”. This approach allows the company to realign itself on a path of normalized growth and upward trajectory. Due to the impact of the high base brought by infection protection products (RMB 620 million) in the first quarter of last year, the Company’s revenue in the first half of 2024 was RMB 4.03 billion, down by 5.5%; net profit attributable to shareholders of listed companies was RMB 380 million, and net profit after extraordinary gains and losses were RMB 330 million, down by 43.6% and 40.6%, respectively. The public health events had almost no impact on the Company’s revenue base since the second half of 2024. The revenue for the second quarter reached RMB 2.12 billion, reflecting an 11.0% year-on-year increase, indicating that revenue is expected to enter a positive growth cycle. (1) Medical consumables business: the effects of the high base are gradually diminishing, and the development of the core categories is accelerating The medical consumables business saw rapid growth during the public health crisis, and after it ended, the Company underwent a series of significant adjustments in 2023. These included strengthening its product mix, managing its inventory of infection protection products, and recruiting talent in key areas. Compared to 2019, the Company’s medical consumables business has reached new heights in product variety, distribution capabilities, and brand recognition. Our medical business strategy for 2024 is clearly defined and executed decisively based on this solid foundation. We are steadily progressing along this established strategy, with positive trends in operational development. In the first half of 2024, the medical sector generated a revenue of RMB 1.72 billion, marking a year-on-year decline of 20.9%, and accounting for 43% of the Company’s overall revenue. In the second quarter alone, revenue reached RMB 860 million, representing a year-on-year increase of 6.6%, reversing the quarterly revenue growth rate. Excluding the fluctuation in infection protection products, the conventional medical consumables business reported a revenue of RMB 1.55 billion in the first half of the year, marking a 7.5% year-on-year increase. Overall, the development remains stable and positive. Among them, the development of the core category accelerated: advanced dressing and health personal care business achieved revenue of RMB 380 million and RMB 180 million respectively in the first half of the year, up by 34.1% and 56.2% respectively, demonstrating positive growth momentum. Innovative R&D drives product development. By leveraging various market opportunities in advanced dressings, the Company plans to increase investment in both R&D and marketing. This approach aims to enhance the quality and productivity of advanced dressings, positioning us to lead industry advancements and expand our presence on the international stage. As of the end of the reporting period, we hold 873 patents in the medical consumables segment and 388 medical product registrations (including 25 registrations of Category III medical products). In terms of channels, in the first half of 2024, the Company continued to enhance its marketing initiatives through various means and actively expanded its marketing channels. Besides, the Company has moved past the impacte of public health events, and its medical business channels have returned to the stable income structure. During the reporting period, foreign sales channels generated a revenue of RMB 790 million, marking a 14.1% increase year-on-year. This accounted for 46% of the total income of the medical sector, demonstrating Winner Medical’s strong foothold in the international market. Domestic hospital channels have steadily expanded, and the C-end business, especially cross-border e-commerce, has made a breakthrough: by the end of the reporting period, the Company has obtained nearly 17 million followers on the domestic e-commerce platform, built a healthcare category matrix, and seized the new development trend of medical consumer goods. The Company has been gained access to nearly 190,000 domestic leading offline pharmacies, and continues to lead in the ranking of core single items on the cross-border e-commerce platform (Amazon). growth does not come at the expense of profitability. The Company remains committed to sourcing global high-quality cotton, focusing on product innovation and advanced production technology to deliver excellent products to consumers, while constantly improving its internal operation and management capabilities. This approach underscores a sustainable and high-quality development trend as a whole. (4) Outlook for future development: Focus firmly on the two main industries and take the road of high-quality development Medical consumables are just-demanded, high-frequency, widely-used products, with huge domestic and international market space. The medical consumables industry in China is extremely decentralized, but in overseas markets, after decades of development, the concentration effect of the leader has emerged. With a strong manufacturing capacity, Winner Medical relies on its brand awareness and reputation accumulated in recent years to further consolidate the construction of online and offline channels, laying a solid foundation for the steady development of conventional products and the continuous improvement of market share. In the future, Winner Medical will endeavor to enhance its endogenous capabilities in clinical R&D, marketing, material development and industry chain control, and stay active to seek opportunities for outward mergers and acquisitions to make great strides toward the strategic goal of “leading in medical consumables and providing one-stop medical consumables solutions”. Healthy consumer goods brand - Purcotton, backed by the parent company’s medical background and quality genes, has formed a differentiated competitive advantage with “all-cotton” comfortable, healthy, environmentally friendly materials, high stickiness of the customer base, and excellent product quality. In today’s climate of mindful consumption, Purcotton is committed to delivering high-quality products. Rather than catering to short-term trends by compromising quality or engaging in price wars, we focus on fostering sustainable, high-quality growth for our business. Purcotton will continue to focus on the scenarios, practicing the best-selling strategy, while actively exploring both domestic and international online and offline channels. This will help more consumers access high-quality cotton products at competitive price, reduce environmental pollution, and promote a more natural way of life. Purcotton will continue to promote a healthy lifestyle of cotton, shaping the brand perception, and conveying its core mission and brand value of “changing the world with pure cotton”. The company is committed to advancing its brand development. 2024 Semiannual Report Opportunities always exist alongside challenges in the complex and changing external environment. The Company will continue to promote the core strategy of “leading products with operational excellence”, focusing on its main business, while pursuing parallel development in both medical and consumer sectors online and offline. It aims for synergistic development of endogenous and exogenous, striving to open a new chapter in the high-quality development of Winner Medical. 2. Business Management Analysis (1) Product R&D The Company sticks to independent innovation and development of basic materials. In the field of medical wound care, the Company has refined its technical layout for the second-generation high-end wet wound dressing product line. The silicone gel foam dressings have been upgraded to their fourth generation and successfully launched. Additionally, the hydrophilic fiber dressings have obtained CE registration under the latest EU MDR regulations, and the medical hydrogel wound dressings have achieved mass production and successful launch. In the field of medical consumables, the Company focuses on the development of core basic materials for the application of operating room consumables such as surgical gowns, surgical towels and wipes. This effort aims to enhance the comfort of the products, reduce the cost of production of the products, and further enhance the market competitiveness of the products, ultimately providing a better experience of the products for the medical practitioners and other users, while creating greater value for users. In the area of production and research, in June 2023, the Company and Wuhan Textile University jointly built a comprehensive technological innovation platform for advanced fiber materials in Hubei Province. This initiative aims to facilitate industrial incubation, and complete the in vitro and in vivo biological evaluation of a new series of artificial blood vessels with high patency rate. The goal is to break the monopoly of artificial blood vessels abroad, and promote the use of domestic alternatives. In November 2023, the Company’s bionic artificial cornea project was successfully designated as a major scientific and technological research project in Shenzhen, in collaboration with the Southern University of Science and Technology. Venturing into the research of high-value medical bionic implant materials and expanding the application fields of collagen will help the Company enhance the production capacity of its collagen production line. In the field of health consumables, the Company has emerged as an industry leader by pioneering a softening technology that eliminates the use of chemical softeners. This innovation enhances the softness of core cotton tissue products while maximizing the retention of the natural softness of cotton fibers, making it more eco-friendly, sustainable, and natural. The Company has pioneered a unique cotton-covered yarn technology along with an innovative finishing process, leading to the successful development of elastic gauze that boasts more than six times the elasticity of traditional gauze. This breakthrough addresses the discomfort often associated with conventional gauze products. Our elastic gauze has been incorporated into children’s outdoor wear and home apparel, giving us a strong edge in the market. For the first time, the Company has developed probiotic anti-allergic antibacterial gauze. This product effectively reduces allergens and inhibits the growth of harmful bacteria through our proprietary probiotic microcapsule wrapping technology. It’s already being used in baby jumpsuits and other infant products. Additionally, we have developed a biological wave anti-mosquito solution. By analyzing and extracting the specific wave frequency of pyrethrins that resonates with the fiber surface, we can paralyze mosquitoes, achieving effective repellent action. This approach uses pure biological wave technology without any chemical additives, ensuring it is gentle on the skin, odorless and safe. This innovation has been applied to baby pants. The company continues to carry out the excavation and transformation of low-carbon production processes, and has completed the verification statement of carbon footprint for five core products. In addition, on that basis, the company has carried out carbon reduction by the low-temperature de-bleaching technology, with the unit steam consumption reduced by more than 30%. The company has also carried out research with Tianjin Polytechnic University on the comfort of all-cotton leisure wear, and with Jiangnan University on the technical development of cotton and cotton-type yarn performance enhancement. (2) Brand building Winner Medical is dedicated to strengthening its brand image, one that resonates with consumers and earns the trust of doctors. We are enhancing our visibility and reputation through media partnerships and advertising, building academic marketing expertise via clinical outreach, and supporting users and special groups through public welfare initiatives - all to drive our brand marketing strategy. In the first half of the total profit R&D expenses 143,142,952.33 194,636,202.14 -26.46% No major changes Net cash flow from operating 193,333,516.76 158,178,712.89 22.22% No major changes activities Mainly due to the decrease in （未完）  |