Kingworld Medicines Group Limited (“Kingworld Medicines” or the “Group”, stock code: 01110.HK), a leading global well-known omni-channel enterprise offering a complete supply chain spanning the greater health products and services industry, has announced its unaudited interim results for the six months ended 30 June 2019 (the “Period”).
During the Period, the Group has been continuously reviewing the complex international and domestic economic situation, committing to providing consumers with quality health products and actively developing channels in lower-tier cities to explore and fill market gaps, and increase market coverage of its products. During the Period, given the current economic challenges and the slowdown in the Chinese economy, consumer market sentiment has turned conservative, and revenue decreased by 6.7% to approximately RMB 519,042,000 in the first half of the year. Profit attributable to owners of the Company increased by 19.4% to approximately RMB 32,885,000 and basic earnings per share increased by 19.2% to approximately RMB 5.28 cents. Revenue from the pharmaceutical products segment amounted to approximately RMB 360,357,000, accounting for 69.5% of the Group’s total revenue. Revenue from the healthcare products segment was approximately RMB 73,906,000, accounting for 14.2% of the Group’s total revenue. Revenue from the medical devices segment amounted to approximately RMB 84,779,000, accounting for 16.3% of the Group’s total revenue.
Mr. Zhao Li Sheng, Chairman of the Board and Executive Director of Kingworld Medicines, said, “Looking at the half year, the global economy has been slowing down. The domestic economy faced downward pressure, and the fundamentals of the Chinese economy will weaken and the consumer market will turn conservative. A wide range of factors contributing to economic instability pose challenges to the retail industry. While implementing the “deep-rooted, optimized and refined” operation and sales management strategy in the first half of 2019, the Group implemented a series of adjustments to the structure and appointment of personnel within each sales region. The Group is focusing on extending the reach of its channels to lower-tier markets, enhancing market coverage of products and strengthening the execution capability of each business segment. At the same time, the Group is continuously integrating the online and offline channels, via using the SMART system and scientific Big Data analysis to ascertain the needs of target consumers, explore niche markets and discover new markets, in order to formulate a more precise and profitable marketing strategy.”
During the Period, the Group pushed ahead with a comprehensive market expansion and marketing campaign for its star product, Taiko Seirogan. It also stepped up channel enhancement activities in order to strengthen ties with its cooperative partners, as well as to boost its market coverage and sales through product distribution activities. Moreover, the Group placed large billboard advertisements in high-traffic areas as well as participated in charity marathon runs to enhance the exposure of its brand and products. As for e-commerce, the Group boosted its engagement in promotional events with cooperative companies and various online merchandising platforms, including marketing activities with JD.com and liangxinyao.com in order to facilitate integration of online and offline channels. During the Period, Taiko Seirogan recorded to approximately RMB 64,939,000 from sales, increased 56.3% as compared to the same period last year.
The Group continued to optimize the structure of distribution channels of the Nin Jiom Product Series, and expand that market to lower-tier cities, enhanced terminal coverage for the products and strengthening the cooperation with regional chains, as well as with regional pharmacy chains so that more customers can experience and appreciate the products. Through a series of large-scale comprehensive promotional activities and the new media branding promotion campaign, the Group cultivates new young consumer groups, consolidated the loyalty of old customers and refurbishes the product into a contemporary brand.
Another well-known brand of Kingworld Medicines, the Culturelle probiotics product series from the United States, is dominant in the Hong Kong and Macao market. During the Period, the Group has focused on the sales coverage and distribution channels coverage in those markets, currently covering Mannings, Watsons, SaSa, Colourmix, CR Care, HealthPlus, Eugene Baby, Yue Wah Chinese Products, AEON Stores, HKTV Mall and a number of pharmacy chain stores and individual pharmacies. There are around 1,600 retail outlets in the distribution channels across Hong Kong and Macao.
In addition, the Group continued to promote the Lifeline Care maternal and infant fish oil nutrient product series from Norway, which is another star healthcare product brand developed in Mainland China, Hong Kong and Macao markets. Through a brand communication and sales strategy, its brand and products have earned positive word-of-mouth among consumers. During the Period, the Group has established cooperation with large scale cross-border e-commerce platforms and maternal and infant public in order to maintain close cooperation in brand exposure and sales. The Group has captured the trend towards promotion platforms by cooperating with KOLs to initiate discussions on many hot topics in different promotion platforms like Xiaohongshu and Kaola.com. Through recommendation from professional doctors, maternal and infant experts and celebrities, consumers’ trust in the brand has thus been greatly enhanced. As a result of the diversified marketing activities, Lifeline Care maternal and infant fish oil nutrient product series has gained a well-deserved reputation for both its brand and products, which resulted in a significant increase in sales volume. The sales revenue grew significantly by 66.4% as compared to the same period last year.
Kingworld Medicines has formulated online and offline promotion activities respectively based on the characteristics and target consumers of each of its medicated oil products for external use. For the Mentholatum series, the Group continued strengthening its close cooperation with online pharma retail while conducting KOL advertorials through TikTok and Xiaohongshu. Marketing activities were launched for Hoe Hin White Flower Embrocation during shopping festivals on e-commerce platforms to improve terminal sales and brand influence. The Group continued to provide product trial packs of Kingworld Imada Red Flower Oil and oil massage services to residents in key communities, also provided medicinal oil massage for residents and mountaineering friends in various communities, aiming to enhance consumers’ recognition and confidence in its products through those services. Kingworld Medicines continued to support a variety of sports events, such as Shenzhen Guangming Town International Half Marathon, Shenzhen’s Mafang 100km Hike, Shanxi Youyu Marathon and Shenzhen Longgang City Orienteering so as to promote health and fitness. During the Period, the sales revenue of external use medicated oil product series grew by 36.8% as compared to the same period last year.
Looking ahead, as market demand and the market competitive landscape changes, the Group will fine-tune the product mix of each product segment and plans to optimize the existing product portfolio. This exercise will lead to some mainstream products managing relatively faster or steady growth, and some products continuing to deliver higher profits, with a small number of non-mainstream products growing more slowly. The Group is nurturing new products with market potential and adjusting the specifications and packaging of some products to achieve product upgrade or renewal. The Group will also push for deeper channel penetration as well as enlarged product coverage and strengthen product reach in those cities and rural villages to seize those untapped markets, thereby increasing product penetration and enhancing profits. In addition, the Group plans to launch collaborative projects in probiotics with the Hong Kong University of Science and Technology (“HKUST”) in the future. Marrying HKUST’s research and development capability with the Group’s analysis and judgment regarding future market trends, the collaboration targets to develop Chinese medicines with probiotics added for relieving dampness in the body. Such cooperation will not only enable the Group to expand variety in its product line, but also reach more niche probiotics product markets and cater for the more diverse demands of a broader spectrum of consumers.
Mr. Zhao commented, “In 2019, Kingworld Medicines celebrates its 25th anniversary. In the past quarter of a century, Kingworld has succeeded in grasping development opportunities presented by the country’s reform policies, starting its journey of pursuing the corporate mission of “Serving the community and healing the soul” and meeting peoples’ demand for a quality and healthy life. The Group strives to turn Kingworld Medicines into a renowned distributor brand for well-known premium brands around the world, providing a wider variety providing premium greater health products to consumers and building a network of care for promoting citizens’ health. Facing the more complex volatile macro-environment, at home and abroad, as well as the shifts in the business environment as well as in the market, consumption patterns and technology, Kingworld will adapt to the trend of integration of online and offline channels, grasping and applying the popular marketing tactic of improving the customer experience, as well as striving to perfect the overall marketing strategy and focus for each product. At the same time, Kingworld will also seize the opportunity presented by the country’s vigorous development of favourable policies towards Chinese medicine to corporate with long-established Chinese medicine manufacturers and enrich its product line. We can also grasp the opportunity to participate in the investment in upstream manufacturers, at the same time promoting the penetration of existing products into third- and fourth-tier cities, and increase our sales volume.”
