Produced by | Bullet Finance
Author | Meng Xiangna
Edit | Hu Fangjie
American Editor | Qianqian
Audit | Ode
As a leading domestic household medical device company, in 2023, Yuyue Medical will hand over a beautiful report card.
At the end of April, Yuyue Medical disclosed its 2023 financial report, with annual revenue of 7.972 billion yuan, a year-on-year increase of 12.25%; the net profit attributable to the parent company was 2.396 billion yuan, a year-on-year increase of 50.21%; The non-net profit was 1.826 billion yuan, a year-on-year increase of 46.79%.
However, in the first quarter of 2024, Yuyue Medical's performance began to "change face". In the first quarter, the company's revenue was 2.231 billion yuan, a year-on-year decrease of 17%; The net profit attributable to the parent company was 659 million yuan, a year-on-year decrease of 7.58%.
In the past four years, Yuyue Medical has caught up with the dividends of the epidemic, and its revenue scale has continued to expand, getting rid of the situation of hovering around 4 billion yuan in the past years, and the revenue scale in 2021 will be close to 7 billion yuan.
However, in the post-epidemic era, whether Yuyue Medical can continue to maintain growth is the main issue it faces. Can Chairman Wu Qun, who was born in 1988, lead Yuyue Medical to create more brilliance?
1. Performance changes
Yuyue Medical's products are mainly focused on respiratory oxygen production, diabetes care, infection control solutions, household electronic testing and in vitro diagnostics and other fields. Among them, the respiratory and oxygen generation segment is the majority of the company's revenue, and ventilators are one of the core products of this business segment.
In the past ten years, Yuyue Medical's revenue has shown a trend of increasing year by year, but before 2020, the company's revenue has not crossed the 5 billion yuan mark.
In 2020, under the influence of the epidemic, Yuyue Medical's main oxygen concentrators, ventilators, oximeters and other products have become popular, promoting the rapid growth of the company's revenue. In that year, Yuyue Medical's revenue was 6.726 billion yuan, a year-on-year increase of 45%.
In the past three years, Yuyue Medical's revenue has still maintained growth, but the growth rate has slowed down significantly compared with 2020. From 2021 to 2023, the company's revenue will be 6.894 billion yuan, 7.102 billion yuan, and 7.972 billion yuan respectively, a year-on-year increase of 2.5%, 3%, and 12%.
(Photo / Photo Network, based on VRF protocol)
With the expansion of revenue scale, Yuyue Medical has also made a lot of money. In the past three years, Yuyue Medical's net profit attributable to the parent company totaled 5.473 billion yuan, which is equivalent to the sum of the net profit attributable to the parent company in the past nine years (2012 to 2020). Especially in 2023, the company's net profit attributable to the parent company will be 2.396 billion yuan, a year-on-year increase of 50%.
With the strong support of the company's performance, Yuyue Medical has also attracted the favor of public funds. In 2023, Huabao CSI Healthcare Exchange-traded Open-ended Index Securities Fund and Xingquan Business Model Preferred Hybrid Securities Investment Fund will increase their positions in Yuyue Medical.
In addition, Yuyue Medical has also won the "preference" of the 802 portfolio of the basic pension insurance fund and the 113 portfolio of the national social security fund. As of the end of 2023, the above two funds hold 12.749 million shares and 12.612 million shares of Yuyue Medical respectively, with a shareholding ratio of 1.27% and 1.26% respectively, becoming the top ten shareholders of Yuyue Medical.
However, in the first quarter of 2024, the social security fund and the pension insurance fund began to reduce their holdings of the company's shares, reducing their holdings by 32,800 shares and 31,800 shares respectively. Although the change is not very large, it also shows that there has been a subtle change in the investment attitude of the social security fund and the pension fund towards Yuyue Medical.
The social security fund has reduced its holdings, and the company's performance is also "changing face". In the first quarter of 2024, Yuyue Medical's revenue was 2.231 billion yuan, a year-on-year decrease of 17%; The net profit attributable to the parent company was 659 million yuan, a year-on-year decrease of 7.58%.
What worries the industry is whether Yuyue Medical's previous growth is sustainable? In the case of declining performance, how will Yuyue Medical bail out?
2. Frequent mergers and acquisitions, and the risk of goodwill impairment
Looking back, in the past four years, the reason why Yuyue Medical has been able to maintain performance growth is inseparable from the new crown epidemic dividend.
During this period, many medical supplies have experienced tight supply and product price increases. As a leading medical device company in China, Yuyue Medical's sales of anti-epidemic materials such as ventilators, oxygen concentrators, oximeters, nebulizers, forehead thermometers, and infection control and disinfection also soared during this period. According to media reports, in December 2022, Yuyue Medical's oximeters and oxygen concentrators were also out of stock in a short period of time.
For a long time, respiratory therapy products have been the main revenue force of Yuyue Medical. In 2023, respiratory therapy solution products will contribute 3.37 billion yuan of revenue to Yuyue Medical, a year-on-year increase of 50.55%, and the revenue of this segment will account for 42% of the annual revenue.
In terms of segmentation, the business scale of oxygen concentrator products increased by nearly 60% year-on-year, the growth rate of ventilator products increased by more than 30%, and the sales of atomization products increased by more than 60%.
As one of the core products of the company's respiratory and oxygen business segment, the revenue scale of the ventilator business has increased significantly, but the ventilator market is also facing greater competitive pressure. According to the website of the State Drug Administration, the number of products that have obtained the registration certificate of ventilators in China is as high as 240.
In addition, according to Frost & Sullivan data, in the Chinese market, Philips and ResMed are the manufacturers with the highest proportion of the home non-invasive ventilator market, accounting for 28.4% and 26.6% of the market share respectively in 2020, and Jardine Jiaye ranks third with a market share of 15.6%. The rest of the domestic enterprises account for a relatively small proportion and are relatively scattered.
From this point of view, although ventilators are one of the core products of Yuyue Medical's core business segment of respiratory and oxygen production, there are not many strong competitors in the domestic market.
(Photo / Photo Network, based on VRF protocol)
In recent years, Yuyue Medical has also been trying to expand its business boundaries. Accelerating the layout of overseas markets is one of the measures, but the results are limited. At present, the domestic market is still the main revenue force of Yuyue Medical, and the proportion of overseas markets is not high.
In 2023, Yuyue Medical's domestic market revenue will be 7.19 billion yuan, accounting for 90.21% of the annual revenue. The revenue of overseas markets was 727 million yuan, accounting for only 9.13%. Not only that, the company's revenue in overseas markets is not as large as in 2019. In 2019, the company's overseas market revenue was 797 million yuan.
In addition to expanding overseas markets, Yuyue Medical is also creating a "second growth curve" through mergers and acquisitions or investment.
In recent years, the company has successively completed the acquisition of Suzhou Medical Supplies Factory, Zhejiang Kailit, Shanghai Zhongyou, German Mangishi Metrax, Shanghai Machinery Group, and 66 Vision, and won the brands of "Huatuo", "Admiralty", "Aner Iodine" disinfectant and "Jiefurou" and German "Pumeikang", and participated in Jiangsu Shizhun Medical Equipment Co., Ltd. to carry out strategic layout in the field of contact lens products, and completed the introduction of important strategic investors in the company's emergency sector.
Through mergers and acquisitions, equity participation and new establishment, the number of consolidated companies of Yuyue Medical is running wildly. At present, Yuyue Medical has more than 100 branches and subsidiaries, with more than 600 product categories and nearly 10,000 product specifications. In this way, the financial statements are indeed enriched. In the 2022 and 2023 financial reports, Yuyue Medical will add 48 and 50 new sub-subsidiaries to the scope of consolidation.
However, the high-premium acquisition method also brings the risk of goodwill impairment. As of the end of 2023, the original value of Yuyue Medical's goodwill was 1.234 billion yuan, with a high book value. Among them, in 2023, the company will provide for the impairment of 66 visual goodwill of 13.0526 million yuan, a cumulative provision of 96.474 million yuan for goodwill impairment, and a provision of 27.9015 million yuan for the impairment of Zhejiang Kailite's goodwill.
If the performance of the acquisition target does not meet expectations, the company still has the risk of continued impairment of goodwill. Taking Aibeiyou Environmental Technology (Shanghai) Co., Ltd. (hereinafter referred to as Beibeiyou Environment) as an example, in April 2023, the company spent 52 million yuan to acquire 65% of the shares of Beibeiyou Environment, forming a goodwill of 37.09 million yuan, and signed a VAM agreement.
However, in 2023, Beiai Environment has not completed the performance bet. The revenue completion rate was 54%, and the non-completion rate was only 35%. At present, the VAM period has not yet ended, but if the follow-up performance continues to fall short of the standard, there is still a risk of goodwill impairment, which will adversely affect the company's net profit.
3. The three-year dividend is 1.7 billion, and the performance assessment is under pressure
In addition to facing risks such as performance fluctuations and goodwill impairment, how to manage a group with more than 100 branches and subsidiaries also tests the management ability of the company's senior management.
Previously, Wu Guangming, the founder of Yuyue Medical, was fined for insider trading, and in 2019, his son Wu Qun took over Yuyue Medical.
According to the data, Wu Qun was born in 1988, has a master's degree, and has served as the assistant manager of the production planning department of Suzhou Sony LCD Co., Ltd. and the director of Yunnan Baiyao Holdings Co., Ltd.
Since Wu Qun took office, Yuyue Medical has caught up with the epidemic dividends, and its performance has ushered in a wave of soaring. In 2020, Wu Guangming, Wu Qun and his son ranked 130th on the 2020 Hurun Rich List with a net worth of 36 billion yuan, becoming the richest man in Danyang, Jiangsu.
The performance soared, and so did the problems. Because of the price increase of the oximeter, Yuyue Medical was accused of "epidemic wealth" and was fined 2.7 million yuan. In addition, the company's product quality issues have also attracted regulatory attention. In 2020, the ultrasonic nebulizer produced by Yuyue Medical was successively notified by the Chongqing, Beijing, Shanghai Municipal Food and Drug Administration and the State Food and Drug Administration that there were problems such as unqualified or non-compliant products.
Although it was not all smooth sailing in the business process, the company earned a lot of "real money" under the leadership of Wu Qun. As of March 31, 2024, Yuyue Medical's monetary funds reached 7.648 billion yuan.
Yuyue Medical, which has made money, is also willing to pay dividends to shareholders. In 2023, the company plans to distribute a cash dividend of 8 yuan to all shareholders for every 10 shares, with a total dividend of 802 million yuan. In the long run, from 2021 to 2023, Yuyue Medical's total dividends will reach 1.7 billion yuan.
The company generously dividends, Wu Guangming, Wu Qun father and son are the most direct beneficiaries. At present, Yuyue Medical is 24.54% owned by the parent company Jiangsu Yuyue Technology (jointly controlled by Wu's father and son), Wu Guangming personally holds 10.32% of the shares, and Wu Qun holds 7.72% of the shares. Roughly calculated, Wu Guangming, Wu Qun and his son account for a total of about 42.58% of the shares in Yuyue Medical, and according to this calculation, from 2021 to 2023, Wu Guangming, Wu Qun and his son will receive a total of 720 million yuan in dividends.
In order to mobilize the enthusiasm of the company's core personnel, in terms of employee management, Yuyue Medical has also used the employee stock ownership plan or equity incentive plan by repurchasing shares, and has formulated employee stock ownership plans for 2021 and 2023. At present, the shares of the 2021 employee stock ownership plan have been fully unlocked.
In September 2023, Yuyue Medical released the "2023 Employee Stock Ownership Plan". The plan requires employees to shell out real money to buy company shares and bear the risk of fluctuations in the secondary market of stocks. However, the purchase price of the employee stock ownership plan was set at 17.3 yuan per share, which was lower than the closing price of 32.32 yuan per share on the same day.
Yuyue Medical has also formulated company-level performance appraisal and individual-level performance appraisal goals. In the company-level performance appraisal, the company has set three stock release periods. In 2023, 2024, and 2025, its net profit will not be less than 2.0007 billion yuan, 2.031 billion yuan, and 2.339 billion yuan, and the proportion of employee-owned shares will be 34%, 33%, and 33% respectively.
(Photo / Yuyue Medical Financial Report)
It can be seen that net profit is an important goal of Yuyue Medical's assessment. In 2023, Yuyue Medical's net profit will be 2.376 billion yuan, completing the first phase of the assessment target. However, "Jiemian News Bullet Finance" noticed that in 2023, Yuyue Medical's net profit after deducting non-profits will only be 1.836 billion yuan, and 555 million yuan of income will come from the disposal of non-current assets, mainly due to the land of Yuyue Medical's subsidiary in Shanghai being acquired and stored by the local government.
(Photo / Yuyue Medical Financial Report)
However, the proceeds from the disposal of non-current assets are not sustainable. From the current point of view, in the first quarter of 2024, both revenue and net profit attributable to the parent company will decline, and there is still great pressure on Yuyue Medical to achieve the annual performance assessment target of 2.031 billion yuan.
Whether Wu Qun, the "second generation of medicine", can lead Yuyue Medical to a new high, and whether the company can achieve its performance target in 2024, "Jiemian News Bullet Finance" will pay long-term attention.
*The title picture in the article comes from: Yuyue Group's official website.