Financial Performance - Kangji Medical achieved operating revenue of RMB926.0 million in 2023, representing a year-on-year growth of approximately 17.8%[6] - The non-HKFRS adjusted net profit attributable to owners of the parent for the Reporting Period was RMB504.0 million, representing a year-on-year growth of approximately 5.3%[6] - Revenue for 2023 increased by 17.8% to RMB926.0 million compared to 2022, driven by domestic market growth and recovery in elective surgery volumes post-COVID-19 restrictions, along with rapid export sales growth due to new distributor development[16] - Net profit attributable to owners of the parent increased by 5.3% to RMB504.0 million in 2023, primarily due to sales growth, partially offset by increased R&D expenses and income tax expenses[16] - Gross profit for 2023 was RMB741.2 million, up from RMB635.2 million in 2022, reflecting improved profitability[14] - Non-current assets increased to RMB883.1 million in 2023 from RMB861.2 million in 2022, while current assets rose to RMB3,380.7 million from RMB3,123.8 million[14] - Earnings per share (basic) for 2023 were RMB43.08 cents, up from RMB39.63 cents in 2022[14] - Non-HKFRS adjusted net profit for the year attributable to owners of the parent increased to RMB538.2 million in 2023 from RMB498.7 million in 2022[14] - Total equity grew to RMB3,943.8 million in 2023, up from RMB3,718.8 million in 2022[14] - Total revenue for 2023 was RMB926.0 million, a 17.8% increase from 2022[20] - Net profit attributable to owners of the parent increased by 5.3% to RMB504.0 million[20] - Adjusted net profit increased by 7.9% to RMB538.2 million, excluding certain financial items[20] - The company's total revenue for 2023 was RMB 926.0 million, a 17.8% increase compared to RMB 786.4 million in 2022[32][33] - Revenue from disposable products increased by 16.8% to RMB 804.9 million in 2023, accounting for 86.9% of total revenue[34] - Disposable trocars revenue grew by 8.1% to RMB 394.4 million, representing 42.6% of total revenue[34] - Polymer ligation clips revenue increased by 18.1% to RMB 227.3 million in 2023[31] - Disposable electrocoagulation forceps revenue surged by 30.1% to RMB 122.6 million[31] - Ultrasonic scalpels revenue experienced significant growth of 109.3% to RMB 38.0 million[31] - Reusable products revenue increased by 24.5% to RMB 121.1 million, with 4K endoscopic camera systems growing by 57.4%[31] - Gross profit increased by 16.7% to RMB741.2 million, with gross profit margin stable at 80.0%[46] - Gross profit increased by 16.7% from RMB 635.2 million in 2022 to RMB 741.2 million in 2023, with gross margin remaining stable at 80.0%[47] - Disposable products contributed RMB 671.71 million with a gross margin of 83.4%, while reusable products contributed RMB 69.49 million with a gross margin of 57.4%[48] - Other income and gains increased to RMB 155.4 million in 2023, primarily due to a RMB 21.8 million increase in interest income from bank deposits[49][50] - Selling and distribution expenses rose by 30.9% to RMB 69.8 million in 2023, driven by increased staff costs and marketing-related expenses[51] - Administrative expenses increased by 40.7% to RMB 100.3 million in 2023, mainly due to higher staff costs and resumed business activities post-COVID-19 restrictions[51] - Research and development expenses surged by 93.2% to RMB 127.6 million in 2023, driven by increased R&D projects and product upgrades[51] - Income tax expenses rose by 33.8% to RMB 136.5 million in 2023, due to higher taxable profits and withholding taxes on distributed profits[52][54] - Net profit attributable to owners of the parent increased to RMB 504,021,000 in 2023 from RMB 478,735,000 in 2022, reflecting a growth of 5.3%[57] - Non-HKFRS adjusted net profit for the year attributable to owners of the parent rose to RMB 538,183,000 in 2023, compared to RMB 498,711,000 in 2022, marking an increase of 7.9%[57] - Basic earnings per share (EPS) increased to 46.00 cents in 2023 from 41.28 cents in 2022, while diluted EPS rose to 45.90 cents from 41.28 cents[57] Product Development and Innovation - Kangji Medical successfully organized and carried out many thematic academic promotion conferences and training sessions in 2023, including single-port procedures training centers established through cooperation with local reputable hospitals[9] - The company is focusing on key development areas including biodegradable implantable consumables, which is one of the most important segments in the medical field[9] - Weijing Medical, a subsidiary of Kangji Medical, launched clinical trials for four-arm surgical robots in the fourth quarter of 2023[9] - The company is actively increasing the market share of its existing core products and expanding the geographical presence of new products, including ultrasonic scalpels, 4K endoscopic camera systems, and disposable products[9] - Kangji Medical is confident in achieving relatively high growth rates for new products in 2024[9] - The company added 14 new product registrations in China during the reporting period, bringing the total to 92 NMPA product registrations, including 12 Class III, 46 Class II, and 34 Class I medical devices[21] - The company obtained 111 new patents in China, with 56 of these coming from Weijing Medical[21] - Weijing Medical initiated clinical trials for its 4-arm surgical robot in Q4 2023 and expects to obtain registration approval by the end of 2024[22][25] - The company is developing a single-port surgical robotic system, with product design finalization expected and plans to commence type inspection and animal trials in the second half of 2024[22][25] - The company established a dedicated team within the R&D department to enhance project progress management, focusing on documentation, time and cost management, and problem-solving capabilities[21] - The company is expanding its R&D team, particularly in areas like absorbable implantable consumable products and energy platforms, recognizing their importance in advancing medical treatments[21] Market Expansion and Sales Strategy - Kangji Medical expects the healthcare industry to gradually resume normal operating levels in the second half of 2024, which will be conducive to the launch of new products and strengthen face-to-face academic exchanges[9] - Domestic sales growth driven by disposable products and new products like ultrasonic scalpels and 4K endoscopic camera systems[19] - Won bids for polymer ligation clips in Anhui province with the highest weighted score and hospital procurement volume[19] - Export sales reached RMB86.0 million, a 20.6% increase from the previous year[20] - VBP implementation for disposable trocars in Guangdong province switched to a "logistics partner + academic promotion partner" model[20] - Added 22 overseas product registrations, mainly in Central and South America and Southeast Asia[20] - VBP policies favor domestic industry leaders with established track records and reliable supply[20] - Growth in European and South American markets such as France, Spain, and Peru[20] - The company strengthened its local distribution network by hiring additional district sales managers and optimizing academic support mechanisms[23][26] - The company transitioned back to in-person academic promotion activities in 2023, including thematic conferences, training sessions, and single-port procedure training centers[24][26] - The company expects the medical industry to return to normal levels in the second half of 2024, benefiting new product promotion and in-person academic exchanges[27] - The company is focusing on increasing the market share of core products like trocars and polymer ligation clips, while expanding sales of new products such as ultrasonic scalpels and 4K endoscopic camera systems[27] - Export sales growth contributed to revenue increase, driven by overseas market demand and expanded distribution channels[32][33] - Domestic market revenue increased by 17.5%, driven by distributor and non-distributor models in VBP provinces[36][38] - Overseas market revenue grew by 20.6% to RMB86.0 million, with expansion to 58 countries/regions and increased product registrations[37][38] Corporate Governance and Leadership - Mr. Zhong, the founder and CEO, has been with the company for nearly 20 years and holds multiple leadership roles including Chairman and CEO[74] - Ms. Shentu, co-founder and executive Director, has also been with the company for nearly 20 years and serves as vice general manager[76] - Mr. Zhong holds a bachelor's degree in business administration from China University of Geosciences and an executive master's degree from Cheung Kong Graduate School of Business[75] - Ms. Shentu holds a college degree in accounting from China University of Geosciences[77] - Mr. Zhong was awarded Outstanding T-Merchants in 2016 and Outstanding Hangzhou Entrepreneur in 2018[75] - Ms. Shentu was awarded Top Ten Innovation Women in Zhejiang in 2019 and Outstanding Hangzhou Entrepreneur Award in 2020[77] - Mr. Zhong and Ms. Shentu are spouses and both serve as executive Directors of the company[78] - Ms. Shentu has been a member of the Chinese People's Political Consultative Conference of Tonglu County since 2007[77] - Mr. YIN Zixin was appointed as an executive Director on April 28, 2022, and has served as a vice general manager at Hangzhou Kangji since August 2020[79] - Ms. CAI Li was appointed as a non-executive Director on March 13, 2020, and is responsible for participating in decision-making for important matters of the Group[79] - Ms. CAI Li served as a non-executive director at Shanghai Bio-heart Biological Technology Co., Ltd. from September 2020 to November 2022, and at Zhaoke Ophthalmology Limited from October 2020 to November 2023[80] - Ms. CAI Li holds a bachelor's degree in biomedical engineering and economics from Yale University, obtained in May 2007[81] - Mr. Jiang Feng, an independent non-executive director, has nearly 40 years of experience in the medical and medical device industry, with extensive experience in clinical and managerial roles at hospitals and pharmaceutical companies[82] - Mr. Jiang served as an independent director at Dirui Industrial Co., Ltd. (stock code: 300396) from December 2010 to August 2016[82] - Mr. Jiang served as an independent director at Guanhao Biotech Co., Ltd. (stock code: 300238) from May 2014 to September 2017[82] - Mr. Jiang served as the head of China Medical Device Information Magazine from July 2005 to March 2017[82] - Mr. Jiang served as a non-executive director at Kaisa Health Group Holdings (stock code: 0876) from June 2015 to February 2017[82] - Mr. Jiang served as an independent director at Zhongzhu Healthcare Holding Co., Ltd. (stock code: 600568) from March 2016 to April 2019[82] - Mr. Jiang is currently an independent director at Eyebright Medical Technology (Beijing) Inc. (stock code: 688050) since January 2022[82] - Mr. Jiang is currently a non-executive director at Lifetech Scientific (Shenzhen) Co., Ltd. (stock code: 01302) since April 2014[82] - Mr. Jiang holds a master's degree in respiratory medicine and a doctor's degree in cardiothoracic surgery from Air Force Medical University, and a second master's degree in business administration from Tsinghua University[83] - Mr. GUO Jian, aged 68, was appointed as an independent non-executive Director on March 7, 2020, effective from June 4, 2020, primarily responsible for supervising and providing independent judgment to the Board[84] - Mr. CHEN Weibo, aged 50, was appointed as an independent non-executive Director on March 7, 2020, effective from June 4, 2020, with nearly 30 years of experience in accounting and financial management[84] - Mr. CHEN Weibo received his bachelor's degree in accounting from Zhejiang University of Finance & Economics in July 1995 and was conferred the qualification of senior accountant by the Zhejiang Province Human Resources and Social Security Department in April 2009[85] - Mr. ZHONG Ming, aged 48, was appointed as the chief executive officer on August 24, 2004, responsible for the overall management of the Group's business[86] - Ms. SHENTU Yinguang, aged 44, was appointed as a vice general manager on November 8, 2016, responsible for human resources and administration of the Group[86] - Mr. YIN Zixin, aged 38, was appointed as a vice general manager on March 7, 2020, mainly responsible for investor relationships, investment, and corporate governance matters of the Group[86] - Ms. HU Yanyu, aged 47, was appointed as the chief financial officer on September 15, 2023, primarily responsible for the management of financial affairs and investor relations of the Group[86] - Ms. HU Yanyu has more than 15 years of experience in enterprise value management, financial management, and investment management, previously working at Sunny Optical Technology (Group) Company Limited and Shenzhen Eastern Marathon Investment Management Company Limited[86] - The company's principal activities include designing, developing, manufacturing, and selling MISIA products focused on OBGYN, urology, general surgery, and thoracic surgery, with no significant changes during the reporting period[96] - The company was listed on the Main Board of the Stock Exchange on June 29, 2020, with stock code 9997[95] - Mr. CHENG Da, aged 46, is responsible for product registration and international business, having joined the company in March 2011[88] - Mr. YUE Jiqiang, aged 44, is primarily responsible for research and development, having joined the company in May 2009[88] - Mr. TANG Wenpeng, aged 49, is mainly responsible for production and quality control, having joined the company in March 2017[89] - Mr. JU Jianyong, aged 48, joined the company on January 1, 2021, as head of domestic sales and marketing, with extensive expertise in academic promotions across multiple specialties[90] - Mr. WAN Siu Keung, aged 40, was appointed as the company secretary on May 3, 2022, with over 16 years of experience in auditing, financial management, and corporate secretary roles[92] - The company was incorporated in the Cayman Islands on February 12, 2020, and started operating in Hong Kong under the name "Kangji Medical Holdings Limited" on April 3, 2020[95] Risk Management and Compliance - The Group faces market risks due to changes in China's healthcare regulatory framework, including centralized procurement and pricing pressures[102] - Potential pandemic outbreaks could disrupt the Group's supply chain and delay elective surgical procedures[102] - The Group is exposed to financial risks, including credit risk, currency risk, interest rate risk, and liquidity risk[102] - The company complied with all relevant environmental and occupational health and safety laws and regulations in China during 2023, with no material adverse incidents or complaints[117] - The company's ESG report, prepared in accordance with Appendix C2 of the Listing Rules, is included in the annual report on pages 84 to 163[117] - The company did not enter into any significant contracts with controlling shareholders or their subsidiaries during the reporting period, except for directors' and senior management's service contracts[111] - No directors had material interests in any significant transactions, arrangements, or contracts related to the company's business during the reporting period[111] - The company did not have any management contracts concerning the administration of the whole or any substantial part of its business during the reporting period[113] - None of the directors waived or agreed to waive any remuneration, and no inducement payments were made to directors or other individuals for joining or leaving the company[115] - The company has maintained the required public float percentage under the Listing Rules[190] - The financial statements for the year ended December 31, 2023, were audited by Ernst & Young, and a resolution to reappoint Ernst & Young as the auditor for 2024 will be proposed at the annual general meeting[191] - The company has arranged appropriate liability insurance for its directors and senior management[190] - The company has complied with the CG Code and maintains high standards of corporate governance, with the board delegating responsibilities to four committees: Audit, Nomination, Remuneration, and ESG[197] - The board composition as of December 31, 2023, included executive, non-executive, and independent non-executive directors, with Ms. Frances Fang Chovanec resigning as an executive director on September 15, 2023[198] - The company has met the requirements of the Listing Rules regarding the appointment of independent non-executive directors, with at least one possessing appropriate professional qualifications or accounting expertise[199] - Frances Fang Chovanec resigned as Executive Director, CFO, and member of the ESG Committee on September 15, 2023, to pursue personal matters and other opportunities, and served as a consultant until December 31, 2023[200] - The Board of Directors complied with the Listing Rules by appointing at least three independent non-executive directors, including one with appropriate professional qualifications or accounting/financial management expertise[200] - The company met the Listing Rules requirement of having independent non-executive directors constituting one-third of the Board[200] - All independent non-executive directors confirmed their independence in accordance with the Listing Rules[200] Shareholder and Investor Relations - The Board recommended a final dividend of RMB41 cents per share and a special dividend of RMB99 cents per share to celebrate the Group's 20th anniversary, to be paid from distributable profits and the share premium account
康基医疗(09997) - 2023 - 年度财报