Meihua International Medical(MHUA) - 2024 Q2 - Quarterly Report

Financial Performance - Total revenues for the six months ended June 30, 2024, were $45,343,698, a decrease of 5.4% compared to $48,190,076 for the same period in 2023[6] - Gross profit for the first half of 2024 was $15,185,401, down from $17,170,729 in 2023, reflecting a gross margin of approximately 33.5%[6] - Net income for the six months ended June 30, 2024, was $4,710,325, a decline of 33.0% from $7,031,529 in the prior year[6] - The company reported a basic net income per ordinary share of $0.19 for the first half of 2024, compared to $0.29 for the same period in 2023[6] - The company’s operating expenses for the first half of 2024 totaled $9,293,389, an increase of 15.1% compared to $8,074,056 in 2023[6] - Revenue from self-manufactured products was $20,693,991, down from $23,435,544 in the previous year, representing a decline of 11.8%[58] - Revenue from resales of sourced disposable medical devices was $24,649,707, slightly decreasing from $24,754,532, a decline of 0.4%[58] - Class II medical devices generated revenue of $32,931,537 for the six months ended June 30, 2024, down from $35,075,347 in 2023, representing a decrease of about 6.1%[72] - Class I medical devices produced revenue of $9,031,781 for the six months ended June 30, 2024, compared to $8,023,860 in 2023, showing an increase of approximately 12.6%[70] - Class III medical devices reported revenue of $941,131 for the six months ended June 30, 2024, down from $1,398,377 in 2023, reflecting a decline of about 32.7%[72] Assets and Liabilities - Total current assets increased to $141,313,649 as of June 30, 2024, from $132,237,053 at the end of 2023, representing a growth of 6.1%[4] - Total assets reached $179,162,816 as of June 30, 2024, compared to $171,915,272 at the end of 2023, indicating an increase of 4.0%[5] - Shareholders' equity rose to $149,572,350 as of June 30, 2024, up from $146,331,840 at the end of 2023, reflecting a growth of 1.6%[5] - Total accounts receivable increased to $83,349,582 as of June 30, 2024, from $79,027,317 as of December 31, 2023, representing a growth of 5.8%[79] - The allowance for credit losses rose to $3,007,231 as of June 30, 2024, compared to $1,928,486 at the end of 2023, indicating a significant increase of 55.8%[80] - Total inventories decreased to $1,092,314 as of June 30, 2024, down from $1,617,225 as of December 31, 2023, reflecting a decline of 32.4%[81] - Intangible assets, net, dropped to $452,661 as of June 30, 2024, from $3,915,917 at the end of 2023, a decrease of 88.5%[82] - Short-term bank borrowings totaled $56,000,000 as of June 30, 2024, compared to $52,000,000 as of December 31, 2023, marking an increase of 7.7%[89][90] Cash Flow and Investments - Net cash provided by operating activities was $1,015,799, compared to a net cash used of $5,424,569 in 2023[11] - Cash paid for income tax in 2024 was $1,664,245, down from $2,313,417 in 2023[11] - Cash at the end of the period increased to $18,490,635 from $17,861,214 in the previous year[11] - The investment gain from Zhongxiangxin was $3,747 for the six months ended June 30, 2024, compared to $1,632 for the same period in 2023, reflecting an increase of 129.1%[49] - The investment gain from Guoxie was $3,187 for the six months ended June 30, 2024, compared to $nil for the same period in 2023[51] - New convertible loans issued amounted to $4,985,000, with a total balance of $4,060,983 as of June 30, 2024, after accounting for losses and conversions[35] - For the six months ended June 30, 2024, the company recognized an unrealized loss of $514,862 due to changes in the fair value of convertible loans[97] Taxation - As of June 30, 2024, the total taxes payable amounted to $1,119,800, an increase from $1,082,131 as of December 31, 2023[99] - The provisions for current income tax in the PRC for the six months ended June 30, 2024, were $1,428,531, with a total income tax expense of $1,175,023[102] - The company recognizes tax benefits associated with uncertain tax positions when it is more likely than not that the position will be sustained upon examination by a taxing authority[67] Shareholder Information - The company issued 2,153,796 ordinary shares upon the conversion of convertible debt during the six months ended June 30, 2024, with a fair value of $1,438,879 prior to conversion[96] - As of June 30, 2024, the company had 26,093,796 ordinary shares issued and outstanding, an increase from 23,940,000 as of December 31, 2023[109] - The company has determined that undistributed earnings in its subsidiaries will be reinvested, postponing the remittance of dividends indefinitely[107] - The company has a maximum withholding tax of 10% on dividends distributed by its subsidiaries, applicable to the parent company[107] Operational Insights - The company has plans for market expansion and new product development, although specific details were not disclosed in the financial statements[6] - The company’s subsidiaries primarily manufacture and sell Class I, II, and III disposable medical devices[15] - The company has only one operating segment as defined by FASB ASC 280, based on the management approach used for internal reporting and decision-making[68] - There were no write-downs recognized on inventories as of June 30, 2024, and December 31, 2023[40] - The Company did not record any impairment charges as of June 30, 2024, and December 31, 2023[43] - The fair value measurement guidance adopted by the company clarifies the definition of fair value and establishes a fair value hierarchy[29] - The average exchange rate for the period was US$1=RMB 7.2150[21]