Wise Medical Reports 2020 Net Profit of RMB 144 Million, Allocates 50% to Dividends

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Changjiang Business Daily Reporter Xu Jia

Benefiting from the dividends of the domestic rehabilitation equipment market,VISHEEPerformance continues to maintain rapid growth.

According to the annual report, VISHEE achieved an operating revenue of RMB 378 million in 2020, representing a year-on-year increase of 18.66%; the net profit attributable to shareholders of the listed company (hereinafter referred to as "net profit") amounted to RMB 144 million, a year-on-year increase of 44.07%. In its first year of listing on the STAR Market, VISHEE's annual performance successfully exceeded RMB 100 million.

A Changjiang Business Daily reporter noted that in recent years, rising demand in the downstream rehabilitation medical market has driven rapid growth in VISHEE’s product sales. According to the annual report, in 2020, the sales volumes of the company’s three core product categories—electrical stimulation, magnetic stimulation, and electrophysiology—increased by 17.26%, 49.27%, and 39.06%, respectively, generating operating revenues of RMB 155 million, RMB 101 million, and RMB 49.4503 million, representing year-on-year increases of 6.9%, 46.32%, and 47.62%, respectively.

In particular, under the "production based on sales" model, the company's production-to-sales ratio for electrical stimulation products exceeded 100% for the first time in two years last year, reaching 102.2%, thereby reducing inventory pressure.

Amid sustained performance growth, VISHEE announced a cash dividend plan of RMB 10.51 per 10 shares (tax inclusive), with an expected total cash dividend distribution of RMB 71.8297 million, accounting for as high as 50% of the net profit for the current period.

　　Q4 Profit Nearly Doubles to RMB 58 Million

According to available information, VISHEE was initially established in early 2001. The company is currently primarily engaged in the research and development, manufacturing, and sales of rehabilitation medical devices, and was listed on the STAR Market of the Shanghai Stock Exchange in July 2020.

In recent years, driven by national policy support such as medical insurance coverage and the two-child policy, as well as the continuously growing demand for rehabilitation medical services among residents due to population aging, the domestic market demand for pelvic floor and postpartum rehabilitation, neurological rehabilitation, and psychiatric rehabilitation has continued to grow, resulting in rapid growth in VISHEE’s operating performance.

From 2017 to 2019, VISHEE generated operating revenues of RMB 144 million, RMB 208 million, and RMB 319 million, respectively, with net profits attributable to shareholders of the parent company amounting to RMB 40.3383 million, RMB 63.3645 million, and RMB 99.7183 million, respectively.

Last year, the pandemic had a brief impact on Vishee Medical’s performance, but the company still maintained a high growth rate throughout the year. According to the annual report, in 2020, the company achieved an operating revenue of RMB 378 million, representing a year-on-year increase of 18.66%. The net profit reached RMB 144 million, up by 44.07% compared to the previous year. After deducting non-recurring gains and losses, the net profit was RMB 128 million, reflecting a year-on-year growth of 35.82%, marking the first time that its annual net profit exceeded RMB 100 million.

However, compared with previous years, VISHEE’s year-on-year growth rates in net profit attributable to shareholders of the parent company from 2017 to 2019 were 74.26%, 57.08%, and 57.37%, respectively, all exceeding 50%. Last year, the company’s performance growth rate decreased by 13.3 percentage points year on year, indicating a slowdown.

From a single-quarter perspective,Hithink RoyalFlushData shows that among the four quarters of last year, the company experienced negative growth in only one quarter, with operating revenue and net profit reaching RMB 57 million and RMB 17 million respectively during that period, representing a year-on-year decrease of 3.55% and 2.45%. VISHEE stated that the epidemic had a significant impact on its upstream and downstream businesses. Hospitals across various regions suspended outpatient services, preventing the completion of equipment installation and revenue recognition for the company's sales, while suppliers and distributors were unable to resume normal operations.

Starting from the second quarter of last year, VISHEE’s performance recovered rapidly. In the second and third quarters, the company reported operating revenues of RMB 100 million and RMB 98 million, representing year-on-year increases of 23.47% and 14.99%, respectively; net profits amounted to RMB 37 million and RMB 32 million, with year-on-year growth rates of 44.19% and 18.13%, respectively. In the fourth quarter of last year, the company’s operating revenue and net profit reached RMB 123 million and RMB 58 million, respectively, with growth rates as high as 31.88% and 94.67%, indicating a further acceleration in performance growth compared to the first three quarters.

In this regard,Zhongtai SecuritiesThe analysis suggests that this is primarily attributable to the continued recovery and growth in product sales, as well as the concentrated fulfillment of outstanding annual orders by hospital-based customers in the fourth quarter. With the pandemic under control and its impact gradually diminishing, and as orders from both hospital-based and non-hospital customers continue to recover, the company is expected to sustain its rapid growth trajectory over the medium to long term.

However, it should be noted that for the full year last year, the net cash flow from operating activities of VISHEE amounted to RMB 121 million, representing a year-on-year decrease of 14.64%, slightly lower than the company’s net profit for the same period. From 2017 to 2019, the net cash flows from operating activities were RMB 52.3495 million, RMB 85.8449 million, and RMB 141.4721 million, respectively, all exceeding the net profits for those respective periods.

　　Sales of the Three Core Products Continue to Rise

Against the backdrop of sustained growth in demand for rehabilitation medical services and rehabilitation medical devices, VISHEE has witnessed a rapid increase in sales of its flagship rehabilitation equipment, including electrical stimulation and magnetic stimulation devices.

Relevant data shows that from 2014 to 2018, the market size of rehabilitation medical devices in China grew from RMB 11.5 billion to RMB 28 billion, with a compound annual growth rate (CAGR) of 24.9%, outpacing the overall medical device industry. Related agencies predict that the market size of rehabilitation medical devices in China will reach RMB 67 billion by 2023, growing at a CAGR of 19.1%.

As disclosed in the prospectus, from 2017 to 2019, Vishee Medical’s sales volume of electrical stimulation products was 1,708 units, 2,409 units, and 3,644 units, respectively; production volume was 1,706 units, 2,668 units, and 4,122 units, respectively; and the production-to-sales ratio was 100.12%, 90.29%, and 88.4%, respectively.

Yangtze Business Daily reporters noted that, due to the adoption of a “production based on sales with appropriate stockpiling” model, VISHEE’s production volume growth was lower than its sales volume growth, thereby enabling effective inventory control.

In 2020, VISHEE sold 4,273 units of its electrical stimulation products, representing a year-on-year increase of 17.26%; production volume amounted to 4,181 units, a year-on-year increase of 1.43%; inventory stood at 693 units, a year-on-year decrease of 18.37%. The production-to-sales ratio once again exceeded 100%, reaching 102.2%.

During the reporting period, the company’s products in this category generated operating revenue of RMB 155 million, representing a year-on-year increase of 6.9%; however, the gross profit margin decreased by 2.68 percentage points year-on-year to 70.75%.

Compared to electrical stimulation products, which contribute significantly to revenue, VISHEE’s magnetic stimulation and electrophysiological product categories achieved higher sales growth rates last year.

In 2020, VISHEE’s sales volume of magnetic stimulation and electrophysiological products reached 612 units and 502 units, representing year-on-year increases of 49.27% and 39.06%, respectively; production volumes were 641 units and 521 units, with year-on-year growth of 20.26% and 32.23%, respectively. During the reporting period, these two major product categories generated operating revenues of RMB 101 million and RMB 49.4503 million, respectively, reflecting year-on-year growth of 46.32% and 47.62%, both exceeding the company’s overall revenue growth rate.

Moreover, the gross profit margins of the aforementioned two products were also higher than those of electrical stimulation products, standing at 83.48% and 74.76%, respectively, with year-on-year changes of 0.2 and -0.11 percentage points.

Sustained R&D investment has become the foundation for VISHEE to continuously launch new products and maintain its market competitiveness. In 2020, the company's R&D expenses amounted to RMB 34.2874 million, representing a year-on-year increase of 25.21%, and accounting for 9.06% of the current period's revenue, an increase of 0.47 percentage points compared to the previous year.

While achieving steady performance growth, VISHEE maintained a high level of cash dividends both before and after its listing. In its annual report, VISHEE proposed a cash dividend plan of RMB 10.51 (including tax) for every 10 shares, with an expected total cash dividend distribution of RMB 71.8297 million, accounting for as high as 50% of the net profit for the period.

From 2017 to 2019, VISHEE’s annual cash dividend amounts were RMB 24 million, RMB 19.9914 million, and RMB 37.8299 million, respectively.

It is worth noting that prior to its initial public offering (IPO), Wang Zhiyu, the controlling shareholder and actual controller of VISHEE, directly held 52.6% of the company’s shares and directly and indirectly controlled 85.55% of the voting rights. Following the IPO, although Wang Zhiyu’s shareholding was diluted, he continues to maintain a strong controlling position.

As of the end of 2020, Wang Zhiyu directly held 26.9615 million shares of VISHEE, accounting for 39.45% of the company's total share capital. Excluding the equity interests held through employee stock ownership platforms, Wang Zhiyu is expected to receive a cash dividend of RMB 28.3368 million from VISHEE for the year 2020.

Responsible Editor: Ma Qiuju SF186