Yuwell Medical (002223.SZ) disclosed its semi-annual report on the evening of August 23, reporting a revenue of 4.308 billion yuan in the first half of the year, with a net profit attributable to the parent company of 1.12 billion yuan. At the end of the reporting period, the company had monetary funds of 6.567 billion yuan and total assets of 15.617 billion yuan.

Against the backdrop of a high base in the same period last year, Yuwell Medical still had many bright spots in its business segments in the first half of the year, especially in its overseas business. Considering the global medical device market is still showing a robust growth trend, Yuwell Medical is also further increasing its overseas business layout, and the proportion of export revenue in the company's total revenue is expected to continue to increase in the future.

The diabetes care and emergency aid business segments are experiencing rapid growth.

Yuwell Medical's business covers multiple fields such as respiratory treatment, diabetes care, infection control, and home electronic testing. Continuous product innovation is an important strategy for Yuwell Medical to maintain product competitiveness and is also the driving force for the company's rapid development in its niche markets. Through a research and innovation platform built on a global resource allocation, Yuwell Medical has now formed more than 600 types of products and nearly 10,000 specifications.

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In the first half of the year, Yuwell Medical continued to maintain a significant investment in innovation, with overall R&D expenditure reaching 270 million yuan, accounting for 6.26% of the company's revenue. During the reporting period, the company successively launched a total of more than 190 new products, including many custom models for different overseas markets, covering several core areas such as respiratory oxygen therapy, blood sugar and POCT, rehabilitation, and clinical instruments, further enriching its product solutions.

Driven by innovation and channel expansion, Yuwell Medical's diabetes care solution business achieved significant breakthroughs during the reporting period, with revenue reaching 562 million yuan, a year-on-year increase of more than 54.94%, and the best performance among all business segments.

Relying on mature technology and production systems in the field of diabetes, Yuwell Medical launched the "AnnoDia" continuous glucose monitoring (CGM) series of products and formed a differentiated competitive advantage in product reliability and ease of use compared to earlier foreign brands, leveraging its advantages in scale, intelligence, and lean production.

Yuwell Medical stated that as the company's professional influence in the field of diabetes monitoring continues to grow, the sales and R&D of new CGM products have rapidly expanded during the reporting period, and the market share and customer base of traditional fingerstick blood glucose meters (BGM) related products have also continued to expand. With a large domestic patient population with diabetes, leveraging the company's leading advantage in CGM technology, the diabetes business is expected to become a new growth driver for Yuwell Medical following its respiratory oxygen therapy business.

The emergency aid segment is another high-growth business segment for the company. Yuwell Medical entered the emergency aid business in 2017 by acquiring German company Primedic and has been accelerating its development in recent years. The company's self-developed AED product, M600, has been certified and went on sale domestically in 2023. During the reporting period, the business scale of this product continued to expand rapidly, driving the emergency aid business revenue to 108 million yuan, a year-on-year increase of more than 34%, and its proportion of the company's revenue also rose to 2.50%.

China's AED configuration level is far lower than that of developed countries such as Europe and America, and the market space is huge. In recent years, the domestic promotion of AED deployment has entered a phase of implementation, and there are relatively few domestic AED equipment manufacturers, which also indicates a promising development prospect for Yuwell Medical's AED products.In its semi-annual report, Yuyue Medical indicated that the next few years will be a crucial phase for rapid growth in the domestic AED market, and it will gain more market share through strategic layout and strong product competitiveness.

Overseas layout continues to accelerate with significant revenue growth

The rapid growth of overseas business is another important highlight of Yuyue Medical's semi-annual report. According to the disclosure, the company's overseas sales revenue reached 479 million yuan in the first half of the year, a year-on-year increase of 30.19%, which is the best performance since 2021.

Since 2023, Yuyue Medical has continued to send signals of accelerating its expansion into overseas markets, bringing a variety of product solutions to important international academic conferences and large-scale exhibitions such as the 17th International Conference on Advanced Technologies and Treatments for Diabetes (ATTD), the Arab International Medical Devices Exhibition, the German Düsseldorf International Hospital and Medical Equipment Expo (MEDICA), and the China International Medical Equipment Fair (CMEF), successfully increasing its brand recognition in overseas markets.

At the same time, as a leader in high-end home medical devices, the pace of Yuyue Medical's overseas market layout for its core products such as electronic detection, respiratory oxygen production, blood glucose, and POCT has continued to accelerate. In the first half of the year, Yuyue Medical's new products such as the Annet continuous glucose monitoring system CT3, the hospital multi-parameter vital signs tester CM100, and the Promikan automatic external defibrillator M600 won international design awards such as the German Red Dot Award and the German iF Award, further gaining global industry authority recognition as a domestic medical device brand.

In terms of channel layout, over the past 20 years, Yuyue Medical has successively laid out more than 50 channel agents in overseas markets such as Southeast Asia, Europe, North America, and Latin America, and has established subsidiaries and offices in countries such as Thailand, Germany, and the United States, radiating to more than 100 countries and regions overseas, and building a prominent channel advantage.

Implementing the localization development strategy of overseas business, Yuyue Medical not only sets up production bases and offices overseas but also implements localization in management, research and development, marketing, and talent to deeply understand and integrate into the local culture and market. While ensuring that products, services, and operations meet local needs, it also enhances the marketing capabilities of the overseas team.

Wu Qun, Chairman of Yuyue Medical, stated that in the future, the company will adhere to long-termism, and based on the differences in medical needs, economic levels, and cultural backgrounds of different countries and regions, it will drive the continuous growth of overseas business through multiple measures such as promoting the implementation of overseas registration certificates, improving the construction of overseas localized teams, expanding export channels, and strengthening brand influence.

With the increased layout of overseas channels and the launch of new products tailored to overseas localized markets, Yuyue Medical has significantly accelerated the pace of obtaining product market access qualifications in overseas markets during the reporting period. The company revealed that it achieved a total of 52 overseas product registrations in the first half of the year, including 34 products such as electronic blood pressure monitors and oxygen generators that were approved for MDR certification in a concentrated manner in March alone.

The global medical device market is huge and is expected to continue to grow steadily with the increasing degree of population aging. Frost & Sullivan estimates that the global medical device market size will maintain an annual growth of about 7% from 2021 to 2025, reaching 699.9 billion US dollars by 2025.The continuously expanding global market presents significant development opportunities for domestic enterprises, making it inevitable for Chinese medical device companies to increase their efforts in going global. Yuyue Medical is expected to leverage cutting-edge technological products such as Continuous Glucose Monitors (CGM) to further enhance its brand recognition overseas and accelerate the market adoption of new categories and businesses.

Zheshang Securities believes that the non-routine demand during the COVID-19 pandemic has driven an increase in the overseas recognition of the company's products. Currently, Yuyue Medical's overseas revenue accounts for a relatively low proportion, and the overseas promotion is still in its early stages. As the company further expands its overseas sales channels, the long-term growth ceiling is expected to be lifted.