3600 ar2019 20200327 eng md websitecagr for global cosmetic dentistry expected between 2015 -2020...
Post on 26-Aug-2020
4 Views
Preview:
TRANSCRIPT
Annual Results 2019
Corporate Presentation
Confidential
Disclaimer
2
By reading these materials, you agree to be bound by the following limitations:
This document is strictly confidential, is not for public dissemination and is for the exclusive use of the persons who are authorized to receive this document. This document is being made available by Modern Dental Group Limited (the “Company”) to a limited number of recipients for the sole purpose of providing information to assist them in deciding whether they wish to proceed with a further investment in the Company. Any recipient of this document must not use the information contained herein for any other purpose and must not reproduce or distribute this document, in whole or in part, to any other person in any manner whatsoever, without the prior written consent of the Company.
Unauthorized reproduction, transmission or redistribution of this document or information contained herein in any electronic or physical form (in whole or in part) into the U.S., or other third parties could result in a breach of the U.S. Securities Act of 1933, as amended (the “Securities Act”) or other applicable securities laws. Any securities described in this document may not be offered or sold in the U.S. absent registration or an available exemption from registration under the Securities Act.
The contents of this document have not been reviewed by any regulatory authority in any jurisdiction.
This document does not constitute, or form part of and should not be construed as, any offer for sale, issue or subscription of, or solicitation or invitation of any offer to buy or subscribe for any securities in any jurisdiction and should not form the basis of any investment decision. Any offer of any securities of the Company, if made, will be made only by means of a separate offering document containing more detailed information about the Company, the securities being offered thereby and the terms on which any such offer is being made. Any prospective purchaser in any such offer is recommended to seek its own financial and other advice.
In Hong Kong, this document must not be sent to anyone other than to “professional investors” as defined in the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and any rules made under that Ordinance. This document contains no information or material which may result in it being deemed (i) to be a prospectus within the meaning of section 2(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong), or an advertisement or extract from or abridged version of a prospectus within the meaning of section 38B of the Companies (Winding Up and Miscellaneous Provisions) Ordinance or an advertisement, invitation or document containing an advertisement or invitation falling within the meaning of section 103 of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), or (ii) in Hong Kong to have effected an offer to the public without compliance with the laws of Hong Kong or being able to invoke any exemption available under the laws of Hong Kong and is subject to material change without notice.
No securities are proposed to be offered by the Company pursuant to this document.
This document and the information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to qualification under the securities laws of such jurisdictions. This document is also not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation.
The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession these materials come should inform themselves about, and observe, any such restrictions. This document is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident in any jurisdiction where such distribution or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction.
This document does not purport to be comprehensive or to contain all the information that a recipient may need in order to evaluate the Company. No representation or warranty, express or implied, is given and, so far as is permitted by law, no responsibility or liability whatsoever (in contract, tort or otherwise) is accepted by any person (for the avoidance of doubt, including but not limited to, the Company, any of its directors, officers, employees, shareholders, agents, affiliates, advisors or representatives) with respect to the accuracy, reliability, correctness, fairness or completeness of this document or its contents or any oral or written communication.
This document is not intended to provide, and you may not rely on this document as providing, a complete or comprehensive analysis of the Company's financial or trading position or prospects. Some of the information is still in draft form and will only be finalized at an appropriate time. The information contained in this document is provided as at the date of the presentation and has not been, and will not be, updated to reflect material developments which may occur after the date of the presentation. None of the Company or any of its respective directors, officers, employees, shareholders, agents, affiliates, advisors or representatives shall have any liability whatsoever (in contract, tort or otherwise) for any loss or damage howsoever arising from any use of this document or its contents or otherwise arising in connection with this document.
This document contains forward-looking statements which express the Company’s current views, projections, beliefs and expectations with respect to future events as of the respective dates indicated herein. Such forward-looking statements are based on a number of assumptions and factors beyond the Company’s control. As a result, they are subject to significant risks and uncertainties and actual events or results may differ materially from these forward-looking statements and the forward-looking events discussed in this document might not occur. No representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on, any projections, targets, estimates or forecasts contained in this document. None of the Company or any of its directors, officers, employees, shareholders, agents, affiliates, advisors or representatives shall have any liability in respect of the use of, or reliance upon, the information contained herein by you or any person to whom the information herein is disclosed. In all cases, interested parties should conduct their own investigation and analysis of the Company and its subsidiaries and the data contained in this document. Only those representations and warranties contained in a definitive agreement shall have any legal effect.
In furnishing this document, the Company undertakes no obligation to provide any additional information or to update this document or any additional information or to correct any inaccuracies which may become apparent. The provision of the information contained herein shall not be or be taken as any form of commitment on the Company. The recipient of this document acknowledges and represents to the Company and its affiliates and advisors that it is a professional investor, has the knowledge, experience and capability to conduct its own assessment of the Company and its shares and that it has and will conduct its own investigation with respect to the Company and its shares and have obtained or will obtain its own independent advice relating to any investment in the shares of the Company.
The recipient of this document agrees to keep the contents of this document and any further information confidential and such document and information form a part of the confidential information in accordance with the confidentiality agreement previously executed by the recipient (if applicable). If such a confidentiality agreement is yet to be executed, the recipient agrees, in consideration for the provision of information herein, to be bound by the confidentiality obligations, exclusion of liability and other provisions herein. Failure to comply with these requirements may lead to legal consequences. You confirm that you are aware that monetary damages may not be a sufficient remedy for any breach of the confidential obligation undertaken by you, or by any of your directors, officers, employees, legal counsel, accountants or tax advisers, agents, consultants and other representatives. You also agree that, in addition to all other remedies, the Company shall be entitled to specific performance and injunctive relief or other equitable relief as a remedy for any such breach. Upon request, the recipient will promptly return this document and all further information made available, without retaining any copies. Any prospective purchaser interested in purchasing securities of the Company is recommended to seek its own financial and other advice.
The recipient of this document hereby accepts the foregoing by accepting delivery of this document and the information contained herein. If the recipient of this document does not accept these conditions and give the acknowledgements and representations set out above, the recipient must immediately return this document to the Company.
Confidential
Contents
1 Company Overview 4
2 2019 Annual Review 9
3 Looking Forward 12
4 Financial Overview 18
3
Company Overview
Section 1
Confidential
Megatrends Driving The Dental Industry
Aging Population Increasing Oral Health Awareness
Increasing Incidents of Dental Diseases
Increasing Disposable Income per Capita
people in 2030 to be
older than 60 years –
compared to 901m in
2015
More annual dental
spending for patients
over 65 years
1.4BN
20%
Estimated per capita GDP growth in
over the world: between 2014 and
2018
Increase in per capita dental
expenditure in over the world between
2014 and 2018
1.6%
8.2%
EUR annual oral health
spending of EU member
states by 202093BN
Annual growth of the
global health insurance
market between 2016 and
2020
11.1%
Of school children and
almost 100% of adults
have dental cavities
People with implants
60-90%
500M+
People in need for
night guardsc. 1BN
People with misaligned
teeth globally>100M
Of household’s
medical spending is for
dental and related
services across OECD
countries
CAGR for global
cosmetic dentistry
expected between
2015 - 2020
20%
6.8%
The global dental consumables & equipment market is expected to grow by 6.6% annually to EUR43bn in 2020
Sources: EY Research, Roland Berger, Millennium Research Group, Dentsply, United Nations, Align Technology, Dental Tribune, WHO, Dental Guide, Business Wire, Markets & Markets
1.8%
5.6%
13.8%
31.3%
4
Confidential
2019 Results Highlights
6
HK$160m 92.7%
Despite the negative impact of foreign
currency depreciation
Profit of the Year
48%1.4 p.p.
Increased sale of high-value products
and strengthened cost control
Gross Margin
HK$5.3 centsper share
Full-year dividend payout at 32%
Dividend
Confidential
Global Footprint
The only multinational denture service
company in the world
Provides services to over 20,000dentists around the world
Leading positions in every
market (ranging from 1st to 3rd)
7
Confidential
Growth Strategies Overview
8
Production moved to Shenzhen and commenced
overseas export
1986
1992
1998
2005
2009
2011
2013
Established in Hong Kong
Setup Modern USA (Seattle, Los Angles,
Chicago & Boston)
Moved to new production
site in Shenzhen
Yangzhijing (Beijing) was acquired by
Yangzhijing(Shenzhen)
Downstream integration: acquired Permadental
in Germany
Downstream integration: acquired Labcost
in France
Setup Yangzhijing (Shenzhen) dental lab
in Shenzhen
2014 Downstream integration: acquired Elysee in Netherlands
2015Downstream integration:
acquired Southern Cross in Australia
Acquired Gold & Ceramics Dental Lab in Australia
Acquired Quantum Dental Lab in Canada
Listed on main board of HKEx
2016
The most experienced consolidator in the market
Acquisition of Dentrade in Norway and Denmark
2019
CDI Dental AB in Sweden
2017
2018
Ranked
Top 1-3 in market
share in all key markets
Successfully completed
10+acquisitions
over the years
Established STM Digital with Straumann Group
MicroDental#2 in North America
Formed JV – Peak Dental Solutions with Straumann group
Acquisition of DD Dental GmbH in Germany
2019 Annual Review
Section 2
Confidential
2018 Europe North America Greater China Australia Others 2019
Regional Performance
9
HKD million
+7
+5
+9
+48 -18
HKD million Europe North America
Greater China
Australia Others Total revenue*
2019 919 697 512 199 19 2,346
Change (%) +0.8% +1.3% +10.4% -8.1% +35.8% +2.2%
*Raw materials revenue, dental equipment revenue and the service revenue are subtracted from the revenue
2,295
2,346
Major reasonsfor the changes:
Depreciation of Euro against HK$ offset by annual increment of the retail price and increase in sales of dental equipment.
Successful introduction of high-end products, gradual phase out of lower value products and annual increment of the retail price.
Depreciation of RMB against HK$ offset by increase in sales of higher value products and volume growth
Depreciation of AUD against HK$ and decrease in service revenue
Confidential 11
2019 Financial Data Review
Net Profit
(1) Selected Expenses include, among others, certain one-off/ transaction-related/ non-cash-related expenses, including amortisation of intangible assets, one-off transaction costs, RSU related expenses, IPO expenses, loan arrangement fee.
103.1
157.4
83.2
160.4
0
50
100
150
200
250
2016 2017 2018 2019
Net Profit
HK$M
EPS and Dividend
10.23
15.60
8.60
16.50
3
4.6
3.3
5.3
0.00
4.00
8.00
12.00
16.00
20.00
2016 2017 2018 2019
EPS Dividend per share
HK cents
In 2019, repurchased 21,454,000 shares.
6,885,000 ordinary shares were cancelled during the Year
29% 29% 38% 32%
Payout ratio
Looking Forward
Section 3
Confidential 13
Future Prospects and Strategies
Joint venture and strategic alliance arrangements with key strategic partners
Continued integration of MicroDental Group under the new leadership; continue to phase out lower value products and turned our attention to higher value products to improve our margins
Additional distribution and joint venture arrangements with upstream suppliers
New products, such as orthodontic devices
Through further integrations, continuing organic growth, joint ventures and new products, the Group will go from strength-to-strength in consolidating
its status as the leading global dental prosthetic device provider
4
3
2
1
Confidential
Impacts of COVID-19 Outbreak / Trade Disputes
14
No tariff imposed on MDG’s products
Certain production facilities of the Group are strategically located outside of the PRCBeneficial to our sales in the US in a longer
term
Healthy financial position to stay strongHK$394m cash on hand & HK$342m net operating cash for 2019
Resilient dental business Short-term impact of deferral of sales
Confidential
Predictable and effective Results
Advanced CBCT Root Simulation
Medical Grade FDA Approved Materials
Clear Aligners
New Consumer Product – TrioClearTo be launched in 1Q2020 in HK, 2Q2020 in Australia & Europe and 4Q2020 in China & US
Comprehensive Clinical Simulation Software
15
Confidential
TrioClear – Opportunities and Advantages
A renowned supplier of high-quality
personalised denture products
Leveraging its existing customer base
(over 20,000 dentists worldwide)for cross-selling
For every 100 dentists, the potential sales
contribution is approximately HK$4 million
Global advantages of Modern Dental
Enormous market brings numerous opportunities
16
Malocclusion, or the misalignment of teeth, affects
billions of people or approximately 60% to 75%of the population
Annually, approximately 12 million people in major
developed regions affected by malocclusion seek treatment by dentists.
Approximately 300 million people with malocclusion
have yet to seek dental assistance, which presents an untapped potential market
Confidential
Dental ImplantExclusively distribute the products of Straumann, a global market leader in dental implants, in
Hong Kong and Macau starting in Q42019
17
Financial overview
Section 4
Confidential
Financial Performance Overview
(HK$’000) 2019 2018 Percentage Change
Revenue 2,399,548 2,315,467 +3.6%
Gross Profit 1,152,931 1,079,336 +6.8%
Gross Profit Margin 48.0% 46.6% +1.4p.p.
Net Profit 160,445 83,240 +92.7%
Working Capital Overview
(Days) 2019 2018 Change in days
Cash Conversion Cycle 75 days 73 days +2 day
Inventory Turnover Days 33 days 28 days +5 days
Trade Payable Days 20 days 18 days +2 days
Trade Receivable Turnover Days 61 days 63 days -2 days
19
Confidential
Balance Sheet Summary
(HK$’000) 31 December 2019 31 December 2018Percentage
Change
Non-current assets 2,338,624 2,146,692 +8.9%
Current assets 1,022,617 959,369 +6.6%
Current liabilities 476,440 305,082 +56.2%
Net current assets 546,177 654,287 -16.5%
Cash and cash equivalents 393,905 380,393 +3.6%
Non-current liabilities 862,394 808,777 +6.6%
Net assets 2,022,407 1,992,202 +1.5%
20
Confidential
Key Financial Ratios
31 December 2019 31 December 2018
Gearing ratio (a) 30.2% 24.9%
Current ratio (times) 2.1 times 3.1 times
Quick ratio (times) 1.9 times 2.8 times
Interest coverage ratio 9.0 3.6
Return (Adjusted net profit) on equity(b) 10.1% 8%
Net bank borrowings(c) / Adjusted EBITDA 1.02 1.51
(a) Gearing ratio is calculated by net debt divided by capital and net debt. Capital refers to Equity attributable to owners of the Company. Net debt includes interest-bearing bank loans and other borrowings, trade payables, other payables and accruals, lease liabilities, other non-current liabilities, deducted by restricted bank deposit, and cash and cash equivalents.
(b) Return on equity is calculated by profit attributable to owners of the Company divided by Equity attributable to owners of the Company.(c) Net bank borrowings is bank borrowings less cash and bank balance and pledged bank deposits.
21
Appendix
Confidential
Corporate structure
23
Note: The shareholding structure is based on the assumption that the green shoe option is not exercised.The calculation of shareholding percentage has been subject to rounding adjustments. Accordingly, the arithmetic aggregation of the figures may not add up to 100.0%.
Macau Holding(BVI)
Europe Holding(BVI)
Modern Dental Laboratory
Company Limited(HK)
HK Holding (BVI)
America Holding(BVI)
100% 100% 100% 100% 100% 100%
Australia Holding(BVI)
Modern Dental USA Permadental Elysee Labocast
100% 100% 100%
YZJModern Dental
ShenzhenSCDL
100% 100% 100%
The Company(Cayman Islands)
Modern Dental Holding(BVI)
100%
49.26% 16.74% 4.08%
Ngai FamilyChan Family Management Team and Others
Public shareholders
29.92%
top related