, and successfully listed on the A-share market in September last year.

However, as the epidemic gradually stabilizes, can the sound medical care supported by the profits of masks still be soaring on the performance track? Can it be "stable and long-lasting"?

Prepare for a rainy day and make contributions by producing masks

Opportunities only favor the prepared mind. The initial main business of Wenwen Medical was the production of medical dressings such as gauze and cotton swabs. Jingmen Wenwen Medical Textiles Co., Ltd. was established in Jingmen City, Hubei Province in December 1995. The founder Li Jianquan was determined to forge ahead and was the first to establish a full industrial chain of medical gauze from cotton procurement to spinning and weaving.

Feeling that the quality of Chinese products was lagging behind, he led the company's R&D team to tackle key problems and conduct independent research and development. As early as 1997, it was exported to Japan and the European Union with its excellent quality, and the finished sterilized gauze products were directly exported. , its products have obtained EU CE certification, US FDA certification and Japanese Ministry of Health and Welfare certification. Its medical dressings are sold to more than 70 countries around the world and have strong strength.

It can be said that China has opened up sales in the international market four years before it joined the World Trade Organization and has become the pride of a national brand. In 2009, Winner Medical's "winner" trademark was rated as a well-known trademark in China. In 2015, Wenwen Medical was rated as a national high-tech enterprise. It can be said that it is full of strength, low-key and not ostentatious.

The wheel of time came to December 2019, and the news of the new coronavirus pneumonia epidemic had just come out. No one expected that this gray swan would turn into a black rhino, eventually sweeping the world and continuing to this day.

Chairman Li Jianquan predicted in advance that with more than 20 years of industry sensitivity, he had a premonition that the demand for masks and other protective materials would increase in the future, so starting from December 20, 2019, Winner Medical began to produce masks. .

On January 10 this year, Winner Medical mobilized 380 people in the only mask workshop of its wholly-owned subsidiary. There will be no holidays during the Spring Festival. The wages of workers in the Hubei Huanggang mask production workshop reached 400 yuan per day, and the entire line of N95 was produced. Masks and other protective masks.

In just one month, Winner Medical worked overtime to produce and deliver more than 100 million masks and 110,000 sets of protective clothing. According to statistics, Winner Medical supplied an average of about 2.86 million masks per day during the same period, and the average daily supply of masks nationwide during the same period was 8 million. Winner Medical was the only company to produce more than one-third of the country's mask output, which can be said to be an outstanding achievement.

Insist on not increasing the price of masks

According to statistics, from January to May 2020 alone, Winner Medical provided a total of 470 million masks of various types and 4 million protective clothing to the country. As of the end of May 2020, a total of 210 million masks and 950,000 protective suits have been produced and exported, and have been shipped to countries such as Italy, France, the United States, Japan, and Singapore that are severely affected by the epidemic.

What is commendable is that although the raw materials for domestic masks increased sharply at that time, and the price of meltblown cloth increased from 3 to 5 times to 50 times at the highest later, Winner Medical remained unmoved and resisted the trend of profits. Temptation, insist on not raising prices.

This behavior won the favor of consumers and praise from dealers. During the same period, due to the price increase trend of many peers, some of the previously lost customers and even some of the competitors' customers also joined the purchasing army of Winner Medical.

In the first half of last year, Li Jianquan, Chairman of Winner Medical, his mobile phone and WeChat kept ringing every day. Almost all of them were requests for "special batch of masks" from various government enterprises and institutions. The demand was almost a blowout, and the production capacity was relatively small. It was limited, which put Li Jianquan in a dilemma.

Adhering to the social responsibility of being responsible for consumers and not raising prices has also won a good reputation in the industry and generous performance returns for Wenwen Medical.

On September 8, 2020, Winnian Medical (Huanggang) Co., Ltd., a subsidiary of Wenwen Medical, won the commendation of "National Advanced Group in Fighting the New Coronavirus Epidemic".

On October 14, 2020, Li Jianquan, Chairman of Winner Medical, was invited to attend the celebration meeting for the 40th anniversary of the establishment of the Shenzhen Special Economic Zone, and was awarded the Innovation and Entrepreneurship Figure and Advanced Figure Commendation for the 40th Anniversary of the Shenzhen Special Economic Zone.

In terms of performance, in the first three quarters of 2020, the sales of medical dressings of Wenwen Medical were 6.927 billion yuan, a year-on-year increase of 680.67.

According to the 2020 performance forecast released by the company in January this year, operating income is expected to be 11.5-13.5 billion yuan, a year-on-year increase of 151-195%; net profit attributable to the parent company is 3.65-3.95 billion yuan, a year-on-year increase of 568-623% .

The sub-brand Cotton Times public relations overturn

It is reported that Wenwen Medical owns three major brands: Wenjian Medical, Cotton Times, and Jinliang Life. The company has changed from a single gauze-based medical dressing production The company has developed into a leading health enterprise with cotton as its core raw material, mainly engaged in the research and development, production and sales of cotton products, covering medical and health, personal care, home care, maternal and infant care, home textiles and apparel and other fields.

Among them, Cotton Era played the biggest role before the outbreak. According to statistics, from 2017 to 2019, Wenwen Medical’s revenue was 3.5 billion yuan, 3.84 billion yuan, and 4.58 billion yuan respectively, and the corresponding net profits were 430 million yuan, 430 million yuan, and 540 million yuan respectively.

In the past three years, Cotton Times has achieved operating income of 2.14 billion yuan, 2.38 billion yuan, and 3.03 billion yuan, accounting for more than 60% of the overall revenue.

With the arrival of the epidemic, the revenue of medical dressings such as masks has increased significantly, and the revenue share of Cotton Times has declined. To make matters worse, in January this year, Cotton Times had an advertising and public relations overturn, which caused a huge impact on it. heavy losses.

Cotton Era was established in 2009 and specializes in daily consumer products for mothers, infants, and women such as diapers, sanitary napkins, wet wipes, and cotton pads. On January 7 this year, Cotton Times released a short video promoting its makeup remover wipes.

In this video, a beautiful young woman was followed by gangsters late at night. The heroine had an idea and took out makeup remover wipes from the cotton era to remove her makeup in a hurry. After removing the makeup, the beauty turned into a male face. , because the ugliness scared away the gangsters on the spot.

Soon Cotton Times’ advertisement was accused of “objectifying and vilifying women” due to its exaggerated propaganda and was pushed to the forefront of public opinion.

However, in the apology letter subsequently released by the official, only 20% of the content was a perfunctory apology, and the remaining 80% was long and boastful brand promotion.

This directly creates a negative teaching material for brand public relations in the industry, and consumers do not buy it even more. Many users left messages stating that they would never buy products from the cotton era again.

This failed public relations operation not only led to a decrease in users and brand recognition, but also caused a drop in the share price of the parent company Wenjian Medical and a significant reduction in market value.

On January 12 this year, the stock price of Wenwen Medical was still as high as 194 yuan per share, and the market value exceeded 80 billion yuan. Now, in just over two months, the stock price has dropped to around 135 yuan, and the market value is less than 60 billion yuan. .

Can sound medical care remain "stable and long-lasting" after the epidemic?

From January to March this year, major domestic securities firms are relatively optimistic about the market outlook for Steady Medical.

For example, CICC pointed out in its research report on January 26 this year that it is optimistic about the development prospects of Wenjian Medical as a leading health enterprise with coordinated development of medical care and consumption; CITIC Securities pointed out in its research report on February 19 this year that considering the relationship between Wenwen Medical’s medical consumables and Both consumer goods businesses have experienced rapid growth, with a target market value of 100 billion yuan, corresponding to a target price of 235 yuan. On March 21 this year, Tianfeng Securities maintained a buy rating on Steady Medical. However, ten fingers are unusually long, and there are still many concerns about sound medical treatment.

First, liquidity risk. Risks including accounts receivable and inventory are increasing. From 2016 to the first three quarters of 2020, Wenwen Medical’s accounts receivable were 291 million yuan, 320 million yuan, 422 million yuan, 416 million yuan and 920 million yuan respectively. Accounts receivable have doubled, posing challenges to corporate liquidity. How to prevent the risk of bad debts is key, and inventories are also growing rapidly.

The inventories from 2016 to the first three quarters of 2020 were 436 million yuan, 762 million yuan, 843 million yuan, 992 million yuan and 1.278 billion yuan respectively. On the one hand, funds are slowly withdrawn, and on the other hand, there is a risk of unsaleable products, both of which affect the company's capital liquidity and are not conducive to cash flow management.

The second is the decline in brand credibility. After the public relations crisis, the cotton era is faced with the dilemma of losing some users and difficulty in developing new users. Brand reputation and credibility have declined. There are still unknowns about how to expand online sales and the layout of new offline stores in business. Although in the long term, consumption upgrades will exist Good support.

Third, demand dropped after the epidemic. Stable Times expects net profit attributable to parent companies to be 3.65-3.95 billion yuan in 2020, a year-on-year increase of 568-623 yuan. Such a profit growth rate of five or six times is relatively rare among listed companies. Whether it can maintain sustained high growth in the future is also unknown.

As the epidemic situation stabilizes in the market outlook, the demand for masks and protective clothing in various countries around the world has gradually declined. Profits in the field of medical dressings no longer maintain the rapid growth in the past, and the all-cotton era has been adversely affected by crisis public relations and other issues. , it is not easy to achieve a significant breakthrough in performance.

Even Li Jianquan, chairman of Winner Medical, once said frankly that the growth rate of business after the outbreak was indeed unimaginable, but it is also difficult to maintain such high-speed operation for a long time.

Overall, Winner Medical is still a good leader in the medical and health field with good development prospects. However, it remains to be seen whether it can maintain the rapid growth of profits and continue to surge at five or six times the profit growth rate.