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Modern Dental Group Announces 2022 Annual Results – Recorded the Second Highest Net Profit of HK$221 million and Built a Comprehensive Dental Ecosystem with High-quality Development

 

 

RESULTS HIGHLIGHTS:

● For the year ended 31 December 2022, the Group’s revenue was HK$2,830.1 million, representing a decrease of 4.2% YoY; the gross profit was HK$1,383.3 million, representing a decrease of 10.8% YoY; the gross profit margin was 48.9%; the net profit was HK$220.5 million, representing a decrease of 38.8% compared with the year ended 31 December 2021.

● For the year ended 31 December 2022, the European market recorded a revenue of approximately HK$1,180.6 million, accounting for 41.7% of the Group’s total revenue. The Group delivered an increase in original currency revenue of 4.9% compared with the year ended 31 December 2021.

● In 2022, the Group’s digital solution cases that are produced from its Mainland China production facilities increased to approximately 549,736 cases, reflecting an increase of 82.5% as compared with the same period in 2021. Sales of intra-oral scanners in the Europe region increased by 13.6% during the year.

● Basic earnings per share for the year ended 31 December 2022 amounted to HK23.1 cents.

● The Board recommended a final dividend of HK 4.4 cents per ordinary share, for the year ended 31 December 2022.

 

 

(30 March 2023, Hong Kong) – Modern Dental Group Limited (hereinafter referred to as “Modern Dental” or “the Group”, stock code: 03600. HK), a leading global dental prosthetic devices provider, announced its annual results for the year ended 31 December 2022 (“the year”).

 

Since the outbreak of the COVID-19 pandemic, the global economy has encountered unprecedented challenges. 2022 was a year filled with challenges and opportunities, during which the Group was continually affected by various pandemic measures adopted by the Chinese government, in particular affecting the Group’s production operations and its Mainland China-based customers and clients. However, the Group was resilient and persevered through all challenges, actively addressed the impact by enhancing product offerings and strengthening its core competitiveness. The Group was in a position to report its second highest record net profit of HK$221 million, revenue of HK$2,830 million and EBITDA of HK$463 million in 2022.

 

Meanwhile, the Group has successfully increased its market share in the industry and improved its customers’ and patients’ experiences by digital transformation, as the Group invests further in being the leading digitally-powered dental prosthetics company, which further allows the Group to differentiate itself from its competitors and outperform industry peers. The Group is committed to grow into more than just a one-stop-shop dental prosthetics provider, but a full dental ecosystem to support our customers.

 

European Business

The revenue generated from sales in the European markets accounted for the largest portion of the Goup’s revenue. During the year ended 31 December 2022, the European market recorded a revenue of approximately HK$1,180.6 million. This geographic market accounted for 41.7% of the Group’s total revenue. Although the operations of our Europe region was affected by the temporary suspension of the production operations in Mainland China in first quarter of 2022 as a result of the various COVID-19 pandemic measures and the depreciation of EUR against HKD by 10.3%. In fact, the Group delivered an increase in original currency revenue of 4.9% compared with the year ended 31 December 2021. The growth was driven by an increase in spending by consumers on specialty dental treatments and by digitalisation of, and adoption of intra-oral scanners in the dental market. In particular, sales of intra-oral scanners in the Europe region increased by 13.6% during the year. The Group has been the frontrunner to provide comprehensive digital solutions offerings, ranging from numerous minimal invasive and aesthetic prosthetic solutions to intra-oral scanners and clear aligners, and is well positioned to capture the opportunities arising from the accelerated digitalisation trend of the dental industry. The Group is committed and would continue to equip ourselves to provide the state-of-the-art digital solutions offering to the dental community in the market.

 

North American Business

The revenue generated from sales in the North American market represented the second largest portion of the Group’s revenue during the year. During the year ended 31 December 2022, the North American market recorded a revenue of approximately HK$709.3 million. This geographic market accounted for approximately 25.1% of the Group’s total revenue. During the year, the Group has the general softness from the inflationary pressure in the North American market. The constraints arose from the temporary suspension of Mainland China production in Q1 2022; and COVID-19 pandemic lockdown imposed in Canada in Q1 2022. The revenue of the North America market decreased by only approximately 1.3% as compared with the year ended 31 December 2021. Looking forward, the Group targets to utilise the newly set up Vietnam production facilities to establish a new business unit specialised in serving mid/large scale dental clinic chains customers in the US market.

 

Greater China Business

The Group’s Greater China market comprises Mainland China, Hong Kong and Macau. The revenue generated from sales in the Greater China market accounted for the third largest portion of the Group’s revenue. For the year ended 31 December 2022, the Greater China market recorded a revenue of approximately HK$666.7 million, accounting for approximately 23.6% of the Group’s total revenue. With the re-opening of the Mainland China market in 2023, the Group is positive in its outlook for this market in particular where the latest procurement-related government measures are expected to (i) standardise the pricing of dental prosthetics and develop price transparency, which would even out the playing field; (ii) allow the Group’s leading brand name and reputation to be a key consideration for its client and customer; and (iii) have the Group benefit from its large production team and its ability to allocate resources efficiently according to the customer or client. In fact, the Group’s substantial market share in the government orders in Hong Kong is a solid proof of the Group’s competitive advantages in gaining market share under a centralised procurement system given our competitive strength in products quality, advancement in products offering and financial resources. Looking ahead, Hong Kong is a market that continues to be dominated by the Group, as it seeks to further reinforce the position by starting an in-house laboratory in Hong Kong ’s only dental post-graduate training facility under the University of Hong Kong. The Group is  committed to supporting the development of the dental community in the region for long-term by increasing promotions of our latest state-of-the-art innovative solutions and products offering, and continuing to expand the depth and width of our products portfolios offering, such as adding mid-end products and clear aligners products in the Mainland China.

 

Australian Business

The Australian market includes both Australia and New Zealand. For the year ended 31 December 2022, the Australian market recorded a revenue of approximately HK$235.8 million. This geographic market accounted for approximately 8.3% of the Group’s total revenue, a decrease of approximately 5.8% compared to last year. The decrease of revenue from the Australian market was largely attributable to the decrease in sales order volume and the depreciation of AUD against HKD by 6.8% compared with the year ended 31 December 2021. During the year, the operations of the Group in the region was affected by the temporary suspension of Mainland China production in Q1 2022 and the business has gradually recovered since the second quarter of 2022. Similar to the Group’s strategy in Europe, where it is focusing on providing better local service, the Group has invested in local production capacity to provide faster service to its customers, and to provide choices around where the products are made. The Group is one of the largest players in the Australian market and is a preferred supplier to the major corporate dental groups in the market. Through the Group’s various brands, which offer onshore-and offshore-made products, at multiple price points ranging from economy and standard to premium/boutique, allowing it continues to effectively penetrate the entire Australian market.

 

Future Prospects

Notwithstanding any short or medium term challenges the global economy may face, the Board is confident that the medium and long-term global demand for dental prosthetics is expected to continue due to key irreversible demographic factors and trends. Following the Group’s vital and landmark acquisitions in previous years, its distribution and sales network is truly global. Going forward, the Group aims to reinforce its worldwide leading position through opportunistic transactions including strategic co-operations, acquisitions, joint ventures and/or partnerships, to further expand and complement its product-offering (in particular, the clear aligner products), distribution and sales networks which will in turn, drive business expansion. The Group’ s investment in Dongguan phase 2 and Vietnam production facilities are expected to provide the Group with greater production solutions and optionality which will in turn, increase the Group’s level of research and development in further enhancing its production and products.

 

Looking forward to the rest of 2023, with the Board’s extensive experience and determination to meet any short-term challenges, the Group is in an ideal position to take full advantage of, and will remain opportunistic in, any business opportunities in 2023 whilst remaining cautious and prudent in safeguarding shareholders’ interests.

 

 

About Modern Dental Group

 

Modern Dental Group Limited (Stock code: 03600.HK) is a leading global dental prosthetics provider, distributor and consultant with a focus on providing custom-made prostheses to customers in the growing prosthetics industry. Our product portfolio is broadly categorized into three product lines: fixed prosthetic devices, such as crowns and bridges; removable prosthetic devices, such as removable dentures; and other devices, such as orthodontic devices, sports guards, clear aligners, and anti-snoring devices.

 

Modern Dental Group has a global portfolio of respected brands, including Labocast, Permadental and Elysee Dental in Western Europe, YZJ Dental in China, Modern Dental Lab in Hong Kong, Microdental in the United States, Modern Dental Pacific in Australia, New Zealand and Ireland, Modern Dental SG in Singapore, Modern Dental TW in Taiwan, and Apex Digital Dental in Malaysia. We have grown these brands by providing premium and consistent quality products and superior customer service. We have more than 80 service centers in over 25 countries and serve over 30,000 customers.