Chinese internal viewing peepholes are set to be launched overseas

On March 21st, an investor asked Southern Micro Medicine: "Dear CEO, good day. Could you please tell us when the factory in Thailand is expected to be completed and when production will start?" The company's secretary replied: "Dear investors, according to the initial plans, the Southern Micro Medicine Thailand manufacturing center plans to begin production around the end of 2025. Thank you for your attention."

The construction of the Nanwei Medical Thailand manufacturing center has long been a closely watched project in the market. The groundbreaking ceremony for the project took place on January 9, 2025, in Ra Mon sub-district, Lok Karn district, Sing Buri府, Thailand, in a grand ceremony. At the groundbreaking ceremony, Nanwei Medical Chairman Long Xiaohui stated that the Thai manufacturing center is an important part of Nanwei Medical's new era strategy and a milestone in the company's development. By setting up in Thailand, Nanwei Medical will not only deliver high-quality medical products to patients around the world but also become a new platform for research and development, trade, and exchange cooperation.

The establishment of a manufacturing center in Thailand holds profound significance for Nanwei Medicine's global strategy. Firstly, Thailand's central location within Southeast Asia, with convenient transportation links, enables better coverage of international markets including the US, Europe, and Southeast Asia. Secondly, the Thai government offers a range of incentive policies to investing enterprises, including tax breaks and convenient land use, which provides strong support for Nanwei Medicine's overseas expansion.

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The production launch of Biosensors Thailand Manufacturing Center will bring new growth opportunities for the company. On the one hand, it will optimize the company's global supply chain, reduce production costs, and enhance product competitiveness. On the other hand, through local partnerships, Biosensors will further expand its overseas market and boost brand influence.

South China Medical Equipment Co., Ltd. has been actively expanding its overseas market presence and enhancing its risk management capabilities through the completion of the acquisition of Creo Medical Group plc's 51% stake in CME. As a result, CME has officially become a subsidiary of South China Medical Equipment Co., Ltd. The acquisition used its own capital not exceeding €3.672 million (approximately ¥2.89 billion), which has been incorporated into the combined financial report of the company.

Creo Medical, headquartered in the UK and listed on the London Stock Exchange (ticker: CREO), focuses on the development and commercialization of minimally invasive surgical devices in the field of surgical endoscopy. Its primary product is CROMA, an electrosurgical platform that provides microwave and bipolar radiofrequency energy for localized cutting via a single accessory port, offering a more efficient and precise solution for minimally invasive surgery. CME Company, a wholly-owned subsidiary of Creo, serves as a channel for the sale of medical device products. Its distribution portfolio includes Creo's own developed products and medical devices from other related companies in areas such as digestion, urology, respiration, and disposable endoscopes. Endoscopic consumables and disposable endoscopes accounted for nearly 70% of CME Company's revenue in 2023.

Following the collaboration, Creo's commercial platform will be strengthened, expanding the scope of its endoscopic therapeutic product range to all markets; enabling Creo to leverage Nancai Medical's specialized global distribution advantages; and allowing Creo to continue funding the ongoing strategic development of its core technology business. Additionally, Creo and Nancai Medical have agreed to explore joint branding and registration strategies to introduce certain Creo core products to the Chinese market.

The two major strategic significance are: 1. To expand our medical research capacity to provide more effective and efficient medical services to patients. 2. To build and strengthen our medical institution's reputation in the international medical field.

▪ One is to expand the European market, deepen the global layout: CME in Western Europe has a wide sales network covering the UK, Spain, and France, serving over 5000 medical institutions customers, which can expand the European market sales channels for South Micro. By leveraging this advantage, South Micro can better promote high-quality products to the European market, accelerate the overseas market expansion.

Second, building international brands to lead industry development: This acquisition is a crucial milestone in South Medical's internationalization strategy. The company will take this collaboration as an opportunity to further improve its global network layout and enhance South Micro Medicine's brand influence in the international market.

Nanwei Medical maintained steady growth in its overall performance in 2024. According to the company's announcement of its 2024 annual performance report, the total operating revenue reached 2,760.51 million yuan, an increase of 14.47% compared to the same period last year; the net profit attributable to the owners of the parent company was 551.67 million yuan, a year-on-year increase of 13.53%. This indicates that the company is still able to maintain good profitability and development momentum in a complex market environment.

In the first half of 2024, the company's domestic market sales revenue was approximately 706 million yuan, representing a year-on-year increase of 1.73%. This relatively modest growth was attributed to intense competition in the domestic market and the impact of centralized procurement policies. However, the international market performed exceptionally well, with sales revenue reaching approximately 624 million yuan, a year-on-year increase of 39.72%. Among these, MTU revenue reached 280 million yuan, up 38.6% year-on-year, and MTE revenue reached 220 million yuan, a 53.9% year-on-year increase. This growth was primarily driven by the continued expansion of overseas channels and the promotion of the company's own brands. The recent acquisitions of two channel companies in Portugal and Switzerland also contributed to the rapid growth of the European business.

In the second half of 2024, the company successfully developed a total of 6,958 million yuan in research and development funds, with 2,165 million yuan allocated to the Visual Technology project, accounting for 31.14% of the total research and development funds. These research and development investments provided a significant boost to the company's market growth in the domestic market. The company's innovative products, including the stent and stent-graft, were successfully promoted in the domestic market and gradually expanded to more hospitals, increasing market penetration.

South Micro Medical continued to maintain a stable growth trend in 2024 and made significant breakthroughs in the international market. Looking ahead, with the completion and operation of the manufacturing center in Thailand, the company will further optimize its global supply chain, reduce production costs, and enhance product competitiveness. Regarding how South Micro Medical will continue to advance research and innovation, expand its product line, expand into overseas markets, and enhance brand influence, Instrument Home will keep a close watch.