Modern Dental Group Limited
MODERN DENTAL GROUP DOUBLED ITS NET PROFIT TO HK$210M FOR THE FIRST HALF OF 2023 DRIVEN BY ACCELERATED DIGITALISATION IN DENTISTRY

MODERN DENTAL GROUP DOUBLED ITS NET PROFIT TO HK$210M FOR THE FIRST HALF OF 2023 DRIVEN BY ACCELERATED DIGITALISATION IN DENTISTRY

RESULTS HIGHLIGHTS:

●The Revenue for the six months ended 30 June 2023 was approximately HK$1,601,552,000, representing an increase of 12.1% as compared to the same period last year.

●The Gross Profit Margin for the six months ended 30 June 2023 was approximately 54.2%. Gross profit for the six months ended 30 June 2023 was approximately HK$867,319,000, representing an increase of 24.7% as compared to the same period last year.

●The Group’s EBITDA for the six months ended 30 June 2023 was approximately HK$369,754,000, representing an increase of 71.2% as compared to the same period last year.

●The Group’s Net Profit for the six months ended 30 June 2023 were approximately HK$210,276,000, representing an increase of 109.3% as compared to the same period last year.

●Basic earnings per share for the six months ended 30 June 2023 amounted to HK22.13 cents.

●The Board declared an interim dividend of HK6.0 cents per ordinary share for the six months ended 30 June 2023.

(29 August 2023, Hong Kong) – Modern Dental Group Limited (hereinafter referred to as “Modern Dental Group” or “the Group”, stock code: 03600.HK”), a leading global dental prosthetics provider, is pleased to announce the unaudited interim results for the six months ended 30 June 2023 (“the Period”).

In the first half of 2023, the Group continued to experience a steady and continued increase in demand for its products from existing, returning and new customers. The growth is primarily driven by the global digitalisation trend, which continues to accelerate the consolidation of the dental prosthetics industry. The digitalization trend has further allowed the Group to expand its market share in the industry, and the ongoing digital transformation is expected to improve the experiences of our customers and patients, enabling the Group to differentiate itself from its competitors and outperform the industry peers. The consolidation trend of the dental prosthetics industry is clearly continuing, and with the addition of our Vietnam production facility – the Group has the optionality to further improve its market positioning and protect its margins.

The Group’s results represent a solid execution across each of the Group’s markets operationally and financially, illustrating the Group’s ability to deliver strong financial results in a relatively stable operating environment characterized by consistent order volume growth, competitiveness in the industry, and close relationship with its clients and customers. The Group’s underlying fundamentals continue to be solid and we are well-positioned to capture further opportunities going forward.

European Business

The revenue generated from sales in the European markets accounted for the largest portion of our revenue. During the period under review, the European market recorded a revenue of approximately HK$710,045,000, representing an increase of approximately HK$93,615,000 as compared with the same period last year. This geographic market accounted for 44.3% of the Group’s total revenue. The increase of revenue from the European market was attributable to the increase in sales order volume driven by the launch of new products, such as digital dentures, and our state-of-the-art digital workflows.

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 will 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 our revenue in the period under review. During the period under review, the North American market recorded a revenue of approximately HK$393,656,000, representing an increase of approximately HK$31,208,000 as compared with the same period last year. This geographic market accounted for approximately 24.6% of the Group’s total revenue.

The clients’ interest surrounding digital dentistry continued to increase during the period. With our centralised digital workflows and network oversight over our wide coverage of production units within the region, the Group is well positioned to support the customers needs through their digitalisation journey, focusing on leveraging efficiencies and providing an enhanced customer experience throughout the network. The revenue of the North America market increased by approximately 8.6% as compared with the same period last year. Looking forward, the Group targets to utilise the newly set up Vietnam production facility to establish a new business unit specialised in serving mid/large scale dental clinic chains customers in the North American market.

Greater China Business

The revenue generated from sales in the Greater China market accounted for the third largest portion of our revenue in the period under review. During the period under review, the Greater China market recorded a revenue of approximately HK$351,203,000, representing an increase of approximately HK$31,964,000 as compared with the same period last year. This geographic market accounted for approximately 21.9% of the Group’s total. The increase of revenue from the Greater China market was largely attributable to the increase in sales orders volumes due to the increase in volume driven by the digitalization trend and the re-opening of Mainland China since late 2022.

The Group is optimistic in its mid/long-term 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 level 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. Our substantial market share of government-related orders in Hong Kong gives us confidence and highlights the Group’s competitive advantages in gaining market share under a centralised procurement system due to our competitive strength in products quality, product offering and financial resources.

Australian Business

During the period under review, the Australian market recorded a revenue of approximately HK$124,257,000 representing an increase of approximately HK$11,390,000 as compared with the same period last year. This geographic market accounted for approximately 7.8% of the Group’s total revenue. The increase of revenue from the Australian market was largely attributable to increase in the sales order volume driven by the digitalization trend and the re-opening of Mainland China.

Through our various brands, which offer onshore-and offshore-made products, at multiple price points ranging from economy and standard to premium/boutique, the Group is able to effectively penetrate the entire Australian market. We have invested in local production capacity to provide faster service to our 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.

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 our vital and landmark acquisitions in previous years, the Group’s 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 our product-offering (in particular, our clear aligner products), distribution and sales networks which will in turn, drive our business expansion. The Group continues to grow into more than just a one-stop shop dental prosthetic provider, but a full dental ecosystem to support our customers. 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 our 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. The Board is highly appreciative of the enormous efforts of our people, customers and suppliers during this unique time, as they work relentlessly to fulfil targets and maintain daily operations.

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, Modern Dental USA 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.