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Public company info - Austar Lifesciences Ltd. , 06118.HK
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Austar Lifesciences Ltd., 06118.HK - Company Profile
Chairman Ho Kwok Keung, Mars
Share Issued (share) 513,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Machinery & Equipment
Corporate Profile Business Summary: The Group is principally engaged in providing integrated engineering solutions to pharmaceutical manufacturers and research institutes, as well as manufacturing and distribution of pharmaceutical equipment and consumables in the People’s Republic of China. Performance for the year: For the Year, the Group’s total revenue amounted to approximately RMB1,049.0 million, representing an increase of approximately 28.5% over 2018 The Group’s gross profit increased by approximately RMB79.8 million or 39.1% from approximately RMB204.4 million for the year ended 31 December 2018 to approximately RMB284.2 million for the Year. The gross profit margin increased from approximately 25.0% for the year ended 31 December 2018 to approximately 27.1% for the Year. Profit before income tax increased from approximately RMB3.5 million for the year ended 31 December 2018 to approximately RMB12.2 million for the Year. Profit for the year increased from approximately RMB0.1 million for the year ended 31 December 2018 to approximately RMB7.5 million for the Year. Business Review During the Year, the Group has recorded significant growth of approximately 28.6% of order-in-take and approximately 28.5% of revenue as compared to 2018. This trend of growth has been going on since 2018 and it is believed by the management that such growth pattern and momentum will continue at present and in the foreseeable future under the current market environment. The gross profit for 2019 recorded an increase of approximately 39.1%. The Group’s efforts of transformation including determination for structure reorganisation, which was started since 3 to 4 years ago, now started to see glimpse of achievement. In order to secure the driving elements for growth momentum in the coming few years, the Company has identified some key initiatives for change and improvement, namely, Global Expansion Strategies, AUSTAR Transformation Initiatives, Technology-Application Focus Branding, Knowledge Acquisition Enhancement and Core-Product Manufacturing. All these initiatives for growth require extra resources and additional expenses, which may adversely impact the Group’s net profit at this moment. However, it is expected that such initiatives will result in favourable results in the long run. With the Group’s corporate strategies and commitment on the Group’s visions and strategies, the Group will continue to be bold in investing in human resources, geographical expansion and enhancing product and application solution competences, with the intention to bring about more satisfactory business results for the Group’s shareholders. The Group has been positioning as a technology-based application solution provider with system integration capability to offer in the life-science industry focusing on pharmaceutical, biologics, bulk pharmaceutical chemical sectors and expanding to medical device, research laboratory animal, animal health sectors with products and services from consulting services, consumables, instruments, equipment, process systems, utility systems to turnkey solutions. The Group has been undergoing a serious review on its product lines and trying to find new technical solutions by combining various product lines together to offer the most cost-effective integrated solutions. Product-line restructuring will continue to facilitate application and solution offerings, and such restructuring will bring about competence improvement and enable the Group to be more resilient under tougher competitive circumstances. The Group is proudly looking forward to a more precise positioning as a technological company with comprehensive knowledge and experience in life-science process technology and applications and industry regulatory rules and practices, being able to help customers to address issues in quality, compliance and operation excellence. The Group’s vision statement which was revised and presented to the public in 2018 remains valid as guiding principles for the Group’s business segments to establish their own strategies: 1. to become a globally recognised best technical product and service and solution provider to pharmaceutical researchers and manufacturers; 2. to deploy resources of global world-class partners to build up all-round knowledge and connection of the whole drug product life cycle and to provide comprehensive and integrated technical solutions; and 3. to gather global resources and leverage products and services empowered with cost and technical advantageous features, and to help upgrading the pharmaceutical industry in emerging countries. Order-in-take During the Year, the total order-in-take amounted to approximately RMB1,435.9 million, representing a significant increase of approximately 28.6% from approximately RMB1,116.5 million for the year ended 31 December 2018, mainly attributable to the increase in order-in-take amount of the business segments of Liquid and Bioprocess System, Clean Room and Automation Control and Monitoring System, GMP Compliance Service and Life Science Consumables, but partially offset by the decrease in order-in-take amount of the business segments of Powder and Solid System and Distribution and Agency of Pharmaceutical Equipment. Driven by persistent marketing efforts especially through exhibitions, industry conferences and seminars, synergy and partnership sales model from the sales teams’ efforts together covering customers’ various demands of different products, supported by a strong and rich pipeline of products with high quality, and more business opportunities from more pharmaceutical industry CAPEX, the Group achieved a significant increase and strengthened its good position in the overall order-in-take volume, in spite of facing continuous keen market competition in the Year. The Company will keep on its investment in market, product development, LEAN manufacturing, as well as further recruiting talents in the sales teams both in domestic and overseas, technology application team, industry expertise and etc., to strengthen the comprehensive competitiveness of the Group as a technology-based application solution provider with system integration capability, which can intensively drive for further growth of the Group. Liquid and Bioprocess System Through several years of persistent endeavours, focusing on biopharmaceutical projects and strongly supported by experienced key account managers and good product with high quality and customised technology application, the Group gained market recognition, as well as a significant increase of order-in-take in the past two years. The order-in-take amount of the business segment of Liquid and Bioprocess System amounted to approximately RMB607.4 million for the Year, representing an outstanding increase of approximately RMB173.3 million or 39.9% from approximately RMB434.1 million for the year ended 31 December 2018. In the coming years, the Directors expect that there will be a huge growth potential in the biopharmaceutical field, as compared to the conventional pharmaceutical chemical field. The Group will endeavour to pursue sustainable developments, build core competitiveness through integration and rich process automation experience and knowledge in biopharmaceutical projects, strive for the high-end market in the PRC, and seek for more opportunities in the overseas market, supported by the Group’s partnership with H+E GmbH and the Group’s non-wholly owned subsidiary H+E Pharma GmbH (“H+E Pharma”) with the manufacturing facility in Dresden, Germany. Clean Room and Automation Control and Monitoring System Through building a unique competence by integrating new technology, continuously-improved automation control system and its partner’s latest equipment and software, the Group has successfully expanded its market share and experienced high growth in system turnkey engineering projects. The order-in-take amount of the business segment of Clean Room and Automation Control and Monitoring System increased by approximately RMB62.6 million or 23.3% from approximately RMB268.1 million for the year ended 31 December 2018 to approximately RMB330.7 million for the Year. The Group will devote to develop Pharma IT business as a system integrator to offer comprehensive automation and digitalisation systems and services, and enhance the Group’s competence. Powder and Solid System After the establishment of a new oral solid dosage (OSD) product line in 2015, the Group’s self-developed equipment has gradually gained market recognition. However, facing keen market competition, the order-in-take amount of the business segment of Powder and Solid System decreased slightly by approximately RMB7.1 million or 5.7% from approximately RMB125.5 million for the year ended 31 December 2018 to approximately RMB118.4 million for the Year. Supported by the value-added services of the formulation process laboratories, and leveraging all kinds of internal resources, the Group will continuously enhance its competitiveness and capture more opportunities in this business segment. GMP Compliance Service Driven by government regulations and secured by the Group’s good reputation in GMP compliance services, the Group was able to capture the strong increasing demand and expanded the Group’s market share in the high-end market. The order-in-take amount of the business segment of GMP Compliance Service increased by approximately RMB42.7 million or 91.6% from approximately RMB46.6 million for the year ended 31 December 2018 to approximately RMB89.3 million for the Year. Accompanied by the trend of stricter regulations and standards in GMP on-site inspection, there is huge potential of increased opportunities in this business segment. Life Science Consumables After several years’ effort on the integration of various products and services, the Group was able to offer a complete solution of Washing, Disinfection and Sterilisation. This unique competence made the business segment of Life Science Consumables continue to keep stable increase in the order-in-take amount by approximately RMB51.8 million or 24.0% from approximately RMB215.7 million for the year ended 31 December 2018 to approximately RMB267.5 million for the Year. The Group will continue to launch more diversified life science consumables and services with the latest technology to its customers. The single-use bioprocess bag material capacity expansion brought by the new facility of PALL-AUSTAR JV in the coming second quarter, is expected to drive the single-use system engineering business intensively. This segment still has a huge potential growth after the rapid growth in the past three years. Distribution and Agency of Pharmaceutical Equipment During the Year, the order-in-take amount of the business segment of Distribution and Agency of Pharmaceutical Equipment experienced a slight decrease by approximately RMB3.9 million or 14.6% from approximately RMB26.4 million for the year ended 31 December 2018 to approximately RMB22.5 million for the Year. The Group, together with its joint ventures and overseas business partners, will keep on engaging in the distribution of various types of high-end pharmaceutical equipments. Prospects: Increasing the market share in the emerging countries During the Year, STERIS Corporation granted a wholly-own subsidiary of the Group the exclusive rights for the sales of water equipments for injection and pure-steam. It will allow the Group to act as water system integrator with the STERIS products in India. STERIS and H+E Pharma, the Group’s subsidiary in co-operation with H+E GmbH, have started to work in Europe and its nearby regions for the sales and proposed a partnership to offer critical utility system turnkey solutions with Austar’s role as system integrator. As part of the Group’s global expansion strategies, a sales marketing and business development team in Europe with the disciplines of clean utilities, bioprocess equipment and systems, clean room systems and integrated fill and finish has been established. It allows additional sales and business development resources to explore more market opportunities in Europe, the Middle East and North Africa. A partnership of sales activity and project execution resources for Spain and Latin America market was negotiated in 2019 and hopefully a concrete action plan can be initiated in 2020. The Group’s market presence in the Middle East was strengthened by a new experienced business development leader recruited from and located in Jordan. After some years of market study, the Group has decided to develop the Group’s own team in Russia with the Group’s own subsidiary instead of forming a joint venture in Russia and the Commonwealth of Independent States (CIS) countries. The Group expects to secure a business development leader of Russia located in Moscow in mid-2020 and meanwhile, business development for Russia was managed by the Group’s Europe team and a lot of sales projects were under discussion. Sales territory development in Asia was under further evaluation in 2019 and a new experienced business development leader of East Asia and South Asia located in Malaysia will create growth opportunities in parallel with the existing growth of business in Hong Kong and Taiwan. The Group will further improve its agency management with better alignment. Identification, qualification and appointment of new agents in Asia, the Middle East and North Africa, and South America will help improve the Group’s market presence. Through the Group’s efforts in sales organisation consolidation and further integration of products, the Group’s order-in-take increased significantly in 2019 as compared to 2018. During the Year, there have been some significant breakthrough in the orders of the product-lines of freeze-dryers and clean room system engineering. It is believed that the Group’s market share in these two product lines will be further improved. In addition, a number of product lines of the Group which are now in their incubation phases are expected to mature gradually and to offer new streams of revenues for the Group. Increasing the market share in the PRC The growth of biopharmaceutical and pharmaceutical market in China has given the Company sufficient project orders for consolidating the concrete foundation for building core competence elements including product, technologies, knowledge and expertise. These elements can contribute to the growth of the Group’s business in other emerging countries. The strong pipeline of sales leads and project enquires in the emerging countries with now improved interfaces and elevated communication supported by more sales and proposal personnel can generate stronger stream of revenues for the Group in the coming years. Sales organisation in China has further aligned with the Group’s sector-focused strategies, including different sectors such as bulk pharmaceutical chemical, biologics, OSD, research sector, animal vaccine and lab animal research. The Group is gradually developing more sector-focused sales and proposal teams for each specific sector leveraging on the Group’s China territory sales teams. It is expected that such sector-focused strategies will bring about further growth driving elements. Proactive marketing and rebranding supported by social media, webinars, seminars and exhibitions could improve the Group’s brand awareness and allow customers to revisit the strength and technical improvement and new value propositions of the Group’s products and services. For project execution, customer satisfaction on the Company’s quality, value-price ratio and project-management control will definitely push up further the Company’s existing reputation in China. The Group believes that there is no competitor in China which has similar or closer project execution competence as the Company in terms of scale, integration capacities, project control tools and technical knowledge. Improving services and product offerings The Group has been developing 12 technology applications in the Group’s competence and knowledge model. The technology applications are namely: • Clean Utilities • Pharmaceutical automation and digitalization • Pharmaceutical formulation technology • Biopharma process and technology • Regulatory compliance and operation excellence • Laboratory technology and facilities • Biosafety technology and facilities • Cleaning, sterilization and disinfection • Clean room/HVAC/EMS/BMS • Quality/measurement and analytics • Filling, freeze-drying and inspection • Containment technology As disclosed in the Group’s 2018 Annual Report, individual specific technology application teams are being gradually established step by step to cover all 12 technology applications within 2 to 3 years. The Group’s approach of offerings would be gradually presented as a technology application solution provider instead of individual product lines and services. Each application team consists of internal Subject Matter Experts (SMEs), external consultants, Technical Advisory Committee (TAC) members, sales proposals and execution staff. Each application team will be able to facilitate the knowledge acquisition model. Each of the individual application team would formalise or revise their mission, visions and strategies under the following guiding principles: Mission:— 1. To help connect the scattered but related product lines into one package of products with one key application concept. 2. To solve the customers’ issues of quality, process, compliance and operational excellence. 3. To increase Austar’s technological competence level and thus improve Austar’s overall competitiveness as a key transformation initiative. Visions:— 1. Through the new value propositions from the technology application team’s efforts, business results of more than 50% can be achieved than by proposing a single solution. 2. Creating technological and commercial value to customers, staff and vendors through specific technology applications. 3. Branding as a global technology application leader in 5 to 8 years. Tactics and Strategic Goals:— 1. Using 4-level from Components/Software, Equipment, Systems to Application Solutions/ Facility to create partnership alliance among the sub-business units of the Group, vendors, suppliers and partners. 2.To become a regional technology application leader in 3 years and a global leader in 5 to 8 years. 3. Team establishment with common shared value and objectives with formalised cooperation structure and mechanism including meeting management and incentive scheme. The Group has its uniqueness in product offerings with the following capacities:– 1. Offering complete products and service by meeting the regulatory compliance requirements for instance, in solving the customers’ contamination control regulatory requirements, consumables, equipment, services are integrated to offer unique solutions to the customers. 2. Offering an integrated solution from the component/software level, to equipment level, to system level to tackle with an application issue – for instance as for containment application, components like flexible containment vessels, valves, to equipment level such as isolator and powder transfer equipment, are integrated to complete the OSD system under one roof. 3. Offering an integrated solution by integrated application technologies – for instance, combining the knowledge of HVAC, VHP, Environmental Monitoring System (EMS), Building Management System (BMS) and energy saving to offer an integrated and automated building solution. The service business would be one of the key growth elements within the Group’s business portfolios. Serious action has been taken to make preparation and planning for restructuring all services scattered around in different product lines in various business segments onto a harmonised portfolio of services. Ultimately, the Group’s goal is to achieve service professionalism, wider differentiation from competitors, better unification of scattered services with customised service plan and more efficient communications between the Group and the Group’s customers. The Group is further improving and strengthening its proposal and front-end engineering team resources to speed up the feedback for technical and commercial proposal requests. It is believed such initiatives would cater for the further surge of order-in-take in 2020 and in coming years.

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