On January 13, 2024, the advancement meeting for Chongqing’s started projects of key manufacturing enterprises in the first quarter of 2024 was held. As a business representative, SWS Hemodialysis Care Co., Ltd. (hereafter “SWS”) gathered significant attention as its blood purification industrial park has fully started construction. Chongqing Party Secretary YUAN Jiajun and Vice-Secretary/Mayor HU Henghua visited the SWS blood purification equipment and high-value consumable industrialization project, situated in the Liangjiang New Area, showing great interest in the development and plans of the company.

SWS Chairman Mr. GAO Guangyong introduced to Secretary YUAN on the company's development and the future plans for the new industrial park.

Secretary YUAN expressed acknowledgement for the company's new project planning as well as its vision to build a world-class hemodialysis brand. He encouraged the company to continue its local growth while engaging in the global market, actively pursue industrial upgrades, and become bigger and stronger through technological innovation.

As the first company from Chongqing listed on the SSE Science and Technology Innovation Board, and currently the only one in China's blood purification industry, SWS has been leveraging its industry-leading position to drive capacity upgrades through integrated development.

The initiation of the blood purification industrial park marks six breakthroughs for the company:

* Scale Upgrade

The total investment in the industrial park is about ¥2 billion, covering approximately 120 mu (19.77 acres) with a total construction area of around 200,000 square meters. This substantial increase in capacity aims to boost the development of both equipment and consumables, driving SWS to be a top player in the blood purification industry.

* Innovation Empowerment

The completion of the project will empower SWS's innovation and technological capabilities, marking a new chapter for the company and adding to the innovative dimension of the industry.

* Structural Optimization

The industrial park is planned to include an R&D center, an equipment production base, and a high-value consumables production base. It will invest in production lines for equipment, fiber spinning, dialyzers, hemoperfusion catridge , dialysate, dialysis powder and tubings, covering the entire blood purification field.

* Green Transformation

The industrial park will integrate green development into production and operations, guided by the principle of science-based, environmentally-friendly, and sustainable growth. It includes building wastewater and exhaust gas treatment systems, introducing solar photovoltaics to reduce energy demand, and optimizing energy use structures to make the park efficient, flexible, intelligent, and environmentally-friendly.

* Location Strategy

The industrial park not only creates synergies with SWS's existing production areas but also aligns with the company's long-term strategic planning. The project is located in the Lijia cluster of Chongqing's Liangjiang New Area, a hub for intelligent manufacturing which is expected to attract a batch of unicorn companies, industry leaders, and other large and medium-sized enterprises, and to develop small, high-growth businesses with specialties and great potentials, fostering a demonstration zone for "development and openness."

* Enterprise Upgrade

Upon completion, the project is expected to achieve an annual output of approximately ¥3 billion.

As a leading provider in the blood purification field with a comprehensive set of solutions, SWS is a national high-tech enterprise integrating blood purification equipment, consumables, intelligent management system, and a chain of blood dialysis centers. According to the company's performance forecast for 2023 (Not Officially Published yet ), it expects to achieve an annual operating income of ¥650 million to ¥720 million, an increase of ¥268 million to ¥338 million compared to the previous year, with a year-on-year growth rate of 70.15% to 88.48%. The expected net profit attributable to the parent company for 2023 is ¥160 million to ¥200 million, with a year-on-year increase of 170.1% to 237.63%, indicating a momentum of continuous high-speed growth.

It is noteworthy that while SWS's performance has significantly improved, its gross profit margin reached a ten-year high. In the first three quarters of 2023, the gross profit margin was 55.47%, surpassing most comparable companies in the industry. The rebound in gross profit margin is also attributed to the company's continuous increase in R&D investment, leading to enhanced product capabilities. According to the third-quarter report, SWS’s R&D expenses from January to September 2023 were ¥25.34 million, an increase of 56.5% compared to ¥16.19 million in the same period of 2022.