Investor Presentation
January 2007
Winner Medical Group Inc.
(OTCBB: WMDG)
Safe Harbor Statement
This presentation contains certain statements that may include ''forward looking
statements'' within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
All statements, other than statements of historical fact included herein are "forward-
looking statements" including statements regarding Winner Medical Group Inc. and
its subsidiary companies business strategy, plans and objective and statements of
non-historical information. These forward looking statements are often identified by
the use of forward-looking terminology such as "believes," "expects" or similar
expressions, involve known and unknown risks and uncertainties. Although Winner
Medical Group Inc. believes that the expectations reflected in these forward-looking
statements are reasonable, they do involve assumptions, risks and uncertainties,
and these expectations may prove to be incorrect. You should not place undue
reliance on these forward-looking statements, which speak only as of the date of
this press release. Winner Medical Group Inc.'s actual results could differ materially
from those anticipated in these forward-looking statements as a result of a variety of
factors, including those discussed in Winner Medical Group Inc.'s periodic reports
that are filed with and available from the Securities and Exchange Commission. All
forward-looking statements attributable to Winner Medical Group Inc. or persons
acting on its behalf are expressly qualified in their entirety by these factors. Other
than as required under the securities laws, Winner Medical Group Inc. does not
assume a duty to update these forward-looking statements.
2
Investment Highlights
Premier manufacturer of cotton surgical dressings and disposable medical
products
Patented comprehensive product portfolio with significant competitive advantages
Leading Chinese exporter of medical disposables
#1 ranked Chinese exporter of cotton wadding, gauze and bandage supplies 2002-2005
Winner Medical’s products account for ~10% of China’s total medical disposables
exports market
Long standing relationships with tier one international distribution channels
Partnerships with world-class medical supply OEMs in Japan, Europe and the U.S.
Typical customer relationship averages 8+ years
U.S. FDA approved for direct import of sterilized surgical dressings
One of few Chinese companies approved for direct import of sterilized products into U.S.
Winner Shenzhen benefits from special tax exempt status
Granted by Shenzhen Bureau of Science Technology & Information – April 2006
50% tax exemption until 2011
3
Strong Base of Existing Business
~75% total sales generated
through OEM channels
Strong Net Sales growth
FY 2002 – 2006 CAGR
~33%
World-class customer base
~55% of FY 2006 total sales derived
from top 10 customers
Current Main Customers
U.S. & Australia
Netherlands
Belgium
Sweden
United Kingdom
Italy
Germany
Japan
Germany
4
Medical Disposable Supplies Market – U.S.
Total U.S. medical disposable
supplies market was $54 billion
2002
Non-woven and wound management
disposables accounted for 7% and
10% respectively
Total U.S. medical disposable
supplies market is expected to
grow to $79 billion by 2007
Source: Freedonia Group www.freedoniagroup.com, www.the-infoshop.com
US Disposable Medical Supplies Market – $$54 billion in 2002
US Disposables Market – $in $billions
5
Medical Disposable Supplies Market – Europe
The EU medical disposable
supplies market increased from
€6.5 billion in 1998 to € 12.4 billion
in 2003
Chinese imports accounted for
~6% of the total EU imports of
cotton wadding, gauze and
bandages
Source: CBI - the Centre for the Promotion of Imports from developing countries, is an
agency of the Netherlands Ministry of Foreign Affairs. www.cbi.nl
2004 EU Imports of Wadding, Gauze and Bandages
EU disposables consumption in Billion €
6
Growth Strategy
Nano assisted antibiotic materials
(Projected to be additive to future woven gauze products)
Revenue anticipated FY 2008
Cohesive and Self-Adhesive bandage materials
Revenue generation effective first quarter of CY 2006
PurCotton™
NEW - Non-woven, cotton spunlace product
Revenue expected to commence in the first half of FY 2007
Sterilized products
Higher gross margins
Non-sterilized products
Transition from low margin to high margin products
Leverage R&D to introduce new products
7
Growth Strategy – Market Expansion
International Strategy
Leverage existing OEM partnerships to aggressively market new Winner
Medical products in Japan, Europe and the U.S.
Shift product focus to higher margin, sterilized products
Develop new OEM relationships
Continually seek new distributors to extend Winner Medical’s reach into new
markets and expand reach in existing markets
Domestic Strategy
Aggressively market Winner Medical products in China
Third party estimates expect increased demand and strong growth for health
care products in China
Regional Strategy
Market the “Winner” brand in Middle East, Southeast Asia, Latin America and
Africa
These emerging markets offer dramatic growth potential and substantial
opportunity for the sale of “low cost, high quality alternatives” to products
produced by large multinational companies
8
Chinese Export Growth Potential
Total US and EU cotton wadding, gauze and bandage supplies market
was ~$5.3 billion in 2004
Chinese exports accounted for ~11% of this market, or ~$600 million
Winner Medical has commanded the leading China export position since
2002
Source: CBI, Freedonia Group, China ecommerce network, Winner management estimates
9
Product Portfolio
Wide-ranging portfolio of medical supply products
Surgical dressings, dressing packs, wound care dressings, protective products,
medical instruments, dental products and hygiene products for the institutional and
home care markets
PurCotton™ – patented, potential “category killer” cotton product
Winner Medical-developed, technology-driven product
Possesses similar advantages to cotton gauze products (absorbent, non-allergenic,
biodegradable), without the disadvantages (micro-organism attachment, fiber loss,
shredding, raw edges, etc.)
Low manufacturing costs
New cohesive (self-adhering) bandage material
Winner Medical-developed, technology-driven product
Significant competitive advantage due to unique weaving pattern
Low manufacturing costs
10
Sample Product Offering
11
Sterilized Products
Higher margin products
U.S. FDA approved for direct export
of sterilized surgical dressings
One of few Chinese companies
approved for direct export to U.S.
Direct shipment allows for customers
to take advantage of Winner
Medical’s lower labor costs and more
efficient workflow process
Most Chinese manufacturers ship
product in bulk to U.S., where it is then
sterilized and repacked, increasing the
cost of the product
Winner plans to capitalize on its
FDA registration to:
Grow sales from a competitive
advantage
Improve gross margin through sale of
higher margin products
12
PurCotton™
Patented, potential “category killer” cotton product
Revolutionary new manufacturing process makes the PurCotton™ technology
proprietary to Winner Medical
Non-woven spunlace material utilizing cotton rather than petrochemical
fiber (polyester/rayon) as the raw material
Non-woven products are the largest and fast-growing segment within the medical
disposables market
Product Advantages:
Strong, durable fabric
Absorbency is superior to traditional cotton gauze
PurCotton™ has higher tensile strength and lower weight than woven alternatives
Does not produce the extraneous fibers and shredding characteristic of traditional cotton
gauze, which is known to exacerbate microbial infection propensity and increase wound
healing complications
Significantly lower manufacturing cost than woven gauze
The technology is expected to eliminate ~90% of labor costs and significantly reduce
production cycle time
“Green” product that is non-allergenic and fully biodegradable
13
PurCotton™ Target Markets
Traditional woven cotton market
Significant product and cost advantages of PurCotton™ are expected to generate
immediate interest and demand for the product
Global medical disposables market is expected to grow 5-6% annually through 2010,
with the non-woven segment growth projected to be 7-8% annually
Industrial and home hygiene markets
Strong application for the industrial and home hygiene markets
Primary applications are expected to be wipes, cloths, etc.
Rolls of PurCotton™ will be produced according to specifications from finished
product manufacturers and shipped in bulk to the manufacturers’ factories for final
finishing, packaging and shipment.
Source: CBI, Freedonia Group
14
Additional Product Opportunities
Self-adhesive and Cohesive Bandages
Technologically superior products at lower cost
Product design enables uniform tearing
without use of ancillary tools
(weaving technology)
Product cost advantages:
Fully integrated production in low cost
Winner Medical factories
Revolutionary adhesive coating technology eliminates
approximately 80% of adhesive application waste
Nano antibiotic materials
Advantages:
Anti-inflammation and anti-bacterial
Increase ventilation, anti-viral and wound-cleansing properties and
enhance efficacy
15
Facilities
2 Winner industrial parks (Shenzhen
and Huanggang)
8 factories in Hubei Province, Shanghai,
and Zhuhai
All facilities in China: nearly 600,000
square meters
New PurCotton™ facility in
Huanggang
ISO 9001: 2000, ISO 13485: 2003 and
CE certification
R&D efforts
Joint research program with Hong Kong
Polytechnic University
16
FINANCIALS
Selected Income Statement
$ 1.2 M
$ 1.5 M
$ 1.7 M
$ 4.0 M
$ 5.7 M
$ 20.3 M
Fiscal Year
Ended
9/30/02
$ 2.3 M
$ 2.4 M
$ 2.8 M
$ 6.1M
$ 8.8 M
$ 31.8 M
Fiscal Year
Ended
9/30/03
$ 4.4 M
$ 4.7 M
$ 5.1 M
$ 6.6 M
$ 11.5 M
$ 44.3 M
Fiscal Year
Ended
9/30/04
Fiscal Year
Ended
9/30/05
Fiscal Year
Ended
9/30/06
$ 7.9 M
$ 5.8M
Net Income
(including Minority Interest)
$ 8.4 M
$ 6.3 M
Pre-tax Income
$ 7.8 M
$ 6.5 M
Operating Income
$ 8.8 M
$ 11.3 M
SG&A and other expenses
$ 16.3 M
$ 17.5 M
Gross Profit
$ 58.4 M
$ 63.9 M
Revenues
18
Revenue Mix and Sources
Winner Medical’s products are exported to approximately 80 countries and
120 firms worldwide
Distribution channels
U.S., Japan and Europe: OEM suppliers
Developing countries: Winner brand
19
Selected Balance Sheet Highlights
$ 54.2 M
$ 34.4 M
$ 1.2 M
$ 18.7 M
$ 54.2 M
$ 26.8 M
$ 25.8 M
$ 10.5 M
$ 2.7 M
9/30/05
$ 44.8 M
$ 27.6 M
$ 1.0 M
$ 16.2 M
$ 44.8 M
$ 25.7 M
$ 18.7 M
$ 8.7 M
$ 1.5 M
9/30/04
$ 39.2 M
$ 23.2 M
$ 1.0 M
$ 15.0 M
$ 39.2 M
$ 20.6 M
$ 18.5 M
$ 7.1 M
$ 1.6 M
9/30/03
$ 21.2 M
$ 35.8 M
Property, Plant & Equipment,
net
$ 5.9 M
$ 11.3 M
Inventories, net
$ 11.6 M
$ 29.8 M
Total Current Assets
$ 31.6 M
$ 67.2 M
Total Liabilities and
Stockholders’ Equity
$ 16.3 M
$ 52.3 M
Total Stockholders’ Equity
$ 1.0 M
$ 0.1 M
Minority Interest
$ 14.3 M
$ 14.7 M
Total Current Liabilities
$ 31.6 M
$ 67.2 M
Total Assets
$ 0.4 M
$ 4.3 M
Cash & Cash Equivalents
9/30/02
9/30/06
20
Capital Market Summary
Ticker Symbol WMDG
Market & nbsp; OTC Bulletin Board
Fiscal Year End September 30
Recent Price (as of Jan 5, 2007) $4.00
Shares Outstanding 44.7 million
Market Capitalization $178.8 million
Cash Position (as of Sept 30, 2006) $4.3 million
Working Capital (as of Sept 30, 2006) $15.1 million
Total Debt (as of Sept 30, 2006) $5.4 million
21
Summary
Winner Medical is the “best in class” manufacturer of cotton surgical
dressings and disposable medical products with a strong base of
revenues, customers and capabilities
Global surgical dressings and medical disposable supplies market is expected
to continue to generate strong demand
Winner Medical’s strategies of superior products/product quality, cost
advantage and logistics excellence have created long term competitive
advantage
Sales growth and gross margin improvement will come from shift in product mix
to higher margin sterilized products, especially new products such as
PurCotton™, Cohesive and Self-adhesive bandages
Winner Medical is well positioned with R&D capabilities to both create
and capitalize on significant future opportunities
22
Thank you
investors@winnermedical.com
www.winnermedical.com
23
