Roth China Discover Tour
May 17, 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.
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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
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Strong Base of Existing Business
~75% total sales generated through
OEM channels
World-class customer base
~55% of FY 2006 total sales derived from
top 10 customers
~62% of revenues in first six months of
FY 2007 derived from customers in
Europe and Japan
Current Main Customers
U.S. & Australia
Netherlands
Sweden
United Kingdom
Italy
Germany
Japan
Germany
United States
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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
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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 €
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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
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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
Regional Strategy
Market the “Winner” brand in Middle East, Southeast Asia, Latin America and Africa
In February 2007, established joint venture, Winner Medical Jordan Limited, to design,
manufacture and market “Winner” brand products in the Gulf region
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
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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
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Product Portfolio Highlights
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
Cohesive (self-adhering) bandage material
Winner Medical-developed, technology-driven product
Significant competitive advantage due to unique
weaving pattern
Low manufacturing costs
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Sample Product Offering
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Sample Product Offering
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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
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PurCotton™
Patented, potential “category killer” cotton product
Revolutionary new manufacturing process makes the PurCotton™ technology proprietary to
Winner Medical
Anticipate PurCotton patent in China will be issued by end of Q3 2007
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
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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
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PurCotton™ Sample Product Offering
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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
New 70% Cotton / 30% Polyester Nonwoven Products
Uses cotton instead of rayon as the raw material
Will compete with traditional nonwoven fabrics on price
Expected to supercede Winner Medical’s traditional
synthetic nonwoven products
Nano Antibiotic Material Products
Advantages:
Anti-inflammation and anti-bacterial
Increase ventilation, anti-viral and wound-cleansing properties and
enhance efficacy
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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
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FINANCIALS
Selected Quarterly Income Statement Highlights
$ 5.8 M
$ 6.3 M
$ 6.5 M
$ 11.3 M
$ 17.5 M
$ 63.9 M
Fiscal Year
2006
09/30/06
Second Quarter
FY 2006
03/31/06
Second Quarter
FY 2007
03/31/07
$ 1.4 M
$ 1.2 M
Net Income
(including Minority Interest)
$ 1.5 M
$ 0.98 M
Pre-tax Income
$ 1.5 M
$ 1.1 M
Operating Income
$ 2.2 M
$ 2.5 M
SG&A and other expenses
$ 3.5 M
$ 3.4 M
Gross Profit
$ 16.1 M
$ 15.1 M
Revenues
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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
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Q2 Net Sales – Past Three Years
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Net Sales – Fiscal Year Comparison
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Q2 Net Income – Past Three Years
* Q2’05 net income includes one time gain of approximately 1.05 M from the disposable of a subsidiary
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Net Income – Fiscal Year Comparison
* FY’05 net income includes one time gain of approximately 1.05 M from the disposable of a subsidiary
** FY’06 includes the first three quarters that Winner Medical was a U.S. listed company
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Selected Quarterly Balance Sheet Highlights
$ 67.2 M
$ 52.3 M
$ 0.1 M
$ 14.7 M
$ 67.2 M
$ 35.8 M
$ 29.8 M
$ 11.3 M
$ 4.3 M
September 30
2006
$ 41.4 M
Property, Plant & Equipment, net
$ 13.1 M
Inventories, net
$ 29.4 M
Total Current Assets
$ 72.5 M
Total Liabilities and Stockholders’
Equity
$ 56.2 M
Total Stockholders’ Equity
$ 0.2 M
Minority Interests
$ 16.1 M
Total Current Liabilities
$ 72.5 M
Total Assets
$ 4.2 M
Cash & Cash Equivalents
March 31
2007
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Capital Market Summary
Ticker Symbol WMDG
Market & nbsp; OTC Bulletin Board
Fiscal Year End September 30
Recent Price (as of May 11, 2007) $3.50
Shares Outstanding 44.7 million
Market Capitalization $156.5 million
Cash Position (as of Mar 31, 2007) $4.2 million
Working Capital (as of Mar 31, 2007) $13.3 million
Total Debt (as of Mar 31, 2007) $8.4 million
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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
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Thank you
investors@winnermedical.com
www.winnermedical.com
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