BY-HEALTH published its 2017 Annual Report: Great Progress and Potential for 

High Growth in 2018 Thanks to Driving Forces

2018.2.27

At the night of February 27, BY-HEALTH Co., Ltd (Stock Code: 300146; hereinafter referred as to "BY-HEALTH" or "the Company") published its 2017 Annual Report. The report shows that, in 2017, BY-HEALTH realized operating income of ￥3,111 million, increasing by 34.72% from the same period of last year; net profit attributable to shareholders of listed companies was ￥766 million, increasing by 43.17% compared with the same period of last year in the reporting period.

In 2017, BY-HEALTH closely followed the trend of consumption upgrade, completed the business integration and structural adjustment which have been initiated since 2016, pooled and reallocated excellent resources, launched the mode of Large Individual Product, supplied exclusive products for e-commerce channels for the first time in its history, and conducted domestic and cross-border e-commerce business, so as to reach a new high in operating income and profit, and form a new growth pattern.

High growth spurred by more than one driving forces

As global consumers become increasingly health-conscious, the market becomes more mature, and consumer demands escalates gradually, the dietary supplements market tends to be segmented and individualized. To adapt to new market conditions, BY-HEALTH started to implement the Large Individual Product strategy in 2017.

As the vanguard of the Large Individual Product strategy, KEYLID’s Glucosamine products were allocated with the advantageous market resources of BY-HEALTH, and a new profitable ecological chain was soon formed; BY-HEALTH achieved a growth of over 160% in this sector in 2017 and thus took up an advantageous position in joint health area. This not only signifies that BY-HEALTH went beyond its target of the first year for the development of Large Individual Product, but also turns out to be a creative and feasible marketing mode for new growth in the market.

Besides, BY-HEALTH's remarkable progress in pursuing the "e-commerce branding" strategy was a significant contribution to its overall performance. The Company's tactics of the differentiation strategy for offline channels were copied to online channels to gain greater competitive advantages in e-commerce channels. “By-health” main brands were strictly implemented according to the core principles of "safeguarding offline sales, safeguarding price and safeguarding the brand". In 2017, the Company increased exclusive products for e-commerce channel starting from online QS exclusive products to maintain and enlarge the leading position of "By-health" brand in the field of e-commerce health food. Together with the sports and nutrient segmented brand "GymMax" and joint venture brand "Nature's Bounty" and "MET-Rx", the Company seized up more online share through strategy of multi-brand operation. The year saw fast growth in online business, increase in its share in channels,and high rank in relevant categories on major e-commerce platforms.

In the field of "cross-border e-commerce", the Company combined online and offline resources to develop "Nature's Bounty" and "MET-Rx" of Jianzhibao, a joint venture of the Company, to achieve increasingly higher rank in cross-border businesses, and foster rapid growth of cross-border e-commerce, and layout their offline channels. Up to present, 6 products of Nature's Bounty by Jianzhibao were among the first batch of imported dietary supplements food products issued with the filing receipts. Jianzhibao's six natural treasure products are the first to obtain the imported health food registration certificate.

A new growth cycle by "driving itself all the way towards consumers"

In the past year, by implementing the strategies of "Large Individual Product", "e-commerce branding" and etc, BY-HEALTH basically completed business integration and structural adjustment, which laid a foundation for future development and allowed for a new growth cycle. In 2018, BY-HEALTH will further the implementation of the strategies of "developing Large Individual Product", "starting e-commerce branding 2.0" and etc, to accelerate growth and distribution.

With the adoption of the "Large Individual Product" strategy , the Company can enhance and expand its distribution channels, and thus not only improve its customer base among people aged 50 and over through offline channels, but also expand the base among young people through online channels, to increase its share of joint health area. At the same time, BY-HEALTH will start the pilot work concerning its second "Large Individual Product" in several model cities and continuously seek suitable modes to drive up the sales of all products with one individual product, to resolve the awkward situation of low percentage of new products and sluggish growth in dietary supplements through drugstores, and to gain more market share.

The adoption of e-commerce branding 2.0 will also be started in 2018. BY-HEALTH will commit itself to cultivating brand image and broadening its base among young consumers by its independent e-commerce brand system, its segmentation strategy for online and offline channels, and e-commerce digitalization. Besides, BY-HEALTH will further speed its cross-border e-commerce supply chain’s responding, and give full play to the advantages of "Nature's Bounty" and "MET-RX" as two international brands with a rich variety of products to consolidate its gains in cross-border e-commerce. BY-HEALTH will also develop imported product related business in offline channels.

In addition, "By-health" main brands were strictly implemented according to the core principles of "safeguarding offline sales, safeguarding price and safeguarding the brand". BY-HEALTH will strengthen its position in offline market, while making full use of its advantages in distributors and retailers, to realize continuous growth of all products and develop new market in offline channels.

Besides, the Company will keep adjusting paths and methods, and continue to promote the mergers and acquisitions under the guidance of overall strategy to create a "United Nations" of nourishments. In January 2018, BY-HEALTH announced that it intended to purchase 100% shares of Life-space, an Australian probiotic company. For this, Lin Zhicheng, CEO of the Company, remarked that the acquisition formed an important part of BY-HEALTH’s development in global market segments, and aimed to acquire “the future and enlargement effect of cooperation”.

Besides, in 2018, BY-HEALTH will continue to develop in the field of sports nutrition, consolidate the market position of "GymMax, its sports nutrition brand, and build such symbolic facilities as transparent factory and nutrition exploratorium to further boost its brand power and service power. At present, the increasingly distinctive business development mode will form a solid foundation for the future development of the Company and is proceeding with a new growth cycle. Under the sound market conditions, BY-HEALTH will have exciting prospects for growth in 2018.