Vanzo Holdings Berhad Launches IPO, Subscription Opens on 27th November 2024

Vanzo Holdings Berhad is an investment holding company. Through its subsidiaries, it is primarily engaged in the design, marketing, and sales of its own brand "Vanzo" air freshening products. Additionally, the company has multiple channels to reach customers, including e-commerce platforms, social media, and offline sales points.

Business expansion and marketing activities: Vanzo Holdings Berhad plans to use RM1.6 million (11.5%) of its IPO funds for business expansion and RM5.0 million (35.7%) for marketing and promotion in Malaysia, to boost product awareness and revenue.

Repayment of bank borrowings: The group plan to allocate RM3.0 million or 21.4% to partially repay  bank overdrafts and bankers’ acceptances which were mainly drawn down to finance general working capital requirements.

Working capital: The group plan to allocate RM0.7 million or 5.0% of IPO proceeds to fund working capital requirements for the purchase of inventories for Group’s expansion

Estimated listing expenses: The group plan to allocate RM3.7 million or 26.4% of IPO proceeds to meet the estimated expenses of Listing.

The company has achieved significant revenue growth over the past three years. From 2021 to 2022, the company's revenue increased from RM22.791 million to RM33.970 million, a growth rate of 49.2%; it then reached RM40.855 million in 2023, an increase of 20.3% year-on-year. Notably, the financial report for the first half of 2024 shows revenue reaching RM36.775 million, suggesting that the company may experience another substantial growth in revenue for the fiscal year of 2024.

In tandem with this, the company's gross profit has also seen robust growth. It soared from RM9.870 million in 2021 to RM15.263 million in 2022, an increase of 54.7%, and further rose to RM19.070 million in 2023, a 24.9% increase compared to the previous year. The faster growth in gross profit compared to revenue indicates that the company has been effective in cost control or product pricing strategies.

Net profit has also shown a positive development trend. Starting from RM3.038 million in 2021, it increased to RM4.275 million in 2022, a growth rate of 40.8%; subsequently, the net profit reached RM5.095 million in 2023, an increase of 19.2% compared to 2022.

Malaysia's air freshener industry experienced a compound annual growth rate (CAGR) of 10.7% from 2021 to 2023, and it is expected to continue growing at a CAGR of 9.0% from 2024 to 2026. This growth is driven by an increase in vehicle ownership, higher disposable income, accelerated urbanization, and a growing awareness of natural air freshener products.

In the broader Southeast Asian and Australian markets, the air freshener industry has also experienced growth, albeit at a more moderate pace. Since 2021, the industry size in this region has increased from $689.8 million to $711.9 million in 2023, with a compound annual growth rate of 1.6%. Forecasts indicate that by 2026, the industry will maintain a CAGR of 1.2%, with the market size expected to grow to $738.7 million (approximately RM3.4 billion).

Malaysia's personal care market grew at a CAGR of 10.3% from 2021 to 2023, while the home care market grew at a CAGR of 6.5% during the same period. It is projected that from 2024 to 2026, the personal care market will grow at a CAGR of 6.9%, and the home care market will grow at a CAGR of 5.4%. This growth is driven by Malaysia's long-term economic growth, population increase, the introduction of new products, and the rising demand for natural products. Vanzo Holdings Berhad, with its diversified product line, is poised to benefit from these growth trends.

Public issue of 93,351,000 new ordinary shares in company (“shares”) in the following manner:

• 23,338,000 new shares available for application by the Malaysian public;

• 23,338,000 new shares available for application by eligible directors, employees and

Persons who have contributed to company success;

• 46,675,000 new shares by way of private placement to selected investors.

Market Leadership: Vanzo Holdings Berhad held a market share of 13.3% in 2023, making it the largest local air freshener company in Malaysia.

Business Scope: The group has expanded beyond Malaysia to Brunei, Singapore, and Australia, demonstrating its regional expansion capabilities and potential in international markets.

Diversified Sales Channels: The group sells its products through various channels, including automotive parts distributors, fast-moving consumer goods (FMCG) distributors, retailers, proprietary retail kiosks, and online platforms (such as social media platforms and e-commerce marketplaces). This diversified sales strategy helps the company reach a broader customer base and increase market share.

Diversified Products: The group offers a range of automotive fragrances and indoor fragrance products, including canned perfumes, car air vent clip-on perfumes, reed diffusers, ultrasonic diffusers, essential oils, scented candles, and bathroom air fresheners. This diversity allows the company to meet the varying needs and preferences of different customers.

Innovation: The group plans to launch at least one new product series each year to adapt to market trends and consumer preferences. This ability to innovate helps the company maintain competitiveness and attract new customers.

Supplier Dependence: The group primarily collaborates with Foshan Ikeda for the development and outsourcing of air fresheners and fragrance products. Any significant supply disruptions or sudden cessations from Foshan Ikeda could lead to product shortages, affecting the company's ability to sell products to its customers.

Counterfeit Products: The group may face issues with unauthorized imitation or replication of product designs and labels by third parties. These counterfeit products are often sold at prices below the market rate, which could impact the company's market share and brand reputation.

Market Competition: The market for air fresheners and fragrance products is highly competitive, and the group may face intense competition from other brands, potentially affecting its market share and profitability.

Epidemics and Similar Outbreaks: The COVID-19 pandemic and similar outbreaks could impact the group's supply chain, production, and sales, thereby affecting its financial performance and business operations.

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