RTO Fact Sheet: AuMake International Limited (ASX: AU8)

RTO Fact Sheet: AuMake International Limited (ASX: AU8)

 

Overview

AuMake International (ASX: AU8) is a wholesaler and retailer selling a wide assortment of local products in the health, beauty and nutrition sectors. Such products include dairy and baby food, vitamins and supplements, body care and cosmetics, plus wool and leather. AU8 is a consolidation of two separate businesses, ITM and AuMake Australia. The consolidated company is the subject of an acquisition courtesy of a reverse takeover from Augend Limited (ASX: AUG).

AuMake’s strategy centres around the large number of Chinese tourists visiting Australia, as well as the ‘daigou’ channel servicing foreign customers, mostly in China. This is an informal channel of commerce where buyers and/or businesses located in Australia purchase goods on behalf of overseas customers. In an effort to maximise its range, the company intends to engage more closely with new and existing suppliers, and also produce some of its own products. At the same time, AuMake also intend to tailor marketing efforts to target tourists.

The company operates a distribution warehouse in Perth, as well as five retail stores and a warehouse in Sydney. Wholesale sales will be made through the company’s warehouses. Additional retail stores are envisaged in the next 12 to 24 months across major cities. This includes a ‘flagship’ store in Sydney’s CBD (late 2017). Online sales will be consolidated from two existing websites into one central ecommerce platform.

 

Offer Details

The reverse takeover includes 50m new shares being issued at $0.08 per share, for a minimum raise of $4m. A further $2m in oversubscriptions, or 25m shares, may be issued to new investors. The public offer is being run from the 21st of August until the 18th of September. Relisting on the ASX is anticipated in early October, subject to approval of the acquisition.

 

Investment Highlights

  • In 2016, approximately 1.2m Chinese tourists visited Australia, spending an estimated $9.2bn
  • Current estimates put the number of daigou in Australia at 40,000, with their number of customers believed to be up to 50m
  • Up to $600m in Australian products were sent to China last year via daigous
  • China’s daigou industry is estimated to turnover $96.4bn p.a. across the globe
  • The health, beauty and nutrition sectors have seen a notable increase in demand from Chinese consumers, with Australia viewed as a trusted market for safe and healthy products
  • Established business with growing revenue and operations set to expand
  • AuMake’s service streamlines sourcing, purchasing and delivery, while also promoting suppliers to foreign customers
  • Experienced Board with founders still active in the company’s management

 

Use of Funds

Under the offer, AuMake International is predominantly looking to use the funds to increase its product inventory. More than half of the proceeds will be allocated in this area.

Other funds will be used accordingly: to provide working capital; offer and acquisition costs; to develop a consolidated online sales platform; to manufacture private label products; and for marketing and business development.

 

Capital Structure

Existing shares will be consolidated on a 6:1 basis. Post consolidation, this leaves a total of just over 15m shares on issue. In addition to shares issued under the public offer, over 95m shares will be provided as consideration for the acquisition of shares in ITM. Other securities include: shares resulting from convertible notes and loans; performance shares; options; and facilitator shares.

Certain existing shares will be subject to escrow for up to 24 months. It should be noted however, the company intends to apply for a waiver regarding the ITM consideration shares, which would lower the proportion held in escrow.

 

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The information contained on this website in no way reflects the opinions of IPO Society. It is provided for informational services only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. The information is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. Detailed information may be needed to make an investment decision, for example: financial statements; a business plan; information about ownership of intellectual or industrial property; or expert opinions including valuations or auditors’ reports. The information contained on this website is not intended to be the only information on which an investment decision is made and is not a substitute for a disclosure document, product disclosure statement or any other notice that may be required under the Act, as the Act may apply to the investment.

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RTO Fact Sheet: AuMake International Limited (ASX: AU8)
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