Special Report: Chinese tourism retail play Mediland Pharm debuted on the ASX after raising $12.6 million from investors.

Mediland Pharm (ASX:MPH) is using the cash to expand its current business — Australian stores that sell exclusively to Chinese tour groups – as well as develop an ecommerce platform that can service both tourists to Australia and customers living in China.

It had a market cap of $62.6m when it listed on Friday February 22 around 11am, after raising money at 20c a share.

Big investors

The company caught the attention of an international array of investors from Australia, New Zealand, China and Malaysia.

Investors were attracted by the fact that the company is profitable, Mediland chairman Dr Peter French told Stockhead.

“We’re a mature business with an established history of making solid profits,” he said.

“Now, we are pursuing an exciting growth strategy and investors have the opportunity to invest in a strong trend, that of Chinese demand for quality Australian products.”

The company has turned a profit for the last three years, making $3.6m in the 2018 financial year on sales of $34m. It has no debt and the funds raised in the initial public offering (IPO) will be primarily used to invest in growing the business.

Mediland saw 50,000 Chinese visitors walk through its three stores in the last financial year 2018, all of whom were on organised tours.

They’re big spenders too: recent numbers from Tourism Australia says Chinese tourists spend $8000 each on a trip to Australia, compared with $5000 per person by other international visitors.

Where the IPO funds are going

Mediland plans to use the cash to develop several new business and product lines.

It intends to expand its existing retail network with an upgrade to its existing Gold Coast store and potential new stores acquisitions.

It will invest in establishing an e-commerce platform through which those 50,000 Chinese tourists a year can become repeat buyers (and recommend Mediland products to their friends) directly from the company.

Dr French says an online store will provide customers who have already visited the stores with a way to keep buying products from the company, without having to make another trip back to Australia.

The company also plans to launch a pilot direct-to-customer retail store aimed at local Chinese residents and Chinese tourists not travelling via tour groups.

To top that all off, it is also looking at building a range of Australian-made house-branded products, in the key categories of healthcare supplements and cosmetics.

Positive vibes for the long term

The Mediland IPO was led by Sydney-based Bridge Street Capital Partners.

Alex Sundich, a director at Bridge Street Capital said: “China is now the largest source of in-bound tourist numbers into Australia and we expect the strong growth in this sector to continue.

“Mediland is well placed to take advantage of the strong growth in Chinese tourist numbers, which should enable the company and its shareholders to prosper over the medium to long term.

“The IPO and associated injection of capital is a game changer as it allows Mediland to accelerate its growth through traditional retail and online distribution channels.”

 

This story was developed in collaboration with Mediland Pharm, a Stockhead advertiser at the time of publishing.
This advice has been prepared without taking into account your objectives, financial situation or needs. You should, therefore, consider the appropriateness of the advice, in light of your own objectives, financial situation or needs, before acting on the advice. If this advice relates to the acquisition, or possible acquisition, of a particular financial product, the recipient should obtain a disclosure document, a Product Disclosure Statement or an offer document (PDS) relating to the product and consider the PDS before making any decision about whether to acquire the product.

Featured Companies

You might be interested in