IPO Watch: Mediland Pharm wants $15m to tap Chinese tourists’ cash
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A brand new ‘daigou’ retailer is listing on the ASX, raising cash to start its own house-branded product range.
Mediland Pharm is looking to raise $12.5m-15m with shares at 20c, valuing the debt-free business at just over $51m.
They own retail stores in Sydney, Melbourne and Surfers Paradise which are specially designed for tour groups and ‘daigou’ buyers, wanting to buy Australian products.
‘Daigou’ is a specifically Chinese term which means to buy on behalf of, referring to people outside China who shop on behalf of a China resident.
Mediland wants a listing to give it access to capital markets and to access the reputational heft that being a listed company brings, which it can then present to businesses partners such as tour group operators.
Chinese tourists are still a growth industry
Daigou buying is a massive sector which companies like AuMake (ASX:AU8) and Food Revolution (ASX:FOD) are spending considerable sums to meet surging demand.
AuMake estimates the number of daigou shoppers active in Australia as high as 400,000, who send up to 200 parcels a day back to China. They spend as much as $600m every year.
Mediland reckons 50,000 Chinese visitors walked through its three stores in the 12 months to June 30 this year, almost all of whom were on organised tours.
The stores make most of their money from retail sales but 5 per cent comes from third party commissions: Mediland arranges for the tour groups that it pays to come to its stores to visit other shops as well.
The company notes that relying on these operators, to which it pays commissions, to bring tour groups to their stores is a risk, as is the rising phenomena of Chinese adults arranging their own travel.
Mediland estimates in its IPO prospectus that up to half of all Chinese travellers to Australia now are self-directed tourists rather than part of a tour group.
The company has turned a profit for the last three years, making $3.7m in fiscal 2018.
AuMake made an $11m loss in fiscal 2018, while Food Revolution made a $2.2m profit.
Second time lucky
It’s chaired by a man whose name has popped up in ASX director lists a few times before.
Peter French was at the helm of Australia WeTouch, a Chinese telco, when it was trying to list at the start of 2018, but that IPO wasn’t approved by the ASX.
Mr French was then invited to join Mediland. He is actually a cell and molecular biologist, founding cord blood stem cell storer Cryosite (ASX:CTE) associated with Benitec Biopharma (ASX:BLT) and Bioxyne (ASX:BXN).
The Mediland IPO offer opens on December 3 and the company anticipates listing on January 25.