IPO Watch: Merino and Co – an Aussie wool icon in the stitching
IPO Watch
Wool product manufacturer Merino & Co has hopes of becoming the poster child of Australia’s wool industry following a $6.3m IPO yesterday.
One of eight companies to list in October, the premium wool brand joined the local bourse under the ticker ‘MNC’, opening at 20.5c per share before closing at 23.5c – a 17.5% lift on its 20c IPO price.
Founded by Fiona Yue and Tim Kang, third generation farming entrepreneurs from inner Mongolia, the company was formed 11 years ago after they led their own cashmere and distribution company for many years before migrating to Australia.
Both were heavily involved in the management and collaboration with Kingdeer and Erdos, two of the world’s largest cashmere producers.
Kang’s experience lies in the trading, manufacturing and supply chain optimisation of cashmere/wool products while Yue’s know-how lies in strategy implementation and partnership development.
Formerly known as Aclink, the business merged with Merinosnug and Hysport and started trading under the name ‘Merino & Co’ in 2020, around the same time the Australian Wool Network – the largest wool marketer in the country – started supporting and investing in the company.
Merino & Co delivered revenue and EBITDA respectively of $5.054m and $539,000 in FY2022 and $7.47m and $1.29m in FY2023 through the sale of wool clothing and apparel from its own showrooms, duty free shops, tourism sites, boutique stores and online.
While Australia is the largest producer globally of merino wool, accounting for 80% of the global total of 304 million kg in 2023, Yue told Stockhead she was surprised to find no-one was turning the material into garments when she settled in Oz a decade ago.
Merino & Co makes garments at the company’s facilities in Gnangara, WA before shipping nationally and to overseas markets such as Japan, Europe or the US.
In 2023, the global merino apparel retail market (at retail prices) was estimated at $730m, having grown from $610m in 2018 and forecast to reach $780m in 2025 with a CAGR of 3.6% between 2018 and 2025.
Speaking with Stockhead, Yue said the float would support the company’s ambitions to be a cultural icon.
“Australia has a strong connection with wool farming, and we believe it is important for the country to have a global icon representing the sector – everyone has heard of RM Williams, but we thought we needed to have an icon in the merino wool sector,” she said.
“Tourists who come to Australia want to bring something back home with them that is authentic and wool products are a good choice.”
Yue says the ASX listing will improve MNC’s visibility.
“For us, becoming a listed entity is first and foremost a branding exercise, there is nothing more credible than becoming a listed entity,” she said.
“It will open up distribution channels, partnerships, expand our realms for global talent and there is the capital injection side of it as well which will help us scale up efficiently.”
The company plans to use the funds to expand production capacity, carry out research and development, marketing and branding activities as well as preparing stock for wholesale orders.