Daigou specialist AuMake will expand into Queensland and New Zealand, expects ’30-40%’ sales growth
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Last year, 1.3 million Chinese tourists visited Australia and a similar number of residents are of Chinese descent.
There are no shortage of businesses reaching out to this market and AuMake (ASX: AU8) is one of them. They operate retail stores for tourists and the practice of daigou – meaning buying goods in the West on behalf of someone in China.
While AuMake operate 13 stores, all of them are in Sydney but now they are expanding into Queensland and New Zealand.
The company announced to investors this morning it had acquired four new stores and two of these were in these new markets.
In Brisbane, it acquired a 300sqm retail store in Brisbane’s Queen St Mall for $450,000 – $300,000 of which is in AuMake shares. The purchase comes with an existing management team that has 15 years experience serving the daigou market.
It will also open a store in Auckland, again acquiring an existing Chinese-tourist focused store, in the shopping precinct of Grafton, for NZ$200,000, all paid in shares.
While the refurbishment bill across all four new stores (the other two in Sydney) will be $580,000, AuMake reckons it will get its money’s worth in 12 months.
But are these opening sustainable? The company is telling investors sales could increase by 30-40% in the next 12 months.
Executive chairman Keong Chan has told investors AuMake’s model is proven to be “both scalable and highly profitable”.
“We are highly proficient in identifying locations, which products will sell in that location, how to assess the capability of store management, what supply chain is most efficient to get the products to market quickly and how to tailor store marketing campaigns to deliver the greatest return on investment,” he said.
“The current retail network is highly profitable and we are confident that future stores, including the four stores that we have announced today, will follow the same profitable growth path.
“This growth in store profit will soon surpass the costs to run our business and will ultimately deliver long term growth and sustainable returns to our shareholders.”
AuMake shares have nearly halved since October’s high of 35 cents. But they made a modest 5% jump at the market open to 21 cents.