Corporate: Daigou store operator AuMake made a gross return of 520pc on Kiwibuy
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AuMake (ASX: AU8) predicted 2019 would be a good year for it and the prediction is proving accurate.
Last year it bought the ‘KiwiBuy’ franchise for $300,000 in AuMake shares. KiwiBuy has five stores in Sydney focused on daigou consumers.
Daigou alludes to the practice of purchasing goods (most notoriously infant formula) in bulk for other people. This happens among Chinese tourist groups as well as Australians with Chinese relatives.
Since the purchase, KiwiBuy has generated $10.8 million in revenue and $2.2 million in gross profit – a return of 520 per cent.
The company also updated shareholders on another acquisition it had made, Broadway. While it did not reveal financial figures, it told shareholders a “record number of Chinese travel agencies” had inquired with Broadway – a 30 per cent increase.
AuMake also said it was “highly encouraged” by Broadway’s financial and operational performance and trading conditions were “better than expected”.
The company has been in a transition plan to integrate the businesses and will take effective control on July 1.
On a company wide basis, AuMake reconfirmed its target of $100 million in revenue and materially positive EDITDA. It also expects increased sales online as well as sales of its own branded products.
While most AuMake stores are in Sydney, it has expanded into Queensland and New Zealand this year. Shares are currently trading at 16.5 cents, a 3.1 per cent increase from Friday’s price.
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