Through its subsidiary, Vanzo Holdings Bhd (VANZO) is principally involved in the design, marketing and sale of air fragrance and fragrance-related products. Reportedly (as per Providence Strategic Partners) Malaysia's largest homegrown air fragrance company, VANZO has grown its range of products series and scents over the years. As at 31 Oct 2024, VANZO markets and sells 12 car and indoor fragrance product series as well as 4 personal and household care products with 28 scents, wherein the Group owns the formulation for 12 of these scents.

VANZO aims to enhance its retail presence in Malaysia by adding four new kiosks in high-traffic malls by 2026, building on its existing six kiosks as at 31 Oct 2024. Besides that, the Group plans to strengthen its marketing efforts through digital engagement, strategic collaborations and event sponsorships. Additionally, VANZO plans to expand its sales channels by increasing distributors and retailers, offering incentives and marketing support to drive growth over the next three years. In order to diversify its offerings, VANZO aims to introduce new co-formulated scent(s) annually. We derive a fair value of RM0.19 based on a 13.5x PE multiple to its FY25F EPS of 1.4sen. The IPO is expected to raise approximately RM14.0m from the issuance of 93.4m new shares, with 47.2% of the proceeds earmarked for business expansion and marketing activities.

• Growth drivers. VANZO's growth will be driven by: i) expansion of network of retail kiosks throughout Malaysia, ii) investment in marketing and promotion activities, iii) expansion of product range, and iv) expansion of sales channels.
• Competitive strengths. VANZO's competitive strengths include: i) leading homegrown air fragrance company, ii) various sales channels, iii) efficient warehouse management and prompt product delivery, iv) wide product range for diverse customer needs, v) harmful chemical-free products, vi) committed management team.
• Catalysts. Key drivers may include: i) increasing vehicle ownership, ii) rising disposable income, iii) rapid urbanisation, iv) growing number of residential and commercial properties, and v) a shift towards natural air fragrances due to health concerns.
• Key risks. Key downside risks, among others, include: i) competition, ii) changes in consumer preferences, iii) risk of counterfeit products, iv) fluctuation in foreign exchange rates, and v) credit risk from trade receivables.

Source: PublicInvest Research - 4 Dec 2024