Vanzo Holdings Berhad (VANZO, 0333) is set to debut on the Bursa Ace Market today. VANZO is a leading homegrown company primarily involved in the design, marketing, and sale of air fragrance and fragrance-related products. We project VANZO to register core net earnings of RM7.0m, and RM7.7m for FY25-FY26F. BUY with a fair value (FV) of RM0.23, based on a 15x PER (a 15% discount to the sector average due to its smaller market cap) over FY25F EPS.

With a 13.3% market share in Malaysia, VANZO is the largest homegrown air fragrance company, offering a portfolio of 11 products with 23 scents. Its strong distribution network includes online platforms, retail kiosks, and distributor partnerships. As VANZO prioritizes consumer health, the company ensures that its products are free from harmful chemicals, certified by reputable organizations like Universiti Sains Malaysia and SIRIM Bhd. The use of plant-based ingredients and efficient logistics further enhances its competitive edge.

VANZO’s expansion plan aims to enhance market presence by using 11.4% of IPO proceeds to establish four new retail kiosks in strategic locations across Malaysia. Additionally, the company plans to introduce at least one new product series annually, featuring co-formulated fragrances and collaborating with expert perfumers to offer a range of scent profiles, from luxury to budget-friendly options. This strategy will broaden Vanzo’s consumer base, drive product innovation, and strengthen brand loyalty.

Outlook for VANZO is promising, driven by growing consumer awareness of air fragrance products, particularly those with natural ingredients. The increasing demand for cars, along with the company’s expansion into the detergent market with fragranced laundry detergent capsules and softeners, presents significant growth opportunities. As VANZO expands beyond traditional car perfumes, its strong branding, broadening product portfolio, and expertise in fragrance innovation uniquely position the company to leverage on trends and distinguish itself within a competitive market.

With 21.4% of the IPO proceeds allocated to reduce bank borrowings, coupled with stronger net earnings growth expected in FY25, the company is poised to achieve a net cash position post IPO. However, the cash will be reduced gradually as proceeds from IPO will be used for business expansions.

Source: Rakuten Research - 17 Dec 2024

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