Financial Highlights

The following table sets out the financial highlights based on the company combined statements of profit or loss and other comprehensive income for the Period Under Review.

• The revenue increased from RM 22 million in FYE 2021 to RM 40 million in FYE 2023, indicating that the company is expanding its market share.
• The gross profit margin increased from 43.3% in FYE 2021 to 46.7% in FYE 2023, driven by collaboration with Bergamot in 2022, selling price adjustments due to forex fluctuations in 2023, and higher sales from car and indoor fragrance products in 2024.
• The PAT margin fell from 13.3% in FYE 2021 to 12.5% in FYE 2023.
• The gearing ratio is 1.0 in FYE 2023, due to higher outstanding bankers’ acceptances. This indicates that the company is more vulnerable to the risk of unexpected circumstances. (A healthy gearing ratio is between 0.25 and 0.5.)

Major customers and suppliers

Major Customers

The company's top 5 major customers for FPE 2024 are as follows:

The company is not dependent on any of its major customers.

Major Suppliers

The company's top 5 major suppliers for the Period Under Review are as follows:

In order to reduce the risk of exposure to the formulation and design of the products, the company has limited the number of appointed outsourced manufacturers. The company is dependent on Foshan Ikeda for the manufacturing of its air fragrance and fragrance related products. As the company owns the formulation for its scents, its agreement with Foshan Ikeda prohibits them from producing the same products for other customers. However, the company could still be able to engage with other outsourced manufacturers to produce its products based on their formulation.

Industry Overview

Air fragrance products refer to scented products intended for use in a confined space such as in a vehicle, room, bathroom or office. Their function is to deodorise the air and neutralise any unpleasant odours. In addition, they may be used to enhance an environment and elevate mood, such as at a spa. Scents can evoke emotions and moods such as relaxation, romance and fun. This is because the olfactory system, which is the sensory system for smelling, recognises scents and relates them to a previous experience. In addition, air fragrance products may be blended with essential oils to provide a variety of benefits such as relieving stress, decreasing anxiety and improving sleep quality.

The air fragrance industry may generally be segmented as follows:

The value chain of the air fragrance industry is as depicted below:

The air fragrance industry in Malaysia can be measured by the value of air fragrance products sold in the country. The air fragrance industry in Malaysia grew from RM244.2 million in 2021 to RM299.2 million in 2023 at a compound annual growth rate (“CAGR”) of 10.7%. Moving forward, the air fragrance industry in Malaysia is forecast to grow by a further CAGR of 9.0%, from an estimated RM326.1 million in 2024 to RM387.5 million in 2026.

The key drivers in this industry:

• Growing vehicle ownership, which will increase demand for car fragrance products and contribute to the growth of the air fragrance industry
• Rising disposable income and rapid urbanisation, which are expected to drive demand for air fragrance products
• The growing number of residential and commercial properties, will create a higher demand for air fragrance products

Sources: PROVIDENCE

Future plans and strategies for VANZO HOLDINGS BERHAD

The company's business strategies and future plans are as follows:

1. Strengthen its presence within Malaysia by setting up new retail kiosks
2. Strengthen the company’s brand and grow the market share within Malaysia
3. Enhance distribution reach by expanding sales channels

MQ Trader View

Opportunities

1. The company is a leading homegrown air fragrance brand in Malaysia with an established in-house brand
2. The company provides a range of air fragrance and fragrance related products to cater to different customer needs

Risk

1. The company is dependent on its fragrance manufacturer, Foshan Ikeda
2. The company is exposed to risk relating to failure to protect its proprietary formulation for the scents of the products
3. The company is exposed to interest rate and credit risks

Click here to continue the IPO - Vanzo Holdings Berhad (Part 1)

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