Aumake Expanding Horizons Across Inter-State And Cross Border

Aumake Expanding Horizons Across Inter-State And Cross Border

Aumake International Limited (ASX: AU8) is into the retail business. It plays a significant role in creating a bridge between Australian suppliers with daigou and Chinese tourists. The company has an effective business relationship with the growing daigou and Chinese tourist markets, as it offers a one-stop-shop retail network. The products include healthcare, body care, and cosmetics, dairy products and baby food and wool and leather products.

The company today, on 15 March 2019, has published a report discussing its store network expansion across inter-state regions and globally. 

The company has come up with four new cross-border retail store locations in Sydney, Brisbane, and Auckland. In Sydney, it has opened two new stores in Campsie (daigou) and Haymarket (Chinese tourist). In Brisbane, the company acquired existing store and management by $150,000 cash and $300,000 fully paid ordinary shares with escrow of 12 months from the date of issue. In Auckland also it has acquired existing store and management through NZ$200,000 in AuMake fully paid ordinary shares with escrow of 12 months from the date of issue. The acquired was made below replacement value.

The opening of four new store stores is likely to increase the current internal sales forecast of the company by 30-40% over the next twelve months. Additionally, the entry into two completely new markets (Brisbane and Auckland) will help the company in providing additional opportunities to convert new customers of the company to online and repeat purchases.

The budget for the refurbishment and branding costs for these four additional stores is $580,000 approximately, with overall payback period to be less than twelve months, providing a highly attractive rate of return on investment. Inventory costs to service these stores are well covered utilizing existing working capital facilities. The fixed costs are expected to remain stable as the additional stores will utilise existing infrastructure such as the Auburn Warehouse for storage and distribution, as well as the head office for marketing and brand promotion. As per the expectation of the company, each new store will be profitable shortly after opening, net of direct operating costs, thus materially contributing to the profitability of the overall business.

As per the Executive Chairman, Keong Chan the new stores opening by the company is consistent with its strategic focus to rapidly grow its share of the $2.5 billion Australia and New Zealand cross-border retail market. Over the last twelve months, the company has continued to test and refine its business to get to a point where the model is both scalable and highly profitable.

On the price-performance front, the stock of Aumake International Limited is currently trading at $0.210, with a market capitalization of $54.29 million (AEST 1:18 PM). The stock has generated a negative YTD return of 20.0% and negative returns of 27.27% and 4.76% over the past six months and one-month period respectively. It had a 52-week high price of $0.360 and a 52-week low price of $0.180, with an average trading volume of ~209,295.


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