IPO Analysis - EZZ Life Science Holdings Limited EZZ

From the prospectus ,Company Presentation , Media articles and company website

IPO Price 50c
Existing shares ( Before IPO ) 30 mil
IPO raise 6 mil ( 12 Mil Shares )
Cash 8.3 mil
SOI 42 mil
EV 12.6 mil
Mcap 21 mil

Escrow Management : 30 mil shares escrowed for 12 to 24 months period ( All existing shares are escrowed )

EZZ Life Science Holdings Limited is a skin care and consumer health company.

The company is an exclusive wholesale distributor for the EAORON brand of skin care products across Australia and New Zealand; and also develops, manufactures, and distributes their own range of consumer health products within Australia and New Zealand as well as to consumers in China, with plans to expand into other international markets.

EZZ has built a considerable market position, with the EAORON brand holding 17.8% to 25.3% of the total facial mask retail market in Australia and New Zealand. EZZ NMN NAD+ Stay Young being ranked as the second best-selling product on Tmall Global among overseas female dietary supplements by revenue in October 2020; and Since being established in July 2018, the company has experienced significant year-over-year revenue growth (+52% to A$16.95m in FY20) driven by the company’s key strengths of utilising market-based learning, marketing capability and its management team with 20+ years of industry experience.

The skin care and consumer health product segments have experienced strong growth in recent years. Between 2015 and 2019, the skin care sector in Australia and New Zealand grew at a CAGR of 7.06% (to A$3.0B), while the consumer health segment in Australia and New Zealand grew at a CAGR of 5.40% (to A$6.4B) and the consumer health segment in China grew at a CAGR of 6.92% (to A$59.8B) over the same period.


The EAORON brand currently comprises five product series and more thantwenty skin care products, including:

• Hyaluronic series
• Facial mask series
• Crystal white series
• Specific care series
• Anti-sugar series

The EZZ branded products cover a wide range of market segmentsincluding vitamin and dietary supplements, sports nutrition, weightmanagement and wellbeing, herbal / traditional products and paediatricproducts. While there are 3 products on the market, the Companycontinuously develops new products to meet consumers’ demand and plansto add 3 more products to its consumer health product portfolio in 2021.




Third party market research firms are engaged to conduct market researchand assess customer demand for the industry segments the Companyoperates in. EZZ decides whether and when to develop a new product underthe EZZ brand. Key decisions in the planning processes may cover allareas of an entire product life cycle. Product functionality requirements are provided to third party research anddevelopment service providers which provide product formula usingingredients that meet regulatory requirements. Requirements are provided to third party packaging design firms, whichassist the Company with sourcing packaging materials, implementingproduct packaging designs. Contract manufacturers licensed by TGA in Australia and Medsafe in NewZealand are engaged to manufacture EZZ branded products.

The Company's sales and marketing team manages and distributes EZZbranded products to consumers through wholesale distributors, retailersand e-commerce platforms in Australia, New Zealand and China. Third party logistics firms are engaged to provide warehouse facilities,handle the pick and pack process and dispatch products to the Company'scustomers.

EZZ has delegated quality control personnel to reinforce strictquality control procedures before, during and after the manufacturingprocess.

EAORON products are sold into 950 + Pharmacies, supermarkets &grocery retailers, specialistretailers and online retailerswithin Australia & NewZealand.




Financials :

Half-Year Ended 31 December 2020 Revenues 12.5 mil . EZZ is profit making cash flow positive company. In the Half-Year Ended 31 December 2020 EZZ made a net profits of 1.2 mil

FY 20 Revenue was 17 mil and EZZ in first half of FY 2021 already made revenues of 12 mil which can be conservatively annualised to 26mil to 28 mil IMO. EZZ also made a net profit of 1.2 mil which is same for the whole year 2020.




Conclusion :

EZZ is one of the most anticipated IPOs of 2021. EZZ is the distributor for the EAORON brand. EAORON brand holding 17.8% to 25.3% of the total facial mask retail market which is a massive market share to have.

At the Mcap of 21 mil and EV of 12.6 mil EZZ is the cheapest skin care products and consumer health products company on ASX.

In my conservative view , EZZ should have at least 26 mil revenues for FY 2021 which is extremely cheap for 21 Mcap company

EZZ got super tight capital structure. Out of 42 mil SOI , 30 mil shares shares are escrowed.

Top 20 shareholders are holding 80 % of the company , again suggesting a tight capital structure.

IMO , EZZ is extremely cheap at IPO price of 50c and It should list between 80c to $ 1 . With new products launch and any positive business update It should trade between $1.50 to $ 2 by the end of FY21.

I managed to get a tiny allocation in EZZ and I intent to buy more on any weakness in SP.

GLTAH

ALL IMO

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