Star Combo Pharma Limited (ASX:S66) Chairman, Richard Allely & CEO, Su Zhang talk about the company's successful listing and plans to grow its product offering and distribution.
Jessica Amir: Hi I’m Jessica Amir for the Finance News Network at the ASX, with just listed Star Combo Pharma Limited (ASX:S66) Chairman, Richard Allely and CEO, Su Zhang. Welcome back and congratulations on the listing.
Su Zhang: Thank you Jessica.
Richard Allely: Thank you very much.
Jessica Amir: Firstly over to you Su. Just tell us what price you listed at and what price has that put on the company?
Su Zhang: We went in for a $7 million raise. The IPO was at 50 cents a share, which means 40 million shares were on issue. 30 minutes into the trading, we’ve got 1.3 million shares being traded, current stock price sitting at 62.5 cents.
Jessica Amir: Richard over to you. For new investors, just remind us of the purpose of the raise and where the funds will be going?
Richard Allely: The primary purpose of the capital raise was to support the product launch and the branding of a newly acquired range, called the Living Healthy brand. This is a brand that will be going through 450 Terry White Chemmart pharmacies across Australia. And the primary use of our funds is to support the marketing and distribution of that brand. We also have a small but very focused, potential acquisition that we’ll use some funds for. And of course, as we build up our stocks and build up our debtors and supply chain, more of the funds will be going into our working capital. We’ll also retire a small amount of debt.
Jessica Amir: How long has the company been operating and tell us about your track record of success?
Richard Allely: The company has been successfully operating for some 13 years. Primarily as a manufacturing business, servicing the OEM (Original Equipment Manufacturer) market. The OEM market historically has represented around 70 per cent of our revenue, and 30 per cent of our revenue being our own branded products. We’ve operated in a profitable, a very profitable business over that whole 13 years.
And of course, our short to medium term strategy is to turn that market share around, so that 70 per cent of what we’re actually selling is our own branded products. And only 30 per cent of our top line revenue will be associated with the OEM market. But that doesn’t mean we’ll walk away from OEM customers, they’ve been with us a long time and they’ll stay as part of our core business. It just means that our branded products will represent a significant amount of what we do.
Jessica Amir: Back to you Su. Your products span three key areas, pharmaceuticals, skincare and vitamins. Just tell us where your products are being sold and what your ambitions are?
Su Zhang: At the moment our current range is being sold across airports nationwide, in Australia. And then also certain high ranked gift stores around the different key central areas. And on top of that, we’ve now signed a deal with Terry White Chemmart to go through their 450 pharmacies nationwide. And we’re looking at aggressive campaigns to build on the sales of that, in the next six to 12 months.
Jessica Amir: Maybe you can tell us what portion of the population are currently using your supplements. And of course, with the aging population you’d expect that to grow?
Su Zhang: Within Australia the vitamin space is such a large market. Just last night I was checking on the data, because I didn’t want to get it wrong. We have every seven out of 10 Australians taking a vitamin or supplement, of some kind. And that was published through the CMA website, which is a Complementary Medicine Healthcare Council. And with that large market space, we have an absolute advantage in that we 100 per cent, make our product in our Smithfield Sydney site. It’s 15,000 square metres, so we control everything from raw material, to packaging material, to the finished product. To ensure only the absolute best products, from a stringent quality control system are released to market.
Jessica Amir: Last question now. What should investors expect over the next six to 12 months, and perhaps longer term?
Richard Allely: I mean firstly as we mentioned, there is the potential for a small acquisition. Obviously if we are successful in that negotiation, we’ll announce that in due course. Clearly 30 of June is rolling around pretty quick and in August, probably around the middle of August, we’ll be releasing our full year financial results. And they’re currently tracking within expectations. And now that we’re a listed public entity, of course we have a continuous disclosure obligation. And you can rest assured that any event that happens within the company, that goes to the core of value for shareholders, we’ll be releasing that to the market.
And longer term, our growth strategy is really to harness the opportunity that exists in Asia. Particularly in China, where today one of our major cornerstone investors, Lepu Medical Technology (Beijing) Co Limited are working with us, to take several of our products to registration on the Chinese market. Now I can’t forecast what that means in terms of top line revenue, it’s well over 12 months away before we would see anything. But when you’ve got a market that’s that big, even a small percentage share is significant.
Jessica Amir: We’re looking forward to your future success. Richard Allely, Su Zhang, thank you so much for the update and congratulations on the listing.
Richard Allely: Thanks Jessica.
Su Zhang: Thank you Jessica.