Company Interview / Cosmetique's IPO cash injection

Key points:

Australian facial injectable market valued at US$9 billion by 2030Cosmetique's IPO aims to raise $6 million for expansionYounger demographic increasingly embraces injectables

Vivek Eranki from Stormeur Group discusses the Australian facial injectable market's growth, projecting it to exceed US$9 billion by 2030. Operating as Cosmetique, Australia's first accredited cosmetic clinic, plans to raise $6 million through an IPO to expand its footprint in Sydney and Melbourne and explore acquisitions.

Vivek explains that Cosmetique, established in 2017, owns 17 clinics nationwide, all corporate-owned. This structure enables flexibility and maximises shareholder value. Cosmetic offers a price-paid guarantee to attract customers despite inflation and increasing interest rates.

The younger demographic, aged 18-35, increasingly views injectables as part of their everyday aesthetic routine. Cosmetique's upcoming IPO will use the code "STR" to enable future B2B acquisitions. Continuous growth is expected through clinic expansions and strategic acquisitions.

Full unedited transcript:

0:00

The Australian facial injectable market is projected to grow to reach more than 9 billion USD by 2030. It's a market Stormer, the parent company of Australia's first accredited cosmetic clinic. Cosmetic wants to tap into its aiming to raise $6 million through its IPO. Cosmetic has been called the McDonald's of the injectables industry. And Chairman Vivek and Raki joins me now. So yeah, very excited about the, uh, about what we what's coming up. And, uh, very bullish about the, uh, cosmetic injectables market. We've been, um, cosmetics been around since 2017, and we've got 17 clinics around the country. And, uh, yeah, we're looking at listing in order to increase our footprint in the eastern states, Sydney and Melbourne, um, as well as potentially looking at acquisitions in the similar and comparable markets as well. So we mentioned that this market is expected to grow quite strongly. Tell us what you're expecting to see because we mentioned

0:59

around $9 billion by 2030. And I guess what you're doing in terms of cosmetic that differentiates you from your competitors. Mhm. So cosmetic because we established in 2017, we were able to see what works and what doesn't work. And we were able to structure the business in a way to maximize the value for our shareholders. So we're not a franchise. We are all corporate owned. Um, so all the clinics are owned by the company, which allows us to pivot in order to, uh, accommodate for any of the market demands. On top of that, because we are corporate owned, we are also able to, um, bring value for our customers as well. So cosmetic offers, um, a price paid guarantee for all our customers. So if they see a cheaper price somewhere else, we're able to beat it by 10%. And especially when there is underlying inflation, increasing interest rates and the market and the economy itself isn't as buoyant as it used to. And on the other side, you have customers who look at getting cosmetic treatments done, similar to getting their hair or their

1:59

nails, or the makeup done in that day. See that as a part of the everyday aesthetic regime we are. We are here to help them. And on top of that, because we are. Yeah, I was just going to say, how can people get involved? Because I think the issue price is something like $0.20, but what's the minimum that you're looking for in the IPO? The minimum we are looking for is a $6 million, um, with $1 million of oversubscription.

2:24

In terms of each person getting in, though, is it like a. Oh, sorry. Yes. Uh, yeah. So so, um, we're looking at a minimum, um, purchase of $2,000 per person. Um, but yeah, the subscription so far are going very well. Uh, so we are very excited about, uh, um, finishing, finishing off this phase of the, uh, fundraising in order to commence listing and commence expansion afterwards. So this growth, though of around 19% to get to that 9 billion USD we mentioned, we are in an environment where there's cost of living pressures. We were just talking about inflation, the effect of rents, um, higher mortgage costs, Are you not concerned that people that are pulling back on consumer discretionary spending would pull back on injectables?

3:07

Consumer discretionary spending is something that we keep a close eye on. But if you look at it historically and that's how we look at it rather than forward projecting, we've seen that when the economy stopped, injectable markets do well when the markets are tough. Uh, sales of makeup and lipstick is still high. So I think this is called the lipstick effect. And it was coined by Chanel back in the day. Um, so, yes, uh, discretionary spending is something that we keep a close eye on. But what we found is the market, the injectables market itself is resilient even during times of recession, which is why we are excited about the the upcoming future of the of the business. So a recession proof sector, if you will. What are you seeing in terms of potentially more consolidation in this space? And would you be open to that too?

3:54

I mean, yeah, absolutely. We are always open to consolidation and what we've identified in terms of consolidation is it started, um, about about 5 or 6 years ago. So KKR acquired um, Laser Clinics Australia back in 2017. I think it is, uh, clear skin has been acquired by API Group. Um, Wesfarmers has acquired silk. I think it's about two years ago now. And uh, recently Sonic, um, has acquired artisans. So in this sector, any company that has scaled any company, uh, with a national footprint is, in a way, ending up inside a portfolio of, of a large public or private company.

4:32

Vivek, I guess in terms of what you're seeing with growth. So you're planning to open new clinics in New South Wales and Victoria within the first year of your listing. But where do you see the majority of your, um, growth coming from? We've touched on injectables, but I understand that you're in laser removal as well. Yeah. We, uh, introduced laser hair removal across all our clinics back in 2023. Three. And what we found. And the reason we did this is because we know that 100% of the customers that we have also get hair removal treatments, and of that laser hair removal is considered the gold standard. And because we are new entrants into the market, this also means that the machines that we use are a lot newer, which means they're a lot more efficient, which means that we are able to do more treatments in a unit of time. The other benefit that our machines have is that they are able to treat patients of all skin types. So we are aware that in the eastern states, um, Sydney and Melbourne, there is a larger demographic of our

5:31

culturally diverse population. And what this means is that we are able to accommodate for those for those patients in terms of the areas of growth on top of laser. The reason we are going for Sydney and Melbourne is a large population growth that we are identifying there. So there's a lot of people who are young, young families in in Sydney and Melbourne. Uh, I mean, we see the same thing in Perth as well, but we've already got a very established footprint in Perth and this is where we see the growth for the company in the next year or so. Vivek, what are you seeing in terms of the demographics? Because I read one article where you said that there is the 18 to 35 year old cohort, and of course, they potentially don't have some of the, uh, other expenses like mortgages, etc. but I always thought that this area was more for older people. Or are you actually seeing younger people looking at cosmetics, too?

6:23

Historically, the older demographic looked at cosmetic treatments, and this is back when cosmetic injectables were seen as something that is a luxury item. But over the last few years, we've seen more and more acceptance among the younger demographic in injectables. There's been a recent study done in the U.K. that showed that the younger demographic actually looks at injectable treatments as a more of a mainstay aesthetic regime for themselves compared to the older demographic. We even see that in the behavior of our customers as well. So the older demographics, historically, they come in, usually on the weekend they pay cash. They don't want anyone to know they've had treatment stuff. Whereas what we found with a younger demographic is they want the world to know they've had treatments done. So these are the people that come in and they they tell all their friends, their live stream, their experience. And, uh, and yeah, we are finding that more and more younger demographics are actually having, um, treatments. And for us, this this works well. I mean, from a business standpoint, this gives us the biggest runway in terms

7:23

of, uh, in terms of their demographic dividend from these from these patients, um, from a business sense. Also, these patients don't have the same, uh, financial commitments as the older demographic. So they don't need to worry about school fees, for example, or mortgages. Um, so yeah, that's that's what we've been identifying. The vast majority of our patients are between the ages of 18 and 35. Now you're going to list under the code Esther. Ah, that's the proposed ticker code Y stoma. I understand you own a majority of the company. Is this. Is this a holding company? Do you have other businesses as well? Vivek. Why not list under cosmetic?

8:00

Um, yeah. So, uh, the reason why we pick the name is actually quite facetious and that we found a.com as well as a trademark was available as well. So that's the reason we where the name came from. But the reason that list go is different to the operating company is that we are looking at acquisitions after listing. So that is a growth strategy that we have, um, coming up. And this way we can invest in, in the future in, into the B2B side with that concerning, um, too much about how the rest of the market might perceive that. So we don't want, uh, our, for example, our competitors to, um, think that a B2B company that we, that we invest into in the future, uh, maybe funding the B2C company that they're competing against. So it just provides a higher degree of separation. And this is after we've spoken to several of our board members who are involved with other publicly and privately held companies. Um, and they provided this wisdom early on.

8:59

And Vivek, just finally, I guess, what sort of growth are you expecting to see if you've got about $150,000 to fit out each store? What kind of return? If people want to get into this IPO, can they expect to see? Well, we know that it typically takes 12 to 24 months for a clinic to break even. Um, it doesn't cost a lot for our stores to be fitted out. We have a very strict mandate in terms of which stores we pick. So we usually pick stores on the main street that are 40 to 60m², with on street frontage and parking at the front. Um, and we also know that about 24 to 36 months afterwards, we typically see a profit of about half $1 million per clinic. Um, that's been produced, um, in our portfolio, seven clinics are already in that category, and ten clinics will be approaching that category. So even as is, um, uh, we would be relying on the existing clinics in our, in our portfolio in order to fund future growth as well.