This article first appeared in The Edge Financial Daily on February 21, 2020 - February 27, 2020

KUALA LUMPUR: The retailer and distributor of The Body Shop products, InNature Bhd, made a firm debut on the Main Market of Bursa Malaysia yesterday, as it opened at 72 sen a share, eight sen or 12.5% higher than its initial public offering (IPO) price of 64 sen.

It then rose even higher to 74 sen, before it paring gains to close at 65.5 sen, still up 2.34% or 1.5 sen from its IPO price. It was the most actively-traded counter on the local exchange yesterday, with 143.7 million shares done.

Its IPO price was initially set four sen higher at 68 sen, which it announced at end-January. But this was lowered to 64 sen on Feb 10, based on the company’s stock exchange filing.

The final IPO price was arrived at after pricing in all the challenges in the current market, according to InNature non-independent non-executive chairman Datuk Simon Foong Choong Heng at the company’s listing ceremony yesterday.

“We have a [price] range [for the company’s IPO] during the book-building, it [was] supposed to be ranged between 62 sen [and]  68 sen. But looking at the challenging times, we decided it [the IPO price] should...price in all these challenges,” he said, citing the Covid-19 outbreak as an example.

InNature managing director (MD) Datin Mina Cheah-Foong, meanwhile, said investors will always look for good investments that can provide stable earnings, and more so in times of uncertainties.

“I do not think you can time the market. If you are a solid company, I think any time is a good time [for IPO],” she said.

Further, she said, it is still too early to tell what is the impact of the virus outbreak on InNature’s business.

“But, we can reassure you that in the [past] 35 years, we have gone through the Nipah virus, H1N1 (influenza virus), SARS (severe acute respiratory syndrome) and so on. Through all those years, we had experienced growth and always maintained our profitability as well.

“I do not think people will stop buying toiletries and soaps. We will weather this [challenge] and others that come,” she said.

Meanwhile, InNature has laid out strategies, including promoting its e-commerce platform under the new beauty brand Natura that is 100% vegan, to counter the challenging business situation, saidchief executive officer Molly Fong.

“For Natura, we will be embarking on social marketing and selling. In short, it is direct-selling 2.0. We intend to use mobile apps (applications) to enable people to conduct a consumer-to-consumer business, whereby all the traditional pinpoints of direct selling [are] taken away. So you do not have to hold stocks and physically meet your customers or beauty consultants, everything is done through the Internet,” said Mina.

At present, the bulk of InNature’s sales is  driven by its retail business, The Body Shop. InNature has 124 The Body Shop stores — 89 in Malaysia, 34 in Vietnam, and a new one in Cambodia.

The company is looking to further expand the retail business and Fong highlighted that the potential for InNature’s business in Vietnam — where it plans to open six new stores per year over the next three years — is huge. The company expects this market to contribute more to the group in the future.

InNature’s net profit for the financial year ended Dec 31, 2019 (FY19) came in at RM30.15 million, compared with RM45.63 million for FY18, though revenue grew 4% to RM191.68 million from RM184.48 million.

It should be noted that FY19 had included non-core items such as listing-related expenses, while FY18 had recorded a fair value gain arising from the distribution of non-cash assets to owners. Excluding these non-core items, the group’s core profit after tax came in at RM33.74 million versus RM36.09 million previously, mainly dragged by a loss of RM1.7 million from its new business.

InNature’s IPO involves a public issue of 74.07 million new shares and an offer for sale of 103.2 million existing shares in the company. At its current share price, it has a market capitalisation of RM462.4 million based on its expanded issued share capital of 705.88 million units.