Mizati is an innovative,
fast-growing designer and distributor of custom luxury alloy wheels. The
Company operates in the $2.6 billion wheels, tires and suspension
segment of the Specialty Automotive Equipment market. Mizatis mission
is to be the premier brand and designated source for value-priced
wheels, rims and auto accessories in the United States within the next
3-5 years while also gaining a foothold into new international markets.
The Company utilizes various sales channels including the internet,
automotive catalogs, wheel and tire distributors and most recently
Rent-To-Own (RTO) stores. Their products are sold at over three hundred
outlets in the United States at high profile brand name distributors
such as Firestone, Americas Tire, Lee Schwab Tire Center, and Discount
Tire. Although the Company is relatively young, CEO Hazel Chu leads a
team with over twenty years experience in the automotive accessories
market. Her focused and disciplined management team has increased
revenues by 102 percent annually for the past three years. Mizati was
recently provided a $1 million credit-line which provides them with
capital to begin building out a network of their own Rent-to-Own (RTO)
Mizati wheels come in three lines for cars, trucks, and sport utilities,
and each line has a variety of different styles. Mizati will be
launching a new product line of oversized rims geared specifically
towards SUVs and trucks. The Company also plans to introduce three new
rims every year. The Company has made a significant investment in their
infrastructure with the purchase of a 16,000 square foot warehouse in
Walnut, California for $2.75 million. The Company has experienced rapid
growth over the last three years driving sales from $625,742 in 2003 to
over $4.1 million in 2006.
The latest addition to Mizatis business model is the Rent-To-Own
program that is set to launch in Q2 of 2007. Adding RTO stores to
compliment the design and manufacturing end of the business will make
Mizati vertically integrated and allow the company to exploit inherent
competitive advantages. This strategic shift should increase Mizatis
customer base as weekly payments are a more affordable purchase method
for many consumers. The RTO program will also significantly improve
Mizatis gross margins, currently wholesale gross margins average twenty
three percent. Most RTO gross margins average seventy percent, and as a
vertically integrated company, Mizatis margins could be even higher.
Mizati operates in the
Specialty Automotive aftermarket which has better-than-average growth
rates, well-above the growth rate of the overall Automotive Aftermarket.
According to Specialty Equipment Market Association (SEMA), the trade
group for aftermarket companies that lobbies and conducts research on
behalf of its members, over the last ten years the trend to enhance
automobile image by upgrading wheels, tires, and suspensions has grown
at a rate of 7.7 percent while the overall aftermarket for automotive
accessories has grown at a rate of 4.5 percent. During this same time
frame, GDP grew by 2.57 percent.
What differentiates the automotive aftermarket from the rest of the
industry is that aftermarket goods are not a necessity. Therefore,
understanding the consumer is essential for a company to create value
for the consumer. According to SEMA, sixty three percent of the people
surveyed want to modify or personalize their vehicles; thirty percent of
those people would purchase wheels and tires first and twenty percent of
those consumers would spend between $1,500 and $2,500. Approximately
half of the people surveyed would make this purchase within the first
two months of owning their automobile. Mizati has timed its entrance
into the U.S. market during a trend that suggests continued sustainable
growth. The Specialty Automotive Equipment market is one of the top
performers in the U.S. manufacturing and retail segment with $31 billion
at the retail level and $11 billion at the manufacturing level. We do
not expect this market to peak for another five-seven years, which gives
Mizati time to establish itself as a leading brand and potentially a
The Specialty Automotive
Equipment market is saturated with many small players, mostly privately
held companies. However, there are several large companies with sales in
excess of $500 million, including American Racing Wheels, one of the
largest and oldest companies in the business. It offers hundreds of
wheels and its products are sold through thousands of retailers.
American Racing sells its products through Sears, Pep Boys, Goodyear,
and thousands of independent tire centers.
Other competitors include Giovanna Wheels, Lowenhard Wheels, and Lexani
Wheels. Competition in this market revolves around such factors as
price, quality, reliability, styling, product features and warranties.
At the dealer or distributor level, competition is based on a number of
factors including sales and marketing support programs, such as
financing and cooperative advertising. American Racing Wheels and the
other big three will provide formidable competition for a company the
size of Mizati; however the strong growth rate in this segment and
Mizatis business model will allow it to compete and continue to gain
- Light truck market is half of the market in the United States.
These are typically small trucks like Toyota and Chevy S-10s.
- The off street racing market is for amateur and professional
- Off-road market is for 4x4 trucks and SUVs.
- Restoration market is classic cars.
- Street-performance market is focused on cars such as modern
Mustangs and Corvettes.
- Restyling market is when after-market wheels are added to brand
- Street rod market is for hot rods from the 1920s to the 1970s.
- Compact car market concentrates on people who fi x up smaller
cars like Honda Civics.
- Mizati has achieved an average annual revenue growth rate of
102% for the past three years.
- Profitable in 2005 and 2006 with net earnings of $100,885 and
- 2007 marks the first year of international sales for Mizati.
Sales agreements in South America worth $2 million have been put in
place and the company projects international sales to reach $4
million in 2007.
- Expanded from a 5,000 sq. ft. facility to a 16,000 sq. ft.
- Mizatis management team has 20+ years of professional
automobile accessory marketing, as well as extensive design and
- MIZATI secured $1M dollar line of credit to launch Rent-To-Own
- Expansion into international markets.
- Mizati has adopted a unique China Concept business model by
combining low-cost OEMs in China with established distribution
channels in the U.S.
- Projected profit margins of twenty three percent in 2007.
- Profitable book value at $105,416.
- Double digit Revenue Growth Expected in 2007.
The Company is projecting
2008 revenue of approximately $13.5 million. This is an aggregate amount
based on three revenue channels: wholesale distribution, international
sales and the Rent-to-Own segment. We are giving MZTI a Buy rating and a
twelve month price target of $1.73 based on a multiple of 5x forward
revenues, which would afford investors nearly a forty five percent
return above current price levels. Assuming a net profit margin of ten
percent, the $13.5 million in revenue would generate earnings of $1.35
million. This translates into earnings of $0.035 a share in 2008. In
establishing a thirty month price target, we assumed a 4x estimated
revenues of $25 million in 2010 for a target price of $3.03 which would
provide patient investors with a 200 percent return above current price
- Ms. Chu founded Mizati Luxury Alloy Wheels, Inc. in 2001 and
continues to lead the Company as its President.
- Hazel Chus passion for automobiles gave her the ability to
recognize the potential for her business in the automotive accessory
- A graduate of California State University, Ms. Chu brings over
10 years of management experience to the Company.
- Under her visionary leadership, Mizati has transformed from a
sketch pad in her college apartment to a rapidly growing, public
company that achieved sales of $4.16 million in 2006.
- Lead sales efforts at a variety of wheel companies including
Savini Wheels, MB Italia LLC, and MAS Italy.
- Strong products knowledge: bolt patterns, offsets, staggered
fitments, center bores. Built new sales channels in US and foreign
markets, recruited and trained sales professionals, managed
advertising campaigns and budgets
- With a diverse language and professional background, Grace Wang
serves as the Spokeswoman and VP of Investor Relations for Mizati
Luxury Alloy Wheels, Inc.
- Since moving to the United States from Taiwan in 1985, Ms. Wang
has held several marketing and business development positions
focused on international trade with Pacific Rim Countries.
- Ms. Wang speaks fluent English, Mandarin, Shanghainese, and
This profile is based on data obtained from sources we believe to be
reliable, but is not guaranteed as to accuracy and does not purport to
be complete. As such, the profile should not be construed as advice
designed to meet the particular investment needs of any investor. Any
opinions expressed herein are subject to change and are not the opinions
of Mizati Luxury Alloy Wheels, Inc. or its management or board of
directors. This profile contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995 regarding, among other things, statements relating to goals, plans
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