Tuesday, 22 October 2013

ValueMax Group Limited



ValueMax Group Limited ("ValueMax" or the "Company") is offering 138m New Shares at $0.51 each whereby 5m shares will be for the Public and the balance via Placement. The prospectus is here. The IPO will close on 28 Oct 12pm.

Principal Business

ValueMax is one of the oldest and most established pawnbroking chains in Singapore and the first to be listed on the Mainboard of Singapore. The other two competitors, Moneymax and Maxi-Cash are listed on Catalist. I guess I didn't notice this "pawn" because there are no glamorous artiste to "brand" the company. The Company currently has 17 outlets in Singapore.

Financial Highlights


As in such businesses, the revenue is impressive but not the net margins. The Company made $14.3m last year. Assuming the profit is maintained for FY2013, the dividend will be 50% x 16.3m (pro-forma) divide by 533.5m shares = Singapore 1.52 cents. That translate into a projected yield of around 3%.

Based on the enlarged share cap, the PE valuation is around 51 divide by 3.04 = 16.7x. Not exactly "value" for money but much better than its peers. The market cap is around $272m at IPO price.

Peer Valuation

Moneymax is currently trading at 27x PE and Maxi-Cash at 48x PE. While valuation by itself is not 'cheap', valuation of its peers is even more crazy. Clearly from the financial results, ValueMax is definitely a leader in pawn broking over MoneyMax and Maxi-Cash. Moneymax is still 23% above its IPO price and Maxi-Cash is 122% over its IPO price.

I will be more "conservative" and assume a fair peer valuation of 20x-23x, that will translate into a fair value range of between 61c to 70c.

What I like about the Company
  • Overseas presence in Malaysia. Compared to its peers, ValueMax has successfully built up a network of 4 pawnshops in Malaysia since 2007 and has intention to expand further.
  • Good succession plan. The Founder has groomed his son and daughter to take over the business and they are both certified gemologist. 
  • Good IT system allows customers to renew their pawn tickets at any of its outlets.
  • An impressive top line of > $450m 
  • Clear direction on its business strategies and future plans such as a dedicated flagship store for HNWs. 
  • Clear intention to pay 50% of its profit after tax as dividends in FY2013, 2014 and 2015.
My concerns
  • Not another pawnbroker. Are we reaching saturation point?
  • Given that this is primarily a cash flow business, are the controls adequate to allow the company to expand successfully into Malaysia and overseas.
My Chilli ratings


Given that this is a well run company and a clear "leader" in this industry that is also listed on the mainboard and paying dividends, it should definitely deserve a valuation premium over its peers. In addition, the tight float and cheaper than peers valuation all point towards an 'explosive' debut for this counter. I will give it a 3 Chilli ratings but the small public tranche may once again prove to be a disappointment for many.

27 comments:

Anonymous said...

Chances of getting is very minimal

Anonymous said...

Hi Mr IPO,

Would it be better to go in with 26 lots at one go basis or split it to 13 and 13 each with different account to buy in ? Which method has the better chance ? Please enlighten.

Mr. IPO said...

Using two accounts will probably make more sense as 11-49 lots are in one bucket

Anonymous said...

Hi Mr IPO,

Thanks to your advice.

Happy IPO....

Anonymous said...

Hi Mr Ipo,

How many lots does one stand to get if applying for 11 to 49 lots? Where did you find the info on the allocation breakdown? I couldn't find it in the prospectus. Thank you.

Anonymous said...

Hi Mr IPO

How is take up for the placement shares?

Mr. IPO said...

Probably 3 to 8 lots. Such allocation will not be in the prospectus. It depends on the demand.

petersmith said...

Informative blog!
Pawnbrokers

Anonymous said...

Hi Mr IPO,
Are you vested or given placement shares for Value Max ?
Tks and rgds.

Mr. IPO said...

Aiyo my usual style is if vested will tell u. Scared ah?

Anonymous said...

What is there to be scared of ? No guarantee that one will be allotted when applying via atm.

Just a question of interest ,don't know about your "usual style " until now.

Tks for the prompt response anyway.

Mr. IPO said...

Haha okie. Good luck. Think tough to get anyway ^_^

Anonymous said...

Hi, I've sent you an email regarding brokerage fees of 0.16% for trades above $200K and trust account of $300K from Maybank-KE, still checking with Phillips Capital. The other 7 brokerage firms standard 0.18%. You have any better rates? Can push to 0.13%? They actually carry no risk as my trade limit is based on secured money in their company! Wonder why can't go lower. Let's work together to push it down.

Mr. IPO said...

Haha I am only a small fry la!

Anonymous said...

So what's your brokerage fees and what's the lowest you've come across

Mr. IPO said...

0.18%-0.4%. Probably 0.1% ?

Anonymous said...

Hi IPO,

If i did not get all the share alloted, when will DBS refund me back the money?

Mr. IPO said...

Tues evening

Anonymous said...

3 chilli, phew ~~.
Applied 200 lots.
Huat ah...

Anonymous said...

Hi Mr IPO, any write ups on viva IPO?

Anonymous said...

Mr IPO, from your experience, what time will the placement results be release?

Thanks.

J.

Mr. IPO said...

vivo write up will be done tonight or tomorrow. Busy lah. Haha. Placement results for valuemax out tonight around 7 pm. Need small caps to hold up though. The sell down not so nice this few days :(

Anonymous said...

anyone got? Bid 200lots, got zero.

Anonymous said...

Me got zero too. Very hot ipo.

Anonymous said...

I used 3 accounts to bid, but none of them got it....

Anonymous said...

applied for 500 lots. got none.

Anonymous said...

Applied for 105 lot

Got refund of $43,344.1 instead of $53,550

Strange

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