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Tuesday, 19 June 2012

Maxi-Cash Financial Services Corporation Ltd

Maxi-Cash Financial Services Corporation Ltd ("Maxi-Cash" or "Company") is issuing 56m new shares of which 2.25m are for the public and the 53.75m for placement at $0.30 each. Maxi-Cash is basically in the pawn broking business and as of May 12, it has pawnshops in 24 locations in Singapore. Maxi-Cash is wholly owned by Aspial, a listed company on SGX and retails under the brand of Aspial and Lee-Wah. 

The NTA per share post-IPO is S$0.203 and the market cap is S$88.8m. The IPO will close on 20 Jun 2012 at 12pm. The revenue for 2011 was $87.7m and the net profit was $3.1m.  The Company intends to distribute at least 60% of their net profits attributable to shareholders for 2012.

I never imagine pawn-business can actually be listed as it was once considered a 'sunset' industry. The image was 'glamorized' only in recent years by the use of actors and actresses in the advertising campaign and after the casino business is legalized. The financial statements indicate a low 3.6% operating margins and that is common for this industry. In additional the revenue drivers are the sale of pre-owned jewellery and watches. This source of revenue are mainly derived from customers who were unable to redeem the stuff that they have pawned after a period of time. While it provides liquidity to people who are usually unable to borrow from the banks, it also seem to take advantage of the plight of these people. I am not a fan of such business model and will give it a miss.

Based on the fully diluted EPS of 1.1 Singapore cents, the Company is listing at a historical PER of 27x. It could be interesting to find out if the business is directly correlated to the profitability of Genting Singapore!


mary brown said...

The image was 'glamorized' only in recent years by the use of actors and actresses in the advertising campaign and after the casino business is legalized. georgia pawn shops

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