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STOCKS NEWS SINGAPORE-Maxi-Cash up 28 pct above IPO price

Shares of pawnbroker Maxi-Cash Financial Services Corp Ltd surged as much as 28 percent above its initial public offering price, on its market debut, outperforming the broader market.

By 0217 GMT, shares of Maxi-Cash were traded at S$0.38, 27 percent above its IPO price of S$0.30, while the Straits Times Index <.FTSTI> was down 0.5 percent.

Around 28.3 million shares were traded, making it the second most actively traded stock by volume. Maxi-Cash sold 56 million new shares, raising S$16.8 million in the IPO.

Maxi-Cash has the largest network of pawnshops and retail outlets in 24 locations in Singapore, and has about 13 percent market share of the licensed pawnbroking business, AmFraser Securities said.

The company will also benefit from growth in Singapore's pawnbroking business, which saw amount of loans disbursed at pawnshops grow at a compounded 16 percent on average a year from 2000-2011, AmFraser said.

"There's a perception that Maxi-Cash's earnings may be more defensive because even during times of recession, the pawnbroking business will still do well," said a local trader.


Source: Reuters

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So the latest IPO starts with market cap of $88.8 mln; balloting ratios for public tranche ranging from 18:88 to 38:88; the public tranche (2.25 mln shares) 88x subscribed; but investors should note the following:

- Pawn broking business in Singapore is highly regulated, eg all un-redeemed pledged articles which exceed $50 in pawn amount have to be put up for public auction; and all surplus is payable to the customers; interest rate of 1.5% per month or 18% pa (much like for credit cards).

- The business is capital intensive, being heavily dependent on bank financing. As at end ’11, borrowings (overdraft and bank loans) totaled $90.96 mln against shareholders funds of $44.92 mln (excluding proceeds from IPO).

- Low margins: for ye Dec ’11, Maxi Cash earned pre tax profit of $3.53 mln on revenue of $87.74 mln, or only 4%.

- While the present intention is to pay 60% of profit in respect of the current year, it does not constitute a legally binding obligation in respect of future dividends.

- Almost half of pre-owned jewellery in 2011 was sold to Heraeus Ltd of Hong Kong, albeit down from 76.7% in 2009 and 70.3% in 2010.

- Despite having the Big 3 local banks and HSBC as bankers, the IPO was handled by Canaccod, formerly known as Collins Stewart.

Source: Lim & Tan

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Issues not discussed in the IPO prospectus

This report discusses a few issues that are relevant in understanding this IPO, but had not been mentioned or elaborated upon in the prospectus.

Calculations have been made from numbers provided in the prospectus and other sources in this regard.


The issues (discussed more fully on page 2) are:


Market share of 13%, as defined in the prospectus, is the number of licenses held by Maxi-Cash divided by the total number of pawnbroking licenses in Singapore.

We calculated that, in terms of loan amount, this share is about 8.2%. Viewed positively, it means that as the number of years of operating experience grows from 3 (FY11), the two market share numbers should near.

The current low interest rate environment affords it a comfortable interest rate margin for pawnbroking profit.


$10.6m operating overheads (FY11) = $5.6m rental + $5m admin/marketing & other expense. With expansion plans, these overheads may not behave like a fixed cost item yet. A fixed cost item is one that increases less than proportionately to any increase in revenue.


Applied for 4 additional pawnbroking licenses but Little India, a popular location among peers, is not included.


A positive 1Q12 result has been announced in the Aspial segment result. FY12 is expected to be better.


The trading segment is cyclical. Increase in loan amounts (industry) is, to some extent, attributed to the increase in gold price: 2011 over 2010; and, ytd2012 over 2011. Gold price decrease is stated only as a risk in the prospectus.


KIVs affecting share price

Positives are increases in loan amount market share; low interest rates; overheads per unit decreases; and, hedging of trading/inventories.

Negatives are decrease in gold price; increase in interest rates; and, increase in overheads that is not accompanied by expansion.

http://www.remisiers.org/cms_images/res ... 120622.pdf

Maxi-Cash's earnings triple in 3Q
http://www.theedgemarkets.com.sg/sg/art ... -triple-3q

Maxi-Cash's FY16 earnings nearly triple to $11.3 mil on higher revenue
http://sgx.i3investor.com/servlets/fdnews/66437.jsp

maxi-cash-1h-earnings-flat-52-mil
https://www.theedgesingapore.com/maxi-c ... lat-52-mil

maxi-cashs-3q-earnings-32-43-mil-higher-revenue
https://www.theedgesingapore.com/maxi-c ... er-revenue

Maxi-Cash reports 17% rise in FY17 earnings to $13.3 mil
https://www.theedgesingapore.com/maxi-c ... gs-133-mil

Maxi-Cash posts 39% drop in 1Q earnings to $1.8 mil on higher expenses
https://www.theedgesingapore.com/maxi-c ... r-expenses

Maxi-Cash declares 55% increase in 1Q earnings to $2.8 mil on lower costs and expenses
https://www.theedgesingapore.com/maxi-c ... d-expenses