Thursday, February 21, 2013

Maxi-cash

Maxi-cash: 4Q12 results. Revenue at $29.0m, +16% yoy, as all business segments recorded higher revenue. Net profit at $1.0m, -4% yoy, as operating margins fell from 4.0% to 3.2%, on higher labor, depreciation and finance costs due to opening of new shops. FY12 revenue at $100.5m, +15% yoy. Revenue from pawnbroking increased more than 50%, due ot higher interest income from a larger pledge book and sales of unredeemed pledges. The retail and trading of pre-owned jewelery and watches business rose 6.5% yoy. Net profit at $4.2m, +34% yoy, mainly boosted by higher operating margins, which grew from 3.6% to 4.3%, thanks to lower % of material costs which helped offset higher labor, depreciation and finance costs. In 4Q12, the group opened 4 new pawnshops and retail outlets in four new locations, namely Tampines, Pasir Ris, Redhill MRT stations, and Hougang Central. The group expects to open additional pawnshops and retail outlets in a few new locations in FY13. Mgt reiterates that the opening of additional pawnshops and retail outlets will have a mixed impact on the group’s performance, as in the short term, the group will incur relatively substantial start up costs and increase in operating costs for rental and staff; pedge book and interest income also start from a zero base leading to some losses. But notes as the business builds up, the group will stand to benefit from a wider network, higher mkt share and larger loan portfolio over the longer term. Mgt expects to see continued growth in its pledge book value and revenue of its retail of secondhand jewelery and watches business in FY13. The group declared at final dividend of 0.68 cts, translating to 1.5% yield, as well as a 1-for-5 bonus share issue. At $0.44 last close, the stock trades at 34.9x P/E, 2.5x P/B.

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