MoneyMax

MoneyMax: Post the 3Q briefing, Philip believes the strategic shift from trading to retail sales of pre-owned jewellery would yield better results in the long term. This was due to higher margins offered from retail sales as compared to trading sales. MoneyMax continues to improve its branding through its marketing campaign launched in July 2013, in conjunction with IPO. The house maintains its Buy rating but lowers TP to $0.425 (from $0.48). To recap, for 3Q13, MoneyMax reported a decline of 36.5% y-y in revenue to $16.2m. This is mainly due to lower revenue from retail & trading segment, resulting from lower gold prices and deliberate decision to increase inventory of pre-owned jewellery and watches in its retail outlets. Despite lower revenue, gross profit was higher 7.7% y-y due to a shift from trading to retail sales of pre-owned jewellery. Retail sales provide higher margin of 6-10%, compared to 1-3% margin from trading. Net loss was $0.9m mainly attributed to the one-time, non-recurring IPO expense of $1.2m, higher advertising and promotion spending, and increase in rental costs for new outlets on Serangoon Road, opened in Aug ‘13.