MoneyMax

MoneyMax: UOBK attended the 9M13 results briefing. The company reported a lower net profit for 9M13 on lower revenue and higher expenses despite stronger gross margins. Net profit fell to $0.85m in 9M13 from $4.5m in 9M12 as company booked higher expenses due to the IPO exercise as well as higher operating costs from an expanded network of pawnshop outlets and several refurbishment activities. Revenue fell 22.9% yoy to $43.5m (9M12: $56.4m) as MoneyMax made a deliberate decision to allocate more inventories to retail outlets instead of selling them to gold traders. As a result, gross profit grew 1.8% yoy to $16.5m with gross margin improving to 37.9% (9M12: 28.7%). MoneyMax expects to allocate more inventories to retail outlets going forward as the company is able to improve gross margin to 7-8% from the 1-2% if it were to sell the inventories to gold traders instead. According to mgt , the co has a 13.5% market share in Singapore and looks to add 4-5 outlets per year. This would provide convenience for customers to renew their loans at any outlet, using the company’s computerised inventory management system. With a larger pledge book, MoneyMax is also able to increase borrowings at effective interest rates of 2-3% p.a. vs loans to customers at 1.5% per month, collaterised by gold. MoneyMax is trading at forward PE of 19.1x and P/B of 2.5x. Based on Bloomberg’s estimates, its 12-month TP is $0.43.