Through its subsidiaries, Evergreen Max Cash Capital Bhd (EMCC) is principally involved in the provision of pawnbroking services, i.e. provision of short-term secured pawn loans to individuals aged 18 and above. These individuals may be part of the population that is underserved by financial institutions. In addition, the group is also involved in the business of retail and trading of gold and luxury products as well as provision of pawnbroking consultancy services and information technology (IT) solutions to third-party pawnbrokers, whom the group has identified to not be in direct competition with its “Pajaking” pawnshops. As at 31 July 2023, the group has a network of 22 “Pajaking” pawnshops in Peninsular Malaysia, of which 19 are located in Kuala Lumpur and Selangor, two in Negeri Sembilan and one in Pahang.
EMCC intends to open five new “Pajaking” pawnshops in Kuala Lumpur, Selangor and Pahang, in order to capture a larger market share. Besides that, the group plans to increase the market visibility of its gold and luxury products retail and trading business. We derive a fair value of RM0.30 based on a c.19x PE multiple to its FY24F EPS of 1.6sen. The IPO is expected to raise approximately RM64.2m from the issuance of 267.6m new shares. Besides utilising 31.1% and 46.7% of the proceeds for expansion of pawnshops and cash capital for pawnbroking business, respectively, 6.2% and 8.8% of the proceeds are allocated for repayment of bank borrowings and working capital, respectively.
Source: PublicInvest Research - 12 Sept 2023
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