ValueMax started at ‘buy’ on future earnings growth, higher interest rate environment

ValueMax started at ‘buy’ on future earnings growth, higher interest rate environment

By: 
Michelle Zhu
07/09/17, 12:40 pm

SINGAPORE (Sept 7): KGI Securities has initiated coverage on ValueMax at “buy” with a target price of 39 cents, based on a price-to-book (P/B) ratio of 1.15 times FY17F estimates and in view of robust future earnings growth as well as a lower-for-longer interest rate environment.

The group operates pawnbroking and moneylending services, as well as deals in the retail and trading of pre-owned jewellery and gold.

In a Thursday report, analyst Colin Tan highlights how ValueMax’s high-margin moneylending business, which was started in 2014, has fuelled “remarkable” earnings per share (EPS) growth of 54.9% and 17.9% in FY15 and FY16, respectively, and says he expects strong growth momentum to continue in the next two financial years ahead.

He sees the stock as undervalued at a P/B of 0.9 times.

Overall, Tan says he appreciates Valuemax for its strong growth engine through moneylending, and says its “recessionary-proof” business model could stand to benefit from rising gold prices.

Based on the analyst’s observations, revenue from this particular segment more than doubled in each of the past four quarters, while the expansion of its pawnbroking business may see higher revenue contributions on the back of a continued recovery in gold prices.

“The group is also poised to benefit from rising gold prices which could enhance the yield on unredeemed pawn pledges and higher sale prices to scrap gold traders,” says Tan.

“ValueMax continues to see lacklustre contribution from the retail and trading segment while its other two SGX-listed peers (Maxi-Cash and MoneyMax) enjoyed growth through pawning and retailing services of pre-owned luxury bags. We could possibly see further earnings growth upside if ValueMax opts to extend its service offerings to luxury bags, in our view,” he adds.

“ValueMax is the most conservative among the three Singapore pawnbroking stocks in expanding the pawnbroking and retail business, and we think there is plenty of headroom for it to gear up to accelerate growth."

As at 12.29pm, shares in ValueMax are trading 1.8% higher at 28 cents.

Right timing: STI’s upclimb supported by momentum and moving averages

SINGAPORE (Apr 20): There has been little change in the trend and chart pattern of the Straits Times Index. The index has been on a very glacial ascent towards 3,420, the target indicated when the index broke out of resistance at 3,190 in mid-Jan. Quarterly momentum eased during the past four trading sessions. The 100- and 200-day moving averages have turned positive. This coupled with positively placed DIs and rising ADX should continue to underpin the STI. The only cautionary signals are the somewhat overbought levels of short term stochastics and 21-day RSI, and stagnant vol....
Read More >>

SMI takes legal action against Hyflux; Maybank moves on Tuaspring

(Apr 20): SM Investments (SMI) has terminated its rescue agreement with Hyflux, it announced on Friday. Hyflux, on its part, had already on April 4 terminated the same agreement with SMI. SMI claims it has thus far abided by the agreement. “To clarify, SMI does not accept the purported termination of the Restructuring Agreement by Hyflux on 4 April 2019. This is because the termination was not in accordance with the terms of the Restructuring Agreement," said SMI. Under the agreement reached last October, SMI, led by Indonesian tycoon Anthoni Salim, was to have invested $530 million in....
Read More >>

CCT reports 3.8% higher 1Q DPU of 2.20 cents on higher property contributions

SINGAPORE (April 19): The manager of CapitaLand Commercial Trust (CCT) has reported a 1Q19 distribution per unit (DPU) of 2.20 cents, rising 3.8% y-o-y from 2.12 cents due to higher contributions from Gallileo and Asia Square Tower 2. Gross revenue and net property income (NPI) for the quarter increased by 3.5% and 3.4% to $99.8 million and $79.8 million, respectively. This comes after booking contributions from Gallileo – an office building in Frankfurt, Germany which the trust acquired a 94.9% stake in during June 2018 – as well as higher occupancy at Asia Square Tower 2, both of w....
Read More >>