Valuemax Group Ltd (Valuemax) offers pawn broking, money lending, and retail of jewelry, timepieces, and precious metals in Singapore and Malaysia. As of 15 December 2019, Valuemax is worth S$ 170.7 million in market capitalisation. In this article, I’ll cover its recent financial results and valuation figures.
Thus, here are 12 things to know about Valuemax before you invest.
- Network Expansion
Valuemax was listed on the SGX in 2013 with 23 retail outlets where 18 were situated in Singapore and the remaining 5 situated in Malaysia. In the last 5 years, Valuemax has expanded its retail network to 43 outlets with 33 outlets situated in Singapore and the remaining 10 are situated in Malaysia.
In addition, it has stakes in 2 retail outlets which are run by its associates in Singapore. Its increase in retail network is attributed to Valuemax’s efforts in acquiring individual pawn shops which include:
|Price (S$ Million)||Principal Activities|
|100% Tai Eng Pawnbroker Pte Ltd|
100% VM Credit Pte Ltd
100% Kwong Hin Pawnshop Pte Ltd
|100% Teck Chong Pawnshop Pte Ltd|
47.6% Ban Lian Pawnshop Pte Ltd
|100% Heng Leong Pawnshop (Pte.) Ltd|
100% Sengkang Pawnshop Pte Ltd
- Key Income Contributors
Valuemax generates most of its earnings from pawnbroking and money lending activities. Meanwhile, its retail & trading division remains small in terms of its profit contribution, despite delivering higher revenues as compared to Valuemax’s pawnbroking and money lending activities.
The following is a breakdown of the financial results for each segment:
|Revenue(S$ ‘000)||Segment Profits |
|3||Retail & Trading of Jewelry and Gold||166,224||416|
- Segment 1: Pawnbroking
Valuemax provides financing to its pawners based on a percentage that is a discount to the value of the pawners’ pledged items. The tenure of financing offered is 8 months where the interest rate is 1.0% per month for its first month and 1.5% per month for the next 7 months.
Since 2014, pawnbroking revenues have increased from S$ 20.1 million to S$ 27.5 million in 2018. This has led to a CAGR of 16.2% in segmental profits, rising from S$ 6.7 million in 2014 to S$ 12.2 million in 2018.
- Segment 2: Moneylending
Valuemax has acquired VM Credit Pte Ltd for S$ 1 million in 2014 to run its money lending business where it provides business terms loans that are secured by residential & commercial properties to business owners and corporations who require urgent cash needs. Also, Valuemax has in December 2015 set up VM AutoFinance Pte Ltd to provide financing to the automotive industry.
For this division, Valuemax charges interest rates of 8.0% – 12.0% a year for its secured loans and 8.2% – 47.0% a year for its unsecured loans.
Since 2014, the money lending division has been the key growth driver to Valuemax. Revenues had increased from S$ 2.7 million in 2015 to S$ 15.0 million in 2018. This had led to an increase in its segmental profits from S$ 1.0 million in 2015 to S$ 7.4 million in 2018.
- Segment 3: Retail & Trading of Jewelry and Gold (Retail)
Revenues from this segment has been falling. Fortunately, this segment has remained profitable and thus, did not become a ‘drag’ to the group overall.
- Group Financial Results
As such, Valuemax has recorded continuous decline in revenues largely due to the sales fall from its retail & trading segment.
However, Valuemax’s shareholders’ earnings have increased at a CAGR of 30.7%, rising from S$ 8.4 million in 2015 to S$ 24.6 million in 2018. It had grown its return on equity (ROE), up from 6.0% in 2015 to 10.5% in 2018.
- Balance Sheet Strength
In Q3 2019, Valuemax has S$ 74.0 million in non-current liabilities and S$ 209.8 million in shareholders’ equity. Thus, its gearing ratio is 35.3%.
Also, Valuemax has S$ 354.6 million in current assets and a total of S$ 240.1 million in current liabilities. Thus, its current ratio is 1.48.
- Major Shareholders
Yeah Hiang Nam and his wife, Tan Hong Yee are the key shareholders of Valuemax with combined interests of 79.60% shareholdings, direct and indirect. Yeah Hiang Nam is the Managing Director & CEO of Valuemax. His sons, Yeah Lee Ching & Yeah Chia Kai are Executive Directors of the company respectively.
- Latest 12-Months
For the past 12 months, Valuemax has made S$ 218.9 million in sales. It has generated S$ 23.1 million in shareholders’ earnings or 4.27 cents in earnings per share (EPS). Thus, it has maintained growth in profitability over the last 4 quarters:
|Group Revenue(S$ ‘000)||Shareholders’ Earnings (S$ ‘000)||Earnings per Share (EPS) (SG Cents)|
- P/E Ratio
As of 15 December 2019, Valuemax is trading at S$ 0.32 per share. The company has a current P/E Ratio of 7.49, the lowest in 10 years.
- P/B Ratio
In Q3 2019, Valuemax has net assets of 37.77 cents per share. Hence, it has a current P/B Ratio of 0.85, below its 5-year average of 0.96.
- Dividend Yields
In 2018, Valuemax has paid out 1.33 cents in dividends per share, a rise from 0.88 cents in 2013 & 2014. Thus, its dividend yield is 4.16% a year if the company is able to maintain its DPS at 1.33 cents for subsequent years to come, which is above its 5-year average of 3.81% per annum.
Valuemax has achieved growth in earnings and dividend payouts over the last 5 years due to higher earnings in both pawnbroking and money lending activities during the period. Its stock price, however, has continued to drop despite rising profits delivered. Thus, it has caused Valuemax to be valued at its lowest P/E & P/B Ratio presently and is offering the highest in dividend yields.
So, would you invest in Valuemax Group Ltd at S$ 0.32 a share?
Well, hold onto your horses. Stay tuned for my subsequent write-ups where I’ll cover Maxi-Cash and make a comparison between the three pawnbrokers.
Meanwhile, please feel free to post your comment below: