KUALA LUMPUR: Pawnbroker Evergreen Max Cash Capital Bhd (EMCC), which debuted on the ACE Market yesterday, is seeking to grow its market share to 10%, based on the total value of pawn loans disbursed in Malaysia and in line with its expansion plans.
Citing an independent market research (IMR) by Providence Strategic Partners Sdn Bhd, its non-independent executive director Low Kai Loon said EMCC had a 3.3% market share in Malaysia in 2022 for pawn loans.
This percentage was calculated based on the total value of pawn loans disbursed in the country, which reached RM10.7bil in 2022, while EMCC itself disbursed RM351.2mil in pawn loans.
“In terms of market share, we are not as significant as 10%, but we strive towards it,” Low told a press conference in conjunction with EMCC’s initial public offering (IPO).
Based on the IMR, the pawnbroking industry in Malaysia is expected to grow at a compounded annual growth rate of 5.9% between 2022 and 2024 to reach RM12bil in 2024.
“We are confident that the pawnbroking industry will continue to grow as pawnbroking services remain a preferred choice for short-term financing, especially among the unbanked and underbanked population,” Low added.
EMCC made its debut on the ACE Market at 32 sen per share, a 33% premium against its IPO price of 24 sen.
At 5pm, the company closed up 7.5 sen, or 31.25% to 31.5 sen with 285.15 million shares tradedThe group, which is also involved in the retail and trading of gold and luxury products, raised a total of RM64.2mil from its IPO, with a bulk of it earmarked to finance the expansion of its pawnbroking business.
It has set aside RM30mil, or 46.7%, of the IPO proceeds to fund the additional cash capital of its pawnbroking business, while another RM20mil, or 31.1%, has been allocated for the opening of up to five new pawnshops, called “Pajaking”, in Kuala Lumpur, Selangor and Pahang.
The remaining IPO proceeds of RM14.2mil, or 22.2%, will be used for repayment of bank borrowings, the group’s working capital purposes and to defray listing expenses.
When asked about the criteria for its new pawnshops, Low said the group is looking for locations with a substantial community, particularly with a high number of bumiputra residents, as 70% to 80% of its customer base consists of bumiputra individuals.
The primary focus of the new pawnshops will be on the Klang Valley due to its dense population.
“We foresee more people from other states moving into Klang Valley. So we are focused on this area, with ample room to grow in this space,” he said.
Low said that as of September 2022, there are 789 active licensed pawnbrokers.
Nevertheless, he believed that the barrier to entry into this market is quite high due to the substantial capital requirements needed.
Established in 2012, EMCC primarily operates in the pawnbroking business through its network of 22 pawnshops, called “Pajaking”, located in Kuala Lumpur, Selangor, Negri Sembilan and Pahang.
In the first half of its financial year 2023 (1H23), EMCC recorded a revenue of RM52mil, marking a 72% increase compared to the RM30.3mil reported during the same period in the previous year.
Net profit in 1H23 rose by RM1.3mil, or 23%, to RM7.2mil from the RM5.9mil reported in 1H22.
The higher revenue was mainly due to the growth in its pawnbroking segment, with pawn loans disbursed increased by RM29mil, or 17.3%, in 1H23 compared with 1H22.
The revenue uptick was also attributed to the growth in the gold and luxury products retail and trading segment, as a result of higher sales volumes of unredeemed pledged gold items from the pawnbroking business, as well as the inclusion of pre-owned gold products sourced from other third-party pawnshops during 1H23 in contrast to 1H22.