PETALING JAYA: Well Chip Group Bhd
’s growth prospects remain supported by its ongoing store expansion strategy and healthy balance sheet, says Maybank Investment Bank Research (Maybank IB).
It said the group aims to open two to three new stores in financial year 2026 (FY26).
With a manageable net gearing ratio of 0.8 times at end-December 2025, the group also retained financial flexibility to tap additional borrowings to fund working capital and expansion needs.
Maybank IB said FY25 earnings had beaten its expectations, at 105% of its full-year earnings estimate, on higher-than-expected contribution from its pawnbroking division.
It liked Well Chip for its growth prospects and raised its FY26 and FY27 net profit forecasts by 3.5% and 4.4%, respectively, to reflect higher contributions from the pawnbroking business, and introduced its FY28 forecast.
It also raised its target price to RM1.95 from RM1.83 a share.
This is based on 2.2 times end-FY26 price-to-book value, which is derived on assumptions of a four year average return on equity of 15.9%, average earnings growth of 2%, and cost of equity of 8.6% based on risk free rate of 4.2%, market risk premium of 6.3% and beta of 0.7 time.
It maintained its “buy” call on the stock.
The key risks cited to the pawn broking sector and Well Chip are cybersecurity risks which expose customer data to external security threats including malware attacks, hacking and cyber threats.
Other risks include gold price volatility, unlawful and suspicious pawn transactions, cash capital requirements which may impact growth, and physical security risks as Well Chip is involved in the safekeeping of cash and valuables.
Well Chip’s fourth-quarter 2025 net profit grew 31% year-on-year (y-o-y) to RM24mil. Excluding listing expenses in FY24, FY25 core net profit grew 61% y-o-y to RM86mil.
The stronger FY25 results were attributable to higher interest income as a result of higher loan disbursed, margin expansion.
On a blended basis, gross profit margin expanded 11.1 percentage points y-o-y to 58.4%.
