The document provides information on the pawnbroking industry in Singapore, including its history and consolidation. It discusses the largest players in the market (MoneyMax, ValueMax, Maxi-Cash), their financials and leadership. Key metrics like interest rates, performance of the industry, and the impact of gold prices are analyzed. Emerging trends in premium pawnbroking and the increased use of technology are also mentioned. Regulations from the Ministry of Law that could affect the industry are outlined.
4. Shortstory
In the 5th Century, pawnshops were
established, owned, and operated by
Buddhist monasteries; only later did
they become more widely seen in
society.
During the Southern Song dynasty,
wealthy laypeople would sometimes
form partnerships with Buddhist
monasteries and open pawnshops (in
doing so they also managed to avoid
certain property taxes from which
monasteries were sometimes exempt).
PawnbrokingHistory
Earliest pawnbrokers in
China
5th Century
5. Pawnbroking takes
off in Greece
6th Century
King Edward pawned his
jewels
14th Century
Pawnbroker’s Act passed
in England
2011
6. 2012
ConsolidationofIndustry
IPO of Singapore’s first pawnbroker,
Maxi-Cash, raising $59 million and
reaching a P/E of 65.6. MoneyMax &
ValueMax followed suit a few years
later.
Main Pawnbrokers
7. Main Pawnbrokers
• Largest pawnbroker
• Established in 1988
• Expanded to
Malaysia
• IPO in 2013
ValueMax
• First shop in AMK
Central
• 35 Outlets
• By the SK Group
MoneyMax
• 4 City Outlets
• Aspial Group
• Most Outlets
Maxi-Cash
8. MoneyMax ValueMax Maxi-Cash
MARKET CAP AS AT
08/03/15
$86,700,000 $197,400,000 $112,500,000
IPO PRICE
$106,000,000 $272,100,000 $59,700,000
IPO DATE
31 July 2013 30 Oct 2013 22 Jun 2012
LISTING BOARD
Catalist SGX Mainboard Catalist
NET INCOME (2014)
$800,000 $9,000,000 $1,800,000
TOTAL ASSETS
$181,000,000 $249,900,000 $247,200,000
FLOAT
13.05% 24.03% 13.38%
P/E
106.383 21.948 62.5
P/B
1.5 1.309 1.756
9. 9Drivers of the Pawnbroking industry
Cost of living
Casinos
Population
Growth
Changing behavior
Changed consumer
perception
Rising prices
& slowing
economy
Leads to 20%
increase in
pawnbroking
activities
Targeted
population of 6.9
million in 2030,
growing
acceptance of
pawnbroking
Weakened stigma of a
pawnshop. Pawnshops extend
a credit line, and the new
pawnshops deliver
convenience
Through modernization and
re-branding. Less
intimidating shop
appearance and with local
celebrity endorsements.
10. CEO - Lim Yong Guan
Managed Soo Kee group of
companies
Dip. Of Business Admin
CEO - Yeah Hiang Nam
40 years of experience with
gold and jewellery
1988, first foray into
pawnshops – Ban Soon
Pawnshops.
Established ValueMax in 1999
CEO – Ng Leok Cheng
• New CEO of Maxi-Cash from 5th Jan
2015, replacing Koh Lee Hwee, VP of
Aspial Group
• Responsible for the overall
management and business operations
• Independent Director of Maxi-Cash
(April 2012 to January 2015)
Co-founder – Lim Yong Sheng
Managed Soo Kee group
BSc. Electrical Engineering
MD - Yeah Lee Ching
Graduate Gemologist
MBA from NUS
Secretary of Pawnbrokers
association
Chairman – Koh Wee Seng
CEO of Aspial Corp Ltd
BBA, NUS
Co-founder – Lim Liang Eng
Retailing of Soo Kee group
jewellery
NJC, Dunman High
MD - Yeah Chia Kai
Certified diamond grader
Foundation certificate in
Gemology
Non-Executive Director – Ko Lee Meng
Executive director of Aspial
Heads Aspial retail merchandising
department
Head of merchandising team
11. • Unwelcoming façade
• Single Outlet
• Non-CASE Certified
• Modern façade
• Multiple Outlets
• CASE Certified
12. Retail & Trading
Suppliers & Walk In
Unredeemed Pledged
Articles
These items are not
redeemed by certain
pawners
Jewellery Retailers,
Wholesalers,
Refiners
Walk-In Individuals
13. Walk-in individual,
Dealers,
Unredeemed
collateral
Pawnshops take in
these watches, gold
bars and pre-owned
jewelry
Jewelry
1. Jewelry is reconditioned
and sold as pre-owned
jewelry
2. If there is no demand,
jewelry will be
processed into scrap
Gems and gold scraps
Some of these gems
and gold are processed
and melted into bars
Resale of scraps
Reselling these bars
to refiners,
goldsmiths and
factories
How did the pawnshop benefit?
Pawnshops earn
money from the sale of
pre-owned jewelry, gold
bars and scraps.
BusinessModel:Retail& Trading
14. Customer
• Pledges a collateral to
obtain a loan
• Customer redeem
collateral within 6
months by repaying
loan + interest
• After 6 months,
unredeemed collateral
will be auctioned off
If there is no demand at auction
The collateral will be
reconditioned and
resold as pre-
owned jewelry
How did the pawnshop benefit?
Pawnshop earns
interest and/or admin
fee
BusinessModel:Pawnbroking
15. Pawn Ticket
Pawnbroker gives
pawner a pawn ticket.
Charges maximum
1.5% interest per
month, $0.5 for
inspection of sale, and
$0.5 for form of
declaration for item of
value below $50 and
$1 for form above $50
Terms of Redemption
Redemption can be
done within 6 months
from first day of
pawning. For item
exceeding $50, longer
term can be specified. A
customer may renew
the loan by paying the
interest charged
Sale of Auction
If redemption is not
done, a pledge for sum
exceeding $50 will be
disposed by auctioneer
licensed on behalf.
Pawnbroker may bid
and purchase at sale.
At any time after sale,
up to 4 months,
pawner can inspect
sale book.
Surplus
Pawnbroker, on demand,
pays surplus to holder of
pawn ticket within 4
months. If no demand is
paid, surplus will be paid
to Accountant General
within 14 days after
expiration period of 4
months.
Pawn Process
16. Auctioneering: an alternative
History
Since 500BC in
Babylon
Items accepted
- Fine Art
- Real Estate
- 2nd hand goods
- Industrial machinery
- Wine
- Commodities
(Fishes)
Popular Type
English auction
Highest bidder wins
Purpose
For liquidation of assets
18. Comparison with Banks
Size
Up to 8x monthly
income or 100%
of asset value
60-80% of
collateral
Speed
24 hours
Within minutes
Interest Rate
(EIR)
10.3% – 19.5%
12.7% – 19.6%
Stringent
Assessment
Pledge and
Proof Identity
Financial
Institution
Bank Loans
Pawnbroker
Credit
Assessment
19. DueDiligence
Pawnbrokers purchase insurance policies
to cover its operations. Even though
pawnbrokers have insurance policies to
cover loss and damage to pledged
collateral and counterfeit pledged
collaterals.
20. In the pawnbroking business, determining a collateral’s true value and its authenticity are of utmost
important in the business. Determining an item requires decades of on-the-job experience due to
industry norms and the risks involved in value judgment.
Watch Counterfeits
Movement
A watch expert can examine
the watch and its internal
mechanisms to determine its
authenticity.
Sound
Luxury watches have extremely
smooth mechanisms and without
the ticking sound
Documents
Check watches against their
certificates, matching serial
numbers and boxes.
Material
The material, finishing, and
color of counterfeit watches
will sometimes be off.
Weight
Counterfeit watches are
typically made with cheaper
and lighter materials than
the original
Typefaces and engravings
Engravings on fine watches are
generally sharper and more
distinct.Typefaces can differ in
size, shape and color too.
21. Gemstone Authenticity
Sparkle
Real stones have been worn
through weather and other
forms of nature, therefore
synthetic gemstones have
more sparkle than real ones.
Cut
A synthetic gemstone will have
well defined cuts and rounded
edges, where as a read
gemstone’s cut is more natural
and uneven.
Weight
Synthetic gemstones tend to
weigh more than real ones as
chemicals are added to make
it look realistic.
Diamonds
Diamonds should not turn
foggy when you breathe onto
it and it must be able to cut
glass.
24. Mitigating Volatility
Peg loans at a lower percentage
of resale value to maintain profit
margins Increase input in retail and trading
businesses due to higher and more
stable yields
Pegging Loans
Retail and Trading
26. High end luxury
watches are pegged to
Swiss Franc
Luxury Watches
54% market share in
value of watch market
in pawnbroking
business
Market Share
Value of watches held
by pawnbrokers rose.
Increased pawning
activities of luxury
watches to obtain higher
liquidity at a low cost
Rising Swiss Franc
Swiss Franc
27. Ministry of Law has proposed a few laws that
affects pawnbrokers
Legal Framework
Tighter Licensing Requirements
Enhanced Process Related
to Pawn Tickets
Removal of Existing
Auction SystemAnti-Money Laundering
Measures
-Minimum paid capital for
retail branches
-Increased security deposits
from $20,000 to $100,000
-Results in lower liquidity &
ROA
-Sale of pawn tickets to
pawnbrokers
- Increase acceptance of
using items as
collaterals
-Lower cost
-Higher loan to valuations ->
increase attractivenessin loan
services ->higher transaction
volumes -> increase revenue
and earnings
-Higher staffing
requirement
-Results in an increase in
overhead costs
28. Interest Rates
Step
Pawnbrokers
charge at an
interest of 1.5%
per month on their
loans
Description
This translates to
an effective
annual rate
(EAR) of 19.56%!
Recent increase in
SIBOR will squeeze
its profit margins
1.5% 19.56%
Cost of Borrowing
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