Eyes on ValueMax: Pawnbrokers, it’s still a competition

Time to review your services.

The government’s move to tighten the moneylending industry has decreased the total amount of loans possible, pushing more and more people to resort to pawnbrokers for their financial needs.

A report by OSK-DMG revealed that this year is a positive one for pawnbrokers and an inflection point is to be expected along the way.

Focus is on ValueMax, which has a fixed dividend policy, and is the only listed pawnbroker with overseas exposure. It may gain even more advantage as it is planning to be the first to venture into high-end pawnbroking, providing better margins and a new revenue source.

Here’s more from the report:

In 2013, despite a sharp plunge in gold prices total pledges received increased 5% y-o-y to 4.2m from 4.0m in 2012. Total redeemed pledges edged up 6% y-o-y to 4.01m from 3.79m. In total, unredeemed pledges are still below the 5% norm, at 4.5% in 2013. For 2014, pledges received increased to 362,300 in March 2014 from 342,000 in Jan 2014.

In 2013, the total amount of loans dropped 22.5% y-o-y to SGD5.47bn from SGD7.07bn, mainly due to sharp plunges in gold prices. However, total amount of loans redeemed including interest, was still higher at SGD5.6bn, justifying the low default rates across the sector. In addition, loans given out by pawnbrokers improved gradually to SGD441.1m in March 2014 from SGD431.5m in Jan 2014, substantiating our belief that FY14 will see a turnaround.