Maxi-Cash’s refusal to expand overseas could take toll on profits

It’s already a full house in Singapore.

Maxi-Cash Financial Services' (Maxi-Cash) 3Q14 revenue dipped 2% YoY to SGD27.9m, due to a decline in the retail of pre-owned jewellery business.

However, according to a report by OSK-DMG, an increase in pawnbroking loans led to a 114% YoY surge in 3Q14 NPAT to SGD0.72m, vs SGD0.34m in 3Q13. Expenses such as employee benefits rose 22% YoY mainly due to an increase in the number of outlets. Going forward, expenses are expected to increase further given the company’s large store network. In addition, its net gearing remained high at 204%.

Both Valuemax Group and MoneyMax Financial Services have already expanded into Malaysia, providing the next leap in growth. However, Maxi-Cash still does not have any concrete plans to expand its business outside of Singapore. We think the company may continue to fall behind its peers in terms of regional expansion, as untapped locations in Singapore might be limited with Maxi-Cash already having 38 stores as of 3Q14.