ValueMax expands collateral coverage with new license

It will possibly add $25m in loans.

With a moneylender’s license in hand, ValueMax can now officially accept a wider range of collateral, especially properties. This business segment may be a new growth driver, with high margins of about +70%.

According to OSK-DMG, about $25m in loans for this segment will be added from now until FY15.

ValueMax has already commenced its new business of accepting properties as collateral after obtaining its moneylender’s license. Management has highlighted that it will charge interest rates of around 1% per month, lower than its usual pawnbroking rates but still expects to enjoy a rich gross margin of around +70%.

Here’s more from OSK-DMG:

In addition, properties would have a 60% loan-to-value (LTV), which means that only a maximum loan of 60% of the pledged property value can be obtained, leaving the company with an ample 40% buffer in the event of any default scenarios.

We expect ValueMax to add conservative estimates of about SGD25m and SGD30m of loans from this new business segment in FY15 and FY16 respectively, which would boost our original net profit after tax (NPAT) estimates for the two years by 17% each. Going forward, we also expect potential strong EPS growth of 36.1% and 15.6% in FY15 and FY16 respectively, coupled with new pawnbroking outlets being opened in Malaysia and Singapore.