PETALING JAYA: Main Market-bound Well Chip Group Bhd is well positioned to rake in commendable earnings for financial year 2024 (FY24) till FY26, underpinned by its pawnbroking and retail segments, expansion plans, as well as rising gold prices.
TA Research expected the group to record a 13.4% year-on-year (y-o-y) increase in FY24 earnings to RM40.1mil on the back of an 11% rise in projected revenue. The stronger earnings are premised on expectations of steadier gross profit margins in both the pawnbroking and retail segments.
“We foresee revenue growth of 11% to 12% per annum in FY25 and FY26, underpinned by the opening of new outlets in Johor and Melaka, as well as from the increase in pawn loans, fuelled by the additional cash capital raised from the initial public offering (IPO) to enable Well Chip to offer more pawn loans to its pawnbroking customers.
“We anticipate the retail business to remain healthy, driven by further improvement in the demand for gold and luxury products, on top of rising gold prices.”
The research house noted that Well Chip Group’s earnings projections for FY24-FY26 are premised on key assumptions such as the growth of healthy pawn loans disbursed of around 25% due to the opening of several new outlets post-IPO, and from additional cash capital raised from the IPO, as well as an average gross profit margin of 38% to 39% for FY24-FY26.
The Well Chip Group is involved in the pawnbroking services business, which provides short-term secured pawn loans, as well as the retail and selling of jewellery and gold. It is operating in 27 locations, comprising 23 pawnshops and four retail stores adjacent to its pawnshops.
Well Chip Group’s operations are based in Malaysia, servicing customers predominantly in Johor.
The IPO entailed a public issue of 150,000,000 new ordinary shares at an IPO price of RM1.15 per share. The pawnbroker, which is seeking to raise RM172.5mil from its IPO, is slated for listing on July 23.
Of the proceeds, RM124.3mil or 72% will be allocated as cash capital for its pawnshops, RM40mil or 23.2% for the expansion of seven new pawnshops and the balance of RM8.2mil or 4.8% to pay for listing expenses.
