Maxi-Cash Financial Services Corporation

[CityFarmer]

The Maxi-Cash share price continue to move up, cross $0.40 by 930am today

The SGX announcement shows Koh Wee Seng (Non-Executive Chairman), is one of the buyer last Friday. Total purchase of 3.1 Mils shares, more than the total share open to public of 2.25 Mils share (exclude the placement share)

Insider are buying, and more others are buying. This is unlikely a hype, but a strong show of confidence on Maxi-Cash

I am optimistic on the biz model, but not at the current price.

Had I missed out important hints?

[shanrui_91]

The Maxi-Cash share price continue to move up, cross $0.40 by 930am today

The SGX announcement shows Koh Wee Seng (Non-Executive Chairman), is one of the buyer last Friday. Total purchase of 3.1 Mils shares, more than the total share open to public of 2.25 Mils share (exclude the placement share)

Insider are buying, and more others are buying. This is unlikely a hype, but a strong show of confidence on Maxi-Cash

I am optimistic on the biz model, but not at the current price.

Had I missed out important hints?

cordlife jumps by 40-50% in the first few days, but look at its current price. IPO price is often not as important initially as the investment banker will have to help to support the price. If the price falls, the institutional player as well as the listed company will not be happy and this will hurt the lead manager reputation.

This is not forgetting the fact that there's such a thing called the greenshoe option when the lead underwriter is allowed to sold extra shares to investors. How it works is that assuming 10 million shares are being issued in the IPO, the lead manager may be lent an additional 1 million of share that it has to return back.

In total, 11m shares will be issued out, with 1 million being shorted as the bank has to return it someday. The bank will then be able to purchase 1m of share without suffering any risk as this 1 m has been shorted by the bank to the customer. By purchasing in the open market, the price will then be supported.

Perhaps janjansen can share more about it

However, 1 positive thing about this IPO is that Aspial holds on to 80% of the shares which reduce the size of free float significantly. A slightly higher demand is all that is needed to push up the price.

[Musicwhiz]

Haha don't have much time to typea lot these days, even though I have views about most stuff.

In short:-

1) I am not excited about the business.
2) I am not excited about the valuation of the business
3) I think IPOs (and RTOs) are generally over-hyped (look at the case of Aussino - case in point).
4) There's too much focus on the share price in the mainstream media, using the IPO price as anchor. If we look at valuations in isolation, perhaps people will have a different view.

[CityFarmer]

The Maxi-Cash share price continue to move up, cross $0.40 by 930am today

The SGX announcement shows Koh Wee Seng (Non-Executive Chairman), is one of the buyer last Friday. Total purchase of 3.1 Mils shares, more than the total share open to public of 2.25 Mils share (exclude the placement share)

Insider are buying, and more others are buying. This is unlikely a hype, but a strong show of confidence on Maxi-Cash

I am optimistic on the biz model, but not at the current price.

Had I missed out important hints?

cordlife jumps by 40-50% in the first few days, but look at its current price. IPO price is often not as important initially as the investment banker will have to help to support the price. If the price falls, the institutional player as well as the listed company will not be happy and this will hurt the lead manager reputation.

This is not forgetting the fact that there's such a thing called the greenshoe option when the lead underwriter is allowed to sold extra shares to investors. How it works is that assuming 10 million shares are being issued in the IPO, the lead manager may be lent an additional 1 million of share that it has to return back.

In total, 11m shares will be issued out, with 1 million being shorted as the bank has to return it someday. The bank will then be able to purchase 1m of share without suffering any risk as this 1 m has been shorted by the bank to the customer. By purchasing in the open market, the price will then be supported.

Perhaps janjansen can share more about it

However, 1 positive thing about this IPO is that Aspial holds on to 80% of the shares which reduce the size of free float significantly. A slightly higher demand is all that is needed to push up the price.

I understand and aware the scenarios listed, but i do not see it aligned with observations.

This is my 1st following-up on a IPO, i used to just ignore all IPOs. I had taken it as a education trip, which i will remain open-minded, skeptical to all views while searching for supporting evident.

---

Haha don't have much time to typea lot these days, even though I have views about most stuff.

In short:-

1) I am not excited about the business.
2) I am not excited about the valuation of the business
3) I think IPOs (and RTOs) are generally over-hyped (look at the case of Aussino - case in point).
4) There's too much focus on the share price in the mainstream media, using the IPO price as anchor. If we look at valuations in isolation, perhaps people will have a different view.

Yes, view noted.

[lonewolf]

Shanrui, u actually walked into a pawnshop? Interesting...
I always have the impression that there will be a high counter secured with vertical bars and the staff will look down at you from behind the bars. You mean the 2nd hand items are displayed out at the shop front much like a luxury watch shop? Or you mean you are invited to a special room behind the counter?

yes, it is such a rare opportunity to have 3 pawnshops within sight of each other. This will obviously be where competition will be the most intense or there will be some form of tacit collusion going on.

Is it really rare to have 3 pawnshops close to each other?? I was under the impression (and I repeat its a general impression and not back up by facts cos I dun really pay so much attention) that this is quite common in all the major HDB towns like AMK , Toa Payoh and Hougang.

Hmm.. next time I'm in that area, I will pay closer attention.

[CityFarmer]

Maxi-Cash close at $0.44 at volume of 61 Mils share, approx 13% more pricey than yesterday.

It has been interesting to observe the trading so far. I am quite convince that traders are the major player here since major shareholders are not selling.

Buy-up volume still bigger than sell-down volume, but with a much lower margin.

The next settlement date is 27 Jun 2012, coming Wed. Let's see...

[Musicwhiz]

Maxi-Cash close at $0.44 at volume of 61 Mils share, approx 13% more pricey than yesterday.

What is the historical valuation at this price? If I understand correctly, at IPO price it was priced at 25x historical earnings, with a promisd 60% payout ratio.

Comparing this to other pawnbrokers, how does it stack up? Higher valuations, more outlets, better prospects?

For me, the share price is usually a very expensive distraction away from the real crux of the issue - which is the business and how it is going to do moving forward.

[shanrui_91]

Is it really rare to have 3 pawnshops close to each other?? I was under the impression (and I repeat its a general impression and not back up by facts cos I dun really pay so much attention) that this is quite common in all the major HDB towns like AMK , Toa Payoh and Hougang.

Hmm.. next time I'm in that area, I will pay closer attention.

It is rare to me as I have just started observing pawn shop recently

Bubble tea shops start opening up one by one after everyone notices the super long queue at Koi. However, I don't see how lucrative pawn shop is such that the 2 jewellery players are jumping into it fast and furious.

What did they really see in their concept of modern pawnbroking? a diversification against recession or do they believe that interest rate is going to stay low forever?

http://moneymax.com.sg/moneymax/images/s...wsAsia.pdf

"Although it was not able to provide the rate of potential growth over the next few years, the association said one good reason for expansion will be the lure of the upcoming integrated resorts."

Point to ponder about....

[CityFarmer]

The SGX announcement shows Koh Wee Seng (Non-Executive Chairman), purchase another of 700 lots shares today @ S$0.405, with PE of ~40x

With closing price of S$0.44 today, historical PE is ~44x (base on FY2011 ~1cts EPS) and PB of more than 2.

IMO, With insiders buying, and assume Chairman Koh is an astute businessman, pawnshop biz model should have sufficient merit to pursue.

Having said so, i still do not feel comfortable with the valuation given.

[shanrui_91]

The SGX announcement shows Koh Wee Seng (Non-Executive Chairman), purchase another of 700 lots shares today @ S$0.405, with PE of ~40x

With closing price of S$0.44 today, historical PE is ~44x (base on FY2011 ~1cts EPS) and PB of more than 2.

IMO, With insiders buying, and assume Chairman Koh is an astute businessman, pawnshop biz model should have sufficient merit to pursue.

Having said so, i still do not feel comfortable with the valuation given.

Excluding Aspial's shareholding of 81.08%, free float for Maxi-Cash is at a mere 18.92%. Till date, Mr Koh holds 1.31% in direct stake. Effectively, he takes up 6.92% of the remaining free float.

If he continues to buy share and reduce the free float, he is going to become very rich.