Maxi-Cash Financial Services Corporation

[dydx]

Having taken a quick look at Maxi-Cash's latest (as at 30Sep13) B/S and results…..
http://infopub.sgx.com/FileOpen/Masnet_3...eID=262724
my own sense is that the company's variable rate notes ("VRNs") are not good enough for me because of its very low credit quality, and therefore I won't want to touch it.

I think it is important to note that Maxi-Cash's interest-bearing loans & borrowings balance (presumably mostly funded by banks) of $67.6m as at 30Sep13, was lower that the balance of $79.3m as at 31Dec12, while the size of its customer loan portfolio had increased from $165.2m as at 31Dec12, to $190.8m as at 30Sep13. It is also important to note that the funding short-fall was met by a big increase in due from immediate holding company (i.e. Aspial Corp. Ltd) from $48.6m as at 31Dec12, to $90.1m as at 30Sep13. I suppose it is reasonable to believe that Maxi-Cash may have problem getting banks to finance its expanding customer loan portfolio, and therefore Aspial Corp (which holds a 81.08% controlling interest) had to take on the additional burden as its "the main banker" as well. Quite obviously, such a funding arrangement and situation is untenable.

It is quite obvious that the main source of repayment for Maxi-Cash's $20.0m Series 1 VRNs - and any other new series to be issued in the future - upon their maturities will be by way of refinancing from banks or Aspial Corp. A relevant question: What if the banks are not willing to extend new loans to Maxi-Cash to refinance the VRNs when due on maturity, and what if Aspial Corp. does not have spare funds or cannot raise new financing to support Maxi-Cash?

I think it is relevant to note that with a branch network of 32 outlets now, Maxi-Cash had a very small PBT of only $2.04m for the 9-month period till 30Sep13. The operation has expanded very quickly - perhaps too quickly! - since its IPO in Jun12. Meanwhile, Maxi-Cash's share price and market cap have been retreating since Oct13 after its 3rd - a 1-for-10 - bonus issue…..
http://finance.yahoo.com/q/bc?s=5UF.SI+Basic+Chart&t=2y

[safetyfirst]

hi dydx, do you know what is the current yield on the VRNs? i wanted to find out how much interest rate Maxi cash is paying but cant find out much info from the uob or aspial website

[dydx]

hi dydx, do you know what is the current yield on the VRNs? i wanted to find out how much interest rate Maxi cash is paying but cant find out much info from the uob or aspial website

I have no idea about the Agreed Yield fixed for the Series 1 Notes/VRNs, but I suppose you can call UOB (the Issue Agent) to find out. What I know is that the Series 1 Notes/VRNs will have 3-month interest periods as it is stated that the notes "will bear interest at a variable rate payable quarterly in arrear". More info on the operating mechanism of the VRNs are available in the Info Memo of Maxi-Cash's S$300,000,000
Multicurrency Medium Term Note (MTN) Programme…..
http://infopub.sgx.com/FileOpen/Maxi-Cas...leID=19568

[CityFarmer]

Having taken a quick look at Maxi-Cash's latest (as at 30Sep13) B/S and results…..
http://infopub.sgx.com/FileOpen/Masnet_3...eID=262724
my own sense is that the company's variable rate notes ("VRNs") are not good enough for me because of its very low credit quality, and therefore I won't want to touch it.

I think it is important to note that Maxi-Cash's interest-bearing loans & borrowings balance (presumably mostly funded by banks) of $67.6m as at 30Sep13, was lower that the balance of $79.3m as at 31Dec12, while the size of its customer loan portfolio had increased from $165.2m as at 31Dec12, to $190.8m as at 30Sep13. It is also important to note that the funding short-fall was met by a big increase in due from immediate holding company (i.e. Aspial Corp. Ltd) from $48.6m as at 31Dec12, to $90.1m as at 30Sep13. I suppose it is reasonable to believe that Maxi-Cash may have problem getting banks to finance its expanding customer loan portfolio, and therefore Aspial Corp (which holds a 81.08% controlling interest) had to take on the additional burden as its "the main banker" as well. Quite obviously, such a funding arrangement and situation is untenable.

It is quite obvious that the main source of repayment for Maxi-Cash's $20.0m Series 1 VRNs - and any other new series to be issued in the future - upon their maturities will be by way of refinancing from banks or Aspial Corp. A relevant question: What if the banks are not willing to extend new loans to Maxi-Cash to refinance the VRNs when due on maturity, and what if Aspial Corp. does not have spare funds or cannot raise new financing to support Maxi-Cash?

I think it is relevant to note that with a branch network of 32 outlets now, Maxi-Cash had a very small PBT of only $2.04m for the 9-month period till 30Sep13. The operation has expanded very quickly - perhaps too quickly! - since its IPO in Jun12. Meanwhile, Maxi-Cash's share price and market cap have been retreating since Oct13 after its 3rd - a 1-for-10 - bonus issue…..
http://finance.yahoo.com/q/bc?s=5UF.SI+Basic+Chart&t=2y

One more possible venue for the company to repay debt, a cash-call from investors.

I am surprise the company didn't make the call till now, instead raised capital via debts, and with variable interest amid an impending uptrend of interest rate.

I do have similar view, that the company has been expanding too fast, much faster than the capital raised, which is definitely not a good sign.

[CityFarmer]

One more round of bonus share, 1-for-5 shares...
(not vested)

---------
The Board of Directors (the “Board” or “Directors”) of Maxi-Cash Financial Services
Corporation Ltd (the “Company”) is pleased to announce that the Company is proposing a
bonus issue (the “Proposed Bonus Issue”) of up to 93,772,799 new ordinary shares in
the capital of the Company (the “Bonus Shares”), on the basis of one (1) Bonus Share
credited as fully paid for every five (5) existing ordinary shares (the “Shares”, each a
“Share”) held by the shareholders of the Company (the "Shareholders") as at the books
closure date to be determined by the Directors for the purpose of determining the
entitlements of the Shareholders (the "Books Closure Date"). Fractional entitlements will
be disregarded and disposed of in such manner as the Directors may in their absolute
discretion deem fit for the benefit of the Company.

Ref: http://infopub.sgx.com/FileOpen/Proposed...eID=275273

[safetyfirst]

I thought investors of courts asia should also take a look at maxi cash. Maxi cash is lucky to have a rich immediate holding company that is willing to lend it 86m as of 31 dec 2013. How about courts? If courts were to continue its business model, then they will probably have to do a rights issue soon because they dont have a rich immediate holding company.

For maxi cash investors, do you believe that the immediate holding company can continue to lend it money again and again for the next few years? I am very skeptical, but you may think otherwise because of the bonus issue

[Investmentrealm]

what is the value we are looking in Maxi cash? profit for full year just plunged almost 50% and its PE ratio is more than 60 based on EPS of 0.47 cents and share price of 32 cents. Am I reading it wrongly?

[greengiraffe]

The Fragrance / Aspial Group seems to be learning a lot from central bankers around the world (who print $ for free) - print paper and more paper that is probably out of line with fundamentals.

I have yet to read their results but will not be surprised that they are ugly...

Not Vested

One more round of bonus share, 1-for-5 shares...
(not vested)

---------
The Board of Directors (the “Board” or “Directors”) of Maxi-Cash Financial Services
Corporation Ltd (the “Company”) is pleased to announce that the Company is proposing a
bonus issue (the “Proposed Bonus Issue”) of up to 93,772,799 new ordinary shares in
the capital of the Company (the “Bonus Shares”), on the basis of one (1) Bonus Share
credited as fully paid for every five (5) existing ordinary shares (the “Shares”, each a
“Share”) held by the shareholders of the Company (the "Shareholders") as at the books
closure date to be determined by the Directors for the purpose of determining the
entitlements of the Shareholders (the "Books Closure Date"). Fractional entitlements will
be disregarded and disposed of in such manner as the Directors may in their absolute
discretion deem fit for the benefit of the Company.

Ref: http://infopub.sgx.com/FileOpen/Proposed...eID=275273

[CityFarmer]

OSK/DMG's report on the company's latest financial result. It is as ugly as expected by buddy greengiraffe

(not vested)

-------------
Maxi Cash 4Q13's net profit plunged 74%. Maxi Cash has
announced its 4Q13 results with operating losses to
SGD0.2m and net profit sliding 74% to SGD0.3m. Net asset
value have also fallen from SGD0.18 to SGD0.14. The
company has proposed a bonus issue of 93.7m new bonus
shares on the basis of 1 bonus share credited as fully paid for
every 5 existing ordinary shares to reflect the growth and
expansion of its business, and at the same time, to reward the
shareholders for their loyalty and continuing support of the
company. (SGX)

Ref: http://remisiers.org/cms_images/research...atters.pdf

[GPD]

Despite this, their bonus issue still work magic.