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IPO Series – Pawnbroker Services, Retail and Trading of Jewellery and Gold Providers
WELL CHIP GROUP BERHAD 5325
Timetable of IPO
Opening of application: 26/6/2024
Closing of application: 10/7/2024
Balloting of application: 12/7/2024
Tentative listing date: 23/7/2024
Opening of application: 26/6/2024
Closing of application: 10/7/2024
Balloting of application: 12/7/2024
Tentative listing date: 23/7/2024
-Will be listed on the Main Board
Info of IPO
Enlarged no. of shares upon listing: 600M
IPO price: RM1.15
Market capitalization: RM690M
Estimated funds to raise from Public Issue: RM172.5M
PE ratio = 19.53x (based on FY2023)
Enlarged no. of shares upon listing: 600M
IPO price: RM1.15
Market capitalization: RM690M
Estimated funds to raise from Public Issue: RM172.5M
PE ratio = 19.53x (based on FY2023)
Utilization of Proceeds
-Cash Capital for the existing 23 pawnshops (RM124.3M or 72.0%)
-Expansion of pawnshops (RM4M or 23.2%)
-Estimated listing expenses (RM5.5M or 4.8%)
-Cash Capital for the existing 23 pawnshops (RM124.3M or 72.0%)
-Expansion of pawnshops (RM4M or 23.2%)
-Estimated listing expenses (RM5.5M or 4.8%)
Figure 1: Utilization of proceeds of Well Chip Group Berhad
Dividend Policy
-The groups recommends to distribute dividends of at least 35.0% of our consolidated PAT attributed to our shareholders for first 3 financial years after our Listing
-The groups recommends to distribute dividends of at least 35.0% of our consolidated PAT attributed to our shareholders for first 3 financial years after our Listing
Financial Summary & Industry Overview
-From the total amount insurance purchased by the group, it has shown a CAGR of 21.87% from FY2020 to FY2023, with the amount of RM303.150M and RM528.450M respectively. This amount continues to increase to RM548.750M from 1 January 2024 up to LPD
-From the total amount insurance purchased by the group, it has shown a CAGR of 21.87% from FY2020 to FY2023, with the amount of RM303.150M and RM528.450M respectively. This amount continues to increase to RM548.750M from 1 January 2024 up to LPD
Figure 2: Total amount insured of Well Chip Group Berhad
Source: $WELLCHIP (5325.MY)$ IPO prospectus
-As of FY2023, the group relies on two major customers which contributed the group’s revenue more than 20%, which are Pavilion Wee Bullion Sdn. Bhd (28.3%) and TTT Bullion (M) Sdn. Bhd. (21.7%) Respectively.
-As of FY2023, the group relies on two major customers which contributed the group’s revenue more than 20%, which are Pavilion Wee Bullion Sdn. Bhd (28.3%) and TTT Bullion (M) Sdn. Bhd. (21.7%) Respectively.
Figure 3: Major customer for FY2023
Source: $WELLCHIP (5325.MY)$ IPO prospectus
-Based on the financial data from FY2020 to FY2023, the group revenue has increased from RM121.840M to RM203.675M, or 67.16% of increment, however, the PAT only shows 4.86% of increment which further translates into a lower PAT margin in FY2023.
-Based on the financial data from FY2020 to FY2023, the group revenue has increased from RM121.840M to RM203.675M, or 67.16% of increment, however, the PAT only shows 4.86% of increment which further translates into a lower PAT margin in FY2023.
Figure 4: Financial statement of Well Chip Group Berhad
Source: $WELLCHIP (5325.MY)$ IPO prospectus
-Based on the forecast by Protégé Associates, it is estimated that the pawnbroking Industry in Malaysia will be having a growth rate of more than 10% from 2024 to 2027, and will drop to 9% in 2028.
-Based on the forecast by Protégé Associates, it is estimated that the pawnbroking Industry in Malaysia will be having a growth rate of more than 10% from 2024 to 2027, and will drop to 9% in 2028.
Figure 5: Financial highlights - Well Chip Group Berhad
Figure 6: Financial highlights - Well Chip Group Berhad
Personal Opinion
-The group plans to set up another 7 new pawnshops, where 2 pawnshops in Melaka and 5 pawnshops in Johor, which can further enhance the business geography in other states other than Johor.
-Due to the business nature, the group is subjected to gold price volatility, and thus estimating to have a greater share price fluctuations if the geopolitical tensions increase.
-Furthermore, the group business nature requires a larger amount of cash capital for pawn loans and to defray for other operating expenses.
-As compared to other listed pawnbroker company like $PPJACK (0242.MY)$ and $EMCC (0286.MY)$ (PE Ratio), Well Chip is having a lower PE ratio as compared to the aforementioned companies.
-The group plans to set up another 7 new pawnshops, where 2 pawnshops in Melaka and 5 pawnshops in Johor, which can further enhance the business geography in other states other than Johor.
-Due to the business nature, the group is subjected to gold price volatility, and thus estimating to have a greater share price fluctuations if the geopolitical tensions increase.
-Furthermore, the group business nature requires a larger amount of cash capital for pawn loans and to defray for other operating expenses.
-As compared to other listed pawnbroker company like $PPJACK (0242.MY)$ and $EMCC (0286.MY)$ (PE Ratio), Well Chip is having a lower PE ratio as compared to the aforementioned companies.
Would you apply for this IPO? Share your thoughts in the comments section below
Disclaimer: The above content is not an investment advisory service, and does not purport to tell or suggest which securities or stocks customers should buy or sell for themselves. It should not be assumed that the methods, techniques, or indicators presented above will be profitable or that they will not result in losses. You should not rely solely on the information in making any investment. Rather, you should use the information only as a starting point for doing additional independent research to allow you to form your own opinion regarding investments
The details of the IPO prospectus can be accessed through https://www.klsescreener.com/v2/announcements/view/7200215
By: Jshen Ng
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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PAUL BIN ANTHONY : best with your company helps someone who can make the best person in charge A1 tq God bless
Amen
104532357 : Looks promising bro
I am going to apply this IPO
Thanks for the effort you put in to do all the research
Jshen Ng OP : You're welcome
Happy trading & let's huat 
Jshen Ng OP : $WELLCHIP (5325.MY)$ congrats to those who got this IPO
Can belanja me ZUS coffee edi, just kidding 
