Evergreen Max Cash Capital Bhd executive director Low Kai Loon said the company is looking to grow its market share to 10% in the next few years, from slightly over 3% currently. (Photo by Patrick Goh/The Edge)

KUALA LUMPUR (Sept 26): Evergreen Max Cash Capital Bhd (EMCC), which debuted on the ACE Market on Tuesday, said it expects demand for pawnbroking to increase amid escalating costs of living.

In a press conference following the listing ceremony, EMCC executive director Low Kai Loon said the company is looking to grow its market share to 10% in the next few years, from slightly over 3% currently.

The pawnbroking industry in Malaysia is expected to grow at a compounded growth rate (CAGR) of 5.9% between 2022 and 2024, and to reach RM12 billion in 2024, Low said.

The company, which has set aside RM20 million from its initial public offering (IPO) to open up five new pawnshops, will prioritise its existing markets in Kuala Lumpur, Selangor, Negeri Sembilan and Pahang, which house its 22 existing “Pajaking” pawnshops, Low said.

“We have identified certain locations and criteria. We are looking for communities with a significant Bumiputera population since they make up a substantial portion of our customer base, contributing to 70% to 80% of our clientele,” Low explained.

“Additionally, we will prioritise the four states where we are already established, particularly [in] the Klang Valley. We foresee that there will be more people from other states moving to the Klang Valley. There is still room for growth in this space,” Low added.

Commenting on the pawnbroking industry’s competition, Low said the entry barrier is high, given the regulatory requirements, cash requirement needed to establish the business, as well as good management to run the business, as all involved transactions are done in cash.

At its Bursa debut, EMCC shares opened at 32 sen, some eight sen higher than its IPO price of 24 sen.

The counter touched 35 sen — up 11 sen or 45.83% and ended its maiden trading day at 31.5 sen, still up 7.5 sen or 31.25%. It was the top active counter on Bursa Malaysia with 285.15 million shares traded.

At its closing price of 31.5 sen, the group’s market capitalisation stood at RM351.2 million.

For the first half ended June 30, 2023 (1HFY2023), EMCC reported a net profit of RM7.21 million, up 23% from RM5.87 million in 1HFY2022. Revenue rose 72% to RM52.03 million, from RM30.26 million.

The increased financial performance was mainly due to higher pawn loans disbursed and higher sales volume of unredeemed pledged gold items from the pawnbroking business, as well as pre-owned gold products sourced from other third party pawnshops.

Established in 2012, EMCC is also involved in retail and trading of gold and luxury products, while offering pawnbroking consultancy and IT solutions services to third-party pawnbrokers who are “not in direct competition with the “Pajaking” pawnshops.

The group raised RM64.2 million from the IPO. Aside from the RM20 million for the five new shops, EMCC allocated RM30 million in cash capital for its pawnbroking business, RM4 million for the repayment of bank borrowings, RM5.6 million for working capital, and RM4.6 million for listing expenses.

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