Pappajack Bhd (PPJACK) is principally involved in the provision of pawnbroking services. As at 14 Feb 2022, the group operates 25 pawnbroking outlets in total, with 12 located in Selangor, 3 in Kuala Lumpur, 5 in Pulau Pinang, 1 in Negeri Sembilan, 2 in Johor and 2 in Perak. Each pawnbroking outlet is held and operated by a subsidiary of the group. Each subsidiary is individually licensed by the Kementerian Perumahan dan Kerajaan Tempatan (KPKT), and as such, adheres to the regulations under the Pawnbrokers Act 1972 and guidelines issued by the KPKT. This includes, amongst others, prescribed interest rate, administrative fees chargeable to customers, operational model and all administrative procedures set by the KPKT. Deriving monthly interest charges and administrative fees from its walk-in customers, PPJACK’s customers are the general public aged 18 years and above who seek micro-loans, but may be financially underserved by conventional financial institutions.
Moving forward, PPJACK's business expansion in the long term is premised on the setting up and opening of new pawnbroking outlets and/or acquiring third party pawnbroking outlets to widen its network and increase its market reach. We derive a fair value of RM0.35 based on a 1.4x PB multiple to its FY22F BVPS of 25sen. The IPO is expected to raise approximately RM50.1m from the issuance of 167.0m new shares. Apart from utilising 38.4% of the proceeds to expand pawnbroking outlets, 54.1% of the proceeds are allocated as cash capital for its existing 20 pawnbroking outlets, which have been identified as outlets with higher growth rate.
Source: PublicInvest Research - 18 Mar 2022
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Created by PublicInvest | Mar 21, 2024