Since EMCC (0286) went public in September this year, Pappajack Berhad (PPJACK, 0242) is no longer the sole pawn shop company listed in Malaysia. Regardless, PPJACK announced an exceptionally strong financial performance a few days ago, setting new records in both revenue and profit. Notably, on the day of the quarter result announcement, PPJACK's stock price also surpassed a 52-week high.

Let's delve into the latest performance of PPJACK and explore the factors contributing to such remarkable results.

Revenue Comparison (YoY +50.51%, QoQ +8.09%)

As of September 30th, the company's revenue stood at approximately RM29.50 million, marking an increase of around 50.51% compared to the same period last year (RM19.60 million). Although management did not provide detailed explanations for this growth, it can be inferred that the increase in revenue is linked to the company's expansion. According to the quarterly report, the company expanded its pawn shop outlets to 36, adding 4 new outlets compared to the previous quarter.

Out of the RM29.50 million in revenue, approximately RM19.97 million came from pawn activities and the sale of unredeemed items, showing a year-on-year increase of about 64.97%. The remaining RM9.53 million originated from interest on pawn loans, marking an increase of approximately 27.23% compared to the same period last year.

In terms of gross profit margin, pawn loan interest contributed approximately 74.49%, while pawn activities and the sale of unredeemed items contributed only around 12.98%. Therefore, pawn loan interest is a key factor in enhancing the company's profitability.

Comparing with the previous quarter, the company's revenue increased by approximately RM2.21 million or 8.09%.

Net Profit Comparison (YoY +64.30%, QoQ +20.35%)

Given the overall growth in business revenue, PPJACK achieved a net profit of approximately RM6.03 million this quarter, reaching a historical high. Compared to the same period last year, the company's net profit increased by about 64.30%. Similarly, compared to the previous quarter, the company's net profit also grew by approximately 20.35%.

It is worth noting that the company's loans increased by about 464.77% year-on-year, reaching approximately RM38.39 million. This led to a significant increase in the company's finance costs, rising from approximately RM0.20 million in the same period last year to about RM0.56 million, representing an increase of about 180.00%. Despite that, PPJACK remains a net cash company, holding approximately RM57.46 million in cash this quarter.

Additionally, the company announced a mid-term dividend of RM 0.0050 in this quarter, with the ex-dividend date on December 6th and payment scheduled for December 20th, 2023.

Outlook

In order to expand market share and serve a broader customer base, PPJACK will continue actively expanding its network of pawn shop outlets. Hence, the management plans to enter new markets on the Malaysian peninsula.

Apart from opening new pawnshop outlets, the management is also considering acquiring eligible pawn shops, which is expected to bring substantial income to the company in the coming years.

So, dear readers, are you excited about PPJACK's future prospects and sustained financial growth?

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Disclaimer: The above is purely for educational purposes and reflects personal opinions. It does not constitute any buying or selling recommendations.

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