$VALUEMAX GROUP LIMITED(T6I.SI)$
$MAXI-CASH FIN SVCS CORP LTD(5UF.SI)$$MONEYMAX FINANCIAL SERVICESLTD(5WJ.SI)$
Can pawn brokers become
defensive stock in troubled times?
[Thinking]
What are the issues that we are facing currently?
1. High inflation
2. Raising interest rates
3. Economic slowdown & recession
Lets see the impact to pawn brokers.
1. High inflation
Inflation boosts the prices of luxury items aswell as gold and jewellery.
Luxury goods:
Pandemic resulted in lesser supply yet higher demand for luxury goods (bags, watches etc), pushing up the prices.
Being pawn brokers, who buy and resell luxury goods, when prices go up, they can get greater returns even if they keep to the same profit margins.
Gold:
Gold prices Raises with inflation.
Check out this response from $VALUEMAX GROUP LIMITED(T6I.SI)$
Raising gold prices will be beneficial to pawn brokers.
2. Raising interest rates
when interest rates raises, what will happen to pawn brokers?
See below response from value max
Although there is a cap for pawnbroking, due to the increased value cause of inflation, there will still be some impact to bottom line.
Which is mentioned above with regards to raising luxury good prices.
What makes the deal sweeter is that money lending interest rates can be adjusted upwards when interest rates raises.
Who's afraid of the big fat interest rates now?
[Cool] [Cool] [Cool]
3. Economic slowdown and recession
Guess this will happen eventually.
With the damage done by pandemic, supply chain disruption and Ukraine-Russia war, economic growth will definitely slow down for the near future, with high chance of recession.
Once that happens, there will suddenly be more panwbroking biz as people will require more short term loans, as well as selling of their valuables.
Those who bought luxury goods on credit during good times, will likely suffer during bad times. Resulting in the pawn brokers profiting from them.
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In terms of valuation, I find $VALUEMAX GROUP LIMITED(T6I.SI)$the cheapest amongst the 3.
PE & PB are Low. PS is on the high side.
In summary, it could be worth checking out the pawn brokers in sg.
There isn't much coverage on them, hence they tend to be off the radar.
There appears to be tailwinds coming their way and well even if shit hits the fan and their share prices plunge, they still give great dividends. [Cool]
Hope that the above post is helpful to u.
[Cool] [Cool] [Cool]
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