Singapore Markets closed

Maxi-Cash Financial Services Corp Ltd’s Stock Is Near A 52-Week Low Now: Is It Actually Cheap?

Lawrence Nga

Maxi-Cash Financial Services Corp Ltd (SGX: 5UF), which is a subsidiary of Aspial Corporation (SGX: A30), has two main businesses: Pawnbroking; and the retail and trading of pre-owned jewellery, watches, and branded bags. The company has a network of 41 pawnshops and retail stores in Singapore which are located near transport hubs such as bus interchanges and MRT stations.

At the current price of S$0.162, Maxi-Cash’s stock is just 10% higher than a 52-week low of S$0.147. This may raise a question among investors: Is Maxi-Cash actually cheap now?

Unfortunately, there is no easy answer. But, we can still get some insight by comparing Maxi-Cash’s current valuations with the market’s. The three valuation metrics I will focus on are the price-to-book (PB) ratio, price-to-earnings (PE) ratio, and dividend yield.

I will be using the SPDR STI ETF (SGX: ES3) as a proxy for the market; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).

Maxi-Cash currently has a PB ratio of 1.1, which is lower than the SPDR STI ETF’s PB ratio of 1.4. In addition, Maxi-cash’s PE ratio is 1%7 lower than that of the SPDR STI ETF’s (9.9 vs 11.9). Coming to the dividend yield, Maxi-Cash shines here too. The pawnbroker has a yield of 9.3%, which far exceeds the market’s yield of 2.79%. The higher a stock’s yield is, the lower is its valuation.

Putting it all together, we can see that Maxi-Cash is trading at a large discount to the market, given its lower PB ratio and PE ratio, and significantly higher dividend yield.

More reading

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn't own shares in any companies mentioned.