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Singapore Investment


 Founder of  PPJACK 0242 PAPPAJACK BERHAD Purchases Company Stocks Continuously

After Pappajack Berhad's (PPJACK, 0242) share price broke through RM0.60 on March 31, its founder and largest shareholder, Mr. Lim Boon Hua, continued to accumulate 5 million shares on April 4, increasing his total shareholding to 367.87 million shares or 55.07%.

According to the Malaysian stock exchange, Mr. Lim Boon Hua had been buying PPJACK's shares frequently since March 2023, and he had accumulated over 20 million shares during this period.

This move caught the attention of the author, who has some thoughts on the matter. Before discussing this, let's briefly introduce the company's background and financial situation.

PPJACK, which listed on April 1, 2022, is a chain of pawnshops that primarily provides short-term financing or pawn loans to individuals, usually using gold, luxury watches, jewellery, or items of equivalent value as collateral to offer small loans.

Remarkably, PPJACK was one of the best-performing IPO new stocks last year, not to mention the company is the only pawnshop company currently listed on the Malaysian stock exchange.

According to the company's latest financial report for the fourth quarter of the 2022 fiscal year, as of December 31, 2022, PPJACK had a total of 30 branches, adding 5 pawn shops since its IPO. In terms of revenue, the company generated RM20.35 million in that quarter, an increase of 3.83% compared to the previous quarter, and net profit also grew by 1.09% to RM3.71 million. This is due to the increase in income from pawn loan interest and a decrease in management expenses, which have led to outstanding results in the latest quarter.

It's worth noting that most of the collateral received by PPJACK is gold, and the international gold price has risen rapidly from around $1,180 per ounce in early March to a high of around $2,020 per ounce on April 3. Analysis suggests that the recent surge in gold prices is mainly due to inflation and the boost in safe-haven demand driven by banking risks. Therefore, this can enhance PPJACK's asset value.

In addition, Mr. Lim Boon Hua stated at the company's 10th anniversary dinner that pawn loans will always be in demand regardless of economic conditions. Therefore, he is confident about the company's continued growth in the future.

What do readers think about PPJACK's current PE valuation of around 40 times and the founder's recent buying activity?


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