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Background: Aspial Corp began as a homegrown jewellery company, carrying a stable of brands such as Aspial, Lee Hwa Jewellery, Goldheart Jewelry and CITIGEMS. More recently, it has diversified into property development under World Class Land and also the pawnbroking business under the franchise Maxi-Cash.
Recent development: In June, a 40:60 joint-venture company formed between Aspial and its sister company Fragrance Group has been awarded a Government Land Sales site at Rosewood Drive in Woodlands for $151.5m. On a GFA of 412,616 sq ft, this works out to $367 psf ppr. The site can potentially yield 390 units.
Key ratios…
Price-to-earnings: n.m.
Price-to-NTA: 2.3x
Dividend per share / yield: $0.0015 / 0.3%
Net gearing: 1.5x
Share price S$0.52
Issued shares (m) 504.0
Market cap (S$m) 262.1
Free float (%) 11%
Recent fundraising activities Jan 2011: 1-for-6 rights issue, 58.9m rights shares @ $0.23/share
Financial YE 31 December
Major shareholders Koh family (72.7%)
YTD change +118.6%
52-wk price range S$0.216-0.635
Our view:
Launches achieved 100% take-up. Aspial has seven projects that have been launched and still under construction. Impressively, all the units have been sold, comprising 234 residential units, 71 office units and 27 retail units. We estimate that a net profit of approximately $58m from these pre-sales will be progressively recognised this year and next.
Moving on to the big stage. Aspial has historically been a boutique developer, specialising in projects with no more than 75 units each. Its latest acquisition at Rosewood Drive could signal that it is now ready to take on bigger developments. Including its 40% stake in the project, Aspial’s landbank now stands at 380,000 sq ft of GFA. For the rest of the year, the company will focus on launching 350 residential and shop units for sale from three projects. RNAV is estimated to be $0.46/share.
Who said pawnbroking is passé? Aspial has reinvented the business of pawnbroking. Its 19 Maxi-Cash outlets all look modern and give customers a “bank-like” experience. With gold prices near a historical high, there may be more patrons putting up their gold accessories as collaterals. The business is now profitable just over a year after operations began, despite high branding expense and start-up costs for new stores. This is likely to be a growing business which is counter-cyclical to Aspial’s jewellery and property businesses.
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