Evergreen Max Cash Capital Berhad: A Deep Dive into Q1 2025 Performance – Growth Amidst Evolving Dynamics
Greetings, fellow investors and market enthusiasts! Today, we’re taking a closer look at the latest financial report from Evergreen Max Cash Capital Berhad (EMCC), a prominent player in Malaysia’s pawnbroking, gold, and luxury products retail and trading sectors. The first quarter of 2025 (1Q 2025) has just wrapped up, and the unaudited interim financial report reveals a period of significant growth for the company, but also some interesting shifts in its financial landscape. Let’s unwrap the numbers and see what EMCC has been up to!
The headline? EMCC has delivered a robust performance, showcasing remarkable growth in both revenue and profit. However, a deeper dive into the segments and cash flow reveals the underlying strategies and challenges that will shape its path forward.
Core Data Highlights: A Quarter of Strong Expansion
EMCC’s 1Q 2025 results demonstrate a clear upward trajectory across key financial metrics when compared to the same period last year (1Q 2024). This growth is a testament to the company’s strategic initiatives and market positioning.
Revenue Growth: Surging Ahead
1Q 2025 Revenue:
RM45,893k
1Q 2024 Revenue:
RM26,954k
EMCC’s revenue soared by RM18.9 million, marking an impressive 70.3% increase compared to 1Q 2024. This significant jump was primarily driven by strong performances across its core business segments.
Gross Profit: Expanding Margins
1Q 2025 Gross Profit:
RM15,277k
1Q 2024 Gross Profit:
RM9,528k
In line with revenue growth, gross profit saw a healthy increase of RM5.8 million, representing a 61.1% rise. This indicates improved operational efficiency and a strong contribution from higher-margin activities.
Profit Before Tax (PBT): Solid Earnings Foundation
1Q 2025 PBT:
RM9,898k
1Q 2024 PBT:
RM6,330k
The company’s PBT increased by RM3.568 million, a 56.4% improvement. This strong PBT growth highlights the company’s ability to translate higher revenue into a healthier bottom line, even after accounting for increased finance costs.
Net Profit and Earnings Per Share (EPS): Delivering Value
1Q 2025 Net Profit:
RM7,012k
1Q 2024 Net Profit:
RM4,684k
Net profit for the quarter grew by RM2.328 million, or 49.7%. Consequently, basic and diluted earnings per share (EPS) rose from 0.42 sen in 1Q 2024 to 0.63 sen in 1Q 2025, reflecting enhanced profitability for shareholders.
Business Unit Performance: The Engines of Growth
A closer look at EMCC’s segments reveals the specific drivers behind its impressive Q1 performance:
| Business Segment | 1Q 2025 Revenue (RM’000) | 1Q 2024 Revenue (RM’000) | Revenue Change (%) | 1Q 2025 PBT (RM’000) | 1Q 2024 PBT (RM’000) | PBT Change (%) |
|---|---|---|---|---|---|---|
| Pawnbroking Services | 12,619 | 9,482 | +33.1% | 7,110 | 4,277 | +66.2% |
| Gold & Luxury Products Retail and Trading | 29,263 | 16,938 | +72.8% | 3,001 | 1,818 | +65.1% |
| Tawarruq Products | 4,007 | 530 | +656.2% | (1,216) | (38) | N/A (Increased Loss) |
- Pawnbroking Services: This core business segment saw revenue increase by 33.1%, primarily due to a 36.5% increase in pawn loans disbursed. This was facilitated by the availability of cash capital from internal funds and substantial bank borrowings, demonstrating effective capital deployment.
- Gold and Luxury Products Retail and Trading: This segment was a standout performer, with revenue surging by 72.8%. This was driven by higher sales volumes of both unredeemed pledged gold items and pre-owned gold products. A notable factor was the significant increase in gold prices (from USD2,232/oz in 1Q 2024 to USD3,062/oz in 1Q 2025), which positively impacted gross profit margins.
- Tawarruq Products: While showing a phenomenal 656.2% increase in revenue, mainly due to a 1,125.1% increase in pawn loans disbursed, this segment also recorded a higher loss before tax of RM1.216 million compared to RM38k in 1Q 2024. This indicates that despite increased activity, the segment’s profitability remains a key area for monitoring and potential optimization.
Financial Health and Cash Flow Dynamics
EMCC’s balance sheet shows a healthy expansion, with total assets growing to RM430.17 million as of March 31, 2025, up from RM381.73 million at the end of 2024. Total equity also increased to RM244.03 million, pushing net assets per share to RM0.22 from RM0.21.
However, the cash flow statement presents a more nuanced picture. The Group reported net cash used in operating activities of RM16.78 million for 1Q 2025, a shift from the RM4.68 million generated in 1Q 2024. This negative operating cash flow, primarily driven by a significant increase in trade receivables, indicates that a large portion of the revenue growth is tied up in working capital. This is a common characteristic for businesses with high loan disbursement activities like pawnbroking.
To support its growth and operational needs, EMCC significantly increased its borrowings, with total borrowings rising to RM150.42 million from RM113.52 million at year-end 2024. This increase was largely from the drawdown of bank borrowings (RM67.3 million), which led to a substantial net cash generated from financing activities of RM40.12 million. This financing inflow ultimately resulted in a net increase in cash and cash equivalents of RM17.40 million for the quarter, bringing the total cash and cash equivalents to RM19.66 million.
Risk and Prospect Analysis: Navigating the Future
EMCC’s management remains optimistic about the Group’s prospects, underpinned by strategic expansion plans and market demand. However, like any business, it faces certain dynamics and considerations.
Bright Prospects Ahead:
- Pawnbroking Expansion: The Group is actively growing its “Pajaking” pawnshop network through new setups and strategic acquisitions. This is crucial given the sustained demand for pawn loans, particularly from Malaysia’s unbanked and underbanked population. EMCC currently boasts 29 pawnshops and 60 “Cahaya Gold” outlets offering Islamic pawnbroking under Tawarruq. Recent acquisitions, such as Evergreen Ah Rahnu Sdn Bhd and the assets of Koperasi Cahaya Al-Kifayah Berhad, underscore this commitment to expansion.
- Increased Market Visibility: For its gold and luxury products business, EMCC is leveraging digital marketing and expanding its online sales teams. This focus on online channels is a smart move to capture a wider audience and drive further sales growth.
Key Considerations and Dynamics:
- Seasonal Demand: The pawnbroking business is inherently seasonal, with higher redemptions before festive seasons and increased demand for loans after them. This requires careful management of cash flow and loan disbursements.
- Effective Tax Rate: The Group’s effective tax rate for 1Q 2025 was 29.16%, higher than the statutory rate of 24%, mainly due to non-deductible expenses like professional fees. This can impact net profitability.
- Cash Flow Management: While financing activities currently offset the negative operating cash flow, sustained growth in trade receivables will necessitate efficient working capital management and continued access to financing.
- Tawarruq Segment Profitability: Despite significant revenue growth, the Tawarruq segment’s increasing loss needs to be closely monitored. Understanding the factors contributing to this and implementing strategies to improve profitability will be important.
Summary and
Evergreen Max Cash Capital Berhad’s Q1 2025 report showcases a company in an aggressive growth phase, successfully expanding its revenue and profits. The conventional pawnbroking and gold & luxury products segments are performing exceptionally well, capitalizing on market demand and rising gold prices. The strategic expansion of its physical and online presence positions EMCC for continued market penetration.
However, an investor’s perspective should also consider the financial dynamics at play. The shift to negative operating cash flow, while potentially typical for a rapidly expanding loan-based business, necessitates reliance on external financing, as evidenced by the significant increase in borrowings. Furthermore, the Tawarruq segment, despite its impressive revenue growth, is currently contributing to losses, which warrants attention.
Key points to watch for EMCC’s future trajectory include:
- The successful integration and profitability contribution of newly acquired pawnshop assets.
- The ability to manage and improve the profitability of the Tawarruq products segment.
- Effective working capital management to sustain growth while potentially moving towards positive operating cash flow in the long run.
- The impact of rising interest rates on finance costs, given the increased reliance on borrowings.
Overall, EMCC demonstrates strong top-line and bottom-line growth, backed by clear expansion strategies. Its financial health, while showing increased leverage, is supported by strategic financing. The focus should now be on how these growth initiatives translate into sustainable and diversified profitability across all segments.
Final Thoughts: What’s Next for EMCC?
EMCC’s Q1 2025 results paint a picture of a dynamic company actively pursuing growth in its niche markets. The expansion efforts, particularly in the pawnbroking sector and the push for digital marketing in gold retail, are clear indicators of its ambition. The challenge will be to balance this rapid expansion with efficient financial management and ensuring all segments contribute positively to the overall profitability.
Do you think EMCC can maintain this impressive growth momentum while navigating the challenges of its evolving financial structure? Share your thoughts in the comments below!
