KUALA LUMPUR (Dec 30): Well Chip Group Bhd (KL:WELLCHIP), a Johor-based pawnbroker listed in July this year, announced an acquisition of three pawnbroking companies in Perak for RM63.44 million in cash.

In an exchange filing, the Main Market-listed firm said it is taking over the three companies, namely Pajak Gadai Koong Sing Sdn Bhd, Lian Foh Pawnshop Sdn Bhd and Fook Foh Pawnshop Sdn Bhd. These companies will become Well Chip’s wholly-owned subsidiaries following the proposed acquisition, slated to be completed by the first quarter of 2025.  

The group said the acquisition will allow it to expand its pawnbroking business into the northern region, particularly in Perak, in line with its strategic expansion plans.

“This increased market presence will enhance the group’s ability to compete more effectively and further expand its customer base in Malaysia,” it said while also noting that the acquisition will potentially improve the group’s future growth prospects.

Based on the pro forma calculations of the acquisition's effects in the filing, its profit after tax will grow by 9.43% to RM38.24 million from RM34.95 million as of September 30, 2024. Earnings per share, meanwhile, will increase to 6.37 sen from 5.82 sen.

The company said the acquisition will be funded via a combination of internally-generated funds and bank borrowings.  

The group’s cash and bank balances stood at RM96.79 million as at end-September 2024, while its bank borrowings amounted to RM164.79 million, according to its latest financial results.

Shares of Well Chip fell one sen or 0.86% to RM1.15 on Monday, valuing the group at RM690 million. The stock hit a high of RM1.83 shortly after it made its debut, but since then it has been on a decline. Its initial public offer was priced at RM1.15 per share.