RCE Capital Berhad is principally involved in the provision of general financing services (through its wholly owned subsidiary RCE Marketing Sdn Bhd). RCE Marketing has been working closely with various co-operatives and foundations to provide personal financing to their members who are mainly government employees. The repayments are done through a Salary Deduction Scheme whereby the installment payments are deducted from the salary of those participating employees on a monthly basis.
Loans are channeled to the cooperatives, Yayasan Ihsan Rakyat (“YIR”) and Yayasan Dewan Perniagaan Melayu Perlis Berhad (“YYP”).
Website:
1. https://www.rce.com.my/index.php
2. https://yir.com.my/
3. https://yyp.com.my/
Main Product/Service
1. Provides unsecured shariah compliant personal loans (fixed rate) to Malaysian civil servants and Selected Bodies and Government Linked Companies (GLC) Employees.
2. Financing amount - RM2,500 to RM150,000.
3. Loan tenure period - 1 year to 10 years.
4. Profit rates (Interest rates) - 6.50%, 7.99%, 8.99% and 9.99% (rate on 09 May 2020). Unsecured personal loans are high risk = high rate = high return.
5. Profit rates are calculated based on fixed rates and credit assessment. Example: High credit risk = high rate.
Target Customer
Malaysian civil servants and Selected Bodies and Government Linked Companies (GLC) Employees (segment that’s not served by the banks or cannot get loans from conventional banks).
Source of income
Interest income - 89% of total revenue (based on annual report of 2019).
Source of profit
Spread of interest - Difference between the interest income and interest expense (net interest margin).
Source of fund
Debts financing - Mainly source from Sukuk (fixed rate).
In 2019，RCECap has established a new Sukuk Programme of RM2.0 billion via a special purpose bankruptcy remote vehicle, namely Zamarad Assets Berhad.
Rating of Sukuk - AAA and AA2. Rating is assessed by Malaysian Rating Corporation Berhad (MARC).
Competitor in Loan to Public Sector
1. Bank Rakyat
https://www.bankrakyat.com.my/c/personal/financing_i/personal_financing_i_public_sector-4/personal
2. BSN
https://www.mybsn.com.my/content.xhtml?contentId=1428
3. MBSB Bank
https://www.mbsbbank.com/en/consumer-banking/financing/personal-financing-i
SWOT Analysis
Strength
1. Speedy loan disbursement. 48-Hour Cash Disbursement. Get money within 2 working days.
*subject to complete documentation, employer verification and customer confirmation through akad.
2. The repayments are done through a Salary Deduction Scheme - Minimise the risk of default. Remark: Compare to other financing companies other than the competitors mentioned above.
3. Government servants are known for their low turnover rate, much lower than that in the private sector.
4. The rating of Sukuk are AAA or AA2 show strong ability to make payment on the instrument issued under the Islamic financing contract(s).
Weakness
1. Higher profit rates as compared to the competitors because RCECap is not a deposit-taking institution.
Mitigate risk: a. Target market segment that’s not served by the competitors. b. Improve sales team. c. Speedy loan disbursement.
2. Higher gross impaired loans, non performing loans and inability to access CCRIS.
Mitigate risk: a. A robust credit scoring model is employed to assess a customer's risk level. b. Require the borrower access their payroll and show to the staff - reduce the risk fake payslip.
Opportunity
1. BNM cuts OPR - sourcing for cheaper funding to sustain its business growth - lower profit rates - encourage people to borrow money.
2. People in need of money urgently.
3. Sukuk Programme of RM2.0 billion - used RM1,137,905,000 (based on 3Q 2020 report) - remaining balance of RM862,095,000 to issue and lend.
Threat
1. Slowdown in remuneration or job cuts by the government.
2. Resignation of borrower - increase the risk of default due to unable to deduct the loan from the salary.
3. Slowdown in consumption - lack of demand in borrowing.
Reason to buy
1. Growth in revenue and profit.
2. Attractive dividend which higher than fixed deposit.
3. Undervalue.
Reason to sell
1. Decline in revenue and profit.
2. Loss of Salary Deduction Scheme advantage.
3. To obtain business in compromising quality of loan in a result of high credit risk and loss.
4. Overvalue.
Reason to hold
1. Growth in revenue and profit. "成长长，长持有，成长短，短持有"
2. Dividend payment.
3. To hold if the decline in revenue and profit is due to the external factor, e.g. bad economic and Covid-19. If drop in share price, to average down.
Disclaimers
The research, information and financial opinions expressed in this article are purely for information and my own homework purpose. I do not make any recommendation for the intention of trading purposes nor is it an advise to trade. I will not be liable for any false, inaccurate, incomplete information and losses or damages suffered from your action. It would be best if you did your own research to make your personal investment decision wisely or consult your investment advisor. Thank you.
Loans are channeled to the cooperatives, Yayasan Ihsan Rakyat (“YIR”) and Yayasan Dewan Perniagaan Melayu Perlis Berhad (“YYP”).
Website:
1. https://www.rce.com.my/index.php
2. https://yir.com.my/
3. https://yyp.com.my/
Main Product/Service
1. Provides unsecured shariah compliant personal loans (fixed rate) to Malaysian civil servants and Selected Bodies and Government Linked Companies (GLC) Employees.
2. Financing amount - RM2,500 to RM150,000.
3. Loan tenure period - 1 year to 10 years.
4. Profit rates (Interest rates) - 6.50%, 7.99%, 8.99% and 9.99% (rate on 09 May 2020). Unsecured personal loans are high risk = high rate = high return.
5. Profit rates are calculated based on fixed rates and credit assessment. Example: High credit risk = high rate.
Target Customer
Malaysian civil servants and Selected Bodies and Government Linked Companies (GLC) Employees (segment that’s not served by the banks or cannot get loans from conventional banks).
Source of income
Interest income - 89% of total revenue (based on annual report of 2019).
Source of profit
Spread of interest - Difference between the interest income and interest expense (net interest margin).
Source of fund
Debts financing - Mainly source from Sukuk (fixed rate).
In 2019，RCECap has established a new Sukuk Programme of RM2.0 billion via a special purpose bankruptcy remote vehicle, namely Zamarad Assets Berhad.
Rating of Sukuk - AAA and AA2. Rating is assessed by Malaysian Rating Corporation Berhad (MARC).
Competitor in Loan to Public Sector
1. Bank Rakyat
https://www.bankrakyat.com.my/c/personal/financing_i/personal_financing_i_public_sector-4/personal
2. BSN
https://www.mybsn.com.my/content.xhtml?contentId=1428
3. MBSB Bank
https://www.mbsbbank.com/en/consumer-banking/financing/personal-financing-i
SWOT Analysis
Strength
1. Speedy loan disbursement. 48-Hour Cash Disbursement. Get money within 2 working days.
*subject to complete documentation, employer verification and customer confirmation through akad.
2. The repayments are done through a Salary Deduction Scheme - Minimise the risk of default. Remark: Compare to other financing companies other than the competitors mentioned above.
3. Government servants are known for their low turnover rate, much lower than that in the private sector.
4. The rating of Sukuk are AAA or AA2 show strong ability to make payment on the instrument issued under the Islamic financing contract(s).
Weakness
1. Higher profit rates as compared to the competitors because RCECap is not a deposit-taking institution.
Mitigate risk: a. Target market segment that’s not served by the competitors. b. Improve sales team. c. Speedy loan disbursement.
2. Higher gross impaired loans, non performing loans and inability to access CCRIS.
Mitigate risk: a. A robust credit scoring model is employed to assess a customer's risk level. b. Require the borrower access their payroll and show to the staff - reduce the risk fake payslip.
Opportunity
1. BNM cuts OPR - sourcing for cheaper funding to sustain its business growth - lower profit rates - encourage people to borrow money.
2. People in need of money urgently.
3. Sukuk Programme of RM2.0 billion - used RM1,137,905,000 (based on 3Q 2020 report) - remaining balance of RM862,095,000 to issue and lend.
Threat
1. Slowdown in remuneration or job cuts by the government.
2. Resignation of borrower - increase the risk of default due to unable to deduct the loan from the salary.
3. Slowdown in consumption - lack of demand in borrowing.
Reason to buy
1. Growth in revenue and profit.
2. Attractive dividend which higher than fixed deposit.
3. Undervalue.
Reason to sell
1. Decline in revenue and profit.
2. Loss of Salary Deduction Scheme advantage.
3. To obtain business in compromising quality of loan in a result of high credit risk and loss.
4. Overvalue.
Reason to hold
1. Growth in revenue and profit. "成长长，长持有，成长短，短持有"
2. Dividend payment.
3. To hold if the decline in revenue and profit is due to the external factor, e.g. bad economic and Covid-19. If drop in share price, to average down.
Disclaimers
The research, information and financial opinions expressed in this article are purely for information and my own homework purpose. I do not make any recommendation for the intention of trading purposes nor is it an advise to trade. I will not be liable for any false, inaccurate, incomplete information and losses or damages suffered from your action. It would be best if you did your own research to make your personal investment decision wisely or consult your investment advisor. Thank you.
No comments:
Post a Comment