AURA Explains Negative Cash Flow in Gold Business

Prachachat•Economy•1d ago

Reader Briefing

AURA explains that negative cash flow in its gold trading and pawning business indicates growth rather than liquidity issues, with NPLs and collateral value being more critical metrics.

•AURA clarified that negative operating cash flow in its gold trading and pawning business is a sign of expansion, not a liquidity problem.
•The company highlighted Non-Performing Loan (NPL) rates and collateral value as more important indicators than cash flow for this business type.
•Rising gold prices incentivize customers to repay loans, reducing NPL risk, while falling prices may increase it.
•Increased inventory is attributed to higher gold prices slowing consumer purchasing power and extending inventory turnover rates.

Overview

•AURA addressed concerns regarding negative cash flow in its gold trading and gold loan business.
•Negative operating cash flow arises from accepting gold for pawning, where cash is paid out to receive gold as collateral, reflecting expansion.
•AURA stated that negative cash flow from operations is not always a negative signal, but rather reflects business expansion.
•AURA emphasized that Non-Performing Loan (NPL) rate, debt collection capability, and collateral value changes are more critical indicators than cash flow for this business.
•In the past, AURA expanded its branches and used cash to purchase gold for retail, leading to reduced cash and increased inventory.
•When gold prices rise, customers are motivated to redeem their gold, thus lowering the NPL risk.
•Increased gold prices have slowed consumer purchasing power, resulting in a slower inventory turnover rate and naturally higher inventory levels.
•AURA has expertise in managing its gold portfolio, both in terms of outflow and buyback, adapting to price fluctuations to support strong growth in retail gold and pawning businesses.

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Key Quotes

AURA

"Cash Flow from Operations (CFO) being negative is not always a bad sign because in the gold pawning business, it involves paying out cash to accept gold for pawning (the company gets gold as collateral), causing CFO to be negative, reflecting 'expansion' rather than a liquidity problem."

กระแสเงินสดจากการดำเนินงาน (Cash Flow from Operations: CFO) ที่ติดลบ ไม่ใช่สัญญาณลบเสมอไป เพราะในธุรกิจขายฝากทองเป็นการจ่ายเงินสดออกไปจากการรับขายฝากทอง (บริษัทได้ทองมาเป็นหลักประกัน) ทำให้กระแสเงินสดจากการดำเนินงานติดลบได้ ซึ่งสะท้อน “การขยายตัว” ไม่ใช่ปัญหาสภาพคล่อง

AURA

"Therefore, a more important indicator than cash flow in this type of business should consider the Non-Performing Loan (NPL) rate, debt collection ability, and changes in collateral value."

ดังนั้นตัวชี้วัดสำคัญกว่ากระแสเงินสดในธุรกิจประเภทนี้ ควรพิจารณาเรื่องอัตราหนี้เสีย (NPL) ความสามารถในการติดตามหนี้รวมถึงมูลค่าหลักประกันที่เปลี่ยนแปลงไป

AURA

"Regarding the risk of bad debt during periods of rising gold prices, customers are motivated to redeem their gold because the gold's value exceeds the loan received, leading to a low NPL risk trend."

ความเสี่ยงด้านหนี้เสียในช่วงที่ราคาทองคำปรับตัวขึ้น ลูกค้ามีแรงจูงใจไถ่ถอนทองคืน เนื่องจากมูลค่าทองสูงกว่าเงินกู้ที่ได้รับ ทำให้ความเสี่ยงหนี้เสียมีแนวโน้มต่ำ

Key Entities

Organization

AURA

A financial services company operating in gold trading and gold pawning.