Based on RHB's analysis, the correlation between the price of gold and amount of pawnbroking loans given in Singapore is relatively strong, at 0.7. A higher gold price, therefore, supports a larger amount of loans given. Between the gold price and value of loan per pledge, the correlation is even stronger, at 0.9.
As such, while customers are pledging for more loans when the price of gold is high, each pledge would yield a higher loan amount. An environment of strong gold prices bodes well for pawnbrokers – their ability to supply loans and increase their loan books for net interest income revenue growth also grows. In 2021-2024, the default rate for unredeemed pledges was low, at <5%.
Moving forward, Yeo expects growth across all segments, as Aspial Lifestyle is using a multi-pronged approach to growth.
In its pawnbroking business, it is growing its loan book in Singapore using service, pricing, and convenience, while in Malaysia, it seeks to grow its loan book via customer outreach programmes. In its retail business, it uses a multi-brand strategy for growth. The Niessing jewellery brand which was consolidated last year, will help to enhance its international appeal in Europe and Asia Pacific, with Lee Hwa positioned as a retailer of finer jewellery brands and diamonds and Goldheart having moved into the gold segment.
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Money lending platform Bigfundr seeks to grow more loans under management by continuing to market the fund to retail and accredited investors. It also increasing the number of Australian real-estate funding projects for lenders to invest in.
As at 2.00pm, shares in Aspial Lifestyle are trading at 22 cents, 79.2% higher ytd.
