by: Tam Ging Wien
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Out of complete curiosity, we decided to do a comparative analysis of pawn brokers listed on SGX.
They roused our curiosity one day when we were out in Chinatown for lunch and we noticed quite a number of pawn shops around the area. Pawn shops are essentially micro-financial institutions that will take smaller assets such as watches, jewelry and gold as collateral in return for a micro-loan.
Certainly if it’s a micro-loan, the loan interest rates can’t be ......
Pawnshop business model is a unique. If one is to use traditional debt-equity ratio, all pawnshops would not measure up. They all started as family business but modernity propel them into public listing.
Their business model is pawning or ‘ah neh’ biz They borrow at low interest from financial institutions or any private individuals for that matter, or arbitrage, and use it to micro-loan out at 15-18% per annum. Most of their cost of loan is below 3.5% per annum. Currently most of their business are affected when gold prices are at Low base. Gold and its Jewelry are the most common items in pawning.