Oi Wah Recorded an Increase of 5.2% and 10.5% in Revenue and Profit Respectively in FP2020

Plans to Launch an Online Pawn Loan Platform to Attract Customers and Will Continue to Adopt a Prudent Approach When Granting Loans

Financial Highlights

HONG KONG, CHINA - Media OutReach - 29 Oct 2019 - The board of directors of Oi Wah Pawnshop Credit Holdings Limited (HKEx stock code: 1319.HK, the "Group" or "Oi Wah") announced its interim results and its financial position. For the six months ended 29 October 2019 ("FP2020"), the Group recorded revenue of approximately HK$117.8 million (6 months ended 31 August 2018 ("FP2019"): approximately HK$112.0 million), representing an increase of approximately 5.2%. During the period, profit attributable to shareholders of the Company has increased by 10.5% and reached approximately HK$59.3 million (FP2019: approximately HK$53.6 million).

During the year, earnings per share was HK3.1 cents (FP2019: HK2.7 cents). The Board of Directors recommends an interim dividend of HK$1.07 cents.

Business Review

Mortgage loan business

For the six months ended 31 August 2019 ("FP2020" or the "Period"）, the mortgage loan business remained as a major source of income of the Group. During the Period, the interest income increased by approximately HK$2.3 million or 2.9% from approximately HK$78.9 million for the six months ended 31 August 2018 ("FP2019") to approximately HK$81.2 million in FP2020. Revenue generated from the mortgage loan business in FP2020 accounted for approximately 68.9% of the Group's total revenue during the Period. The gross mortgage loan receivables increased from approximately HK$1,223.3 million as at 28 February 2019 to approximately HK$1,269.1 million as at 31 August 2019, where the total amount of new mortgage loans granted was approximately HK$306.6 million during FP2020. During the Period, there were 84 new cases of mortgage loan transactions while no bad debt was recorded.

In FP2020, the Group continued to adopt a cautious and prudent approach when granting loans, as well as maintain a higher proportion of first mortgage loans in the Group's portfolio to manage risk. During the Period, the loan-to-value ratio for first mortgage was approximately 49.4%, while the overall loan-to-value ratio for subordinate mortgage was approximately 52.6%, in which the loan-to-value ratio of subordinate mortgage that the Group participated in was approximately 13.6%.

Pawn Loan Business

Due to an ongoing rise in gold price during the Period, the revenue generated from the pawn loan business increased by approximately HK$3.5 million or 10.6% from approximately HK$33.1 million in FP2019 to approximately HK$36.6 million in FP2020. Interest income derived from pawn loan receivables increased by approximately HK$3.7 million or 12.7% from approximately HK$29.2 million in FP2019 to approximately HK$32.9 million in FP2020, while revenue derived from disposal of repossessed assets slightly decreased by approximately HK$0.2 million or 5.1% from approximately HK$3.9 million in FP2019 to approximately HK$3.7 million in FP2020.

During the Period, the Group continued to channel resources to advertising and promotion to enhance the Group's brand exposure. Such effort has generated demand for one-to-one pawn loan appointment services for pawn loans exceeding HK$0.1 million. The number of pawn loan transactions granted with such amount increased from 217 transactions in FP2019 to 274 transactions in FP2020. The average loan amount also increased to approximately HK$9,200 per transaction (FP2019: HK$7,700 per transaction).

Industry Overview

Due to the uncertainties of the US-China trade conflict and Brexit, as well as risk aversion among investors, gold price had increased sharply since the second quarter of 2019 and reached a six-year high which was above the major psychological level of US$1,500 per ounce. The Board believes that gold prices will remain strong in the near future and will have a positive impact on the Group's pawn loan business.

Meanwhile, the Hong Kong government announced the relaxation of mortgage restrictions to increase the ceiling for mortgage financing scheme. It is an initiative that aims to help first-time homebuyers who have sufficient income to cover monthly mortgage repayments but do not have enough funds for the down payment. It is expected to result in a boost of property prices in the short run. However, the recent social unrest in Hong Kong and uncertainties of the global economy have rendered the property market unpredictable. Homebuyers should be cautious of the increase in leverage level and market risk.

Prospects

Looking ahead, the Group plans to launch an online pawn loan platform in next financial year that enables customers to obtain loans in a discreet, simple and efficient manner. It is believed that online pawn loan services will appeal to the younger generation, and help promote the Group's pawn loan business at a lower cost.

For mortgage loans, it is believed that the raise of the mortgage cap for first-time property buyers in the "The Chief Executive's 2019 Policy Address" will stimulate property prices in the short run. However, given the potential downturn in local economy, social unrest and uncertainties in the global economy, the Directors are of the view that the Hong Kong property market remains unpredictable. The Group will continue to implement a prudent strategy, maintain its focus on high net worth customers and remain cautious when granting mortgage loans.

About Oi Wah Pawnshop Credit Holdings Limited

Oi Wah is a financing service provider in Hong Kong, mainly providing short-term secured financing, including pawn loans and mortgage loans. The Group established its first pawnshop in 1975 and currently owns 11 pawnshops in various locations in Hong Kong. Oi Wah diversified into mortgage loan business in 2009. The Group is the first local pawn shop which successfully listed on the Main Board of The Stock Exchange of Hong Kong Limited on 12 March 2013.