Revenue and Net Profit of Oi Wah rise 7.6% and 17.3% respectively in FP2023　 Actively Expand the Branch Network and Integrate with Fintech

Financial Highlights

For the six months ended 31 Aug
HK$’000	2022	2021	Change
Revenue	81,991	76,201	+7.6%
Profit before taxation	52,684	44,807	+17.6%
Profit for the period attributable to shareholders	44,120	37,611	+17.3%
Net interest margin	15.6%	14.8%	+0.8 p.p.
Basic earnings per share (HK cents)	2.3	1.9	+21.1%

HONG KONG SAR - Media OutReach - 27 October 2022 - 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 31 August 2022 (“FP2023”), the Group recorded revenue of approximately HK$82.0 million and profit attributable to shareholders of the Company of approximately HK$44.1 million. During the period, net interest margin improved by 0.8 percentage point to 15.6%.

During the period, earnings per share was HK 2.3 cents. The Board of Directors recommends an interim dividend of HK 0.92 cents.

Business Review

Mortgage loan business

In FP2023, the interest income of the mortgage loan business of the Group increased by 5.8% to approximately HK$45.3 million, which accounted for approximately 55.3% of the Group’s total revenue. As at 31 August 2022, the gross mortgage loan receivable was approximately HK$836.7 million and during the period, the total new mortgage loans granted amounted to approximately HK$375.0 million. The net interest margin of the mortgage loan business increased by 0.8 percentage point to 10.6% and there were 54 new cases of mortgage loan transactions in FP2023.

The Group continued to keep a close eye on the performance of its loan portfolio, especially in respect to the repayment status of existing customers. As a result, there was no bad debt recorded during the period. In FP2023, the loan-to-value ratio for first mortgage was approximately 53.7%, while the overall loan-to-value ratio for subordinate mortgage was approximately 51.7%, of which, loan-to-value ratio of subordinate mortgage that the Group participated in was approximately 5.1%.

Pawn Loan Business

In FP2023, the interest income generated from the pawn loan business increased by 19.7% to approximately HK$34.6 million. It is mainly attributable to the prevailing trend in investing luxury goods, which promoted the relevant re-financing needs. However, due to the price fluctuation of second-hand luxury market, the Group recorded gain from disposal on repossessed assets of approximately HK$2.1 million, representing a decrease of 53.3%. During the period, the Group continued to channel resources to advertising and promotion in order to enhance the brand exposure. Such effort has generated demand of one-to-one pawn loan appointment services for pawn loans of loan size exceeding HK$0.1 million. Number of pawn loan transactions with such amount granted increased by 130 transactions to 357 transactions in FP2023 and average loan amount increased to approximately HK$15,000 per transaction.

In September 2022, the Group successfully acquired approximately HK$8.0 million pawn loan receivables (principal amount) and opened a new pawnshop in Tuen Mun. Together with this new pawnshop, the Group is currently operating a total of 11 pawnshops. In addition, the Group continued to develop its mobile app that enables customers to obtain pawn loans easily. The app is expected to help promote the Group’s pawn loan business at a lower promotional cost.

Prospects

With the pandemic situation continue to be more stable, the Hong Kong government has eased travel restrictions to “0+3” quarantine-free medical surveillance. However, the market still remains conservative and the management expect the economic activities in Hong Kong will be steady strides along the path to normalcy if and only if all travel restrictions are lifted entirely. The Board is of the view that the reopen of Hong Kong and Mainland China border and an eventual economic recovery in the Mainland China could become a new tailwind of local economy. At the same time, the rising interest rates enable the Group to improve its net interest margin and overall profitability. Before that, the Group will continue to remain prudent when granting loans and closely monitor the credit risk of its loan portfolio and wait for market recovery.

In view of the rising loan demand, the Group is actively exploring to expand its branch network to more convenient locations (such as MTR stations) and serve as premium service centres for both pawn loan and mortgage loan. The Group plans to integrate with fintech and is currently developing a mobile APP that enable customers to make online appointments, get a quote of collateral evaluation and apply for pawn loan, etc.

Mr. Edward Chan, Chairman and CEO of the Company, said, “Although economic activities are gradually resuming with the stabilization of the pandemic, the Group remains prudent in exploring and seizing new business opportunities while continuing to strike a balance between business growth and risk management. Looking forward, we hope to maximize return for shareholders and to further create value for them in the long run.”