Oi Wah recorded 6.5% growth of net profit in FY2020

Financial Highlights

For the year ended 29 Feb

HK$

2020

2021

Change

Revenue

223,959

224,763

-0.4%

Net interest margin

13.1%

12.4%

+0.7 p.pt.

Profit before taxation

128,282

121,566

+5.5%

Profit attributable to shareholders of the Company

107,383

100,820

+6.5%

Earnings per share (HK cents)

5.5

5.1

+7.8%

HONG KONG,May 27,2020 -- The board of directors of Oi Wah Pawnshop Credit Holdings Limited (HKEx stock code: 1319.HK,the "Group" or "Oi Wah")announced its annualresults and its financial position. For the year ended 29 February2020("FY2020"),the Group recorded revenue of approximatelyHK$224.0 million (Year ended 28 February 2019 ("FY2019"): approximately HK$224.8 million),representing a slightly decrease of approximately 0.4%.During the year,profit attributable to shareholders of the Company has increased by 6.5% and reached approximately HK$107.4million (FY2019: approximately HK$100.8 million).

During the year,earnings per share was HK5.5 cents (FY2019: HK5.1 cents). The Board of Directors recommends a final dividend of HK$0.87centsand a special dividend of HK$0.28 cents.

Business Review

Mortgage loan business

In FY2020,the mortgage loan business remained a majorsource of income of the Group. Revenue generated from the mortgage loan business in FY2020 accounted for approximately 68.0% of the Group's total revenue during the year. During the year,the revenue generated from the mortgage loan business slightly decreased from approximately HK$158.7 million in FY2019 to HK$152.2 million in FY2020,representing a decrease of 4.1% or HK$6.5million. The mortgage loan receivables reached HK$1,137.3 million at 29 February 2020. During the year,there were 176 new cases of mortgage loan transactions,with average loan size of approximately HK$2.9 million.

In FY2020,the Group continued to adopt a prudent and cautious 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 year,the loan-to-value ratio for the first mortgage is around 47.7%,while overall loan-to-value ratio for subordinary mortgage is around 56.0%,of which,loan-to-value ratio of subordinary mortgage that the Group participate in is around 12.1%.

Pawn Loan Business

During FY2020,due to an ongoing rise in gold price,the revenue derived from the pawn loan business increased from HK$66.1 million to HK$71.8million,representing an increase of 8.6% or HK$5.7million. The aggregate loan amount increase by 9.2% or HK$63.1 million from approximately HK $685.4 million in FY2019 to approximately HK$748.5 million in FY2020.

During the year,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 of such amount increased from 419 transactions in FY2019 to 544 transactions in FY2020. The average loan amount also increased to approximately HK$9,300 per transaction (FY2019: HK$8,100 per transaction).

Industry Overview

During the yearof 2019,the property prices and transaction volumes of the local property market experienced substantial fluctuations. According to the findings ofthe Rating and Valuation Department of the Hong Kong Government,home prices has been climbing since the beginning of the year and reached a record high in May2019. However,the property market bull run was halted in the latter half of 2019 by the ongoinglocal social unrest and the prolonged US-China trade friction. As such,only a 5% increase in overall home prices was recorded in the year of 2019.

It is expected that the local property market will remain volatile in light ofthe global outbreak of the Coronavirus Disease 2019 ("COVID-19"). Nevertheless,given there is a constant demandfor small to middle-sized apartments,and the fact thatthe Hong Kong Government has raised the mortgage cap for first-time homebuyers,it is believed that the market price of local properties with a value belowHK$10.0million will be relativelystable.

Meanwhile,international gold price rose by approximately 15% during the latter half of FY2020,thereby triggering a growth in the size of our pawn loans. It is expected thatvariousfactors,such as ongoing global uncertaintiesas well as the implementation of quantitative easingpolicies bythe world's major central bankswill continue to stimulate the international gold market.

Prospects

Looking ahead,the local business environment is challenging,as the Hong Kong economy has entered a technical recession due to double blow of social unrest and the COVID-19 pandemic. Many enterprises,especially SMEs,have decided to postpone expansion plans or reduce the scale of expansion until they see a sustainable recovery of COVID-19 and resumption of vital economic activities.

The Group has adopted a prudent strategy when granting loans in the past years. In response to the present economic uncertainties,the Group will continue to strengthen its risk management measures,such as increasing the proportion of first mortgage loans,further tightening the loan-to-value ratio,adopting a more cautious approach to properties such as shops,as well as focusing on high-net-worth customers.

Currently,the implement of ultra-loose monetary policy of by the world's major central banks areboosting the global economy in a low interest rate environment. The Group will continue to actively explore sources of funds,especially in Southeast Asian countries.

Regarding our pawn loan business,the Group is currently developing a mobile appfor online pawn loan service,which aims to make the pawning process simpler and more accessible for everyone,everywhere. It is believed that such 24/7 service allows the Group to cater to the needs of the busy generation,as well as to promote the Group's pawn loan business at a lower cost.

Mr. Edward Chan,Chairman and CEO of the Company,said,"During the year,pawn loan business and mortgage loan business of the Group has continued to achieve steady growth. We will continue to seize opportunities and strive to create the best interests for our shareholders and the Company,as well as continue to strengthen our risk management measures in response to the economic uncertainty."

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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.