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

FinancialHighlights

HONG KONG, CHINA - MediaOutReach - 29 Oct 2019 - The board of directors of Oi Wah Pawnshop Credit Holdings Limited(HKEx stock code: 1319.HK, the "Group" or "Oi Wah") announcedits interimresults and its financial position. For the six months ended 29October 2019("FP2020"), theGroup recorded revenue of approximately HK$117.8 million (6 monthsended 31 August 2018("FP2019"): approximately HK$112.0 million), representing an increase of approximately5.2%. During theperiod, profit attributable to shareholders of the Company hasincreased by 10.5%and reached approximately HK$59.3 million (FP2019: approximately HK$53.6million).

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

Business Review

Mortgage loan business

Forthe six months ended 31 August 2019 ("FP2020" or the "Period"）, the mortgage loan business remained as a majorsource of income of the Group. During the Period, the interest income increasedby approximately HK$2.3 million or 2.9% from approximately HK$78.9 million forthe six months ended 31 August 2018 ("FP2019") to approximately HK$81.2 millionin FP2020. Revenue generated from the mortgage loan business in FP2020accounted for approximately 68.9% of the Group's total revenue during thePeriod. The gross mortgage loan receivables increased from approximately HK$1,223.3million as at 28 February 2019 to approximately HK$1,269.1 million as at 31August 2019, where the total amount of new mortgage loans granted wasapproximately HK$306.6 million during FP2020. During the Period, there were 84new cases of mortgage loan transactions while no bad debt was recorded.

InFP2020, the Group continued to adopt a cautious and prudent approach whengranting loans, as well as maintain a higher proportion of first mortgage loansin the Group's portfolio to manage risk. During the Period, the loan-to-valueratio for first mortgage was approximately 49.4%, while the overallloan-to-value ratio for subordinate mortgage was approximately 52.6%, in whichthe loan-to-value ratio of subordinate mortgage that the Group participated inwas approximately 13.6%.

Pawn Loan Business

Dueto an ongoing rise in gold price during the Period, the revenue generated fromthe pawn loan business increased by approximately HK$3.5 million or 10.6% fromapproximately HK$33.1 million in FP2019 to approximately HK$36.6 million inFP2020. Interest income derived from pawn loan receivables increased byapproximately HK$3.7 million or 12.7% from approximately HK$29.2 million in FP2019to approximately HK$32.9 million in FP2020, while revenue derived from disposalof repossessed assets slightly decreased by approximately HK$0.2 million or5.1% from approximately HK$3.9 million in FP2019 to approximately HK$3.7million in FP2020.

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

Industry Overview

Dueto the uncertainties of the US-China trade conflict and Brexit, as well as riskaversion among investors, gold price had increased sharply since the secondquarter of 2019 and reached a six-year high which was above the majorpsychological level of US$1,500 per ounce. The Board believes that gold priceswill remain strong in the near future and will have a positive impact on theGroup's pawn loan business.

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

Prospects

Lookingahead, the Group plans to launch an online pawn loan platform in next financialyear that enables customers to obtain loans in a discreet, simple and efficientmanner. It is believed that online pawn loan services will appeal to the youngergeneration, and help promote the Group's pawn loan business at a lower cost.

Formortgage loans, it is believed that the raise of the mortgage cap forfirst-time property buyers in the "The Chief Executive's 2019 Policy Address"will stimulate property prices in the short run. However, given the potentialdownturn in local economy, social unrest and uncertainties in the globaleconomy, the Directors are of the view that the Hong Kong property marketremains unpredictable. The Group will continue to implement a prudent strategy,maintain its focus on high net worth customers and remain cautious whengranting mortgage loans.

About Oi Wah Pawnshop Credit Holdings Limited

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