omniture

Oi Wah Announces Interim Results - Profit Attributable to Shareholders and Revenue Increase 24.3% and 28.8% Respectively

Interest income from mortgage business increases 50.8%
Oi Wah Pawnshop Credit Holdings Limited
2015-10-27 21:15 2466

HONG KONG, Oct. 27, 2015 /PRNewswire/ --

Financial Highlights


Six months ended 31 August

HK$

2015

2014

Change

Revenue

88,635,139

68,824,407

+28.8%

Profit before taxation

54,820,535

44,103,546

+24.3%

Profit attributable to shareholders of the Company

45,760,505

36,821,622

+24.3%

Net profit margin

51.6%

53.5%

-1.9ppt

Earnings per share (HK cents)

2.2

1.8*

+22.2%





* Amount for the period ended 31 August 2014 adjusted for the bonus shares issued on August 2015.

The board of directors of Oi Wah Pawnshop Credit Holdings Limited (HKEx stock code: 1319, the "Group" or "Oi Wah") announced its interim results and its financial position. For the six months ended 31 August 2015 ("FP2016"), profit attributable to shareholders of the Company has increased by 24.3% and reached approximately HK$45.8M (six months ended 31 August 2014 ("FP2015"): approximately HK$36.8M). The Board of Directors recommends an interim dividend of HK$0.65 cents.

In FP2016, the Group recorded revenue of approximately HK$88.6M (FP2015: approximately HK$68.8M), representing an increase of approximately 28.8%. The increase was mainly attributable to the increase in interest income earned on our loan receivables by approximately HK$21.5 million or 32.3% from approximately HK$66.5 million in FP2015 to approximately HK$88.0 million in FP2016. The profit attributable to shareholders was HK2.2 cents per share (FP2015: HK1.8 cents per share) (After adjusted for the bonus shares issued on August 2015).

Business Review

Pawn Loan Business

In FP2016, the pawn loan business continued to be one of the major sources of income for the Group. During the reporting period, the interest income remained stable with total loan amount granted of approximately HK$304.2 million, representing a period-on-period increase of 6.2%. During the period, the number of pawn loan transactions with large loan amount maintained a steady growth, with an average loan amount increased to approximately HK$5,600 per transaction (FP2015: approximately HK$4,900 per transaction). As a result of the advertising effect, the demand for one-to-one pawn loan appointment services for pawn loans that exceed HK$100,000 has increased and the number of pawn loan transactions with such amount granted increased from 145 transactions in FP2015 to 163 transactions in FP2016.

The decrease in gain on disposal of repossessed assets in the reporting period was mainly attributable to factors such as the weak retail market and the price reduction of international luxury brands. However, the Group considers that there was still certain demand in the retail industry. In addition, the Group has already established appropriate countermeasures and has cut down the valuation of pawn collaterals, and thus the overall pawn business was not materially affected.

Mortgage loan business

In FP2016, the Group's mortgage loan business have continued to show a rapid growth, and with its income contribution exceeded that from pawn loan business. The average loan size of new mortgage loans granted increased from HK$3.0 million in FP2015 to HK$6.6 million in FP2016 and the aggregated loan amount increased from approximately HK$337.2 million in FP2015 to approximately HK$456.1 million in FP2016, representing an increase of approximately 35.3%. The interest income rose from approximately HK$37.8 million in FP2015 to approximately HK$57.0 million in FP2016, representing an increase of 50.8%. During the reporting period, there were 115 new cases of loan transactions while no bad debt was recorded.

Whereas the demand for mortgage loan has been increasing, the Group's credit management remains cautious and prudent. During FP2016, more uncertainties arose in the property market of Hong Kong. The Group has made adjustments accordingly and been more cautious during property valuation. It is of the view that appropriate adjustments are normal due to the periodicity of economic development. The Group will implement proper risk management and maintain its focus on high net worth customers.

Prospects 

Looking forward, the Group will continue to actively expand our business. In regard to pawn loan business, the Group will gradually update the webpage of the Company and consummate the mobile version of the webpage, as well as introduce the online valuation service so as to provide customers with a more convenient channel to increase our market share.

In regard to our mortgage loan business, the Group announced that on 24 September 2015, it had entered into a memorandum of understanding with CITIC Capital. Both parties intended to: (i) jointly develop mortgage loan businesses, in the form of any business model as appropriate; (ii) provide syndicated mortgage loans jointly by a subsidiary under the Group or related parties of CITIC Capital that holds a qualified money lender's license pursuant to Money Lenders Ordinance (Chapter 163 of the Laws of Hong Kong) and the Group; and (iii) develop a mutual customers referral plan. The Group believes that, such cooperation will help both parties diversify the risk on money lending, broaden the income sources and customer base.

The mortgage loan business will remain as the Group's growth momentum. Oi Wah will actively expand diversified financing channels in the future. Currently, the Group is actively expanding the plan on loan to banks in the Southeast Asia regions. It is expected that agreements will be reached in the financial year of 2016.

Mr. Edward Chan, Chairman and CEO of the Company, said, "Oi Wah has been established for 40 years, we have grown from a pawn loan broker, to an enterprise engaged in pawn loan and mortgage loan that are complementary to each other. Looking forward, with the increasing market recognition of 'Oi Wah' brand, we aim to expand our current business, capture more market share, and provide better return to shareholders."

About Oi Wah Pawnshop Credit Holdings Limited

Oi Wah is a financing service provider in Hong Kong, mainly providing secured financing, including pawn loans and mortgage loans. According to the Ipsos Report, Oi Wah is the largest pawn loan service provider in Hong Kong in 2011 in terms of loan amount granted and number of pawnshops, and has been constantly growing since. The Group established its first pawnshop in 1975 and currently owns 12 pawnshops in various locations in Hong Kong. Oi Wah diversified into mortgage loan business in 2009.

Source: Oi Wah Pawnshop Credit Holdings Limited
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