The Group is a loan service provider operating in Hong Kong under the “Haohua” brand name. It mainly provides short-term secured loans, including pawnbroker loans and mortgage mortgages. According to Ipsos reports, based on the amount of loans issued and the number of pawn shops, the group was the largest pawn loan service provider in Hong Kong in 2011. The total amount of pawn loans issued accounted for about 9.4% of the total value of loans and grants issued by all pawn loan service operators in Hong Kong. At the last practical date, the Group had 12 pawn shops, with branches spread across multiple locations in Hong Kong. A pawnshop loan is a loan secured by personal property (such as gold, jewellery and diamonds, watches and consumer electronics). Mortgage-backed real estate includes residential real estate such as apartments, village houses, and commercial real estate (such as parking lots and offices). The Group's pawnbroker loan service has been divided into approximately 45,000, 43,000, and 41,000 customers over the past 3 years.

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Company advantages

1) Have a stable market position. According to Ipsos reports, based on the amount of loans issued and the number of pawnshops, the group was the largest pawnbroker loan service provider in Hong Kong in 2011. At the last practical date, the group had 12 pawnshop stores spread across different regions of Hong Kong; (2) the group is one of a few loan service providers with mortgage licenses and lender licenses in Hong Kong. These licenses allow the group to flexibly issue pawnshop loans at different interest rates, such as loan amounts and terms, and accept different types of personal property. Gold and jewellery, diamonds, watches and consumer electronics products, and mortgage-backed real estate are used separately as guarantees Pawn loans and mortgage loan collateral provide quick and convenient diversified loan services for different types of customers with different needs; (3) All of the Group's pawnshops and mortgage centers adopt standardized and computerized operating procedures to minimise the risk of accepting illegal or counterfeit collateral, so that the Group can manage its business and risk in a more efficient and efficient manner, thereby maintaining the quality of the Group's existing service delivery and enhancing the Group's popularity; (4) A number of second-hand goods dealers have established contacts, and a network of second-hand goods dealers has been established for their collateral. Punda's second-hand goods dealer network enables the Group to compare second-hand resale prices, and is therefore better able to ensure that collateral can be sold smoothly. Furthermore, the relationships established with second-hand goods dealers can also enable the group to obtain the latest information on the resale values of different personal property in the second-hand market in a timely manner, so that the group can make informed decisions on the valuation of collateral, thereby enhancing the competitiveness of the group in issuing loan amounts to its customers.

Industry Overview

Pawn loans have a long history and are the most traditional form of bank originating in Hong Kong. The first legal pawnshop was established in Sheung Wan in 1926 after the government legalized the business. Prior to the establishment of an licensing mechanism in Hong Kong, customers pawned their personal items (such as shoes, clothing, quilts) in immediate exchange for money to meet their short-term financial needs, and interest was subsequently paid to redeem the pawned items. The number of pawnshops has increased from less than 10 in 1926 to around 202 in 2011. As the living standards of Hong Kong citizens have changed and technology has advanced, people now pawnshop more valuable and more valuable items (such as gold, watches, mobile phones and notebooks) in exchange for money. Convenience, instant payments, no loan entry and credit review regulations have enabled Hong Kong's pawnbroker industry to continue to develop. From 2007 to 2011, the number of pawnbroker loan service operators and pawnshops in Hong Kong grew steadily at a compound annual growth rate of around 0.3% and 1.1%, respectively. The value of loans and deposits issued by pawnbrokers increased from approximately HK$4.274 billion in 2007 to approximately HK$5.438 billion in 2011, with a compound annual growth rate of approximately 6.2%.

The majority of pawnbroker lenders are Hong Kong residents, accounting for about 70% of the total number of pawnbroker lenders in 2011. Low-income middle-aged people and the elderly are the main customers for pawnbroker loans, especially those with monthly income of less than HK$8,000. Most pawnbroker lenders are repeat customers. These customers sometimes only need a few hundred or thousands of dollars to respond and banks are unable to meet the requirements. There are also wealthy clients who want to get money instantly for gambling and investment. Over the past few years, there have also been more and more young people between the ages of 20 and 30 seeking pawnbroker loans because people want a higher standard of living and luxury goods when they are young. Continued widening of the gap between rich and poor and rising living standards will keep Hong Kong customers in demand for pawnbroker loans, while ever-changing technology will provide more opportunities for young people to pawn their electronic products to solve short-term financial needs. Foreign domestic assistants as a whole accounted for about 25% of the total number of customers during the same period, while people from mainland China accounted for the remaining 5% of the total number of pawnbroker loan customers.

The pawnbroker industry is highly fragmented, with no single pawnbroker service operator leading the market. In Hong Kong, less than 10% of pawnbroker loan service operators have more than 5 pawnshops. In 2011, there were around 150 pawn loan service operators in Hong Kong, operating 202 pawn shops. Most pawn loan service operators had over 40 years of experience in the industry. Over the past few years, a growing number of financial instruments (such as credit card overdrafts) have been replacing the need for pawnbroker loans, reducing the demand for pawnbroker loans. Chain management has become a way to continuously develop business, and more and more pawnbroker service operators are expanding their range of services by obtaining lender licenses, thereby providing different types of loans (such as mortgages and personal loans). However, demand for pawnbroker loans continues from low-income people in Hong Kong (people with a monthly income of less than HK$8,000, accounting for about 26.8% of the total employed population). Coupled with the continuous increase in the number of foreign domestic assistants and new immigrants from China, the Hong Kong pawnbroker market remains optimistic. It is expected that the number of pawnbroker service operators will grow steadily at a compound annual growth rate of about 1.1% from 2012 to 2016, while the number of pawnbrokers is expected to increase at about 1.0%. The estimated growth rate of loans and deposits issued by pawnbrokers in the 2012-2016 compound year is estimated to be around 8.0%.