Company introduction

Mihua Securities is a loan service provider in Hong Kong that deals in brokerage and mortgage collateral business. According to Ipsos reports, based on the amount of loans issued and the number of pawnshops, the company was the largest pawnbroker loan service provider in Hong Kong in 2011. In 2011, the total amount of pawnbroker loans issued by the company accounted for about 9.4% of the total value of loans and deposits issued by all pawnbroker service operators in Hong Kong. At the last practical date, the company had a total of 12 pawn shops, spread across multiple locations in Hong Kong. The company has obtained mortgagers' licences for each of these 12 pawnshops, and Mihua Hong Kong also currently holds a creditor's license.

For the three years ended at the end of February 2012 and for the nine months ended November 30, 2012, the company's operating volume was divided into approximately HK$46.7 million, HK$54.7 million, HK$66.4 million and HK$52.6 million. Of these, interest income contributions from pawnbroker loans accounted for approximately 86.5%, 82.8%, 78.9% and 81.5% of the company's total operating amount; in the same period, the company's equity profit was divided into approximately HK$20.2 million, HK$24.6 million, HK$33.4 million, and HK$33.4 million HK$10,000 and HK$19.3 million.

Assumed use of proceeds

Assuming that no over-allotment rights have been exercised, the net proceeds from the sale of shares are estimated to be approximately HK$64.5 million based on the median offer price of HK$0.87 per share. The Board of Directors proposes to use the net proceeds for the following purposes: