Company introduction

China Huirong Financial is a mainland short-term mortgage loan service provider. It specializes in providing clients with short-term loans secured by real estate, property rights, or movable property collateral. It operates in Suzhou City and four county-level cities (or major cities of Suzhou) governed by the Suzhou Municipal Government. The company's core customers are small and medium-sized enterprises and individual business owners in Suzhou. The company earns most of the company's interest income by granting loans to collect loan interest and comprehensive administrative expenses. The company's current sales network has 11 branches. As the largest network in Jiangsu Province, the company intends to selectively expand business in the Yangtze River Delta region outside of Suzhou starting in the second half of 2014.

As of June 30 of this year, the total amount of loans granted but not redeemed by the company to customers was approximately RMB 747 million, of which 64.9% were loans secured by real estate collateral. For the three years ended December 31, 2012 and the six months ended June 30, 2013, the company's net profit was divided into RMB 29 million, RMB 66 million, RMB 96 million and RMB 64 million. The average return on equity rates were 13.9%, 20.6%, 20.1% and 20.2%.

Intended use of proceeds

Assuming that the over-allotment rights have not been exercised, based on a median offer price of HK$2.08 per share, it is estimated that the net proceeds from the share sale would be approximately HK$6958 million. The Board of Directors proposes to use the net proceeds for the following purposes: