Oi Wah FY2026 Net Profit Soars 47.8%, Strengthening Core Pawn Business Amid Economic Recovery

Oi Wah Pawnshop Credit Holdings Limited has reported a significant increase in its financial performance for the fiscal year ending February 28, 2026. The company’s profit attributable to shareholders surged by approximately 47.8% year-on-year, reaching around HK$82.6 million. This growth reflects a robust recovery in the economic landscape and highlights the effectiveness of the Group’s risk management strategies.

Financial Performance Overview

The Group’s total revenue for FY2026 was approximately HK$164.4 million, with a net profit margin expanding to about 50.2%, an increase of 16.2 percentage points compared to the previous year. The net interest margin also saw a notable rise, reaching approximately 17.2%. As of February 28, 2026, cash and cash equivalents stood at approximately HK$376.9 million, marking a substantial year-on-year increase of 74.8%. The net assets of the Group rose to approximately HK$1,155.7 million, while the gearing ratio decreased to 4.1%. Earnings per share increased by approximately 48.3% to HK$4.3 cents, and the Board of Directors has proposed a final dividend of HK$1.15 cents per share.

Mortgage Loan Business Insights

During FY2026, the mortgage loan segment generated approximately HK$65.8 million, constituting around 40% of the Group’s total revenue. The gross mortgage loan receivables reached approximately HK$612.5 million. The net interest margin for this segment was approximately 10.1%. The Group adopted a disciplined approach in its lending activities, focusing on high-quality collateral and prudent loan-to-value ratios. The average loan-to-value ratio for first mortgages was approximately 56.27%, while the overall average for subordinate mortgages was about 40.82%.

The Group’s proactive risk management is evident in its impairment losses on loan receivables, which decreased significantly from approximately HK$46.3 million to HK$12.7 million, representing a reduction of approximately 72.6%. This decline underscores the Group’s commitment to maintaining a resilient loan portfolio amidst economic fluctuations.

Growth in Pawn Loan Business

The pawn loan business experienced a revenue increase of approximately 12.9%, reaching around HK$98.6 million in FY2026. This growth was further supported by a 73.0% rise in gains from the disposal of repossessed assets, totaling approximately HK$19.2 million. The robust performance in this sector can be attributed to strong gold prices and a thriving secondary market for luxury items, particularly high-end timepieces. These factors have reinforced the pawn loan business as a strategic hedge against economic volatility.

To enhance brand visibility, the Group invested in advertising and promotional activities, generating demand for personalized pawn loan services for amounts exceeding HK$0.1 million.

Future Outlook and Strategic Initiatives

Looking ahead, Oi Wah maintains a cautiously optimistic outlook regarding global economic recovery. While macroeconomic and geopolitical uncertainties persist, the Group is committed to a proactive yet prudent strategy aimed at ensuring sustainable long-term growth and maximizing shareholder returns.

In the mortgage loan market, the Group plans to adopt a calibrated approach, focusing on high-quality opportunities in the residential property segment while exercising caution in the commercial and industrial sectors. The ongoing challenges of inventory overhang and distressed assets necessitate rigorous credit underwriting and collateral appraisal to mitigate valuation risks.

The pawn loan business is expected to remain resilient, bolstered by stable gold prices and sustained liquidity demand. The Group is actively optimizing its pawn shop network by identifying cost-effective locations to reduce operating overheads while maintaining market leadership.

Furthermore, the strategic partnership with PACM Group is pivotal for geographic diversification. By exploring institutional credit opportunities in developed markets, the Group aims to navigate evolving industry dynamics and deliver stable value to stakeholders.

Mr. Edward Chan, Chairman and CEO, emphasized the importance of a proactive management strategy in navigating the complexities of the current economic environment. He noted that the core pawn loan business has proven to be an effective tool for hedging against macroeconomic fluctuations, showcasing the Group’s resilience amid market challenges.

Oi Wah’s commitment to a differentiated strategy and regional diversification positions it well for future growth. The Group aims to expand its revenue streams and customer base while delivering long-term, stable returns for shareholders.

For further details on Oi Wah’s financial performance, visit Zawya.

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