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Stock Code: 2619
(A joint stock company incorporated in the People’s Republic of China)
GLOBAL
OFFERING
Sole Sponsor and Sole Sponsor-Overall Coordinator
Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers

Joint Bookrunners and Joint Lead Managers
(In alphabetical order)


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If you are in any doubt about any of the contents of this prospectus, you should obtain independent professional advice.
X.J. ELECTRICS (HU BEI) CO., LTD
ʮ̡
 (A joint stock company incorporated in the People’s Republic of China with limited liability)
GLOBAL OFFERING
Number of Offer Shares under the
Global Offering
: 68,220,000 H Shares (subject to the
Over-allotment Option)
Number of Hong Kong Offer Shares : 6,822,000 H Shares (subject to reallocation)
Number of International Offer Shares : 61,398,000 H Shares (subject to reallocation
and the Over-allotment Option)
Maximum Offer Price : HK$3.35 per H Share, plus brokerage of
1.0%, SFC transaction levy of 0.0027%,
AFRC transaction levy of 0.00015% and
Stock Exchange trading fee of 0.00565%
(payable in full on application in Hong
Kong dollars and subject to refund)
Nominal value : RMB1.00 per Share
Stock code : 2619
Sole Sponsor and Sole Sponsor-Overall Coordinator
Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Joint Bookrunners and Joint Lead Managers
(in alphabetical order)
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing
Company Limited take no responsibility for the contents of this prospectus, make no representation as to its accuracy or completeness
and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the
contents of this prospectus. A copy of this prospectus, having attached thereto the documents specified in the section headed “Appendix
VIII – Documents Delivered to the Registrar of Companies in Hong Kong and Documents on Display” in this prospectus, has been
registered by the Registrar of Companies in Hong Kong as required by section 342C of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission of Hong Kong and the
Registrar of Companies in Hong Kong take no responsibility for the contents of this prospectus and any other documents referred to
above.
The Offer Price is expected to be fixed by agreement between the Sole Sponsor-Overall Coordinator (on behalf of the Underwriters)
and us on the Price Determination Date. The Price Determination Date is expected to be on Monday, 23 June 2025. The Offer Price
will not be more than HK$3.35 and is currently expected to be not less than HK$2.86 per Offer Share. If, for any reason, the final
Offer Price is not agreed by 12:00 noon on Monday, 23 June 2025 between the Sole Sponsor-Overall Coordinator (on behalf of the
Underwriters) and us, the Global Offering will not proceed and will lapse.
The Sole Sponsor-Overall Coordinator (on behalf of the Underwriters) may, with our consent, where considered appropriate, reduce the
number of Offer Shares being offered under the Global Offering and/or the indicative Offer Price range below that is stated in this
prospectus at any time on or prior to the morning of the last day for lodging applications under the Hong Kong Public Offering. In
such a case, we will as soon as practicable following the decision to make such reduction, and in any event not later than the morning
of the day which is the last day for lodging applications under the Hong Kong Public Offering, make an announcement on the websites
of the Stock Exchange at www.hkexnews.hk and our Company at http://www.xjgroup.com . For further information, please see
“Structure of the Global Offering” and “How to apply for Hong Kong Offer Shares” in this prospectus.
The obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Agreement are subject to termination by the Sole
Sponsor-Overall Coordinator (on behalf of the Hong Kong Underwriters) if certain grounds arise prior to 8:00 a.m. on the Listing Date.
Such grounds are set out in the section headed “Underwriting – Underwriting Arrangements – Hong Kong Public Offering – Grounds
for Termination of the Hong Kong Underwriting Agreement” in this prospectus. It is important that you refer to that section for further
details.
The Offer Shares have not been and will not be registered under the U.S. Securities Act or any state securities law in the United States
and may not be offered, sold, pledged or otherwise transferred within the United States, or to, or for the account or benefit of, U.S.
persons, except in transactions exempt from or not subject to, the registration requirements of the U.S. Securities Act. The Offer Shares
are being offered and sold outside the United States in offshore transactions in reliance on Regulation S under the U.S. Securities Act.
IMPORTANT
17 June 2025


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IMPORTANT NOTICE TO INVESTORS:
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong Public
Offering. We will not provide printed copies of this prospectus in relation to the Hong
Kong Public Offering.
This prospectus is available at the website of the Stock Exchange at
www.hkexnews.hk under the “HKEXnews > New Listings > New Listing Information”
section, and our website at http://www.xjgroup.com. Y ou may download and print
from these website addresses if you want a printed copy of this prospectus.
To apply for Hong Kong Offer Shares, you may:
(1) apply online via the HK eIPO White Form service at www.hkeipo.hk ;o r
(2) apply electronically through the HKSCC EIPO channel and cause HKSCC
Nominees to apply on your behalf by instructing your broker or custodian who is
an HKSCC Participant to give electronic application instructions via HKSCC’s
FINI system to apply for the Hong Kong Offer Shares on your behalf.
We will not provide any physical channels to accept any application for the Hong
Kong Offer Shares by the public. The contents of the electronic version of this prospectus
are identical to the printed prospectus as registered with the Registrar of Companies in
Hong Kong pursuant to Section 342C of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance.
If you are an intermediary , broker or agent , please remind your customers, clients
or principals, as applicable, that this prospectus is available online at the website addresses
above.
IMPORTANT


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Please see “How to Apply for Hong Kong Offer Shares” in this prospectus for further
details on the procedures through which you can apply for the Hong Kong Offer Shares
electronically.
Your application through the HK eIPO White Form service or the HKSCC EIPO
channel must be for a minimum of 1,000 Hong Kong Offer Shares and in one of the
numbers set out in the table. You are required to pay the amount next to the number you
select.
If you are applying through the HK eIPO White Form service, you may refer to the
table below for the amount payable for the number of H Shares you have selected. You
must pay the respective maximum amount payable on application in full upon application
for Hong Kong Offer Shares.
If you are applying through the HKSCC EIPO channel, you are required to prefund
your application based on the amount specified by your broker or custodian, as determined
based on the applicable laws and regulations in Hong Kong.
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
1,000 3,383.79 20,000 67,675.70 100,000 338,378.48 2,000,000 6,767,569.50
2,000 6,767.57 25,000 84,594.62 200,000 676,756.96 2,500,000 8,459,461.88
3,000 10,151.36 30,000 101,513.54 300,000 1,015,135.43 3,000,000 10,151,354.26
4,000 13,535.14 35,000 118,432.47 400,000 1,353,513.90 3,411,000
(1) 11,542,089.78
5,000 16,918.93 40,000 135,351.39 500,000 1,691,892.38
6,000 20,302.71 45,000 152,270.32 600,000 2,030,270.86
7,000 23,686.49 50,000 169,189.23 700,000 2,368,649.33
8,000 27,070.27 60,000 203,027.09 800,000 2,707,027.80
9,000 30,454.06 70,000 236,864.93 900,000 3,045,406.28
10,000 33,837.84 80,000 270,702.78 1,000,000 3,383,784.76
15,000 50,756.78 90,000 304,540.62 1,500,000 5,075,677.13
(1) Maximum number of Hong Kong Offer Shares you may apply for and this is 50% of the Hong Kong
Offer Shares initially offered.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee
and AFRC transaction levy. If your application is successful, brokerage will be paid to the Exchange
Participants (as defined in the Listing Rules) or to the HK eIPO White Form Service Provider (for
applications made through the application channel of the HK eIPO White Form service) while the
SFC transaction levy, the Stock Exchange trading fee and the AFRC transaction levy will be paid to
the SFC, the Stock Exchange and the AFRC, respectively.
No application for any other number of the Hong Kong Offer Shares will be
considered and any such application is liable to be rejected.
IMPORTANT


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If there is any change in the following expected timetable of the Hong Kong Public
Offering, we will issue an announcement to be published on the websites of the Stock
Exchange at www.hkexnews.hk and our Company on http://www.xjgroup.com.
Hong Kong Public Offering commences .................................. 9:00 a.m. on
Tuesday, 17 June 2025
Latest time to complete electronic applications
under the HK eIPO White Form service
through the designated website at www.hkeipo.hk
(2) .....................1 1:30 a.m. on
Friday, 20 June 2025
Application lists of the Hong Kong Public Offering open (3) ..................1 1:45 a.m. on
Friday, 20 June 2025
Latest time to (a) complete payment of HK eIPO White Form
applications by effecting Internet banking transfer(s) or
PPS payment transfer(s) and (b) give electronic
application instructions to HKSCC
(4) ................................ 12:00 noon on
Friday, 20 June 2025
If you are instructing your broker or custodian who is a HKSCC Participant to give
electronic application instructions via FINI to apply for the Hong Kong Offer Shares on your
behalf, you are advised to contact your broker or custodian for the latest time for giving such
instructions which may be different from the latest time as stated above.
Application lists of the Hong Kong Public Offering close
(3) ................. 12:00 noon on
Friday, 20 June 2025
Expected Price Determination Date (5) .......................n o t later than 12:00 noon on
Monday, 23 June 2025
Announcement of the final Offer Price, an indication of the level
of interest in the International Offering, the level of
applications in the Hong Kong Public Offering and the basis of
allocation of the Hong Kong Offer Shares to be published on
the website of the Stock Exchange at www.hkexnews.hk and
our Company’s website at http://www.xjgroup.com
(6) on or
before ...................................................T uesday, 24 June 2025
The results of allocations in the Hong Kong Public Offering (with successful applicants’
identification document numbers, where appropriate) to be available through a variety of
channels, including:
 In the announcement to be published on the website of
the Stock Exchange at www.hkexnews.hk and our
Company’s website at http://www.xjgroup.com
(6) ..........T uesday, 24 June 2025
EXPECTED TIMETABLE (1)
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 Results of allocations for the Hong Kong Public
Offering will be available at the designated results of
allocations website at www.hkeipo.hk/IPOResult (or
www.tricor.com.hk/ipo/result ) with a “search by ID”
function from .......................................T uesday, 24 June 2025
Dispatch of H Share certificates in respect of wholly or partially
successful applications pursuant to the Hong Kong Public
Offering or deposited into CCASS on or before
(7)(9)(10)(11) ..........T uesday, 24 June 2025
Dispatch of HK eIPO White Form e-Auto Refund payment
instructions/refund cheques on or before (8)(9)(10)(11) .............W ednesday, 25 June 2025
Dealings in the H Shares on the Stock Exchange expected to
commence ....................................................... 9:00 a.m. on
Wednesday, 25 June 2025
Notes :
(1) All times and dates refer to Hong Kong local time and date, except as otherwise stated.
(2) You will not be permitted to submit your application through the designated website at www.hkeipo.hk after
11:30 a.m. on the last day for submitting applications. If you have already submitted your application and
obtained a payment reference number from the designated website prior to 11:30 a.m., you will be permitted to
continue the application process (by completing payment of application monies) until 12:00 noon on the last day
for submitting applications, when the application lists close.
(3) If there is a typhoon warning signal number 8 or above, “Extreme Conditions” and/or a “black” rainstorm
warning (collectively, “ Bad Weather Signals ”) at any time between 9:00 a.m. and 12:00 noon on Friday, 20 June
2025, the application lists will not open on that day. Please see “How to Apply for Hong Kong Offer Shares – E.
Bad Weather Arrangements” of this prospectus.
(4) Applicants who apply for Hong Kong Offer Shares by giving electronic application instructions to HKSCC
should refer to “How to Apply for Hong Kong Offer Shares – A. Application for Hong Kong Offer Shares – 2.
Application Channels” of this prospectus.
(5) The Price Determination Date is expected to be on Monday, 23 June 2025. If, for any reason, we do not agree
with the Sole Sponsor-Overall Coordinator (on behalf of the Underwriters) on the pricing of the Offer Shares by
12:00 noon on Monday, 23 June 2025, the Global Offering will not proceed and will lapse.
(6) None of the websites or any of the information contained on the website forms part of this prospectus.
(7) No temporary documents of title will be issued in respect of the Offer Shares. H Share certificates will only
become valid evidence of title at 8:00 a.m. on the Listing Date provided that the Global Offering has become
unconditional in all respects and neither of the Underwriting Agreements has been terminated in accordance with
its terms. Investors who trade H Shares on the basis of publicly available allocation details before the receipt of
H Share certificates and before they become valid do so entirely at their own risk.
(8) e-Auto Refund payment instructions/refund cheques will be issued in respect of wholly or partially unsuccessful
applications pursuant to the Hong Kong Public Offering and also in respect of wholly or partially successful
applications in the event that the final Offer Price is less than the price payable per Offer Share on application.
EXPECTED TIMETABLE (1)
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(9) Applicants who have applied for Hong Kong Offer Shares through the HKSCC EIPO channel should refer to the
section headed “How to Apply for Hong Kong Offer Shares – D. Despatch/Collection of H Share Certificates and
Refund of Application Monies” of this prospectus for details.
(10) Applicants who have applied through the HK eIPO White Form service and paid their applications monies
through single bank accounts may have refund monies (if any) dispatched to the bank account in the form of
e-Auto Refund payment instructions. Applicants who have applied through the HK eIPO White Form service
and paid their application monies through multiple bank accounts may have refund monies (if any) dispatched to
the address as specified in their application instructions in the form of refund cheques in favour of the applicant
(or, in the case of joint applications, the first-named applicant) by ordinary post at their own risk.
(11) Further information is set out in the section headed “How to Apply for Hong Kong Offer Shares – D.
Despatch/Collection of H Share Certificates and Refund of Application Monies” of this prospectus.
The above expected timetable is a summary only. Y ou should read carefully the
sections headed “Underwriting”, “Structure of the Global Offering” and “How to Apply for
Hong Kong Offer Shares” of this prospectus for details relating to the structure of the
Global Offering, procedures on the applications for Hong Kong Offer Shares and the
expected timetable, including conditions, effect of bad weather and the despatch of refund
cheques and H Share certificates.
If the Global Offering does not become unconditional or is terminated in accordance with
its terms, the Global Offering will not proceed. In such a case, our Company will make an
announcement as soon as practicable thereafter.
EXPECTED TIMETABLE (1)
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This prospectus is issued by our Company solely in connection with the Hong Kong
Public Offering and Hong Kong Offer Shares and does not constitute an offer to sell or a
solicitation of an offer to subscribe for or buy any security other than Hong Kong Offer
Shares. This prospectus may not be used for the purpose of, and does not constitute, an offer
to sell or a solicitation of an offer to buy any security in any other jurisdiction or in any
other circumstances. No action has been taken to permit a public offering of the Offer Shares
or the distribution of this prospectus in any jurisdiction other than Hong Kong. The
distribution of this prospectus and the offering and sale of the Offer Shares in other
jurisdiction are subject to restrictions and may not be made except as permitted under the
applicable securities laws of such jurisdictions pursuant to registration with or authorisation
by the relevant securities regulatory authorities or an exemption therefrom. You should rely
only on the information contained in this prospectus to make your investment decision. We
have not authorised anyone to provide you with information which is different from that
contained in this prospectus. Any information or representation not made in this prospectus
must not be relied upon by you as having been authorised by us, the Sole Sponsor , the Overall
Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead
Managers, the Underwriters any of their respective directors, agents, employees or advisers,
or any other person or party involved in the Global Offering.
Page
Expected Timetable .................................................... i
Contents ............................................................. i v
Summary ............................................................ 1
Definitions ........................................................... 2 6
Glossary of Technical Terms ............................................. 3 8
Forward-looking Statements ............................................. 3 9
Risk Factors .......................................................... 4 1
Waivers from Strict Compliance with the Listing Rules ...................... 7 7
Information about this Prospectus and the Global Offering ................... 8 2
Directors, Supervisors and Parties Involved in the Global Offering ............. 8 7
Corporate Information ................................................. 9 4
Industry Overview ..................................................... 9 7
CONTENTS
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Page
Regulatory Overview ................................................... 1 2 3
History, Development and Corporate Structure ............................. 1 4 4
Business ............................................................. 1 6 6
Relationship with Our Controlling Shareholders ............................ 2 8 1
Connected Transactions ................................................ 2 8 6
Directors, Supervisors and Senior Management ............................. 2 8 8
Substantial Shareholders ............................................... 3 0 9
Cornerstone Investors .................................................. 3 1 1
Share Capital ......................................................... 3 1 8
Financial Information .................................................. 3 2 3
Future Plans and Use of Proceeds ........................................ 3 8 8
Underwriting ......................................................... 3 9 2
Structure of the Global Offering ......................................... 4 0 5
How to Apply for Hong Kong Offer Shares ................................ 4 1 8
Appendix I — Accountants’ Report .................................. I - 1
Appendix II — Unaudited Pro Forma Financial Information .............. II-1
Appendix III — Valuation Report ..................................... III-1
Appendix IV — Summary of Principal Legal and Regulatory Provisions ..... I V - 1
Appendix V — Summary of the Articles of Association ................... V - 1
Appendix VI — Taxation and Foreign Exchange ......................... VI-1
Appendix VII — Statutory and General Information ...................... VII-1
Appendix VIII — Documents Delivered to the Registrar of
Companies in Hong Kong and Documents on Display ..... VIII-1
CONTENTS
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This summary aims at giving you an overview of the information contained in this
prospectus. Because this is a summary, it does not contain all the information that may be
important to you. You should read this prospectus in its entirety, including our financial
statements and the accompanying notes, before you decide to invest in the Offer Shares. There
are risks associated with any investment. Some of the particular risks in investing in the Offer
Shares are set out in the ‘ ‘Risk factors’ ’ in this prospectus. You should read that section
carefully before you decide to invest in the Offer Shares. V arious expressions used in this
summary are defined in ‘ ‘Definitions’ ’ and ‘ ‘Glossary of Technical Terms’ ’ in this prospectus.
OVERVIEW
We are a manufacturer of lifestyle household goods in the PRC. We mainly operate on
ODM/OEM basis and have built a customer portfolio comprising globally reputable and long
standing names, such as Walmart, Telebrands, SEB Asia Ltd (“ SEB”), Sensio, Hamilton Beach
and Philips etc. During the Track Record Period, a major portion of our revenue came from our
sales of small kitchen appliances.
(1) According to the F&S Report, we were the 10th largest
company with a market share of 0.8% in terms of export value in 2024 in the small kitchen
appliance industry in the PRC.
(2) Our electric kettles had a market share of approximately 24.6%
and 59.6% in the respective category classified by the General Administration of Customs of the
PRC in terms of export volume from the PRC to the U.S. and Canada, respectively, in 2024. Our
motor-driven products such as mixers had a market share of approximately 3.8% in the
respective category classified by the General Administration of Customs of the PRC in terms of
export volume from the PRC to the U.S. in 2024. Please see “Industry Overview” in this
prospectus for the details.
We focus on research and development, design, manufacturing and sales of electric home
appliances and non-electric household goods. Our electric home appliances consist of three
categories, namely (i) electro-thermic appliances, such as electric griddle, air fryer and kettle;
(ii) motor-driven appliances, such as blender, mixer and electric can opener; and (iii) electronic
appliances such as digital scale, humidifier and laser projector light. We also offer non-electric
household goods such as garden hose and cookware.
(1) For FY2022, FY2023 and FY2024, revenue contributed by sales of small kitchen appliances represented 73.9%,
72.1% and 72.7% of our total revenue, respectively.
(2) According to Frost & Sullivan, small kitchen appliance accounted for the largest share of the global small home
appliance industry.
SUMMARY
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The table below sets out a breakdown of our total revenue by product type during the Track
Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
Electric home
appliances
– Electro-thermic
appliances 459,013 41.8 499,099 42.0 757,883 50.5
– Motor-driven
appliances 317,623 29.0 321,937 27.1 315,560 21.0
– Electronic
appliances 122,997 11.2 111,570 9.4 115,066 7.7
Subtotal 899,633 82.0 932,606 78.5 1,188,509 79.2
Non-electric
household goods
– Garden hose 181,460 16.5 221,788 18.7 285,118 19.0
– Others (Note) 15,872 1.5 33,927 2.8 27,883 1.8
Subtotal 197,332 18.0 255,715 21.5 313,001 20.8
Total 1,096,965 100.0 1,188,321 100.0 1,501,510 100.0
Note: Others include cookware, cleaning tools and other household goods etc.
During the Track Record Period, we primarily manufactured and sold our products to our
ODM/OEM customers under their respective brands. Leveraging our experience and knowledge
in the industry and capabilities we have developed throughout the last two decades, as a
strategic approach, in 2016, we started our OBM business to design, develop, manufacture and
sell home appliances under our own brands
(“Weighmax ”),
(“Accuteck ”) and
 (“Aigoli ”). We sell our OBM products mainly on e-commerce
market place including Amazon, JD.com (؇Tmall ( ˂፟) and Pinduoduo (εε).
SUMMARY
–2–


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The following table sets forth the breakdown of the revenue of our Group by business
model during the Track Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
ODM 938,536 85.6 1,056,623 88.9 1,289,950 86.0
OEM 97,056 8.8 81,992 6.9 170,407 11.3
OBM 61,373 5.6 49,706 4.2 41,153 2.7
Total 1,096,965 100.0 1,188,321 100.0 1,501,510 100.0
Note: Revenue from our OBM business represents revenue generated from Aigrentrading, Nawu Technology,
Nuocheng E-Commerce and Weighmax. Revenue from our ODM and OEM business represents revenue
generated from other subsidiaries of our Group.
Since 2000, we have established different production facilities in different parts of China.
Currently, we have seven manufacturing bases in the PRC with a total construction area of
approximately 367,000 sq.m. To establish our overseas presence outside of the PRC, we have
established a production base in Indonesia, which is expected to commence production in the
second quarter of 2025, and we plan to establish another production base with a site area of
43,436.8 sq.m. in Thailand, which is expected to commence production in the second half of
2025. For details of our production facilities, please see “Business – Our Production Facilities”
in this prospectus.
As at the Latest Practicable Date, our overall annual designed capacity for the electric
home appliances and non-electrical household goods was 33.1 million units and 5.8 million
units, respectively.
The table below sets out the details of each of the Indonesia Factory and Thailand Factory:
Construction
Area
Annual designed capacity
Types of Products to
be manufactured
Electric
home
appliances
Non-electric
household
goods
(sq.m.) (’000 unit)
Indonesia Factory 7,745 4,224.0
(Note) – Electro-thermic
appliances,
motor-driven
appliances,
electronic
appliances, garden
hoses and others
SUMMARY
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Construction
Area
Annual designed capacity
Types of Products to
be manufactured
Electric
home
appliances
Non-electric
household
goods
(sq.m.) (’000 unit)
Thailand Factory 25,000 5,352.0 2,880.0 Motor-driven
appliances,
electronic
appliances and
garden hoses
Note: For Indonesia Factory, while our assembly lines are flexible and capable of manufacturing different
products including non-electric household goods to meet the actual customer demands by adjusting
configurations of our machines and equipment, it is planned mainly for the manufacture of electric home
appliances. Accordingly, the calculation of the expected designed capacity is based on electric home
appliances.
OUR BUSINESS MODEL
The following diagramme sets out our main business model:
Product flow
Non-product flow
product demand
product demand/
product specification
Orders for OBM products
Our Group Retailers/
consumers
ODM/
OEM customers ODM/OEM productsODM/OEM products
OBM products
SUMMARY
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We are a manufacturer of lifestyle household goods in the PRC. We mainly operate on
ODM/OEM basis with a customer portfolio comprising globally reputable and long standing
names. Under ODM model, we collaborate with our customers to develop designs of products
and then we manufacture; whereas under OEM model, our customers provide us their designs
and we are only responsible for manufacturing. We procure raw materials for production and
finished products are affixed with our customers’ brand labels and shipped to ports designated
by customers. In addition to our ODM/OEM operations, since 2016, we have started our OBM
operation that we design, develop, manufacture and sell our products under three self-owned
brands, namely, brands
(“Weighmax ”),
 (“Accuteck ”) and
(“Aigoli ”). We sell our OBM products mainly on major e-commerce market place including
Amazon, JD.com (؇Tmall ( ˂፟) and Pinduoduo (εε)f
During the Track Record Period, our products are delivered to more than 70 countries and
regions covering six continents while a majority of our sales came from North America during
the Track Record Period.
The table below sets out a breakdown of our total revenue by shipping destination of our
products during the Track Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
North America
The U.S. 755,142 68.8 958,315 80.6 1,148,669 76.5
Others
(Note) 25,987 2.4 35,634 3.0 107,647 7.2
Europe 227,672 20.8 111,730 9.4 139,551 9.3
Oceania 44,073 4.0 28,834 2.4 57,219 3.8
Asia (excluding
mainland China) 26,331 2.4 35,833 3.0 34,258 2.3
South America 8,527 0.8 12,228 1.0 7,369 0.5
Africa 552 0.1 759 0.1 476 0.0
Mainland China 8,681 0.7 4,988 0.5 6,321 0.4
Total 1,096,965 100.0 1,188,321 100.0 1,501,510 100.0
Note: Others include Canada and Mexico.
SUMMARY
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OUR CUSTOMERS AND SUPPLIERS
During the Track Record Period, we generated our revenue mostly from ODM/OEM
customers which represent 94.4%, 95.8% and 97.3% of our total revenue. Our ODM/OEM
customers mainly comprise international brand owners and their procurement service providers.
The remaining portion of our revenue came from our OBM business including direct sales of our
self-branded products to end consumers through ecommerce marketplaces, including Amazon,
JD.com (؇Tmall ( ˂፟) and Pinduoduo (εε). Our five largest customers in each year
during the Track Record Period accounted for 62.4%, 72.4% and 77.9% of our total revenue for
FY2022, FY2023 and FY2024, respectively; and our largest customer in each year during the
Track Record Period accounted for 21.3%, 28.5% and 24.1% of our total revenue for FY2022,
FY2023 and FY2024, respectively. For details, please see “Business – Our Customers” in this
prospectus.
Our major suppliers are suppliers of metal and plastic raw materials, components and
accessories. Our five largest suppliers in each year during the Track Record Period accounted for
18.2%, 22.4% and 18.3% of our total purchase for FY2022, FY2023 and FY2024, respectively;
and our largest supplier in each year during the Track Record Period accounted for 7.2%, 9.4%
and 5.3% of our total purchase for FY2022, FY2023 and FY2024, respectively. For details,
please see “Business – Our Suppliers” in this prospectus.
SINO-U.S. AND GLOBAL TRADE TENSION
For FY2022, FY2023 and FY2024, products with the U.S. as the shipping destination
contributed 68.8%, 80.6% and 76.5% of our total revenue of the corresponding year,
respectively. In recent years, the U.S. government has imposed tariff and trade restrictions on
imports from China; and recently, such trade tension has escalated further to a global context
that does not only affect China but also the other countries. On 1 February 2025, the U.S.
government imposed a blanket tariff on Canada, Mexico and China, among which, all imports
from China to the US would be subject to a 10% tariff, with a few exceptions. Since then, the
U.S. government has raised tariff imposed on imports from China by stage and once reached
145% (on top of other tariff and duties which had already been implemented before 1 February
2025). On 12 May 2025, after their trade meeting in Geneva, the Chinese and the US
government released a joint statement (the “ 512 Joint Announcement ”) announcing, among
others, the removal of the 91% tariff announced on 7 April 2025 and 9 April 2025 and a 90-day
pause, coming into effect on 14 May 2025, of 24% (out of 34%) tariff announced on 2 April
2025, meaning the effective tariffs on imports from China will become 30%, down from 145%;
and China will reduce tariff imposed on imports from the US since 2 April 2025 to 10%, down
from 125% (tariff as imposed and adjusted by the U.S. government on China from time to time
since 1 February 2025 and up to the Latest Practicable Date, “ New Tariff on China ”).
SUMMARY
–6–


--- page 16 ---
In addition to China, the U.S. government also announced tariff in a global context,
including East Asian countries, such as Vietnam, Thailand and Indonesia, which have become
popular manufacturing locations for PRC manufacturing companies in recent years. In particular,
on 2 April 2025, the U.S. government announced a reciprocal tariff of 36% and 32% (which
comprise a baseline tariff of 10%) on imports from Thailand and Indonesia, respectively.
Subsequently, on 9 April 2025, the U.S. government announced a pause of 90 days for the
reciprocal tariff on Thailand and Indonesia (and other countries, except for China). Accordingly,
as at the Latest Practicable Date, Thailand and Indonesia are subject to the baseline tariff of
10% (together with the New Tariff on China, the “ 2025 Tariff ”).
During the Track Record Period, sales of our products with the U.S. as the shipping
destination accounted for 68.8%, 80.6% and 76.5% of our total revenue, respectively. Certain of
our major products, such as electric griddles, kettles, blenders and garden hoses, had been
subject to tariff during the Track Record Period while there had been no fluctuation in most of
the tariff applicable to our major products during the Track Record Period. The table below set
out (i) the respective revenue contribution of major products which had been subject to tariff
during the Track Record Period, (ii) the applicable tariff rates during the Track Record Period
and (iii) the applicable tariff rates announced by the U.S. government as at the Latest Practicable
Date:
FY2022 FY2023 FY2024
Applicable
tariff during
the Track
Record Period
Applicable
tariff rates
as at
the Latest
Practicable
Date
RMB’000
% of total
revenue RMB’000
% of total
revenue RMB’000
% of total
revenue
Electric griddles 103,503 9.4 98,867 8.3 107,180 7.1 Nil or
2.7% (Note 2)
30% or
32.7% (Note 2)
Kettles 64,611 5.9 94,926 8.0 123,894 8.3 3.7% or
11.2% (Note 2)
33.7% or
41.2% (Note 2)
Blenders 150,220 13.7 207,975 17.5 186,524 12.4 4.2% 34.2%
Garden hoses 181,460 16.5 221,788 18.7 285,118 19.0 10.0% or
28.1% (Note 2)
40% or
58.1% (Note 2)
Notes:
1. The aforementioned products, together with air fryers, are our major products in terms of their revenue
contribution during the Track Record Period. For details of tariff applicable to air fryers, please refer to
the paragraph immediately following this table.
2. Applicable tariff for different models of the same product varied.
SUMMARY
–7–


--- page 17 ---
To the best knowledge of our Directors, save the tariff on air fryers, which represented less
than 8% of our total revenue for each of FY2022, FY2023 and FY2024, respectively, there was
no material fluctuation of the rate of U.S. tariff applicable to our other major products during
the Track Record Period. In relation to air fryers, an additional tariff of 25% was exempted
between 1 January 2022 and 14 June 2024, which has been resumed since 15 June 2024;
therefore, as at the the Latest Practicable Date, the applicable tariff rate for our air fryers had
become 55%.
Party responsible for paying U.S. tariff (including the 2025 Tariff)
As advised by our U.S. Legal Advisers, the liability for payment for the U.S. import duties
and tariffs belongs to the importers of the goods. When we sell our products as an exporter, as
our products are sold and delivered to the U.S. on a FOB Chinese ports arrangement, we are not
responsible for customs clearance within the jurisdiction of the U.S. and we are not responsible
for the payment of any such tariffs for products imported into the U.S.
Risks associated with the Sino-U.S. and the global trade tension
Subsequent to the announcement of a 34% tariff on Chinese goods announced on 2 April
2025, on 4 April 2025, the Chinese government announced tariff on U.S. goods in response.
Tariff applicable to Chinese goods once reached 145%, yet subsequently reduced to 30% after
the meeting between the two countries on 12 May 2025. Other countries such as Vietnam and
Indonesia have expressed their willingness to negotiate. As at the Latest Practicable Date, there
was a sign of easing of the Sino-U.S. tension, but it remained uncertain how the Sino-U.S. and
the global trade tension will develop.
If the Sino-U.S. and the global trade tension persists or escalates further, macro-economy
and demand of the U.S. market for lifestyle household goods imported from non-U.S. countries
in general may be adversely affected; and in turn, our business will be adversely and materially
affected, particularly given that U.S. had been the shipping destination to which we shipped
more than 70% of our products for each year during the Track Record Period and, as at the
Latest Practicable Date, we produced our products in China only. While our customers, many of
which are overseas retail chains and reputable brand owners, may increase their retail prices to
partially mitigate the impact of the 2025 Tariff by shifting their tariff burden to end consumers,
there is no assurance that they can shift it all to the consumers. In that case or if the applicable
tariff continues to climb up, it may be inevitable that our customers would require their
suppliers, including us, to reduce our prices in order to share the burden of tariff, which may
materially and adversely affect our business. Furthermore, if we cannot satisfy such request of
our customers, or there is a fundamental change in consumer behaviour, whether directly or
indirectly, led by the Sino-U.S. and/or global trade tension, our business, financial conditions
and results of operation will be materially and adversely affected.
SUMMARY
–8–


--- page 18 ---
While our Indonesia Factory is expected to commence operation in the second quarter of
2025 and our Thailand Factory is expected to commence operation by the end of 2025 and, as at
the Latest Practicable Date, Thailand and Indonesia were set to be subject to tariff at a lower
rate (i.e. 10% as at the Latest Practicable Date) than that imposed on China, it is unpredictable
how the trade relationship between the U.S. and Thailand and Indonesia will develop. In the
event that global trade tension persists or escalates further, or Indonesia and Thailand are both
subject to the same tariff as China, we may lose the benefit of the planned expansion in
Thailand and Indonesia as we may not be able to mitigate geopolitical risks due to the Sino-U.S.
trade tension effectively or at all.
Please see “Risk Factors – Risks Relating to our Industry and Business – The Sino-U.S and
global trade tension may adversely affect our business, financial conditions and results of
operation”.
Impact of the Sino-U.S. and global trade tension on our business
According to Frost & Sullivan, consumers tend to be less sensitive to price changes for
low-priced small home appliances and non-electric household goods due to certain key factors.
Firstly, such products are often associated with convenience-oriented and routine purchasing
behavior. Secondly, these items typically fall within a low-to-moderate price range, where
consumers may be less inclined to conduct extensive price comparisons or delay purchases in
anticipation of discounts. Therefore, our Directors believe that the potential pressure on the
pricing of our products resulting from the 2025 Tariff could be partially passed on to the end
consumers. According to the F&S Report, overseas retail chains and reputable brand owners
generally have higher pricing power over the end consumers, especially for lower-priced
consumer goods such as small home appliances and non-electric household goods; and it is
relatively easier for overseas retail chains and reputable brand owners to pass on the economic
burden due to tariff to the end consumers. Therefore, we believe that, our customers, many of
which are overseas retail chains and reputable brand owners, may increase their retail prices to
partially mitigate the impact of the 2025 Tariff. However, if the applicable tariff continues to
climb up, it may be inevitable that our customers would require their suppliers, including us, to
reduce our prices in order to share the burden of tariff. In that case, considering that (i) small
home appliances and non-electric household goods manufactured in the PRC are expected to
remain competitive in the U.S. market as compared with non-PRC manufacturing companies
that, as confirmed by Frost & Sullivan, there would be substantial and significant difficulties in
various aspects for non-PRC manufacturing companies to produce products at comparable prices,
with similar consistency and similar volume as PRC products; (ii) we have long business
relationship with customers which are reputable companies and they have high quality
requirements on suppliers; (iii) our competitiveness over non-PRC manufacturing companies is
expected to remain and (iv) we have non-PRC production facilities in Indonesia and Thailand
which will commence operation in near future, we believe that our competitive advantages over
our competitors would remain.
SUMMARY
–9–


--- page 19 ---
Since 1 January 2025 and up to the Latest Practicable Date, we had not received any
request from our customers which may cause significant pricing pressure as a result of the 2025
Tariff and none of our customers, including major customers, had cancelled their existing orders
or request re-negotiation of prices for existing orders as a result of the 2025 Tariff. While we
had received request from four customers (including three major customers during the Track
Record Period) to suspend delivery, after the Sino-US trade tension relaxed with the release of
the 512 Joint Announcement, delivery of approximately 79.9% of such suspended orders had
been confirmed to resume normal for shipment from China, and the remaining will be
transferred to the Indonesia Factory for shipment from Indonesia. As confirmed by our
Directors, given that (i) delivery was resumed shortly after the request for temporary suspension
and (ii) most of such suspended orders were produced after resumption of delivery and their
production will stay in China, no material additional cost had been incurred due to the
temporary suspension of delivery of orders nor the resumption. Moreover, our Directors
confirmed that our Group had not received request from Walmart to postpone delivery, although
it is reported by the media that Walmart had requested other suppliers to temporarily suspend
delivery in early April which, reportedly, had resumed in late April. Furthermore, since the
imposition of the New Tariff on China, we have been closely communicating with our
customers, including major customers, and our customers had expressed interest in relocating
production of some of their orders to our Indonesia Factory which is expected to commence
operation in the second quarter of 2025. Eight customers, including four major customers during
the Track Record Period, have already conducted factory inspection in order to start production
of their orders as soon as possible; and where necessary, factory audit had been completed. As at
the Latest Practicable Date, four major customers had placed orders to be produced in the
Indonesia Factory. Also, since the announcement of the 2025 Tariff and up to 30 April 2025, our
major customers had continued to place orders with us with no material change in product prices
and payment terms as a result of the 2025 Tariff. Although the New Tariff on China rose to
145% in early April, as the U.S. government signaled a potential relaxation of the New Tariff on
China in the second half of April, in terms of order amount, there had been no material adverse
change in April 2025 as compared with April 2024.
Given the unpredictability of the development of the Sino-U.S. and the global trade tension,
we cannot assure you that our customers will not raise request for change in prices or other
contract terms, or reduce their orders, in the future, be such due to a decrease in overall demand
of lifestyle household goods, replacing us with U.S. local manufacturing companies or other
manufacturing companies in other countries, or downturn of the macro-economy. In spite of the
foregoing, we consider that our competitive advantage would remain, considering that (i) small
home appliances and non-electric household goods from China are expected to remain
competitive in the U.S. market as compared with non-PRC countries; (ii) we have long business
relationship with our major customers which are reputable companies ranging from nine to 13
years, and our customers have stronger pricing power over the end consumers and higher quality
requirements on suppliers; (iii) our competitiveness over non-PRC manufacturing companies is
expected to remain and (iv) we have non-PRC production facilities in Indonesia and Thailand
which will commence operation in near future. For a detailed analysis of the impact of the
Sino-U.S. and the global trade tension on our Group, please refer to “Industry Overview –
Impact Analysis of Sino-U.S. Trade Tension on the Global Small Home Appliances and
Non-electric Household Goods Industry” and “Business – Sino-U.S. and Global Trade Tension”
in this prospectus.
SUMMARY
–1 0–


--- page 20 ---
In response to such uncertainties, as at the Latest Practicable Date, we had started
communicating and negotiating with our suppliers with an aim to reduce our costs. Moreover, to
further diversify our customer base, we are actively looking for new customers based outside of
the U.S. Since 1 January 2025, we have procured eight new non-U.S. customers and these
customer have placed orders with us with planned delivery mostly in May and June 2025. We
believe that our strategic overseas layout with our Indonesia Factory and Thailand Factory will
be a feasible approach to mitigate risks arising from the 2025 Tariff. Our Directors are of the
view, and the Sole Sponsor concurred, that the 2025 Tariff had not had a material and adverse
impact on our Group as at the Latest Practicable Date. Based on the information currently
available and subject to changes and development of the Sino-U.S and global trade tension
which is highly unpredictable and associated risks as detailed in “Risk Factors”, as at the Latest
Practicable Date, our Directors are of the view, and the Sole Sponsor concurred, that 2025 Tariff
is not expected to have a material and adverse impact on our Group. We will continue to closely
monitor the development of the Sino-U.S. and global trade tension.
COMPETITIVE LANDSCAPE
According to Frost & Sullivan, in 2024, the market size of the global lifestyle household
goods industry, measured by retail value was USD1,071.2 billion. The global lifestyle household
goods industry is divided into three categories, namely, major home appliances, small home
appliances and non-electric household goods. The global small home appliance industry has
experienced a robust growth in recent years, with its retail value reaching USD183.5 billion in
2024; and small kitchen appliances account for the largest share of the global small home
appliance industry, with the retail value reaching USD74.1 billion in 2024. In 2024, the export
value of small kitchen appliances in China reached approximately RMB141.7 billion. The top
ten companies accounted for a total market share of 36.9% by export value in 2024. We were the
10th largest company in terms of export value in 2024 in the small kitchen appliance industry in
the PRC with a market share of 0.8%.
In relation to garden hoses, the global garden hose market is highly fragmented with
numerous participants, especially in China. In 2024, the export value of our Company’s garden
hose series products (Customs HS Codes 39173900 and 40091200) to the U.S. accounted for
11.72% of China’s total export value to the United States.
OUR COMPETITIVE STRENGTHS
We believe that our competitive strengths include the following:
 Established relationships with internationally reputable customers, including some of
the world’s famous brand names
SUMMARY
–1 1–


--- page 21 ---
 Reputation as a supplier of lifestyle household goods with decades of track record
 R&D capabilities enabling continual product upgrade and development
 Highly experienced and stable management team and a functional organisational
structure with effective internal control system
For details, please see “Business – Our Competitive Strengths” in this prospectus.
OUR STRATEGIES
Our strategies to foster the development of our Group include:
 Set up our Thailand Factory to enhance our global presence
 Increase the level of automation and digitalisation for sustainable growth
 Set up a new R&D Centre
 Enlist new brands to enhance our OBM business
For details, please see “Business – Our Strategies” in this prospectus.
RISK FACTORS
Our business faces risks including those set out in the section headed “Risk Factors”. As
different investors may have different interpretations and criteria when assessing the significance
of a risk, you should read the “Risk Factors” section in its entirety before you decide to invest
in our H Shares. Some of the major risks that we face include:
 The Sino-U.S. and global trade tension may adversely affect our business, financial
conditions and results of operation
 We rely on few major customers, which, in aggregate, accounted for more than 60% of
our total revenue during the Track Record Period
 We do not have long-term purchase commitments from most of our customers, which
may subject us to uncertainty and revenue volatility from period to period
 Our business is subject to legal, regulatory, political, economic, commercial and other
risks associated with conducting operations in overseas markets
SUMMARY
–1 2–


--- page 22 ---
 Our Group is exposed to currency risk
 The rights to use certain leased properties could be challenged by third parties or
relevant authorities, and we may be forced to relocate due to title defects of such
leased properties
 We have not obtained ownership certificates for and had non-compliance with some of
our owned properties and we may incur loss if we become subject to the relevant
penalties.
OUR CONTROLLING SHAREHOLDERS
Immediately prior to the Global Offering, our Company was held by Mr. Pan Yun, X.J.
Management (Qichun) and Qichun Hengxing as to approximately 54.07%, 26.39% and 19.54%,
respectively. X.J. Management (Qichun) is owned as to 70.37% and 29.63% by Mr. Pan Yun and
Mr. Guangshe Pan, respectively. Qichun Hengxing is an employee shareholding platform of our
Group, which is owned as to 47.50% by Mr. Pan Yun. Mr. Pan Yun is the sole general partner of
each of X.J. Management (Qichun) and Qichun Hengxing.
As such, Mr. Pan Yun, Mr. Guangshe Pan, X.J. Management (Qichun) and Qichun
Hengxing are considered to be a group of Controlling Shareholders, who collectively held 100%
of our total issued Shares as at the Latest Practicable Date.
Immediately following the completion of the Global Offering (assuming the Over-allotment
Option is not exercised), Mr. Pan Yun, Mr. Guangshe Pan, X.J. Management (Qichun) and
Qichun Hengxing will collectively hold approximately 75.00% of our total issued Shares.
Accordingly, Mr. Pan Yun, Mr. Guangshe Pan, X.J. Management (Qichun) and Qichun Hengxing
will remain as a group of Controlling Shareholders upon Listing.
For details, please see “Relationship with Our Controlling Shareholders” in this prospectus.
SELECTED FINANCIAL INFORMATION
The following tables set forth a summary of our consolidated financial information for the
Track Record Period, extracted from the Accountant’s Report set out in Appendix I. The
summary of consolidated financial data set forth below should be read together with, and is
qualified in its entirety by reference to, the consolidated financial statements in this prospectus,
including the related notes. Our consolidated financial information has been prepared in
accordance with IFRS.
SUMMARY
–1 3–


--- page 23 ---
Summary Consolidated Statements of Profit or Loss
FY2022 FY2023 FY2024
RMB’000 RMB’000 RMB’000
Revenue 1,096,965 1,188,321 1,501,510
Cost of sales (873,095) (902,300) (1,172,986)
Gross profit 223,870 286,021 328,524
Other income 23,215 22,149 19,382
Impairment losses under expected credit
loss (“ ECL”) model, net of reversal (1,610) (2,494) (865)
Other gains and losses 8,602 9,798 10,646
Selling expenses (24,188) (28,274) (34,560)
Administrative expenses (87,714) (90,071) (111,184)
Research and development expenses (31,981) (34,447) (36,426)
Other expenses (3,806) (3,470) (1,839)
Listing expenses – – (370)
Finance costs (14,467) (12,519) (11,993)
Profit before tax 91,921 146,693 161,315
Income tax expense (11,660) (25,231) (20,890)
Profit for the year 80,261 121,462 140,425
Our net profit increased from RMB80.3 million in FY2022 to RMB121.5 million in
FY2023 and further increased to RMB140.4 million in FY2024 primarily because of the increase
in revenue by RMB91.3 million and RMB313.2 million for FY2023 and FY2024 respectively.
SUMMARY
–1 4–


--- page 24 ---
During the Track Record Period, we offered a range of electric and non-electric household
goods. Our electric home appliances comprise three major categories, namely, (i) electro-thermic
appliances, such as electric griddle, air fryer and kettle; (ii) motor-driven appliances, such as
blender, mixer and electric can opener; and (iii) electronic appliances such as digital scale,
humidifier and laser projector light. We also offered non-electric household goods such as
garden hose and cookware. The following table sets forth the breakdown of the revenue of our
Group by product type during the Track Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
Electric home
appliances
– Electro-thermic
appliances 459,013 41.8 499,099 42.0 757,883 50.5
– Motor-driven
appliances 317,623 29.0 321,937 27.1 315,560 21.0
– Electronic
appliances 122,997 11.2 111,570 9.4 115,066 7.7
Subtotal 899,633 82.0 932,606 78.5 1,188,509 79.2
Non-electric
household goods
– Garden hose 181,460 16.5 221,788 18.7 285,118 19.0
– Others
(Note) 15,872 1.5 33,927 2.8 27,883 1.8
Subtotal 197,332 18.0 255,715 21.5 313,001 20.8
Total 1,096,965 100.0 1,188,321 100.0 1,501,510 100.0
Note: Others include cookware, cleaning tools and other household goods etc.
SUMMARY
–1 5–


--- page 25 ---
The following table sets forth the breakdown of the gross profit and gross profit margin
(calculated by dividing gross profit by revenue of the business model) of our Group by business
model during the Track Record Period:
FY2022 FY2023 FY2024
Gross
Profit
Gross
profit
margin
Gross
Profit
Gross
profit
margin
Gross
Profit
Gross
profit
margin
RMB’000 % RMB’000 % RMB’000 %
ODM 185,347 19.7 252,129 23.9 275,186 21.3
OEM 18,282 18.8 14,450 17.6 36,461 21.4
OBM 20,241 33.0 19,442 39.1 16,877 41.0
Total 223,870 20.4 286,021 24.1 328,524 21.9
The following table sets forth the breakdown of the gross profit and gross profit margin
(calculated by dividing gross profit by revenue of the product type) of our Group by product
type during the Track Record Period:
FY2022 FY2023 FY2024
Gross
Profit
Gross
profit
margin
Gross
Profit
Gross
profit
margin
Gross
Profit
Gross
profit
margin
RMB’000 % RMB’000 % RMB’000 %
Electric home appliances
– Electro-thermic appliances 63,665 13.9 88,944 17.8 133,501 17.6
– Motor-driven appliances 50,132 15.8 67,057 20.8 54,851 17.4
– Electronic appliances 35,201 28.6 38,650 34.6 39,451 34.3
Subtotal 148,998 16.6 194,651 20.9 227,803 19.2
Non-electric household goods
– Garden hose 72,876 40.2 85,082 38.4 94,629 33.2
– Others
(Note) 1,996 12.6 6,288 18.5 6,092 21.8
Subtotal 74,872 37.9 91,370 35.7 100,721 32.2
Total/Overall gross profit
margin 223,870 20.4 286,021 24.1 328,524 21.9
Note: Others include cookware, cleaning tools and other household goods etc.
SUMMARY
–1 6–


--- page 26 ---
The gross profit of our Group increased by RMB62.1 million or 27.7% from RMB223.9
million for FY2022 to RMB286.0 million for FY2023, which was primarily due to revenue
growth in most product categories and the improvement of our overall gross profit margin. The
increase in our overall gross profit margin for FY2023 was mainly driven by the increase of
gross profit margin of electric home appliances, which was mainly due to that the decrease in
the average cost of sales of electric-thermic appliances and motor-driven appliances outweighed
the decrease in average selling price of these appliances in FY2023. The increase of profit
margin of electric home appliances was partially offset by the decrease of gross profit margin of
garden hose in FY2023, as the increase in average cost of sales outweigh the increase in average
selling price of garden hose, following the successful product upgrade in FY2022.
Despite that we recorded an increase of 26.4% in our revenue for FY2024 as compared to
FY2023 and increase in gross profit by RMB42.5 million or 14.9% from RMB286.0 million for
FY2023 to RMB328.5 million for FY2024, we recorded a decrease in gross profit margins for
both our electric home appliances and non-electric household goods in general. Our overall gross
profit margin decreased from 24.1% for FY2023 to 21.9% for FY2024, primarily attributable to
the decrease in gross profit margins of our motor-driven appliances and garden hoses. Decrease
in gross profit margin of motor-driven appliances was mainly due to the sales of new types of
blender sold to a customer, which account for more than 50% of our sales of blenders in
FY2024, such blenders has a relatively high production costs, leading to a low gross profit
margin; whereas decrease in gross profit margin of garden hoses was primarily attributable to
that the decrease of average selling price of garden hoses for FY2024 as compared with FY2023
following negotiations with our customer taking into account the trend of appreciation of the
USD against RMB as well as the bulk volume of order such customer had placed with us in
recent years.
The table below sets out the breakdown of average selling price and sales volume by
product category for FY2022, FY2023 and FY2024:
FY2022 FY2023 FY2024
Average
selling
price Volume
Average
selling
price Volume
Average
selling
price Volume
(per
unit) (units)
(per
unit) (units)
(per
unit) (units)
RMB (‘000) RMB (‘000) RMB (‘000)
Electric home appliances
– Electro-thermic appliances 91.6 5,012 80.3 6,215 74.7 10,139
– Motor-driven appliances 60.6 5,241 55.5 5,802 55.5 5,687
– Electronic appliances 49.5 2,484 55.0 2,028 57.8 1,992
Non-electric household goods
– Garden hose 58.9 3,082 59.7 3,713 57.6 4,951
– Others (Note 1) 4.5 3,497 8.9 3,818 12.7 2,197
SUMMARY
–1 7–


--- page 27 ---
Notes:
1. Others include cookware, cleaning tools and other household goods etc.
2. In FY2023, considering the trend of appreciation of the USD against RMB, our customers negotiated with
us to reduce the selling price of our major products and therefore the average selling price of our major
products, except for electronic appliances and garden hoses, decreased in FY2023. The average selling
price of electronic appliances increased in FY2023, primarily due to the increase in the price of laser
lights and postal scales. The average selling price of garden hoses increased in FY2023, primarily due to
the decrease in sales of lower-priced models. For FY2024, the average selling price of different product
categories remained relatively stable, except for electro-thermic appliances and others. The average selling
price of electro-thermic appliances decreased in FY2024, which was primarily attributable to the decrease
in the average selling price of certain products, including electric kettles, electric griddles and slow
cookers. Such decrease in average selling price was mainly attributable to the change of our sales
structure, as we sold more products with relatively low gross profit margins in FY2024. The average
selling price of others increased in FY2024, which was mainly due to the increase in the average price of
some of our cleaning tools. The slight decrease in average selling price of garden hoses in FY2024 was
due to negotiation with our customer taking into account the trend of appreciation of the USD against
RMB as well as the bulk volume of order such customer had placed with us in recent years.
3. In FY2023, considering the trend of appreciation of the USD against RMB, our customers negotiated with
us to reduce the selling price of our electro-thermic appliances and motor-driven appliances. Such price
reduction had promoted the sales volume of our electro-thermic appliances and motor-driven appliances in
FY2023. The decrease in the sales volume of electronic appliances in FY2023 was mainly due to the
decrease in sales volume of card scales and knife sharpeners. In relation to garden hoses, the increase in
sales volume in FY2023 was due to the success of product upgrade initiated in FY2022. In FY2024, the
sales volume of most product categories remained stable, except for electro-thermic appliances and garden
hoses. The sales volume of garden hoses continued to grow in FY2024, especially for the upgraded
versions. The sales volume of electro-thermic appliances also increased in FY2024, mainly driven by
higher sales of slow cookers and electric kettles.
Summary of Consolidated Statement of Financial Position
As at 31 December
2022 2023 2024
(RMB’000) (RMB’000) (RMB’000)
Total current assets 730,463 924,726 1,018,601
Total current liabilities 450,481 599,301 629,994
Net current assets 279,982 325,425 388,607
Total non-current assets 490,311 625,566 688,378
Total non-current liabilities 107,126 166,056 150,774
Total equity 663,167 784,935 926,211
SUMMARY
–1 8–


--- page 28 ---
Our Group’s net current assets increased by 16.2% from RMB280.0 million as at 31
December 2022 to RMB325.4 million as at 31 December 2023, mainly due to an increase in
bank balances and cash of RMB166.8 million which was partially offset by an increase in trade
and bills payables of RMB65.8 million and an increase in other payables and accruals of
RMB39.3 million.
Our Group’s net current assets increased by 19.4% from RMB325.4 million as at 31
December 2023 to RMB388.6 million as at 31 December 2024, mainly due to an increase of
trade and bills receivables of RMB89.5 million and decrease in other payables and accruals of
RMB44.3 million, which was partially offset by increase in borrowings of RMB77.8 million.
Our total equity amounted to RMB663.2 million, RMB784.9 million and RMB926.2
million, as at 31 December 2022, 2023 and 2024, respectively. Our total equity has grown
throughout the Track Record Period, primarily due to total comprehensive income for the year of
RMB81.8 million, RMB121.8 million and RMB141.3 million for FY2022, FY2023 and FY2024,
respectively.
Summary of Consolidated Statements of Cash Flows
FY2022 FY2023 FY2024
RMB’000 RMB’000 RMB’000
Operating cash flows before
movements in working capital
changes 168,075 215,977 217,278
Change in working capital (note) 62,297 52,827 (124,395)
Income tax paid (5,908) (26,014) (21,595)
Net cash generated from operating
activities 224,464 242,790 71,288
Net cash used in investing activities (116,446) (112,103) (170,411)
Net cash (used in) generated from
financing activities (108,484) 24,598 7,030
Net (decrease)/increase in cash and
cash equivalents (466) 155,285 (92,093)
Effect of foreign exchange rate
changes 17,149 11,493 17,909
Cash and cash equivalents at the
beginning of year 364,877 381,560 548,338
Cash and cash equivalents at the
end of year, represented by bank
balances and cash 381,560 548,338 474,154
Note: Represents change in working capital items, including, inventories, trade and bill receivables, trade
receivables at FVTOCI, prepayments and other receivables, restricted bank deposits, trade and bill
payables, other payables and accruals and contract liabilities.
SUMMARY
–1 9–


--- page 29 ---
Net cash generated from operating activities in FY2024 was RMB71.3 million, which was
primarily attributable to our profit before tax for FY2024 of RMB161.3 million adjusted by
certain non-cash and working capital items, including (i) positive adjustments, which primarily
included, depreciation of property, plant and equipment of RMB43.9 million, depreciation of
right-of-use assets of RMB26.9 million and financial costs of RMB12.0 million, and (ii)
negative adjustments, which primarily included, interest income of RMB11.7 million and net
foreign exchange gains of RMB16.7 million.
Net cash generated from operating activities in FY2023 was RMB242.8 million, which was
primarily attributable to our profit before tax for FY2023 of RMB146.7 million adjusted by
certain non-cash and working capital items, including (i) positive adjustments, which primarily
included, depreciation of property, plant and equipment of RMB40.0 million, depreciation of
right-of-use assets of RMB24.9 million and increase in trade and bills payables of RMB65.8
million, and (ii) negative adjustments, which primarily included interest income of RMB10.2
million and increase in trade and bills receivables of RMB15.3 million.
Net cash generated from operating activities in FY2022 was RMB224.5 million, which was
primarily attributable to our profit before tax for FY2022 of RMB91.9 million adjusted by
certain non-cash and working capital items, including (i) positive adjustments, which primarily
include depreciation of property, plant and equipment of RMB47.1 million, depreciation of
right-of-use assets of RMB23.7 million, decrease in inventories of RMB66.2 million, decrease in
trade and bills receivables of RMB68.5 million, decrease in other receivables, prepayments and
others of RMB17.8 million, and (ii) negative adjustments, which primarily included decrease in
trade and bills payables of RMB84.9 million.
KEY FINANCIAL RATIOS
For the year ended/As at 31 December
2022 2023 2024
Current ratio
(1) 1.6 times 1.5 times 1.6 times
Quick ratio (2) 1.2 times 1.3 times 1.3 times
Return on equity (3) 12.1% 15.5% 15.2%
Return on total assets (4) 6.6% 7.8% 8.2%
Gearing ratio (5) 27.2% 31.4% 34.9%
Notes:
(1) Current ratio is calculated by dividing current assets with current liabilities as at the end of the respective
year.
SUMMARY
–2 0–


--- page 30 ---
(2) Quick ratio is calculated by dividing total current assets net of inventory with current liabilities as at the
end of the respective year.
(3) Return on equity is calculated by profit for the year attributable to owners of our Company divided by
equity attributable to owners of our Company as at the end of the respective year multiplied by 100%.
(4) Return on total assets is calculated by profit for the year attributable to owners of our Company divided by
total assets as at the end of the respective year multiplied by 100%.
(5) Gearing ratio is calculated based on the total borrowings divided by total equity as at the end of respective
year multiplied by 100%.
For an analysis of our key financial ratios, please see “Financial Information – Key
Financial Ratios” in this prospectus.
OFFERING STATISTICS
Unless otherwise indicated, all statistics in the following table are based on the
assumptions that (i) the Global Offering has been completed and 68,220,000 H Shares are issued
pursuant to the Global Offering; and (ii) the Over-allotment Option is not exercised:
Based on an
Offer Price of
HK$2.86 per
Share
Based on an
Offer Price of
HK$3.35 per
Share
Market capitalisation of our Shares
(Note 1) HK$780.4
million
HK$914.1
million
Unaudited pro forma adjusted consolidated net tangible
assets of our Group per Share (Note 2) HK$4.25 HK$4.37
Notes:
1. The calculation of market capitalisation is based on the total number of 272,879,509 Shares, being the
total of 204,659,509 Domestic Unlisted Shares and 68,220,000 H Shares expected to be issued
immediately upon completion of the Global Offering assuming the Over-allotment Option is not exercised.
2. The unaudited pro forma adjusted consolidated net tangible asset of our Group per Share as at 31
December 2024 is calculated after making the adjustments referred to “Appendix II – Unaudited Pro
Forma Financial Information – A. Unaudited Pro Forma Statement of Adjusted Consolidated Net Tangible
Assets of our Group Attributable to Owners of our Company”.
SUMMARY
–2 1–


--- page 31 ---
LISTING EXPENSES
Our total listing expenses are expected to be HK$40.4 million, which is approximately
19.0% of the gross proceeds from the Global Offering (assuming Over-allotment Option will not
be exercised and based on an Offer Price of HK$3.11 per Offer Share, being the mid-point of the
indicative Offer Price range) with (i) an amount of approximately HK$35.7 million being
directly attributable to the issuance of H Shares will be deducted from our equity upon
completion of the Global Offering; and (ii) approximately HK$0.4 million was charged to our
consolidated statements of profit or loss and other comprehensive income for the year ended 31
December 2024, with an additional HK$4.3 million to be charged thereafter. Such listing
expenses comprise underwriting-related expenses of HK$10.6 million and non-underwriting
expenses of HK$29.8 million, which includes (i) professional fees paid and payable to the legal
advisers, and the reporting accountants of HK$16.9 million, and (ii) fees paid and payable to
other working parties and other expenses in relation to the Listing and the Global Offering of
HK$12.9 million.
For FY2022, FY2023 and FY2024, listing expenses charged to our consolidated statements
of profit or loss and other comprehensive income amounted to nil, nil and RMB0.4 million,
respectively.
The listing expenses above are our Directors’ best estimate as of the Latest Practicable
Date and for reference only, and the actual amount may differ from this estimate.
FUTURE PLANS AND USE OF PROCEEDS
We estimate that we will receive net proceeds from the Global Offering, after deducting the
estimated underwriting fees and expenses payable by us in the Global Offering, of approximately
HK$171.8 million (i.e. approximately RMB158.5 million), assuming (i) an Offer Price of
HK$3.11 per Share, being the midpoint of the indicative Offer Price range, and (ii) no exercise
of the Over-allotment Option. In line with our strategies, we intend to use our net proceeds from
the Global Offering:
 approximately 41.9% of the net proceeds, or HK$71.9 million, is expected to be used
for setting up our Thailand Factory to enhance our global presence;
 approximately 15.8% of the net proceeds, or HK$27.2 million, is expected to be used
for increasing the level of automation and digitalisation for sustainable growth. In
particular, such proceeds will be used for acquiring and installing machines and
equipment;
 approximately 37.3% of the net proceeds, or HK$64.1 million, is expected to be used
for setting up the New R&D Centre; and
 approximately 5.0% of the net proceeds, or HK$8.6 million, is expected to be used for
the general working capital of our Group.
For details, please see “Future Plans and Use of Proceeds” in this prospectus.
SUMMARY
–2 2–


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DIVIDENDS AND DIVIDEND POLICY
During the Track Record Period, we did not declare or distribute any dividend.
In order to return capital to our Shareholders in line with our growth, we have adopted in
our general dividend policy a dividend payout ratio of no less than 30% of our annual
distributable net profit of the immediately preceding year for each of the three financial years
upon Listing (including the year of the Listing) (the “ Initial Period ”). After the Initial Period,
pursuant to such general policy, we will determine the dividend payout ratio with reference to
our results of operations, cash flows, financial condition, operating and capital expenditure
requirements, distributable profits and other factors that our Directors may consider relevant. We
may declare and pay dividends by way of cash or by other means that we consider appropriate.
The dividend payout ratio will be decided by our Board at their discretion and distribution of
dividends will be subject to Shareholders’ approval. In addition, our dividend policy will also be
subject to our Articles of Association, the PRC Company Law and any other applicable law and
regulations.
COMPLIANCE
Save as disclosed in “Business – Properties” and “Business – Compliance”, our Directors,
as advised by our legal advisers of the relevant jurisdictions, confirmed that as at the Latest
Practicable Date, we had complied with all relevant laws and regulations in all material respects
and have obtained all material licenses, approvals and permits from relevant regulatory
authorities for our operations.
RECENT DEVELOPMENTS AND NO MATERIAL ADVERSE CHANGE
There had been no material adverse change on our business operation after the Track
Record Period and up to the date of this prospectus. Except for the recent Sino-U.S. and global
trade tension, there had been no material change to the industry, market or regulatory
environment in which our Group operates. For the analysis of the impact of the Sino-U.S. and
the global trade tension on our Group, please refer to “Risk Factors – Risks Relating to our
Industry and Business – The Sino-U.S and global trade tension may adversely affect our
business, financial conditions and results of operation”, “Industry Overview – Impact Analysis
of Sino-U.S. and the Global Trade Tension on the Global Small Home Appliances and
Non-electric Household Goods Industry” and “Business – Sino-U.S. and Global Trade Tension”
in this prospectus. During the Track Record Period and as at the Latest Practicable Date, we had
entered into an agreement to purchase a parcel of land for setting up a new production site in
Rayong Province, Thailand and we had paid the first two instalments of the land price in an
aggregate of RMB15.7 million and the construction fee of RMB47.7 million. For further details,
please see “Business – Our Strategies – Set up our Thailand Factory to enhance our global
presence” in this prospectus.
SUMMARY
–2 3–


--- page 33 ---
Our Directors confirm that, up to the date of this prospectus, there has been no material
adverse change in our financial, operational and/or trading position of our Group since 31
December 2024, which is the end date of the period reported on in the Accountants’ Report in
Appendix I to this prospectus, and there is no event since 31 December 2024 and up to the date
of this prospectus which would materially affect the information shown in the Accountants’
Report in Appendix I to this prospectus.
Based on the unaudited management accounts of our Group for the four months ended 30
April 2025, our revenue recorded a decrease primarily due to the decrease in revenue recorded
in April 2025 as compared with April 2024, mainly as a result of a decrease in the sales of
garden hose (for which monthly purchase was relatively uneven during the Track Record Period)
and electro-thermic appliances. Our revenue and net profit for FY2025 is expected to experience
a decrease as compared to that of FY2024, mainly due to (i) the Sino-U.S. and global trade
tension, (ii) the possible decrease in exchange gain due to the uncertainty in foreign exchange
and (iii) an increase in professional fees to be incurred for the Listing and after the Listing.
IMPACT OF COVID-19
While the outbreak of COVID-19 had affected various sectors widely in a global context
and overall market sentiment, the pandemic also brought opportunities to a number of industries
including the household good industry due to change of lifestyle and consumer habits. According
to the F&S Report, the COVID-19 pandemic led to more people staying at home and reducing
social gatherings, which boosted global demand for small home appliances. While the
COVID-19 pandemic might have disrupted sea and freight logistics globally, since we mainly
deliver on FOB basis (i.e. our products were only required to be delivered to the designated
local ports) and we mainly make procurement in the PRC, our delivery of products to customers
and procurement of materials had not been materially and adversely affected during COVID-19.
Moreover, while COVID-19 had caused suspension of our production facilities, such suspensions
were not longer than 20 days. Accordingly, there had been no significant delay in the delivery to
our customers nor material disruption of our production due to COVID-19. Based on the
foregoing, our Directors consider that COVID-19 did not have a material adverse effect on our
operations.
SUMMARY
–2 4–


--- page 34 ---
PREVIOUS A SHARE LISTING ATTEMPT
We previously considered the possibility of seeking an initial public offering in the PRC
when we had no overseas production facilities and did not have plans to establish overseas
manufacturing facilities. We filed an application for A share listing with the CSRC in June 2022,
which was subsequently transferred to the SZSE in March 2023. To diversify and expand our
Group’s manufacturing capability and enhance our global presence, we began to strategically
establish our production facilities in Southeast Asia since 2023. In view of the robust foundation
of Hong Kong as a hub for international investors, our Directors considered that a listing status
on the Stock Exchange would be able to facilitate our strategic goal of overseas expansion and
elevate international visibility. Therefore, in April 2024, we voluntarily withdrew our A share
listing application and subsequently filed an application for the Listing. Prior to the withdrawal
of our A share listing application, we had submitted our response to the second round of
comments raised by the SZSE. As confirmed by our Directors, no key outstanding comments
from the SZSE or the CSRC remained unresolved. For further details, please see “History,
Development and Corporate Structure – Previous A Share Listing Attempt” in this prospectus.
SUMMARY
–2 5–


--- page 35 ---
In this prospectus, the following words and expressions shall have the meanings set out
below unless the context otherwise requires. Certain other terms are explained in “Glossary
of Technical Terms” in this prospectus.
“affiliate(s)” with respect to any specified person, any other person,
directly or indirectly, controlling or controlled by or under
direct or indirect common control with such specified
person
“AFRC” Accounting and Financial Reporting Council
“Aigrentrading” Aigrentrading Co., Ltd.* (ʮ̡), a limited
liability company established in the PRC on 26 April 2013
and a directly wholly-owned subsidiary of our Company
“Aisijie Factory” our production facilities in Shenzhen, Guangdong
Province, the PRC
“Articles of Association”
or “Articles”
the amended and restated articles of association of our
Company, which will become effective on the Listing
Date, as amended, supplemented or otherwise modified
from time to time, a summary of which is set out in
Appendix V to this prospectus
“associate(s)” has the meaning ascribed thereto under the Listing Rules
“Board” or “Board of Directors” the Board of Directors of our Company
“Bookrunner” Sinolink Securities (Hong Kong) Company Limited
“business day” a day on which banks in Hong Kong are generally open to
the public for normal banking business and which is not a
Saturday, Sunday or public holiday in Hong Kong
“Capital Market
Intermediary(ies)” or “CMI(s)”
the capital market intermediaries participating in the
Global Offering and has the meaning ascribed thereto
under the Listing Rules
“CCASS” the Central Clearing and Settlement System established
and operated by HKSCC
DEFINITIONS
–2 6–


--- page 36 ---
“China” or “PRC” the People’s Republic of China, but for the purpose of this
prospectus and for geographical reference only and except
where the context requires, references in this prospectus
to ‘‘China’’ or the ‘‘PRC’’ do not apply to Taiwan, Macau
Special Administrative Region and Hong Kong
“close associate(s)” has the meaning ascribed thereto under the Listing Rules
“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of
Hong Kong), as amended, supplemented or otherwise
modified from time to time
“Companies (Winding Up and
Miscellaneous Provisions)
Ordinance” or “Companies
(WUMP) Ordinance”
the Companies (Winding Up and Miscellaneous
Provisions) Ordinance (Chapter 32 of the Laws of Hong
Kong), as amended, supplemented or otherwise modified
from time to time
“Company” or “our Company” X.J. Electrics (Hu Bei) Co., Ltd* (ࠢ
ʮ̡), a joint stock company with limited liability
established in the PRC on 23 July 2012
“connected person(s)” has the meaning ascribed to it under the Listing Rules
“connected transaction(s)” has the meaning ascribed to it under the Listing Rules
“Controlling Shareholders” has the meaning ascribed to it under the Listing Rules and
unless the context otherwise requires, refers to Mr. Pan
Yun, Mr. Guangshe Pan, X.J. Management (Qichun) and
Qichun Hengxing. For further details, please see
“Relationship with Our Controlling Shareholders” in this
prospectus
“core connected person(s)” has the meaning ascribed thereto under the Listing Rules
“COVID-19” a respiratory illness that was first reported in December
2019 and officially named by the World Health
Organisation as COVID-19
“CSRC” the China Securities Regulatory Commission ( ʕ਷ᗇՎ္
ึ )
“Director(s)” the director(s) of our Company, including all executive
and independent non-executive Directors
DEFINITIONS
–2 7–


--- page 37 ---
“Domestic Unlisted Shares” ordinary shares in the share capital of our Company, with
a nominal value of RMB1.00 each, which are not listed on
any stock exchange
“Extreme Conditions” the occurrence of “extreme conditions” as announced by
any government authority of Hong Kong due to serious
disruption of public transport services, extensive flooding,
major landslides, large-scale power outage or any other
adverse conditions before Typhoon Signal No. 8 or above
is replaced with Typhoon Signal No. 3 or below
“EU” European Union
“F&S Report” an independent market research report, commissioned by
our Company and prepared by Frost & Sullivan
“FINI” Fast Interface for New Issuance, which is an online
platform operated by HKSCC that is mandatory for
admission to trading and, where applicable, the collection
and processing of specified information on subscription in
and settlement for all new listings
“Frost & Sullivan” Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., an
independent industry consultant commissioned by us to
prepare the F&S Report
“FY2022” the financial year ended 31 December 2022
“FY2023” the financial year ended 31 December 2023
“FY2024” the financial year ended 31 December 2024
“General Rules of HKSCC” the General Rules of HKSCC as may be amended or
modified from time to time and where the context so
permits, shall include the HKSCC Operational Procedures
“Global Offering” the Hong Kong Public Offering and the International
Offering
“Goodlife Global” Goodlife Global Imports Inc, a limited liability company
established in the U.S. on 19 November 2021 and an
indirectly wholly-owned subsidiary of our Company
“Group”, “our Group”, “we”, “our”
or “us”
our Company and its subsidiaries
DEFINITIONS
–2 8–


--- page 38 ---
“H Share Registrar” Tricor Investor Services Limited
“H Share(s)” ordinary share(s) in the share capital of our Company with
nominal value of RMB1.00 each, which are to be
subscribed for and traded in Hong Kong dollars and are to
be listed on the Stock Exchange
“HK eIPO White Form ” the application for Hong Kong Offer Shares to be issued
in the applicant’s own name, submitted online through the
designated website at www.hkeipo.hk
“HK eIPO White Form Service
Provider”
the HK eIPO White Form service provider designated by
our Company as specified on the designated website at
www.hkeipo.hk
“HKSCC” Hong Kong Securities Clearing Company Limited, a
wholly-owned subsidiary of Hong Kong Exchanges and
Clearing Limited
“HKSCC Operational Procedures” the operational procedures of HKSCC, containing the
practices, procedures and administrative or other
requirements relating to HKSCC’s services and the
operations and functions of CCASS, FINI or any other
platform, facility or system established, operated and/or
otherwise provided by or through HKSCC, as from time to
time in force
“HKSCC Participant” a participant admitted to participate in CCASS as a direct
clearing participant, a general clearing participant or a
custodian participant
“HNW Electronics” HNW Electronics (Shenzhen) Co., Ltd.* (ཥ
ʮ̡ ), a limited liability company established in
the PRC on 2 June 2020 and a directly wholly-owned
subsidiary of our Company
“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the PRC
“Hong Kong dollars” or “HK
dollars” or “HK$”
Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong Legal Counsel” Mr. Yan Kwok Wing, barrister-at-law in Hong Kong, legal
advisers to our Company as to Hong Kong law
“Hong Kong Offer Shares” the 6,822,000 H Shares initially offered for subscription
pursuant to the Hong Kong Public Offering, subject to
reallocation as described in the section headed “Structure
of the Global Offering” in this prospectus
DEFINITIONS
–2 9–


--- page 39 ---
“Hong Kong Public Offering” the offering by our Company of the Hong Kong Offer
Shares for subscription by the public in Hong Kong, as
further described in the section headed “Structure of the
Global Offering” in this prospectus
“Hong Kong Underwriters” the underwriters of the Hong Kong Public Offering listed
in the section headed “Underwriting – Hong Kong
Underwriters” in this prospectus
“Hong Kong Underwriting
Agreement”
the underwriting agreement dated 16 June 2025 relating to
the Hong Kong Public Offering and entered into by our
Company, the Controlling Shareholders, the Overall
Coordinators and the Hong Kong Underwriters, as further
described in the section headed “Underwriting –
Underwriting Arrangements – Hong Kong Public Offering
– Hong Kong Underwriting Agreement” in this prospectus
“Hongnuowei Factory” our production facilities in Shenzhen, Guangdong
Province, the PRC
“Hubei XJ Factory” our production facilities in Huanggang, Hubei Province,
the PRC
“Independent Third Party(ies)” any entity or person who is not a connected person of our
Company within the meaning ascribed thereto under the
Listing Rules
“Indonesia Factory” our production facilities in East Java Province, Indonesia
“Indonesia Legal Advisers” SEA Law firm, legal advisers to the Company as to
Indonesian law
“Innovative (Jiangyin)” Innovative (Jiangyin) Electronics Co., Ltd.* (۾( Ϫ
௕)ʮ̡ ), a limited liability company established
in the PRC on 5 September 2000 and a directly
wholly-owned subsidiary of our Company
“International Offer Shares” the 61,398,000 H Shares initially offered for subscription
pursuant to the International Offering, subject to the
Over-allotment Option and reallocation as described in the
section headed “Structure of the Global Offering” in this
prospectus
DEFINITIONS
–3 0–


--- page 40 ---
“International Offering” the conditional placing of the International Offer Shares
by the International Underwriters at the Offer Price
outside the United States in offshore transactions in
reliance on Regulation S, as further described in the
section headed “Structure of the Global Offering” in this
prospectus
“International Sanctions” all applicable laws and regulations related to economic
sanctions, export controls, trade embargoes and wider
prohibitions and restrictions on international trade and
investment related activities, including those adopted,
administered and enforced by the United States, the EU
and its member states, United Nations or Australia
“International Sanctions Legal
Advisers”
Stephen Peepels, our legal advisers as to International
Sanctions law
“International Underwriters” our group of underwriters, led by the Sole
Sponsor-Overall Coordinator, that is expected to enter into
the International Underwriting Agreement to underwrite
the International Offering
“International Underwriting
Agreement”
the underwriting agreement expected to be entered into on
or about 23 June 2025 by, among others, our Company,
the Overall Coordinators and the International
Underwriters in respect of the International Offering
“Jikai Plastic Products” Jikai Plastic Products (Shenzhen) Co., Ltd.* (Ⴁ
ۜ(ଉέ)ʮ̡ ), a limited liability company
established by Mr. Pan Yun in the PRC on 29 May 1997,
which was subsequently deregistered on 5 June 2012
“Joint Bookrunners” the joint bookrunners as named in the section “Directors,
Supervisors and Parties Involved in the Global Offering”
“Joint Global Coordinators” the joint global coordinators as named in the section
“Directors, Supervisors and Parties Involved in the Global
Offering”
“Joint Lead Managers” the joint lead managers as named in the section
“Directors, Supervisors and Parties Involved in the Global
Offering”
DEFINITIONS
–3 1–


--- page 41 ---
“Latest Practicable Date” 9 June 2025, being the latest practicable date for
ascertaining certain information in this prospectus before
its publication
“Listing” the listing of the H Shares on the Main Board
“Listing Date” the date on which dealings in our H Shares first
commence on the Main Board
“Listing Rules” the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited, as amended,
supplemented or otherwise modified from time to time
“Main Board” the stock market (excluding the option market) operated
by the Stock Exchange which is independent from and
operated in parallel with GEM of the Stock Exchange
“MeiNuoWei Electrics” MeiNuoWei Electrics (HuiZhou) Co., Ltd.* (ፕ
ʮ̡ ), a limited liability company established
in the PRC on 9 March 2017 and a directly wholly-owned
subsidiary of our Company
“Meinuowei Factory” our production facilities in Huizhou, Guangdong Province,
the PRC
“MOF” the Ministry of Finance of the PRC (݁
௅)
“MOFCOM” the Ministry of Commerce of the PRC ( ʕശɛ͏΍ձ਷ਠ
ਕ௅)
“Nawu Technology” Shenzhen Nawu Technology Co., Ltd.* (Ҧ
ʮ̡ ), a limited liability company established in the
PRC on 22 January 2020 and an indirectly wholly-owned
subsidiary of our Company
“Nuocheng Electronic Commerce” Shenzhen Nuocheng Electronic Commerce Co., Ltd.* ( ଉ
ʮ̡ ), a limited liability company
established in the PRC on 20 January 2020 and an
indirectly wholly-owned subsidiary of our Company
“OFAC” the United States Department of Treasury’s Office of
Foreign Assets Control
DEFINITIONS
–3 2–


--- page 42 ---
“Offer Price” the final offer price per Offer Share in Hong Kong
(exclusive of brokerage, SFC transaction levy, AFRC
transaction levy and Stock Exchange trading fee) of not
more than HK$3.35 and expected to be not less than
HK$2.86 at which the Offer Shares are to be subscribed
for and issued pursuant to the Global Offering, to be
determined in the manner further described in the section
headed “Underwriting” in this prospectus
“Offer Share(s)” the Hong Kong Offer Shares and the International Offer
Shares, collectively, and where relevant, together with any
additional Shares which may be issued pursuant to the
exercise of the Over-allotment Option
“Over-allotment Option” the option expected to be granted by our Company to the
International Underwriters, exercisable at the sole
discretion of the Sole Sponsor-Overall Coordinator (on
behalf of the International Underwriters) pursuant to
which our Company may be required to allot and issue up
to 10,233,000 H Shares at the Offer Price (representing
15% of the Offer Shares initially being offered under the
Global Offering) to cover over-allocation in the
International Offering. For more details, please see
“Underwriting” in this prospectus
“Overall Coordinators” Sinolink Securities (Hong Kong) Company Limited and
CCB International Capital Limited
“PRC Legal Advisers” Zhong Lun Law Firm, legal advisers to our Company as to
PRC Law
“Price Determination Agreement” the price determination agreement to be entered into
between our Company and the Sole Sponsor-Overall
Coordinator (on behalf of the Underwriters) on the Price
Determination Date to record and fix the Offer Price
“Price Determination Date” the date, expected to be Monday, 23 June 2025, on which
the Offer Price will be determined for the purposes of the
Global Offering
“prospectus” this prospectus being issued in connection with the Hong
Kong Public Offering
DEFINITIONS
–3 3–


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“PT Dingsheng” PT Dingsheng Electrics Indonesia ( ཻସཥኜ ( Ι
̵)ʮ̡ *), a limited liability company established in
Indonesia on 8 August 2023 and an indirectly
wholly-owned subsidiary of our Company
“Qichun Hengxing” Qichun Hengxing Technology Management Centre
(Limited Partnership)* (Ҧ၍ଣʕː (Υ
ྫ)), a limited partnership established in the PRC on 28
October 2016 whose sole general partner is Mr. Pan Yun,
is an employee shareholding platform of our Company and
is one of our Controlling Shareholders
“R&D” research and development
“Receiving Banks” DBS Bank (Hong Kong) Limited and Industrial and
Commercial Bank of China (Asia) Ltd.
“Regulation S” Regulation S under the U.S. Securities Act
“Relevant Countries” Egypt, Haiti, Lebanon, Russia, Ukraine and Venezuela
“Relevant Persons” the Sole Sponsor, the Overall Coordinators, the Joint
Global Coordinators, the Joint Bookrunners, the Joint
Lead Managers, the Joint Underwriters, any of their or our
Company’s respective directors, advisers, officers,
employees, agents or representatives or any other person
or party involved in the Global Offering
“Renminbi” or “RMB” the lawful currency of the PRC
“SDN List” the list of Specially Designated Nationals and Blocked
Persons maintained by OFAC, which sets forth individuals
and entities that are subject to its sanctions and restricted
from dealing with U.S. persons
“SFC” the Securities and Futures Commission of Hong Kong
“SFO” or “Securities and Futures
Ordinance”
the Securities and Futures Ordinance (Chapter 571 of the
Laws of Hong Kong), as amended, supplemented, or
otherwise modified from time to time
“Share(s)” ordinary share(s) in the share capital of our Company with
a par value of RMB1.00 each
“Shareholder(s)” holder(s) of our Share(s)
DEFINITIONS
–3 4–


--- page 44 ---
“Shenzhen Branch” X.J. Electrics (Hu Bei) Co., Ltd., Shenzhen Branch* ( ಳ̏
ʮ̡ଉέʱʮ̡ ), a branch office of
our Company established in the PRC on 19 July 2017
“Sole Sponsor” or
“Sole Sponsor-Overall
Coordinator”
Sinolink Securities (Hong Kong) Company Limited, a
licensed corporation under the SFO permitted to carry out
Type 1 (dealing in securities), Type 2 (dealing in futures
contracts), Type 4 (advising on securities), Type 6
(advising on corporate finance), and Type 9 (asset
management) regulated activities, being the sole sponsor
of the Global Offering
“Stabilising Manager” Sinolink Securities (Hong Kong) Company Limited
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“subsidiary(ies)” has the meaning ascribed thereto in section 15 of the
Companies Ordinance
“substantial shareholders” has the meaning ascribed to it in the Listing Rules
“SZSE” the Shenzhen Stock Exchange
“Takeovers Code” The Codes on Takeovers and Mergers and Share
Buy-backs issued by the SFC, as amended, supplemented
or otherwise modified from time to time
“Thailand Factory” the production facilities planned to be built in in Rayong,
Thailand as part of our future plans that utilise net
proceeds from the Global Offering
“THB” Thai Baht, the lawful currency of Thailand
“THS Industrial” THS Industrial Limited (ʮ̡ ), a limited
liability company established in Hong Kong on 26 June
2017 and an indirectly wholly-owned subsidiary of our
Company
“Track Record Period” the period comprising FY2022, FY2023 and FY2024
“Underwriters” the Hong Kong Underwriters and the International
Underwriters
“Underwriting Agreements” the Hong Kong Underwriting Agreement and the
International Underwriting Agreement
DEFINITIONS
–3 5–


--- page 45 ---
“United States”, “U.S.” or “US” the United States of America
“USD”, “US$” or “US dollars” United States dollars, the lawful currency of the United
States
“U.S. Legal Advisers” Law Offices of Bin Li & Associates
“U.S. Securities Act” the United States Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder
“Weighmax” W eighmax Group (௥കʮ̡ ), a limited liability
company established in the U.S. on 30 March 2016 and a
directly wholly-owned subsidiary of our Company
“Xiangjiang Plastic Products” Xiangjiang Plastic Products (Shenzhen) Co., Ltd.* ( ଉέ
ʮ̡ ), a limited liability company
established in the PRC on 5 February 1990, which was
subsequently deregistered on 4 November 2010
“X.J. Electrical Appliances” X.J. Electrical Appliances Co., Ltd.* (Ϫ౽ঐཥ
ʮ̡ ), a limited liability company established in
the PRC on 23 October 2020 and a directly wholly-owned
subsidiary of our Company
“X.J. Electrics (Shenzhen)” X.J. Electrics (Shenzhen) Co., Ltd.* (௫ཥኜ (ଉέ)Ϟ
ʮ̡ ), a limited liability company established in the
PRC on 12 August 2002 and a directly wholly-owned
subsidiary of our Company
“X.J. Electrics (Thailand)” X.J. Electrics (Thailand) Co., Ltd. (Ϫཥኜ (इ਷)ʮ
̡*) a limited liability company established in Thailand
on 23 April 2024 and an indirectly wholly-owned
subsidiary of our Company
“X.J. Electronics (Shenzhen)” X.J. Electronics (Shenzhen) Co., Ltd.* (ཥɿ (ଉ
έ)ʮ̡ ), a limited liability company established in
the PRC on 7 June 2004 and a directly wholly-owned
subsidiary of our Company
“X.J. Group (HK)” X.J. Group (HK) Limited (Ϫཥኜ (ಥ)ࠢ
ʮ̡ ), a limited liability company established in Hong
Kong on 30 June 2014 and a directly wholly-owned
subsidiary of our Company
DEFINITIONS
–3 6–


--- page 46 ---
“XJ Intelligence Factory” our production facilities in Huizhou, Guangdong Province,
the PRC
“X.J. Management (Qichun)” X.J. Management (Qichun) Limited Partnership* (݆
Ҧ၍ଣʕː (Υྫ )), a limited partnership
established in the PRC on 18 November 2016 whose sole
general partner is Mr. Pan Yun, is owned by Mr. Pan Yun
and Mr. Guangshe Pan as to 70.37% and 29.63%,
respectively, as at the Latest Practicable Date, and is one
of our Controlling Shareholders
“Yinuowei Factory” our production facilities in Jiangyin, Jiangsu Province, the
PRC
“Yuantexin Factory” our production facilities in Shenzhen, Guangdong
Province, the PRC
“%” per cent
Unless expressly stated or the context otherwise requires, all information and data in this
prospectus is as of the Latest Practicable Date.
Certain amounts and percentage figures included in this prospectus have been subject to
rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic
aggregation of the figures preceding them. Any discrepancies in any table or chart between the
total shown and the sum of the amounts listed are due to rounding.
For ease of reference, the names of Chinese laws and regulations, governmental
authorities, institutions, natural persons or other entities (including certain of our subsidiaries)
have been included in this prospectus in both the Chinese and English languages and in the
event of any inconsistency, the Chinese version shall prevail. English translations of company
names and other terms from the Chinese language are provided for identification purposes only.
* For identification purposes only
DEFINITIONS
–3 7–


--- page 47 ---
This glossary contains explanations of certain terms used in this prospectus in
connection with our Group and our business. The terms and their meanings may not
correspond to standard industry meaning or usage of these terms.
“ERP system” acronym for enterprise resource planning system, a type
of software that organisations use to manage day-to-day
business activities such as procurement
“FOB” acronym for free on board, i.e. delivery of goods on board
the vessel at the named port of origin (loading) at the
seller’s expense. The buyer is responsible for main
carriage/freight, cargo insurance and other costs and risks
once the cargo is on board
“OBM” acronym for “original brand manufacturing”, whereby
products are design in-house and manufactured which
ultimately will be branded under our self-owned brands
for sale by us
“ODM” acronym for “original design manufacturing”, whereby
products are design in-house and manufactured which
ultimately will be branded under the customer’s brand for
sale by customers
“OEM” acronym for “original equipment manufacturing”, whereby
products are manufactured in accordance with a
customer’s specifications for sale by customers under the
customer’s or third-party’s brand
“PCB” acronym for printed circuit board
“PCBA” acronym for printed circuit board assembly
“SMT” acronym for surface-mount technology, an assembly and
production method that applies electronic components
directly onto the surface of a PCB
“sq.m.” square metre(s)
GLOSSARY OF TECHNICAL TERMS
–3 8–


--- page 48 ---
This prospectus contains certain forward-looking statements and information relating to our
Group that are based on the beliefs of our management as well as assumptions made by and
information currently available to our management. When used in this prospectus, the words
“aim”, “anticipate”, “believe”, “could”, “expect”, “going forward”, “intend”, “may”, “might”,
“ought to”, “plan”, “potential”, “predict”, “project”, “seek”, “should”, “will”, “would” and the
negative of these words and other similar expressions, as they relate to our Group or our
management, are intended to identify forward-looking statements. Such statements reflect the
current views of our management with respect to future events, operations, liquidity and capital
resources, some of which may not materialise or may change. These statements are subject to
certain risks, uncertainties and assumptions, including the other risk factors as described in this
prospectus. You are strongly cautioned that reliance on any forward-looking statements involves
known and unknown risks and uncertainties. The risks and uncertainties facing our Company
which could affect the accuracy of forward-looking statements include, but are not limited to,
the following:
 our operations and business prospects;
 future developments, trends and conditions in the industry and markets in which we
operate;
 our business strategies and plans to achieve these strategies;
 general economic, political and business conditions in the markets in which we
operate;
 changes to the regulatory environment and general outlook in the industry and markets
in which we operate;
 the effects of the global financial markets and economic crisis;
 our ability to control or reduce costs;
 our dividend policy;
 the amount and nature of, and potential for, future development of our business;
 capital market developments;
 the actions and developments of our competitors;
 certain statements in “Business” and “Financial Information” with respect to trends in
prices, operations, margins, overall market trends, and risk management; and
 change or volatility in interest rates, foreign exchange rates, equity prices, volumes,
operations, margins, risk management and overall market trends.
FORW ARD-LOOKING STATEMENTS
–3 9–


--- page 49 ---
Subject to the requirements of applicable laws, rules and regulations, we do not have any
and undertake no obligation to update or otherwise revise the forward-looking statements in this
prospectus, whether as a result of new information, future events or otherwise. As a result of
these and other risks, uncertainties and assumptions, the forward-looking events and
circumstances discussed in this prospectus might not occur in the way we expect or at all.
Accordingly, you should not place undue reliance on any forward-looking information. All
forward-looking statements in this prospectus are qualified by reference to the cautionary
statements in this section.
In this prospectus, statements of or references to our intentions or those of the Directors are
made as of the date of this prospectus. Any such information may change in light of future
developments.
FORW ARD-LOOKING STATEMENTS
–4 0–


--- page 50 ---
An investment in our H Shares involves significant risks. Potential investors should read
and consider carefully all the information set out in this prospectus, and, in particular , should
evaluate the following risks and uncertainties before deciding to make any investment in our
H Shares. Any of the risks and uncertainties listed below could have a material adverse effect
on our business, results of operations, financial condition or on the trading price of our H
Shares, and could cause you to lose all or part of your investment. The risks and
uncertainties identified below are not the only ones we face. Additional risks and
uncertainties not presently known to us or that we currently deem immaterial may also affect
our business and results of operations.
These factors are contingencies that may or may not occur , and we are not in a position
to express a view on the likelihood of any such contingency occurring. The information given
is as of the Latest Practicable Date unless otherwise stated, will not be updated after the date
hereof, and is subject to the cautionary statements in “Forward-looking Statements” in this
prospectus.
Our business and operations involve certain risks and uncertainties, many of which are
beyond our control. These risks can be broadly categorised into (1) risks relating to our industry
and business, (2) risks relating to doing business in the PRC, and (3) risks relating to the Global
Offering.
RISKS RELATING TO OUR INDUSTRY AND BUSINESS
The Sino-U.S and global trade tension may adversely affect our business, financial
conditions and results of operation.
During the Track Record Period, a significant portion of our revenue was derived from the
sale of our products to the U.S. as shipment destination, while our products are manufactured in
the PRC. During the Track Record Period, sales of our products with the U.S. as the shipment
destination accounted for 68.8%, 80.6% and 76.5% of our total revenue, respectively. In
particular, four, five and five, out of our Group’s top five customers in FY2022, FY2023 and
FY2024, respectively, are U.S. companies. Since 2018, the Office of the U.S. Trade
Representative has released different lists of Chinese imported goods to be the subject of
different level of tariffs. Please see “ Appendix IV – Summary of Principal Legal and Regulatory
Provisions – The U.S.” for details of the relevant U.S. laws and regulations.
RISK FACTORS
–4 1–


--- page 51 ---
Recently, the Sino-U.S. trade tension has escalated further. On 1 February 2025, the U.S.
government increased a blanket tariff of 10% on all imports from the PRC. Since then, the U.S.
government has raised tariff imposed on imports from China by and once reached 145% (on top
of other tariff and duties which had already been implemented before 1 February 2025). On 12
May 2025, after their trade meeting in Geneva, the Chinese and the US government released a
joint statement (the “ 512 Joint Announcement ”) announcing, among others, the removal of the
91% tariff announced on 7 April 2025 and 9 April 2025 and a 90-day pause, coming into effect
on 14 May 2025, of 24% (out of 34%) tariff announced on 2 April 2025, meaning the effective
tariffs on imports from China will become 30%, down from 145%; and China will reduce tariff
imposed on imports from the US since 2 April 2025 to 10%, down from 125%.
In addition, on 2 April 2025, the U.S. government also announced tariff in a global context,
including East Asian countries such as Vietnam, Thailand and Indonesia, which have become
popular manufacturing locations in recent years. In particular, on 2 April 2025, the U.S.
government announced a reciprocal tariff of 36% and 32% (which comprise a baseline tariff of
10%) on imports from Thailand and Indonesia. Subsequently, on 9 April 2025, the U.S.
government announced a pause of 90 days for the reciprocal tariff on Thailand and Indonesia
(and other countries, except for China). Accordingly, as at the Latest Practicable Date, Thailand
and Indonesia are subject to the baseline tariff of 10%. As at the Latest Practicable Date, it
remained uncertain how the Sino-U.S. and the global trade tension will develop. There is no
assurance that tariff imposed on China, Thailand and Indonesia will stay at the present level.
Although, as advised by our U.S. Legal Advisers, at present, the liability for payment for the
U.S. import duties lies with the importer of the goods (i.e. our customers), we cannot predict
how the consumer market and our customers which are brand owners and retailers will respond
to the global and Sino-U.S. trade tension. There is no assurance that our customers, many of
which are overseas retail chains and reputable brand owners, will be able to shift their tariff
burden to the end consumers effectively, or at all. In that case or if the applicable tariff
continues to climb up, it may be inevitable that our customers would require their suppliers,
including us, to reduce our prices in order to share the burden of tariff, which may materially
and adversely affect our business. Given that our customers are overseas retail chains and
reputable brand owners, and we primarily sell lower-priced electric home appliances and
non-electric household goods that we may be replaced by other suppliers offer comparable
products, we may have limited bargaining power over our major customers. Furthermore, if we
cannot satisfy such request of our customers, they may reduce their orders for us. In the event
that our customers reduce their orders, be such due to a decrease in overall demand of lifestyle
household goods, replacing us with other suppliers, downturn of the macro-economy or other
reasons, our business, financial conditions and results of operation will be adversely affected.
Also, in the event that we are required to lower our prices to secure orders from our customers,
our business, financial conditions and results of operation will be adversely affected. We cannot
assure you that our sales to the U.S. in the future will remain unaffected or how our sales will
be affected in light of the uncertainties relating to the geopolitical landscape and the
development of the trade tension and tariff imposition. Any trade restrictions, at any level or in
any manner, imposed by the U.S. on our products may increase our U.S. customers’ purchase
costs of our products and hence lower our competitiveness; and in turn affect our business and
financial performance.
RISK FACTORS
–4 2–


--- page 52 ---
Moreover, our Indonesia Factory is expected to commence operation in the second quarter
of 2025 and our Thailand Factory is expected to commence operation by the end of 2025 as part
of our mitigation plan to counter the geopolitical risks arising from the Sino-U.S. tension.
However, as at the Latest Practicable Date, Thailand and Indonesia are also subject to the U.S.
tariff at a rate of 10%, which may be increased as the 90-day pause of reciprocal tariff
announced on 9 April 2025 ends. It is unpredictable how the global trade tension will develop.
In the event that trade tension between the U.S. and Thailand and Indonesia persists or escalates
further, or Indonesia and Thailand are both subject to the same tariff as China, we may lose the
benefit of the planned expansion in Thailand and Indonesia as we may not be able to mitigate
geopolitical risks due to the Sino-U.S. trade tension effectively or at all. Furthermore, in light of
the global trade tension which may adversely and materially affect our business, we cannot
assure you that we will be able to recoup our investments in Indonesia and Thailand; and in
turn, our overall financial performance and condition will be adversely and materially affected.
Also, in recent years, in addition to import tariffs, there have been others steps taken by
U.S. government to impose restrictions on trade with China, affecting areas such as, transfer of
data and protection of intellectual property, which may eventually affect our sales to the U.S. in
the future. If we are subject to any anti-dumping allegation or investigation, we may need to
incur material legal costs and divert the effort of our management in defending ourselves against
such allegation or investigation, and the sales of our products in the relevant country may be
adversely affected if we do not succeed in these proceedings. Any further escalation in these
trade tensions, whether between China and the U.S. or in global context, could negatively impact
our sales, whether due to tariffs, duties, export controls, restrictions on market access, other
regulatory measures or the consequential impact on the macro-economy or demand of lifestyle
household goods. Consequently, our business, financial conditions and results of operations may
be adversely affected.
We rely on few major customers, which, in aggregate, accounted for more than 60% of our
total revenue during the Track Record Period.
A majority of our revenue is derived from a limited number of customers. For FY2022,
FY2023 and FY2024, sales to our five largest customers in each year during the Track Record
Period accounted for 62.4%, 72.4% and 77.9% of our total revenue, respectively and sales to our
largest customer of the relevant year accounted for 21.3%, 28.5% and 24.1% of our total
revenue, respectively. During the Track Record Period, we sell our garden hoses exclusively to
one of our major customers, namely, Telebrands. Sales of our garden hoses represented 16.5%,
18.7%, 19.0% of our total revenue, for FY2022, FY2023 and FY2024, respectively.
RISK FACTORS
–4 3–


--- page 53 ---
Our current concentration on a few major customers exposes us to the risks of substantial
losses if such major customers stop engaging in businesses with us or significantly reduce orders
to us. Specifically, any of the following events, among others, may cause material fluctuations or
declines in our revenue and have a material and adverse effect on our business, financial
condition and results of operations:
 the reduction, delay or cancellation of purchase orders from one or more of our major
customers;
 the reduction in the purchase price of our products;
 the rejection of products manufactured by us for one or more of our major customers
due to manufacturing defects or failure of meeting customers’ requirements;
 the loss of one or more of our major customers and our failure to identify and obtain
additional or replacement customers that can replace the lost sales volume at
satisfactory pricing or other terms; or
 the failure or inability of any of our major customers to make timely payment for our
products.
Our reliance on our major customers may lead to trade arrangement between our Group and
our major customers which may have an temporary effect on our financial position. To foster our
relationship with Telebrands, which is one of our major customers, we had made different
payment arrangements for Telebrands for their convenience. In particular, in FY2024, we had
paid transportation fees on behalf of Telebrands leading to a receivables for payments made on
behalf of customers of RMB25.0 million as at 31 December 2024. On the other hand, as initiated
by Telebrands when their staff were working remotely during the pandemic, we received
prepayments from Telebrands to settle customs duties on their behalf for goods purchased by
them and we have agreed to continue such arrangement after the pandemic, leading to the
settlement payables to suppliers on behalf of customers amounted to RMB5.1 million, RMB2.0
million and RMB4.7 million as at 31 December 2022, 2023, and 2024, respectively.
We anticipate that our dependence on a limited number of major customers will continue
for the foreseeable future. We cannot assure you that our customer relationships will continue to
develop or if these customers will continue to generate significant revenue for us in the future.
Any failure to maintain our existing customer relationships or to expand our customer base will
materially and adversely affect our results of operations and financial condition.
RISK FACTORS
–4 4–


--- page 54 ---
We do not have long-term purchase commitments from most of our customers, which may
subject us to uncertainty and revenue volatility from period to period.
We do not have long-term purchase commitments from our customers. While certain our
customers may provide us their procurement forecast, orders and prices are confirmed on a
purchase order basis. We cannot assure you that order volumes and selling prices will be
consistent with our track record nor our expectation. Cancellations, reductions or postponements
of purchase orders by a major customer or by a group of customers could adversely affect our
business, financial condition and results of operations. The absence of long-term purchase
commitments with pre-determined prices may also mean our selling prices are subject to
fluctuations.
In addition, we make significant decisions, including determining the levels of business that
we will seek and accept, production schedules, raw material procurement commitments,
personnel needs and other resource requirements, based on our estimates of customer
requirements. The nature of our customers’ commitments and the possibility of rapid changes in
demand for their products reduce our ability to accurately estimate future customer
requirements. On occasion, customers may require rapid increases in production which can strain
our resources. We may not be able to increase our manufacturing capacity at any given time to
meet our customers’ demands. On the other hand, a reduction in customer demand may
negatively impact our financial condition, result of operations and prospect.
Our business is subject to legal, regulatory, political, economic, commercial and other risks
associated with conducting operations in overseas markets including but not limited to the
U.S.
We derive a significant portion of our revenue from products shipped to the overseas.
During the Track Record Period, we generated over 90% of our revenue from overseas markets
with revenue from shipment to the North America market represented over 70% of our total
revenue for each year during the Track Record Period. Our products are shipped to over 70
countries and regions during the Track Record Period and we have subsidiaries in Hong Kong,
the United States, Indonesia and Thailand. Accordingly, we face numerous risks, including legal,
regulatory, political, economic, commercial and other risks associated with conducting
operations in various jurisdictions, any of which could negatively affect our financial
performance. While North America is our major market at present, our risk exposure is not
limited to that arisen from the U.S. market. These risks associated with overseas markets,
including the U.S. market, include the following, which may affect demand of our Group’s
products:
 legal, regulatory, political and economic changes such as economic downturn resulted
from trade war;
 changes in foreign tax rules, regulations and other requirements, such as changes in
tax rates and statutory and judicial interpretations of tax laws;
RISK FACTORS
–4 5–


--- page 55 ---
 changes in international trade policies and regulations including those in relation to
economic sanctions, export controls and import restrictions, as well as trade barriers
such as imposition of tariffs;
 difficulty in coping with possible conflict of laws resulting from sanctions and
import/export controls measures of different jurisdictions where we operate;
 changes in foreign country regulatory requirements, including data privacy laws;
 complexities relating to compliance with foreign anti-bribery, anti-corruption and
anti-money laundering regulations and antitrust laws;
 difficulty in obtaining or enforcing intellectual property rights;
 difficulty in enforcing agreements and collecting overdue receivables through local
legal systems;
 changes in geopolitical situations especially those in jurisdictions where we do
business;
 foreign currency exchange rate fluctuations;
 strict foreign exchange controls and cash repatriation restrictions;
 inflation and/or deflation, and changes in interest rates;
 misconduct by our customers beyond our control, including but not limited to
breaching the agreements with them, policies that we require them to adhere to, and
laws and regulations of various jurisdictions that are applicable to them;
 labour disputes and work stoppages at our operations and suppliers; and
 increased costs associated with maintaining the ability to understand local markets and
follow their trends, as well as develop and maintain an effective marketing and
distribution presence.
For details of our risks specifically related to the Sino U.S. and global trade tension, please
see “ – The Sino-U.S and global trade tension may adversely affect our business, financial
conditions and results of operation.” in this section.
RISK FACTORS
–4 6–


--- page 56 ---
We are subject to various laws and regulations of different jurisdictions in which we
operate and are required to obtain and comply with various permits, licences, certificates,
consents and other approvals from administrative authorities. Each approval is dependent on the
satisfaction of certain conditions and failure to obtain governmental approvals could have an
adverse effect on our operations. We are also subject to inspections, examinations, inquiries and
audits by governmental authorities as part of the process of maintaining or renewing our permits,
licences or certificates. There can be no assurance that we will be able to fulfil the
pre-conditions necessary to obtain the required governmental approvals or that we will be able
to adapt to new laws, regulations or policies that may come into effect from time to time with
respect to our operations. There may be delays on the part of relevant administrative bodies in
reviewing our applications and granting approvals. In recent years, there have been heightened
complexity in international relations. There is no guarantee that we would only be subject to the
risks associated with the geopolitical tension between the PRC and the U.S. If the relationship
between the PRC and other countries deteriorates, other risks in addition to those we currently
face may arise. In the event we are not able to manage the aforementioned risks, whether
individually or collectively, partly or at all, our business, financial condition and results of
operations may be materially and adversely affected.
Our Group is exposed to currency risk.
Our consolidated financial results are affected by currency exchange rate fluctuations.
During the Track Record Period, our export sales to regions outside of the PRC are usually
denominated in USD. On the other hand, our costs, including our transactions with our top five
suppliers in each year during the Track Record Period, are generally denominated in RMB.
Accordingly, fluctuations in exchange rate of USD and RMB may affect our price
competitiveness and harm our business operation and financial performance. For FY2022,
FY2023 and FY2024, we recorded a net foreign exchange gain of RMB14.4 million, RMB9.9
million and RMB16.7 million, respectively. Changes in foreign exchange rates may be due to
many factors such as changes in the global economy and geopolitical condition which are
beyond our control. There is no assurance that we will make similar or any net foreign exchange
gain in the future, which will in turn affect our future financial performance.
Furthermore, our multi-country operations subject us to foreign exchange fluctuations on
translation from functional currencies of our foreign operation to our presentation currency (i.e.
RMB). We have subsidiaries in the United States, Indonesia, and Thailand, and most of our
foreign operations are denominated in its local currency which is different from our presentation
currency. Therefore, we are exposed to foreign currency risks related to exchange differences
arising on translation of foreign operations. For FY2022, FY2023 and FY2024, we recorded
positive exchange differences arising on translation of foreign operation of RMB1.5 million,
RMB0.3 million and RMB0.9 million, respectively. As a result of foreign currency fluctuations,
it could be more difficult to detect underlying trends in our business and results of operations
and we may record negative exchange differences arising on translation of foreign operations.
RISK FACTORS
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During the Track Record Period, we had entered into foreign currency forward contracts
with a view to managing risks associated with foreign exchange fluctuations. All of our foreign
currency forward transactions had been settled by FY2022 and we had not entered into foreign
currency forward contracts since then. For FY2022, we incurred loss from disposal of foreign
currency forward contracts in the amount of RMB8.0 million.
The rights to use certain leased properties could be challenged by third parties or relevant
authorities, and we may be forced to relocate due to title defects of such leased properties.
We lease certain properties in the PRC as our production facilities, which form part of our
Aisijie Factory, Yuantexin Factory and Hongnuowei Factory. Lessors of such leased properties
have not obtained relevant title ownership certificates. For details, please see “Business –
Properties – Leased Properties – Defects in our leased properties” in this prospectus. As a result
of such title defects, there is a risk that our right to occupy and use such leased properties may
face challenges by the property owners. Moreover, the leased properties may be subject to the
order of demolition or relocation. If any of these risks is materialised, we may not be able to
locate suitable alternative sites for our use. The occurrence of any of such events could cause
material adverse impacts on our business, financial condition, results of operations and
prospects.
We have not obtained ownership certificates for and had non-compliance with some of our
owned properties and we may incur loss if we become subject to the relevant penalties.
As at the Latest Practicable Date, we had not obtained ownership certificates for and had
non-compliance with certain properties situated in our Yinuowei Factory, Hubei XJ Factory and
XJ Intelligence Factory. For details of the background and potential consequence of such title
defects and non-compliance, please see “Business – Properties – Owned properties without
ownership certificates” and “Business – Compliance – Production facilities of XJ Intelligence
Factory” in this prospectus. If we are forced to demolish and/or relocate from the
aforementioned properties, we may have to incur demolition and/or relocation costs. Moreover,
if we cannot identify suitable replacement properties at a timely manner or at a manageable cost,
or at all, our production, and hence our business, results of operations, financial condition and
prospects may be materially and adversely affected. In addition, if we are penalised by the
relevant authority due to the non-compliance in relation to XJ Intelligence Factory, we may be
liable for penalties and order of suspension. In this case, our business, results of operations,
financial condition and prospects may be materially and adversely affected.
RISK FACTORS
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We rely on our suppliers and subcontractors to deliver materials or provide services as
required in terms of time, cost, quality and quantity.
We rely on our suppliers and subcontractors to deliver materials or provide services for our
production. Shun Liang Fa Industrial (Shenzhen) Co., Ltd.* ( නԄ೯ʈุ (ଉέ)ʮ̡ ) (and
its related party, Hubei Yixiong Industrial Technology Co., Ltd.* (ʮ̡ )),
our overall largest supplier and the largest supplier for our manufacture of garden hoses (which
supplied fabric cover and provided pipe assembly and tube extrusion processing services)
accounted for 7.2%, 9.4% and 5.3% of our total purchase during the Track Record Period.
Generally, we make our procurement for materials and services on an as-need basis and we did
not enter into long-term agreement which stipulates supply commitment with our
suppliers/subcontractors during the Track Record Period. If we are unable to procure raw
materials and services in the quantity, of a quality or at a price that we require, our business,
operation, financial performance and reputation will be adversely affected. Moreover, there is no
assurance that we will be able to monitor the performance of our suppliers and subcontractors as
directly and efficiently as with our own staff. Our ability to complete orders could be impaired
if we are unable to make procurement from suitable suppliers and subcontractors at reasonable
costs or at all. If a supplier or subcontractor fails to provide materials or services as required,
we may need to source substitutes on a delayed basis or at a higher replacement cost than
anticipated, which may have an adverse impact on our profitability. If the performance of a
subcontractor or the quality of raw materials does not meet our standards, our reputation may be
harmed and we may be exposed to litigation and damage claims from our customers, which may
in turn adversely and materially affect our business, financial condition and results of
operations.
Our international operations may be subject to transfer pricing adjustments by competent
authorities.
During the Track Record Period, our Group’s intra-group transactions, which involved
subsidiaries in Hong Kong, the PRC and the U.S., primarily included tangible goods buy-sell,
with total revenue amounts of RMB1,089.7 million, RMB1,251.8 million, and RMB1,583.9
million in FY2022, FY2023 and FY2024, respectively. Please see “Business – Transfer Pricing”.
RISK FACTORS
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We cannot assure you that our intra-group transactions will not be challenged by the
relevant authorities in the future, or that the relevant regulations or standards will remain
unchanged. If our transfer arrangements are later adjudged not in line with arm’s length
principles by relevant authorities or disagree with our assessment and determine that our
intra-group transactions do not comply with the relevant transfer pricing laws and regulations,
we may be required to re-assess the transfer prices, re-allocate the income, or adjust the taxable
income. Any such re-allocation or adjustment could result in higher tax liabilities for us and may
adversely affect our business, results of operations, and financial condition. Also, we may face
adverse tax consequences, such as the payment of outstanding tax, statutory interest or tax
penalty. Moreover, failure to rectify within the timeframe prescribed by the relevant authorities
may result in late payment interest, surcharge, or other penalties for any unpaid taxes. Any such
circumstances could result in a higher overall tax liability for our Group and may adversely
affect our business, financial condition and results of operation. Additionally, if relevant
authorities challenge the intra-group transactions, it could give rise to tax recoverable in certain
jurisdictions due to adjustments in taxable income. However, there is no assurance that we
would successfully recover such taxes from the relevant authorities which could have a material
adverse effect on our business, results of operations, and financial condition.
We are subject to various risks relating to third-party payments.
During the Track Record Period, certain of our customers (the “ Relevant Customer(s) ”)
settled their payments with us through third-party payors (the “ Third-party Payment
Arrangement(s) ”). For FY2022, FY2023 and FY2024, the amount of third-party payments
accounted for approximately 3.4%, 1.8% and 0.4% of our total revenue, respectively.
We were subject to various risks relating to such Third-party Payment Arrangements during
the Track Record Period, including but not limited to (i) being exposed to money laundering
risks due to our limited background knowledge of the parties involved in the Third-party
Payment Arrangements and the source of funds for the third-party payments; (ii) possible claims
from third-party payors for return of funds as they were not contractually indebted to us and
possible claims from liquidators of third-party payors. In the event that any funds received by
the Group from the Relevant Customers were in fact illegally gained proceeds, our Group may
be subject to governmental inquiries, enforcement actions, prosecuted, or otherwise held
secondarily liable for aiding or facilitating the illegal activities which generated those illegally
gained proceeds. In the event of any claims from third-party payors or their liquidators, or legal
proceedings (whether civil or criminal) instituted or brought against us in respect of third-party
payments, we will have to spend significant financial and managerial resources to defend against
such claims and legal proceedings, or we will be forced to comply with any court rulings to
return the payment which was paid for the services that we provided. In addition, we cannot
assure you that we will not be subject to any fines or penalties resulting from Third-party
Payment Arrangements. Even we receive court rulings favourable to us, our reputation, our
business relationship with our existing customers and our ability to attract new customers may
be adversely affected. Our business, financial condition and results of operations may as a result
be adversely affected. For further details, please see section headed “Business – Our Third-Party
Payment Arrangements” in this prospectus.
RISK FACTORS
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We did not make adequate contributions to social insurance and housing provident fund
and additional payment may adversely and materially affect our results of operation and
financial condition.
Under the applicable PRC laws and regulations, we are required to register with the
relevant authorities in respect of social insurance and housing provident fund and to contribute
social insurance and housing provident fund for their employees. During the Track Record
Period, we failed to comply with the relevant PRC laws and regulations in relation to social
insurance and housing provident fund. For FY2022, FY2023 and FY2024, the outstanding social
insurance and housing provident fund amounted to RMB1.7 million, RMB2.2 million and
RMB3.0 million, respectively. Please see “Business – Compliance – Social Insurance and
Housing Provident Funds” in this prospectus for details. If an employer fails to pay its social
insurance contributions in accordance with the Social Insurance Law of the PRC ( ʕശɛ͏΍ձ
جthe regulator may demand that the employer to pay all outstanding social
insurance contributions within a prescribed time limit. The employer may also be subject to a
surcharge at a daily rate of 0.05% on the outstanding amount, accruing from the date when the
social insurance funds are due. If the employer fails to make such payment within a prescribed
time limit, the relevant authority may impose an additional fine of one to three times the
outstanding amount. If an employer fails to pay its housing provident fund contributions in
accordance with the Administrative Regulations on the Housing Provident Fund of the PRC ( ʕ
၍ଣૢԷ ), the regulator has the power to order the employer to make
contribution within a prescribed time limit and if the employer fails to act accordingly, an
application of compulsory enforcement can be made to the People’s Court of the PRC.
In the event that we are required to pay the outstanding of social insurance and housing
provident fund or be penalised as a result of our failure to make contribution to the social
security insurance and housing provident fund in respect of all of our employees by relevant
governmental authorities, our operating expenses will increase and consequently our results of
operation and financial condition will be adversely and materially affected.
We operate in a highly competitive industry.
We manufacture electric home appliances and non-electric household goods for export. We
compete principally in terms of our product design, development and production capabilities,
scale of production capacity, product quality and ability to deliver products in compliance with
stringent international standards. Our products compete in highly competitive markets that
include intense price competition, frequent introduction of new products, short product life
cycles, rapid adoption of product advancements and diverse preferences of consumers. We also
see competition from companies who use lower prices or other means to provide more attractive
solutions to customers. Thus, we may not compete successfully against our competitors.
RISK FACTORS
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Our competition is increasing as the technology and markets mature. Current competitors
and new entrants may seek to develop new offerings, technologies or capabilities that could
render many of our products obsolete or less competitive. In addition, our competitors may
attract our current and potential customers to favour their products and therefore reduce our
sales volume. The occurrence of any of these circumstances may hinder our growth and our
ability to compete and reduce our market share and in turn materially and adversely affect our
business, results of operations, financial condition and prospects.
Any disruption of our current production facilities could reduce or restrict sales and
materially and adversely affect our business.
As at the Latest Practicable Date, we had seven production facilities in the PRC and one
production facility in Indonesia. Natural disasters or other unanticipated catastrophic events,
including storms, fires, explosions, earthquakes, terrorist attacks and wars, as well as changes in
governmental planning for the land underlying our facility, could significantly impair our ability
to manufacture our products and operate our business. If we experience any unanticipated
situation that forces us to shut down our production facilities, our production will be severely
disrupted, which may in turn materially and adversely affect our business and results of
operations. Catastrophic events could also destroy any inventory located in our production
facilities. The occurrence of any catastrophic event could result in the temporary or long-term
closure of our production facilities, severely disrupt our business operations and materially and
adversely affect our results of operations and financial condition.
We have leased properties, and we may not be able to renew current leases or relocate in a
timely manner or a reasonable commercial terms.
Currently, we leased properties for our production facilities and offices in the PRC,
Indonesia and the U.S. For details, please see “Business – Properties – Leased properties” in this
prospectus. We cannot assure you that our rights to use these premises may not be challenged or
we will always be able to successfully renew such leases upon their expiry. If we are required to
relocate certain of our leased properties, we may not be able to relocate in a timely manner or
on reasonable commercial terms, which, in turn, may materially and adversely affect our
operations. In addition, we would incur additional relocation costs, thus affecting our business
operations and financial condition. Certain of our leased properties may also be exposed to the
risk of invalid lease agreements under the relevant laws and regulations as a result of the
lessors’ failure to obtain valid proof of ownership of the property. If our lease agreements are
deemed to be invalid and we are required to vacate the existing property, and we are unable to
find alternative premises, our business operations will be adversely affected. Moreover, due to
rapid rental increases, we may not be able to renew the existing leases at reasonable prices.
Therefore, we may not be able to obtain new leases at desirable locations or renew our existing
leases on acceptable terms, in a timely fashion or at all, resulting in the closure or relocation of
the leased properties, which could adversely affect our business and results of operations.
RISK FACTORS
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We may not be able to operate our production facilities in Indonesia and the proposed
production facilities in Thailand as smoothly as those in the PRC.
As at the Latest Practicable Date, we had not commenced large-scale production at our
production facilities in Indonesia and it is our plan to build a new production facility in
Thailand. The operation of such overseas production facilities is subject to various risks,
including those relating to political and economic instability, local labour market conditions,
trade barriers, governmental expropriation and differences in business practices. We may incur
increased costs or experience delays or disruptions in product deliveries that could cause loss of
revenues and earnings. Unfavourable changes in the political, regulatory and business climates
could have a material and adverse effect on our business, financial condition, results of
operations and prospects.
Any downtime for maintenance and repair of our equipment could lead to business
interruptions that could be expensive and harmful to our reputation and to our business.
Our machinery and equipment may be subject to breakdowns. Significant downtime
associated with the maintenance and repair of equipment used in our manufacturing facilities
will result in temporary interruption of our production. Although we have implemented a
comprehensive maintenance system for our facilities and equipment, including scheduled
downtimes for maintenance and repairs and regular inspections of facilities and equipment, the
failure of equipment manufacturers or our team to provide timely repairs on our equipment could
interrupt the operation of our production facility for extended periods of time. Such extended
downtime could result in lost revenue for us. We may lose customers and may be unable to
regain those customers thereafter. As a result, our business and results of operations could be
materially and adversely affected.
We grant credit terms to our customers and our working capital and cash flow position
may be adversely affected if such customers fail to settle or delay in making their
payments.
Our financial position and profitability are dependent on the creditworthiness of our
customers. Currently, the normal credit term to the customers ranged between 30 to 135 days,
depending on the past payment history and the length of business relationship with the relevant
customers. For FY2022, FY2023 and FY2024, our trade receivables were RMB135.2 million,
RMB150.6 million and RMB241.3 million, respectively, while our trade and bills receivable
turnover days were approximately 63 days, 49 days and 50 days, respectively. For FY2022,
FY2023 and FY2024, our total impairment losses recognised on trade receivables under ECL
model amounted to RMB2.5 million, RMB2.0 million and RMB1.1 million, respectively.
RISK FACTORS
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We cannot guarantee that we will be able to successfully collect any or all of the debts due.
We may encounter doubtful or bad debts due to a slow-down of industry growth, individual
customer’s deteriorating financial condition or otherwise in the future. Any failure on the part of
our customers to settle or settle on time the amounts due may adversely affect our financial
condition and operating cash flows, which may have a material adverse effect on our business
and results of operations.
Our Group’s future partnerships and/or acquisitions may prove to be difficult to integrate
and manage or may not be successful. Failure to address such risk may have a material
adverse affect on our financial condition, results of operations, cost structure and risk
profile.
In the future, as a strategic approach to have our own brand and to manage potential risks
and costs associated with building a new brand at the same time, we may identify and acquire
brand owner(s) selling lifestyle household goods to complement our existing brand portfolio. For
details, please see “Business – Our Strategies – Enlist new brands to enhance our OBM
business”. As at the Latest Practicable Date, we had not identified any specific target for such
acquisition.
This strategy entails potential risks that could have a material adverse effect on our
business, financial condition, results of operations and prospects, including:
 unidentified or unanticipated liabilities or risks in the businesses which we may
acquire;
 inability to successfully integrate the products, services and personnel of the
businesses which we may acquire into our operations or to realise any synergies from
the acquisitions;
 inability to retain employees and player base of the businesses acquired; and
 diversion of management attention and other resources.
In addition, we may not be able to identify attractive acquisition opportunities, or make
acquisitions on attractive terms or obtain financing necessary to complete and support such
acquisitions. We cannot assure you that any of such acquisitions will result in long-term benefits
to us or that we will be able to effectively manage the integration and growth of our operations.
Failure to address such risks may have a material adverse effect on our financial condition,
results of operations, cost structure and risk profile.
RISK FACTORS
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Our success depends on a stable and adequate supply of raw materials which are subject to
price volatility and other risks.
For FY2022, FY2023 and FY2024, our costs of materials consumed amounted to
RMB600.5 million, RMB619.9 million and RMB836.5 million, representing 68.8%, 68.7% and
71.3% of our total cost of sales, respectively. The principal raw materials we use in our
production include plastic and metal raw materials, components and accessories. As a result, our
production volume and production costs depend on our ability to source quality key raw
materials at competitive prices. If we are unable to obtain raw materials in the quantities, of a
quality or at a price that we require, our production volume, quality of products and profit
margins may be adversely affected. Raw materials used in our production are subject to price
volatility caused by external conditions, such as market supply and demand, commodity price
fluctuations, currency fluctuations, fluctuations in transportation costs, changes in governmental
policies and natural disasters. Therefore, there is no assurance that our raw material cost will not
increase significantly in the future. Our ability to pass increased raw material costs along to our
customers may be limited by competitive pressure. We cannot assure you that we will be able to
raise the prices of our products sufficiently to cover increased costs resulting from increases in
the cost of our raw materials or overcome the interruption of sufficient supply of qualified raw
materials for our products. As a result, any significant price increase of our raw materials may
have an adverse effect on our profitability and results of operations.
If our current suppliers decide to terminate business relationships with us or if the raw
materials supplied by our current suppliers fail to meet our standard, or if our current supplies of
raw materials are interrupted for any reason, qualified suppliers may not be readily available and
we may not be able to easily switch to other suppliers in a timely fashion, which may materially
and adversely affect our business and financial results.
Failure to maintain optimal inventory levels could increase our inventory holding costs and
obsolescence risk which could have a material adverse effect on our business, financial
condition and results of operations.
Maintaining an optimal level of inventory is critical to the success of business. We are
exposed to inventory risks as a result of a variety of factors beyond our control, including,
changing market trends and consumer needs. We generally make our procurement on an as-need
basis. We cannot assure you that we can accurately predict trends and possible events to avoid
under or over-stocking inventory. While we have adopted an inventory policy which aims at
optimising our inventory level, a sudden decrease in the market demand for our products could
cause our inventory of raw materials to accumulate, which in turn may adversely affect our
financial condition and results of operations. On the other hand, in the event of under-stocking
inventory of raw materials, we may lose sales and our results of operations may be adversely
affected.
RISK FACTORS
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Our results of operations could be adversely affected if we fail to keep pace with customer
demands and consumer preferences for product design, research and development and
manufacturing of our products.
Under both ODM and OBM model, we develop product designs. Our success and continued
development is therefore dependent on our ability to develop new products and product
technologies. Developing new products and product technologies are a complex process
requiring high levels of innovation and skilled research and development personnel, as well as
the accurate anticipation of technological and market trends. We cannot assure you that we will
be able to identify and develop new products and product technologies successfully, if at all, or
on a timely basis. In addition, we cannot assure you that products will be well received by
customers and gain market acceptance.
The lifestyle household goods market is affected by consumer preferences as well as
changes in consumers’ spending patterns, which are often difficult to predict. Consequently, our
success depends on our ability to accurately identify these factors and take them into account
during our product planning and manufacturing process. This requires a combination of various
elements, including, without limitation, accurate analysis and prediction of market trends, timely
collection of consumer feedback, strong research and development capability and flexible and
cost-effective product production. If we are unable to successfully anticipate, identify or timely
react to changing consumer preferences or market trends or if we misjudge the market for our
products, the growth and success of our business could be materially and adversely affected,
potentially resulting in significant decreases in sales. Specifically, any of the following events,
among others, may have a material and adverse effect on our business, financial condition and
results of operations:
 failure to remain competitive in our product design, research and development
capabilities;
 inability to maintain the high-quality of our manufacturing;
 failure to maintain our efficient and cost-effective production operation;
 inability to distribute our products in a timely and efficient manner in response to
customer demand; or
 failure to recruit or train sufficient product design, research and development
employees.
RISK FACTORS
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Failure by us, the e-commerce marketplaces where we sell our OBM products, or our
third-party service providers to maintain data security, or any non-compliance with
evolving legal requirements on data protection by us, could have a material adverse effect
on our operations and profitability.
For FY2022, FY2023 and FY2024, sales of our OBM products amounted to RMB61.4
million, RMB49.7 million and RMB41.2 million, respectively, representing 5.6%, 4.2% and
2.7% of the total revenue of our Group, respectively. We have access to personal data belonging
to our customers in our day-to-day operations, including partially removed or obscured names,
addresses, phone numbers and other contact information for order fulfilment in connection with
the sales of our OBM products on e-commerce marketplaces. Ensuring the proper use and
protection of this data is crucial to maintaining customer trust and confidence in our services.
However, there are potential risks associated with data securities breaches and hacking attempts
on our system or the systems of e-commerce platforms that we collaborate with. Such incidents
could compromise the technology we use to safeguard personal data, making it vulnerable to
illegal access by third parties, including hackers and other malicious entities. These unauthorized
individuals or entities may misuse the personal data they obtained, engaging in various illegal
activities. While we have adopted securities policy and measures, there remains a possibility that
personal data could be misappropriated despite our efforts. Moreover, as we engage third party
services provider, such as logistic service providers for order fulfilment, they also gain access to
our customers’ personal data. Our limited control over these third parties makes it difficult for
us to ensure sufficient and effective safeguard of data security. In the event of a data breach by
these third-party providers, we may also suffer reputational damage, which in turn could have a
negative impact on our business operations.
Moreover, in recent years, practices regarding the collection, use, storage, transmission, and
security of personal data have faced increased public scrutiny. The relevant regulatory
frameworks worldwide are rapidly evolving, and new laws and regulations on data protection
and policy may be adopted in different countries where we have operation. Complying with
these evolving regulations may subject us to additional compliance costs, divert management
attention, and potentially impact our results of operations. Any failure to adequately address data
protection and security concerns, or any non-compliance with applicable laws and regulations in
this area, could result in additional cost and liability to us, damage our reputation, impede sales,
and adversely affect our business.
Our sales and results of operations are subject to seasonal variations.
There are certain seasonal patterns for purchases of our products due to holiday-driven
promotions in different regions. For example, the major holidays in North America are
concentrated in the latter half of the year, therefore, the peak number of sales in North America
will generally coincide in the second half of the year. We expect the impact of seasonality on
our business to remain in the future. The seasonality changes may cause fluctuations in our
financial results and any occurrence that disrupts our product supply during our busy seasons
could have a disproportionately material adverse effect on our business, financial condition and
results of operations.
RISK FACTORS
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We could be adversely affected as a result of our operations in certain countries that are
subject to evolving economic sanctions of the United States government, the United Nations
Security Council, the EU and other relevant sanctions authorities.
The United States and other jurisdictions or organisations, including the EU, the United
Nations and Australia, have comprehensive or broad economic sanctions targeting certain
countries, or against industry sectors, groups of companies or persons, and/or organisations
within such countries. During the Track Record Period, our revenue generated from sales and/or
deliveries to the Relevant Countries amounted to RMB5.0 million, RMB7.4 million and RMB5.9
million, representing 0.5%, 0.6% and 0.4% of our total revenue for each of FY2022, FY2023
and FY2024, respectively. Other than our sales and/or deliveries to the Relevant Countries, we
did not sell or deliver our products to any other countries subject to International Sanctions.
Please see “Business – Business Activities in Countries Subject to International Sanctions” in
this prospectus for further details.
We cannot predict the interpretation or implementation of government policy at the U.S.
federal, state or local levels or the interpretation or implementation of any policy by the EU, the
United Nations or the government of Australia or by the governments or agencies of other
applicable jurisdictions with respect to any current or future activities by us or our affiliates in
these countries. Our business and reputation could be adversely affected if the government of the
United States, the EU, the United Nations or any governmental entities were to determine that
any of our activities constitute violations of the sanctions they impose. In addition, as sanctions
programmes evolve over time, new requirements or restrictions may render our business
activities to be the subject of sanctions and increase our associated risks. In addition, in the
event that any of our customers becomes subject to economic sanctions in the future, we may
have to discontinue our business with such customers due to potential economic sanctions
liability risks. In such events, our financial results may be materially and adversely affected.
We may be have intellectual property disputes with our customers and other third parties
and may be exposed to intellectual property infringement.
Our success depends on our ability to protect the intellectual property rights of our
customers and our intellectual property rights, including our self-owned brands such as
“Weighmax”, “Accuteck” and “Aigoli”. Pursuant to the framework agreements we entered into
with certain customers, we are bound by intellectual property-related obligations. We cannot
assure you that our customers’ designs, trademarks, patents and other intellectual property rights
that we have access to during the manufacturing process will not be misappropriated despite the
precautions and measures that we have taken to protect those rights. While our suppliers,
subcontractors and employees are subject to contractual obligations to protect intellectual
property rights of our customers and us, there is no assurance that such measures will effectively
prevent leakage of confidential information or infringement of intellectual property rights, or at
all. As at the Latest Practicable Date, we were not aware of any incident of failure to protect the
intellectual property rights of our customers. In the event that our measures and precautions we
have taken do not adequately safeguard our customers’ intellectual property rights or at all,
customers may initiate legal proceedings against us or even reduce or discontinue their purchase
orders with us, which would have a material adverse effect on our business, financial condition
and results of operations.
RISK FACTORS
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Moreover, we may be subject to claims from other parties such as industry participants and
competitors alleging our infringement of their patents, trade marks and/or other intellectual
property rights in the future. Any legal or administrative proceedings resulting from such
allegations is likely subject us to significant liability and even to cause a declaration of
invalidity of our existing intellectual property rights. These lawsuits or proceedings would be
time-consuming and costly to resolve, and would divert much of our managerial attention and
administrative resources. Any lawsuits or proceedings or threat of the same as instituted by other
parties could necessitate us to:
 pay pecuniary damages to the claimant;
 stop selling or distributing products to which the technology or manufacturing
processes bearing the allegedly infringing intellectual property apply;
 obtain from the claimant in respect of the relevant intellectual property rights a
licence, which may not be available on a commercially acceptable terms or at all; and
 redesign those products that contain the allegedly infringing intellectual property with
the replacement of non-infringing intellectual property, which may be technically or
commercially impossible.
The outcome of a dispute arising from such kind of infringement allegations may force us
to use non-infringing technology or, alternatively, negotiate and enter into royalty or licensing
agreements with the owner of the intellectual property which may involve substantial time and
costs. Accordingly, our business, financial condition and results of operations may be materially
and adversely affected.
If our trademarks, trade names, copyrights, patents and other intellectual property rights
do not adequately protect our product design or trade secrets, we may lose market share to
our competitors and be unable to operate our business profitably.
We rely on a combination of applicable intellectual property laws as well as confidentiality
agreements to protect our trademarks, trade names, copyrights, product designs and other
intellectual property rights. Details of our intellectual property rights are set out in “Appendix
VII – Statutory and General Information – B. Further Information about Our Business – 2. Our
Material Intellectual Property Rights” to this prospectus. Our intellectual property rights may be
subject to various forms of infringement. As at the Latest Practicable Date, we were not aware
of any material violations or infringements of our trademarks, trade names, copyrights, patents
or any other intellectual property rights.
RISK FACTORS
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Policing unauthorised use of proprietary technology is difficult and costly, and we may
need to resort to litigation to enforce or defend patents issued to us or to determine the
enforceability, scope and validity of our proprietary rights or those of others. Any such litigation
may require significant expenditure of financial and managerial resources and could have a
material adverse impact on our business, financial condition and results of operations. An
adverse determination in any such litigation will impair our intellectual property rights and may
harm our business, prospects and reputation. In addition, given that the enforceability and scope
of protection of proprietary rights in China are uncertain and still evolving, we may choose not
to litigate or spend significant resources in litigation to enforce our intellectual property rights
or to defend our patents against unauthorised use by third parties.
Our success depends largely on the continued service of our senior management and key
technical personnel.
Much of our future success depends on the continued contributions of our senior
management and other key employees, many of whom are difficult to replace. The loss of the
services of any of our executive officers, our senior management and other highly skilled
employees could harm our business. Competition for qualified talent is intense. Our future
success depends on our ability to attract a large number of qualified employees and retain
existing key employees. If we are unable to do so, our business and growth may be materially
and adversely affected.
Our future success therefore depends, to a significant extent, on our ability to recruit, train
or retain qualified personnel, particularly technical, marketing and other operational personnel
with relevant experience. Our experienced mid-level managers are instrumental in implementing
our business strategies, executing our business plans and supporting our business operations and
growth. We can provide no assurance that we will be able to attract or retain qualified staff or
other highly skilled employees that we will need to achieve our strategic objectives.
We may face labour shortages, increases in labour costs and labour disputes which could
adversely affect our growth and results of operations.
Our production activities are dependent on the availability of a large number of labour. For
FY2022, FY2023 and FY2024, our direct labour costs included in cost of sales amounted to
RMB120.8 million, RMB114.5 million and RMB145.7 million, representing 13.8%, 12.7% and
12.4% of our total cost of sales, respectively. Substantial shortage of labour, inefficient labour
management or substantial number of labour disputes may result in disruption of our business
operations, which may in turn have a material and adverse effect on our business, prospects,
financial condition and results of operations. In addition, labour costs in China have been
increasing in recent years and our labour costs in the PRC may continue to increase as well. If
labour costs in the PRC continue to increase, our production costs will increase which may in
turn affect competitiveness of our products. We may not be able to pass on these increased costs
to consumers by increasing the selling prices of our products in light of competitive pressure in
the markets where we operate. In such circumstances, our profit margin may decrease, which
could have an adverse effect on our results of operations.
RISK FACTORS
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We are subject to various regulatory and customer-imposed guidelines and may not be
successful in maintaining an effective quality control system.
In addition to PRC laws and regulations, we are subject to a variety of guidelines imposed
by our customers relating to production safety, health and environmental conditions, and our
customers may require us to implement an internal quality control system to perform various
inspections over the course of the entire manufacturing process. In addition, most of our
customers require us to comply with specific guidelines based on the U.S., EU and other
international product safety and restricted and hazardous materials laws and regulations that are
applicable in the jurisdictions into which they sell their products. We cannot assure you that our
quality control system will continue to be effective in ensuring full compliance with our
customers’ stringent quality control requirements. Any significant failure or deterioration of our
quality control system in respect of, among other things, our production process and product
inspection, may seriously damage our product quality and have a material adverse effect on our
reputation in the market among our existing or prospective customers, which may, in turn, lead
to a reduction of orders or loss of customers in the future, harming our business, financial
condition and results of operations.
We may be involved in legal or other proceedings arising out of our operations, including
product liability claims, from time to time and may face significant liabilities as a result.
We may be involved from time to time in disputes with various parties involved in our
business operations, including but not limited to our customers, suppliers, employees, logistics
service providers, insurers and banks. These disputes may lead to legal or other proceedings,
which may result in damages to our reputation, substantial costs and diversion of our resources
and management’s attention. In addition, we may encounter additional compliance issues in the
course of our operations, which may subject us to administrative proceedings and unfavourable
results, and result in liabilities and delays relating to our production or product launch
schedules. Regardless of the outcome of such legal proceedings, we may incur substantial cost
and divert our resources, including our management’s time and attention, to handle them. We
cannot assure you as to the outcome of such legal proceedings, and any negative outcome may
materially and adversely affect our business, financial condition and results of operations.
We are also exposed to potential product liability claims in the event that there is any
damage caused by defective products. A successful product liability claim against us could
require us to pay for substantial damages. Product liability claims against us, whether or not
successful, are costly and time-consuming to defend, and have a negative impact on our brand
image. Though we have never recalled any of our products in the past, in the event that our
products prove to be defective, we may be required to redesign or recall such products. We
cannot assure you that a product liability claim will not be brought against us in the future. A
product liability claim, with or without merit, could result in significant adverse publicity
against us, and could have a material adverse effect on the marketability of our products and our
reputation, which in turn, could have a material adverse effect on our business, financial
condition and results of operations.
RISK FACTORS
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There is no assurance that the implementation of our future plans will be successful.
We have formulated our future plans with the view to increase our market share and sustain
business growth. The future plans of our Group as described in “Business – Our Strategies” and
“Future Plans and Use of Proceeds” in this prospectus are based on current intentions and
assumptions.
Whether our future plans can be implemented successfully may be affected by various
factors which are beyond our control, such as business environment, economic conditions,
market demand and regulatory framework, and other contingencies which are beyond are control.
Such uncertainties and contingencies may lead to postponement of our future plans or may
increase the costs of implementation. There can be no assurance that our future plans will
materialise.
We may require additional funding to finance our operations, which may not be available
on terms acceptable to us or at all, and if we are able to raise funds, the value of your
investment in us may be negatively impacted.
We believe that our current cash and cash equivalents and the anticipated cash flows from
operations will be sufficient to meet our anticipated cash needs for the next 12 months. We may,
however, require additional cash resources to finance our continued growth or other future
developments, including any investments or acquisitions we may decide to pursue. To the extent
that our funding requirements exceed our financial resources, we will be required to seek
additional financing or to defer planned expenditures. There can be no assurance that we can
obtain additional funds on terms acceptable to us, or at all. In addition, our ability to raise
additional funds in the future is subject to a variety of uncertainties, including, but not limited
to:
 our future financial condition, results of operations and cash flows;
 general market conditions for capital raising and debt financing activities; and
 economic, political and other conditions in China and elsewhere.
Furthermore, if we raise additional funds through equity or equity-linked financings, your
equity interest in our Company may be diluted. Alternatively, if we raise additional funds by
incurring debt obligations, we may be subject to various covenants under the relevant debt
instruments that may, among other things, restrict our ability to pay dividends or obtain
additional financing. Servicing such debt obligations could also be burdensome to our
operations. If we fail to service such debt obligations or are unable to comply with any of these
covenants, we could be in default under such debt obligations and our liquidity and financial
condition could be materially and adversely affected.
RISK FACTORS
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Our business relies on the proper operation of our information technology infrastructure.
We depend on our information technology systems such as our ERP system to conduct our
manufacturing and warehousing activities, manage risks, implement our internal control systems
as well as oversee our business operations. Our ERP system enables us to monitor and exchange
information on, among other aspects, our supply chain and retail network, from and among
various enterprise departments. Any malfunctioning or breakdown of our information technology
systems for an extended period of time may result in network disruption. Even worse, a serious
dispute with our information technology service provider or termination of the service contract
with such provider may materially and adversely affect our ability to give effect to a prompt and
cost-effective maintenance and/or upgrade of our information technology infrastructure. We may
also experience interruptions to our operations during regular upgrades or in the course of
integration of new components with our existing network systems. Should any of the foregoing
situation occur, our business, results of operations and growth prospects would likely be
impacted to a material extent.
Past dividend records should not be treated as indicative of future dividend payments.
No dividend was declared and paid by our Company during the Track Record Period.
Our Board has adopted a dividend policy with a pre-determined dividend payout ratio. For
details, please see “Financial Information – Dividends and Dividend Policy”. The payment and
the amount of any dividends will depend on our results of operations, cash flows, financial
condition, future prospects, capital expenditure, expansion plans and other factors that our Board
may consider relevant. The dividend distribution record in the past may not be used as a
reference or basis to determine the level of dividends that may be declared or paid by our
Company in the future.
RISK FACTORS
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We may not continue to receive preferential tax treatment currently available to us, and the
increase in enterprise income tax could decrease our net income and materially and
adversely affect our financial condition and results of operations.
The rate of income tax assessable on companies in China may vary depending on the
availability of preferential tax treatment or subsidies granted to the specific industries or
locations. Under the Enterprise Income Tax Law of the PRC (ج)
the “ EIT Law ”) and its relevant regulations, PRC companies are typically subject to an income
tax rate of 25% under the EIT Law. During the Track Record Period, our Company qualified as a
High and New Technology Enterprise ( ৷อҦஔΆุ ) and was subject to a preferential income
tax rate of 15%. For FY2022, FY2023 and FY2024, benefiting from the preferential income tax
rate, our effective income tax rate, which was calculated by dividing our income tax expense of
each year by our profit before tax of the corresponding year, was 12.7%, 17.2% and 12.9% in
FY2022, FY2023 and FY2024, respectively. The High and New Technology Enterprise
Certificate (ࣣwas first obtained in 2016 and subsequently renewed in 2019
and 2022, which will expire in 2025. For FY2022, FY2023 and FY2024, our tax savings
attributable to PRC tax preferential treatments for our Company being a High and New
Technology Enterprise ( ৷อҦஔΆุ ) amounted to RMB4.6 million, RMB6.3 million and
RMB7.5 million, respectively. In the event that our Company fails to renew its qualification as a
High and New Technology Enterprise ( ৷อҦஔΆุ ), it would not be able to enjoy the relevant
preferential tax treatment. The PRC Government or provincial government could also eliminate
or reduce the preferential tax treatment in the future, which, would lead to an increase in our
effective tax rate. Upon the eventual lapse of any preferential tax treatments, our effective tax
rate will also increase in the future. As a result, our financial condition and results of operation
could be materially and adversely affected. For details of the income tax expenses during the
Track Record Period, please see Note 11 to the Accountants’ Report in Appendix I to this
prospectus.
The lease agreements of our leased properties have not been registered with the relevant
PRC government authorities as required by PRC law, which may expose us to potential
fines.
Under the PRC law, all lease agreements are required to be registered with the local land
and real estate administration bureau. However, the enforcement of this legal requirement varies
depending on the local regulations and practices. Although failure to do so does not in itself
invalidate the leases, the lessees may not be able to defend these leases against bona fide third
parties and may also be exposed to potential fines if they fail to rectify such non-compliance
within the prescribed time frame after receiving notice from the relevant PRC government
authorities. The penalty ranges from RMB1,000 to RMB10,000 for each unregistered lease, at
the discretion of the relevant authority. As at the Latest Practicable Date, the lease agreements
for some of our leased properties in the PRC which had been mostly used as dormitory have not
been registered with the relevant PRC government authorities. Therefore, as advised by our PRC
Legal Advisers, we may be subject to a maximum penalty of RMB80,000. In the event that any
fine is imposed on us for our failure to register our lease agreements, we may not be able to
recover such losses from the lessors. For details, please see “Business – Properties – Lease
Properties – Lease Registration” in this prospectus.
RISK FACTORS
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System interruption of e-commerce market places where our products are sold may affect
our sales.
Under our OBM business, we sell our products mainly through e-commerce market places
including Amazon, JD.com (؇Tmall ( ˂፟) and Pinduoduo (εε). For FY2022, FY2023
and FY2024, our OBM sales amounted to RMB61.4 million, RMB49.7 million and RMB41.2
million, which accounted for 5.6%, 4.2% and 2.7% of our total revenue during the same year.
Thus, the performance, reliability and availability of those e-commerce marketplaces may affect
our OBM sales. In addition, given the prevalence of the use of e-commerce market places, our
ODM/OEM customers may also sell the products that we manufacture for them on e-commerce
market places. Therefore, any system interruption caused by telecommunication failures,
computer viruses, hacking or other attempts to harm the systems could reduce our sales volume.
In addition, traffic surge of these e-commerce marketplaces due to promotional activities and
festivities, such as during the Black Friday or Christmas, may cause errors or system outage
which may in turn affect our sales. Accordingly, any system interruptions, errors or failure of
e-commerce market places where our products are sold may affect our business, financial
condition and results of operations.
Any catastrophe, including outbreaks of health pandemics, such as COVID-19, and other
extraordinary events, could severely disrupt our business operations.
We face various risks and potential interruptions beyond our control. In particular, public
health emergencies, such as COVID-19, could affect the global economy and consumer demand.
Apart from reducing demand, COVID-19 also has also caused disruptions to business activities
such as cargo logistics along the supply chain of different industries. We cannot assure that any
other similar public health emergencies, such as avian flu, SARS, Ebola, will not adversely
affect our business, results of operations, and financial condition. We also faces risks which may
be arisen from catastrophes such as fires, earthquakes, hurricanes, floods, tornadoes, and other
severe weather conditions. Additionally, we are exposed to risks related to terrorist acts or
disruptive global political events. The unpredictable nature of these events makes it difficult to
predict their frequency, timing, and severity. Any of these occurrences could have a material and
adverse impact on our business operations and financial performance.
RISKS RELATING TO CONDUCTING BUSINESS IN THE PRC
Failure to respond to development in the economic, government policies, and laws and
regulations in the principal place where we operate may have a material adverse effect on
our business, financial condition and results of operations.
A substantial portion of our businesses, assets and operations are located in the PRC.
Accordingly, our financial condition, results of operations and business prospects are, to a
significant degree, subject to the economic, political and legal and regulatory developments in
the PRC.
RISK FACTORS
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The PRC economy has experienced significant growth over the past decades since the
implementation of reform and opening-up policy. In recent years, the PRC government has
implemented measures emphasising the utilisation of market forces in economic reform and the
establishment of sound corporate governance practices in business enterprises. These economic
reform measures may be adaptively adjusted from industry to industry or across different regions
of the country. Failure to respond to such development may materially and adversely affect our
business in the PRC.
The interpretation and enforcement of PRC laws and regulations may change from time to
time, which may subject us to non-compliance due to unexpected changes to laws and
regulations applicable to us.
The PRC legal system is based on written statutes. Unlike common law systems, it is a
system in which legal cases have limited value as precedents. In the late 1970s, the PRC
government began to promulgate a comprehensive system of laws and regulations governing
economic matters in general. The overall effect of legislation over the past four decades has
significantly increased the protections afforded to various forms of foreign or private-sector
investment in China. Our PRC subsidiaries are subject to various PRC laws and regulations
generally applicable to companies in China. However, since these laws and regulations are
relatively new and the PRC legal system continues to evolve, the interpretations and
enforcement of many laws, regulations and rules are subject to changes from time to time.
From time to time, we may have to resort to administrative and court proceedings to
enforce our legal rights. However, since PRC administrative and court authorities have a certain
degree of discretion within their scope of authority in interpreting and implementing statutory
and contractual terms, it may be difficult to evaluate the outcome of administrative and court
proceedings and the level of legal protection we enjoy. Such uncertainties, including uncertainty
over the scope and effect of our contractual, property (including intellectual property) and
procedural rights, and any failure to respond to changes in the regulatory environment in China
could materially and adversely affect our business and impede our ability to continue our
operations, and may further affect the legal remedies and protections available to investors,
which may, in turn, adversely affect the value of your investment.
We may be subject to filing procedure and other requirements of the CSRC or other PRC
governmental authorities in connection with future capital raising activities and future
major events.
On 6 July 2021, the relevant PRC government authorities issued Opinions on Strictly
Cracking Down Illegal Securities Activities in Accordance with the Law (੽ᘌ͂Ꮨᗇ
จԈ). These opinions enhanced administration and supervision on overseas
listing by the PRC-based companies and proposed to take effective measures, such as promoting
the construction of relevant regulatory systems to deal with the risks and incidents faced by The
PRC based oversea-listed companies.
RISK FACTORS
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On 17 February 2023, the CSRC released the Trial Administrative Measures of Overseas
Securities Offering and Listing by Domestic Companies ( ྤʫΆุྤ̮೯БᗇՎձɪ̹၍ଣ༊
) (the “ Trial Measures ”) and five supporting guidelines, which came into effect on
31 March 2023. The Trial Measures comprehensively improved and reformed the prior
regulatory regime for overseas listing of securities of PRC domestic companies, and had
regulated both direct and indirect overseas listing of PRC domestic companies’ securities by
adopting a filing based regulatory regime. Pursuant to the Trial Measures, domestic companies
that seek to offer listing securities and list overseas, both directly and indirectly (the “ Overseas
Offering and Listing ”), should fulfil the filing procedure and report relevant information to the
CSRC, and in the event of subsequent offering and occurrence of certain major events, domestic
companies shall also fulfil relevant filing procedures and report information to the CSRC. If a
domestic company fails to complete the filing procedure, omits any material fact, falsifies any
content or contains any misleading statement in its filing documents, such domestic company
may be subject to administrative penalties, such as order to rectify, warnings, fines, and its
controlling shareholders, actual controllers, the person directly in charge and other directly
liable persons may also be subject to administrative penalties, such as warnings and fines. See
“Appendix IV – Summary of Principal Legal and Regulatory Provisions – The PRC” in this
prospectus.
If it is determined that we are subject to any filing or other authorisation or requirements of
the CSRC or other PRC governmental authorities for future fund raising activities or other major
events, and we fail to complete such filing or meet such requirements in a timely manner or at
all, we could be subject to sanctions by the CSRC or other PRC regulators authorities. If we are
determined not in compliance with the requirements under the Trial Measures, and thus are
unable to complete the filing with the CSRC, we may need to postpone or terminate our future
fund-raising activities if any. Any uncertainties or negative publicity regarding such filing or
other requirements stated above could materially and adversely affect our business, prospects,
financial condition, reputation, and offering and listing of the Shares.
Fluctuations in the value of the Renminbi and other currencies may have a material
adverse impact on your investment.
During the Track Record Period, our expenditures were mainly denominated in Renminbi,
while the net proceeds from the Global Offering will be in Hong Kong dollars. Fluctuations in
the exchange rate between the Renminbi and the Hong Kong dollar will affect the relative
purchasing power in Renminbi terms of the proceeds from the Global Offering. Fluctuations in
the exchange rate may also cause us to incur foreign exchange losses and affect the relative
value of any dividend issued by us.
RISK FACTORS
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Movements in Renminbi exchange rates are affected by, among other things, changes in
political and economic conditions and China’s foreign exchange regime and policy. With the
development of the foreign exchange market and progress towards interest rate liberalisation and
Renminbi internationalisation, the PRC government may in the future announce further changes
to the exchange rate system, and we cannot assure you that the Renminbi will not appreciate or
depreciate significantly in value against other currencies in the future. It is difficult to predict
how market forces or relevant government policies may impact the exchange rate between the
Renminbi and other currencies in the future.
Regulations on currency exchange may limit our foreign exchange transactions, including
our ability to pay dividends and other obligations, and may affect the value of your H
Shares.
Currently, the conversion and remittance of foreign currencies from RMB are subject to
PRC foreign exchange regulations. It cannot be guaranteed that under a certain exchange rate,
we will have sufficient foreign exchange to meet our foreign exchange requirements. Under the
current PRC foreign exchange regulatory system, foreign exchange transactions under the
current account conducted by us, including the payment of dividends, do not require advance
approval from the SAFE, but we are required to present documentary evidence of such
transactions and conduct such transactions at designated foreign exchange banks within China
that have the licences to carry out foreign exchange business. Foreign exchange transactions
under the capital account conducted by us, however, must be approved in advance by the SAFE.
Under existing foreign exchange regulations, following the completion of the Global
Offering, we will be able to pay dividends in foreign currencies without prior approval from the
SAFE by complying with certain procedural requirements. However, the foreign exchange
policies regarding payment of dividends in foreign currencies may change from time to time in
the future. In addition, any insufficiency of foreign exchange may restrict our ability to obtain
sufficient foreign exchange for dividend payments to shareholders or to satisfy any other foreign
exchange requirements. If we fail to obtain approval from the SAFE to convert Renminbi into
any foreign exchange for any of the above purposes, our capital expenditure plans, and even our
business, operating results and financial condition, may be materially and adversely affected.
RISK FACTORS
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Holders of our H Shares may be subject to PRC income tax on dividends from us or on any
gain realised on the transfer of our H Shares.
As is customary with all major economies, China has tax treaties or similar arrangements
with jurisdictions across the world. Under the EIT Law and its implementation rules, subject to
any applicable tax treaty or similar arrangement between China and your jurisdiction of
residence that provides for a different income tax arrangement, PRC withholding tax at the rate
of 10% is normally applicable to dividends from PRC sources payable to investors that are
resident enterprises outside of the PRC, which do not have an establishment or place of business
in the PRC, or which have such establishment or place of business if the relevant income is not
effectively connected with the establishment or place of business. Any gain realised on the
transfer of shares by such investors is subject to 10% (or a lower rate) PRC income tax if such
gain is regarded as income derived from sources within the PRC unless a treaty or similar
arrangement otherwise provides. Under the Individual Income Tax Law of the People’s Republic
of China ( ) and its implementation rules, dividends from
sources within the PRC paid to foreign individual investors who are not residents in the PRC are
generally subject to a PRC withholding tax at a rate of 20% and gains from PRC sources
realised by such investors on the transfer of shares are generally subject to 20% PRC income
tax, in each case, subject to any reduction or exemption set forth in applicable tax treaties and
PRC laws. Although our business operations are in China, it is unclear whether dividends we
pay with respect to our H Shares, or the gain realised from the transfer of our H Shares, would
be treated as income derived from sources within the PRC and as a result be subject to PRC
income tax. If PRC income tax is imposed on gains realised through the transfer of our H Shares
or on dividends paid to our non-resident investors, the value of your investment in our Shares
may be adversely affected. Furthermore, our Shareholders whose jurisdictions of residence have
tax treaties or arrangements with the PRC may not qualify for benefits under such tax treaties or
arrangements.
Payment of dividends is subject to restrictions under PRC laws.
Under the PRC laws, dividends may be paid only out of distributable profits. Our
distributable profits represent our distributable net profits less appropriations to statutory surplus
reserve, general reserve, and discretionary surplus reserve (as approved by our Shareholders’
meeting), each such appropriation based on the unconsolidated net profit determined under PRC
GAAP. Our distributable net profit referred to above represents the lowest of (i) our net profit
attributable to our equity holders for a period plus distributable profits or net of accumulated
losses, if any, at the beginning of such period, as determined under PRC GAAP, and (ii) our net
profit attributable to our equity holders for the period plus distributable profits or net of
accumulated losses, if any, at the beginning of such period, as determined under IFRS. As a
result, we may not have sufficient distributable profits, if any, to make dividend distributions to
our Shareholders in the future, including in respect of periods where we register an accounting
profit. Any distributable profits that are not distributed in a given year are retained and available
for distribution in subsequent years.
RISK FACTORS
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It may be difficult to effect service of process upon us or our Directors, Supervisors or
executive officers who reside in China or to enforce against us or them in China any
judgments obtained from non-PRC courts.
All of our executive Directors, Supervisors and executive officers reside within China, and
substantially all of our assets are located within China. Similar to the difficulties faced by most
of the countries around the world on effecting service of process and enforcing judgment
obtained from foreign countries, it may be difficult for investors to effect service of process
upon us or our executive Directors, Supervisors and officers inside China or to enforce against
us or them in China any judgments obtained from non-PRC courts.
A judgment of a court of another jurisdiction may be reciprocally recognised or enforced in
the PRC only if the jurisdiction has a treaty with China or if the jurisdiction has been otherwise
deemed by the courts in China to satisfy the requirements for reciprocal recognition, subject to
the satisfaction of other requirements. However, China does not have treaties providing for the
reciprocal recognition and enforcement of judgments of courts of some other countries and
regions. Therefore, recognition and enforcement in China of judgments of a court in any of these
non-PRC jurisdictions in relation to any matter not subject to a binding arbitration provision
may be difficult or impossible.
On 3 July 2008, the Supreme People’s Court and the Government of the Hong Kong
Special Administrative Region signed the Arrangement between the Mainland and the HKSAR
on Reciprocal Recognition and Enforcement of the Decisions of Civil and Commercial Cases
under Consensual Jurisdiction (ʝႩ̙ձੂБ຅ԫɛ՘ᙄ၍
τર ) (the “ 2008 Arrangement ”). Under the 2008 Arrangement, where
any designated court of mainland China or Hong Kong court has made an enforceable final
judgment requiring payment of money in a civil and commercial case pursuant to a choice of
court agreement, the party concerned may apply to the relevant court of mainland China or Hong
Kong court for recognition and enforcement of the judgment. The 2008 Arrangement took effect
on 1 August 2008, but the effectiveness of any action brought under the arrangement remains
uncertain. On 18 January 2019, the Supreme People’s Court and the Department of Justice under
the Government of the Hong Kong Special Administrative Region signed the Arrangement on
Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the
Courts of the Mainland and of the Hong Kong Special Administrative Region (ಥ
τર ) (the “ 2019 Arrangement ”), which
became effective on 29 January 2024. The 2019 Arrangement regulates, among others, the scope
and particulars of judgments, the procedures and methods of the application for recognition or
enforcement, the review of the jurisdiction of the court that issued the original judgment, the
circumstances where the recognition and enforcement of a judgment shall be refused, and the
approaches towards remedies for the reciprocal recognition and enforcement of judgments in
civil and commercial matters between the courts in mainland China and those in Hong Kong.
However, the 2008 Arrangement will remain applicable to a “choice of court agreement in
writing” within the meaning of 2008 Arrangement which is made before the effective date of
2019 Arrangement.
RISK FACTORS
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If we fail to comply with anti-bribery or anti-money laundering laws, our reputation may
be harmed, and we could be subject to significant penalties and expenses that could have a
material adverse effect on our business, financial conditions and results of operations.
We are subject to the laws governing anti-bribery and anti-money laundering in the PRC. In
the PRC, the Anti-Unfair Competition Law, and provisions of the Criminal Code, prohibit giving
and receiving money or property (which includes cash, proprietary interests and items of value)
to obtain an undue benefit. Further, in the PRC, Anti-Money Laundering Law of the People’s
Republic of the PRC ( ), promulgated by the Standing Committee of
the National People’s Congress on 31 October 2006 and effective on 1 January 2007, prohibits
money laundering. Our procedures and controls to monitor anti-bribery and anti-money
laundering compliance may fail to protect us from reckless or criminal acts committed by our
employees. If we fail to comply with applicable anti-bribery laws and anti-money laundering
laws, we may be subject to criminal and civil penalties and sanctions or incur significant
expenses, and our reputation could be harmed, all of which could have a material adverse effect
on our business, financial conditions and results of operations.
RISKS RELATING TO THE GLOBAL OFFERING
There has been no prior market for our H Shares.
Prior to the completion of the Global Offering, there has been no public market for our H
Shares. The Initial Offer price range for our H Shares was the result of, and the Offer Price will
be the result of, negotiations among us and the Sole Sponsor-Overall Coordinator (on behalf of
the Underwriters). The Offer Price may thus not be indicative of the price at which our H Shares
will be traded following the completion of the Global Offering.
We have applied to list and deal in our H Shares on the Stock Exchange. However, even if
approved, there can be no assurance that (i) an active trading market for our H Shares will
develop, or (ii) if it does develop, that it will be sustained following the completion of the
Global Offering or that the market price and liquidity of our H Shares will not be adversely
affected.
Liquidity, market price and trading volume of our H Shares may be volatile.
The market price and trading volume of our H Shares is likely to be volatile and subject to
wide fluctuations in response to one or more of the following factors, over some of which we
have no control:
 Regulatory and legal developments in our target markets affecting us, our clients or
our competitors;
 Announcements of market studies or reports relating to the quality of our lifestyle
household goods or those of our competitors;
RISK FACTORS
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 Changes in the financial performance or market valuations of other companies that
provide lifestyle household goods in the form and of the scale comparable to ours;
 Actual or anticipated fluctuations in our financial and/or operating results, as well as
changes or revisions of our expected results;
 Actual or anticipated fluctuations in our cash flow;
 Changes in the securities research analysts’ estimates or general market perceptions of
the financial estimates of us and our competitors;
 Variations in market sentiments driven by economic or political considerations in the
PRC, the United States and elsewhere in the world that could affect the contemporary
as well as prospective competitive landscape of the lifestyle household goods industry;
 Announcements by us or our competitors of the launch of new products and services,
changes in pricing or promotion policies, execution of business restructuring
(including but not limited to significant acquisitions and dispositions) and other forms
of capital commitment plans, establishment of strategic alliances or joint ventures etc.;
 Recruitment or loss of key personnel by us or our competitors;
 Fluctuations in the trading volumes or the release and/or expiration of lock-up or other
share transfer restrictions on our outstanding Shares or sales of additional Shares by
us;
 Sales or perceived potential sales of our H Shares in the market;
 Ability to safeguard our intellectual property rights against infringement and to keep
up-to-date with the latest technologies and research methodologies with respect to the
development of lifestyle household goods; and
 Valuation of publicly-traded companies that are engaged in business activities similar
to ours.
We cannot give assurance as to Shareholders’ ability to sell their H Shares or to achieve
their desired price for, or any profit on, such H Shares. Shareholders may not be able to sell
their H Shares at prices equal to or greater than the price paid for their H Shares in the Global
Offering. In addition, shares of other companies listed on the Stock Exchange with significant
operations and assets in the PRC have experienced in the past significant volatility in the share
price and trading volume. Common to the shares of other listed companies, it is possible that our
H Shares may equally be subject to changes in price for reasons which are beyond our Group’s
control and are unrelated or disproportionate to our operational performance.
RISK FACTORS
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Our Controlling Shareholders has significant influence over our Company and their
interests may not be aligned with the interest of our other Shareholders.
Our Controlling Shareholders will, through their voting power at the Shareholders’
meetings and delegates on the Board, have significant influence over our business and affairs,
including decisions in respect of mergers or other business combinations, acquisition or
disposition of assets, issuance of additional shares or other equity securities, timing and amount
of dividend payments, and our management. Our Controlling Shareholders may not act in the
best interests of our minority Shareholders. In addition, without the consent of our Controlling
Shareholders, we could be prevented from entering into transactions that could be beneficial to
us. This concentration of ownership may also discourage, delay or prevent a change in control of
our Company, which could deprive our Shareholders of an opportunity to receive a premium for
the H Shares as part of a sale of our Company and may significantly reduce the price of our H
Shares.
Shareholders’ equity interests may be diluted.
We may need to raise additional funds in the future to finance, inter alia, expansion or new
developments relating to its existing operations. If additional funds are raised through the issue
of new equity and equity-linked securities of our Company other than on a pro-rata basis to the
existing Shareholders, the percentage ownership of the Shareholders in our Company may be
reduced and Shareholders may experience dilution in their percentage shareholdings in our
Company. In addition, any such new securities may have preferred rights, options or pre-emptive
rights that make them more valuable than or senior to the Shares.
Investors of our H Shares may experience dilution in the net tangible asset book value per
Share of the Shares they invested if our Company issues additional H Shares in the future at a
price which is lower than the net tangible asset book value per Share.
Future sales or issuances or perceived sales or issuances of our Shares or conversion of our
Domestic Unlisted Shares into H Shares could have a material adverse effect on the
prevailing market price of our H Shares.
The market price of our H Shares could decline as a result of future sales or issuances of a
substantial number of our H Shares or other securities in the public market, or the perception
that such sales or issuances may occur. Moreover, such future sales or issuances or perceived
sales or issuances may also adversely affect the prevailing market price of our H Shares and our
ability to raise capital in the future at a favourable time and price.
The PRC Company Law provides that the Shares issued by our Company prior to the
Listing Date shall not be transferred within a period of one year from the date on which trading
in our H Shares commences on the Stock Exchange. We cannot assure you that the current
Shareholders will not be in breach of such statutory restriction and dispose of any Shares they
own now or may own in the future.
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Our Domestic Unlisted Shares can be converted into H Shares, provided that such
conversion and the trading of H Shares so converted have been duly completed pursuant to our
requisite internal approval process and the approval from the relevant PRC regulatory
authorities. In addition, such conversion and trading must, in all aspects, comply with the
regulations promulgated by the securities regulatory authority under the State Council, as well as
the regulations, requirements and procedures of the Stock Exchange. If a significant number of
our Domestic Unlisted Shares are converted into H Shares, the supply of H Shares may be
substantially increased, which could materially and adversely affect the prevailing market price
of our H Shares.
There may be a possible fall in price of Offer Shares below the Offer Price when trading
commences due to the gap of several days between pricing and trading of our Offer Shares.
The Offer Price of our H Shares is expected to be determined on the Price Determination
Date. However, our H Shares will not commence trading on the Stock Exchange until they are
delivered, which is expected to be a short period after the date of pricing. As a result, investors
may not be able to sell or deal in our H Shares during that period. In view of adverse market
conditions or other adverse developments, if any, that could occur between the time of sale and
time at which trading begins, holders of our H Shares are accordingly subject to the risk that the
price of our H Shares could fall below the Offer Price when the trading commences.
We have no experience operating as a public company, and we may incur increased costs as
a result of becoming a listed company.
We have no experience conducting our operations as a public company. As a result of the
Listing, we may face enhanced administrative and compliance requirements, which may make us
incur substantial related costs and expenses that we did not incur as a private company. We
expect rules and regulations applicable to public companies to increase our accounting, legal and
financial compliance costs and to make certain corporate activities more time-consuming and
costly. Our management may be required to devote substantial time and attention to our public
reporting obligations and other compliance matters. We will evaluate and monitor developments
with respect to these rules and regulations, but we cannot predict or estimate the amount of
additional costs we may incur or the timing of such costs. Our reporting and other compliance
obligations as a public company may place a significant strain on our management, operational
and financial resources and systems for the foreseeable future.
In addition, since we are becoming a public company, our management team will need to
develop the expertise necessary to comply with the numerous regulatory and other requirements
applicable to public companies, including requirements relating to corporate governance, listing
standards and securities and investor relationships issues. As a public company, our management
will have to evaluate our internal controls system with new thresholds of materiality, and to
implement necessary changes to our internal controls system. We cannot guarantee that we will
be able to do so in a timely and effective manner.
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There is no assurance on the accuracy or completeness of certain facts, forecasts and other
statistics in this prospectus obtained from publicly available sources.
Certain facts, forecasts, indicators and other statistics contained in this prospectus relating
to the PRC and other countries and regions and the lifestyle household goods industry have been
derived from various sources and publicly available data, including government and official
resources. We believe that the sources of the said information are appropriate sources for such
information and have taken reasonable care in extracting and reproducing such information. We
have no reason to believe that such information is false or misleading or that any fact has been
omitted that would render such information false or misleading. Nevertheless, information from
official government sources has not been independently verified by us, the Sole Sponsor, the
Overall Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead
Managers, the Capital Market Intermediaries or any of the Underwriters or any of our respective
directors, affiliates or advisors or any other parties involved in the Global Offering and,
therefore, none of them make any representation as to its accuracy.
Further, there is no assurance that they are stated or compiled on the same basis or with the
same degree of accuracy as the case may be in other jurisdictions. In all cases, you should give
careful consideration as to how much weight or importance you should attach to or place on
such facts, forecasts, indicators and other statistics relating to the economy and the industry. For
the aforesaid reasons, you should not place undue reliance on such information as a basis for
making your assessment in our Shares.
Forward-looking statements contained in this prospectus are subject to risks and
uncertainties
This prospectus contains forward-looking statements with respect to our business strategies,
operating efficiencies, competitive positions, growth opportunities for existing operations, plans
and objectives of management, certain pro forma information and other matters. The words
“aim”, “anticipate”, “believe”, “could”, “predict”, “potential”, “continue”, “expect”, “intend”,
“may”, “might”, “plan”, “seek”, “will”, “would”, “should” and the negative of these terms and
other similar expressions identify a number of these forward-looking statements. These forward
looking statements, including, amongst others, those relating to our future business prospects,
capital expenditure, cash flows, working capital, liquidity and capital resources are necessarily
estimates reflecting the best judgement of our Directors and management and involve a number
of risks and uncertainties that could cause actual results to differ materially from those
suggested by the forward-looking statements. As a consequence, these forward-looking
statements should be considered in light of various important factors, including those set out in
the section headed “Risk Factors” in this prospectus. Accordingly, such statements are not a
guarantee of future performance and investors should not place undue reliance.
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We strongly caution you not to place any reliance on any information contained in press
articles or other media regarding us and the Global Offering.
Our Directors wish to emphasise to potential investors that they do not accept any
responsibility for the accuracy or completeness of the information contained in any press articles
or other media and those information was not sourced from or authorised by us. We make no
representation as to appropriateness, accuracy, completeness or reliability of any information
contained by press articles or other media. To the extent that any of such information is
inconsistent or in contradiction with the information contained in this prospectus, the Directors
disclaim it. Accordingly, prospective investors should not place reliance on any of the
information in the press articles or other media channels.
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In preparation for the Listing, we have applied for the following waivers from strict
compliance with the relevant provisions of the Listing Rules:
W AIVER IN RELATION TO MANAGEMENT PRESENCE IN HONG KONG
Pursuant to Rule 8.12 of the Listing Rules, we must have sufficient management presence
in Hong Kong, which normally means that at least two of our executive Directors must be
ordinarily resident in Hong Kong. As at the Latest Practicable Date, none of our executive
Directors resided in Hong Kong.
Pursuant to Rule 19A.15 of the Listing Rules, the requirement in Rule 8.12 may be waived
by having regard to, among other considerations, the applicant’s arrangements for maintaining
regular communication with the Stock Exchange.
Since our headquarters and principal business operations and management of our Group are
carried out in the PRC, and all of our executive Directors ordinarily reside outside Hong Kong,
our Company considers that it would be practically difficult and commercially unreasonable and
undesirable for our Company to arrange for two executive Directors to be ordinarily resident in
Hong Kong, either by means of relocation of existing executive Directors or appointment of
additional executive Directors. Therefore, we do not and, in the foreseeable future, will not have
sufficient management presence in Hong Kong for the purpose of satisfying the requirements
under Rule 8.12 of the Listing Rules.
Accordingly, pursuant to Rule 19A.15 of the Listing Rules, we have applied for, and the
Stock Exchange has granted, a waiver from strict compliance with the requirements under Rule
8.12 of the Listing Rules, subject to the following conditions. We will ensure that there is an
effective channel of communication between us and the Stock Exchange by way of the following
arrangements:
1. we have appointed Ms. Hu Yan (ܗߡ“() Ms. Hu ”), our executive Director, secretary
to our Board, chief financial officer and one of our joint company secretaries, and Mr.
Ng Chun Hoi ( юऔ》)( “ Mr. Ng ”), one of our joint company secretaries, as our
authorised representatives (the “ Authorised Representatives ”) pursuant to Rule 3.05
of the Listing Rules. The Authorised Representatives will act as our principal channel
of communication with the Stock Exchange. Each of the Authorised Representatives
will be readily contactable by phone, facsimile and email to promptly deal with
enquiries from the Stock Exchange, and will also be available to meet with the Stock
Exchange to discuss any matter within a reasonable period of time upon request of the
Stock Exchange;
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2. when the Stock Exchange wishes to contact our Directors on any matter, each of the
Authorised Representatives will have all necessary means to contact all of our
Directors (including our independent non-executive Directors) and senior management
team promptly at all times. Our Company will also inform the Stock Exchange
promptly in respect of any changes in the Authorised Representatives. We have
provided the Stock Exchange with the contact details (i.e., mobile phone number,
office phone number, fax number and email address) of each of our Authorised
Representatives and our Directors to facilitate communication with the Stock
Exchange;
3. all Directors who do not ordinarily reside in Hong Kong possess or can apply for valid
travel documents to visit Hong Kong and can meet with the Stock Exchange within a
reasonable period of time upon request;
4. in compliance with Rules 3A.19 of the Listing Rules, we have appointed Sinolink
Securities (Hong Kong) Company Limited as our compliance adviser (the
“Compliance Adviser ”), which has access at all times to our Authorised
Representatives, Directors and other officers of our Company, and will act as an
additional channel of communication with the Stock Exchange. Our Company will
keep the Stock Exchange up to date in respect of any change to such details. Our
Authorised Representatives, our Directors and other officers of our Company will
provide promptly such information and assistance as the Compliance Adviser may
reasonably require in connection with the performance of the Compliance Adviser’s
duties as set forth in Chapter 3A of the Listing Rules. There will be adequate and
efficient means of communication between our Company, our Authorised
Representatives, our Directors and other officers and the Compliance Adviser, and to
the extent reasonably practicable and legally permissible, our Company will keep the
Compliance Adviser informed of all communications and dealings between our
Company and the Stock Exchange; and
5. we shall ensure that there are adequate and efficient means of communication among
our Company, our Authorised Representatives, our Directors, other officers and the
Compliance Adviser, and will keep the Compliance Adviser fully informed of all
communications and dealings between us and the Stock Exchange.
W AIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES
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W AIVER IN RESPECT OF APPOINTMENT OF JOINT COMPANY SECRETARIES
Pursuant to Rules 3.28 and 8.17 of the Listing Rules, we must appoint a company secretary
who, by virtue of his/her academic or professional qualifications or relevant experience, is, in
the opinion of the Stock Exchange, capable of discharging the functions of company secretary.
Note 1 to Rule 3.28 of the Listing Rules further provides that the Stock Exchange considers
that the following academic or professional qualifications to be acceptable:
(a) a member of The Hong Kong Chartered Governance Institute;
(b) a solicitor or barrister (as defined in the Legal Practitioners Ordinance (Chapter 159
of the Laws of Hong Kong)); and
(c) a certified public accountant as defined in the Professional Accountants Ordinance
(Chapter 50 of the Laws of Hong Kong).
Note 2 to Rule 3.28 of the Listing Rules provides that the Stock Exchange will consider the
following factors in assessing an individual’s “relevant experience”:
(i) length of employment with the issuer and other issuers and the roles he/she played;
(ii) familiarity with the Listing Rules and other relevant laws and regulations including
the SFO, the Companies Ordinance, the Companies (Winding Up and Miscellaneous
Provisions) Ordinance and the Takeovers Code;
(iii) relevant training taken and/or to be taken in addition to the minimum requirement of
taking not less than fifteen hours of relevant professional training in each financial
year under Rule 3.29 of the Listing Rules; and
(iv) professional qualifications in other jurisdictions.
We have appointed Ms. Hu, as one of our joint company secretaries. In view of her
experience within our Group and her thorough understanding of the internal administration and
business operations of our Group, our Directors consider that Ms. Hu is a suitable person to act
as a company secretary of our Company. In addition, as the core business and operations of our
Group are substantially based and conducted in the PRC, our Directors believe that it is
necessary to appoint Ms. Hu as a company secretary whose presence in the headquarters of our
Group enables her to attend to the day-to-day corporate secretarial matters concerning our
Group.
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Given Ms. Hu does not possess the qualification and sufficient relevant experience
stipulated in Rule 3.28 of the Listing Rules, she is not able to solely fulfil the requirements as a
company secretary of a listed issuer stipulated under Rules 3.28 and 8.17 of the Listing Rules.
To provide assistance to Ms. Hu and enable her to acquire all qualifications and experience as
our company secretary of our Company required under Rule 3.28 of the Listing Rules, we have
also appointed Mr. Ng, a member of the Hong Kong Institute of Certified Public Accountants,
who fully meets the requirements stipulated under Rules 3.28 and 8.17 of the Listing Rules to
act as the other joint company secretary and to provide assistance to Ms. Hu for an initial period
of three years from the Listing.
Since Ms. Hu does not possess the formal qualifications required of a company secretary
under Rule 3.28 of the Listing Rules, we have applied to the Stock Exchange for, and the Stock
Exchange has granted, a waiver from strict compliance with the requirements under Rules 3.28
and 8.17 of the Listing Rules such that Ms. Hu may act as a joint company secretary of our
Company. Pursuant to paragraph 13 of Chapter 3.10 of the Guide for New Listing Applicants
published by the Stock Exchange, the waiver will be for a fixed period of time (the “ Waiver
Period ”) and on the following conditions:
(i) the proposed company secretary must be assisted by a person who possesses the
qualifications or experience as required under Rule 3.28 of the Listing Rules and is
appointed as a joint company secretary throughout the Waiver Period; and
(ii) the waiver can be revoked if there are material breaches of the Listing Rules by the
issuer.
The waiver is valid for an initial period of three years from the Listing, and is granted on
the condition that Mr. Ng, as a joint company secretary of our Company, will work closely with,
and provide assistance to, Ms. Hu in the discharge of her duties as a joint company secretary and
in gaining the relevant company secretary experience as required under Rule 3.28 of the Listing
Rules and to become familiar with the requirements of the Listing Rules and other applicable
Hong Kong laws and regulations, for an initial period of three years commencing on the Listing.
Given Mr. Ng’s professional qualifications and experience, he will be able to explain to
both Ms. Hu and our Company the relevant requirements under the Listing Rules. Mr. Ng will
also assist Ms. Hu in organising Board meetings and Shareholders’ meetings of our Company as
well as other matters of our Company which are incidental to the duties of a company secretary.
He is expected to work closely with Ms. Hu, and will maintain regular contact with Ms. Hu, our
Directors, Supervisors and the senior management of our Company. The waiver will be revoked
immediately if Mr. Ng ceases to provide assistance to Ms. Hu as a joint company secretary for
the three-year period after the Listing or where there are material breaches of the Listing Rules
by our Company.
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In addition, Ms. Hu will comply with the annual professional training requirement under
Rule 3.29 of the Listing Rules and will enhance her knowledge of the Listing Rules during the
three-year period from the Listing. Ms. Hu will also be assisted by (a) the Compliance Adviser,
particularly in relation to compliance with the Listing Rules; and (b) the Hong Kong legal
advisers of our Company, on matters concerning our Company’s ongoing compliance with the
Listing Rules and the applicable laws and regulations.
Prior to the expiration of the initial three-year period, the qualifications and experience of
Ms. Hu will be re-evaluated to determine whether the requirements as stipulated in Rules 3.28
and 8.17 of the Listing Rules can be satisfied and whether the need for ongoing assistance of
Mr. Ng will continue. We will liaise with the Stock Exchange to enable it to assess whether Ms.
Hu, having benefited from the assistance of Mr. Ng for the preceding three years, will have
acquired the skills necessary to carry out the duties of company secretary and the relevant
experience within the meaning of Note 2 to Rule 3.28 of the Listing Rules so that a further
waiver will not be necessary.
For the biographical information of Ms. Hu and Mr. Ng, please see “Directors, Supervisors
and Senior Management” in this prospectus.
W AIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES
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DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS
This prospectus, for which our Directors (including any proposed director who is named as
such in this prospectus) collectively and individually accept full responsibility, includes
particulars given in compliance with the Listing Rules for the purpose of giving information
with regard to our Group. Our Directors, having made all reasonable enquiries, confirm that to
the best of their knowledge and belief the information contained in this prospectus is accurate
and complete in all material respects and not misleading or deceptive, and there are no other
matters the omission of which would make any statement herein or this prospectus misleading.
UNDERWRITING AND INFORMATION ON THE GLOBAL OFFERING
This prospectus is published solely in connection with the Hong Kong Public Offering,
which forms part of the Global Offering. For applicants under the Hong Kong Public Offering,
this prospectus sets out the terms and conditions of the Hong Kong Public Offering.
The Hong Kong Offer Shares are offered solely on the basis of the information contained
and representations made in this prospectus and on the terms and subject to the conditions set
out herein and therein. No person is authorised to give any information in connection with the
Global Offering or to make any representation not contained in this prospectus, and any
information or representation not contained herein must not be relied upon as having been
authorised by us, the Sole Sponsor, the Overall Coordinators, the Joint Global Coordinators, the
Joint Bookrunners, the Joint Lead Managers, the Underwriters, the Capital Market
Intermediaries, any of our or their respective directors, officers, agents, employees or advisers or
any other party involved in the Global Offering.
Neither the delivery of this prospectus nor any offering, sale or delivery made in
connection with the Offer Shares should, under any circumstances, constitute a representation
that there has been no change or development reasonably likely to involve a change in our
affairs since the date of this prospectus or imply that the information contained in this
prospectus is correct as at any date subsequent to the date of this prospectus.
Details of the structure of the Global Offering, including its conditions, are set out in
“Structure of the Global Offering” and the procedures for applying for the Hong Kong Offer
Shares are set out in “How to Apply for Hong Kong Offer Shares”.
The Listing is sponsored by the Sole Sponsor and the Global Offering is managed by the
Overall Coordinators. The Hong Kong Public Offering is fully underwritten by the Hong Kong
Underwriters pursuant to the Hong Kong Underwriting Agreement and is subject to us and the
Sole Sponsor-Overall Coordinator (on behalf of the Underwriters) agreeing on the Offer Price.
The International Underwriting Agreement relating to the International Offering is expected to
be entered into on or about the Price Determination Date, subject to determination of the Offer
Price.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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CSRC APPROV AL
Our filing procedures with the CSRC for the submission of the application to list our H
Shares on the Stock Exchange and for the Global Offering were completed on 26 January 2025.
In completing such filing, the CSRC accepts no responsibility for our financial soundness, nor
for the accuracy of any of the statements made or opinions expressed in this prospectus. No
other filings in the PRC are required to be completed for the listing of the H Shares on the Stock
Exchange.
DETERMINATION OF THE OFFER PRICE
The Offer Shares are being offered at the Offer Price which will be determined by us and
the Sole Sponsor-Overall Coordinator (for itself and on behalf of the other Underwriters) on
Monday, 23 June 2025.
If, for any reason, the Offer Price is not agreed among us and the Sole Sponsor-Overall
Coordinator (for itself and on behalf of the other Underwriters) by 12:00 noon on Monday, 23
June 2025, the Global Offering (including the Hong Kong Public Offering) will not proceed and
will lapse.
RESTRICTIONS ON OFFER AND SALE OF THE H SHARES
Each person acquiring the Hong Kong Offer Shares under the Hong Kong Public Offering
will be required to, or be deemed by his, her or its acquisition of the Offer Shares to, confirm
that he, she or it is aware of the restrictions on offers of the Offer Shares described in this
prospectus.
No action has been taken to permit a public offering of the Hong Kong Offer Shares or the
general distribution of this prospectus in any jurisdiction other than in Hong Kong. Accordingly,
without limitation to the following, this prospectus may not be used for the purposes of, and
does not constitute, an offer or invitation in any jurisdiction or in any circumstances in which
such an offer or invitation is not authorised or to any person to whom it is unlawful to make
such an offer or invitation. The distribution of this prospectus and the offering and sale of the
Offer Shares in other jurisdictions are subject to restrictions and may not be made except as
permitted under the applicable securities laws of such jurisdictions and pursuant to registration
with or authorisation by the relevant securities regulatory authorities or an exemption therefrom.
APPLICATION FOR LISTING OF THE H SHARES ON THE STOCK EXCHANGE
We have applied to the Stock Exchange for the approval of the listing of, and permission to
deal in, the H Shares to be issued pursuant to the Global Offering (including the H Shares which
may be issued pursuant to the exercise of the Over-allotment Option).
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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No part of our share capital is listed on or dealt in on any other stock exchange and no
such listing or permission to list is being or proposed to be sought on the Stock Exchange or any
other stock exchange as of the date of this prospectus. All the Offer Shares will be registered on
our H Share Registrar in order to enable them to be traded on the Stock Exchange.
Under section 44B (1) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, any allotment made in respect of any application will be invalid if the listing of, and
permission to deal in, the H Shares on the Stock Exchange is refused before the expiration of
three weeks from the date of the closing of the application lists, or such longer period (not
exceeding six weeks) as may, within the said three weeks, be notified to our Company by or on
behalf of the Stock Exchange.
COMMENCEMENT OF DEALINGS IN THE SHARES
Assuming that the Hong Kong Public Offering becomes unconditional in Hong Kong at or
before 8:00 a.m. in Hong Kong on Wednesday, 25 June 2025, it is expected that dealings in our
H Shares on the Stock Exchange will commence on Wednesday, 25 June 2025. The H Shares
will be traded in board lots of 1,000 H Shares each, and the stock code of the H Shares will be
2619.
H SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
Subject to the granting of the listing of, and permission to deal in, the Offer Shares on the
Stock Exchange and our compliance with the stock admission requirements of HKSCC, the H
Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in
CCASS with effect from the date of commencement of dealings in the H Shares on the Stock
Exchange or any other date as determined by HKSCC. Settlement of transactions between
participants of the Stock Exchange is required to take place in CCASS on the second settlement
day after any trading day. All activities under CCASS are subject to the General Rules of
HKSCC and HKSCC Operational Procedures in effect from time to time. All necessary
arrangements have been made for the H Shares to be admitted into CCASS.
Investors should seek the advice of their stockbrokers or other professional advisers for
details of the settlement arrangements and how such arrangements will affect your rights and
interests as such arrangements may affect their rights and interests.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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PROFESSIONAL TAX ADVICE RECOMMENDED
Potential investors in the Global Offering are recommended to consult their professional
advisers if they are in any doubt as to the taxation implications of subscribing to, purchasing,
holding or disposing of, and/or dealing in the H Shares (or exercising rights attached thereto).
None of us, the Sole Sponsor, the Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers, the Underwriters, the Capital Market Intermediaries, any
of our or their respective directors, agents, employees or advisers or any other person or party
involved in the Global Offering accepts responsibility for any tax effects on, or liabilities of, any
person resulting from the subscription to, purchase, holding or disposal of, dealing in, or the
exercise of any rights in relation to, the H Shares or exercising any rights attached to them.
H SHARE REGISTER AND STAMP DUTY
All of the H Shares issued pursuant to applications made in the Hong Kong Public Offering
will be registered on our H Share register of members to be maintained in Hong Kong by our H
Share Registrar, Tricor Investor Services Limited, at 17/F, Far East Finance Centre, 16 Harcourt
Road, Hong Kong. Our principal register of members will be maintained by us at our head office
in the PRC.
Dealings in the H Shares registered in our H Share register of members will be subject to
the Hong Kong stamp duty. Please see “Appendix VII – Statutory and General Information – E.
Other Information – 8. Taxation of Holders of H Shares” to this prospectus. Investors should
seek professional tax advice for further details of Hong Kong stamp duty.
Unless otherwise determined by our Board, dividends will be paid to Shareholders whose
names are listed on our register of members in Hong Kong, by ordinary post, at the
Shareholders’ risk in Hong Kong dollars.
EXCHANGE RATE CONVERSION
Solely for your convenience, this prospectus contains translations among certain amounts
denominated in Renminbi and Hong Kong dollars. No representation is made that the amounts
denominated in one currency could actually be converted into the amounts denominated in
another currency at the rates indicated or at all. Unless indicated otherwise, (i) the translations
between Hong Kong dollars and Renminbi were made at the rate of RMB1.0 to HK$1.08394;
and (ii) the translations between Thai Baht and Renminbi were made the rate of THB1.0 to
RMB0.21.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–8 5–


--- page 95 ---
LANGUAGE
If there is any inconsistency between this prospectus and the Chinese translation of this
prospectus, this prospectus shall prevail. However, the translated English names of the PRC and
foreign nationals, entities, departments, facilities, certificates, titles, laws, regulations (including
certain of our subsidiaries) and the like included in this prospectus and for which no official
English translation exists are unofficial translations for your reference only. If there is any
inconsistency, the names in their original languages shall prevail.
ROUNDING
Any discrepancies in any table in this prospectus between total and sum of amounts listed
therein are due to rounding. Certain amounts and percentage figures included in this prospectus
have been subject to rounding adjustments or have been rounded to one or two decimal places.
Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of
the figures preceding them.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–8 6–


--- page 96 ---
DIRECTORS
Names Residential address Nationality
Executive Directors
Mr. Pan Yun ( ᆙʪ) 7-501
Tonglin Garden
Haishan Road
Shatoujiao
Yantian District
Shenzhen
PRC
Chinese
Mr. Guangshe Pan 4060 Duke Dr
Yorba Linda
CA 92886
American
Ms. Ji Ying ( Λ጑) 3B202
Tonglin Garden
Haishan Road
Shatoujiao
Yantian District
Shenzhen
PRC
Chinese
Ms. Li Youxiang (࠰Block E, Yishan Garden Phase III
Shatoujiao
Yantian District
Shenzhen
PRC
Chinese
Mr. Xu Xiping (୚̻) Room 205, Block 1
Shangshan Wutong Garden
Shenyan Road
Yantian District
Shenzhen
PRC
Chinese
Ms. Hu Yan (ܗߡRoom 11A, Unit 2, Block 1
Jindi Meilong Town
Longhua District
Shenzhen
PRC
Chinese
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–8 7–


--- page 97 ---
Names Residential address Nationality
Independent non-executive Directors
Dr. Huang Hanxiong ( රဏඪ) 2-801 Xixiu Village
South China University of Technology
Tianhe District
Guangzhou
PRC
Chinese
Dr. Li Jiannan ( ҽ਄Ӳ) Room 1802, Building F
Lideyashe
West Zhongshan Road
Tianhe District
Guangzhou
PRC
Chinese
Dr. Gu Zhaoyang ( ᚥಃජ) 32B, Hilltop Garden
Pun Shan Chau, Tai Po
New Territories
Hong Kong
Chinese
(Hong Kong)
SUPERVISORS
Names Residential address Nationality
Mr. Yip Hung Tung (؇ߎFlat 7, Floor 17
Wah Lun House
Siu Lun Court
Tuen Mun
New Territories
Hong Kong
Chinese
(Hong Kong)
Mr. Shi Chuanlai ( ̦ෂԸ) Room 208
Aisijie
Shantang Industrial Zone
Henggang Street
Longgang District
Shenzhen
PRC
Chinese
Ms. Yi Hongliang (Ԅ) Junlin Haiyu
No. 2 Haijing Road
Shatoujiao
Yantian District
Shenzhen
PRC
Chinese
Please see “Directors, Supervisors and Senior Management” in this prospectus for further
information on our Directors and Supervisors.
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–8 8–


--- page 98 ---
PARTIES INVOLVED IN THE GLOBAL OFFERING
Sole Sponsor and Sole
Sponsor-Overall Coordinator
Sinolink Securities (Hong Kong) Company
Limited
(a licensed corporation under the SFO to engage
in type 1 (dealing in securities), type 2 (dealing
in futures contracts), type 4 (advising on
securities), type 6 (advising on corporate
finance), and type 9 (asset management)
regulated activities
Units 3501–08
35/F, Cosco Tower
183 Queen’s Road Central
Hong Kong
Overall Coordinators, Joint Global
Coordinators, Joint Bookrunners
and Joint Lead Managers
Sinolink Securities (Hong Kong) Company
Limited
(a licensed corporation under the SFO to engage
in type 1 (dealing in securities), type 2 (dealing
in futures contracts), type 4 (advising on
securities), type 6 (advising on corporate
finance), and type 9 (asset management)
regulated activities
Units 3501–08
35/F, Cosco Tower
183 Queen’s Road Central
Hong Kong
CCB International Capital Limited
(a licensed corporation under the SFO to engage
in type 1 (dealing in securities), type 4 (advising
on securities) and type 6 (advising on corporate
finance) regulated activities)
12/F, CCB Tower
3 Connaught Road Central
Central
Hong Kong
Joint Bookrunners,
Joint Lead Managers and
Capital Market Intermediaries
ABCI Capital Limited
(Only as a Joint Bookrunner)
11/F, Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–8 9–


--- page 99 ---
ABCI Securities Company Limited
(Only as a Joint Lead Manager)
10/F, Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
CMBC Securities Company Limited
45/F, One Exchange Square
8 Connaught Place
Central
Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road
Central
Hong Kong
First Fidelity Capital (International)
Limited
36/F, Times Tower
391–407 Jaffe Road
Wanchai
Hong Kong
Uzen Securities Limited
8/F, EC Healthcare Tower (Central)
19–20 Connaught Road Central
Central
Hong Kong
Valuable Capital Limited
RM 3601–06 & 3617–19
36/F, China Merchants Tower
Shun Tak Centre
168–200 Connaught Road Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–9 0–


--- page 100 ---
Legal Advisers to our Company As to Hong Kong law
DeHeng Law Offices (Hong Kong) LLP
28/F, Henley Building
5 Queen’s Road Central
Central
Hong Kong
Room 3507, 35/F
Edinburgh Tower
The Landmark
15 Queen’s Road Central
Central
Hong Kong
Mr. Y an Kwok Wing
Barrister-at-law, Hong Kong
Pacific Chambers
9th Floor, Dina House
11 Duddell Street
Central
Hong Kong
As to the PRC law
Zhong Lun Law Firm
22–31/F, South Tower of CP Centre
20 Jin He East Avenue
Chaoyang District
Beijing 100020
P.R. China
As to the U.S. law
Law Offices of Bin Li & Associates
730 N. Diamond Bar Blvd
Diamond Bar, CA 91765
As to Indonesian law
SEA Law Firm
APL Tower – Central Park
JI. Letjen S. Parman Kav.28
Lt.20 Unit T-5
Grogol Petamburan
Jakarta Barat
Daerah Khusus Ibukota Jakarta 11470
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–9 1–


--- page 101 ---
As to Thailand law
DTL Law Office
33/4 The Ninth Tower A
34th Floor
Rama 9 Road
Huaykwang Sub-District
Huaykwang District
Bangkok, 10310
Thailand
As to International Sanctions law
Stephen Peepels
51 Tung Street, 1st Floor
Meehan House
Sheung Wan
Hong Kong
Legal Advisers to the Sole Sponsor
and the Underwriters
As to Hong Kong law
Jingtian & Gongcheng LLP
Suites 3203–3207, 32/F
Edinburgh Tower
The Landmark
15 Queen’s Road Central
Central
Hong Kong
As to the PRC law
Sundial Law Firm
11–12F., Taiping Finance Tower
6001 Yitian Road
Futian District, Shenzhen
PRC
Auditor and Reporting Accountants Deloitte Touche Tohmatsu
Certified Public Accountants
Registered Public Interest Entity Auditor
35/F, One Pacific Place
88 Queensway
Admiralty
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–9 2–


--- page 102 ---
Property Valuer A VISTA Group
Suites 2401–06, 24/F
Everbright Centre
No 108 Gloucester Road
Wan Chai
Hong Kong
Industry Consultant Frost & Sullivan (Beijing) Inc.,
Shanghai Branch Co.
Room 2504, Wheelock Square
No. 1717 West Nanjing Road
Jing’an District
Shanghai, PRC
Main Receiving Bank DBS Bank (Hong Kong) Limited
16/F, The Centre
99 Queen’s Road Central
Hong Kong
Sub-receiving Bank Industrial and Commercial Bank of China
(Asia) Ltd.
33/F, ICBC Tower
3 Garden Road
Central, Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–9 3–


--- page 103 ---
Registered Office in the PRC Kai Di Road
Li Shi Zhen Industrial Park
Qichun County
Hubei Province
PRC
Headquarters in the PRC 7th Floor, Building 7
Shatoujiao Free Trade Zone
Haishan Road, Yantian District
Shenzhen
PRC
Principal Place of Business in
Hong Kong
Unit 2703B, 27/F
148 Electric Road
North Point
Hong Kong
Company’s Website http://www.xjgroup.com
(Note: the information on this website does not
form part of this prospectus)
Joint Company Secretaries Ms. Hu Yan (ܗߡ)
Room 11A, Unit 2, Block 1
Jindi Meilong Town
Longhua District
Shenzhen
PRC
Mr. Ng Chun Hoi ( юऔ》)
(a member of the Hong Kong Institute of Certified
Public Accountants)
28/F, Henley Building
5 Queen Road’s Central
Central
Hong Kong
CORPORATE INFORMATION
–9 4–


--- page 104 ---
Authorised Representatives Ms. Hu Yan (ܗߡ)
Room 11A, Unit 2, Block 1
Jindi Meilong Town
Longhua District
Shenzhen
PRC
Mr. Ng Chun Hoi ( юऔ》)
(a member of the Hong Kong Institute of Certified
Public Accountants)
28/F, Henley Building
5 Queen Road’s Central
Central
Hong Kong
Audit Committee Dr. Gu Zhaoyang (Chairman)
Dr. Huang Hanxiong
Dr. Li Jiannan
Remuneration Committee Dr. Li Jiannan (Chairman)
Ms. Ji Ying
Dr. Gu Zhaoyang
Nomination Committee Dr. Huang Hanxiong (Chairman)
Ms. Ji Ying
Dr. Li Jiannan
Strategic Committee Mr. Pan Yun (Chairman)
Dr. Huang Hanxiong
Ms. Li Youxiang
H Share Registrar Tricor Investor Services Limited
17/F, Far East Finance Centre
16 Harcourt Road
Hong Kong
CORPORATE INFORMATION
–9 5–


--- page 105 ---
Compliance Adviser Sinolink Securities (Hong Kong)
Company Limited
(a licensed corporation under the SFO to
engage in type 1 (dealing in securities) and
type 6 (advising on corporate finance)
regulated activities)
Units 3501–08
35/F, Cosco Tower
183 Queen’s Road Central
Hong Kong
Principal Banks Ping An Bank Co., Ltd.
Shenzhen Branch Longhua Subbranch
1–2/F, East side of Donghe Garden Complex
Donghuan 2nd Road, Longhua Street Office
Bao’an District
Shenzhen
PRC
DBS Bank (China) Limited
Shenzhen Branch
18/F, China Resources Building
No. 5001 Shennan East Road
Luohu District
Shenzhen
PRC
CORPORATE INFORMATION
–9 6–


--- page 106 ---
The information and statistics set out in this section and other sections of this
prospectus were extracted from the Frost & Sullivan Report, which was commissioned by us,
and from various official government publications and other publicly available publications.
We engaged Frost & Sullivan to prepare the Frost & Sullivan Report, an independent industry
report, in connection with the Global Offering. We believe that the sources of this information
are appropriate sources for such information and have taken reasonable care in extracting
and reproducing such information. We have no reason to believe that such information is false
or misleading or that any fact has been omitted that would render such information false or
misleading. The information from official government sources has not been independently
verified by us, the Sole Sponsor , Overall Coordinators, Joint Global Coordinators, Joint
Bookrunners, Joint Lead Managers, Underwriters, any of their respective directors and
advisors, or any other persons or parties involved in the Global Offering, and no
representation is given as to its accuracy.
SOURCE OF INFORMATION
We commissioned Frost & Sullivan to conduct market research on global lifestyle
household goods industry, global small home appliance industry and global garden hose industry,
and prepare the Frost & Sullivan Report. Frost & Sullivan is an independent global consulting
firm founded in 1961 in New York that offers industry research and market strategies. We have
contracted to pay RMB520,000 to Frost & Sullivan for compiling the Frost & Sullivan Report.
In preparing the Frost & Sullivan Report, Frost & Sullivan conducted detailed primary
research which involved discussing the status of the industry with certain leading industry
participants and conducting interviews with relevant parties. Frost & Sullivan also conducted
secondary research which involved reviewing company reports, independent research reports and
data based on its own research database. Frost & Sullivan obtained the figures for the estimated
total market size from historical data analysis plotted against macroeconomic data as well as
considered the above-mentioned industry key drivers. Its market engineering forecasting
methodology integrates several forecasting techniques with the market engineering
measurement-based system and relies on the expertise of the analyst team in integrating the
critical market elements investigated during the research phase of the project. These elements
primarily include expert-opinion forecasting methodology, integration of market drivers and
restraints, integration with the market challenges, integration of the market engineering
measurement trends and integration of econometric variables.
The Frost & Sullivan Report is compiled based on the following assumptions: (i) the social,
economic and political environment of the globe and mainland China is likely to remain stable
in the forecast period; and (ii) related industry key drivers are likely to drive the market in the
forecast period.
INDUSTRY OVERVIEW
–9 7–


--- page 107 ---
OVERVIEW OF GLOBAL LIFESTYLE HOUSEHOLD GOODS INDUSTRY
Definition and Classification of Lifestyle Household Goods
Lifestyle household goods encompass a range of items designed to optimise modern home
environments and elevate living experiences and can be categorised into electric home
appliances and non-electric household goods based on their usage characteristics and modes of
operation. Electric home appliances consist of major home appliances and small home
appliances. Non-electric household goods mainly consist of non-electric household items relating
to gardening, bathroom, kitchen, indoor living, etc.
Market Size of Global Lifestyle Household Goods Industry
The following chart illustrates the historical and forecast market size of global lifestyle
household goods industry by retail value from 2020 to 2029:
Market Size of Global Lifestyle Household Goods Industry by Retail Value, 2020–2029E
407.8371.0 402.6 388.2 383.5 382.1 383.4 387.2 393.0 399.8
227.4156.4 170.4 169.6 175.8 183.5 190.8 199.9 209.1 218.1
548.3448.4 500.9 486.9 496.1 505.6 511.2 521.3 531.0 540.0
975.9
1,183.5
1,073.9 1,044.6 1,055.4 1,071.2 1,085.4 1,108.3 1,133.1 1,158.01,200
1,000
800
600
400
200
0
Major Appliances
Small Appliances
Non-electric Household Goods
Global Lifestyle Household Goods Industry
CAGR 2020–2024
3.0%
CAGR 2025E–2029E
1.8%
4.1% 4.5%
0.7% 1.6%
2.4% 2.2%
Billion USD
2029E2020 2021 2022 2023 2025E 2026E 2027E 2028E2024
Source: Interviews with Industry Experts, Frost & Sullivan
INDUSTRY OVERVIEW
–9 8–


--- page 108 ---
OVERVIEW OF GLOBAL SMALL HOME APPLIANCE INDUSTRY
Definition and Classification of Small Home Appliances
Small home appliances are compact household devices that consume minimal electricity,
exclude high-power output, and are designed to enhance quality of life. They are integral to
modern living, providing convenience and efficiency in various aspects of daily life. Small home
appliances can be categorised based on their functions into small kitchen appliances, small home
living and environment appliances, and small personal care appliances.
 Small Kitchen Appliances: Small kitchen appliances consist of small food
preparation appliances and small cooking appliances. Small food preparation
appliances are used for the preparation and processing of food (e.g., blender, mixer,
juice extractor, food processor, etc.). Small cooking appliances are used for cooking
food in the kitchen (e.g., kettle, rice cooker, electric steamer, fryer, electric grill, etc.).
 Small Home Living and Environment Appliances: Small home living and
environment appliances are used to reduce household chores, improve living
conditions and maintain cleanliness (e.g., air purifier, dehumidifier, humidifier,
electric fan, vacuum, etc.).
 Small Personal Care Appliances: Small personal care appliances are used for
personal hygiene, health and grooming (e.g., body shaver, electric toothbrush, electric
facial cleanser, etc.).
Market Size of Global Small Home Appliance Industry
Driven by advancements in technology, increasing consumer demand for energy-efficient
products and the rise of smart home solutions, the global small home appliance industry has
experienced a steady growth in recent years, with its retail value increasing from USD156.4
billion in 2020 to USD183.5 billion in 2024, representing a CAGR of 4.1%. The COVID-19
pandemic led to more people staying at home and reducing social gatherings, which boosted
global demand for small home appliances in 2020 and 2021. As the world transitioned into the
post-pandemic period, combined with factors such as geopolitical tensions and a global
macroeconomic downturn, the retail value of global small home appliance industry declined in
2022. Moving forward, with ongoing technological advancements and environmental-friendly
innovations, the global small home appliance industry is expected to keep a steady growth from
USD190.8 billion in 2025 to USD227.4 billion in 2029, representing a CAGR of 4.5%.
INDUSTRY OVERVIEW
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--- page 109 ---
Driven by increasing demand for convenient, time-saving and energy efficient products, the
market size of the small home appliance industry in the USA has experienced rapid growth in
recent years, with its retail value rising from USD38.6 billion in 2020 to USD48.7 billion in
2024, with a CAGR of 5.9%. With advancements in technology and changing lifestyle
preferences, increasing number of households are adopting innovative appliances. Fueled by
ongoing innovation, rising disposable incomes and growing focus on sustainability, the upward
trend is expected to accelerate further over the next five years, with retail value in small home
appliance industry in the USA growing from USD51.0 billion in 2025 to USD63.7 billion in
2029, representing a CAGR of 5.7%.
Market Size of Global Small Home Appliance Industry
by Retail Value by Region, 2020–2029E
240
200
160
120
80
40
0
China
USA
Europe
Global Small Home Appliance Industry
CAGR 2020–2024
1.7%
CAGR 2025E–2029E
2.2%
5.9% 5.7%
4.0% 4.7%
ROW 4.0% 4.4%
4.1% 4.5%Billion USD
2029E2020 2021 2022 2023 2025E 2026E 2027E 2028E2024
227.4
156.4
170.4 169.6 175.8 183.5 190.8 199.9 209.1 218.1
34.3
28.9 31.4 30.6 30.3 30.9 31.5 32.2 32.9 33.6
63.7
38.6 41.5 44.1 46.0 48.7 51.0 54.0 57.2 60.4
59.1
40.1 44.7 41.9 44.4 46.8 49.1 51.5 54.0 56.6
70.348.8 52.8 53.0 55.2 57.1 59.3 62.1 65.0 67.6
Source: Interviews with Industry Experts, Frost & Sullivan
INDUSTRY OVERVIEW
– 100 –


--- page 110 ---
The global small home appliance industry has undergone notable advancements with
significant growth across various product types, driven by increasing consumer demand for
convenience, health and sustainability. Small kitchen appliances account for the largest share of
the market, with the retail value increasing from USD66.6 billion in 2020 to USD74.1 billion in
2024 at a CAGR of 2.7%. The retail value of small home living and environment appliances
increased from USD57.4 billion in 2020 to USD68.5 billion in 2024, with a CAGR of 4.6%.
Meanwhile, fueled by growing focus on personal wellness, beauty trends and adoption of smart,
portable personal care technologies, small personal care appliances have experienced a rapid
growth over the past few years, with its retail value increasing from USD32.4 billion in 2020 to
USD40.8 billion in 2024 at a CAGR of 6.0%. As the industry moves forward, small kitchen
appliances are expected to maintain the dominance, with the retail value increasing from
USD76.5 billion in 2025 to USD89.7 billion in 2029 at a CAGR of 4.1%.
Market Size of Global Small Home Appliance Industry
by Retail Value by Type of Functions, 2020–2029E
240
200
160
120
80
40
0
Small Kitchen Appliances
Small Home Living and Environment Appliances
Small Personal Care Appliances
CAGR 2020–2024
2.7%
CAGR 2025E–2029E
4.1%
4.6% 4.3%
6.0% 5.5%Billion USD
2020 2021 2022 2023 2025E 2026E 2027E 2028E 2029E2024
227.4
156.4 170.4 169.6 175.8 183.5 190.8 199.9 209.1 218.1
89.7
66.6 71.9 70.1 71.6 74.1 76.5 79.7 83.1 86.3
84.2
57.4 63.4 63.5 65.9 68.5 71.2 74.4 77.6 80.9
53.532.4 35.2 36.0 38.4 40.8 43.2 45.8 48.4 51.0
Source: Interviews with Industry Experts, Frost & Sullivan
INDUSTRY OVERVIEW
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--- page 111 ---
After years of development, China’s small home appliance industry has evolved from
simple assembly to lean manufacturing, becoming one of the world’s leading production bases.
The export value of China’s small home appliances increased from USD42.0 billion in 2020 to
USD56.8 billion in 2024, with a CAGR of 7.9%. Looking forward, the continued recovery of the
global economy, particularly the rising demand for small home appliance in developing
countries, combined with China’s ongoing technological innovations and diverse range of
exported small home appliances, is expected to drive the export value of China’s small home
appliance from USD58.4 billion in 2025 to USD65.6 billion in 2029, with a CAGR of 2.9%.
Export Value of China’s Small Home Appliances, 2020–2029E
70
60
50
40
30
20
10
0
Export Value of Small Home Appliances
CAGR 2020–2024
7.9%
CAGR 2025E–2029E
2.9%
Billion USD
2029E2020 2021 2022 2023 2025E 2026E 2027E 2028E2024
65.6
42.0
52.1 50.1 50.4
56.8 58.4 60.7 62.6 64.2
Source: China Household Electrical Appliances Association, China Chamber of Commerce for Import and
Export of Machinery and Electronic Products, Frost & Sullivan
INDUSTRY OVERVIEW
– 102 –


--- page 112 ---
Market Drivers and Trends Analysis of Global Small Home Appliance Industry and Small
Kitchen Appliance Industry
Growing Demand for Small Home Appliances in the United States
The U.S. small home appliance market has experienced rapid growth over the past few
years and now holds an important position in the global landscape. As one of the largest markets
in the world, it sets trends and influences manufacturing and product development across the
global home appliance industry. The growing demand for small home appliances in the United
States can be attributed to rising domestic consumer focus on convenience and lifestyle and
decreasing trend of family size. First, in the United States, appliances that offer convenience and
time-saving solutions are seeing strong demand. Smart kitchen appliances, in particular, are
gaining popularity as consumers increasingly prefer efficient, user-friendly products that fit into
modern lifestyles. The market size of the small kitchen appliance industry in the U.S. increased
from USD17.2 billion in 2020 to USD21.2 billion in 2024, with an expectation to further
increase from USD22.1 billion in 2025 to USD26.8 billion in 2029 at a CAGR of 5.0% from
2025. Among the industry, market size of some of the small kitchen appliances is expected to
increase. For example, the market size of electric fryer, electric griddle and kettle in the U.S.
will increase to USD2,169.5 million by a CAGR of 8.1%, USD682.3 million by a CAGR of
5.3% and USD314.2 million by a CAGR of 5.1%, respectively, in 2029. Second, the decreasing
trend in family size as well as the rise of the “lazy single economy”, particularly in developed
countries like the United States, has fueled growth in the small home appliance industry, as
single consumers increasingly purchase small home appliances to enhance personal well-being
and convenience. For example, according to data released by U.S. Census Bureau, the average
number of people per household in the USA decreased from 2.6 in 2010 to 2.5 in 2024. In
addition, the share of one-person households in the United States increased from 26.7% in 2010
to 29.0% in 2024. As households become smaller, consumers are looking for compact,
space-efficient home appliances that cater to their individual needs. This shift in household
dynamics is expected to further drive the growth in small home appliance industry, aligning with
the evolving lifestyle preferences in the United States.
INDUSTRY OVERVIEW
– 103 –


--- page 113 ---
Rising Demand for Innovative and Eco-friendly Small Home Appliances
As global living standards continue to rise, consumers are demanding more functional small
home appliances. They are no longer satisfied with basic operational capabilities and instead
seek advanced performance, user-friendly designs, and greater convenience. The rise of the “lazy
single economy” has fueled growth in the small home appliance industry, as single consumers
increasingly purchase small home appliances to enhance personal well-being and convenience.
The single population is also steadily increasing, particularly in developed countries. Therefore,
innovative multifunctional small home appliances cater especially well to this demographic,
offering practical and time-saving solutions for individual lifestyles. In addition, the growing
demand is further influenced by increasing awareness of low-carbon and green living principles.
Modern consumers prioritize products that are efficient, environmentally friendly, made from
sustainable materials, and safe for personal health. For example, with a rising emphasis on
hygiene, there is a growing demand for small kitchen appliances that incorporate sterilization,
antibacterial, and non-toxic features. Electric griddles and skillets are preferred to be
polytetrafluoroethylene (PTFE) and perfluorooctanoic acid (PFOA) free, making it safe for
customers. Thus, consumers are increasingly opting for products that support a cleaner, healthier
lifestyle. Consequently, small home appliance manufacturers are investing heavily in research
and development to enhance product quality and functionality, aiming to meet the diverse and
evolving needs of consumers. This trend signifies a significant move towards innovation and
sustainability within the small home appliance industry, reflecting broader societal values and
consumer expectations.
Innovative Technological Advancements on Product, Manufacture and Quality Control
Technological innovation is profoundly shaping the global small home appliance industry,
driven by advanced product design, automated manufacturing technology, better quality control
system, and enhanced product performance. Companies are significantly increasing their R&D
investments to introduce appliances with cutting-edge features such as smart connectivity,
remote control, and automated operations. For example, modern smart small kitchen appliances
now feature app-based controls, voice activation, and automated heating or cooking schedules,
enabling users to effortlessly customize their settings. Further, intelligent production lines are
improving efficiency and product quality while reducing costs. For example, leading companies
adopt modular standard designs and optimize processes to enhance traditional production lines
by incorporating equipment such as temperature sensing systems and reciprocating lifts,
achieving automated production. Based on the adoption of automated manufacturing technology,
leading companies implement automated quality control systems for collecting production
volume and quality data, achieving integrated automated testing. This reduces manual
involvement, lowers the defect rate of finished products, and prevents issues such as
mis-assembly, missing components, incorrect measurements, and missed tests, thereby enhancing
product quality and reliability. Moreover, product performance is continuously enhanced through
innovative technological advancements. For instance, some leading players in the industry are
upgrading motors to reduce heat generation, extending product lifespan. Additionally, advanced
product designs contribute to improved heat dissipation. Innovations in product development,
manufacturing, and quality control are set to significantly elevate the performance and standards
of future products.
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Transformation of Traditional Business Model
The global small home appliance industry is undergoing a significant shift in business
models, transitioning from traditional OEM approaches to more integrated ODM and OBM
models. Historically, many small home appliance manufacturers focused primarily on producing
appliances for established brands. However, as product types and consumer demands diversify,
companies are increasingly adopting the ODM model, where they design, produce, and sell their
own products to boost market competitiveness. Especially for ODM manufacturers engaged in
cross-border sales, under the ODM model, brand owners provide market demand, design
requirements, brand concepts, etc. in specified regions. ODM manufacturers with professional
design and manufacturing capabilities can better meet market demands and brand requirements,
reducing design costs for brand owners while improving product quality and competitiveness.
Additionally, enterprises with strong design capabilities and brand influence are embracing the
OBM model, creating and marketing their proprietary brands. This shift enables companies to
better control market channels and brand image, enhancing brand value and market share. This
evolution has led to the emergence of some Chinese small home appliance brands, which are
adopting a hybrid ODM/OEM+OBM approach. High quality, cost-effectiveness, superior product
design, manufacturing processes and brand positioning, and excellent after-sales service have
helped these emerging Chinese brands gain recognition and support from global consumers,
securing a strong position in the competitive market.
Accelerated Path of Chinese Companies to Set up Factories in Southeast Asia
The rapid economic growth, favorable geographical location, supportive partnerships and
relatively free global trade mechanism across Southeast Asia have positioned the region as an
attractive destination for Chinese companies seeking to expand their presence in overseas
markets, particularly in the small home appliance sector. From 2020 to 2024, Southeast Asia’s
GDP grew at a robust CAGR of 6.6%, with projections indicating a rise from USD3.5 trillion in
2025 to USD4.4 trillion by 2029, achieving a CAGR of 6.0%. Southeast Asia has an increasing
flow of foreign investment and trade and investment facilitated by regional economic
cooperation. Besides, Southeast Asia has a well-developed network of land, sea, and air
transportation that conveniently connects it to various parts of the world, such as Europe and the
Americas. Furthermore, with the deepening of the China-ASEAN Free Trade Area (ACFTA), the
full implementation of the “Regional Comprehensive Economic Partnership” (RCEP) and the
comprehensive progress of the “Belt and Road Initiative”, Chinese home appliance companies
are actively pursuing opportunities in the Southeast Asian market. For example, under the “Belt
and Road” initiative, the Rayong Industrial Park in Thailand is one of the first overseas
economic and trade cooperation zones established by China. China is also Thailand’s largest
source of foreign investment. Looking ahead, in light of potential impacts from the US-China
trade war, strategic positioning in Southeast Asia will enable Chinese companies, especially
small home appliance manufacturers operating on an ODM/OEM basis, to ensure stable exports
to the United States and other places while controlling product costs and quality. This strategy
supports the implementation of a globalized industrial approach and mitigates risks associated
with globalization policies for Chinese small home appliance companies.
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Industry Barrier Analysis of Global Small Home Appliance Industry and Small Kitchen
Appliance Industry
Technological Barrier
As consumers increasingly prioritise the functionality, aesthetics, environmental
friendliness, and health attributes of products, small home appliance manufacturers must
continuously innovate in technology and processes to meet rapidly evolving market demands.
The application of new technologies, materials, and manufacturing techniques drives product
iterations and upgrades, creating significant technological barriers for new entrants. These
newcomers must invest substantial resources into research and development to keep pace with
industry advancements. Additionally, they need to continuously advance their production
equipment to effectively respond to market trends such as intelligent and automated
manufacturing. The complexity of manufacturing processes and the precision required in
production further elevate the challenges and costs for new entrants. This environment
necessitates a high level of technical expertise and substantial financial investment, making it
difficult for new companies to compete with established players who already possess the
necessary technological capabilities and manufacturing efficiencies. Thus, the technological
sophistication and innovation within the small home appliance industry act as formidable
barriers, safeguarding the competitive edge of established manufacturers while deterring
less-equipped newcomers from entering the market.
Customer Recognition Barrier
The small home appliance market is characterised by high demand for quality, and the
nature of the ODM/OEM industry necessitates that manufacturing enterprises gain recognition
and establish stable business partnerships with overseas clients based on their long-term
experience and solid reputation in the small home appliance industry. The supplier certification
process for well-known international customers is typically very rigorous, involving
comprehensive assessments of a manufacturer’s operational qualifications, production capacity,
quality management, human rights policies, anti-terrorism and factory safety measures and
environmental protection practices. This thorough vetting process generally spans 2-3 years,
encompassing initial client contact, factory inspections, sample trials, small-scale trial
production, and finally, large-scale orders. Once a manufacturer achieves certified supplier status
and begins cooperation, large clients are unlikely to switch suppliers easily due to high
switching costs. This creates a significant barrier for new entrants, who find it challenging to
quickly establish trust and business relationships with potential clients. Therefore, the lengthy
and demanding process of gaining customer recognition, coupled with the reluctance of
established clients to change suppliers, forms a formidable barrier to entry in the global small
home appliance industry.
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Qualification Barrier
The small home appliance industry is governed by stringent requirements for production
qualifications and product certifications, posing significant barriers for new entrants. To legally
manufacture and sell products, newcomers must obtain relevant production licences and
certifications. Various countries and regions around the world have established mandatory
certification systems for electric home appliances. For example, products exported to the United
States and Canada must pass safety certifications such as ETL and UL, as well as FDA
food-grade certifications. Exports to Europe require CE, GS, and UKCA safety certifications,
along with food-grade certifications such as Germany’s LFGB, France’s DGCCRF, and Italy’s
DM. Australian exports need SAA safety certifications, while exports to the Asia-Pacific region
require PSE and CB safety certifications. Additionally, with growing environmental awareness,
companies must also secure appropriate environmental qualifications to meet ecological
standards. The process of obtaining these certifications is complex and time-consuming,
significantly increasing the difficulty for new entrants to break into the market. These rigorous
certification requirements ensure that only manufacturers who can meet high standards of safety,
quality, and environmental compliance can compete in the global small home appliance industry,
thereby protecting established players and maintaining industry standards.
Capital Barrier
Entering the small home appliance industry demands substantial capital investment in key
areas such as research and development, marketing, production line construction, and global
expansion. The industry’s downstream customers, particularly global well-known brands, have
stringent requirements for delivery times and product quality, making supplier selection highly
dependent on the supplier’s capacity for large-scale production. As a result, companies must
invest heavily in building standardised factories, acquiring advanced production lines, and
implementing automation technologies to meet these demands. Achieving economies of scale is
essential and can only be realised after reaching a certain volume of business, which necessitates
ongoing capital expenditure to expand production capacity in response to growing market
demand. New entrants often lack the financial resources or effective financing capabilities
required to rapidly establish large-scale production facilities and deploy comprehensive
resources on a global scale. This financial barrier, combined with the need for continuous
investment to scale operations, makes it challenging for new competitors to establish a foothold
in the market and compete with established players who already possess the necessary capital
and production capabilities.
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Major Development Challenge Analysis of Global Small Home Appliance Industry and
Small Kitchen Appliance Industry
Uncertainties in International Trade
Ongoing trade disputes, particularly the US-China trade tensions, have heightened trade
barriers between the two countries, posing significant challenges for the export and import of
small home appliances. High tariffs and stringent trade restrictions are likely to increase export
costs, potentially undermining the competitiveness of Chinese small home appliance companies
in the U.S. market. The uncertainties in international trade may further impact the development
of the small home appliance industry. In response to this international landscape, some leading
Chinese small home appliance manufacturers are establishing factories in Southeast Asia to
effectively deploy their production capacity on a global scale and enhance risk management
capabilities. This strategic move aims to improve resilience against fluctuations in international
trade policies and enhance the overall competitiveness of these companies.
Diverse Consumer Demand
In the small home appliance industry, consumer demands are evolving rapidly. Today’s
customers increasingly seek products that are not only intelligent and personalised but also of
the highest quality. This shift in consumer expectations calls for constant innovation in product
development and marketing strategies to stay ahead of the curve. For example, some smart small
kitchen appliance products have gained increasing popularity due to their ability to offer diverse
options, time-saving features, and app-based controls that allow users to monitor and adjust
settings remotely. Companies in the small home appliance industry need to invest in cutting-edge
technologies and sophisticated design features that cater to the growing demand for smarter and
more customised appliances. To succeed in a highly competitive market, small home appliance
companies must ensure their products exceed evolving consumer preferences, allowing them to
stand out from the competition.
Rising Environmental Standards
The global focus on environmental protection and sustainable development is intensifying,
with countries implementing stricter environmental regulations and standards. Manufacturers of
small home appliances must adhere to these regulations by integrating eco-friendly materials and
technologies into their product design and production processes. This compliance increases
production costs and technical challenges, forcing companies to balance environmental
responsibility with economic viability. However, adopting sustainable practices not only fulfils
regulatory requirements but also resonates with environmentally conscious consumers, fostering
long-term brand loyalty and driving market growth.
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Raw Material Price Analysis of Global Small Home Appliance Industry and Small Kitchen
Appliance Industry
The small home appliance industry faces challenges due to the fluctuating prices of key
raw materials such as copper, aluminum and Acrylonitrile Butadiene Styrene (ABS). These
fluctuations necessitate efficient procurement strategies and cost management practices to ensure
manufacturers can maintain profitability and competitiveness in the market. Copper, a primary
raw material for metal components and electronic parts, has seen its average price in China rose
from RMB48.6 thousand per tonne in 2020 to RMB75.1 thousand per tonne in 2024. This
increase is driven by growing demand and limited supply in the market. The high cost of copper
affects various components of small home appliances such as power cords, thermostats, and PCB
boards, which rely on copper for their production. Consequently, manufacturers must navigate
these rising costs to maintain profitability and competitive pricing. Aluminium is a key material
for various appliance components such as aluminium motors, heating pipes, etc., and its price
changes directly impact manufacturing costs. Aluminium prices have also shown notable
fluctuations, impacting the small home appliance sector. The average price of aluminium in
China has increased from RMB14.2 thousand per tonne in 2020 to RMB19.9 thousand per tonne
in 2024. This surge is driven by rising downstream demand from emerging sectors such as
automotive and renewable energy, alongside supply constraints due to capacity lags and
operational disruptions related to regulatory interventions and environmental concerns. The
average price of ABS, a crucial plastic material for small home appliances, has experienced
significant volatility over the past few years in China. The average price of ABS in China
peaked at RMB17.6 thousand per tonne in 2021 then dropped to RMB11.0 thousand per tonne in
2024. The ABS industry is currently experiencing a potential oversupply due to expanding
production capacity and increased supply.
Average Prices of Copper, Aluminium,
Acrylonitrile Butadiene Styrene (China), 2020–2024
0
13
12
11
14
15
16
17
18
0
16.5
16.0
15.5
15.0
14.5
17.0
17.5
18.0
19.0
18.5
20
19.5
55
50
60
65
70
75
80
Thousand RMB
/Tonne
2020 2021 2022 2024 2023
Copper
48.6
68.3 67.1 68.3
75.1
Thousand RMB
/Tonne
2020 2021 2022 2024 2023
14.2
18.9
19.9
18.7
19.9
Thousand RMB
/Tonne
2020 2021 2022 2024 2023
Acrylonitrile Butadiene Styrene (ABS)Aluminium
13.4
17.6
13.1
10.7 11.0
Source: BAIINFO, Frost & Sullivan
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Competitive Landscape Analysis of Global Small Home Appliance Industry and Small
Kitchen Appliance Industry
The product categories involved in the small home appliance industry are relatively
complex, and the product categories are still growing, making the industry highly fragmented
and segmented. After years of development, small home appliance companies in China have
primarily split into two major categories. The first category comprises brand-focused companies,
which dominate the domestic market and wield significant brand influence. The second category
includes OEM/ODM companies, which mainly focus on ODM/OEM models. These companies,
primarily provide integrated R&D and production services to well-known international brands.
In 2024, the export value of small kitchen appliances in China reached approximately
RMB141.7 billion. The top ten companies accounted for a total market share of 36.9% by export
value in 2024. The export value for our Group was approximately RMB1.1 billion in 2024,
ranking the 10
th among the market participants in China and accounting for a market share of
0.8%.
Top Ten Companies in China’s Small Kitchen Appliance Industry by Export Value, 2024
Ranking Company Name
Export Value of
Small Kitchen
Appliances in
2024 Market Share
(RMB Billion)
1 Guangdong Galanz Electrical Appliances Manufacturing
Co., Ltd.
20.0 14.1%
2 Guangdong Xinbao Electrical Appliances Holdings Co., Ltd. 9.0 6.4%
3 Midea Group Co., Ltd. 7.0 4.9%
4 Zhejiang Supor Co., Ltd. 6.0 4.2%
5 Guangdong WELLY Electrical Appliances Co, Ltd. 2.2 1.6%
6 Zhejiang Biyi Electric Appliance Co., Ltd. 1.9 1.3%
7 Ningbo careline Electric Appliance Co., Ltd. 1.8 1.3%
8 Ningbo Borine Electric Appliance Co., Ltd. 1.7 1.2%
9 Joyoung Co., Ltd. 1.6 1.1%
10 Our Group 1.1 0.8%
TOP 10 52.3 36.9%
TOTAL 141.7
Source: Annual Reports of Listed Companies, China Chamber of Commerce for Import and Export of
Machinery and Electronic Products, Interviews with Industry Experts, Frost & Sullivan
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The following sets forth the profile of the companies in the ranking:
Company Name
Establish Y ear and
Registered Place Listed or Not
Major Types of Small
Home Appliances
Major Business
Model of Overseas
Business
Guangdong Galanz
Electrical Appliances
Manufacturing
Co., Ltd.
2011
Zhongshan,
Guangdong
Unlisted  Small Kitchen
Appliances
OBM+OEM/ODM
Guangdong Xinbao
Electrical Appliances
Holdings Co., Ltd.
1995
Foshan,
Guangdong
Listed (002705.SZ)  Small Kitchen
Appliances
 Small Home Living
and Environment
Appliances
 Small Personal Care
Appliances
OEM/ODM
Midea Group Co., Ltd. 2000
Foshan,
Guangdong
Listed (000333.SZ;
0300.HK)
 Small Kitchen
Appliances
 Small Home Living
and Environment
Appliances
 Small Personal Care
Appliances
OBM+OEM/ODM
Zhejiang Supor Co.,
Ltd.
1996
Yuhuan,
Zhejiang
Listed (002032.SZ)  Small Kitchen
Appliances
 Small Home Living
and Environment
Appliances
OBM+OEM/ODM
Joyoung Co., Ltd. 2002
Jinan,
Shandong
Listed (002242.SZ)  Small Kitchen
Appliances
 Small Home Living
and Environment
Appliances
OBM+OEM/ODM
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Company Name
Establish Y ear and
Registered Place Listed or Not
Major Types of Small
Home Appliances
Major Business
Model of Overseas
Business
Guangdong WELLY
Electrical Appliances
Co, Ltd.
2005
Zhongshan,
Guangdong
Unlisted  Small Kitchen
Appliances
OEM/ODM
Ningbo careline
Electric Appliance
Co., Ltd.
2010
Ningbo,
Zhejiang
Unlisted  Small Kitchen
Appliances
OEM/ODM
Ningbo Borine Electric
Appliance Co., Ltd.
2007
Ningbo,
Zhejiang
Listed (873083.NQ)  Small Kitchen
Appliances
OEM/ODM
Zhejiang Biyi Electric
Appliance Co., Ltd.
2001
Yuyao,
Zhejiang
Listed (603215.SH)  Small Kitchen
Appliances
OEM/ODM
According to the data released by the General Administration of Customs of PRC, the
following is the proportion of the export volume of our Group’s major small home appliance
product series to China’s export volume to the corresponding countries:
Customs Goods and
HS Codes
Exporter
Country Units
China’s
Export Volume
in 2024
Our Group’s
Export Volume
in 2024
Our Group’s
Market Share
in China (%)
Food grinder and
blender (85094090)
1
The U.S. Piece 71,329,719 2,678,751 3.76
Australia Piece 5,521,711 64,602 1.17
Netherlands Piece 12,203,807 46,070 0.38
Switzerland Piece 373,038 1,196 0.32
Other electric furnace;
electric pot, electric
heating plate,
heating ring,
barbecue oven, etc.
(85166090)
The U.S. Piece 49,867,199 4,361,181 8.75
Germany Piece 8,045,708 116,739 1.45
France Piece 10,257,515 230,001 2.24
The U.K. Piece 9,536,980 86,684 0.91
Switzerland Piece 326,236 10,220 3.13
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Customs Goods and
HS Codes
Exporter
Country Units
China’s
Export Volume
in 2024
Our Group’s
Export Volume
in 2024
Our Group’s
Market Share
in China (%)
Other electric coffee
and tea maker
(85167190)
The U.S. Piece 6,428,613 1,579,649 24.57
Canada Piece 532,974 317,453 59.56
France Piece 251,169 13,252 5.28
Sweden Piece 45,258 1,800 3.98
Scale, including baby
scale, household
scale (84231000)
The U.S. Ten Thousand
Pieces
3,143 82.36 2.62
Source: General Administration of Customs of PRC, Frost & Sullivan
Notes:
1. Corresponds to our Group’s products including mixer and other motor-driven products;
2. Corresponds to our Group’s products including electric oven, electric fryer, electric boiler, air fryer, dried
fruit machine, slow cooker, football oven, waffle machine and other electro-thermic products;
3. Corresponds to our Group’s products including electric kettle;
4. Corresponds to our Group’s products including electronic scale series (kitchen scale, human scale, etc.).
OVERVIEW OF GLOBAL GARDEN HOSE INDUSTRY
Garden goods refer to tools, machines, or devices specifically designed for gardening and
outdoor maintenance. Garden hose is one of the major garden goods used for garden irrigation,
cleaning, and other purposes. It is typically made of durable materials such as PVC,
polyethylene, TPE (thermoplastic elastomers), latex, etc., characterised by being soft,
lightweight, and durable.
Market Size of Garden Hose and Garden Goods Industry
As the global economy expands and the demand for high-quality lifestyles rises, an
increasing number of consumers are investing in personal gardens and there are ongoing shift
towards outdoor living and rising popularity of gardening as a leisure activities which fueled the
significant growth of the garden goods market. Within this broader market of garden goods,
garden hoses represent a critical segment. The retail value of the garden hose market increased
from USD8.2 billion in 2020 to USD9.2 billion in 2024, reflecting a CAGR of 2.9%. This
growth is attributed to the increasing adoption of high-performance and durable garden hose
products that cater to both amateur gardeners and professional landscapers. As the garden goods
industry continues to expand, the market size of garden hoses is projected to grow from USD9.5
billion in 2025 to USD11.4 billion by 2029, with a CAGR of 4.7%.
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Market Size of Garden Hose and Garden Goods Industry
by Retail Value, 2020–2029E
60
50
40
30
20
10
0
Total Garden Goods
Garden Hoses
CAGR 2020–2024
2.8%
CAGR 2025E–2029E
5.1%
2.9% 4.7%Billion USD
2029E2020 2021 2022 2023 2025E 2026E 2027E 2028E2024
55.0
11.4
39.0
8.2
41.9
8.8
41.8
8.9
42.4
9.0
43.6
9.2
45.0
9.5
47.0
9.9
49.3
10.3
52.0
10.8
Source: Frost & Sullivan
The United States has been the largest garden hose market in the world over the past five
years, accounting for over 50% of the global market. Driven by the growing popularity of
gardening, the U.S. garden hose industry has seen rapid growth in recent years, with its retail
value rising from USD4.6 billion in 2020 to USD5.3 billion in 2024, with a CAGR of 3.9%.
Looking ahead, the market is expected to continue its upward trajectory, fueled by rising
participation in gardening activities, increased gardening spending, and ongoing innovation in
garden hose products. The retail value of the U.S. garden hose industry is projected to grow
from USD5.5 billion in 2025 to USD6.8 billion in 2029, representing a CAGR of 5.8%.
Market Size of Garden Hose Industry by Retail Value by Region, 2020–2029E
12,000
10,000
8,000
6,000
4,000
2,000
0
China
USA
Europe
Global Garden Hose Industry
CAGR 2020–2024
3.6%
CAGR 2025E–2029E
3.8%
3.9% 5.8%
1.5% 3.7%
ROW 2.0% 2.3%
2.9% 4.7%Million USD
2029E2020 2021 2022 2023 2025E 2026E 2027E 2028E2024
11,445.7
8,243.7 8,768.5 8,857.4 9,013.7 9,248.1 9,525.5 9,887.5 10,322.4 10,849.0
6,835.6
4,551.9 4,693.2 5,005.7 5,137.9 5,297.2 5,456.1 5,701.6 6,043.7 6,418.4
2,960.52,352.2 2,627.1 2,436.5 2,455.9 2,500.1 2,562.6 2,639.5 2,729.2 2,838.4
1,635.1 1,329.0 1,436.3 1,403.3 1,408.0 1,438.6 1,494.2 1,533.4 1,546.0 1,578.2
14.6
10.6 11.9
14.013.4 13.0 12.2 12.6 11.9 11.9
Source: Frost & Sullivan
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Market Drivers and Trends Analysis of Global Garden Hose Industry
Increasing Gardening Activities in Pursuit of High-quality Life
Gardening has a rich tradition in the United States and Europe, fostering widespread
participation that creates a large, stable market for garden hoses and related products. As living
standards improve, gardening has gained popularity not only as a hobby but also as a means of
home maintenance. This shift has led to a significant increase in demand for gardening supplies,
particularly garden hoses, which are essential for maintaining garden spaces and enhancing the
aesthetic appeal of living environments. In developed regions like the United States and Europe,
higher average incomes enable many households to enjoy and care for their private gardens. The
rising interest in gardening, coupled with the pursuit of a higher quality of life, is driving steady
expansion in the garden hose market. Garden hoses, as essential tools, are well-positioned to
meet consumer expectations for quality and functionality. As households continue to embrace
gardening for leisure, beauty, and self-sufficiency, the garden hose industry benefits from a
reliable customer base and a strong demand pipeline.
Emerging Planting Demand and Rising Gardening Expenditures
The trend toward home-grown vegetables and eco-friendly landscaping has spurred the need
for high-quality, durable hoses. As urban and suburban residents expand their gardening
activities, demand grows for specialized hoses, including those designed for drip irrigation,
flexibility, and eco-friendly materials, making garden hoses an essential component of household
gardening expenses. In addition, growing participation in gardening activities is driving
increasing demand for garden hoses. The gardening household population in the United States
increased from 95.8 million in 2020 to over 120.0 million in 2024. Moreover, rising
expenditures on gardening activities reflect a growing trend as more consumers invest in outdoor
spaces for recreation, aesthetics, and sustainable practices. The average household gardening
expenditure in the U.S. rose from USD458 in 2020 to over USD700 in 2024. This growing
investment in gardening is driving demand for related products, including garden hoses, and is
expected to further expand the market for garden hose products as more consumers engage in
outdoor home improvement and landscaping.
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Advancements in Technology and Product Performance
The garden hose market is undergoing substantial evolution in technology and product
performance, driven by consumer demand for enhanced functionality and convenience.
Automatic extension garden hoses are increasingly popular for their ease of handling, storage,
and transport, making them particularly well-suited for garden spaces. Durability is a top
priority, with consumers seeking hoses that resist kinking, extreme temperatures, and long-term
wear. New models incorporate advanced features such as ultra-high temperature and burst
tolerance, as well as the ability to function under extreme low temperatures. In addition, the
industry is focusing on material innovations, utilizing soft yet resilient materials and thicker
inner tube designs for added reliability. New designs featuring polyester-braided outer layers and
latex inner tubes offer superior elasticity, high-temperature resilience, and freeze resistance,
making them versatile for a variety of outdoor tasks. Furthermore, the growing emphasis on
eco-friendly materials and sustainable production methods contributes to product longevity and
safety while aligning with consumer interest in environmentally responsible gardening tools.
This combination of advanced features, durability, and sustainability is driving continuous
innovation in the garden hose market, ensuring that products not only meet but exceed evolving
consumer expectations.
Impact Analysis of Sino-U.S. and the Global Trade Tension on the Global Small Home
Appliances and Non-electric Household Goods Industry
1. Price Competitiveness of Chinese Manufacturing and Market Adaptability: Small home
appliances and non-electric household goods are typically sold at relatively low prices, with
consumers showing less sensitivity to price changes. Consumers tend to be less sensitive to
price changes for low-priced small home appliances and non-electric household goods due
to certain key factors. Firstly, such products are often associated with convenience-oriented
and routine purchasing behavior. For small kitchen appliances or garden hoses, they are
replaced based on practical daily needs rather than planned spending cycles. Secondly,
these items typically fall within a low-to-moderate price range, where consumers may be
less inclined to conduct extensive price comparisons or delay purchases in anticipation of
discounts. As a result, modest price fluctuations may not significantly affect consumer
demand, particularly when the products are purchased for daily needs and use. China is one
of the cheapest sources for these products to the U.S., thanks to its established supply chain
and experience in manufacturing at lower costs while maintaining quality. Therefore, even
though the U.S. is imposing additional tariffs on Chinese products, which could lead to
price increases, this change has limited impact on consumers’ purchasing decisions. With
their inherent cost advantage, Chinese manufacturers are likely to maintain competitiveness
in the U.S. market, even in the face of higher tariffs.
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2. The Continued Dependence of the U.S. on Imports from China: For many years, the
U.S. has been heavily reliant on imports of small home appliances and non-electric
household goods from China, making China one of the largest export countries for these
products to the U.S. Over the past decade, China’s role as a key supplier has been firmly
established. According to data from the International Trade Administration of the U.S.
Department of Commerce, over the past ten years, China has consistently been the largest
source of U.S. imports in the Electrical Equipment, Appliances & Components category.
Imports from China have accounted for approximately 30% of the total U.S. import value
in this category, highlighting the country’s pivotal role in the U.S. supply chain for these
products. Due to the long-term and stable relationships between U.S. importers and Chinese
manufacturers, it is difficult to quickly alter this dependence in the short term. The
dependence of U.S. importers on Chinese manufacturers has been built over decades, driven
by cost efficiency, large-scale production capabilities, and a well-integrated industrial
ecosystem spanning raw materials, manufacturing, and logistics. Long-term partnerships
with Chinese suppliers have ensured reliability, quality, and competitive pricing. Shifting
away from these established relationships is not simply about finding new suppliers. It
involves reconfiguring entire supply chains, which demands time, investment, and strategic
planning. In the short term, diversification efforts are limited by infrastructure gaps,
workforce constraints, and insufficient capacity in alternative markets. Additionally, new
supply chain setups may lead to higher labor costs, logistical inefficiencies, and regulatory
complexities, making it difficult for U.S. importers to quickly reduce their reliance on
China without facing disruptions, cost increases, or quality concerns. As a result, while the
additional tariffs may increase import prices, this does not imply that the U.S. market will
be able swiftly pivot to domestic supplies or other countries, not to mention when other
popular manufacturing hubs, such as Vietnam, are also subject to tariff. The established
supply chain and experience in manufacturing at lower costs with consistent quality
continue to give Chinese manufacturers a competitive edge, even amidst the tariff
challenges.
3. China’s Advantage in Global Supply Chains: China’s mature and efficient supply chain
network has long been a key factor in its dominance in producing and shipping small home
appliances and non-electric household goods globally at low costs. This comprehensive
advantage in material procurement, production efficiency, technological accumulation and
labor resources enables Chinese manufacturers to maintain a leading position in the global
market, particularly in the U.S. Although manufacturers in regions such as Southeast Asia
are gradually becoming more competitive in terms of price and capacity, they still lag
behind China in crucial areas such as production technology, supply chain management and
infrastructure development. These gaps make it difficult for U.S. importers to find viable
alternatives in the short term, given that they face significant time and financial costs when
switching to new suppliers due to a range of complex and interrelated factors. The process
involves extensive sourcing and evaluation, including factory audits and product testing,
which demand both time and investment. Legal and administrative burdens also increase as
new contracts are negotiated and regulatory certifications updated. Operationally, retailers
must adapt logistics, inventory systems, and shipping arrangements which also means there
are risks of delays or stock outs. In addition, integrating new suppliers often requires
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modifications to production processes, system upgrades and staff retraining. Compounding
these challenges are reputational risks, because any lapse in quality or delivery during the
transition can erode consumer trust and necessitate further spending on customer retention
and brand repair. The foregoing collectively ensures China’s continued dominance in the
sector despite increasing competition from other countries. As a result, Chinese
manufacturers are likely to remain the preferred supplier to the U.S. market in the near
future.
4. Overseas Retailers’ Preference for Stable Suppliers: Overseas retail chains and reputable
brand owners tend to maintain long-term stable relationships with a limited number of
approved suppliers. Switching to new suppliers involves significant time and financial
costs. Despite the rising tariffs, these retailers are likely to continue their collaboration
with Chinese suppliers due to the latter’s reliability in terms of quality, price and supply
chain stability, avoiding the risks and uncertainties of changing suppliers.
5. International Expansion of Leading Chinese Small Home Appliance Manufacturers:
Leading Chinese small home appliance and non-electric household goods manufacturers
have been actively expanding their overseas production capacity. Through international
production layouts, they can better cope with the challenges brought about by trade tension.
By establishing overseas production bases or partnerships, these manufacturers reduce their
dependence on single markets and gain the flexibility to adjust production capacity and
supply chains, thereby maintaining their competitive edge in the global market.
Industry Barrier Analysis of Global Garden Hose Industry
Technological Barrier
In the garden hose market, technical barriers encompass the use of advanced materials and
construction techniques, as well as innovative design features that complicate product
development. Achieving high performance in areas such as temperature and pressure resistance,
as well as freeze resistance, involves complex engineering that new entrants may find
challenging to replicate without significant investment in R&D. The existing patents and
intellectual property rights on these technologies present substantial hurdles, requiring new
entrants to navigate legal constraints while striving to develop competitive products. In addition,
the leading suppliers in the garden hose industry are continuously promoting the deployment of
automated and intelligent production equipment in their manufacturing factories, which will
further strengthen their competitive position in the market.
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Customer Network Barrier
Established garden hose manufacturers have built extensive customer networks over time,
leveraging their OEM/ODM models to secure long-term partnerships and client relationships.
New entrants must navigate the complexities of establishing their own customer networks, often
requiring significant effort to forge new partnerships and build credibility within the industry.
Additionally, existing manufacturers benefit from established relationships and loyalty among
their clientele, which new entrants must develop from the ground up.
Supply Chain Barrier
Building relationships with reliable suppliers for raw materials and components can be both
challenging and time-consuming for new entrants. Effective supply chain management is
essential for controlling costs and ensuring timely product delivery, which new players may
initially struggle with. Furthermore, established companies often have well-developed risk
management strategies to handle supply chain disruption s – a capability new entrants will need
to develop to effectively mitigate potential risks.
Capital Barrier
Establishing production facilities for garden hoses requires a significant investment in
machinery, equipment, and raw materials, necessitating substantial capital for infrastructure and
technology. Additionally, developing innovative products demands considerable funding for
research and development. New entrants must also invest heavily in marketing, advertising, and
brand-building campaigns to gain market visibility and attract consumers, which can be
particularly costly in the initial stages.
Major Development Challenge Analysis of Global Garden Hose Industry
Supply Chain Disruptions
Managing a global supply chain for garden hoses can be complex and vulnerable to
disruptions. Fluctuations in the availability and cost of raw materials, transportation delays, and
geopolitical tensions can impact production schedules and cost control. Especially in today’s
escalating trade tensions, leading garden hose manufacturers are strategically expanding their
global production networks to enhance the resilience of their supply chains and improve their
capacity for global delivery. Ensuring a reliable supply of components and managing logistics
effectively are critical for maintaining consistent product availability and competitive pricing.
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Regulatory Compliance and Environmental Standards
The industry faces increasing pressure to meet stringent environmental regulations and
sustainability standards. Compliance with these regulations requires investment in eco-friendly
materials and production processes, which can drive up costs. Additionally, navigating varying
regulatory requirements across different regions can be challenging for global manufacturers.
Technological Innovation and Competition
The rapid pace of technological advancements in garden hoses, such as smart technologies
and energy-efficient features, requires continuous investment in research and development.
Manufacturers must stay ahead of trends and incorporate the latest innovations to remain
competitive. This need for ongoing innovation can be resource-intensive and requires balancing
technological advancements with cost-effectiveness.
Raw Material Price Analysis of Global Garden Hose Industry
Natural rubber latex is a milky fluid that is collected from the rubber tree. It is composed
mainly of water along with rubber particles, proteins, lipids, sugars, and other compounds.
Natural rubber latex is widely used in the production of various products such as gloves,
balloons, garden hose, and other rubber products. Affected by tight supply caused by abnormal
weather, the average price of rubber latex in China rose to RMB14,687.7 per tonne in 2024.
PP (Polypropylene) is a lightweight, chemically resistant material recognised for its
durability and versatility. It is widely used in the production of various types of pipes and hoses,
including garden hoses, due to its ability to endure harsh environmental conditions and chemical
exposure. The average price of polypropylene in China has remained relatively stable, reaching
RMB7,565.7 per tonne in 2024.
Average Prices of Nature Rubber Latex and Polypropylene (China), 2020–2024
RMB/Tonne
2020 2021 2022 2024 2023
0
5,000
10,000
15,000
Natural rubber latex RMB/Tonne
2020 2021 2022 2024 2023
0
2,000
4,000
6,000
8,000
10,000
Polypropylene
11,259.2
13,145.8
12,455.9 12,200.1 14,687.7
7,738.2
8,690.8 8,336.5
7,405.7 7,565.7
Source: Wind, Frost & Sullivan
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Competitive Landscape Analysis of Global Garden Hose Industry
The global garden hose market is highly fragmented with numerous participants, especially
in China. Many companies operate on a smaller scale, focusing on mid-to-low-end products,
which intensifies competition. However, as technology advances and consumer preferences shift
towards higher-quality and innovative products, there is increasing emphasis on product
differentiation. Companies that invest in R&D to develop advanced features – such as enhanced
durability and self-retracting mechanisms–can gain a competitive edge. Additionally, global
competition and existing patents create barriers for new entrants, making it essential for
companies in the garden hose industry to continually innovate and adapt to thrive in this
dynamic market.
The total export value of garden hoses in China reaching approximately RMB10.6 billion in
2024, and the top five players holding a market share of approximately 9.5%. The export value
for our Group was approximately RMB285.1 million in 2024, ranking the 1st among the market
participants in China and accounting for a market share of 2.7%.
Top Five Companies in China’s Garden Hose Industry by Export Value, 2024
Ranking Company Name
Export Value of
Garden Hoses in
2024 Market Share
(RMB Million)
1 Our Group 285.1 2.7%
2 Ningbo Daye Garden Industry Co., Ltd. 230 2.2%
3 Puning Xinhongjie Plastic Co., Ltd. 200 1.9%
4 Zhejiang Helen Garden Co., Ltd. 160 1.5%
5 Zhejiang Tianti Rubber & Plastic Technology Co., Ltd. 130 1.2%
TOP 5 1,005.1 9.5%
TOTAL 10,607.5
Source: General Administration of Customs of PRC, Interviews with Industry Experts, Frost & Sullivan
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The following sets forth the profile of the companies in the ranking:
Company Name
Established Y ear
and Registered
Place Listed or Not
Major Business
Model
Ningbo Daye Garden Industry
Co., Ltd.
2001
Ningbo,
Zhejiang
Unlisted OEM/ODM
Puning Xinhongjie Plastic
Co., Ltd.
2009
Puning,
Guangdong
Unlisted OEM/ODM
Zhejiang Helen Garden Co., Ltd. 2001
Taizhou,
Zhejiang
Unlisted OEM/ODM
Zhejiang Tianti Rubber &
Plastic Technology Co., Ltd.
2012
Taizhou,
Zhejiang
Unlisted OEM/ODM
In 2024, the export value of our Group’s garden hose series products (Customs HS Codes
39173900 and 40091200) to the U.S. accounted for 11.72% of China’s total export value to the
U.S.
Customs Goods and HS Codes
Exporter
Country
China’s
Export
Value in
2024
Our
Group’s
Export
Value of
Garden
Hose in
2024
Our
Group’s
Market
Share in
China
(RMB
Million)
(RMB
Million) (%)
Plastic pipes, not specified
(39173900) & pipes with
accessories not reinforced or
combined with other materials
(40091200)
1
The U.S. 2,348.97 275.30 11.72
Source: General Administration of Customs of PRC, Frost & Sullivan
Note : 1. The corresponding company products under “Customs HS Code (39173900)” are garden hose series
(aluminum head hoses, ribbed bungee hoses etc.); the corresponding products under “Customs HS
Code (40091200)” are latex garden hoses.
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THE PRC
Our business operations are subject to extensive supervision and regulation by the PRC
government. This section sets out: (i) an introduction to the major PRC government authorities
with jurisdiction over our current operations; (ii) a summary of the major laws and regulations
to which we are subject.
Principal Regulatory Authorities
In addition to the supervision and management by authorities that perform general
regulation on companies in the PRC, our operations in the PRC are mainly subject to supervision
and management under the following authorities:
Ministry of Industry and Information Technology of the People’s Republic of China
Ministry of Industry and Information Technology of the People’s Republic of China (the
“MIIT ”) is the department in charge of proposing strategies and policies of new industrialization
development, drafting and organising the implementation of industrial plans and industrial
policies, drafting and formulating regulations, formulating industrial technical specifications,
formulating and implementing standards and policies of new materials and high-tech industries,
promoting the development of emerging industries, and guiding relevant industries in
strengthening safety production management.
Ministry of Ecology and Environment of the People’s Republic of China
Ministry of Ecology and Environment of the People’s Republic of China (the “ MEE”) is
the department in charge of formulating the basic system relevant to ecological environment,
examining and approving fixed asset investment projects, supervising environmental pollution
prevention and control, formulating and supervising the implementation of pollution prevention
and control system, enforcing the law, and investigating and dealing with major ecological and
environmental violations.
National Development and Reform Commission of the People’s Republic of China
The National Development and Reform Commission of the People’s Republic of China (the
“NDRC ”) is an authority that formulates and implements economic and social development
policies, carries out overall balances and guides the overall economic system reform from an
all-rounded macro perspective. It is responsible for promoting the economic and social
development, formulating and implementing the national strategic emerging industries
development plan, coordinating high-stake investment projects. Our Company is also subject to
NDRC’s supervision and management on overseas investment regarding to establishment of
enterprises or acquisition of assets and shares outside China.
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Ministry of Emergency Management of the People’s Republic of China
Ministry of Emergency Management of the People’s Republic of China (the “ MEM”) is the
department in charge of organising the preparation of the national overall emergency response
plan and planning, guiding all regions’ and departments’ respond to emergencies, promoting the
formation of the emergency response system, guiding emergency rescue on safe production, and
in charge of the supervision of safe production of industrial, mining and commercial industries.
Regulations in Relation to Product Liability
Pursuant to the Product Quality Law of the PRC ( ) which
was promulgated by the SCNPC on 22 February 1993 and last amended on 29 December 2018,
producers and sellers shall have their own proper regulations for the management of product
quality, rigorously implementing post-oriented quality regulations, quality liabilities and relevant
measures for their assessment. Producers and sellers are responsible for the product quality
according to the provisions of the laws.
Quality of products shall pass standard examinations and no substandard products shall be
used as standard ones. Industrial products which may be hazardous to the health of the people
and the safety of lives and property shall conform to the state and trade standards for ensuring
the health of the human body and safety of lives and property. In absence of such state or trade
standards, the products shall conform to the minimum requirements for ensuring the health of
the human body and the safety of lives and property. It shall be prohibited to produce or sell
industrial products that do not come to the requirements and demands for physical health and
safety of body and property. Producers or sellers shall be responsible for any compensation
arising from their unlawful acts such as production or sales of defective, eliminated or
ineffective products, faking the place of origin or quality marks, mixing or adulterating products
or passing off imitations as genuine, substandard products as quality ones or non-conforming
products as conforming. Proceeds from the sales may be confiscated, the business licence may
be revoked and penalties may be imposed. If the case is serious, criminal responsibilities shall
be investigated. Producers or sellers shall be liable for any damage to any person or property
due to the defects of products resulting from the default of the producers or sellers.
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Regulations in Relation to Consumer Production
Law of the People’s Republic of China on the Protection of Consumer Rights and Interests
( ) was promulgated by the Standing Committee of the
National People’s Congress (the “ SCNPC ”) on 31 October 1993, latest revised on 25 October
2013 and became effective on 15 March 2014. Business operators, when providing consumers
with the commodities produced or sold by them or services, shall abide by the Law of the
People’s Republic of China on the Protection of Consumer Rights and Interests. Business
operators that provide goods or services in any of the following circumstances shall bear civil
liability in accordance with other relevant laws and regulations, except as otherwise provided in
the Law: (1) there are defects in the goods or services provided; (2) the goods provided do not
possess the usability they are supposed to possess with no declaration thereabout made at the
time of sale; (3) the goods provided do not conform to the standards indicated on the goods or
on the packages thereof; (4) the goods provided do not conform to the quality indicated by the
product description or by physical samples; (5) production of goods that have been formally
declared by the State to be obsolete or sales of goods that are no longer effective or have
deteriorated; (6) goods are sold short of weight or quantity; (7) service contents and fees are in
violation of a prior agreement; (8) deliberately delaying or unreasonably refusing consumers’
demand for the repair, remake, change or return of goods, making up for any shortage in
quantity, refunding the expenses for goods or services, or compensating for losses; or (9) other
circumstances infringing consumer rights and interests as specified by laws and regulations.
Business operators who fail to fulfil the obligation of guaranteeing the safety of consumers and
cause damage to consumers shall be liable for tort. Business operators who provide goods or
services in violation of the provisions of the Law of the People’s Republic of China on the
Protection of Consumer Rights and Interests, infringe the legitimate rights and interests of
consumers and constitute crimes shall be investigated for criminal liability in accordance with
the law.
Regulations in Relation to Safe Production
The Work Safety Law of the People’s Republic of China ( )
was promulgated by the Standing Committee of the National People’s Congress (the “ SCNPC ”)
on 29 June 2002, which was implemented on 1 November 2002, and latest revised on 10 June
2021 and became effective on 1 September 2021. Production and business entities shall abide by
this Law and other laws and regulations concerning work safety, strengthen work safety
management, establish and improve a work safety responsibility system and work safety rules
and systems for all employees, increase efforts to guarantee the input of funds, materials,
technology, and personnel in work safety, improve work safety conditions, strengthen
standardisation and informatisation of work safety, construct a dual prevention mechanism
consisting of graded management and control of safety risks and examination and control of
potential risks, improve the risk prevention and resolution mechanism, raise work safety levels,
and ensure work safety. The law stipulates provisions on guarantee of safety by production and
business operation entities, rights and obligations of employees relating to work safety,
supervision and administration of work safety, emergency rescue, investigation, and handling of
work safety accidents and legal responsibilities.
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Regulations in Relation to E-Commerce and Online Transaction
The E-commerce Law of the People’s Republic of China ( )
was promulgated by the Standing Committee of the National People’s Congress on 31 August
2018, which became effective on 1 January 2019. The E-commerce Law promulgated to
safeguard the legitimate rights and interests of all subjects involved in electronic commerce,
regulate e-commerce practices, maintain the sound market order and foster the development of
the e-commerce industry in a sustainable and healthy manner. The E-commerce Law proposes a
series of requirements on e-commerce operators. According to the E-commerce Law, in carrying
out business activities, e-commerce operators shall comply with the principles of voluntariness,
equality, fairness, and good faith, abide by laws, observe business ethics, equally participate in
market competition, perform obligations regarding the protection of consumers’ rights and
interests, environmental protection, intellectual property protection, and the protection of
cyberspace safety and personal information, take charge of the quality of products and services,
and receive the supervision of the government and the general public.
Measures for the Supervision and Administration of Online Transactions (္ຖ၍
) was promulgated by State Administration for Market Regulation on 15 March 2021,
which became effective on 1 May 2021. Measures for the Supervision and Administration of
Online Transactions applies to business activities involving the sale of commodities or provision
of services through information networks such as the Internet (hereinafter referred to as
“online”) as well as to the supervision and administration thereof by departments for market
regulation within the territory of the People’s Republic of China. According to Measures for the
Supervision and Administration of Online Transactions, online transaction operators shall, when
engaging in business activities, follow the principles of voluntariness, equality, fairness and
good faith, abide by laws, regulations, rules and business ethics as well as public order and good
customs, participate in market competition on an equal footing, earnestly fulfil their statutory
obligations, proactively assume the primary responsibility and accept supervision from all
sectors of society. No online transaction operator may, in violation of laws, regulations or
decisions of the State Council, engage in business operations without a licence or permit. Except
under the circumstances for exemption from registration as prescribed in Article 10 of the
E-commerce Law of the People’s Republic of China, online transaction operators shall go
through market entity registration in accordance with the law.
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Regulations in Relation to Import and Export of Goods
According to the Foreign Trade Law of the PRC ( )
promulgated by the SCNPC on 12 May 1994 and recently amended on 30 December 2022, and
the Measures for the Record Registration of Foreign Trade Operators (೮
) promulgated by the MOFCOM on 25 June 2004 and last amended on 10 May 2021,
foreign trade operators engaged in goods or technology import and export are required to go
through the record-filing registration procedures with the competent department of foreign trade
under the State Council or its entrusted institutions, except for those that are not required to
complete the record-filing registration as prescribed by laws, administrative regulations and the
provisions of the competent department of foreign trade under the State Council. Where a
foreign trade operator fails to go through the record-filing registration formalities according to
relevant provisions, the Customs are entitled to refuse to handle the formalities for declaration
and clearance of goods imported or exported by the operator.
In accordance with the Provisions on the Administration of Recordation of Customs
Declaration Entities of the PRC ( ) published by
the General Administration of Customs of the PRC on 19 November 2021, and effective from
1 January 2022, consignees or consignors of imports and exports and customs declaration
enterprises applying for filing shall obtain market entity qualification; in the case of consignees
or consignors of imports and exports applying for filing, they shall also complete filing
formalities for foreign trade operators.
Customs Law of the People’s Republic of China () was
promulgated by the Standing Committee of the National People’s Congress on 22 January 1987,
which became effective on 1 January 2019, latest revised on 29 April 2021 and became effective
on 29 April 2021. The Customs of the People’s Republic of China is the state’s organ
responsible for supervision and control over the activities entering and leaving the customs
territory. The Customs shall, in accordance with the Customs Law and other relevant laws and
administrative regulations, exercise supervision and control over the means of transport, goods,
travelers’ luggage, postal items and other articles entering or leaving the territory, collect
customs duties and other taxes and fees, uncover and suppress smuggling, work out customs
statistics and handle other customs operations. According to the Customs Law, all export goods,
throughout the period from the time of customs declaration to the time of departure from the
territory shall be subject to customs surveillance. Customs formalities for export goods shall be
completed by the consignor at the customs office where the goods depart from the territory. The
consignor of export goods shall be the obligatory customs duty payer.
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Regulations in Relation to Compulsory Product Certification
Administrative Provisions on Compulsory Product Certification (Ⴉᗇ၍ଣ஝
) was promulgated by the State Administration for Market Regulation on 3 July 2009, latest
revised on 29 September 2022 and became effective on 1 November 2022. According to the
Administrative Provisions on Compulsory Product Certification, for products that are subject to
compulsory product certification, the State shall implement a unified product catalogue (the
“catalogue ”), unified compulsory requirements, standards and compliance assessment procedures
in the technical specification, unified certification marks and unified charging standards. The
catalogue shall be prepared and adjusted by the State Administration for Market Regulation in
conjunction with relevant departments under the State Council, be issued by the State
Administration for Market Regulation, and be implemented by the State Administration for
Market Regulation in junction with other related authorities. Producers or sellers or importers of
products included in the catalogue shall entrust certification authorities designated by the State
Administration for Market Regulation to certify their produced, sold or imported products.
Producers or sellers of products included in the catalogue shall, upon finding that a potential
safety hazard in their produced or sold products may cause damage to human health and life
safety, announce the relevant information to the public, proactively adopt remedying measures
such as recalling the products, and report the matter to the relevant supervision and
administration departments in accordance with relevant provisions.
Regulations in Relation to Overseas Investment
The Administrative Measures for Outbound Investment Management ( ྤ̮ҳ༟၍ଣ፬
) was promulgated by the MOFCOM on 6 September 2014 and came into effect on 6 October
2014. As defined by the Measures for Overseas Investment Management, overseas investment
means that the enterprises legally incorporated in the PRC own the non-financial enterprises or
obtain the ownership, control and operation management rights of the existing non-financial
enterprises in foreign countries through incorporation, merger and acquisition and other means.
If the overseas investments involve sensitive countries and regions or sensitive industries, they
shall be subject to the approval of competent authorities. For other overseas investments, they
shall be subject to filing administration. Local enterprises shall file with the provincial
commercial administration authorities where they are located. The qualified enterprises will be
put into record and granted with Overseas Investment Certificate for Enterprise by the relevant
provincial commercial administration authorities.
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The Administrative Measures for Outbound Investment by Enterprises ( Άุྤ̮ҳ༟၍ଣ
) was promulgated by the NDRC on 26 December 2017 and came into effect on 1 March
2018. As defined therein, overseas investment means any investment activities in which a
domestic enterprise of the PRC obtains ownership, control, operation and management rights and
other relevant interests directly or through its controlled overseas enterprise by way of
contributing asset and/or interest or providing financing and/or guarantee. To conduct overseas
investment, certain procedures shall be compiled with, including approval and record-filing of
overseas investment project, reporting relevant information and cooperating with the supervision
and inspection. The NDRC promulgated the Catalogue of Sensitive Sectors for Outbound
Investment (2018 Edition) ( ྤ̮ҳ༟ઽชБุͦ፽ (2018و)), which was promulgated by the
NDRC on 31 January 2018 and came into effect on 1 March 2018, to list the current sensitive
industries in detail.
Regulations in Relation to Overseas Securities Offering and Listing by Domestic Companies
According to the Trial Administrative Measures of Overseas Securities Offering and Listing
by Domestic Companies ( ) (the “ Trial
Measures ”), PRC domestic enterprises that seek to offer and list securities in overseas markets,
either in direct or indirect means, are required to fulfill the filing procedure with the CSRC and
submit filing reports, legal opinions, and other relevant documents. Subject to specific
circumstances, the Trial Measures require that, among other things, (i) initial public offerings or
listings on overseas markets shall be filed with the CSRC within three working days after the
relevant application is submitted overseas, (ii) subsequent securities offerings of an issuer on the
same overseas market where it has previously offered and listed securities shall be filed with the
CSRC within three working days after the offering is completed, and (iii) subsequent securities
offerings or listings of an issuer on other overseas markets other than where it has offered and
listed securities shall be filed with the CSRC within three working days after the relevant
application is submitted overseas. If a PRC company fails to complete the filing procedure or
the filing documents submitted by a PRC company contain misrepresentation, misleading
statement or material omission, such PRC company may be subject to order to rectify, warnings
and fines, and its controlling shareholders, actual controllers, the person directly in charge and
other directly responsible persons may also be subject to fines.
The Trial Measures also set forth the issuer’s reporting obligations in the event of
occurrence of material events after the Overseas Offering and Listing. If the overseas offering
and listing has been deemed as indirect Overseas Offering and Listing by PRC domestic
enterprises, the issuer shall make a detailed report to the CSRC within 3 working days after the
occurrence and public announcement of the relevant event: (i) change in controlling rights; (ii)
being subject to investigation, punishment or other measures by overseas securities regulatory
authorities or the relevant authorities; (iii) changing listing status or changing the listing board;
or (iv) voluntary or compulsory termination of listing. Besides, if any material change in the
principal business and operation of the issuer after its Overseas Offering and Listing makes the
issuer no longer within the scope of record-filing, the issuer shall submit a special report and a
legal opinion issued by a PRC domestic law firm to the CSRC within 3 working days after the
occurrence of the relevant change to provide an explanation of the relevant situation. According
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to the Trial Measures, the PRC domestic enterprises engaging in Overseas Offering and Listing
activities shall strictly comply with the PRC laws, administrative regulations, and relevant
provisions on foreign investment, state-owned assets, industry regulation, overseas investment,
etc., shall not disrupt domestic market order, and shall not harm national interests, public
interests and the legitimate rights and interests of domestic investors. The PRC domestic
enterprise that conducts Overseas Offering and Listing shall (i) formulate its articles of
association, improve its internal control system and standardise its corporate governance,
financial affairs and accounting activities in accordance with the PRC Company Law, the PRC
Accounting Law and other PRC laws, administrative regulations and applicable provisions; (ii)
abide by the legal system of the PRC on confidentiality and take necessary measures to
implement the confidentiality responsibility, shall not divulge any state secret or the work
secrets of state authorities, and shall also comply with laws, administrative regulations and the
relevant provisions of the PRC where involved in the overseas provisions of personal
information and important data.
According to the Trial Measures, the PRC domestic companies that seek to offer and list
securities in overseas markets, either in direct or indirect means, are required to fulfil the filing
procedure with the CSRC and report relevant information. The Trial Measures provide that an
overseas listing or offering is explicitly prohibited, if any of the following applies: (i) such
securities offering or listing is explicitly prohibited by provisions in PRC laws, administrative
regulations or relevant state rules; (ii) the proposed securities offering or listing may endanger
national security as reviewed and determined by competent authorities under the State Council
in accordance with laws; (iii) the domestic company intending to be listed or offer securities in
overseas markets, or its controlling shareholder(s) and the actual controller, have committed
crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining
the order of the socialist market economy during the latest three years; (iv) the domestic
company intending to be listed or offer securities in overseas markets is currently under
investigations for suspicion of criminal offences or major violations of laws and regulations, and
no conclusion has yet been made thereof; or (v) there are material ownership disputes over
equity held by the domestic company’s controlling shareholder(s) or by other shareholder(s) that
are controlled by the controlling shareholder(s) and/or actual controller. As advised by our PRC
Legal Advisers, given that (i) the proposed securities offering or listing is not prohibited by
provisions in PRC laws, administrative regulations or relevant state rules; (ii) as of the Latest
Practicable Date, our Group and the proposed securities offering or listing have not been
determined by competent authorities under the State Council that will endanger the national
security; (iii) our Group, our Controlling Shareholders and the actual controller of the Company
have not committed crimes, including corruption, bribery, embezzlement, misappropriation of
property or undermining the order of the socialist market economy during the last three years;
(iv) our Company is not currently under any investigations for suspicion of criminal offenses or
major violations of laws and regulations, and no conclusion has yet been made thereof; and (v)
there are no material ownership disputes over equity held by the controlling shareholders and the
actual controllers, our Company has complied with the Overseas Listing Trial Measures and
relevant guidelines.
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On 24 February 2023, the CSRC and other relevant government authorities promulgated the
Provisions on Strengthening the Confidentiality and Archives Administration of Overseas
Securities Issuance and Listing by Domestic Enterprises (̋੶ྤʫΆุྤ̮೯БᗇՎձɪ
 ) (the “ Provision on Confidentiality ”), which became
effective from 31 March 2023. Pursuant to the Provision on Confidentiality, where a domestic
enterprise provides or publicly discloses to the relevant securities companies, securities service
institutions, overseas regulatory authorities and other entities and individuals, or provides or
publicly discloses through its overseas listing subjects, documents and materials involving state
secrets and working secrets of state organs, it shall report the same to the competent department
with the examination and approval authority for approval in accordance with the law, and submit
the same to the secrecy administration department of the same level for filing. Domestic
enterprises providing accounting archives or copies thereof to entities and individuals concerned
such as securities companies, securities service institutions and overseas regulatory authorities
shall perform the corresponding procedures pursuant to the relevant provisions of the State. The
working papers formed within the territory of the PRC by the securities companies and securities
service institutions that provide corresponding services for the overseas issuance and listing of
domestic enterprises shall be kept within the territory of the PRC, and those that need to leave
the PRC shall go through the examination and approval formalities in accordance with the
relevant provisions of the State.
Regulations in Relation to Foreign Exchange
Foreign exchange in the PRC is mainly regulated by the Foreign Exchange Administration
Regulations ( ʕശɛ͏΍ձ਷̮ි၍ଣૢԷ ), which was promulgated by the State Council on
29 January 1996 and amended on 5 August 2008. Renminbi is freely convertible for current
account items, including the distribution of dividends, interest payments, trade and
service-related foreign exchange transactions, but not for capital account items, such as direct
investments, loans, repatriation of investments and investments in securities outside of the PRC,
unless prior approval is obtained from the SAFE and/or prior registration with the SAFE is
made.
According to the Circular of the State Administration of Foreign Exchange on Issues
concerning the Administration of Foreign Exchange Involved in Overseas Listing (̮ි၍
 ) announced by the SAFE on 26 December 2014,
the SAFE and its branch offices and administrative offices shall oversee, regulate and inspect
domestic companies regarding their business registration, opening and use of accounts,
trans-border payments and receipts, exchange of funds and other conduct involved in overseas
listing. Domestic company shall, within 15 working days upon the end of its public offering
overseas, handle registration formalities for overseas listing with the foreign exchange authority
at its place of registration with the required materials.
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On 13 February 2015, SAFE promulgated the Notice on Further Simplifying and Improving
Foreign Exchange Administration Policy on Direct Investment (ટҳ
, the “ SAFE Circular 13 ”), which took effect on 1 June 2015 and was
amended on 30 December 2019. In accordance with the SAFE Circular 13, the banks will review
and carry out foreign exchange registration under domestic direct investment as well as foreign
exchange registration under overseas direct investment directly, and the SAFE and its branches
shall implement indirect supervision over foreign exchange registration of direct investment via
the banks.
On 30 March 2015, SAFE issued the Circular on Reforming the Management Approach
Regarding the Foreign Exchange Capital Settlement of Foreign-Invested Enterprises (̮ි
 , the “ SAFE Circular 19 ”),
which took effect on 1 June 2015. SAFE further issued the Circular on Reforming and
Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts ( ਷
 , the “ SAFE Circular 16 ”) and the
Notice on Annulling five Foreign Exchange Management Normative Documents and clauses of
seven Foreign Exchange Management Normative Documents (ࣖ
5˖΁ʿ 7 ), which, among other things,
amend certain provisions of SAFE Circular 19. According to SAFE Circular 19, the flow and use
of the Renminbi capital converted from foreign currency denominated registered capital of a
foreign-invested company is regulated such that Renminbi capital may not be used for business
beyond its business scope or to provide loans to persons other than affiliates unless otherwise
permitted under its business scope. Violations of SAFE Circular 19 or SAFE Circular 16 could
result in administrative penalties.
According to the Circular on Optimising Administration of Foreign Exchange to Support
the Development of Foreign-related Business ( )
issued by the SAFE on 10 April 2020, eligible enterprises are allowed to make domestic
payments by using their capital, foreign credits and the income under capital accounts of
overseas listing, with no need to provide the evidentiary materials concerning authenticity of
such capital for banks in advance, provided that their capital use shall be authentic and in line
with provisions, and conform to the prevailing administrative regulations on the use of income
under capital accounts. The concerned bank shall conduct spot checking in accordance with the
relevant requirements.
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Regulations in Relation to Environmental Protection
General Provisions
The major environmental laws applicable to our Group include the Environmental
Protection Law of the PRC ( ) promulgated by the SCNPC on 26
December 1989, amended on 24 April 2014 and effective on 1 January 2015, the Law of the
PRC on Prevention and Control of Atmospheric Pollution ( )
promulgated by the SCNPC on 5 September 1987 and last amended on 26 October 2018, the
Law of the PRC on Prevention and Control of Water Pollution (ط
) promulgated by the SCNPC on 11 May 1984, last amended on 27 June 2017 and effective
on 1 January 2018, the Law of the PRC on Prevention and Control of Noise Pollution ( ʕശɛ
) promulgated by the SCNPC on 24 December 2021 and took effect
on 5 June 2022, the Law of the PRC on the Prevention and Control of Environmental Pollution
Caused by Solid Wastes ( ) promulgated by the
SCNPC on 30 October 1995, last amended on 29 April 2020 and effective on 1 September 2020.
These laws set out various standards and requirements for the prevention and control of air,
water, noise and solid waste pollutions in order to protect and improve the environment,
safeguard public health and promote economic and social development. Enterprises that fail to
comply with these laws may be subject to warnings, fines, suspension of operations and
closing-down of business, as determined by the relevant governmental authorities.
Construction Project Environmental Protection
Pursuant to the Administrative Regulations on Environmental Protection of Construction
Projects (ᚐ၍ଣૢԷ ) promulgated by the State Council on 29 November
1998 and amended on 16 July 2017 with effect from 1 October 2017, the Environment Impact
Assessment Law of the PRC ( ) promulgated by the SCNPC
on 28 October 2002 and last amended on 29 December 2018 with effect from the same day, the
Rules on the Examination and Approval of Environmental Impact Assessment Documents for
Construction Projects by Authorities at Various Levels (ணධͦᐑྤᅂᚤ൙ᄆ˖΁ʱॴᄲҭ஝
) promulgated by the Ministry of Environmental Protection (the “ MEP”, currently known as
the MEE) on 16 January 2009 and became effective on 1 March 2009, and the Interim Measures
on Environmental Protection Acceptance of Construction Projects (ᚐ᜕ϗ
) promulgated by the MEP on 20 November 2017 and became effective on the same
day, the PRC government implements an environmental impact assessment system for
construction projects. Based on the extent of effects exerted on the environment by a
construction project, the construction entity is required to prepare an environmental impact
report, or an environmental impact report form, or an environmental impact registration form
regarding the environmental impacts of the construction project. The report and the report form
will be approved by the competent environmental protection administrative department prior to
the commencement of construction, while the registration form is regulated by way of
record-filing. Where a construction project needs supporting environmental protection facilities,
these facilities should be designed, constructed and put into use at the same time with the main
project. Furthermore, the construction entity should, upon completion of a construction project
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for which an environmental impact report or an environmental impact report form is formulated,
conduct acceptance inspection of the constructed supporting environmental protection facilities
pursuant to the standards and procedures prescribed by the environmental protection
administrative department of the State Council, and formulate the acceptance inspection report.
Pollutant Discharge Licensing
Pursuant to the Administrative Measures for Pollutant Discharge Licensing ( રϮ஢̙၍ଣ
) promulgated by the MEE on 1 April 2024 and became effective on 1 July 2024 and
Regulations on the Administration of Pollutant Discharge Licensing ( રϮ஢̙၍ଣૢԷ)
promulgated by the State Council on 24 January 2021 and became effective on 1 March 2021,
the MEE shall formulate and release a category-based administration catalogue of pollutant
discharge licensing for stationary pollution sources, specifying the scope subject to the
administration of pollutant discharge licensing and the time limit to apply for a pollutant
discharge permit. Enterprises, public institutions and other producers and business operators that
are included in the category-based administration catalogue are required to apply for and obtain
a pollutant discharge permit within the prescribed time limit. According to the Guidelines for
Registration of Stationary Pollution Sources (for Trial Implementation) (๕રϮ೮া
یܸ( ༊Б)) promulgated by the General Office of the MEE and implemented on 6 January
2020, where the amount of pollutants produced, discharged and the impact on the environment is
slight, such enterprises do not need to apply for the pollutant discharge permit, but are required
to register for the discharge of pollution of stationary sources.
Regulations in Relation to Labour Protection in the PRC
Labour Contract Law
The Labour Contract Law of the PRC ( , effective on
1 January 2008 and last amended on 28 December 2012 with effect from 1 July 2013) and the
Regulations on Implementation of the Labour Contract Law of the PRC ( ʕശɛ͏΍ձ਷௶ਗ
ૢԷ), effective on 18 September 2008 provide for the establishment of labour
relationship between employing entities and employees, as well as the concluding, performance,
dissolution and revision of the labour contracts. To establish a labour relationship, a written
labour contract shall be signed. Employers are also required to pay wages no lower than the
local minimum wage standards to their employees.
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Social Insurance and Housing Provident Funds
The Social Insurance Law of the PRC ( ), which was
promulgated by the SCNPC on 28 October 2010 and amended on 29 December 2018, governs
the PRC social insurance system. It requires employers and/or employees (as the case may be) to
register social insurance with competent authorities and contribute required amount of social
insurance funds, including funds for pension insurance, unemployment insurance, basic medical
insurance, work-related injury insurance and maternity insurance. Employers who failed to
complete social security registration shall be ordered by the social security administrative
authorities to make correction within a stipulated period; where correction is not made within
the stipulated period, the employer shall be subject to a fine ranging from one to three times the
amount of the social security premiums payable, and the person(s)-in-charge who is/are directly
accountable and other directly accountable personnel shall be subject to a fin e ranging from
RMB500 to RMB3,000. Employers who failed to promptly contribute social security premiums
in full amount shall be ordered by the social security premium collection agency to make or
supplement contributions within a stipulated period, and shall be subject to a late payment fine
computed from the due date at the rate of 0.05% per day; where payment is not made within the
stipulated period, the relevant administrative authorities shall impose a fine ranging from one to
three times the amount of the amount in arrears.
Under the Regulations on the Administration of Housing Provident Fund (၍ଣ
ૢԷ), which was promulgated by the State Council on April 3, 1999 and last amended on
March 24,2019, an employer shall make contribution registration with the housing provident
fund management and complete the formalities of opening housing provident fund accounts for
its employees. Where an employer fails to undertake payment and deposit registration of housing
provident fund or fails to go through the formalities of opening housing provident fund accounts
for its employees, the housing provident fund management centre shall order it to go through the
formalities within a prescribed time limit; where failing to do so at the expiration of the time
limit, a fine of not less than RMB10,000 nor more than RMB50,000 shall be imposed. Where an
employer is overdue in the payment of, or underpays, the housing provident fund, the housing
provident fund management centre shall order it to make the payment within a prescribed time
limit; where the payment has not been made after the expiration of the time limit, an application
may be made to a people’s court for compulsory enforcement.
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Regulations in Relation to Intellectual Property
Patent
The SCNPC enacted the Patent Law of the PRC () in 12 March
1984 and last amended on 17 October 2020. A patentable invention or utility model must meet
three conditions: novelty, inventiveness and practical applicability. Patents cannot be granted for
scientific discoveries, rules and methods for intellectual activities, methods used to diagnose or
treat diseases, animal, plant breeds or nuclear transformation method and substances obtained by
means of nuclear transformation and a design which has major marking effect on the patterns or
colours of graphic print products or a combination of both patterns and colours. The Patent
Office under the State Intellectual Property Office is responsible for receiving, examining and
approving patent applications. A patent is valid for a twenty-year term for an invention, a
fifteen-year term for a design and a ten-year term for a utility model, starting from the
application date. Except under certain specific circumstances provided by law, any third party
user must obtain consent or a proper licence from the patent owner to use the patent, or else the
use will constitute an infringement of the rights of the patent holder.
Trademark
Trademarks are protected by the Trademark Law of the PRC ()
which was enacted on 23 August 1982 and last amended on 23 April 2019, as well as the
Implementation Regulation of the Trademark Law of the PRC (ૢ
Է) promulgated by the State Council on 3 August 2002 and amended on 29 April 2014. The
Trademark Office handles trademark registrations and grants a term of ten years to registered
trademarks and each renewal of registration shall be ten years. Trademark licence agreements
must be filed with the Trademark Office for record. The Trademark Law has adopted a
“first-to-file” principle with respect to trademark registration. Where a trademark for which a
registration has been made is identical or similar to another trademark which has already been
registered or been subject to a preliminary examination and approval for use on the same kind of
or similar commodities or services, the application for registration of such trademark may be
rejected. Any person applying for the registration of a trademark may not prejudice the existing
right first obtained by others, nor may any person register in advance a trademark that has
already been used by another party and has already gained a “sufficient degree of reputation”
through such party’s use.
Copyright and Software Registration
The SCNPC promulgated the Copyright Law of the PRC ( ) (the
“Copyright Law ”) in 1990 and amended it in 2001, 2010 and 2020, respectively. The Copyright
Law of the PRC provides that Chinese citizens, legal persons, or other organisations shall,
whether published or not, enjoy copyright in their works, including computer software. The
purpose of the Copyright Law is to encourage the creation and dissemination of works which
contribute to the construction of socialist spiritual and material civilisation and promote the
development and prosperity of socialist cultural and scientific pursuit.
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The Regulation on Computers Software Protection (ᚐૢԷ), which was
promulgated by the State Council on 4 June 1991 and amended in 2001, 2011 and 2013,
respectively, was formulated for the purposes of protecting the rights and interests of copyright
owners of computer software, regulating the relationship of interests generated in the
development, dissemination and use of computer software, encouraging the development and
application of computer software, and promoting the development of software industry and the
informatisation of national economy. According to the Regulation on Computer Software
Protection, Chinese citizens, legal entities or other organisations are entitled to the copyright in
the software which they have developed, whether published or not. A software copyright owner
may register with the software registration institution recognised by the copyright administration
department of the State Council. A registration certificate issued by the software registration
institution is a preliminary proof of the registered items. The Measures for the Registration of
Computer Software Copyright ( ), which was promulgated by the
National Copyright Administration on 20 February 2002 and took effect on the same day,
regulates registrations of software copyright, exclusive licensing contracts for software copyright
and transfer contracts. The National Copyright Administration shall be the competent authority
for the nationwide administration of software copyright registration and the Copyright Protection
Centre of China (the “ CPCC ”) is designated as the software registration authority. The CPCC
shall grant registration certificates to the computer software copyright applicants which
conforms to the provisions of both the Measures for the Registration of Computer Software
Copyright and the Regulation on Computers Software Protection.
Domain Names
Pursuant to the Administrative Measures for Internet Domain Names ( ʝᑌၣਹΤ၍ଣ፬
), which was promulgated by the Ministry of Industry and Information Technology on
24 August 2017 and became effective on 1 November 2017, domain names are registered on a
“first-come, first-served” basis. The domain names registered or used by an organisation or
individual shall not contain any contents prohibited by laws and administrative regulations. A
domain name registration applicant shall provide the domain name registration service agency
with truthful, accurate and complete identity information on the domain name holder.
Regulations in relation to Data Privacy and security
According to the Cybersecurity Law of the PRC ( ) (the
“Cybersecurity Law ”), which was promulgated by the SCNPC and became effective from 1
June 2017, those who provide services through networks shall take technical measures and other
necessary measures pursuant to the mandatory requirements of laws, regulations and national
standards to safeguard the safe and stable operation of the networks, respond to network security
incidents effectively, prevent illegal and criminal activities, and maintain the integrity,
confidentiality and usability of network data, and the network operator shall not collect the
personal information irrelevant to the services it provides or collect or use the personal
information in violation of the provisions of laws or agreements between both parties.
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The Data Security Law of PRC ( ) (the “ Data Security
Law”) was promulgated by the SCNPC and became effective from 1 September 2021. The Data
Security Law mainly sets forth specific provisions regarding establishing basic systems for data
security management, including hierarchical data classification management system, risk
assessment system, monitoring and early warning system, and emergency disposal system.
The Personal Information Protection Law () was promulgated by the
SCNPC and effective from 1 November 2021. The Personal Information Protection Law requires,
among others, that (i) the processing of personal information should have a clear and reasonable
purpose which should be directly related to the processing purpose, using a method that has the
least impact on personal rights and interests, and (ii) the collection of personal information
should be limited to the minimum scope necessary to achieve the processing purpose to avoid
the excessive collection of personal information.
On 24 September 2024, the State Council promulgated the Regulations on Administration
of Network Data Security ( ၣഖᅰኽτΌ၍ଣૢԷ ) (the “ Network Data Security Regulations ”)
which will take effect on 1 January 2025. The Network Data Security Regulations stipulates
relevant regulations on data processing activities, personal information protection, important
data security, and the obligations of network platform service providers. According to Article 62
of the Network Data Security Management Regulations, important data refers to data of specific
fields, specific groups, specific areas or that reaches a certain specificity and scale that once
such data is tampered with, destroyed, leaked or illegally obtained or used illegally, it may
directly endanger national security, economy, social stability, public health and safety. Large
network platforms refer to those with more than 50 million registered users or more than 10
million monthly active users, complex business types, and network data processing activities that
have a negative impact on national security, economy and people’s livelihood of the PRC.
Laws and Regulations in Relation to Taxation
Enterprise Income Tax
According to the Enterprise Income Tax Law of PRC ( ),
which was promulgated by the NPC on 16 March 2007, implemented on 1 January 2008, and
subsequently revised on 24 February 2017 and 29 December 2018 respectively, and the
Implementation Rules for the Enterprise Income Tax Law of the PRC (ה
ૢԷ) enacted on 6 December 2007 by the State Council and became effective on 1
January 2008, and amended on 23 April 2019, a resident enterprise shall pay EIT on its income
originating from both inside and outside PRC at an EIT rate of 25%. Foreign invested
enterprises in the PRC falls into the category of resident enterprises, which shall pay EIT for the
income originated from domestic and overseas sources at an EIT rate of 25%. High and new
technology enterprises which are supported by the State may enjoy a reduced EIT rate of 15%. A
non-resident enterprise having no office or establishment inside China, or for a non-resident
enterprise whose incomes have no actual connection to its office or establishment inside China
must pay enterprise income tax on the incomes derived from China at a rate of 10%.
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V alue-added Tax
According to the Interim Regulations of the PRC on Value-Added Tax ( ʕശɛ͏΍ձ਷ᄣ
೼ᅲБૢԷ) which was promulgated by the State Council on 13 December 1993, and
amended on 10 November 2008, 6 February 2016 and 19 November 2017, and the Detailed
Rules for the Implementation of the Provisional Regulations of the PRC on Value-added Tax
( ) which was promulgated by the Ministry of
Finance on 25 December 1993 and subsequently amended on 15 December 2008 and 28 October
2011, all enterprises and individuals that engage in the sale of goods, the provision of
processing, repair and replacement services, sales of services, intangible assets and real estate,
and the importation of goods within the territory of the PRC shall pay value-added tax at the
rate of 17%, except when specified otherwise.
According to the Circular on Comprehensively Promoting the Pilot Programme of the
Collection of Value-added Tax in Lieu of Business Tax (೼༊ᓃ
), which was promulgated on 23 March 2016 and came into effect on 1 May 2016, the
pilot program of the collection of value-added tax in lieu of business tax shall be promoted
nationwide in a comprehensive manner as of 1 May 2016, and all taxpayer of business tax
engaged in the building industry, the real estate industry, the financial industry and the life
service industry shall be included in the scope of the pilot programme with regard to payment of
value-added tax instead of business tax.
According to the Circular of the Ministry of Finance and the SAT on Adjusting Value-added
Tax Rates ( ), which was promulgated on
4 April 2018 and became effective on 1 May 2018, where a taxpayer engages in value-added tax
taxable sales activities or import of goods, the previous applicable value-added tax rates of 17%
and 11% are adjusted to 16% and 10%, respectively.
According to the Announcement on Relevant Policies for Deepening Value-Added Tax
Reform (ʮѓ ) promulgated on 20 March 2019 and became
effective on 1 April 2019, with respect to V AT taxable sales or imported goods of a V AT general
taxpayer, where the V AT rate of 16% applies currently, it shall be adjusted to 13%; the currently
applicable V AT rate of 10% shall be adjusted to 9%.
HONG KONG
There is no specific statutory requirement for our Group to obtain any licence to carry out
our business in Hong Kong other than the requirement to have a business registration certificate
under the Business Registration Ordinance (Chapter 310 of the Laws of Hong Kong). Our Group
does not import any food, dutiable commodities under the Dutiable Commodities Ordinance
(Cap. 109) or any prohibited articles under the Import and Export Ordinance (Cap. 60) in or into
Hong Kong. Below is a summary of the laws and regulations in Hong Kong which are material
to our Group’s business.
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Sale of Goods Ordinance (Chapter 26 of the Laws of Hong Kong)
The Sale of Goods Ordinance (Chapter 26 of the Laws of Hong Kong) governs the
formation, performance and remedies of contract for the sale of goods in Hong Kong and the
transfer of title of goods sold. The ordinance also sets out certain implied terms or conditions
and warranties generally relating to the safety and suitability of goods supplied under a contract
of sale for goods in Hong Kong, including:
(i) where there is a sale of goods by description, the goods shall correspond with the
description;
(ii) where the seller sells goods in the course of a business, the goods shall be of a
merchantable quality, i.e. (a) as fit for the purpose or purposes for which the goods of
that kind are commonly bought; (b) of such standard of appearance and finish; (c) as
free from defects (including minor defects); (d) as safe; and (e) as durable, as it is
reasonable to expect having regard to any description applied to them, the price (if
relevant) and all the other relevant circumstances; and
(iii) where the seller sells goods in the course of a business and the buyer makes known to
the seller (whether expressly or by implication) any particular purpose for which the
goods are being bought, the goods supplied under the contract shall be reasonably fit
for that purpose.
Under section 55 of the Sale of Goods Ordinance, where there is a breach of warranty by
the seller, the buyer is not, by reason only of such breach of warranty, entitled to reject the
goods, but he may set up against the seller the breach of warranty in diminution or extinction of
the price, or maintain an action against the seller for damages for the breach of warranty.
Business Registration Ordinance (Chapter 310 of the Laws of Hong Kong)
The Business Registration Ordinance (Chapter 310 of the Laws of Hong Kong) requires
every person carrying on any business to make application to the Commissioner of Inland
Revenue in the prescribed manner for the registration of that business. The Commissioner of
Inland Revenue must register each business for which a business registration application is made
and as soon as practicable after the prescribed business registration fee and levy are paid, and
issue a business registration certificate or branch registration certificate for the relevant business
or the relevant branch as the case may be.
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Laws relating to Transfer Pricing
The Inland Revenue Department (“ IRD”) may make transfer pricing adjustments by
disallowing expenses incurred by Hong Kong residents under sections 16(1), 17(1)(b) and
17(1)(c) of the Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong) (“ IRO”) and
challenging the entire arrangement under general anti-avoidance provisions such as sections 61
and 61A of the IRO if the IRD considers that the related party transactions are not conducted on
an arm’s length basis. In December 2009, the IRD released Departmental Interpretation and
Practice Notes No. 46 (“ DIPN 46 ”). DIPN 46 provides clarifications and guidance on the IRD’s
views on transfer pricing and how it intends to apply the existing provisions of the IRO to
establish whether related parties are transacting at arm’s length prices. In general the practices
followed by the IRD are based on the transfer pricing methodologies recommended by the
OECD Transfer Pricing Guidelines. In April 2009, the IRD released Departmental Interpretation
and Practice Notes No. 45 (“ DIPN 45 ”). DIPN 45 provides that where double taxation arises as
a result of transfer pricing adjustments made by the tax authorities of another country, a Hong
Kong taxpayer may potentially claim relief under the treaty between Hong Kong and that
country (countries that entered into tax arrangements with Hong Kong includes the PRC).
Furthermore, the Hong Kong Government has gazetted the Inland Revenue (Amendment) (No. 6)
Ordinance 2018 (the “ Amendment Ordinance ”) on 13 July 2018. The main objectives of the
Amendment Ordinance are to codify the transfer pricing principles and implement certain
measures under the Base Erosion and Profit Shifting (“ BEPS ”) package promulgated by the
Organisation for Economic Co-operation and Development, such as the transfer pricing
documentation requirements. The BEPS package seeks to counter the exploitation of gaps and
mismatches in tax rules by multinational enterprises to artificially shift profits to low or no-tax
locations where there are little or no economic activity.
Section 50AAF of the IRO now codifies the arm’s-length principle and allows for an
adjustment of a taxpayer’s profits upwards/losses downwards if the taxpayer has entered into
transaction(s) with an associated person, and the pricing of such transaction(s) differs from that
between independent persons and has created a Hong Kong tax advantage. Section 82A of the
IRO stipulates that a person is liable to be assessed for penalties to additional tax of the amount
of tax undercharged resulting from transfer pricing adjustments, unless it is proved that
reasonable efforts have been made to determine the arm’s length price for the transaction(s).
Pursuant to section 58C of the IRO, Hong Kong entities engaged in transactions with associated
enterprises will be required to prepare master and local files for accounting periods beginning on
or after 1 April 2018, except where they meet either one of the following exemptions in respect
of business size or relevant transaction volume:
Exemption based on size of business: Taxpayers meeting any two of the following
conditions are not required to prepare the master file and local files:
(i) Total revenue for the accounting period not exceeding HK$400 million;
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(ii) Total assets at the end of the accounting period not exceeding HK$300 million;
(iii) No more than 100 employees on average.
Exemption based on related party transactions: If the amount of a type of controlled
transactions for the relevant accounting period is below the threshold set out below, an
enterprise will not be required to prepare a local file for that particular type of transactions:
(i) Transfer of properties (other than financial assets and intangibles): HK$220 million;
(ii) Transaction of financial assets: HK$110 million;
(iii) Transfer of intangibles: HK$110 million;
(iv) Any other transaction (e.g., service income and royalty income): HK$44 million.
If all types of controlled transactions for the relevant accounting period are not required to
be covered in local files, neither of the following is required to be prepared or retained by a
taxpayer:
(i) Local file for the accounting period;
(ii) Master file for the corresponding accounting period.
Trade Description Ordinance (Chapter 362 of the Laws of Hong Kong)
The Trade Descriptions Ordinance (Chapter 362 of the Laws of Hong Kong) aims to
prohibit false trade description, false, misleading or incomplete information, false marks and
misstatements in respect of goods and services provided in the course of trade. The definition of
trade description under section 2 of the ordinance covers a broad range of matters including but
not limited to: quantity, method of manufacture, composition, fitness for purpose, availability,
compliance with a standard specified or recognised by any person, price, approval by any
person, a person by whom they have been acquired, the goods being of same kind as goods
supplied to a person, place or date of manufacture, etc.
Section 2 also provides that a trade description which is false to a material degree or
which, though not false, is misleading, that is to say, likely to be taken for a trade description of
a kind that would be false to a material degree, would be regarded as a false trade description.
REGULATORY OVERVIEW
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Section 7 provides that it is an offence for any person who, in the course of any trade or
business, applies a false trade description to any goods or supplies or offer to supply any goods
to which a false description is applied. Section 7A provides that it is an offence for a trader who
applies a false trade description to a service supplied or offered to be supplied to a consumer, or
supplies or offers to supply to a consumer a service to which a false trade description is applied.
Section 12 further prohibits any person from importing or exporting any goods to which a false
trade description or forged trade mark is applied.
Sections 13E, 13F, 13G, 13H and 13I of the ordinance provide that a trader commits an
offence if the trader engages, in relation to a consumer, in a commercial practice that is a
misleading omission, or is aggressive, or constitutes bait advertising, or constitutes a bait and
switch, or wrongly accepting payment for a product.
Any person who commits an offence under sections 7, 7A, 13E, 13F, 13G, 13H or 13I shall
be liable, on conviction on indictment, to a fine of HK$500,000 and to imprisonment for 5
years, and on summary conviction, to a level 6 fine of HK$100,000 and imprisonment for 2
years.
Trade Marks Ordinance (Chapter 559 of the Laws of Hong Kong)
The Trade Marks Ordinance (Chapter 559 of the Laws of Hong Kong) makes provision in
respect of the registration of trade marks and provides for connected matters.
The ordinance provides that a person infringes a registered trade mark if he uses in the
course of trade or business a sign which is:
(a) identical to the registered trade mark in relation to goods or services which are
identical to those for which it is registered;
(b) identical to the registered trade mark in relation to goods or services which are similar
to those for which it is registered and such use is likely to cause confusion on the part
of the public;
(c) similar to the registered trade mark in relation to goods or services which are identical
to or similar to those for which it is registered and such use is likely to cause
confusion on the part of the public; or
(d) identical or similar to the registered trade mark in relation to goods or services which
are not identical or similar to those for which the trademark is registered, and the
trade mark is entitled to protection under the Paris Convention as a well-known trade
mark, and such use, being without due cause, takes unfair advantage of or is
detrimental to the distinctive character or repute of a trade mark.
The ordinance further provides that the owner of a trade mark may bring infringement
proceedings against the infringer for damages, injunction, accounts or any other relief available
in law.
REGULATORY OVERVIEW
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OVERVIEW
We are a manufacturer of lifestyle household goods in the PRC. We mainly operate on
ODM/OEM basis and have built a customer portfolio comprising globally reputable and long
standing names, such as Walmart, Telebrands, SEB, Sensio, Hamilton Beach and Philips etc.
With our capability to design, develop and manufacture a range of small home appliances of
over 2,400 models, we have gained recognition in our small kitchen appliances. We were the
“Top 10 Small Kitchen Appliance Export Companies (ཥ̈ɹΆุ )” in 2022 and
2023 recognised by China Chamber of Commerce for Import and Export of Machinery and
Electronic Products (ආ̈ɹਠึ ). According to the F&S Report, we were the 10th
largest company with a market share of 0.8% in terms of export value in 2024 in the small
kitchen appliance industry in the PRC. Our electric kettles had a market share of approximately
24.6% and 59.6% in the respective category classified by the General Administration of Customs
of the PRC in terms of export volume from the PRC to the U.S. and Canada, respectively, in
2024. Our motor-driven products such as mixers had a market share of approximately 3.8% in
the respective category classified by the General Administration of Customs of the PRC in terms
of export volume from the PRC to the U.S. in 2024. Please see “Industry Overview” in this
prospectus for details.
Our history can be traced back to 2000 when we established our Yinuowei Factory in
Jiangyin. In 2012, our Company was founded by Mr. Pan Yun, Ms. Ji Ying, Ms. Li Youxiang,
Mr. Xu Xiping, Ms. Hu Yan and Ms. Yi Hongliang and six other former or current employees as
promoters in the PRC. Since the establishment of our Company, Mr. Pan Yun has played a
pivotal role as a Director, Controlling Shareholder, chairman of the Board and the general
manager of our Company. For biographical details of Mr. Pan Yun, please see “Directors,
Supervisors and Senior Management – Directors” in this prospectus.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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OUR KEY MILESTONES
The following table sets out the key milestone in our business development:
Y ear Milestone
2000 We established our Yinuowei Factory in Jiangyin, following by the
establishment of other production facilities in different parts of China
2002 We established our Aisijie Factory
2004 We established our Yuantexin Factory
2012 Mr. Pan Yun, together with other then shareholders established our
Company
We established our Hubei XJ Factory in the same year
2016 We commenced our operation in the US under the brand of Weighmax
2023 We established our first overseas production facility in Indonesia
2024 We established our Thailand subsidiary, X.J. Electrics (Thailand), as our
second base in Southeast Asia
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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CORPORATE DEVELOPMENT
The following sets forth the corporate development and major shareholding changes of our
Company and our principal subsidiaries.
Our Company
Our incorporation
Pursuant to the promoters’ agreement dated 7 June 2012 entered into by Mr. Pan Yun, Ms.
Ji Ying, Ms. Li Youxiang, Mr. Xu Xiping, Mr. Yi Jie, Mr. Hu Qingfeng, Mr. Ye Huanchun, Ms.
Hu Yan, Mr. Zou Chenghou, Mr. Geng Congen, Ms. Yan Li and Ms. Yi Hongliang, our Company
was established as a joint stock company with limited liability in the PRC on 23 July 2012, with
an initial registered and paid-up capital of RMB30,000,000 divided into 30,000,000 Shares with
a nominal value of RMB1 per Share. Upon incorporation, Mr. Pan Yun owned as to 85% of the
Shares and the remaining 11 promoters owned as to 15% of the Shares in aggregate. For details
of Mr. Pan Yun, Ms. Ji Ying, Ms. Li Youxiang, Mr. Xu Xiping and Ms. Hu Yan, who are our
Directors, please see “Directors, Supervisors and Senior Management – Directors” in this
prospectus. For details of Ms. Yi Hongliang, who is our Supervisor, please see “Directors,
Supervisors and Senior Management – Supervisors” in this prospectus. As to the remaining
promoters, they are either former or current employees of our Group.
The following table sets out the shareholding structure of our Company immediately upon
our incorporation:
Shareholders
Number of
Shares held
Percentage of
shareholding
(%)
Mr. Pan Yun 25,500,000 85.00
Ms. Ji Ying 600,000 2.00
Ms. Li Youxiang 600,000 2.00
Mr. Xu Xiping 600,000 2.00
Mr. Yi Jie 600,000 2.00
Mr. Hu Qingfeng 450,000 1.50
Mr. Ye Huanchun 450,000 1.50
Ms. Hu Yan 300,000 1.00
Mr. Zou Chenghou 300,000 1.00
Mr. Geng Congen 300,000 1.00
Ms. Yan Li 150,000 0.50
Ms. Yi Hongliang 150,000 0.50
Total 30,000,000 100
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Our historical changes in registered capital and shareholdings
The first increase of registered capital in 2013
On 12 April 2013, the registered capital of our Company was increased from
RMB30,000,000 to RMB50,000,000. The newly increased registered capital was subscribed by
the then Shareholders in proportion to their existing capital contribution at the subscription price
of RMB1 per Share which was determined based on the nominal value of the Shares. The
following table sets out the shareholding structure of our Company immediately upon the
completion of the capital increase as mentioned above:
Shareholders
Number of
Shares held
Percentage of
shareholding
(%)
Mr. Pan Yun 42,500,000 85.00
Ms. Ji Ying 1,000,000 2.00
Ms. Li Youxiang 1,000,000 2.00
Mr. Xu Xiping 1,000,000 2.00
Mr. Yi Jie 1,000,000 2.00
Mr. Hu Qingfeng 750,000 1.50
Mr. Ye Huanchun 750,000 1.50
Ms. Hu Yan 500,000 1.00
Mr. Zou Chenghou 500,000 1.00
Mr. Geng Congen 500,000 1.00
Ms. Yan Li 250,000 0.50
Ms. Yi Hongliang 250,000 0.50
Total 50,000,000 100
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The second increase of registered capital in 2013
On 10 December 2013, the registered capital of our Company was increased from
RMB50,000,000 to RMB80,000,000. The newly increased registered capital was subscribed by
the then Shareholders in proportion to their existing capital contribution at the subscription price
of RMB1 per Share which was determined based on the nominal value of the Shares. The
following table sets out the shareholding structure of our Company immediately upon the
completion of the capital increase as mentioned above:
Shareholders
Number of
Shares held
Percentage of
shareholding
(%)
Mr. Pan Yun 68,000,000 85.00
Ms. Ji Ying 1,600,000 2.00
Ms. Li Youxiang 1,600,000 2.00
Mr. Xu Xiping 1,600,000 2.00
Mr. Yi Jie 1,600,000 2.00
Mr. Hu Qingfeng 1,200,000 1.50
Mr. Ye Huanchun 1,200,000 1.50
Ms. Hu Yan 800,000 1.00
Mr. Zou Chenghou 800,000 1.00
Mr. Geng Congen 800,000 1.00
Ms. Yan Li 400,000 0.50
Ms. Yi Hongliang 400,000 0.50
Total 80,000,000 100
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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The third increase of registered capital in 2014
On 23 June 2014, the registered capital of our Company was increased from
RMB80,000,000 to RMB120,000,000. The newly increased registered capital was subscribed by
the then Shareholders in proportion to their existing capital contribution at the subscription price
of RMB1 per Share which was determined based on the nominal value of the Shares. The
following table sets out the shareholding structure of our Company immediately upon the
completion of the capital increase as mentioned above:
Shareholders
Number of
Shares held
Percentage of
shareholding
(%)
Mr. Pan Yun 102,000,000 85.00
Ms. Ji Ying 2,400,000 2.00
Ms. Li Youxiang 2,400,000 2.00
Mr. Xu Xiping 2,400,000 2.00
Mr. Yi Jie 2,400,000 2.00
Mr. Hu Qingfeng 1,800,000 1.50
Mr. Ye Huanchun 1,800,000 1.50
Ms. Hu Yan 1,200,000 1.00
Mr. Zou Chenghou 1,200,000 1.00
Mr. Geng Congen 1,200,000 1.00
Ms. Yan Li 600,000 0.50
Ms. Yi Hongliang 600,000 0.50
Total 120,000,000 100
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Transfer of shares from 11 promoters to Qichun Hengxing in 2016
Pursuant to 11 equity transfer agreements all dated 21 October 2016, Ms. Ji Ying, Ms. Li
Youxiang, Mr. Xu Xiping, Mr. Yi Jie, Mr. Hu Qingfeng, Mr. Ye Huanchun, Ms. Hu Yan, Mr. Zou
Chenghou, Mr. Geng Congen, Ms. Yan Li and Ms. Yi Hongliang transferred an aggregate of
18,000,000 Shares (representing 15% of shareholding in our Company) to Qichun Hengxing at
the consideration of RMB1 per Share which was determined based on the nominal value of the
Shares. Qichun Hengxing was owned by the 11 promoters and their shareholdings in Qichun
Hengxing were proportional to their partnership interests in our Company immediately before
the share transfer. The following table sets out the shareholding structure of our Company
immediately upon the completion of the share transfer as mentioned above:
Shareholders
Number of
Shares held
Percentage of
shareholding
(%)
Mr. Pan Yun 102,000,000 85.00
Qichun Hengxing 18,000,000 15.00
Total 120,000,000 100
The fourth increase of registered capital in 2016
Pursuant to the shareholders’ resolutions dated 25 November 2016, the registered capital of
our Company was increased from RMB120,000,000 to RMB200,000,000 on 5 December 2016.
Such additional registered capital was contributed by X.J. Management (Qichun), Qichun
Hengxing and Suizhou Yuhui Longfang Enterprise Management Consulting Centre (General
Partnership)* ( ᎇψ̹༃ිඤ˙Άุ၍ଣፔ༔ʕː (౷ஷΥྫ )) (“ Yuhui Longfang ”) as to
RMB54,000,000, RMB22,000,000 and RMB4,000,000, respectively, at the consideration of
RMB1 per Share which was determined based on the nominal value of the Shares. The
consideration was fully settled by X.J. Management (Qichun), Qichun Hengxing and Yuhui
Longfang on 8 December 2016, 8 December 2016 and 2 December 2016, respectively. At the
material time, X.J. Management (Qichun) was owned by Mr. Pan Yun and Mr. Guangshe Pan as
to 70.37% and 29.63%, respectively; Qichun Hengxing was owned by Mr. Pan Yun as to 25%,
Ms. Ji Ying as to 10%, Ms. Li Youxiang as to 10%, Mr. Xu Xiping as to 5%, Ms. Hu Yan as to
5%, Mr. Shi Chuanlai as to 4%, Ms. Yi Hongliang as to 2.5% and Ms. Yan Li as to 1.5%, and
the remaining 37% partnership interest was collectively owned by 17 partners, all of whom were
our employees and Independent Third Parties; and Yuhui Longfang was ultimately beneficially
owned by three individuals, all of whom were Independent Third Parties.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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The following table sets out the shareholding structure of our Company immediately upon
the completion of the capital increase as mentioned above:
Shareholders
Number of
Shares held
Percentage of
shareholding
(%)
Mr. Pan Yun 102,000,000 51.00
X.J. Management (Qichun) 54,000,000 27.00
Qichun Hengxing 40,000,000 20.00
Yuhui Longfang 4,000,000 2.00
Total 200,000,000 100
Transfer of shares from Yuhui Longfang to Mr . Pan Yun in 2017
On 5 December 2017, Yuhui Longfang and our Company mutually agreed to terminate our
shareholding relationship and entered into an equity transfer agreement on even date, pursuant to
which Yuhui Longfang transferred 4,000,000 Shares (representing 2% of shareholding in our
Company) to Mr. Pan Yun at the consideration of RMB1 per Share which was determined having
considered the consideration paid by Yuhui Longfang for acquiring such Shares, being the
nominal value of the Shares. The consideration was fully settled by Mr. Pan Yun on 20
December 2017. The following table sets out the shareholding structure of our Company
immediately upon the completion of the share transfer as mentioned above:
Shareholders
Number of
Shares held
Percentage of
shareholding
(%)
Mr. Pan Yun 106,000,000 53.00
X.J. Management (Qichun) 54,000,000 27.00
Qichun Hengxing 40,000,000 20.00
Total 200,000,000 100
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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The fifth increase of registered capital in 2017
Pursuant to a capital increase agreement dated 27 December 2017 entered into among our
Company, Mr. Pan Yun, Shenzhen Huiyin Hefu No. 10 Investment Partnership (Limited
Partnership)* ( ଉέ̹ිვΥబɤ໮ҳ༟ΥྫΆุ (Υྫ )) (“ Huiyin Hefu ”) and Shenzhen
Huiyin Ruihe No. 6 Investment Partnership (Limited Partnership)* ( ଉέ̹ිვ๿ձʬ໮ҳ༟Υ
ྫΆุ(Υྫ )) (“ Huiyin Ruihe ”), Huiyin Hefu and Huiyin Ruihe agreed to invest RMB30.0
million and RMB9.0 million, respectively, in our Company. Upon the completion of the said
capital increase on 28 December 2017, the registered capital of our Company was increased
from RMB200,000,000 to RMB205,567,500. The consideration of RMB7.005 per Share was
determined with reference to our Company’s performance and the then price-to-earnings (P/E)
ratio of the industry and was fully settled by Huiyin Hefu and Huiyin Ruihe on 28 December
2017. At the material time, Shenzhen Zhongtong Huiyin Asset Management Co., Ltd.*
(ʮ̡ ) was the general partner of both Huiyin Hefu and Huiyin
Ruihe. The ultimate beneficial owners of Huiyin Hefu and Huiyin Ruihe were Independent Third
Parties.
The following table sets out the shareholding structure of our Company immediately upon
the completion of the capital increase as mentioned above:
Shareholders
Number of
Shares held
Percentage of
shareholding
(%)
Mr. Pan Yun 106,000,000 51.56
X.J. Management (Qichun) 54,000,000 26.27
Qichun Hengxing 40,000,000 19.46
Huiyin Hefu 4,282,700 2.08
Huiyin Ruihe 1,284,800 0.63
Total 205,567,500 100
Pursuant to a supplemental capital increase agreement dated 28 December 2017 entered into
among our Company, Mr. Pan Yun, Huiyin Hefu and Huiyin Ruihe, the parties agreed that in the
event the A share listing attempt of our Company being not completed by 31 December 2020,
our Company shall return the respective investment amount to Huiyin Hefu and Huiyin Ruihe
through reduction of registered capital, with a pre-tax annual rate of return of 6% simple
interest, net of any cash dividend returns received by Huiyin Hefu and Huiyin Ruihe from our
Company (the “ Supplemental Agreement with Huiyin Hefu and Huiyin Ruihe ”). For further
details of our A share listing attempt, please see “Previous A Share Listing Attempt” in this
section below.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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The sixth increase of registered capital and subscription of registered capital by Huiyin Jiafu in
2018
Pursuant to a capital increase agreement dated 8 August 2018 entered into among our
Company, Mr. Pan Yun and Shenzhen Huiyin Jiafu Preferred Phase I Venture Capital Partnership
(Limited Partnership)* ( ଉέ̹ිვ̋బᎴ፯ɓಂ௴ุҳ༟ΥྫΆุ (Υྫ )) (“ Huiyin
Jiafu ”), Huiyin Jiafu agreed to invest RMB29.7 million in our Company. Upon the completion
of the said capital increase on 21 September 2018, the registered capital of our Company was
increased from RMB205,567,500 to RMB210,227,009. The consideration of RMB6.3741 per
Share was determined with reference to our Company’s then performance and the then
price-to-earnings (P/E) ratio of the industry and was fully settled on 9 August 2018. At the
material time, Shenzhen Zhongtong Huiyin Equity Investment Fund Management Co., Ltd.*
(ʮ̡ ) was the general partner of Huiyin Jiafu. The
ultimate beneficial owners of Huiyin Jiafu were Independent Third Parties to our Group.
The following table sets out the shareholding structure of our Company immediately upon
the completion of the capital increase as mentioned above:
Shareholders
Number of
Shares held
Percentage of
shareholding
(%)
Mr. Pan Yun 106,000,000 50.42
X.J. Management (Qichun) 54,000,000 25.69
Qichun Hengxing 40,000,000 19.03
Huiyin Jiafu 4,659,509 2.22
Huiyin Hefu 4,282,700 2.04
Huiyin Ruihe 1,284,800 0.61
Total 210,227,009 100
Pursuant to a supplemental capital increase agreement dated 8 August 2018 entered into
between Mr. Pan Yun and Huiyin Jiafu, the parties agreed that in the event the A share purchase
attempt of our Company being not completed by 31 December 2020, Mr. Pan Yun shall purchase
the Shares held by Huiyin Jiafu, with a pre-tax annual rate of return of 6% simple interest, net
of any cash dividend returns received by Huiyin Jiafu from our Company (the “ Supplemental
Agreement with Huiyin Jiafu ”). For further details of our A share listing attempt, please see
“Previous A Share Listing Attempt” in this section below.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Transfer of shares from Huiyin Jiafu to Mr . Pan Yun in 2019
In view of the anticipated delay in our A share listing attempt, on 6 March 2019, pursuant
the equity transfer agreement entered into between Mr. Pan Yun and Huiyin Jiafu, Huiyin Jiafu
transferred 4,659,509 Shares (representing approximately 2.22% of shareholding in our
Company) to Mr. Pan Yun. The total consideration of the said equity transfer amounted to
RMB30,827,000, representing the original investment cost of Huiyin Jiafu of RMB29,700,000
and the investment return of RMB1,127,000 pursuant to the Supplemental Agreement with
Huiyin Jiafu, was fully settled on 10 May 2019. The following table sets out the shareholding
structure of our Company upon the completion of the said equity transfer:
Shareholders
Number of
Shares held
Percentage of
shareholding
(%)
Mr. Pan Yun 110,659,509 52.64
X.J. Management (Qichun) 54,000,000 25.69
Qichun Hengxing 40,000,000 19.03
Huiyin Hefu 4,282,700 2.04
Huiyin Ruihe 1,284,800 0.61
Total 210,227,009 100
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Repurchase and cancellation of registered capital in 2019
In or around December 2019, in view of the anticipated delay in our A share listing
attempt, our Company agreed with Huiyin Hefu and Huiyin Ruihe to their early withdrawal from
our Company. Pursuant to a shareholders’ resolution on 12 December 2019, a total of 5,567,500
Shares held by Huiyin Hefu and Huiyin Ruihe were repurchased and cancelled by our Company.
As at 2 April 2020, our Company fully settled the payments of RMB33,964,166.66 and
RMB10,101,000 to Huiyin Hefu and Huiyin Ruihe, respectively, representing their respective
original investment cost of RMB30,000,000 and RMB9,000,000 and their respective investment
return of RMB3,964,166.66 and RMB1,101,000 pursuant to the Supplemental Agreement with
Huiyin Hefu and Huiyin Ruihe. As a result, the registered capital of our Company was reduced
from RMB210,227,009 to RMB204,659,509. The following table sets out the shareholding
structure of our Company immediately upon the completion of the repurchase and cancellation
of the registered capital as mentioned above:
Shareholders
Number of
Shares held
Percentage of
shareholding
(%)
Mr. Pan Yun 110,659,509 54.07
X.J. Management (Qichun) 54,000,000 26.39
Qichun Hengxing 40,000,000 19.54
Total 204,659,509 100
As advised by our PRC Legal Advisers, all the above transfers and changes in registered
capital have been properly and legally completed and settled, all necessary approvals from
competent authorities have been obtained and all necessary registration or filings with the
relevant local branches of the State Administration for Market Regulation of the PRC have been
made.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Our principal subsidiaries
As at the Latest Practicable Date, we had nine subsidiaries in the PRC, two subsidiaries in
Hong Kong, two subsidiaries in the U.S., one subsidiary in Indonesia and one subsidiary in
Thailand. The following table sets out our principal subsidiaries which made a material
contribution to our performance during the Track Record Period:
Name
Date and place of
incorporation
Registered
share
capital
Principal business
activities
Equity interest held
by our Group as at
the Latest
Practicable Date
Major shareholding
changes during
the Track Record
Period
Innovative (Jiangyin) 5 September 2000,
the PRC
RMB36,432,000 Manufacturing,
processing and sales of
electronic devices
100% None
X.J. Electrics (Shenzhen) 12 August 2002,
the PRC
RMB6,366,600 Research, design,
production and sales
of electro-thermic
appliances and
motor-driven
appliances
100% None
X.J. Electronics
(Shenzhen)
7 June 2004,
the PRC
RMB6,250,000 Research, design,
production and sales
of electro-thermic
appliances and
motor-driven
appliances
100% None
MeiNuoWei Electrics 9 March 2017,
the PRC
RMB20,000,000 Research, design,
production and sales
of electro-thermic
appliances and
motor-driven
appliances
100% None
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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--- page 166 ---
Name
Date and place of
incorporation
Registered
share
capital
Principal business
activities
Equity interest held
by our Group as at
the Latest
Practicable Date
Major shareholding
changes during
the Track Record
Period
X.J. Electrical
Appliances
23 October 2020,
the PRC
RMB200,000,000 Production and sales of
electro-thermic
appliances and
motor-driven
appliances
100% On 21 May 2024, the
registered capital of
X.J. Electrical
Appliances was
increased from
RMB50,000,000 to
RMB200,000,000. As
advised by our PRC
Legal Advisers, the
change in the
registered capital of
X.J. Electrical
Appliances has been
duly completed and is
legally valid pursuant
to the applicable PRC
laws, regulations and
rules.
X.J. Group (HK) 30 June 2014,
Hong Kong
USD1,290,000 Sales of our products to
international customers
100% None
THS Industrial 26 June 2017,
Hong Kong
HKD10,000 Sales of our products to
international customers
100% None
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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--- page 167 ---
EMPLOYEE SHAREHOLDING PLATFORM
Qichun Hengxing was established in the PRC as an employee shareholding platform of our
Company, in order to align the interests of our Company and our employees. Mr. Pan Yun is the
sole general partner of Qichun Hengxing and is responsible for its management. As at the Latest
Practicable Date, Qichun Hengxing held approximately 19.54% shareholding in our Company.
As at the Latest Practicable Date, the partnership structure of Qichun Hengxing was as
follows:
Name of
partner Position(s) in our Group
Capital
subscription
amount
Partnership
interest
(RMB) (%)
Mr. Pan Yun  Executive Director, chairman of our
Board and general manager of our
Company;
 Director and chairman of the board of
X.J. Electrics (Shenzhen);
 Director and chairman of the board of
X.J. Electronics (Shenzhen);
 Director and chairman of the board of
Innovative (Jiangyin);
 Director and chairman of the board of
MeiNuoWei Electrics;
 Director of X.J. Group (HK);
 Director, the chairman of the board and
the general manager of X.J. Electrical
Appliances;
 Executive director and the general
manager of Aigrentrading; and
 Director and the chief executive officer
of PT Dingsheng
19,000,000 47.50
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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--- page 168 ---
Name of
partner Position(s) in our Group
Capital
subscription
amount
Partnership
interest
(RMB) (%)
Ms. Ji Ying  Executive Director and vice general
manager of our Company;
 Director of X.J. Electrics (Shenzhen);
 Director of X.J. Electronics (Shenzhen);
 Director of Innovative (Jiangyin);
 Director of X.J. Group (HK);
 Director of MeiNuoWei Electrics;
 Director of X.J. Electrical Appliances;
 Director of PT Dingsheng;
 Director and general manager of HNW
Electronics; and
 Director of X.J. Electrics (Thailand)
4,000,000 10.00
Ms. Li
Youxiang
 Executive Director and vice general
manager of our Company;
 Director of X.J. Group (HK);
 Director of Innovative (Jiangyin);
 Director of MeiNuoWei Electrics;
 Director of X.J. Electrical Appliances;
and
 Executive director and general manager
of Nuocheng Electronic Commerce
4,000,000 10.00
Mr. Xu
Xiping
 Executive Director of our Company;
 Director of X.J. Electrical Appliances;
and
 Technical consultant of the outsourcing
centre of Shenzhen Branch
2,000,000 5.00
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Name of
partner Position(s) in our Group
Capital
subscription
amount
Partnership
interest
(RMB) (%)
Ms. Hu Yan  Executive Director, secretary to our
Board, chief financial officer and one of
the joint company secretaries of our
Company;
 Director of X.J. Electronics (Shenzhen);
 Director of THS Industrial;
 Director of X.J. Electrical Appliances;
and
 Director of X.J. Electrics (Thailand)
2,000,000 5.00
Mr. Shi
Chuanlai
 Supervisor of our Company; and
 Director and general manager of X.J.
Electrics (Shenzhen)
1,600,000 4.00
Mr. Wang
Chengang
 General manager of Innovative
(Jiangyin)
1,400,000 3.50
Ms. Yi
Hongliang
 Supervisor of our Company;
 Supervisor of MeiNuoWei Electrics;
 Supervisor of X.J. Electrical Appliances;
and
 President of the outsourcing centre of
Shenzhen Branch
1,000,000 2.50
Mr. Liang
Changhong
 Vice president of R&D centre of our
Company
1,000,000 2.50
Ms. Su
Jingjing
 Sales manager of our Company 800,000 2.00
Mr. Huang
Haitao
 Executive director and general manager
of Nawu Technology; and
 Sales manager of our Company
800,000 2.00
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Name of
partner Position(s) in our Group
Capital
subscription
amount
Partnership
interest
(RMB) (%)
Ms. Yan Li  Director of THS Industrial; and
 Audit manager of our Company
600,000 1.50
Mr. Hu
Qingfeng
 Staff of administrative department of
Shenzhen Branch
400,000 1.00
Mr. Ye
Huanchun
 Vice general manager of HNW
Electronics
400,000 1.00
Mr. Zhong
Dingan
 Supervisor of Nuocheng Electronic
Commerce; and
 Sales manager of our Company
400,000 1.00
Mr. Hu
Jianfeng
 Vice general manager of the general
manager office of our Company
400,000 1.00
Mr. Geng
Congen
 Vice president of the general manager
office of our Company
200,000 0.50
Total 40,000,000 100
MAJOR ACQUISITIONS, DISPOSALS AND MERGERS
During the Track Record Period and up to the Latest Practicable Date, we did not conduct
any major acquisitions, disposals or mergers.
PREVIOUS A SHARE LISTING ATTEMPT
Our Company previously considered the possibility of seeking an initial public offering in
the PRC (“ A Share Listing Attempt ”). On 3 May 2017, our Company engaged a tutoring
agency (“ Tutoring Agency A ”) to provide tutoring and preliminary compliance advice in
relation to the requirements of the CSRC. Due to high turnover of personnel of Tutoring Agency
A and upon mutual agreement, our Company terminated the engagement with Tutoring Agency A
on 30 October 2020 and the termination was reported to Hubei Commissioner Office of the
CSRC (“ Hubei CSRC ”) on 2 November 2020.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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On 18 November 2020, we engaged a financial adviser to provide financial advice to us,
and engaged it as our tutoring agency (“ Tutoring Agency B ”) to provide tutoring in relation to
our A Share Listing Attempt on 25 January 2021. In view of Tutoring Agency B’s failure to
adhere to the agreed listing timetable and upon mutual agreement, our Company terminated the
engagement with Tutoring Agency B on 29 March 2021 and the termination was reported to
Hubei CSRC on the same date.
On 30 August 2021, our Company engaged Sinolink Securities Co., Ltd. as the tutoring
agency and filed the pre-listing tutoring with Hubei CSRC on 1 September 2021. On 21 June
2022, our Company filed an application for A share listing with the CSRC. We received one
round of comments from the CSRC in September 2022 and submitted our response in December
2022. In March 2023, our application was transferred to the SZSE (the “ A Share Listing
Application ”). We received two rounds of comments from the SZSE in March and September
2023. In relation to the first round of comments raised by the SZSE, our Company submitted our
initial response in August 2023 for addressing the first round of comments and an updated
response in September 2023 for updating the financial information therein to cover the stub
financial period from 1 January 2023 to 30 June 2023. In December 2023, our Company
submitted our response to the second round of comments. As confirmed by our Directors, no key
outstanding comments from the SZSE or the CSRC remained unresolved. Our Directors are of
the view, and the Sole Sponsor concurs, that none of such comments raised by the CSRC and the
SZSE will render our Group not suitable for Listing, and all information that is relevant to the
Listing and reasonably necessary for the potential investors to make an informed assessment of
our Group has been included in this prospectus.
Back in 2017, we considered that seeking a listing on the A-Share market was suitable and
aligned with our business position as a manufacturer of lifestyle household goods in the PRC. At
that time, we had no overseas production facilities and did not have plans to establish overseas
manufacturing facilities. To diversify and expand our Group’s manufacturing capability and
enhance our global presence, we began to strategically establish our production facilities in
Southeast Asia since 2023. In view of the robust foundation of Hong Kong as a hub for
international investors, our Directors considered that a listing status on the Stock Exchange
would be able to facilitate our strategic goal of overseas expansion and elevate international
visibility. Hence, our Company voluntarily withdrew our A share listing application on 29 April
2024.
To the best of our Directors’ knowledge, our Directors are not aware of (i) any other
matters in relation to the A Share Listing Application which are relevant to the Listing and
should be reasonably highlighted in this prospectus for prospective investors to form an
informed assessment of our Company or to be brought to the attention of the Stock Exchange;
(ii) any enquiries from the CSRC or the SZSE in relation to the A Share Listing Application that
would affect our Company’s suitability for listing on the Stock Exchange; and (iii) any other
matters relating to the A Share Listing Application that may have implications on our Company’s
suitability for listing on the Stock Exchange or on the truthfulness, accuracy and completeness
of information disclosed in this prospectus.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Based on the Sole Sponsor’s due diligence work including, amongst others, (a) reviewing
materials submitted to the CSRC on the previous A-share Listing Attempts; (b) reviewing
publicly available information relating to the previous A-share Listing Attempts; and (c)
conducting interviews with certain professional parties engaged in connection with the previous
A-share Listing Attempts, the Sole Sponsor is not aware of any other matters in relation to the A
Share Listing Application that need to be brought to the attention of the Stock Exchange.
Save as disclosed above, the Sole Sponsor is not aware of any material matters relating to
the A share Listing Application which need to be brought to the attention of the investors and
the Stock Exchange based on the independent due diligence work performed by the Sole
Sponsor.
REASONS FOR THE LISTING
Our Directors believe that the listing of our H Shares on the Stock Exchange benefits our
Group and our Shareholders considering that the Stock Exchange offers an international platform
for accessing foreign capital and promoting our Group to global investors, which in turn
provides further capital to bolster our business development and expansion efforts, and to
strengthen our Group’s working capital. For details of our application of proceeds from the
Listing, please see “Future Plans and Use of Proceeds” in this prospectus.
PUBLIC FLOAT
The 204,659,509 Domestic Unlisted Shares collectively held by Mr. Pan Yun, Mr. Guangshe
Pan, Qichun Hengxing and X.J. Management (Qichun), our Controlling Shareholders,
representing approximately 75.00% of our total issued Shares immediately following the
completion of the Global Offering (assuming the Over-allotment Option is not exercised), will
not be counted towards the public float as (i) these Shareholders will constitute core connected
persons of our Company; and (ii) these shares are unlisted which would not be converted to H
Shares and listed following the completion of the Global Offering.
To the best knowledge of our Directors, save as disclosed above, upon the completion of
the Global Offering (assuming that the Over-allotment Option is not exercised), 68,220,000 H
Shares held or controlled by our Shareholders who are not our core connected persons,
representing approximately 25.00% of our total issued Shares, will be counted towards the
public float, which is in compliance with the requirement under Rule 8.08 of the Listing Rules.
Taking into account the Shares to be issued to other Shareholders pursuant to the Global
Offering, our Directors are of the view that our Company will be able to satisfy the public float
requirement under Rule 8.08 of the Listing Rules.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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SHAREHOLDING STRUCTURE OF OUR COMPANY
The following chart sets forth our corporate structure as at the Latest Practicable Date and
immediately before completion of the Global Offering:
100%
99.90%
0.10% 1.77%
100%
98.23%
Goodlife Global
(U.S.)
PT Dingsheng
(Indonesia)
THS Industrial
(Hong Kong)
X.J. Electrics
(Thailand)
(Thailand)
100% 100% 100%
 X.J. Electrical
Appliances
(PRC)
Weighmax
(U.S.)
X.J. Group (HK)
(Hong Kong)
70.37%47.50%
Qichun Hengxing(1)
(PRC)
29.63%
26.39%54.07%19.54%
100% 100% 100%
100% 100%
100% 100% 100%
Mr. Pan Yun
X.J. Management
(Qichun)
(PRC)
Our Company
(PRC)
Aigrentrading
(PRC)
Nuocheng
Electronic
Commerce
(PRC)
Nawu
Technology
(PRC)
Innovative
(Jiangyin)
(PRC)
X.J. Electronics
(Shenzhen)
(PRC)
X.J. Electrics
(Shenzhen)
(PRC)
MeiNuoWei
Electrics
(PRC)
HNW
Electronics
(PRC)
Mr. Guangshe Pan
Note:
1. Mr. Pan Yun is the sole general partner of Qichun Hengxing, the employee shareholding platform of our
Company. Mr. Pan Yun is interested in 47.5% partnership interest in Qichun Hengxing. The remaining
52.5% partnership interest is held by 16 limited partners, including our Directors, Ms. Ji Ying, Ms. Li
Youxiang, Mr. Xu Xiping and Ms. Hu Yan as to 10%, 10%, 5% and 5%, respectively, our Supervisors, Mr.
Shi Chuanlai and Ms. Yi Hongliang as to 4% and 2.5%, respectively, director of THS Industrial, Ms. Yan
Li as to 1.5% and other nine current employees of our Group who were Independent Third Parties. The
range of partnership interest held by these nine employees ranged from 0.5% to 3.5%. For further details,
please see “Employee Shareholding Platform” in this section above.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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The following chart sets forth our corporate structure immediately after the Global Offering
(assuming that the Over-allotment Option is not exercised):
100% 100%
Goodlife Global
(U.S.)
THS Industrial
(Hong Kong)
99.90%
0.10% 1.77%
98.23%
PT Dingsheng
(Indonesia)
X.J. Electrics
(Thailand)
(Thailand)
70.37%47.50%
Qichun Hengxing(1)
(PRC)
29.63%
19.79%40.55%14.66%25.00%
100% 100% 100%
100% 100%
100% 100% 100% 100% 100% 100%
Mr. Pan Yun
Other Public
Shareholders
Our Company
(PRC)
Nawu
Technology
(PRC)
Innovative
(Jiangyin)
(PRC)
X.J. Electronics
(Shenzhen)
(PRC)
X.J. Electrics
(Shenzhen)
(PRC)
MeiNuoWei
Electrics
(PRC)
HNW
Electronics
(PRC)
 X.J. Electrical
Appliances
(PRC)
Weighmax
(U.S.)
X.J. Group (HK)
(Hong Kong)
Mr. Guangshe Pan
X.J. Management
(Qichun)
(PRC)
Aigrentrading
(PRC)
Nuocheng
Electronic
Commerce
(PRC)
Note:
1. Mr. Pan Yun is the sole general partner of Qichun Hengxing, the employee shareholding platform of our
Company. Mr. Pan Yun is interested in 47.5% partnership interest in Qichun Hengxing. The remaining
52.5% partnership interest is held by 16 limited partners, including our Directors, Ms. Ji Ying, Ms. Li
Youxiang, Mr. Xu Xiping and Ms. Hu Yan as to 10%, 10%, 5% and 5%, respectively, our Supervisors, Mr.
Shi Chuanlai and Ms. Yi Hongliang as to 4% and 2.5%, respectively, director of THS Industrial, Ms. Yan
Li as to 1.5% and other nine current employees of our Group who were Independent Third Parties. The
range of partnership interest held by these nine employees ranged from 0.5% to 3.5%. For further details,
please see “Employee Shareholding Platform” in this section above.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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OVERVIEW
We are a manufacturer of lifestyle household goods in the PRC. We mainly operate on
ODM/OEM basis and have built a customer portfolio comprising globally reputable and long
standing names, such as Walmart, Telebrands, SEB, Sensio, Hamilton Beach and Philips etc.
With our capability to design, develop and manufacture a range of small home appliances, we
have gained recognition in our small kitchen appliances. We were the “Top 10 Small Kitchen
Appliance Export Companies (ཥ̈ɹΆุ )” in 2022 and 2023 recognised by
China Chamber of Commerce for Import and Export of Machinery and Electronic Products ( ʕ਷
ආ̈ɹਠึ ). During the Track Record Period, a major portion of our revenue came
from our sales of small kitchen appliances.
(1) According to the F&S Report, we were the 10th
largest company with a market share of 0.8% in terms of export value in 2024 in the small
kitchen appliance industry in the PRC.
(2) Our electric kettles had a market share of
approximately 24.6% and 59.6% in the respective category classified by the General
Administration of Customs of the PRC in terms of export volume from the PRC to the U.S. and
Canada, respectively, in 2024. Our motor-driven products such as mixers had a market share of
approximately 3.8% in the respective category classified by the General Administration of
Customs of the PRC in terms of export volume from the PRC to the U.S. in 2024. Please see
“Industry Overview” in this prospectus for details.
We focus on research and development, design, manufacturing and sales of electric home
appliances and non-electric household goods. Our electric home appliances consist of three
categories, namely (i) electro-thermic appliances, such as electric griddle, air fryer and kettle;
(ii) motor-driven appliances, such as blender, mixer and electric can opener; and (iii) electronic
appliances such as digital scale, humidifier and laser projector light. We also offer non-electric
household goods such as garden hose and cookware. As at 14 March 2025, we had over 10
ODM/OEM products that made Amazon’s “best-sellers” list of respective categories, among
which our steamer, rice cooker, electric griddle and electric skillet were in the top 10 of the
Amazon’s “best-sellers” list of respective categories.
(1) For FY2022, FY2023 and FY2024, revenue contributed by sales of small kitchen appliances represented 73.9%,
72.1% and 72.7% of our total revenue, respectively.
(2) According to Frost & Sullivan, small kitchen appliance accounted for the largest share of the global small home
appliance industry.
BUSINESS
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The table below sets out a breakdown of our total revenue by product type during the Track
Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
Electric home
appliances
– Electro-thermic
appliances 459,013 41.8 499,099 42.0 757,883 50.5
– Motor-driven
appliances 317,623 29.0 321,937 27.1 315,560 21.0
– Electronic
appliances 122,997 11.2 111,570 9.4 115,066 7.7
Subtotal 899,633 82.0 932,606 78.5 1,188,509 79.2
Non-electric
household goods
– Garden hose 181,460 16.5 221,788 18.7 285,118 19.0
– Others
(Note) 15,872 1.5 33,927 2.8 27,883 1.8
Subtotal 197,332 18.0 255,715 21.5 313,001 20.8
Total 1,096,965 100.0 1,188,321 100.0 1,501,510 100.0
Note: Others include cookware, cleaning tools and other household goods etc.
During the Track Record Period, we primarily manufactured and sold our products to our
ODM/OEM customers under their respective brands. Leveraging our experience and knowledge
in the industry and capabilities we have developed throughout the last two decades, as a
strategic approach, in 2016, we started our OBM business to design, develop, manufacture and
sell home appliances under our own brands
(“Weighmax ”),
(“Accuteck ”) and
 (“Aigoli ”). We sell our OBM products mainly on e-commerce
market place including Amazon, JD.com (؇Tmall ( ˂፟) and Pinduoduo (εε).
BUSINESS
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The following table sets forth the breakdown of the revenue of our Group by business
model during the Track Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
ODM 938,536 85.6 1,056,623 88.9 1,289,950 86.0
OEM 97,056 8.8 81,992 6.9 170,407 11.3
OBM 61,373 5.6 49,706 4.2 41,153 2.7
Total 1,096,965 100.0 1,188,321 100.0 1,501,510 100.0
Note: Revenue from our OBM business represents revenue generated from Aigrentrading, Nawu Technology,
Nuocheng E-Commerce and Weighmax. Revenue from our ODM and OEM business represents revenue
generated from other subsidiaries of our Group.
Since 2000, we have established different production facilities in different parts of China.
Currently, we have established seven manufacturing bases in the PRC with a total construction
area of approximately 367,000 sq.m. To establish our overseas presence outside of the PRC, we
have established a production base in Indonesia, which is expected to commence production in
the second quarter of 2025, and we plan to establish another production base with a site area of
43,436.8 sq.m. in Thailand, which is expected to commence production in the second half of
2025. For details of our production facilities, please see “– Our Production Facilities” in this
section.
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A majority of our products are exported to overseas customers. During the Track Record
Period, our products were shipped to over 70 countries and regions covering six continents. For
details of our relationship with our overseas customers, please see “– Our Customers” in this
section. The table below sets out a breakdown of our total revenue by shipping destination of
our products during the Track Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
North America
The U.S. 755,142 68.8 958,315 80.6 1,148,669 76.5
Others
(Note) 25,987 2.4 35,634 3.0 107,647 7.2
Europe 227,672 20.8 111,730 9.4 139,551 9.3
Oceania 44,073 4.0 28,834 2.4 57,219 3.8
Asia (excluding
mainland China) 26,331 2.4 35,833 3.0 34,258 2.3
South America 8,527 0.8 12,228 1.0 7,369 0.5
Africa 552 0.1 759 0.1 476 0.0
Mainland China 8,681 0.7 4,988 0.5 6,321 0.4
Total 1,096,965 100.0 1,188,321 100.0 1,501,510 100.0
Note: Others include Canada and Mexico.
We consider our R&D capabilities as one of our core competitive advantages. As at the
Latest Practicable Date, we had obtained approximately 440 registered patents worldwide,
including 19 invention patents. We have been awarded “High and New Technology Enterprise”
(৷อҦஔΆุ ) since 2016. For details, please see “– Research and Development” in this
section.
For FY2022, FY2023 and FY2024, our revenue was RMB1,097.0 million, RMB1,188.3
million, and RMB1,501.5 million respectively, and our net profit was RMB80.3 million,
RMB121.5 million and RMB140.4 million, respectively. For details, please see “Financial
Information – Results of Operations” in this prospectus.
BUSINESS
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OUR COMPETITIVE STRENGTHS
We believe that the following strengths position us well to capitalise on future
opportunities and deliver continued growth.
Established relationships with internationally reputable customers, including some of the
world’s famous brand names
We have maintained long-term business relationships with various large-scale customers for
over nine years and our products are shipped to more than 70 countries and regions worldwide.
Harnessing our ability to design, develop, manufacture and sell, we have established long-term
business relationship with global brand names, including (i) Walmart, one of the world’s largest
retail companies; (ii) Philips, one of the long standing consumer electronics companies in the
world; (iii) SEB, a member of the world’s leading small home appliances manufacturing
consortium and the holding company of which is listed on Euronext Paris with a market
capitalisation of over USD5 billion as of the Latest Practicable Date; (iv) Telebrands, a long
standing U.S. company; (v) Sensio, a leading kitchen appliances brand owner and (vi) Hamilton
Beach, a leading designer, marketer and distributor of branded small electric household and
specialty house wares appliances. To become a qualified supplier of these well-known brands,
we are required to undergo in-depth inspection of our production capacity, quality management,
factory safety and other aspects. We believe that our long-term relationships testified our
capabilities and quality.
Moreover, we maintain close interactions with our customers. Through constant
communication with our customers, we collect valuable feedback and statistics of our products,
for improvement of our existing products and development of new products to address our
customers and consumers’ unmet needs. We assign a dedicated account manager to each key
customer and our sales team conduct regular meeting with our customer to thoroughly
understand its needs in order to explore new product development opportunities and timely
address customer’s feedback. As we continuously serve our internationally reputable customers,
we are able to obtain first-hand industry information and the global market trend which provides
pivotal direction for R&D of our product and manufacture. Our customer interactions drive
product upgrades and new product development, therefore enhancing our customers loyalty,
achieving a virtuous cycle and propelling our business growth. For details, please see “– Our
Business Model” in this section. We believe that such long-term relationships with our
customers, including internationally reputable customers, accentuates our business sustainability
and capabilities which distinguish us from our competitors.
BUSINESS
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Reputation as a supplier of lifestyle household goods with decades of track record
We established our Yinuowei Factory in Jiangyin in 2000. Throughout the years, we have
grown into a notable manufacturer of lifestyle household goods in the PRC. In FY2023, our
revenue reached RMB1,188.3 million, representing a growth of 8.3% from FY2022. We are a
member of the China Household Electrical Appliances Association (͜ཥኜ՘ึ ), the
China Chamber of Commerce for Import and Export of Machinery and Electronic Products ( ʕ਷
ආ̈ɹਠึ ), and the vice-president unit of the Shenzhen Chamber of Commerce for
Import and Export ( ଉέ̹ආ̈ɹਠึ ). Our reputation has been attested by the various awards
and certificates including, “Top 10 Small Kitchen Appliance Export Companies (ཥ
̈ɹΆุ )” in 2022 and 2023, “Class I Enterprise Certificate for Exporting Industrial Products
(ࣣTop 10 Green Innovative Enterprise in 2018 (2018ၠЍ௴
อΆุTop 10)” from China Council for International Investment Promotion (ආ
ึ) and “Leading Enterprise in High-quality Foreign Trade Development (ࠏ
Άุ)”. For details, please see “– Awards and Recognitions” in this section.
We offer a wide array of lifestyle household goods. According to the F&S Report, we were
the 10th largest company with a market share of 0.8% in terms of export value in 2024 in the
small kitchen appliance industry in the PRC. Our electric kettles had a market share of
approximately 24.6% and 59.6% in the respective category classified by the General
Administration of Customs of the PRC in terms of the export volume from the PRC to the U.S.
and Canada, respectively, in 2024. Our motor-driven appliances such as mixers had a market
share of approximately 3.8% in the respective category classified by the General Administration
of Customs of the PRC in terms of export volume exported from the PRC to the U.S. in 2024.
We had over 10 ODM/OEM products that made Amazon’s “best-sellers” list of respective
categories on 14 May 2025, among which our steamer, rice cooker, electric griddle and electric
skillet were in the top 10 of the Amazon’s “best-sellers” list of respective categories.
Strategically positioned overseas manufacturing bases and production operation
As part of our overall business strategy to diversify our manufacturing beyond the PRC, we
have also established our manufacturing facility in Indonesia, which is expected to commence
production in the second quarter of 2025. We will allocate our purchase orders between the PRC
production facilities and Indonesian production facility to mitigate potential geopolitical risks.
We also plan to establish a production facility in Thailand which is targeted to commence
production in the second half of 2025. Together with our seven manufacturing bases in the PRC
with a total construction area of approximately 367,000 sq.m., we are well-positioned to capture
the growing opportunities in lifestyle household goods in a global context.
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Our production lines are flexible that they are capable of manufacturing different products
with different specifications by adjusting configurations of our machines and equipment. Our
manufacturing capability does not only allow us to respond promptly to sudden upsurge in
demand and purchase orders by our customers, but they are also capable of switching into
production of different products. During the Track Record Period, we produced over 2,400
models of products in different categories. We believe that our flexible production facilities will
continue to drive our growth and success.
We also adopt modular manufacturing in our production processes. We subdivide our
manufacturing into smaller modules which are individual, standardised and interchangeable
components that can be later assembled into a complete product. Modular manufacturing allows
us to manufacture simultaneously, instead of creating a product in a sequential manner. We are
able to streamline the production process by breaking down a product into its basic parts and
components, thus reducing lead times and enhancing productivity and flexibility.
In Meinuowei Factory, we have established automated production systems which automate
critical production stages with precision. We integrate machines for production and systems for
inspection and quality control to realise the integration of automated production and testing.
Such automation will reduce manual participation and enhance product performance.
By leveraging on our worldwide presence and production capability to provide regional
support to our customers, we are well-positioned to seize new opportunities in the ever-changing
market and excelling in this competitive industry.
R&D capabilities enabling continual product upgrade and development
We have a professional and experienced R&D team. For FY2022, FY2023 and FY2024, we
incurred R&D expenses of RMB32.0 million, RMB34.4 million and RMB36.4 million,
respectively. As at 31 December 2024, we had a R&D team of more than 170 members. As at the
Latest Practicable Date, we had approximately 440 registered patents, including 19 invention
patents. As our success is centred around our understanding of customer needs, we insist on
serving customers with technological breakthroughs and determine the direction of product
development based on customer demand. In addition to improvement of production process
mentioned in the last paragraph, our R&D efforts have resulted in technological breakthroughs
and development in products.
We have strong capability to develop moulds, which are the important tools to transform
our R&D achievements into products. In order to effectively control the development progress
and quality of moulds, we have established a dedicated mould department in our Yuantexin
Factory. As at 31 December 2024, we have mastered a series of mould development technologies
and developed over 13,000 moulds. Efficient mould development ensures our rapid response to
customers’ requirements.
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We also conduct customised R&D on the core components of our products. For example,
we have mastered several technologies to improve the performance of motors, the critical
components of our motor-driven products. By conducting electromagnetic simulation and
analysis, we effectively modify our motors to reduce heat generation while improving their
efficiency and product lifetime. We also adopt special internal structure to improve heat
dissipation performance and reduce wind resistance. For example, the electromagnetic induction
technology in automatic adjustment of motor speed developed by us have been applied across
the different models of blender to improve grinding efficiency and effectively prevent damage of
motor. As at the Latest Practicable Date, we have obtained 50 registered patents in relation to
motors. We insist on product development and attach importance to fundamental R&D activities.
Our garden hoses feature automatic extension with ultra-high temperature, burst and
pressure tolerance that function under extreme temperature from -40°C to 60°C. Our R&D effort
is widely recognised and converted into commercial success in Europe and North America. Since
2023, our garden hoses have been the top 50 best sellers on Amazon, the largest e-commerce
marketplace in the United States.
Highly experienced and stable management team and a functional organisational structure
with effective internal control system
Our senior management team has extensive experience in the production and supply of
lifestyle household goods. Our business has experienced an impressive growth under the
leadership of our senior management team. Mr. Pan Yun ( ᆙʪ), an executive Director and
general manager of our Company has over 35 years of experience in business management and
over 24 years of experience in the electrical home appliances manufacturing industry. He is
primarily responsible for overall strategic planning, business direction and management of our
Group. Mr. Guangshe Pan, an executive Director, has over nine years of experience in business
management and in the electrical home appliances manufacturing industry, in particular in
overseas market. He is mainly responsible for the management and operation of our U.S. sales
and has participated in the overall strategic planning, business direction and management of our
Group. The keen industry insight and rich management experience of Mr. Pan Yun and Mr.
Guangshe Pan have proven to be valuable to us, allowing us to precisely capture market
dynamics and optimise strategic planning.
In addition to Mr. Pan Yun and Mr. Guangshe Pan, we have a stable and experienced
management team who has been with us for over 12 years and has more than 20 years of
experience in our industry. Our management team has accumulated in-depth knowledge of the
lifestyle household goods industry and played an important role in maintaining a strong
relationship with key market participants. We believe that we will continue to be well-positioned
to excel in the competition within our industry. For details of the background of our senior
management, please see “Directors, Supervisors and Senior management” in this prospectus.
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We have a functional organisational structure designed to support our strategic
development. Each of our departments deeply understands the dynamics of the relevant function
it operates and nimbly responds to achieve rapid growth. Our management have maintained a
comprehensive and stringent internal control system to regulate our operational activities and
implemented various policies such as production management policy, procurement management
policy and after-sales and complaint management policy. Ensuring competence at the level of
each department and the synergistic operations across different business units through the
leadership of our experienced management team and the effective internal control system, we are
able to pursue our business vision.
OUR STRATEGIES
The four pillars of our management policy are “customer oriented, quality first, be
practically innovative and be unique” (ሯୋɓe௴อӋྼeዹዓɓᄹ ). We are
abide by this motto and committed to becoming a leading manufacturer of quality lifestyle
household goods and offer our customers with unique lifestyle household goods. In our pursuit,
we plan to implement the following strategies to foster the development of our Group.
Set up our Thailand Factory to enhance our global presence
In light of the increasing demand of lifestyle household goods and to enhance our global
presence, we intend to set up a production site in Rayong Province, Thailand (“ Thailand
Factory ”).
Reasons for setting up the Thailand Factory
1. Industry landscape presenting opportunities that we are poised to capture
The industry presents growth potential and prospect. According to Frost & Sullivan, the
market size of the small kitchen appliance industry in the U.S., our major shipping destination,
increased from USD17.2 billion in 2020 to USD21.2 billion in 2024, with an expectation to
further increase to USD 26.8 billion in 2029 by a CAGR of 5.0% from 2025. In particular, the
market size of some small kitchen appliances which were our major products during the Track
Record Period is expected to increase. For example, the market size of electric fryer, electric
griddle and kettle in the U.S. is expected to increase to USD2,169.5 million by a CAGR of
8.1%, USD682.3 million by a CAGR of 5.3% and USD314.2 million by a CAGR of 5.1%,
respectively, in 2029. Moreover, the demand for China’s small home appliance is expected to
continue growing that the export value of China’s small home appliance is expected to increase
from USD58.4 billion in 2025 to USD65.6 billion in 2029, with a CAGR of 2.9%. For garden
hoses, the market size of garden hoses is projected to grow from USD9.5 billion in 2025 to
USD11.4 billion by 2029, with a CAGR of 4.7%. Moreover, the total export value of garden
hoses of China reached RMB10.6 billion in 2024. For details, please see “Industry Overview”.
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We experienced a growth by 27.4% for our electric home appliances in FY2024 as
compared to FY2023. In particular, we recorded an increase of 19.6% for our electric home
appliances shipped to the U.S. in the same period. Such growth outperforms the year-on-year
growth rate in the same period of (i) the global small kitchen appliance market, which was only
3.5%, (ii) the small kitchen appliance industry in the U.S, which was 5.1% and (iii) the export
value of China’s small home appliance, which was 9.3%. For garden hoses, our year-on-year
growth in FY2024 significantly outpaces the growth of the garden hose market in the same
period. In FY2024, sales of our garden hoses rose by 28.6% while the growth of the garden hose
market in the same period was only 2.6% and the export value for our Group was approximately
RMB285.1 million in 2024, ranking the first among the market participants in China and
accounting for a market share of 2.7%. We believe that these figures demonstrate our
competitiveness against non-PRC and PRC ODM/OEM suppliers to capture business
opportunities emerging from the favourable industry landscape.
From a macro perspective, according to Frost & Sullivan, China’s small home appliance
industry has become the world’s leading production bases for decades. In the course of China’s
advancement to be the world’s production hub of small home appliances, not only a supply chain
network that is internationally recognised and approved has been developed, but an abundance of
talents and caliber in different manufacturing disciplines has also been nurtured. Such has
brought PRC manufacturing companies advantages on various aspects, such as technologies,
know-how, knowledge of supply chain management and cost control, understanding of
international brands and experience of serving these brands, over non-PRC manufacturing
companies. More importantly, according to Frost & Sullivan, these advantages of PRC
manufacturing companies over non-PRC manufacturing companies take years to develop and
therefore are expected to remain. Leveraging these intangible advantages that we can apply in
our overseas factories, we believe that we will be able to capture the demand and compete with
non-PRC manufacturing companies.
On the other hand, according to Frost & Sullivan, a key competitive advantage of
manufacturing companies with non-PRC production facilities over their counterparts with only
PRC production facilities is the ongoing Sino-U.S. trade tensions which give manufacturing
companies with non-PRC production facilities business opportunities to capture demand from
international brands seeking to diversify their supply chains and shift production out of China to
mitigate tariff impacts. Although the U.S. government had also announced tariff on certain East
Asian countries, such as Indonesia and Thailand, tariff rates applicable to certain East Asian
countries are lower than that of the PRC. Moreover, as at the Latest Practicable Date, some East
Asian countries had expressed their willingness to negotiate with the U.S. government for a
reduction of tariff in such countries. Additionally, manufacturing companies with non-PRC
production facilities may benefit from shorter shipping times and lower logistical costs if they
are geographically closer to target markets, improving delivery efficiency. Their established
distribution networks in regions like Southeast Asia may also enable manufacturing companies
with non-PRC production facilities to better compete on supply chain resilience, further
appealing to international clients seeking stability in a shifting trade environment. We consider
that this justifies our expansion plan in Thailand. With the overseas production facilities in
Thailand and Indonesia, coupled with our track record of working with international customers,
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we believe that we provide U.S. importers a procurement alternative that is reliable and
mitigates their tariff impact at the same time. Based on the foregoing, we consider that there
would be sufficient demand that justifies our expansion plan and use of proceeds.
2. Enhancing our global presence
According to Frost & Sullivan, Chinese small kitchen appliance manufacturing companies
are establishing overseas production facilities and as at the Latest Practicable Date, six
(excluding us) out of the top 10 companies in China’s small kitchen appliance industry in terms
of export value in 2024 have established or have plans to establish their overseas production
facilities in Southeast Asia to diversify their supply chain in this mature manufacturing hub. The
global conglomerates are adjusting their procurement strategies to reduce the risks associated
with reliance on “made in China” supply chain particularly after the supply chain disruption
caused by COVID-19 but not reducing reliance on Chinese manufacturing companies given the
strengths of Chinese manufacturing companies which cannot be easily replicated by non-Chinese
manufacturing companies as aforementioned. To echo with the customers’ purchase strategies,
some of the PRC manufacturing companies maintain their production in the PRC but start to
allocate parts of the production to other countries. Such trend is evidenced by China’s increasing
investment in Southeast Asia. According to Frost & Sullivan, China has been investing in
Southeast Asia, particularly in the manufacturing sector, that China’s foreign direct investment
in the manufacturing sector in Southeast Asia reached USD9.16 billion in 2023, representing an
increase of 11.4% from 2022. In light of the trend of the establishment of overseas production
bases and the expected growth in the small home appliances market, we believe that having
production facilities and capacity overseas is crucial to the long-term sustainable growth of our
business and to maintain our market competitiveness in a global context.
3. Mitigating geopolitical risks by diversifying our product origins
During the Track Record Period, a significant portion of our revenue was derived from the
sale of our products to the United States as shipment destination, while all of our products are
manufactured in the PRC. While we, being the exporter, were not directly affected by tariff
during the Track Record Period, it is uncertain that whether any further trade restrictions as a
result of the Sino-U.S. trade tension will adversely and materially affect us in the future. For
details of the impact of the Sino-U.S. trade tension, please see “Business – Sino U.S. and Global
Trade Tension” and “Risk Factor – The Sino-U.S and global trade tension may adversely affect
our business, financial conditions and results of operation” in this prospectus.
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We believe that building up a multi-jurisdiction manufacturing network will enable us to
respond to changes in global trade policies and mitigate geopolitical risks. By setting up the
Thailand Factory, our Group can diversify our product origins and offer goods made outside the
PRC which may mitigate exposure of trade restrictions to a certain extent under Sino-U.S. trade
tension for our OEM/ODM customers, thus enhance our competitiveness over other home
appliance PRC manufacturing companies, in particular those do not have overseas production
facilities. As at the Latest Practicable Date, although Thailand had also become a subject of the
U.S. tariff, tariff rate applicable to imports from Thailand to the U.S. was 10% which is lower
than the tariff of 30% imposed on imports from China to the U.S. Also, our production facilities
layout with overseas and PRC coverage will also offer our customers flexibility to choose
according to their needs. We believe that the establishment of the Thailand Factory will also
bring us other intangible benefits including strengthening our image as a sizable manufacturer
with overseas facilities, reducing disruption risks due to incidents similar to COVID-19 in the
future, as well as demonstrating our production stability and reliability to be explained in the
paragraph below which are crucial for our long term growth.
The unpredictable U.S. tariff policy may affect our customer’s choice of production
location. Contemplating such uncertainty, some major customers have already approached us to
designate production of their products in our Indonesia Factory. Several customers have already
conducted factory inspection in order to start production of their orders as soon as possible; and
for the major customer who requested inspection of our Indonesia Factory, we have passed such
inspection. We therefore foresee the necessity to set up another overseas production facilities in
Thailand.
4. Demonstrating the stability and reliability in the production and delivery of products
We consider that it is necessary to expand our production capacity taking into account the
utilisation rate of production capacity during the Track Record Period. For example, the
utilisation rate of production capacity for electric home appliances was close to or exceeded
90% for four months and six months for FY2023 and FY2024, respectively whereas that for
non-electric household goods was close to or exceeded 110% for five months and six months for
FY2023 and FY2024, respectively. Therefore, we intend to expand our production capacity to
capture opportunities arisen from the favourable landscape as explained above. Our Directors
consider that it would not be optimal for our production facilities to achieve full utilisation rate
with no spare production capacity for taking up urgent and/or bulk orders received from time to
time and cater for potential market growth. To maintain customer satisfaction, we plan and
allocate our production resources to satisfy the needs of our customers so far as we can. With
the capacity across our different production facilities, during the Track Record Period, we did
not need to reject bulk or urgent orders due to limitation of our production capacity.
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For illustrative purpose only, the expected annual designed capacity of electric home
appliances and non-electric household goods would be 44.3 million units and 8.6 million units,
respectively, upon the completion of the setting up of all production facilities (including
Thailand Factory and XJ Intelligence Factory both of which will involve use of net proceeds
from the Global Offering). Taking into account (i) that our historical growth rate outpaced
industry growth as demonstrated above, (ii) the benefits and reasons of our future plan as
explained in this section, in particular, the increasingly imminent geopolitical risks due to
intensifying tension between US and China as well as cost savings may be achieved by owning a
factory in Thailand, and (iii) that the future plan is a long-term plan and it would not be
commercially sensible or practicable to carry out construction for expansion in a piecemeal
manner only when demand materialised, we believe that our future plan to build our own
Thailand Factory is justified. Also, we will assess the overall utilisation of our production
facilities from time to time on a continuous and rolling basis and consider whether integration
and reorganisation of our production facilities is necessary. For details of the utilisation rate
during the Track Record Period and expected annual utilisation rate upon completion of the set
up of all production facilities and underlying assumptions, please see “– Our Production
Facilities – Production capacity and utilisation rate” in this section.
In addition, suppliers’ stability and reliability in the production and delivery of products are
important for our international ODM/OEM customers. Any delays in the delivery of products or
if the products delivered are not of an acceptable quality will cause material detrimental and
negative impact on the reputation and publicity of the ODM/OEM customers. As such, the global
brands take into account various factors in selecting and approving their suppliers including the
supplier’s stability and reliability. The manufacturer’s dedication and financial commitment to
its business and financial strength are attributes of a business’ stability and reliability, which can
be evidenced by establishing a new overseas manufacturing basis.
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5. Benefits of owning a factory instead of leasing a factory
We also consider that it is more cost-efficient for us to build our own a factory than leasing
a factory. The following table sets forth a cost saving analysis for a five-year period that
compares owning a factory and leasing a factory:
Y ear 1 Y ear 2 Y ear 3 Y ear 4 Y ear 5
RMB’000
(1) Own a factory
Estimated yearly
depreciation on
land
(Note 1) 4,884 4,884 4,884 4,884 4,884
(2) Lease a factory
Estimated yearly
rental costs (Note 2) 10,734 10,949 11,168 11,391 11,619
Cost saving of
owning a
property 5,850 6,065 6,284 6,507 6,735
Notes:
1. The estimated depreciation charges are determined in accordance with our depreciation policy that
depreciate the estimated total cost of land (i.e. RMB31.4 million) and buildings (i.e. RMB66.3 million) of
the proposed Thailand Factory by an estimated useful life of 50 and 20 years, respectively, on a
straight-line basis.
2. The estimated yearly rental costs are determined with reference to the present average market rental price
of comparable properties in the same district as the Thailand Factory and an estimated annual growth in
rental cost.
In addition to the aforementioned cost saving, we believe that owning a factory will also
have other qualitative benefits that leasing a factory will not provide:
 Earlier mitigation of geopolitical risks – In light of increasing imminent geopolitical
risks due to uncertainties in China-US relationships and potential trade tension against
China, we consider that there is an imminent need for an overseas operation earlier.
However, as Thailand is a one of the highly sought-after locations in South-east Asia
for Chinese manufacturers to set up their overseas production facilities, such trend has
led to a rising demand in properties for factory use for rent while there is a lack of
new supply for such properties. It follows that finding a suitable factory for rent in
Thailand has become increasingly difficult and time-consuming. Given that we have
already identified a location in Thailand and also entered into an agreement for the
purchase of land, we believe that proceeding with our plan of building our own
factory would be the better option than leasing a factory which would involve the
search and negotiation for suitable properties at suitable price that may take months.
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 Design and use flexibility – With our own factories, we would be able to tailor the
design of the factory for our use and have more flexibilities to upgrade our facilities
or install new equipment which suits our business needs better.
 Operational stability – Owning a factory will also provide us production and financial
stability that we can also avoid rent increases, spending time and effort on finding
new suitable site and incurring relocation costs when lease expires or is terminated.
 Assets for financial leveraging – acquiring a new plot of land can strengthen our asset
base which may be beneficial for obtaining debt financing at more preferential terms
from banks for our future use.
Although we expect that we will have to incur additional transportation costs for importing
the work-in-progress or raw materials from the PRC to Thailand, it is expected that our Thailand
Factory will incur similar production cost as compared to the production in the PRC due to the
lower labour cost. According to Frost & Sullivan, the minimum wage of Rayong, Thailand,
where our Thailand Factory is located, is approximately RMB76.5 per day (which is about 47%
of the labour cost we paid in the PRC). The additional increase in the transportation costs is
expected to be offset by the lower labour cost in Thailand, leading to a similar total production
cost. Also, by reference to the land acquisition cost of XJ Intelligence Factory, the cost of land
acquisition in Thailand and the PRC is similar. Given the aforementioned cost saving and other
benefits of owning a factory in Thailand, we believe that our plan of building our Thailand
Factory is justified.
Production Plan
We plan to construct the new production facilities in Thailand with an aggregate
construction area of approximately 25,000 sq.m. in which we will build new automated assembly
lines for the manufacturing of mainly motor-driven products and garden hoses. In light of the
expanded capacity, we will assess the overall utilisation of our production facilities from time to
time on a continuous and rolling basis to maintain the utilisation of our production facilities at
an optimal level. When we consider our assembly lines being under-utilised which are almost
idle for six months or above, we will integrate and reorganise our production facilities and
dispose obsolete assembly lines. We may also prioritise disposing assembly lines in factories we
leased from third-parties to better utilise our self-owned factories.
Timetable
As at the Latest Practicable Date, we had entered into a sale and purchase agreement with
an Independent Third Party to acquire a parcel of land in Thailand with a site area of 43,436.8
sq.m. for a consideration of THB149,314,000 (equivalent to approximately RMB31.4 million)
for the establishment of our Thailand Factory. As at the Latest Practicable Date, we had paid the
first two instalments of the land price in an aggregate of RMB15.7 million and the construction
fee of RMB47.7 million.
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Below are the key stages and expected timing for establishment of our Thailand Factory
upon Listing:
Key stages Expected timeline
Continue the construction and renovation of
production space
May 2025
Acquire and install machines and equipment May 2025
Commence production The second half of 2025
Conduct acceptance testing September 2026
Estimated capital expenditure for setting up our Thailand Factory
We plan to utilise an aggregate of approximately RMB139.2 million for establishing the
Thailand Factory, of which RMB66.4 million will be paid by the net proceeds from the Global
Offering, representing 41.9% of such net proceeds, and the remaining sum of RMB72.8 million
will be financed by our internal resources and/or bank loans.
Below is our planned allocation of capital expenditure of RMB139.2 million for
establishing our Thailand Factory:
Use
Estimated
capital
expenditure %
(RMB million)
Land acquisition cost 31.4 22.5
Construction and renovation of production space 66.3 47.7
Acquisition and installation of machines and equipment 41.5 29.8
Total 139.2 100.0
We plan to spend a total of RMB66.3 million on the construction and renovation of
production space of Thailand Factory, based on the planned construction area of approximately
25,000 sq.m. and the estimated construction cost of approximately RMB2,500 per sq.m.
according to the preliminary discussion with construction contractors.
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Based on the historical purchase cost of similar machines and equipment, we plan to spend
a total of RMB41.5 million on acquiring and installing the machines and equipment for Thailand
Factory. The table below sets out details of the machines and equipment we plan to install for
Thailand Factory:
Machinery and equipment to be acquired and installed Estimated cost
(RMB’ million)
Injection moulding machines and auxiliary equipment 14.2
Metal processing facilities 6.6
Automated assembly lines and auxiliary equipment 16.7
Office equipment 4.0
Total 41.5
Breakeven and payback period
Breakeven is considered to have been achieved once the revenue generated by our Thailand
Factory covers its operating costs and expenses (excluding depreciation charge and after tax)
incurred in the same year on an accounting basis. Time required for achieving breakeven
depends on various factors, such as general economic and market conditions, market demand,
utilisation rate of our production lines, market competition and costs of production. Investment
payback is considered to be achieved once the total future net cash flow generated from
operating activities of our Thailand Factory covers its total investment amount including land
acquisition cost, construction cost and machinery and equipment acquisition cost. The time
required to achieve investment payback also depends on various factors, including those
mentioned above and the actual capital expenditure such as costs of machinery and equipment.
Based on our knowledge and experience, we estimate that the payback period for our Thailand
Factory will be approximately 60 months and that breakeven could be achieved within
approximately 20 months.
Increase the level of automation and digitalisation
In recent years, the PRC government has shown strong support and placed emphasis on
revving up and transforming the manufacturing sector in China which was once characterised by
bustling assembly lines and labour intensiveness. Series of smart manufacturing pilot initiatives
had been launched by the PRC government including the artificial intelligence plus initiative. To
stay at the forefront of the competition and to embrace the digital trend, we launched our smart
manufacturing initiative and established our XJ Intelligence Factory in Huizhou, Guangdong
Province, the PRC. As at the Latest Practicable Date, we had completed the construction of our
XJ Intelligence Factory with a construction area of approximately 147,069 sq.m. and completed
the first-phase setting up with 20 basic and automated assembly lines built. The annual designed
capacity of our XJ Intelligence Factory upon the completion of the first-phase setting up is 11.3
million units. Our XJ Intelligence Factory has commenced operation since June 2024. Our next
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step is to continue the setting up of our XJ Intelligence Factory and purchase additional
equipment and machines with higher automation level for our smart manufacturing lines. We
currently mainly produce electro-thermic products in XJ Intelligence Factory. To complete the
setting up, we will equip our XJ Intelligence Factory with computerised manufacturing execution
system, supported by comprehensive IT infrastructure, which works as real time monitoring
system to control the overall operation of the production of XJ Intelligence Factory. Coupled
with the automated production line and equipment, we believe that the modernised and
digitalised production in XJ Intelligence Factory will facilitate our sustainable growth.
We plan to spend an aggregate of RMB42.9 million on acquiring and installing new
machinery and equipment for our XJ Intelligence Factory, of which RMB25.1 million will be
paid by the net proceeds from the Global Offering, representing 15.8% of such net proceeds, and
the remaining RMB17.8 million will be financed by our internal resources and/or bank loan. The
table below sets out details of the machineries and equipment we plan to purchase for our XJ
Intelligence Factory:
Machinery and equipment
to be acquired Functions and use Estimated cost
(RMB million)
Manufacturing line
– Motorised curve roller conveyors Automated and continuous
transporting of products
5.4
– Automated production line of
motor stator
Automated manufacturing of stator,
major components of motor
2.6
– Other machines and equipment
and installation
3.3
Machines
– Six-axis robots Automated welding, handling and
removing materials and painting
4.8
– Numerically-controlled
hydraulic press
Moulding, punching and clinching 3.0
– Other machines and equipment
and installation
3.8
Assembly line
– Multi-functional automated
production line
Automated manufacturing,
electrical testing and quality
control
9.0
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Machinery and equipment
to be acquired Functions and use Estimated cost
(RMB million)
System
– Manufacturing execution system Monitoring, tracing and
documenting the manufacturing
process
4.0
– IT infrastructure Optimising the operation and
manufacturing process through
the network of computers,
software and storage devices
2.0
Automated pallet shuttle
Automated loading and unloading
pallets from racking
5.0
Total 42.9
Breakeven is considered to have been achieved once the revenue generated by our XJ
Intelligence Factory covers its operating costs and expenses (excluding depreciation charge and
after tax) incurred in the same year on an accounting basis. Time required for achieving
breakeven depends on various factors, such as general economic and market conditions, market
demand, utilisation rate of our production lines, market competition and costs of production.
Investment payback is considered to be achieved once the total future net cash flow generated
from operating activities covers its total investment amount including land acquisition cost,
construction cost and machinery and equipment acquisition cost. The time required to achieve
investment payback also depends on various factors, including those mentioned above and the
actual capital expenditure such as costs of machinery and equipment. Based on our knowledge
and experience, it is estimated that the payback period for our XJ Intelligence Factory will be
approximately 60 months and that breakeven could be achieved within approximately 15 months.
Set up a new R&D Centre
To facilitate the R&D of home appliances and as part of our plan to expand our product
offerings, we intend to build a R&D centre in Qichun County, Hubei Province (the “ New R&D
Centre ”) which occupies an aggregate construction area of approximately 6,000 sq.m for R&D
of new products, and testing laboratory. The New R&D Centre will be located in the same site
as the Hubei XJ Factory.
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Reasons for setting up the New R&D Centre
In recent years, the PRC government has shown strong support and placed emphasis on the
development of energy-conserving, environmentally-friendly and smart home appliances. In June
2019, the National Development and Reform Commission, the Ministry of Ecology and
Environment, and the Ministry of Commerce jointly released “Implementation Plan for
Promoting the Updating, Upgrading and Facilitating Resource Recycling of Key Consumer
Products (2019–2020)*ࣩ2019–2020 ϋ)”.
The plan aimed to promote and support the research, development and industrialisation of
eco-friendly and smart home appliances. It also encouraged the innovation of home appliances
based on the use of IT and AI to manufacture integrated products. In 2021, the China Household
Electrical Appliances Association subsequently released “The Guiding Opinions for the 14th
Five-Year Plan by the China Household Electrical Appliances Association*ཥʈุɤ
ኬจԈ”, proposing China to become a pioneer in technological innovation of
global home appliances. In response to favourable government policies, we are dedicated to
devote more resources on R&D.
We will purchase a series of advanced R&D testing software and hardware equipment such
as spectrum analyser and 3D printers and hire the relevant experienced talents specialising in the
research and development of small home appliances. In order to develop new products, for both
our existing customers and under our own brands, we believe that investing in a more advanced
R&D centre, which will be equipped with software and hardware for computerising conceptual
designs of new products and a testing laboratory for testing life functionality of the prototypes,
we will be able to modify existing products and develop new products and product technologies.
We intend to carry out 15 R&D projects in the New R&D Centre, including the development of
new products such as high-power mixer, intelligent electric dumpling pan frying machine and
intelligent multi-layer oven and the upgrading of our existing motor-driven products and
electro-thermic products. In addition to hardware, for our R&D activities, we will need to recruit
high calibre with knowledge and expertise in empirical and holistic sciences with wide industrial
applications.
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Timetable
Below are the key stages and expected timing for the establishment of the New R&D
Centre upon Listing:
Key stages Expected timeline
Commence tendering process for renovation and
equipment
August 2025
Commence construction of the New R&D Centre
(i) Construct and renovate laboratories October 2025
(ii) Acquire and install facilities and equipment April 2026
Recruit 59 R&D personnel June 2026
Commence operation June 2026
Estimated capital expenditure expenses for setting up the New R&D Centre
We plan to utilise an aggregate of RMB59.1 million for establishing the New R&D Centre,
which will be paid by the net proceeds from the Global Offering, representing 37.3% of such net
proceeds.
Below is our planned allocation of capital expenditure of RMB33.5 million for establishing
our New R&D Centre:
Use
Estimated capital
expenditure
Approximate % of
net proceeds
used for
establishing the
new R&D Centre
(RMB’ million)
Construction and renovation of laboratories 16.2 27.4
Acquisition and installation of facilities and
equipment 17.3 29.3
Total 33.5 56.7
BUSINESS
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Below is our planned allocation of other expenses of RMB25.6 million for establishing our
New R&D Centre:
Use Estimated expenses
Approximate % of
net proceeds
used for
establishing the
new R&D Centre
(RMB’ million)
Procurement of materials and consumables of
R&D 14.6 24.7
Recruitment of 59 staff 11.0 18.6
Total 25.6 43.3
Enlist new brands to enhance our OBM business
According to Frost & Sullivan, the global small home appliance industry is undergoing a
significant shift in business models, transitioning from traditional OEM approaches to more
integrated ODM + OBM models. A mix of the business models allow these manufacturers to
diversify their source of revenue and attain market recognition, expanding market position in the
industry. Leveraging our strong R&D capabilities and our experience in ODM model to keep up
with industry development, we intend to enhance our OBM business.
In general, on OBM model, we may have control over product design, quality, and
branding, as well as its marketing and sales; and therefore, we were able to generate higher
profit margins than running ODM/OEM model. Accordingly, for a sustainable growth and
diversification of our business, we consider that it is necessary to maintain and enhance our
OBM business. However, OBM incurs marketing cost in brand building and it takes time for
new brands to gain market reception and sales volume. As a strategic approach to have our own
brand and to manage potential risks and costs associated with building a new brand at the same
time, we plan to explore and pursue investment and acquisition opportunities in existing brand
owner(s) on the market with potential for growth and offer synergies that complement our
existing brand portfolio to save our initial cost and mitigate our risks in brand building, mainly
through acquisition of majority equity interests of target companies.
BUSINESS
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We will mainly look for brand owner(s) selling lifestyle household goods, including
electro-thermic appliances and motor-driven appliances, such as kettles, air fryers, slow cookers
and mixers. We will target companies or businesses with established market position as
evidenced by the business relationship with customers and sales volume. We may look for
target(s) that have proven track record in offering lifestyle household goods with an annual
revenue of at least USD50 million. We intend to look for brand owners which offer popular
products and/or have a great variety of product types in their offerings. We believe that
companies which fulfil these criteria will be able to continue its business operation shortly upon
our acquisition so that we may save our time and cost. As advised by Frost & Sullivan, it is
estimated that there are around 100 brand owners of small home appliances in the U.S. that had
an annual revenue of at least USD50 million.
As to geographical and sales channel coverage, we plan to explore targets which are U.S.
brands that distribute products through both online and offline channels with a focus on the
latter. We target to acquire brand owner(s) which offers lifestyle household goods focusing in the
U.S. and European market.
We intend to utilise an aggregate of RMB100 million for enlisting new brands to our brand
portfolio to enhance our OBM business, which will be financed by our internal resources and/or
bank loans. As at the Latest Practicable Date, we had not identified any potential investment or
acquisition targets or entered into any agreements in this regard.
OUR BUSINESS MODEL
The following diagramme sets out our main business model:
Product flow
Non-product flow
product demand
product demand/
product specification
Orders for OBM products
Our Group Retailers/
consumers
ODM/
OEM customers ODM/OEM productsODM/OEM products
OBM products
BUSINESS
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ODM and OEM Business
We are a manufacturer of lifestyle household goods in the PRC. We mainly operate on
ODM/OEM basis with a customer portfolio comprising globally reputable and long standing
names. ODM and OEM models are distinguished based on the degree of our design input, in
other words, whether product designs are provided by customers or developed by our in-house
staff. It follows that, in essence, under ODM model, we collaborate with our customers to
develop designs of products and then we manufacture; whereas under OEM model, our
customers provide us their designs and we are only responsible for manufacturing. Finished
products under ODM and OEM models are affixed with our customers’ brand labels and shipped
to ports designated by customers. During the Track Record Period, our products are delivered to
more than 70 countries and regions covering six continents while a majority of our ODM/OEM
products are shipped to North America during the Track Record Period. From an operation
perspective, except that ODM involves conceptualisation of designs, ODM and OEM models go
through similar stages in our general business operations.
OBM Business
In addition to our ODM/OEM operations, since 2016, we have started our OBM operation
that we design, develop, manufacture and sell our products under our self-owned brands, unlike
ODM and OEM models under which we affix customers’ labels. As at the Latest Practicable
Date, we had three self-owned brands, namely,
(“Weighmax ”),
(“Accuteck ”) and
 (“Aigoli ”). Our OBM products are mainly sold on major
e-commerce market places including Amazon, JD.com (؇Tmall ( ˂፟) and Pinduoduo (ܳ
εε). From an operation perspective, except that OBM involves conceptualisation of designs
and marketing and distribution of our self-branded products by our own, given that products we
sold under OBM model are of the same nature (i.e. electric home appliances), certain stages of
business operation, such as procurement, manufacturing process and quality control, are similar
to OEM/ODM model.
The following table sets forth the breakdown of the revenue of our Group by ODM, OEM
and OBM basis during the Track Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
ODM 938,536 85.6 1,056,623 88.9 1,289,950 86.0
OEM 97,056 8.8 81,992 6.9 170,407 11.3
OBM 61,373 5.6 49,706 4.2 41,153 2.7
Total 1,096,965 100.0 1,188,321 100.0 1,501,510 100.0
Note: Revenue from our OBM business represents revenue generated from Aigrentrading, Nawu Technology,
Nuocheng E-Commerce and Weighmax. Revenue from our ODM and OEM business represents revenue
generated from other subsidiaries of our Group.
BUSINESS
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OUR PRODUCTS
Under our ODM/OEM business, we offer a range of electric and non-electric household
goods. Our electric home appliances comprise three major categories, namely, (i) electro-thermic
appliances, such as electric griddle, air fryer and kettle; (ii) motor-driven appliances, such as
blender, mixer and electric can opener; and (iii) electronic appliances such as digital scale,
humidifier and laser projector light. We also offer non-electric household goods such as garden
hose and cookware.
Under our OBM business, we mainly sell different models of digital scales.
The table below sets forth the breakdown of our total revenue by product category during
the Track Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
Electric home
appliances
– Electro-thermic
appliances 459,013 41.8 499,099 42.0 757,883 50.5
– Motor-driven
appliances 317,623 29.0 321,937 27.1 315,560 21.0
– Electronic
appliances 122,997 11.2 111,570 9.4 115,066 7.7
Non-electric
household goods
– Garden hose 181,460 16.5 221,788 18.7 285,118 19.0
– Others
(Note) 15,872 1.5 33,927 2.8 27,883 1.8
Total 1,096,965 100.0 1,188,321 100.0 1,501,510 100.0
Note: Others include cookware, cleaning tools and other household goods etc.
BUSINESS
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The pictures below are some of our products under our ODM/OEM model:
Electro-thermic appliances
Electric griddle Air fryer Kettle
Motor-driven appliances
Blender Mixer Electric can opener
Electronic appliances
Digital scale Humidifier Laser projector light
BUSINESS
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The pictures below are some of the non-electric household goods manufactured and
sold by us:
Garden hose
Others
Cookware
BUSINESS
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--- page 202 ---
Average selling price and sale volume
The table below sets out the breakdown of average selling price and sales volume by
product category for FY2022, FY2023 and FY2024:
FY2022 FY2023 FY2024
Average
selling
price Volume
Average
selling
price Volume
Average
selling
price Volume
(per unit) (units) (per unit) (units) (per unit) (units)
RMB (‘000) RMB (‘000) RMB (‘000)
Electric home appliances
– Electro-thermic appliances 91.6 5,012 80.3 6,215 74.7 10,139
– Motor-driven appliances 60.6 5,241 55.5 5,802 55.5 5,687
– Electronic appliances 49.5 2,484 55.0 2,028 57.8 1,992
Non-electric household goods
– Garden hose 58.9 3,082 59.7 3,713 57.6 4,951
– Others (Note 1) 4.5 3,497 8.9 3,818 12.7 2,197
Notes:
1. Others include cookware, cleaning tools and other household goods etc.
2. In FY2023, considering the trend of appreciation of the USD against RMB, our customers negotiated with
us to reduce the selling price of our major products and therefore the average selling price of our major
products, except for electronic appliances and garden hoses, decreased in FY2023. The average selling
price of electronic appliances increased in FY2023, primarily due to the increase in the price of laser
lights and postal scales. The average selling price of garden hoses increased in FY2023, primarily due to
the decrease in sales of lower-priced models. For FY2024, the average selling price of different product
categories remained relatively stable, except for electro-thermic appliances and others. The average selling
price of electro-thermic appliances decreased in FY2024, which was primarily attributable to the decrease
in the average selling price of certain products, including electric kettles, electric griddles and slow
cookers. The average selling price of others increased in FY2024, which was mainly due to the increase in
the average price of some of our cleaning tools.
3. In FY2023, considering the trend of appreciation of the USD against RMB, our customers negotiated with
us to reduce the selling price of our electro-thermic appliances and motor-driven appliances. Such price
reduction had promoted the sales volume of our electro-thermic appliances and motor-driven appliances in
FY2023. The decrease in the sales volume of electronic appliances in FY2023 was mainly due to the
decrease in sales volume of card scales and knife sharpeners. In relation to garden hoses, the increase in
sales volume in FY2023 was due to the success of product upgrade initiated in FY2022. In FY2024, the
sales volume of most product categories remained stable, except for electro-thermic appliances and garden
hoses. The sales volume of garden hoses continued to grow in FY2024, especially for the upgraded
versions. The sales volume of electro-thermic appliances also increased in FY2024, mainly driven by
higher sales of slow cookers and electric kettles.
BUSINESS
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OUR OPERATION FLOW
ODM and OEM Business
Our business operations involves several key stages. The flowchart below illustrates our
general business operations and time generally needed for each stage:
ODM
Conceptualisation
Six to eight months
OEM
Design verification and
prototype development
for new designs
One to two months
Delivery to
destination specified
by customers
Material planning and
procurement
Confirmation of customer
purchase order
Production and Testing
Warehousing of finished
products
30 to 60 days
BUSINESS
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--- page 204 ---
We mainly serve our customers on an ODM or OEM basis. On an OEM basis, we
manufacture according to designs developed by our customers; whereas we collaborate with our
customers to develop designs according to their requirements when we are serving our customers
on ODM basis.
It usually takes 30 to 60 days from receiving the purchase orders to delivering the finished
products to our customers, depending on the complexity of product designs and specifications,
volume of the purchase order and the lead time in our supply chain.
Conceptualisation and Design Verification
A project is usually initiated by a customer enquiry. For ODM orders, our business
development team personnel communicates with our customers to understand their needs. We
will then make proposal with price estimate according to our customers’ specifications. We work
closely with our customers to modify and finalise our designs and if our customers agrees with
our proposal, our customers will place an order with us. For OEM orders, designs and technical
drawings are provided by customers and we will verify and review to ensure that all
specifications and requirements of customers can be met, upon satisfaction of which we will
accept the purchase order.
Confirmation of Customer Purchase Order
For OEM orders, our customers will provide us with a purchase order and delivery
requirements, together with information package generally comprising bill of materials (which is
a schedule of components and parts required), technical drawings for the mechanical parts and
components. A project team, comprising engineers and members from the quality assurance team
production and materials team, will be formed to be responsible for each order. For ODM orders,
during this stage, our engineering team will provide our bills of materials and drawings for our
customers’ approval. Where necessary, we will produce prototype for customer’s approval.
Material Planning and Procurement
With the use of the ERP system, our procurement department works with our suppliers
closely to ensure that there are sufficient production materials to meet our customers’ purchase
orders within the requisite timeframe. Upon arrival of production materials, we will conduct
quality inspection of the materials.
BUSINESS
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Production and Testing
We adopt flexible manufacturing systems comprising machines and computerised systems
which can be configured to manufacture a wide range of parts and components. For details of
key stages of our manufacturing process, please see “– Our Manufacturing Process” in this
section. Where necessary, we outsource certain non-core processes to our subcontractors. For
details of our outsourcing to subcontractors, please see “– Outsourcing” in this section. To
maintain our quality standard, we conduct in-line quality inspection with the aid of our quality
control technologies. Fully assembled products will undergo a series of tests and inspections to
ensure that our customers’ specifications are met.
Warehousing and delivery
Upon passing our quality control, products will be packed and stored in our warehouse
pending delivery by third-party logistics companies.
OBM Business
Similar to our ODM model, we develop our own design under our OBM model. Unlike
ODM/OEM model, we are in control of the timing of the launch of new products and we
manufacture in anticipation of orders to be placed by our customers. Upon receiving orders from
customers via e-commerce marketplaces, we ship our products to their designated addresses.
OUR CUSTOMERS
During the Track Record Period, we generated our revenue mostly from ODM/OEM
customers which represent 94.4%, 95.8% and 97.3% of our total revenue. Our ODM/OEM
customers mainly comprise international brand owners and their procurement service providers.
The remaining portion of our revenue came from our OBM business including direct sales of our
self-branded products (i.e. products under
(“Weighmax ”),
 (“Accuteck ”)
and
 (“Aigoli ”)) to end consumers through ecommerce marketplaces, including
Amazon, JD.com (؇Tmall ( ˂፟) and Pinduoduo (εε), and sales to distributors, the
latter of which represented less than 0.1% of our total revenue for each year during the Track
Record Period.
BUSINESS
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The following table sets forth the breakdown of the revenue of our Group by business
model during the Track Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
ODM 938,536 85.6 1,056,623 88.9 1,289,950 86.0
OEM 97,056 8.8 81,992 6.9 170,407 11.3
OBM 61,373 5.6 49,706 4.2 41,153 2.7
Total 1,096,965 100.0 1,188,321 100.0 1,501,510 100.0
Note: Revenue from our OBM business represents revenue generated from Aigrentrading, Nawu Technology,
Nuocheng E-Commerce and Weighmax. Revenue from our ODM and OEM business represents revenue
generated from other subsidiaries of our Group.
Our shipping destinations
Based on the delivery destinations of our products requested by our customers, our
products were exported to more than 70 countries and regions worldwide during the Track
Record Period. The table below sets out the breakdown of our total revenue by shipping
destination of our products during the Track Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
North America
The U.S. 755,142 68.8 958,315 80.6 1,148,669 76.5
Others
(Note) 25,987 2.4 35,634 3.0 107,647 7.2
Europe 227,672 20.8 111,730 9.4 139,551 9.3
Oceania 44,073 4.0 28,834 2.4 57,219 3.8
Asia (excluding
Mainland China) 26,331 2.4 35,833 3.0 34,258 2.3
South America 8,527 0.8 12,228 1.0 7,369 0.5
Africa 552 0.1 759 0.1 476 0.0
Mainland China 8,681 0.7 4,988 0.5 6,321 0.4
Total 1,096,965 100.0 1,188,321 100.0 1,501,510 100.0
Note: Others include Canada and Mexico.
BUSINESS
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--- page 207 ---
Top five customers
Our five largest customers in each year during the Track Record Period accounted for
62.4%, 72.4% and 77.9% of our total revenue for FY2022, FY2023 and FY2024, respectively;
and our largest customer in each year during the Track Record Period accounted for 21.3%,
28.5% and 24.1% of our total revenue for FY2022, FY2023 and FY2024, respectively.
FY2022
Customer Background
Products purchased
from us
Y ears of
relationship
with us
(approximate) Credit terms
Payment
method
Revenue
contribution
% of our total
revenue
(RMB’000)
Walmart Stores, Inc.
(“Walmart ”)
Walmart is an American multinational retail
corporation that operates a chain of
hypermarkets, discount department stores and
grocery stores in the United States. Walmart
is one of the largest corporations in the
global retail industry. As of 31 July 2024,
Walmart has over 10,000 stores in the United
States and other countries.
Electro-thermic appliances,
motor-driven appliances
13 60 days Telegraphic
transfer
233,389.5
ODM:
230,892.5
OEM:
2,497.0
21.3
Telebrands Corp.
(“Telebrands ”)
Founded in 1983, Telebrands is a long standing
American company, which is engaged in,
among others, designing and selling
consumer products with international
locations in 70 countries worldwide.
Garden hose, electronic
appliances and other
non-electric household
goods
11 30% deposit
advance
payment,
90–120 days
for the
balance
Telegraphic
transfer
223,746.4
ODM:
223,746.4
OEM: Nil
20.4
Sensio Inc.
(“Sensio ”)
Sensio is an American brand owner with a
history of 17 years focused on the kitchen
appliances sector which owns brands
including Bella and Crux.
Electro-thermic appliances,
motor-driven appliances
10 45–90 days Telegraphic
transfer
92,272.1
ODM:
66,919.5
OEM:
25,352.6
8.4
BUSINESS
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--- page 208 ---
Customer Background
Products purchased
from us
Y ears of
relationship
with us
(approximate) Credit terms
Payment
method
Revenue
contribution
% of our total
revenue
(RMB’000)
Hamilton Beach
Brands, Inc.
(“Hamilton
Beach ”)
Hamilton Beach is an American brand owner of
home appliances and commercial restaurant
equipment marketed primarily in the United
States, Canada and Mexico. Its holding
company is listed on the New York Stock
Exchange with a market capitalisation of
over US$400 million.
Electro-thermic appliances,
motor-driven appliances
10 60–90 days Telegraphic
transfer
79,032.8
ODM:
78,526.6
OEM: 506.2
7.2
TGI (FAR EAST)
Limited (“ TGI”)
TGI primarily engages in the import and export
of small home appliances, with its business
footprint primarily in Europe. It is the
procurement service provider for an
European international discount retailer chain
that operates over 10,000 stores worldwide.
Electro-thermic appliances,
motor-driven appliances
9 10% deposit
advance
payment,
balance
against bill
of lading
Telegraphic
transfer
56,182.1
ODM:
56,182.1
OEM: Nil
5.1
Total 684,622.9 62.4
BUSINESS
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--- page 209 ---
FY2023
Customer Background
Products purchased
from us
Y ears of
relationship
with us
(approximate) Credit terms
Payment
method
Revenue
contribution
%o fo u r
total revenue
(RMB’000)
Walmart Walmart is an American multinational
retail corporation that operates a chain
of hypermarkets, discount department
stores and grocery stores in the United
States. Walmart is one of the largest
corporations in the global retail industry.
As of 31 July 2024, Walmart has over
10,000 stores in the United States and
other countries.
Electro-thermic appliances,
motor-driven appliances
13 60 days Telegraphic
transfer
338,166.5
ODM:
338,166.5
OEM: Nil
28.5
Telebrands Founded in 1983, Telebrands is a American
company, which is engaged in, among
others, designing and selling consumer
products with international locations in
70 countries worldwide.
Garden hose, electronic
appliances and other
non-electric household
goods
11 30% deposit
advance
payment,
90–120
days for
the balance
Telegraphic
transfer
282,147.6
ODM:
280,471.8
OEM:
1,675.8
23.7
Sensio Sensio primarily is an American brand
owner with a history of 17 years focused
on the kitchen appliances sector which
owns brands including Bella and Crux.
Electro-thermic appliances,
motor-driven appliances
10 45–90 days Telegraphic
transfer
100,927.0
ODM:
82,654.8
OEM:
18,272.2
8.5
Hamilton Beach Hamilton Beach is an American brand
owner of home appliances and
commercial restaurant equipment
marketed primarily in the United States,
Canada and Mexico. Its holding
company is listed on the New York
Stock Exchange with a market
capitalisation of over US$400 million.
Electro-thermic appliances,
motor-driven appliances
10 60–90 days Telegraphic
transfer
83,055.6
ODM:
80,822.1
OEM:
2,233.5
7.0
RJ Brands, LLC
(“RJ”)
RJ is an American kitchen equipment
brand owner. RJ owns brands including
Chefman with different customers
including Tesco, Target and other large
retailers.
Electro-thermic appliances,
motor-driven appliances
11 60–90 days Telegraphic
transfer
55,454.1
ODM:
54,310.3
OEM:
1,143.8
4.7
Total 859,750.8 72.4
BUSINESS
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--- page 210 ---
FY2024
Customer Background
Products purchased
from us
Y ears of
relationship
with us
(approximate) Credit terms
Payment
method
Revenue
contribution
%o fo u r
total revenue
(RMB’000)
Telebrands Founded in 1983, Telebrands is a long
standing American company, which is
engaged in, among others, designing and
selling consumer products with
international locations in 70 countries
worldwide.
Garden hose, electronic
appliances and other
non-electric household
goods
11 90–120 days Telegraphic
transfer
361,741.4
ODM:
351,616.0
OEM:
10,125.4
24.1
Walmart Walmart is an American multinational
retail corporation that operates a chain
of hypermarkets, discount department
stores, and grocery stores in the United
States. Walmart is one of the largest
corporations in the global retail industry.
As of 31 July 2024, Walmart has over
10,000 stores in the United States and
other countries.
Electro-thermic appliances,
motor-driven appliances
13 60 days Telegraphic
transfer
316,678.8
ODM:
316,678.8
OEM: Nil
21.1
Sensio Sensio is an American brand owner with a
history of 17 years focused on the
kitchen appliances sector which owns
brands including Bella and Crux.
Electro-thermic appliances,
motor-driven appliances
10 45–90 days Telegraphic
transfer
269,047.4
ODM:
171,497.8
OEM:
97,549.6
17.9
RJ RJ is an American kitchen equipment
brand owner. RJ owns brands including
Chefman with different customers
including Tesco, Target and other large
retailers.
Electro-thermic appliances,
motor-driven appliances
11 60–90 days Telegraphic
transfer
134,253.8
ODM:
131,507.7
OEM:
2,746.1
8.9
Hamilton Beach Hamilton Beach is an American brand
owner of home appliances and
commercial restaurant equipment
marketed primarily in the United States,
Canada and Mexico. Its holding
company is listed on the New York
Stock Exchange with a market
capitalisation of over US$400 million.
Electro-thermic appliances,
motor-driven appliances
10 60–90 days Telegraphic
transfer
87,930.0
ODM:
83,764.7
OEM:
4,165.3
5.9
Total 1,169,651.4 77.9
BUSINESS
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--- page 211 ---
During the Track Record Period, all of our five largest customers in each year during the
Track Record Period were Independent Third Parties. To the best knowledge and belief of our
Directors, none of the Directors, their close associates; or any Shareholder (which to the
knowledge of the directors owns more than 5% of the number of issued Shares of the issuer) had
any interest in the aforementioned top five customers in each year during the Track Record
Period.
During the Track Record Period, none of the major customers as aforementioned was also a
supplier.
ODM/OEM customers
For FY2022, FY2023 and FY2024, we had 177, 168 and 183 ODM/OEM customers,
respectively. Our ODM/OEM customers mainly comprise international brand owners and their
procurement service providers who act as outsourced procurement function of brand owners and
place their orders with us in a similar manner as a brand owner. We have entered into framework
agreements with our ODM/OEM customers, including most of our top five customers in each
year during the Track Record Period for the sales of our products. Thereafter, sales will be
placed through separate purchase orders. For customers who have not enter into framework
agreement with us, sales will be placed through purchase orders. Key terms such as the quantity,
price, time and destination of delivery, product specifications and payment terms are set out in
purchase orders.
Framework agreements
A summary of the key commercial terms of our framework agreements with our major
customers is set forth below:
Term No specific term specified or for a term of one to
two years which will be automatically renewed for
another term upon expiry unless written notice of
termination is served.
Product quality & returns We are required to deliver products in accordance
with customer’s specifications and/or production
samples.
Generally, defective allowance of 2%–5% is
provided. If actual return exceeds the defective
allowance, we will make corresponding refund.
Minimum purchase commitment We do not impose minimum purchase amount on our
customers.
BUSINESS
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--- page 212 ---
Prices, payment and credit terms Prices shall be set out in separate purchase orders
which shall be mutually agreed by both parties and
we may receive deposits of 30% of order amount.
Credit terms of 60 to 120 days after the
shipment/receipt of shipping documents and
generally payment shall be made by bank or
telegraphic transfer.
Confidentiality We shall keep information, including designs,
know-how and manufacturing data of our customers
in confidence.
Termination (i) Either party may terminate framework agreement
by giving 30–90 days’ notice to the other; or (ii) if
we fail to deliver or remedy the default on time, our
customer is entitled to terminate the framework
agreement.
Pursuant to our framework agreement with Telebrands, one of our major customers, we
exclusively manufacture and sell garden hoses to Telebrands. During the Track Record Period,
apart from garden hoses, we also sold other non-electric household goods such as mop buckets
and seat liners to Telebrands. We have maintained long-term and stable relationships with
Telebrands for 11 years and Telebrands had placed orders with us each year during the Track
Record Period. Moreover, given that (i) during the Track Record Period and up to the Latest
Practicable Date, we did not have any material disputes with Telebrands and (ii) currently there
is no indication from Telebrands that our existing relationship will change materially and
adversely, or terminate, in the near future, our Directors are of the view that there is no
indication or sign from Telebrands that our relationship with Telebrands is likely to change
materially and adversely, or terminate, in the near future.
In relation to the major customers who had entered into framework agreements with us, (i)
we have maintained long-term and stable relationships for over nine years with each of these
major customers, (ii) each of them had placed orders with us each year during the Track Record
Period, (iii) our framework agreements remain effective until either party intends to terminate or
is automatically renewed at expiration whereas none of these major customers had notified us or
requested for termination of their framework agreements, (iv) during the Track Record Period
and up to the Latest Practicable Date, we did not have any material disputes with them and (v)
we have maintained stable business relationship, our Directors are of the view that there is no
indication or sign from these major customers that our existing relationship with them is likely
to change materially and adversely, or terminate, in the near future.
BUSINESS
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OBM customers
Our OBM customer base is primarily composed of retail customers who purchase our
products either directly ecommerce market places such as Amazon, JD.com (؇Tmall ( ˂፟)
and Pinduoduo (εε). Our OBM customers also include distributors, such as online and
offline shop owners, the sales of which represented less than 0.1% for each year during the
Track Record Period.
During the Track Record Period, sales to our five largest customers in each year during the
Track Record Period accounted for 62.4%, 72.4% and 77.9% of our total revenue, respectively
and sales to our largest customer in each year during the Track Record Period accounted for
21.3%, 28.5% and 24.1% of our total revenue of the relevant year, respectively. Our Directors
are of view that our reliance on our customers, in particular, Walmart and Telebrands (being the
single largest customer of different year during the Track Record Period), would not have a
material adverse impact on our business sustainability, given that (i) we have maintained
long-term and stable collaboration relationships with them, (ii) our framework agreements
remains effective until either party intends to terminate or is automatically renewed at
expiration, (iii) during the Track Record Period and up to the Latest Practicable Date, we did not
have any material disputes with them, and (iv) we have maintained good business relationships,
and currently, there is no indication or sign from them that our existing relationship will
materially adversely change in the near future. Please also see “Risk Factors – Risks Relating to
our Industry and Business – We rely on a few major customers, which, in aggregate, accounted
for more than 60% of our total revenue during the Track Record Period” in this prospectus.
During the Track Record Period and up to the Latest Practicable Date, we did not have any
dispute with our major customers or major breach of the framework agreements we entered into
with our customers which would have a material impact on our business, financial condition or
results of operations.
During the Track Record Period, since most of our sales of products are export sales, such
sales were mainly denominated in US$. For domestic sales in the PRC, our sales were
denominated in RMB. Accordingly, we are exposed to foreign exchange risks. For details, please
see “Risk Factors – Our Group is exposed to currency risk” in this prospectus.
We typically offer credit period 30 to 135 days to our customers. We regularly review the
credit standing and payment status of our customers. During the Track Record Period, we did
not experience any material delay in settlement by customers that would have a material impact
on our business, financial condition or results of operations.
BUSINESS
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SEASONALITY
From our experience, we generally record relatively higher revenue in the second half of
each year which coincides with higher sales of our customers resulted from festivities around the
Black Friday, Thanksgiving and Christmas time and year-end promotion events in the second
half of a year. According to the F&S Report, this seasonality trend is consistent with the
industry norm.
IMPACT OF COVID-19
While the outbreak of COVID-19 had affected various sectors widely in a global context
and overall market sentiment, the pandemic also brought opportunities to a number of industries
including the household good industry due to change of lifestyle and consumer habits. According
to the F&S Report, the COVID-19 pandemic led to more people staying at home and reducing
social gatherings, which boosted global demand for small home appliances. While the
COVID-19 pandemic might have disrupted sea and freight logistics globally, since we mainly
deliver on FOB basis (i.e. our products were only required to be delivered to the designated
local ports) and we mainly make procurement in the PRC, our delivery of products to customers
and procurement of materials had not been materially and adversely affected during COVID-19.
Moreover, while COVID-19 had caused suspension of our production facilities, such suspensions
were not longer than 20 days. Accordingly, there had been no significant delay in the delivery to
our customers nor material disruption of our production due to COVID-19. Based on the
foregoing, COVID-19 did not have a material adverse effect on our operations.
SINO-U.S. AND GLOBAL TRADE TENSION
In recent years, the U.S. government had imposed tariff and trade restrictions on imports
from China; and recently, such trade tension has escalated further to a global context that does
not only affect China but also other countries. On 1 February 2025, the U.S. government
announced a blanket tariff on Canada, Mexico and China, among which, all imports from China
to the US would be subject to a 10% tariff, with a few exceptions. Since then, the U.S.
government has raised tariff imposed on imports from China by stage and once reached 145%
(on top of other tariff and duties which had already been implemented before 1 February 2025).
On 12 May 2025, after their trade meeting in Geneva, the Chinese and the US government
released a joint statement (the “ 512 Joint Announcement ”) announcing, among others, the
removal of the 91% tariff announced on 7 April 2025 and 9 April 2025 and a 90-day pause,
coming into effect on 14 May 2025, of 24% (out of 34%) tariff announced on 2 April 2025,
meaning the effective tariffs on imports from China will become 30%, down from 145%; and
China will reduce tariff imposed on imports from the US since 2 April 2025 to 10%, down from
125% (tariff as imposed and adjusted by the U.S. government on China from time to time since
1 February 2025 and up to the Latest Practicable Date, “ New Tariff on China ”).
BUSINESS
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In addition to China, the U.S. government also announced tariffs in a global context,
including East Asian countries such as Vietnam, Thailand and Indonesia, which have become
popular manufacturing locations in recent years. In particular, on 2 April 2025, the U.S.
government announced a reciprocal tariff of 36% and 32% (which comprise a baseline tariff of
10%) on imports from Thailand and Indonesia. Subsequently, on 9 April 2025, the U.S.
government announced a pause of 90 days for the reciprocal tariff on Thailand and Indonesia
(and other countries, except for China). Accordingly, as at the Latest Practicable Date, Thailand
and Indonesia are subject to the baseline tariff of 10% (together with New Tariff on China, the
“2025 Tariff ”).
During the Track Record Period, sales of our products with the U.S. as the shipping
destination accounted for 68.8%, 80.6% and 76.5% of our total revenue, respectively. Certain of
our major products, such as electric griddles, kettles, blenders and garden hoses, had been
subject to tariff during the Track Record Period while there had been no fluctuation in most of
the tariff applicable to our major products during the Track Record Period. The table below set
out (i) the respective revenue contribution of major products which had been subject to tariff
during the Track Record Period, (ii) the applicable tariff rates during the Track Record Period
and (iii) the applicable tariff rates announced by the U.S. government as at the Latest Practicable
Date:
FY2022 FY2023 FY2024
Applicable
tariff during
the Track
Record Period
Applicable
tariff rates
as at
the Latest
Practicable
Date
RMB’000
% of total
revenue RMB’000
% of total
revenue RMB’000
% of total
revenue
Electric griddles 103,503 9.4 98,867 8.3 107,180 7.1 Nil or
2.7% (Note 2)
30% or
32.7% (Note 2)
Kettles 64,611 5.9 94,926 8.0 123,894 8.3 3.7% or
11.2% (Note 2)
33.7% or
41.2% (Note 2)
Blenders 150,220 13.7 207,975 17.5 186,524 12.4 4.2% 34.2%
Garden hoses 181,460 16.5 221,788 18.7 285,118 19.0 10.0% or
28.1% (Note 2)
40% or
58.1% (Note 2)
Notes:
1. The aforementioned products, together with air fryers, are our major products in terms of their revenue
contribution during the Track Record Period. For details of tariff applicable to air fryers, please refer to
the paragraph immediately following this table.
2. Applicable tariff for different models of the same product varied.
BUSINESS
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To the best knowledge of our Directors, save for air fryers, which represented less than 8%
of our total revenue for each of FY2022, FY2023 and FY2024, respectively, there was no
material fluctuation of the rate of U.S. tariff applicable to our other major products during the
Track Record Period. For air fryers, an applicable tariff of 25% was exempted between 1
January 2022 and 14 June 2024, which has been resumed since 15 June 2024; and therefore, as
at the the Latest Practicable Date, the applicable tariff rate for our air fryers had become 55%.
Party responsible for paying U.S. tariff (including the 2025 Tariff)
As advised by our U.S. Legal Advisers, the liability for payment for the U.S. import duties
and tariffs belongs to the importer of the goods. When we sell our products as an exporter, as
our products are sold and delivered to the U.S. on a FOB Chinese ports arrangement, we are not
responsible for customs clearance within the jurisdiction of the U.S. and we are not responsible
for the payment of any such tariffs for products imported into the U.S.
Risks associated with the Sino-U.S. and the global trade tension
Subsequent to announcement of a 34% tariff on Chinese goods, the Chinese government
announced the imposition of tariff on U.S. goods in response. Tariff applicable to Chinese goods
once reached 145%, yet subsequently reduced to 30% after the meeting between the two
countries on 12 May 2025. Other countries such as Vietnam and Indonesia have expressed their
willingness to negotiate. As at the Latest Practicable Date, there was a sign of easing of the
Sino-U.S. tension, but it remained uncertain how the Sino-U.S. and the global trade tension will
develop.
If the Sino-U.S. and the global trade tension persists or escalates further, macro-economy
and demand of the U.S. for lifestyle household goods imported from non-U.S. countries in
general may be adversely affected; and in turn, our business will be adversely and materially
affected, particularly given that U.S. had been the shipping destination to which we shipped
more than 70% of our products for each year during the Track Record Period and, as at the
Latest Practicable Date, we produced our products in China only.
BUSINESS
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While our Indonesia Factory is expected to commence operation in the second quarter of
2025 and our Thailand Factory is expected to commence operation by the end of 2025, and
Thailand and Indonesia are subject to tariffs at a lower rate (i.e. 10% as at the Latest Practicable
Date) than that imposed on China, it is unpredictable how the trade relationship between the
U.S. and Thailand and Indonesia will develop. In the event that trade tension between the U.S.
and Thailand and Indonesia persists or escalates further, or Indonesia and Thailand both
becoming subject to the same tariff as China, we may lose the benefit of the planned expansion
in Thailand and Indonesia as we may not be able to mitigate geopolitical risks due to the
Sino-U.S. trade tension effectively or at all. Please see “Risk Factors – The Sino-U.S and global
trade tension may adversely affect our business, financial conditions and results of operation”.
Impact of the Sino-U.S. and global trade tension on our business
According to Frost & Sullivan, consumers tend to be less sensitive to price changes for
low-priced small home appliances and non-electric household goods due to certain key factors.
Firstly, such products are often associated with convenience-oriented and routine purchasing
behavior. Secondly, these items typically fall within a low-to-moderate price range, where
consumers may be less inclined to conduct extensive price comparisons or delay purchases in
anticipation of discounts. Therefore, our Directors believe that the potential pressure on the
pricing of our products resulting from the 2025 Tariff could be partially passed on to the end
consumers. Moreover, according to the F&S Report, overseas retail chains and reputable brand
owners generally have higher pricing power over the end consumers, especially for lower-priced
consumer goods such as small home appliances and non-electric household goods; and it is
relatively easier for overseas retail chains and reputable brand owners to pass on the economic
burden due to tariff to the end consumers. Therefore, we believe that, our customers, many of
which are overseas retail chains and reputable brand owners, may increase their retail prices to
partially mitigate the impact of the 2025 Tariff. However, if the applicable tariff continue to
climb up, it may be inevitable that our customers would require their suppliers, including us, to
reduce our prices in order to share the burden of tariff. On the other hand, in general, overseas
retail chains and reputable brand owners may have relatively stronger pricing leverage in their
supplier relationships, especially when they possess well-established sales channels, brand
influence and scale advantages. However, the actual pricing power can vary depending on
factors including the uniqueness and competitiveness of the supplier’s products, supply-demand
dynamics as well as the depth and stability of the cooperation between the two parties.
Considering that (i) small home appliances and non-electric household goods manufactured in
the PRC are expected to remain competitive in the U.S. market as compared with non-PRC
products; (ii) we have long business relationship with customers which are reputable companies
and they have high quality requirements on suppliers; (iii) our competitiveness over non-PRC
manufacturing companies is expected to remain and (iv) we have non-PRC production facilities
in Indonesia and Thailand which will commence operation in near future, we believe that our
competitive advantages over our competitors would remain.
BUSINESS
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Since 1 January 2025, up to the Latest Practicable Date, we had not received any request
from our customers which may cause significant pricing pressure as a result of the imposition of
the 2025 Tariff and none of our customers, including major customers, had cancelled their
existing orders or request re-negotiation of prices for existing orders as a result of the 2025
Tariff. While we had received request from four customers (including three major customers
during the Track Record Period) to suspend delivery, after the Sino-US trade tension relaxed
with the release of the 512 Joint Announcement, delivery of approximately 79.9% of such
suspended orders had been confirmed to resume normal for shipment from China, and the
remaining will be transferred to the Indonesia Factory for shipment from Indonesia. As
confirmed by our Directors, given that (i) delivery was resumed shortly after the request for
temporary suspension and (ii) most of such suspended orders were produced after resumption of
delivery and their production will stay in China, no material additional cost had been incurred
due to the temporary suspension of delivery of orders nor the resumption. Moreover, our
Directors confirmed that our Group had not received request from Walmart to postpone delivery,
although it is reported by the media that Walmart had requested other suppliers to temporarily
suspend delivery in early April which, reportedly, had resumed in late April. Furthermore, since
the imposition of the New Tariff on China, we have been closely communicating with our
customers, including major customers, and our customers had expressed interest in relocating
production of some of their orders to our Indonesia Factory which is expected to commence
operation in the second quarter of 2025. Eight customers, including four major customers during
the Track Record Period, have already conducted factory inspection in order to start production
of their orders as soon as possible; and where necessary, factory audit had been completed. As at
the Latest Practicable Date, four major customers had placed orders to be produced in the
Indonesia Factory. Also, since the imposition of the 2025 Tariff and up to 30 April 2025, our
major customers had continued to place orders with us with no material change in product prices
and payment terms as a result of the 2025 Tariff. In terms of order amount, there had been no
material adverse change in April 2025 as compared with April 2024.
Given the unpredictability of the development of the Sino-U.S. and the global trade tension,
we cannot assure you that our customers will not raise request for change in prices or other
contract terms, or reduce their orders, in the future, be such due to the tariffs, a decrease in
overall demand of lifestyle household goods, replacing us with U.S. local manufacturing
companies or other manufacturing companies in other countries, or downturn of the
macro-economy. Please see “Risk factors – The Sino-U.S and global trade tension may adversely
affect our business, financial conditions and results of operation”. As to impact of the Sino-U.S.
trade tension and tariff imposed by the Chinese government on imports from the U.S. in
response on our supply, during the Track Record Period, we did not rely on supplies from the
U.S. for our production and a majority of our suppliers are based in the PRC. Therefore, at
present, our Directors consider that the Sino-U.S. and the global trade tension would not have a
material and adverse impact on our procurement.
BUSINESS
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Our Directors are of the view, and the Sole Sponsor concurred, that the 2025 Tariff had not
had a material and adverse impact on our Group as at the Latest Practicable Date. Based on the
information currently available and subject to changes and development of the Sino-U.S and
global trade tension which is highly unpredictable and associated risks as detailed in “Risk
Factors”, as at the Latest Practicable Date, our Directors are of the view, and the Sole Sponsor
concurred, that 2025 Tariff is not expected to have a material and adverse impact on our Group.
In spite of the foregoing, we consider that our competitive advantages would remain for the
reasons below:
1. Small home appliances and non-electric household goods from China are expected to
remain competitive in the U.S. market as compared with those from non-PRC countries
According to the F&S Report, the U.S. has been heavily relying on the import of small
home appliances and non-electric household goods from China, making China one of the largest
export countries for these products to the U.S. for many years. China is one of the cheapest
sources for small home appliances and non-electric household goods to the U.S., thanks to its
established supply chain and experience in manufacturing at lower costs while maintaining
quality. In particular, the comprehensive advantage of China in material procurement, production
efficiency, technological accumulation and labor resources enables Chinese manufacturing
companies to maintain a leading position in the global market, particularly in the U.S. Although
manufacturing companies in regions such as Southeast Asia are gradually becoming more
competitive in terms of price and capacity, they still lag behind China in crucial areas such as
production technology, supply chain management and infrastructure development. These
advantages of PRC manufacturing companies over non-PRC manufacturing companies take years
to develop and therefore are expected to remain. This implies significant challenges for U.S.
importers to find alternative manufacturing companies of other countries to match PRC
manufacturing companies’ prices and cost effectiveness, and to reduce its reliance on imports
from China. For an impact analysis of Sino-U.S. trade tension on the global small home
appliances and non-electric household goods industry, please refer to “Industry Overview –
Impact Analysis of Sino-U.S. and Global Trade Tension on the Global Small Home Appliances
and Non-electric Household Goods Industry” in this prospectus. In light of the above, at present,
we consider that small home appliances from China including our products are expected to
remain competitive in the U.S. market in the future despite the recent development of the
Sino-U.S. and global trade tension.
BUSINESS
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2. We have long business relationship with major customers which are reputable
companies/brands, and our customers have stronger pricing power over end consumers
and higher quality requirements on suppliers
We have maintained a long term relationship with our top five customers for each year
during the Track Record Period, ranging from nine to 13 years. In particular, we have
established a long business relationship with US-based reputable brand owners and retail
companies such as Walmart, Telebrands, Sensio and Hamilton Beach, each of them having a
business relationship with us for more than a decade. According to the F&S Report, overseas
retail chains and reputable brand owners, including our customers, generally have higher pricing
power over end consumers, especially for lower-priced consumer goods such as small home
appliances and non-electric household goods; and it is relatively easier for overseas retail chains
and reputable brand owners to pass on the economic burden due to tariff to the end consumers.
Moreover, they tend to source their supplies from a limited number of suppliers as price is not
the only factor they consider when choosing suppliers but they also place strong emphasis on
other attributes unrelated to price such as quality and stability. As a result, they normally
maintain a stable and long term business relationship with their approved suppliers as switching
to new suppliers incurs substantial costs due to their rigorous and stringent procedures in
supplier selection. We believe that the stable and growing business relationship between us and
these top five customers pronounced our capabilities and competitive advantages. We consider
our long relationships between our reputable customers and us would also allow us to attract
further sales order from non-U.S.-based customers.
3. Our competitiveness over non-PRC manufacturing companies is expected to remain
Since 1 January 2025 and up to the Latest Practicable Date, (i) none of our customers,
including major customers, had cancelled their orders or request re-negotiation of prices for
existing orders as a result of the 2025 Tariff and (ii) our major customers had continued to place
orders with us with no material change in product prices and payment terms. Moreover, since the
imposition of the New Tariff on China, we have been closely communicating with our
customers, including major customers, and our customers had expressed interest in relocating
production of some of their orders to our Indonesia Factory which is expected to commence
operation in the second quarter of 2025. Several customers have already conducted factory
inspection in order to start production of their orders as soon as possible. We believe these
indicated that, taking into account factors such as manufacturing experience, stability, scale,
quality and price, we are still on our customers’ supplier lists and they intend to continue to
place orders with us in spite of the 2025 Tariff. Also, considering (i) that the retail price of our
products are relatively low that end consumers are less sensitive to price adjustment; (ii) our
competitive strengths as detailed in “Business – Our Competitive Strengths”; and (iii) that we
will be able to offer choices to customers to have their production in location outside of the PRC
which are currently subject to lower tariff rates (i.e. Indonesia and Thailand upon
implementation of our future plans), we believe that our competitiveness over other non-PRC
competitors would remain.
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4. We have non-PRC production facilities in Indonesia and in Thailand, which will
commence operation in the near future
As a contingency measure to mitigate geopolitical risks which also forms part of our
expansion plan, we have set up our Indonesia Factory, which is expected to commence
production in the second quarter of 2025. In addition, we have also commenced the construction
of our Thailand Factory, which is expected to commence operation in the second half of 2025.
As at the Latest Practicable Date, although Thailand and Indonesia had also become a subject of
the U.S. tariffs, tariff rates applicable to imports from Thailand and Indonesia to the U.S., being
10%, are lower than the tariff imposed on imports from China to the U.S. being 30% (on top of
any pre-existing tariff). Moreover, it is unpredictable whether the US government will re-impose
the higher tariff applicable to Chinese goods, which once reached 145%. Therefore, at present,
assuming the discrepancy in tariff imposed by the U.S. government between China and other
east Asian countries remains, we believe that relocation of our production from China to
Thailand and Indonesia remain to be a viable alternative for us to manage geopolitical risks by
diversifying our product origins. We believe that our expansion with overseas production layouts
will maintain our competitiveness as we will be able to offer reliable options to customers. For
details of our Indonesia Factory and Thailand Factory, please refer to “– Our Production
Facilities – Overseas production facilities” and “– Our Strategies – Set up our Thailand Factory
to enhance our global presence” in this section, respectively.
Our strategic approach to encounter the 2025 Tariff and its feasibility
Our Directors consider that our strategic domestic and overseas layout, including the
operation of the Indonesia Factory, would be feasible and would mitigate the risks arising from
the 2025 Tariff for the following reasons:
 as advised by our Indonesian Legal Advisers, there will be no material legal
impediment for us to obtain the required regulatory approvals for commencement of
production;
 certain number of our comparable companies in China have established factories in
Southeast Asia; and some of them have established factories in Indonesia and have
already successfully commence production and operation for a considerable period.
Given our experience of running factories for more than 20 years, we believe that we
would also be able to operate its overseas factory as our comparable companies;
BUSINESS
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 the establishment of our Indonesia Factory is well supported by our major customers
since its inception. In addition to early participation in the setup of the Indonesia
Factory, although the Indonesia Factory is only expected to commence commercial
production by the end of the second quarter of 2025, our major customers had already
placed orders to be produced in the Indonesia Factory to be delivered by the end of
the third quarter of 2025. We believe that our customers are in the best position to
assess whether we have the capability to run a new factory and their actions has
testified our capability;
 we have long relationship with major customers and we have been recognized as their
major suppliers. Major customers, which are sizable and globally renowned brand
owners, had indicated that we are their key suppliers;
 As confirmed by Frost & Sullivan, overseas retail chains and reputable brand owners,
such as our major customers, would face high switching costs if they change
suppliers. Shifting away from these established relationships is not simply about
finding new suppliers. It involves reconfiguring entire supply chains, which demands
time, investment, and strategic planning. In the short term, diversification efforts are
limited by infrastructure gaps, workforce constraints, and insufficient capacity in
alternative markets. Our Directors therefore are of the view that, if demands from our
customers for non-made-in-China products increase further in the future due to the
tariff imposed/ to be imposed by the U.S. government, with the overseas establishment
of our Group, our Group’s competitive advantage, especially, advantages over PRC
manufacturing companies who do not have overseas factories and non-PRC
manufacturing companies (e.g. local manufacturing companies in Indonesia) would
remain, if not being more prominent, also taking into account the other factors as
aforementioned. Since the imposition of the 2025 Tariff, based on our communication
with our customers and as confirmed by our Directors, we have received orders or
enquiries from customers for products (which had been supplied by other suppliers) to
be produced by our Indonesia/Thailand Factory. In particular, one of our customers
who had been placing orders mostly for shipping to non-U.S. destinations during the
Track Record Period had also formed plan to place orders with our overseas factory to
be shipped to the U.S. Our Directors are of the view that such switch of suppliers
amid the tariff situation is a strong indication of the demand of overseas brand owners
for PRC manufacturing companies with overseas production facilities that is expected
to increase given that PRC manufacturing companies possess intangible skills and
know-hows which are also applicable to production outside of the PRC. Moreover,
given that overseas expansion requires substantial financial resources and support
from customers which may not be readily available for PRC manufacturing companies
(which have not set up oversea production facilities), our Directors consider that such
change in the industry landscape would highlight our Group’s strategic overseas layout
and therefore further differentiate our Group from its competitors.
BUSINESS
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Notwithstanding the abovementioned, given the present geopolitical landscape is constantly
evolving and highly unpredictable, there is no assurance that our business would not be
negatively affected by the Sino-U.S. and the global trade tension and there is no assurance that
our competitive advantages would remain. Please refer to “Risk Factors – Risks Relating to our
Industry and Business – The Sino-U.S. and global trade tension may adversely affect our
business, financial conditions and results of operation” in this prospectus. In response to such
uncertainties, as at the Latest Practicable Date, we had started communicating and negotiating
with our suppliers with an aim to reduce our costs. Moreover, to further diversify our customer
base, we are actively looking for new customers based outside of the U.S. Since 1 January 2025,
we have procured eight new non-U.S. customers and these customers have placed orders with us
with planned delivery mostly in May and June 2025. We will continue to closely monitor the
development of the Sino-U.S. and global trade tension.
OUR SUPPLIERS
Our major suppliers are suppliers of metal and plastic raw materials, components and
accessories. Our procurement department is responsible for the procurement of materials and
supplies. We centralised our procurement and maintained an approved list of suppliers, a
majority of which are located in the PRC. We have formulated internal policies specifying
supplier selection criteria and procedures as well as procurement process. We evaluate suppliers
taking into consideration factors such as price, quality and production capacity. In our
evaluation, we gather suppliers’ information including compliance level of environmental
protection-related and quality-related certifications and perform site visits of our major
suppliers. In order to avoid reliance on our supplier, we generally maintain more than one
supplier for our major raw materials. The major materials used by us for the production include
metal and plastic raw materials, components and accessories and a majority of our raw materials
are sourced domestically from suppliers in the PRC.
Top five suppliers
Our five largest suppliers in each year during the Track Record Period accounted for
18.2%, 22.4% and 18.3% of our total purchase for FY2022, FY2023 and FY2024, respectively;
and our largest supplier accounted for 7.2%, 9.4% and 5.3% of our total purchase for FY2022,
FY2023 and FY2024, respectively.
BUSINESS
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FY2022
Supplier Background
Major
products/
services we
purchased
Y ears of
relationship
with us
(approximate) Credit terms
Payment
method
Purchase
amount
%o fo u r
total
purchase
(RMB’000)
Shun Liang Fa
Industrial
(Shenzhen) Co.,
Ltd.* ( නԄ೯ʈ
ุ(ଉέ)ʮ̡ )
Incorporated in the PRC, it is
engaged in, among others,
import and export of goods,
sales of personal protective
equipment and hardware
products and manufacturing of
fibres.
Fabric hose
jacket and
assembling
service for
semi-finished
products
8 On delivery Telegraphic
transfer/bank’s
acceptance
bill
47,190.8 7.2
Shenzhen Jiazhi
Trading Co., Ltd.*
(Ϟ
ʮ̡)
Incorporated in the PRC, it is
engaged in, among others,
purchase and sale of hardware
products, electronic products,
plastic products and chemical
products.
Plastic raw
materials
10 30 days Telegraphic
transfer/bank’s
acceptance
bill
23,094.9 3.5
Shengjialun Rubber &
Plastic (Heyuan)
Co., Ltd.* (ࡐ
ዖ෧(๕)ࠢ
ʮ̡)
Incorporated in the PRC, it is
engaged in, among others,
sales of plastic parts and their
raw materials.
Thermo
polyurethane
11 30 days Telegraphic
transfer/bank’s
acceptance
bill
18,619.8 2.8
Hubei Linglong
Aluminum Co.,
Ltd.* ( ಳ̏ᜳᎲ቙
ʮ̡ )
Incorporated in the PRC, it is
engaged in, among others,
scrap metal recycling,
processing and sales.
Hardware
accessories
1 Prepayment Telegraphic
transfer/bank’s
acceptance
bill
16,330.1 2.5
Hunan Jifu Aluminum
Plastic Products
Co., Ltd.* (޲ی
ࠢ
ʮ̡)
Incorporated in the PRC, it is
engaged in, among others,
processing of non-metallic
scraps, sales of non-ferrous
metal, manufacturing and sales
of plastic products.
Metal raw
materials
6 On delivery Bank
transfer/telegraphic
transfer/bank’s
acceptance
bill
14,473.8
(Note 1)
2.2
Total 119,709.4 18.2
Note:
1. Aggregating all purchase from two PRC companies, namely Hunan Jifu Aluminum Plastic Products Co., Ltd.*
(ʮ̡ ) and Hunan Shenke Non-ferrous Metal Co., Ltd.* (ʮ̡ ),
the shareholders of which, to the knowledge of our Directors, are relatives.
BUSINESS
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--- page 225 ---
FY2023
Supplier Background
Major
Products/services
we purchased
Y ears of
Relationship
(approximate) Credit terms
Payment
method
Purchase
amount
%o fo u r
total
purchase
(RMB’000)
Hubei Yixiong
Industrial
Technology Co.,
Ltd.* ( ಳ̏ूඪʈ
ʮ̡ )
Incorporated in the PRC, it is
engaged in, among others,
import and export of goods,
sales and manufacturing of
plastic products, hardware
products and knitwear
products.
Fabric hose
jacket
8
(Note 1)
On delivery Telegraphic
transfer/bank’s
acceptance
bill
72,367.6
(Note 1)
9.4
Danyang Anke Fitness
Equipment Co.,
Ltd.*
(਄Ԓኜҿ
ʮ̡ )
Incorporated in the PRC, it is
engaged in, among others, the
manufacturing of plastic
products and mechanic
products, the assembly of
electronic accessories.
Latex inner
tubes
2 30% deposit
advance
payment,
balance on
the 15th
day of each
calendar
month
Telegraphic
transfer/bank’s
acceptance
bill
33,580.5 4.4
Shenzhen Jiazhi
Trading Co., Ltd.*
(Ϟ
ʮ̡)
Incorporated in the PRC, it is
engaged in, among others,
purchase and sale of hardware
products, electronic products,
plastic products and chemical
products.
Plastic raw
materials
10 30 days Telegraphic
transfer/bank’s
acceptance
bill
30,226.4 3.9
Shenzhen
Jinfengcheng
Precision Hardware
Co., Ltd.*
(ଉέ̹ᎀቜ༐ၚ੗
ʮ̡ )
Incorporated in the PRC, it is
engaged in, among others,
sales of small motor
accessories, hardware
accessories and moulds.
Hardware
accessories
9 30–150 days Telegraphic
transfer/bank’s
acceptance
bill
20,242.0
(Note 2)
2.6
Hunan Jifu Aluminum
Plastic Products
Co., Ltd.* (޲ی
ࠢ
ʮ̡)
Incorporated in the PRC, it is
engaged in, among others,
processing of non-metallic
scraps, sale of non-ferrous
metal, manufacturing and sales
of plastic products.
Metal raw
materials
6 On delivery Bank
transfer/telegraphic
transfer/bank’s
acceptance
bill
15,851.0
(Note 3)
2.1
Total 172,267.5 22.4
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Notes:
1. Aggregating all purchase from (i) Shun Liang Fa Industrial (Shenzhen) Co., Ltd.* ( නԄ೯ʈุ (ଉέ)ʮ̡ )
and (ii) Hubei Yixiong Industrial Technology Co., Ltd.* (ʮ̡ ). To the knowledge of the
Director, the former is owned by a father and son and the latter is wholly-owned by the father.
2. Aggregating all purchase from Shenzhen Jinfengcheng Precision Hardware Co., Ltd.* (Ϟ
ʮ̡) and its fellow subsidiary.
3. Aggregating all purchase from two PRC companies, namely Hunan Jifu Aluminum Plastic Products Co., Ltd.*
(ʮ̡ ) and Hunan Shenke Non-ferrous Metal Co., Ltd.* (ʮ̡ ),
the shareholders of which, to the knowledge of our Directors, are relatives.
FY2024
Supplier Background
Major
Products/services
we purchased
Y ears of
Relationship
(approximate) Credit terms
Payment
method
Purchase
amount
%o fo u r
total
purchase
(RMB’000)
Hubei Yixiong
Industrial
Technology Co.,
Ltd.* ( ಳ̏ूඪʈ
ʮ̡ )
Incorporated in the PRC, it is
engaged in, among others,
import and export of goods,
sales and manufacturing of
plastic products, hardware
products and knitwear
products.
Fabric hose
jacket
8
(Note 1)
On delivery Telegraphic
transfer/bank’s
acceptance
bill
56,924.7
(Note 1)
5.3
Shenzhen Jiazhi
Trading Co., Ltd.*
(Ϟ
ʮ̡)
Incorporated in the PRC, it is
engaged in, among others,
purchase and sale of hardware
products, electronic products,
plastic products and chemical
products.
Plastic raw
materials
10 30 days Telegraphic
transfer/bank’s
acceptance
bill
44,953.4 4.2
Danyang Anke Fitness
Equipment Co.,
Ltd.* (਄
ʮ̡ )
Incorporated in the PRC, it is
engaged in, among others, the
manufacturing of plastic
products and mechanic
products and the assembly of
electronic accessories.
Latex inner
tubes
2 30% deposit
advance
payment,
balance on
the 15th
day of each
calendar
month
Telegraphic
transfer/bank’s
acceptance
bill
41,562.1 3.9
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--- page 227 ---
Supplier Background
Major
Products/services
we purchased
Y ears of
Relationship
(approximate) Credit terms
Payment
method
Purchase
amount
%o fo u r
total
purchase
(RMB’000)
Liling Xiangcheng
Ceramics
Manufacturing Co.,
Ltd.* ( ᙐ௒̹ಱϓ
ʮ̡ )
Incorporated in the PRC, it is
engaged in, among others, the
manufacturing and sales of
pottery products.
Cooker liner 10 60 days Telegraphic
transfer/bank’s
acceptance
bill
28,877.3 2.7
Hunan Jifu Aluminum
Plastic Products
Co., Ltd.* (޲ی
ࠢ
ʮ̡)
Incorporated in the PRC, it is
engaged in, among others,
processing of non-ferrous
scraps, sales of non-ferrous
metal, manufacturing and sales
of plastic products.
Metal raw
materials
6 On delivery Bank transfer/
telegraphic
transfer/bank’s
acceptance
bill
23,487.0
(Note 2)
2.2
Total 195,804.5 18.3
Notes:
1. Aggregating all purchase from (i) Shun Liang Fa Industrial (Shenzhen) Co., Ltd.* ( නԄ೯ʈุ (ଉέ)ࠢ
ʮ̡) and (ii) Hubei Yixiong Industrial Technology Co., Ltd.* (ʮ̡ ). To the
knowledge of the Director, the former is owned by a father and son and the latter is wholly-owned by the
father.
2. Aggregating all purchase from Hunan Jifu Aluminum Plastic Products Co., Ltd.*
(ʮ̡ ) and Hunan Shenke Non-ferrous Metal Co., Ltd.* (ࠢ
ʮ̡), the shareholders of which, to the knowledge of our Directors, are relatives.
During the Track Record Period, all of our five largest suppliers in each year during the
Track Record Period were Independent Third Parties. To the best knowledge and belief of our
Directors, none of the Directors; their close associates; or any Shareholder (which to the
knowledge of the directors owns more than 5% of the number of issued Shares of the issuer) had
any interest in the aforementioned top five suppliers in each year during the Track Record
Period.
During the Track Record Period, none of the major suppliers aforementioned was also a
customer of our Group.
During the Track Record Period, we did not experience any shortage or delay in the supply
of raw materials which would have a material impact on our business, financial condition or
results of operations.
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During the Track Record Period, we did not experience any delay or shortage of supply,
price fluctuation on products sourced or product delivery issues which would have had a
material impact on our business, financial condition or results of operations. Our Directors
consider that alternative suppliers for our production materials are readily available in the
market with comparable quality and prices and we do not foresee significant difficulty to source
production material in the foreseeable future.
Please see “Financial Information – Principal Components of Results of Operation –
Sensitivity analysis” in this prospectus for further details on the sensitivity analysis in respect of
the impact of hypothetical fluctuations in our cost of sales to our profit before income tax.
Framework agreements
We have entered into legally binding framework agreements with our major suppliers.
Thereafter, purchase will be placed through separate purchase orders. For suppliers who have not
enter into framework agreements with us, purchase will be placed through purchase orders. Key
terms such as the quantity, price, time and destination of delivery, product specifications and
payment terms are set out in purchase orders.
A summary of the key commercial terms of framework agreements we entered into with our
suppliers is set forth below:
Term No specific term specified
Obligations of suppliers Suppliers are required to deliver products in
accordance with the specifications stipulated in
separate purchase orders and the products supplied
must conform to the pre-production samples and
relevant national and industry standards.
Minimum purchase commitment No minimum purchase commitment was imposed on
our Group.
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Prices, payment and credit terms Prices shall be set out in separate quotations which
shall be mutually agreed by both parties. For
tailor-made supplies, such as tailor-made metal
hardware, we may be required to pay deposits of
around 30% of the total contractual amount.
Credit terms of 30 to 150 days after issuance of
invoice and payment shall generally be made by
bank’s acceptance bill or telegraphic transfer.
Intellectual property Suppliers must keep any information, including any
data, know-how, in relation to our Group or its
business that the supplier may gain access to during
the course of business with our Group confidential.
Termination The agreement may be unilaterally terminated by our
Group in the event of material delay in delivery by
the suppliers.
Apart from framework agreements as aforementioned, to add an additional layer of
intellectual property protection, we also entered into technology confidentiality agreements with
certain major suppliers, pursuant to which, among other confidentiality obligations, they are
prohibited from developing, manufacturing or selling similar products using our Group’s
proprietary know-hows including product designs and formula.
During the Track Record Period and up to the Latest Practicable Date, we did not have any
dispute with our major suppliers or major breach of the framework agreements we entered into
with our suppliers which would have a material impact on our business, financial condition or
results of operations.
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OUR PRODUCTION FACILITIES
As at the Latest Practicable Date, we have seven production facilities in the PRC which had
commenced production:
Production facility Location
Y ear of
establishment
Approximate
construction area
Major operations during the
Track Record Period (Note 1)
1. Yinuowei Factory Jiangyin, Jiangsu
Province
2000 15,609 sq.m. Design and manufacture of
electronic appliances
2. Aisijie Factory Shenzhen,
Guangdong
Province
2002 32,300 sq.m. Design and manufacture of our
ODM/OEM products including
motor-driven appliances and
electronic appliances
3. Yuantexin Factory Shenzhen,
Guangdong
Province
2004 52,000 sq.m. Design and manufacture of our
ODM/OEM products including
electro-thermic appliances and
garden hoses
4. Hubei XJ Factory Huanggang, Hubei
Province
2012 97,367.9 sq.m. Design and manufacture of our
ODM/OEM products including
electro-thermic appliances and
garden hoses
5. Meinuowei Factory Huizhou, Guangdong
Province
2017 18,976.9 sq.m. Design and manufacture of our
ODM/OEM products including
electro-thermic appliances and
garden hoses
6. Hongnuowei Factory Shenzhen,
Guangdong
Province
2020 4,000 sq.m. Manufacture and processing of
PCBA for our internal use
7. XJ Intelligence
Factory
Huizhou, Guangdong
Province
2024 147,069.0 sq.m. Design and manufacture of our
ODM/OEM products including
electro-thermic appliances
Note:
1. Major operations in terms of the revenue contribution in aggregate during the Track Record Period.
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Overseas Production Facilities
As part of our international expansion plan, as at the Latest Practicable Date, we had
completed the set up of our production facility in East Java Province, Indonesia. As at the Latest
Practicable Date, our Indonesia Factory had been in the process of obtaining the regulatory
approval and certification necessary for commencement of production. As advised by our
Indonesian Legal Advisers, there will be no material legal impediment for us to obtain the
requisite regulatory approvals for commencement of production. As at the Latest Practicable
Date, we had provided all documents requested by the relevant authority thus far. Although we
expect that we will have to incur additional transportation costs for importing the
work-in-progress or raw materials from the PRC to Indonesia and public utility service costs, it
is expected that our Indonesia Factory will incur similar production cost as compared to the
production in the PRC due to the lower labour and rental costs. Currently, our Indonesia Factory
is expected to commence production in the second quarter of 2025. Our Indonesia Factory is
designed for the manufacture of electro-thermic appliances, motor-driven appliances, electronic
appliances, garden hoses and other products, with an aggregate construction area of
approximately 7,745 sq.m. Breakeven is considered to have been achieved once the revenue
generated by our Indonesia Factory covers its operating costs and expenses (excluding
depreciation charge and after tax) incurred in the same year on an accounting basis. Time
required for achieving breakeven depends on various factors, such as general economic and
market conditions, market demand, utilisation rate of our production lines, market competition
and costs of production. Investment payback is considered to be achieved once the total future
net cash flow generated from operating activities covers its total investment amount including
machinery and equipment acquisition cost. The time required to achieve investment payback also
depends on various factors, including those mentioned above and the actual capital expenditure
such as costs of machinery and equipment. Based on our knowledge and experience, it is
estimated that the payback period for our Indonesia Factory will be approximately 26 months
and that breakeven could be achieved within approximately nine months.
Furthermore, we also plan to build a new production facility in Rayong, Thailand, which is
expected to commence production in the second half of 2025. For details of our planned
construction of our Thailand Factory including breakeven and payback period of our Thailand
Factory, please see “– Our Strategies – Set up our Thailand Factory to enhance our global
presence” in this section.
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Upon construction of our overseas production facilities, we plan to allocate our purchase
orders between the production facilities in the PRC and overseas production facilities based on,
among others, (i) the delivery addresses of our products and the proximity between the delivery
addresses and location of the production facilities; (ii) the preference of production location of
our ODM/OEM customers; (iii) the workload and resources of different production facilities at
the relevant time; (iv) the geopolitical conditions and trade restrictions at the relevant time that
we will give priority in allocating the purchase orders which will be shipped to the U.S. or are
subject to the potential imposition of trade restrictions under the Sino-U.S. trade tension to
Indonesia Factory and Thailand Factory; and (v) the strengths of different production facilities in
the PRC. Depending on the preference of our customers and the impact of the trade restrictions,
we give priority in allocating the purchase orders that will be shipped to the U.S. or are subject
to the potential imposition of trade restrictions under the Sino-U.S. trade tension to Indonesia
Factory and Thailand Factory.
Production capacity and utilisation rate
Throughout the years of our operation, we have made substantial investment in building our
flexible manufacturing systems, which is characterised by its ability to adapt to changes in the
type and quantity of products being ordered by our customers as our machines and computerised
systems can be configured to manufacture a variety of parts and handle changing levels of
production. Our Directors consider that the production bottleneck is the assembly process which
is the critical production process that determines quality of our finished products and output.
The production capacity of our assembly lines is therefore used to calculate our production
capacity during the Track Record Period.
The table below sets out our designed capacity, converted actual production volume and
utilisation rate during the Track Record Period:
Designed
Capacity
Converted
actual
production
volume
Utilisation
rate
(’000 unit)
(Notes 1, 2)
(’000 unit)
(Note 3)
(%)
(Note 4)
FY2022
Electric home appliances 18,895.7 12,714.0 67.3
Non-electric household goods
(Note 5) 6,907.0 3,767.5 54.6
FY2023
Electric home appliances 19,288.0 14,913.1 77.3
Non-electric household goods
(Note 5) 5,760.0 4,917.4 85.4
FY2024
Electric home appliances 24,340.0 19,899.4 81.8
Non-electric household goods
(Note 5) 5,760.0 5,330.2 92.5
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Expected
designed
capacity
(’000 unit)
(Note 6)
Upon completion of
the set up of all
production facilities
Electric home appliances 44,340.0
Non-electric household goods
(Note 5) 8,640.0
Notes:
1. We produced more than 2,400 models of products during the Track Record Period and the production
capacity of our assembly lines of different products highly varies (ranging from 20 units per hour to 3,150
units per hour). In light of such difference in the manufacturing time for different models of products, for
illustration purpose, we have taken into account various factors including actual sales volume and re-order
frequency of different products and selected a common model of kettle, blender, digital scale, which were
the major products (in terms of sales volume) of each category of electric home appliances during the
Track Record Period as the standardised model in calculating our designed capacity and converted actual
production volume which form the basis of our utilisation rate. For non-electric household goods, we
selected a common model of garden hose to be the standardised model on a similar basis for the
calculation of utilisation rate.
2. Designed capacity refers to the designed capacity of all production facilities in the PRC in use in the
relevant year, except for (i) Hongnuowei Factory which was mainly for the manufacture of PCBA parts for
internal use, (ii) our Indonesia Factory which had completed set up yet not commenced commercial
production as at the Latest Practicable Date and (iii) our proposed Thailand Factory which is part of our
future plans and had not been built as at the Latest Practicable Date.
Designed capacity is calculated by using the formulae below, assuming the production hours being eight
hours (being the standard working hours per day) a day, and 267 days for FY2022 (taking into account the
total number of suspension days of all production facilities due to COVID-19, while the suspension of
each production facility was no longer than 20 days), 300 days for FY2023 and 300 days for FY2024:
Designed capacity = the number of units of products of the standardised model (referred in Note 1 above)
that one assembly line can produce per hour x the average number of assembly lines (averaged by month)
in use during the relevant year x the number of production hours during the relevant year.
For illustration purpose, while an assembly line is capable of manufacturing different categories of
products, in the calculation of designed capacity, each assembly line is assumed to be producing only the
category(ies) of products that the relevant factory (in which such assembly line is located) is specialised
in.
3. Given our business model involves a variety of products which also means variance in production time and
for a comparison between production volume and the designed capacity on the same basis, actual
production volume of each product are converted to be in terms of the number of the units of standardised
model of the relevant product category (referred in Note 1 above).
BUSINESS
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--- page 234 ---
4. Utilisation rate equals to the converted production volume divided by the designed capacity during the
same year. Based on Frost & Sullivan’s advice, the Sole Sponsor is of the view that the calculation of
utilisation rate is in line with industry practice.
5. Given that sales of non-electric household goods mainly comes from sales of garden hoses, for illustration
purpose, non-electric household goods refers to garden hose only and other non-electric household goods
are excluded.
6. The expected designed capacity is calculated on an annualised basis upon the completion of the set up of
all production facilities in the PRC (excluding Hongnuowei Factory which was mainly for manufacturing
and processing of PCBA parts for internal use) and overseas (i.e. Thailand Factory and Indonesia Factory).
The table below sets out the expected designed capacity of each of the Thailand Factory, XJ Intelligence
Factory and Indonesia Factory upon the completion of their set up:
Expected designed capacity
Electric home
appliances
Non-electric
household goods
(‘000 unit) (‘000 unit)
Thailand Factory 5,352.0 2,880.0
XJ Intelligence Factory 16,750.0 –
Indonesia Factory 4,224.0 –
As at 31 December 2024, we had completed the construction of our XJ Intelligence Factory and finished
the first-phase setting up. The abovementioned expected designed capacity of XJ Intelligence Factory has
taken into account the assembly lines already installed as at 31 December 2024 and other new assembly
lines to be installed upon full completion of its set up.
For Indonesia Factory, while our assembly lines are flexible and capable of manufacturing different
products including non-electric household goods to meet the actual customer demands by adjusting
configurations of our machines and equipment, it is planned mainly for the manufacture of electric home
appliances. Accordingly, the calculation of the expected designed capacity is based on electric home
appliances.
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--- page 235 ---
OUR MANUFACTURING PROCESS
We manufacture and sell different types of products during the Track Record Period. While
different products involve different designs, production material, component parts, technical
specifications and production process, the flowchart below illustrates the critical process in the
production of our products. The critical stages of our manufacturing process are (i) processing of
metal/plastic raw materials into metal/plastic components and parts, (ii) processing of PCBA,
(iii) wiring of wires and parts, (iv) assembly of components and parts and (v) final product
testing. The manufacture of different products involves different combinations of these stages.
PCB
SMT process Solder paste
Solder paste
inspection
Automated Optical
Inspection (“AOI”)
Wave soldering Plug-in
processing
ICT testing PCBA checking
and rework
AOIReflow soldering
Metal raw
materials
Metal
processing Plastic processing PCBA processing
Wiring
Cutting
Stamping
Electric wires
Timers, switches,
thermal tubes,
thermostats etc.
Cutting
Wiring
Injection
moulding
Indirect coolingCrushing
Moulded
semi-finished
products
Silk printing/
Laser marking
Inspection
Drilling
Silk printing/
Laser marking
Plastic raw materials
Product testing
Packaging and
warehousing
Product assembly
Other components (e.g metal hardware
and plastic accessories)
Input of raw materials
Flow of semi-finished/finished products
Substandard
products
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Metal parts processing
For the manufacture of metal hardware, parts and accessories to be assembled to our
products, we procure metal raw materials such as aluminum alloy and go through stages of
metalwork processes including stamping in order to form the desired shape, which will be
followed by drilling in order to create holes. Where necessary, metal parts will go through laser
marking or silk printing to form logos or patterns on the product.
Plastic parts processing
For plastic parts, the major process is injection moulding. Injection moulding is the process
of producing plastic parts of different shapes and specifications by injecting molten plastic
material into a mould. Afterwards, the molten and moulded plastic will go through cooling in
order to return to the solid state to form semi-finished parts for assembly. We conduct in-process
inspection and if defective parts are found, such defective parts will be crushed for rework.
Where necessary, plastic parts will go through laser marking or silk printing to form logos or
patterns on the product.
Wiring
This process includes connecting electrical wires and other components such as switches,
timers, thermostats.
PCBA processing
Printed circuit board assembly (PCBA) is essential for electronic appliances. The process
turns a printed circuit board (PCB) which is a blank circuit board with no electronic components
attached into a completed assembly that contains the components required for the PCB to
function as needed for the desired application. PCBA processing includes various steps from
printing solder paste on the empty board, attaching electronic components to the PCB by reflow
soldering and wave soldering, followed by AOI and ICT testing and packaging upon passing the
tests.
Product Assembly
With different parts and components, we assemble them with our assembly lines to form
the finished products, which will then go through testing and inspection.
Product testing
Finished products are inspected by our quality control staff. To satisfy national/ regional
requirements and requirements of our customers, we will sample our finished products and send
them to third-party laboratories for different tests including tests for harmful substances and
safety requirements.
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Major machinery and equipment
We owned most of our major machineries and equipment which were generally sourced
from the PRC. Our major machineries include die casting machines, injection moulding
machines, CNC machines and assembly lines. Generally, their useful lives are 10 years and our
major machines had on average attained over half of their estimated useful lives according to
our depreciation policy. We conduct regular maintenance of our machineries and equipment. For
the depreciation method of our machineries and equipment, please see “Appendix I –
Accountants’ Report – Note 17. Property, Plant and Equipment” in this prospectus. During the
Track Record Period, we did not experience any major malfunctioning of these machineries or
equipment which would have a material impact on our business, financial condition or results of
operations.
OUTSOURCING
During the Track Record Period, we had outsourced certain production processes, such as
injection moulding, die-casting, electroplating, spraying and module assembling. We deliver
semi-processed products or raw materials to subcontractors’ site for their processing. Generally,
upon quality inspection by us, semi-finished products will be delivered back to our factories for
further processing. For FY2022, FY2023 and FY2024, we incurred subcontracting fees in the
amount of RMB35.1 million, RMB50.7 million and RMB69.2 million, respectively, representing
approximately 4.0%, 5.6% and 5.9%, respectively, of our total cost of sales during the
corresponding periods. We consider this allow us to accommodate urgent bulk orders from our
customers more efficiently. During the Track Record Period, subcontractors we engaged were
Independent Third Parties.
We adopt various evaluation and assessment criteria in selecting our subcontractors,
including their experience, reputation, expertise, product quality and quality control, price,
financial condition, production capacity and ability to meet our delivery timeline. In addition, all
of our subcontractors are subject to annual evaluation, which includes an assessment on their
product quality, production costs and product delivery time. We have established stringent
quality control measures and standards for our subcontractors. We conduct on-site inspection
prior to engagement if necessary. For details of our quality control measures, please see “–
Quality Control” in this section. For any semi-finished products that are defective, the
subcontractors are required to further inspect with us within the prescribed timeframe, and we
are entitled to return the defective semi-finished products if necessary.
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During the Track Record Period, we generally place orders with our subcontractors on a
project-by-project basis. We generally entered into a legally binding orders with our
subcontractors. Key terms of a typical order with our subcontractors are set out as below:
Scope of works The detailed scope of each order such as work
process to be performed by the subcontractor,
quantity, quality and work specifications are set out
in each order.
Subcontracting fee Determined based on the actual quantity of products
processed.
Duration Delivery time shall be specified in each order.
Payment and credit terms We are generally required to settle the payment
monthly or bimonthly.
Responsibilities of subcontractors Subcontractors are required to deliver semi-processed
products in accordance with the specifications
stipulated in separate purchase orders.
Quality control Subcontractors shall comply with our quality control
measures and our quality control staff shall attend
the production facilities to conduct sample check.
Where processed products do no pass our quality
test, subcontractors shall make rectifications at their
cost.
We consider the protection of the proprietary technology, know-how, trade secrets and other
intellectual property rights of our customers and us is crucial to our business and we expect our
subcontractors to follow. Therefore, we adopted various internal control measures to maintain
the confidentiality of such intellectual properties. Please see “– Intellectual Properties” and
“– Risk Management and Internal Control – Maintenance of confidentiality” in this section.
INVENTORY MANAGEMENT
Each of our production facilities has warehouses for storage of our inventory, which mainly
comprise production materials, work-in-progress and finished goods. As at 31 December 2024,
our inventory, with the carrying amount of RMB207.4 million, includes raw materials,
work-in-progress, finished goods and goods in transit. Our inventory turnover days for each of
the FY2022, FY2023 and FY2024 was 88 days, 71 days and 60 days, respectively. As confirmed
by Frost & Sullivan, our inventory turnover day is in line with industry norm.
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To manage our inventory level effectively and cost efficiently, we generally produce our
products on a made-to-order basis so that we generally do not keep large inventory of finished
products in anticipation of order. On the other hand, we generally procure raw materials for
production based on purchase forecast provided by our customers which specifies their estimated
demand for a certain upcoming period or actual orders on a back-to-back basis from customers
which allow us to maintain an optimal level of inventory of raw materials. Given that a majority
of raw materials for our production, such as metal and plastic raw materials, components and
accessories are readily available in the PRC and it is our policy to maintain alternative suppliers
for major raw materials, we do not need to maintain high level of inventory for raw materials.
Moreover, we employ ERP software to track inventory levels which enables us to control the
movement and storage of inventory in our facilities so that we can make procurement plans
based on our business needs and our production planning. We also perform physical stock-take
regularly and make provision for obsolete inventory where necessary. For details of our policy
on making provision for obsolete inventory, please see “Financial Information – Material
Accounting Policies and Critical Accounting Estimates and Judgements – Net realisable value of
inventories” in this prospectus.
QUALITY CONTROL
We believe that our stable relationships with customers is the consummation of consistent
commitment to quality. In order to achieve consistently high quality control standards, we have a
quality control department comprising 111 members in our PRC and overseas production
facilities as at 31 December 2024. Our quality assurance approach aims to control variables
throughout our production process to ensure our product meets our quality standards at every
increment throughout the production, from screening of suppliers, conducting quality checks for
incoming raw material, work-in-progress quality inspection in order to identify defects at early
stages of production, to quality checks of final products, packaging, inventory and loading of
goods.
In particular, since our products are shipped to different parts of the world for consumer
use, our quality benchmarks are formulated with reference to our customer standards and
specifications and we follow internationally recognised standards such as China Compulsory
Certification (CCC), European Union (EU) and U.S. Food and Drug Administration (FDA). In
recognition of our efforts on maintaining quality control and management, we have been
accredited with ISO9001: 2015 since 2008, and our environmental management system is also
ISO-certified with ISO14001: 2015 since 2018.
During the Track Record Period and up to the Latest Practicable Date, we did not
experience any significant quality defects or product claims, refunds or returns from our
customers in respect of our products which would have a material impact on our business,
financial condition or results of operations.
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PRODUCT RETURN AND W ARRANTY
We accept product return from our customers for defective products. Under the framework
agreements we entered into with our major customers, generally, we are provided with a
defective allowance from 2% to 5%; where actual return exceeds such allowance, we shall be
liable for returns. In the event of complaint from our ODM/OEM customers, our sales and
marketing team will communicate and liaise with our quality control department and initiate
investigation. We will then prepare a preliminary investigation report, generally, in
approximately two weeks upon receipt of complaints. Based on our findings, we will discuss
with our customers to come up with improvement plans in order to avoid recurrence of quality
issues.
For our OBM products which are mainly sold directly to consumers on ecommerce
marketplaces, our sales and marketing team offers customer support to our online retail
customers and handle their complaints and we provide product warranty from seven days to one
year, depending on the business practice of different e-commerce marketplaces.
During the Track Record Period, the overall product return (including ODM, OEM and
OBM model) represented less than 1.0% of our total revenue of the corresponding year. During
the Track Record Period and up to the Latest Practicable Date, there were no product recalls,
product returns, product liability claims, or customer complaints that would have a material
impact on our business, financial condition or results of operation.
SALES AND MARKETING
Our sales and marketing department is responsible for the sales and marketing of our
products and maintaining relationship with our customers. As at 31 December 2024, we had 51
employees in our sales and marketing department.
In order to keep abreast of the latest market trends, as well as to attract potential
ODM/OEM customers, our management and sales and marketing team regularly attend domestic
and international trade fairs and exhibitions such as China Import and Export Fair, Hong Kong
Electronics Fair and Internationale Funkausstellung Berlin (IFA) which is one of the world’s
largest consumer electronics and home appliances trade show to meet potential overseas
customers. We also participate in international product design competitions such as Reddot and
MUSE Design Awards to exhibit our work, earn critical feedback on our ideas, and increase our
brand awareness.
For our OBM products under our self-owned brands of “Weighmax௥ക” and
“Accuteck” and “Aigoliᘆ”, we promote our brands and sell our products mainly through
advertising features of the respective online channels where sell our products, namely Amazon
for “Weighmax௥ക” and “Accuteck”, and JD.com (؇Tmall ( ˂፟) and Pinduoduo (ε
ε) for “Aigoliᘆ”.
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In FY2022, FY2023 and FY2024, we incurred RMB10.2 million, RMB9.0 million and
RMB7.4 million, respectively, as our marketing and promotion expenses.
PRICING
We determine our products prices taking into account our cost of raw materials, labour cost
and other expenses, expected delivery date, complexity of the products, volume of the orders,
desired profit margin, our relationship with the customer and prevailing market conditions.
For export sales, prices are generally quoted in US$ on free on board basis, for delivery at
the pre-determined ports. To manage erosion of our margins due to fluctuations in raw material
prices, we review our cost components regularly and, where necessary, we may initiate
discussion on price adjustment with our customers.
RESEARCH AND DEVELOPMENT
We consider our R&D capability is one of our competitive advantages and we strive to
augment this competitive advantage continuously. Our R&D team also continuously monitors
technological advancement in the industry to keep our knowledge up-to-date and relevant with
our customers’ preferences. As R&D work invariably requires a broad spectrum of expertise as
at 31 December 2024, we have a R&D team of more than 170 members, with an average of six
years of work experience with us and a majority of them obtained academic qualification of
tertiary level and/or vocational education in different disciplines. We collaborate closely with
our customers and participating industry events to identify desired product performance and
quality parameters and market needs which are not satisfied and formulate R&D initiatives with
our team of experts from different disciplines. We also carry out projects which aim to research
and develop new products and technologies and to enhance quality and cost efficiency. For
example, during the Track Record Period, we conducted a range of R&D activities, from
technologies which enhance our production capability to technologies for enhancing performance
of different product attributes, including: mould development technologies; surface polishing
technology for the welding of electric kettles; electronic temperature control technology for our
air fryer heating system, slow cooker heating system, yogurt market thermostatic system and
multi-functional electric cooker control system; latex tube automatic extension technology for
our garden hoses; and electromagnetic induction technology in automatic adjustment of motor
speed for our motor-driven appliances such as household blender control system and portable
grinders. We believe that these have proven that we have successfully translated our R&D
efforts into our products and technologies.
We have entered into legally-binding confidentiality agreements with our key technological
personnel and employees involved in our R&D activities, pursuant to which any intellectual
property developed during their employment in the course of performing their duties thereunder
belongs to us. As at the Latest Practicable Date, we had 403 registered patents and eight
software copyrights in the PRC, two registered patents in Japan, nine registered patents in
Europe, 24 registered patents in the United States. For details of our intellectual properties,
please see “– Intellectual Properties” in this section.
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For FY2022, FY2023 and FY2024, we incurred R&D expenses of RMB32.0 million,
RMB34.4 million and RMB36.4 million, respectively. Our R&D costs represent amounts
incurred for the development of new products and technologies. For details of our research and
development expenses, please see “Financial Information – Principal Components of Results of
Operations – Research and development expenses” in this prospectus.
We believe that our R&D will continue to drive our growth. As a major footstep of
strengthening our R&D capability and part of our future plans, we plan to establish a R&D
centre in Qichun County, Hubei Province. For details of our future plans to further expand our
R&D efforts, please see “– Our Strategies” in this section.
EMPLOYEES
The table below sets out the breakdown of our employees by geographical location as of 31
December 2024:
Location
Number of
employees
The PRC 2,518
Indonesia 5
United States 6
Total 2,529
The table below sets out the breakdown of our employees by function as of 31 December
2024:
Department
Number of
employees
Sales and marketing 51
R&D 171
Finance and audit 53
Administration 157
Quality control 111
Procurement 29
Production 1,957
Total 2,529
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In addition to direct employment, during the Track Record Period, we procured labour by
way of labour dispatch or labour subcontracting to meet our need in daily business operations.
As advised by our PRC Legal Advisers, the major difference between labour dispatch and
labour subcontracting is the control and management of the workers. Labour dispatch occurs
when the labour dispatch company recruits and dispatches workers to us and we directly
command and manage the dispatched workers, who are required to follow our instructions.
Generally, payment is calculated based on the number of staff dispatched. Under the PRC laws,
there is a statutory limit to the number of dispatched workers. On the other hand, labour
subcontracting occurs when we subcontract works/tasks to the subcontractor, and the
subcontractor has to determine the number of workers necessary and arrange its own workers to
complete the works/tasks according to the requirements of us. We are not entitled to directly
command or instruct the subcontracted workers. Instead, the labour subcontractor will be
responsible for commanding and managing the subcontracted workers. Generally, payment is
calculated based on a lump sum service fee, regardless of the number of subcontracted workers
involved. Under the PRC laws, there is no limit to the number of subcontracted workers
involved nor the number of labour subcontractors engaged.
Labour dispatch
In addition to our employees as mentioned above, in FY2022, we entered into labour
dispatch agreements with independent labour dispatch providers when we do not have sufficient
workforce for our orders. Key duties of the dispatched labour included simple processes and
tasks such as hand gluing, material sorting and visual inspection. Fee we incurred for labour
dispatch arrangement represented 0.2% of total cost of sales of FY2022. As confirmed by our
Directors, we do not plan to engage labour dispatch providers going onward.
Labour subcontracting
During the Track Record Period, we entered into labour subcontracting arrangement ( ௶ਕ
̮̍՘ᙄ ) with labour subcontractor agencies to meet the need of our business operation. We
have entered into labour subcontracting agreements with our labour subcontractor agencies. Key
duties of the subcontracted labour included different work processes for the manufacture of our
products including material feeding assembly, packaging. Pursuant to the agreements, the labour
subcontractor agencies is responsible for bearing the relevant costs of social insurance and other
statutory employee benefits. In return, we allow subcontracted staff to work on our sites and we
pay a lump sum service fee to the labour subcontractor agencies calculated based on the number
of units processed by the subcontracted staff. We are responsible to provide training to ensure
the occupational health and safety of the independent contractors. As advised by our PRC Legal
Advisers, our labour subcontracting arrangement under such agreements as aforementioned is
legal. In general, our Group is not required to obtain approval from our customers before
entering into outsourcing, labour dispatch and labour subcontracting agreements. Fee we
incurred for labour subcontracting arrangement for our production represented 0.1%, nil and
2.2% of total cost of sales of FY2022, FY2023 and FY2024, respectively.
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To management risks of leakage of confidential information, such as proprietary
technology, know-how, trade secrets and other intellectual property rights of our customers and
us, associated with labour subcontracting, we adopted various internal control measures to
maintain the confidentiality of such intellectual properties. Please see “– Intellectual Properties”
and “– Risk Management and Internal Control – Maintenance of confidentiality” in this section.
Training and recruitment
We believe that our ability to recruit and retain experienced and skilled labour is crucial to
our growth and development.
We generally recruit our employees by placing advertisements in the open market, or
through personal referrals and recruitment agencies. Based on our business needs, we select
candidates having regard their credentials, experience, qualifications and expertise.
Remuneration packages of our employees generally include basic salaries, bonuses and other
employee benefits such as medical insurance. We conduct annual appraisal on employee to
review their salary and consider promotion where their performances meet our expectation.
We have adopted a training policy and we provide orientation training and employees
handbook to our new employees to familiarise them with our working environment and work
culture. We also provide on-the-job training to our employees, to enhance their technical and
safety knowledge. Trainings are given by our senior employees or third-party consultants. We
also provide fire safety training to our production staff regularly. We believe our human resource
management policy can encourage our employees to progress and develop continuously and
contribute to our success.
To build and maintain bond with our employees, we have established a labour union in the
PRC to represent the interests of our employees and to facilitate effective communication
between our employees and our management. The union organises various activities for our
employees. We consider that we have maintained a positive relationship with our employees.
During the Track Record Period and up to the Latest Practicable Date, we had not experienced
any strike, labour dispute or other labour disturbances which would have had a material impact
on our business, financial condition or results of operations.
Save as disclosed “Compliance – Social Insurance and Housing Provident Funds” in this
section, we have complied with the applicable labour laws and regulations in the PRC in all
material respects.
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INSURANCE
We maintain various insurance policies including property insurance covering risks of
physical loss or damage to the inventory of our products and fixed assets, general liability
insurance (including product liability), worker compensation insurance, employer liability
insurance and transportation and export insurance. As confirmed by Frost & Sullivan, our
insurance coverage is in line with industry practice. During the Track Record Period and up to
the Latest Practicable Date, we had not made or been the subject of any material insurance
claims.
PROPERTIES
Owned properties
As at the Latest Practicable Date, we had obtained land use certificates for 12 parcels of
land with an aggregate site area of approximately 211,380 sq.m. and building ownership
certificates of 30 buildings with an aggregate floor area of approximately 116,649.6 sq.m. in the
PRC. As of the Latest Practicable Date, we had entered into an agreement to acquire a piece of
land with a site area of 43,436.8 sq.m. in Thailand, details of which are set out in “Business –
Our Strategies – Set up our Thailand Factory to enhance our global presence”.
We use our owned properties in the PRC mainly for production and dormitories. For further
details of our production facilities, please see “– Our Production Facilities” in this section.
During the Track Record Period, we also leased out some of our properties to Independent Third
Parties from which we derived a rental income of RMB0.9 million, RMB0.6 million and
RMB1.0 million for FY2022, FY2023 and FY2024, respectively, after deducting the costs.
Except for the property interests described in the property valuation report, our Group has
no other owned property interest that forms part of our non-property activities that has a
carrying amount of 15% or more of total assets or property activities that requires valuation
report pursuant to Rule 5.01B(2)(b) of the Listing Rules.
Owned properties without ownership certificates
Due to administrative oversight and insufficient knowledge of the relevant regulatory
requirements of the responsible staff, certain buildings in our Hubei XJ Factory and Yinuowei
Factory with an aggregate construction area of 2,595 sq.m. (the “ Defective Properties ”) that we
use for auxiliary production, canteen and warehouse do not comply with the urban and rural
planning requirements; and therefore, we have not obtained building ownership certificates for
the Defective Properties.
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Pursuant to Article 64 of the Urban and Rural Planning Law of the People’s Republic of
China (2019 Amendment) (ج2019͍)), if a construction project
planning permit is not obtained or construction is not carried out in accordance with the
provisions of the construction project planning permit, the urban and rural planning authorities
of the local people’s government at or above the county level may order suspension of
construction; if corrective measures to eliminate the impact of construction is possible,
corrections within a time limit may be ordered, and a fine of not less than 5% but not more than
10% of the construction project cost will be imposed; if corrective measures is not possible, the
property may be ordered to be demolished within a time limit. If demolition is not possible, the
property or illegal income will be confiscated, and a fine of not more than 10% of the
construction project cost may be imposed. Article 65 of the Urban and Rural Planning Law of
the People’s Republic of China (2019 Amendment) (ج2019͍))
further stipulates that failure to obtain a rural construction planning license in accordance with
the law or to construct in accordance with the provisions of the rural construction planning
license within a township or village planning area shall be ordered by the township or town
people’s government to suspend construction and rectify within a time limit; If rectification is
not made within the prescribed time limit, the property may be demolished. During the Track
Record Period and up to the Latest Practicable Date, we had not received any notification from
the government authorities requiring us to demolish and/or relocate from the Defective
Properties. Our PRC Legal Advisers are of the view that the risk of our Group being subject to
administrative penalty in relation to the Defective Properties is relatively low. Taking into
account the size and use of the Defective Properties, our Directors are of the view that in the
event that we were ordered to demolish the Defective Properties, we could be readily relocate to
our other properties with a cost of not more than RMB100,000 in aggregate. Our Directors
therefore consider that the title defects of the Defective Properties are not expected to have
material adverse impact on our business operations.
Considering (i) the opinion of our PRC Legal Advisers as aforementioned, (ii) that as at the
Latest Practicable Date, we had not received any administrative penalty, rectification order
imposed by competent authorities in PRC, (iii) the Defective Properties are only for auxiliary
use and relocation would not have a material adverse impact on our business operations, our
Directors are of the view that, and the Sole Sponsor concurs, the absence of ownership
certificates of the Defective Properties would not materially and adversely affect our suitability
for listing.
For enhanced internal control measures taken in relation to property laws and regulations
compliance, please see “– Risk Management and Internal Control – Property laws and
regulations compliance” in this section.
As at the Latest Practicable Date, we were in the course of obtaining building ownership
certificates for buildings in our XJ Intelligence Factory with an aggregate construction area of
approximately 147,069.0 sq.m. For further details, please see “– Compliance – Production
facilities in XJ Intelligence Factory” in this section.
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Leased properties
As at the Latest Practicable Date, we had entered into 20 leases with a total area of
approximately 111,621.3 sq.m. in the PRC as our production facilities, warehouses, offices and
dormitories. We also had one lease in the United States and one lease in Indonesia as our office
and production facilities. Except for three leases for our dormitories in the PRC for which the
lessor is Mr. Pan Yun, our Controlling Shareholder and executive Director, the lessors of other
leased properties are Independent Third Parties.
The following table sets forth a summary of our leased properties for major use as at the
Latest Practicable Date:
PRC
Location
Approximate
lease area
(sq.m.) Term of lease
Major use
of property
1. No. 1–3, Paibang Shantang
Industrial Zone, Siluan
Community, Hegang Street,
Longgang District, Shenzhen
(ٟ
ਜર࿮ʆ෨ʈุਜ 1–3 ໮)
27,700.0 2022.04.01–
2027.03.31
Production
2. No. 8, Paibang Shantang
Industrial Zone, Siluan
Community, Hegang Street,
Longgang District, Shenzhen
(ٟ
ਜર࿮ʆ෨ʈุਜ 8໮)
2,300.0 2023.08.31–
2026.08.31
Warehouse
3. No. 16, Paibang Shantang
Industrial Zone, Siluan
Community, Hegang Street,
Longgang District, Shenzhen
(ٟ
ਜર࿮ʆ෨ʈุਜ 16໮)
2,300.0 2024.11.1–
2026.10.30
Warehouse
4. 8th Floor, Building 7, Factory,
Free Trade Zone, No. 2015
Shenyan Road, Yantian
District, Shenzhen
(ଉέ̹᜾͞ਜଉ᜾༩ 2015 ໮
ג7ಊୋ8ᄴ)
2,607.9 2025.02.01–
2027.01.31
Office
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Location
Approximate
lease area
(sq.m.) Term of lease
Major use
of property
5. Building 3, No. 5, Shijing
Industrial Park, Pingshan New
District, Shenzhen
(ଉέջʆอਜͩʜʈุ෤ 5໮3
ಊ)
8,000.0 2024.12.01–
2027.11.30
Production
6. No. 3, Shijing Industrial Park,
Shijing Street, Pingshan
District, Shenzhen
(ଉέ̹ջʆਜͩʜ൑༸ͩʜʈ
ุ෤3໮)
16,877.0 2022.07.03–
2025.07.02
(Note)
Production
7. No. 3, Shijing Industrial Park,
Shijing Street, Pingshan
District, Shenzhen
(ଉέ̹ջʆਜͩʜ൑༸ͩʜʈ
ุ෤3໮)
12,023.0 2022.07.03–
2025.07.02
(Note)
Production
8. No. 3, Shijing Industrial Park,
Shijing Street, Pingshan
District, Shenzhen
(ଉέ̹ջʆਜͩʜ൑༸ͩʜʈ
ุ෤3໮)
5,035.0 2022.07.03–
2025.07.02
(Note)
Production
9. No. 3, Shijing Industrial Park,
Shijing Street, Pingshan
District, Shenzhen
(ଉέ̹ջʆਜͩʜ൑༸ͩʜʈ
ุ෤3໮)
5,035.0 2022.07.03–
2025.07.02
(Note)
Production
10. No. 3, Shijing Industrial Park,
Shijing Street, Pingshan
District, Shenzhen
(ଉέ̹ջʆਜͩʜ൑༸ͩʜʈ
ุ෤3໮)
5,030.0 2022.07.03–
2025.07.02
(Note)
Production
Note: Currently, we are in negotiation with the landlord for lease renewal.
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Location
Approximate
lease area
(sq.m.) Term of lease
Major use
of property
11. Second Factory Building, 4th
and 5th Floor of Third Factory
Building, 1st Floor of Fourth
Factory and Power
Distribution Room on 1st
Floor of Third Production
Building, Kerui High-tech
Industrial Park, No. 46,
Electronic City Road, Longxi
Town, Boluo County, Huizhou
City
(༩
46๿৷อପุ෤ 2#዆
ಊe3#ג4ᅽʿ5ᅽe4#ג
1ᅽe3#1ג)
18,976.9 2023.04.01–
2029.03.31
Production
12. No. 53, Shakeng Road, Biling
Street Office, Pingshan
District, Shenzhen
(ଉέ̹ջʆਜ၀Ꮚ൑༸፬ӍѦ
༩53໮)
4,000.0 2025.01.01–
2025.12.31
Production
13. 25A, Haidu Garden, No. 2122
Shenyan Road, Tiandong
Community, Haishan Road,
Yantian District, Shenzhen
(ٟ؇
ਜଉ᜾༩ 2122෤ 25A)
107.0 2023.01.20–
2026.01.19
Dormitory
and office
14. 11A, Haidu Garden, No. 2122
Shenyan Road, Tiandong
Community, Haishan Road,
Yantian District, Shenzhen
(ٟ؇
ਜଉ᜾༩ 2122෤ 11A)
107.0 2023.01.20–
2026.01.19
Dormitory
and office
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Location
Approximate
lease area
(sq.m.) Term of lease
Major use
of property
15. 11C, 11F, 20F, 24A, 24F, 26A,
Haidu Garden, No. 2122
Shenyan Road, Tiandong
Community, Haishan Road,
Yantian District, Shenzhen
(ٟ؇
ਜଉ᜾༩ 2122෤ 11C
e11Fe20F e24A e24F e
26A)
622.0 2023.12.31–
2025.12.30
Dormitory
16. Room 1–4C, Building 2, Shanhai
Home, Yantian District,
Shenzhen
(෤ 2ಊ
1–4Cג)
106.2 2023.10.01–
2025.09.30
Dormitory
17. 19H Haidu Garden, Shatoujiao,
Yantian District, Shenzhen
(෤
19H)
107.0 2024.09.01–
2025.08.31
Dormitory
18. Room 804, Unit 2, Building 21,
Pengwan Garden Village 1,
Yantian District, Shenzhen
(෤ɓӀ 21
ಊ2ఊʩ804ג)
98.0 2025.03.04–
2026.03.03
Dormitory
19. Room 2–2D, Building 5, Cuijing
Garden, Wutong Road South,
Yantian District, Shenzhen
(ڀ
෤ୋ5ಊ2–2D)
90.4 2025.03.01–
2027.03.01
Dormitory
20. Room 2407, Building 11, Phase
II, Tian’an Cloud Park,
Gangtou Community, Bantian
Road, Longgang District,
Shenzhen
(ٟ
ਜ˂τථԋପุ෤ɚಂ 11ಊ
2407)
499.0 2025.04.02–
2028.04.01
Office
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United States
Location
Approximate area
(sq.m.) Term of lease
Major use
of property
1. Chino, California 975.4 2022.11.01–
2025.10.31
General office,
warehouse and
distribution of
small consumer
products and
other legal
related uses
Indonesia
Location
Approximate area
(sq.m.) Term of lease
Major use
of property
1. Sidoarjo Regency,
East Java
Province
10,000 2023.12.01–
2033.11.30
Industrial activities
Defects in our leased properties
As of the Latest Practicable Date, eight of our leased properties in the PRC which formed
part of our Aisijie Factory, Yuantexin Factory and Hongnuowei Factory, respectively, with an
aggregate lease area of approximately 63,423 sq. m. were subject to title defects (the “ Defective
Leased Properties ”). The lessors of such leased properties had not obtained the relevant title
ownership certificates for the Defective Leased Properties. During the Track Record Period and
up to the Latest Practicable Date, we had not encountered any safety issues or disputes with
respect to the Defective Leased Properties.
As advised by our PRC Legal Advisers, without ownership, the validity of leases of the
Defective Leased Properties may by challenged by the lessor. In addition, if the lessors do not
have the ownership certificates of these defective leased properties, these Defective Leased
Properties may be subject to order of demolition and relocation. Based on the advice of our PRC
Legal Advisers, we consider that, taking into account the long term relationship with the lessors
as confirmed by the lessors, the risk of the leases of the Defective Leased Properties being
challenged by the lessors and thereby affecting our use is relatively low. Our PRC Legal
Advisers further advised that taking into account, among others, the confirmations from the
relevant competent authorities, the risk of us being subject to relocation order is relatively low.
See also “Risk Factors – Risks Relating to Our Industry and Business – The rights to use certain
leased properties could be challenged by third parties or relevant authorities, and we may be
forced to relocate due to title defects of such leased properties.” If we were ordered to relocated
from these defective leased properties in such unlikely circumstance, taking into account our
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existing and future production capacity, and based on currently available information and to our
best knowledge, we estimate the relocation, if necessary, would be completed in one to two
weeks for the relocation of each production facilities and would incur an aggregate cost RMB3.4
million, which would not be a material loss for our Group as we may reallocate orders to other
production facilities. Having considered the foregoing, our Directors believe that these title
defects in relation to the Defective Leased Properties will not, individually or in the aggregate,
materially affect our business and results of operation.
Lease Registration
As at the Latest Practicable Date, 10 out of our 20 leased properties are required by the
applicable PRC laws and regulations to be registered and filed with the relevant land and real
estate administration bureaus in the PRC, among which eight had not been so registered or filed.
We are in the process of preparing the registration and filing of certain leases which necessary
documents have been provided. These properties have an aggregate area of approximately
1,736.5 sq.m., accounting for 1.6% of the total lease area of our leased properties in the PRC.
As advised by our PRC Legal Advisers, failure to complete the registration and filing of
lease agreements will not affect the validity of the lease agreements or result in us being
required to vacate the leased properties. However, the relevant PRC authorities may impose a
fine ranging from RMB1,000 to RMB10,000 for each unregistered lease, and therefore a
maximum penalty of RMB80,000 in aggregate, which will not have any material and adverse
impact on our business operations. Please see “Risk Factors – Risks Relating to our Industry and
Business – The lease agreements of our leased properties have not been registered with the
relevant PRC government authorities as required by PRC law, which may expose us to potential
fines.” in this prospectus. As at the Latest Practicable Date, we have submitted the application
documents for lease registration where those documents are complete.
Having considered the foregoing, our Directors believe that the non-registrations of leases
described above will not, individually or in the aggregate, materially affect our business and
results of operation, on the grounds that: (i) no penalty had been imposed on us for our failure
to register and file the relevant lease agreements during the Track Record Period and up to the
Latest Practicable Date; (ii) we were advised by our PRC Legal Advisers that, the risk of
governmental authorities imposing an administrative penalty on us with respect to these leased
properties is relatively low; and (iii) we have enhanced our internal control measures and
procedures to prevent re-occurrence of such non-compliance incidents.
For enhanced internal control measures taken in relation to property laws and regulations
compliance, please see “– Risk Management and Internal Control – Property laws and
regulations compliance” in this section.
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INTELLECTUAL PROPERTIES
Apart from our ODM/OEM operations, we also manufacture and sell our OBM products
under our self-owned brands of “Weighmax௥ക” and “Accuteck” and “Aigoliᘆ” for
which we have registered trademarks in the PRC or overseas. As of the Latest Practicable Date,
we were the registered owner of 60 trademarks and 12 domain names.
As of the Latest Practicable Date, we had 403 registered patents and eight software
copyrights in the PRC, two registered patents in Japan, nine registered patents in Europe, 24
registered patents in the United States. We had made application for registration of eight patents
in the PRC, nine patents in the United States, one patent in Europe and one patent in Korea. For
details of our intellectual property rights, please see “Appendix VII – Statutory and General
Information – B. Further Information about Our Business – 2. Our material intellectual property
rights”.
We recognise the importance of protecting and enforcing our ODM/OEM customers and our
proprietary technology, know-how, trade secrets and other intellectual property rights. Our
agreements with our customers and our suppliers have stipulated relevant clauses imposing
confidentiality obligations so as to protect our customers and our intellectual property rights
during the production. For details of our intellectual properties protection measures, please see
“– Risk Management and Internal Control – Maintenance of confidentiality” in this section.
During the Track Record Period and up to the Latest Practicable Date, we did not
experience any material infringement of our intellectual property rights nor had we been subject
to any material intellectual property rights claims by third parties.
DATA PRIV ACY AND SECURITY
Our Group establish online storefronts on e-commerce marketplaces including Amazon,
JD.com (؇Tmall ( ˂፟), Pinduoduo (εε) to sell our OBM products. As such, we
indirectly collect personal information desensitized by e-commerce marketplaces pursuant to the
authorisation between such e-commerce marketplaces and their users, including but not limited
to partially removed or obscured customers’ username, recipient’s name, contact numbers and
delivery addresses for order fulfilment. For details of data privacy and security-related laws and
regulations in the PRC applicable to our Group, please see “Regulatory Overview – Regulations
in relation to Data Privacy and Security”. Please also see “Risk Factors – Risks Relating to Our
Industry and Business – Failure by us, the e-commerce marketplaces where we sell our OBM
products, or our third-party service providers to maintain data security, or any non-compliance
with evolving legal requirements on data protection by us, could have a material adverse effect
on our operations and profitability.” for details of our risk exposure in this respect.
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To comply with the applicable laws and regulations, we have developed a series of internal
management policies and operating procedures, including “Information Management Policy” and
“Confidentiality Management Policy”, for protection of data privacy and security, and have
implemented corresponding measures to prevent data security incidents. Such internal control
measures include:
 we have adopted policies to safeguard our IT systems against cyberattacks during our
ordinary online sales activities including firewalls and data access control to enhance
our network security and data security defence, and we have regularly tested and
traced the recoverability of our data backups;
 we provide internal training to our employees on cybersecurity, aiming to increase
their understanding and awareness of cyber threats and relevant countermeasures. Our
internal guidelines also require our employees to abide by information security
regulations, in order to ensure safety of the relevant information involved in the
business operations;
 to enhance information management and the information confidentiality, we engage
professional third-party service providers to store the business and financial data
necessary for daily operation and management, including personal information
obtained from operating online stores on e-commerce platforms; and
 we have set up different access restrictions for different departments and seniority to
limit unauthorised viewing and access of information.
During the Track Record Period and up to the Latest Practicable Date, we have not been
subject to regulatory investigations, administrative penalties or public notifications related to
data privacy and security, and the Group had not experienced any significant data privacy and
security incidents related to theft, leakage, damage or loss of data or personal information. As
advised by the PRC Legal Advisers, during the Track Record Period and up to the Latest
Practicable Date, we have complied with all material aspects of the applicable PRC laws and
regulations concerning data privacy and security.
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On 24 September 2024, the State Council promulgated the Regulations on Administration
of Network Data Security ( ၣഖᅰኽτΌ၍ଣૢԷ) (the “ Network Data Security
Regulations ”) which has taken effect on 1 January 2025. The Network Data Security
Regulations stipulates relevant regulations on data processing activities, personal information
protection, important data security, and the obligations of network platform service providers.
According to Article 62 of the Network Data Security Regulations, important data refers to
specific fields, specific groups, specific areas or reaches a certain specificity and scale that once
such data is tampered with, destroyed, leaked or illegally obtained or used illegally, it may
directly endanger national security, economy, social stability, public health and safety. Large
network platforms refer to those with more than 50 million registered users or more than 10
million monthly active users, complex business types, and network data processing activities that
have a negative impact on national security, economy and people’s livelihood of the PRC.
Taking into account that (i) revenue from sales of our OBM products represented only a
minor portion of our total revenue (representing 5.6%, 4.2% and 2.7% of the total revenue of
our Group for FY2022, FY2023 and FY2024, respectively); (ii) information collected by us in
the course of the sales of OBM products through our storefront on third-party e-commerce
platforms would not fall under the definition of important data under the Network Data Security
Regulations; and (iii) we are not network platform nor network platform service provider as
defined by the Network Data Security Regulations, our PRC Legal Advisers are of the view that
the Network Data Security Regulations would not have a material and adverse impact on our
Group.
LICENCES, PERMITS AND APPROV ALS
Save as disclosed in in “Business – Properties” and “Business – Compliance”, during the
Track Record Period and up to the Latest Practicable Date, we have obtained all licences,
permits, approvals and certificates that are material for our business operations in the
jurisdictions where we operate, and such licences, permits, approvals and certificates are valid
and subsisting. During the Track Record Period and up to the Latest Practicable Date, we had
not been penalised by any government authorities for non-compliance relating to material
licences, permits or approvals which may have a material and adverse impact on our Group.
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A W ARDS AND RECOGNITIONS
During the Track Record Period, we received different recognitions. The table below is
summary of awards and recognitions that we consider significant:
Award Y ear Award/Recognition Awarding Institution/Authority
2024 Top 10 Small Kitchen Appliance
Export Companies in 2023 (2023
ཥ̈ɹΆุ )
China Chamber of Commerce for
Import and Export of Machinery
and Electronic Products ( ʕ਷ዚ
ආ̈ɹਠึ )
2023 Top 10 Small Kitchen Appliance
Export Companies in 2022 (2022
ཥ̈ɹΆุ )
China Chamber of Commerce for
Import and Export of Machinery
and Electronic Products ( ʕ਷ዚ
ආ̈ɹਠึ )
2022 Sample Enterprise of China’s
Foreign Trade Export Pilot Index
(ᅰᅵ͉Άุ )
General Administration of Customs,
P.R. China ( ʕശɛ͏΍ձ਷ऎᗫ
ᐼ໇)
2022 2022 Hubei Province Manufacturing
Product Champion Enterprise
(2022ࠏڿ
Άุ(ۜ))
Hubei Provincial Department of
Economy and Information
Technology (ʷ
ᝂ)
2018 Top 10 Green Innovative Enterprise
in 2018 (2018ၠЍ௴อΆุ
Top 10)
China Council for International
Investment Promotion ( ʕ਷਷ყ
ආึ )
LEGAL PROCEEDINGS
We may from time to time be subject to various legal proceedings arising from our course
of business. Litigation or any other legal proceeding, regardless of the outcome, may incur
substantial cost and divert our resources, including our management’s time and attention. Please
see “Risk Factors – Risks Relating to Our Industry and Business – We may be involved in legal
or other proceedings arising out of our operations, including product liability claims, from time
to time and may face significant liabilities as a result” in the prospectus.
During the Track Record Period and up to the Latest Practicable Date, we were not
involved in any legal proceedings which would have a material impact on our business, financial
condition or results of operations.
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COMPLIANCE
Save as disclosed in “– Properties” in this section and as follows, our Directors, as advised
by our legal advisers of the relevant jurisdictions, confirmed that as at the Latest Practicable
Date, we had complied with all relevant laws and regulations in all material respects and have
obtained all material licenses, approvals and permits from relevant regulatory authorities for our
operations.
Social Insurance and Housing Provident Funds
Background and reasons of non-compliance
During the Track Record Period, we did not make sufficient social insurance and housing
provident fund contributions for some of our employees, primarily due to the preference of many
of our employees not to make full contribution to such funds. Based on the estimation of our
Directors, the shortfall of social insurance and housing provident fund contributions amounted to
RMB1.7 million, RMB2.2 million and RMB3.0 million for FY2022, FY2023 and FY2024,
respectively.
Possible consequences of non-compliance
Our PRC Legal Advisers advised that, pursuant to relevant PRC laws and regulations, if we
fail to pay sufficient amount of social insurance contributions as required, we may be ordered to
pay the outstanding social insurance contributions within a prescribed time limit and may be
subject to an overdue fine of 0.05% of the delayed payment per day from the date on which the
payment is payable. If such payment is not made within the stipulated period, the competent
authority may further impose a fine from one to three times the amount of any overdue payment.
With respect to housing provident fund, our PRC Legal Advisers advised us that, pursuant to
relevant PRC laws and regulations, if we fail to pay the full amount as required, the housing
provident fund management centre may order us to make the outstanding payment within a
prescribed time limit. If the payment is not made within such time limit, an application may be
made to the PRC courts for compulsory enforcement.
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Likelihood of being penalised, latest status and remedial measures
Considering that (i) we have obtained the confirmations issued by the competent authorities
that we had not been subject to any administrative penalties in relation to social insurance and
housing provident fund; (ii) during the Track Record Period, we had not been imposed any
penalties in respect of social insurance and housing provident funds; (iii) pursuant to the
relevant laws and regulations, including the Urgent Notice on Enforcing the Requirement of the
General Meeting of the State Council and Stabilising the Levy of Social Security
Insurance Payment (ஷ
ٝadministrative enforcement authorities are prohibited from organising and conducting
centralised collection of enterprises’ historical social security insurance arrears; (iv) as at the
Latest Practicable Date, no laws and regulations in relation to centralised collection of
enterprises’ historical of social security insurance nor housing provident fund arrears had been
promulgated and our Group had not been requested to make payment for the relevant shortfall;
(v) our Group has undertaken to make payment for shortfall when so requested by the relevant
authorities; and (vi) Mr. Pan Yun and Mr. Guangshe Pan, have undertaken to indemnify our
Group if the relevant authorities order us to make payment for the relevant shortfall or penalise
us for this cause, our PRC Legal Advisers are of the view that the likelihood of us being
required to make full payment of the shortfall of social insurance and housing provident fund
contribution and the likelihood of us being imposed administrative penalties is remote.
Accordingly, no provision was made for the shortfall of social security insurance and housing
provident fund contribution in our consolidated financial statements during the Track Record
Period.
Considering (i) the opinion of our PRC Legal Advisers as aforementioned and (ii) that as at
the Latest Practicable Date, we had not received any administrative penalty, rectification order
imposed by competent authorities in PRC, nor any material complaint from our employees
concerning their payment of social insurance and housing provident funds, our Directors are of
the view, and the Sole Sponsor concurs, that the underpayment of social insurance and housing
provident fund during the Track Record Period would not materially and adversely affect our
suitability for listing.
We will take the following internal control rectification measures to prevent future
occurrences of such non-compliance:
 we have enhanced our human resources policies, which explicitly require social
insurance and housing provident fund contributions to be made in accordance with
applicable local requirements;
 we have designated our consolidated management department to be led by Ms. Ji
Ying, our executive Director and vice general manager, to review and monitor the
reporting and contributions of social insurance and housing provident fund on a
regular basis in order to ensure that we have made these payments for our employees
in compliance with the applicable laws and regulations or in a manner as required by
the relevant government authorities;
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 we will keep abreast of latest developments in the PRC laws and regulations in
relation to social insurance and housing provident funds;
 we will strengthen legal compliance training to our employees to increase their
awareness of the relevant PRC laws and regulations and encourage their cooperation
in making payments for social insurance and housing provident funds; and
 we will consult our PRC legal advisers on a regular basis for advice on relevant PRC
laws and regulations to keep us abreast of relevant regulatory developments.
Having considered (i) the facts and circumstances leading to the non-compliance incidents
and (ii) details and relevance of our Group’s internal control measures to avoid recurrence of the
non-compliance incidents, our Directors are of the view, and the Sole Sponsor concurs, that the
above measures are effective and adequate in preventing non-compliance with respect to social
insurance and housing provident funds.
Production facilities of XJ Intelligence Factory
Background and reasons of non-compliance
In 2021, we began the construction of our XJ Intelligence Factory on a parcel of land to
which we own land use right in Boluo Industrial Park, Boluo County, Guangdong Province and
it commenced operation in June 2024. At the time of commencement of operation in June 2024,
we had not completed (i) the as-built acceptance inspection ( ംʈ᜕ϗ ), (ii) fire protection
acceptance inspection ( ऊԣ᜕ϗ ), (iii) environmental protection acceptance inspection ( ംʈᐑ
ᚐ᜕ϗ ), and (iv) energy conservation acceptance inspection ( ືঐ᜕ϗ ) as required by
applicable PRC laws and regulations.
In relation to (i) the as-built acceptance inspection ( ംʈ᜕ϗ ) and (ii) fire protection
acceptance inspection ( ऊԣ᜕ϗ ), reasons for the non-compliance was because the relevant
construction contractor had not provided us the requisite documents for us to complete such
inspection. In relation to (iii) environmental protection acceptance inspection (ᚐ᜕
ϗ), and (iv) energy conservation acceptance inspection ( ືঐ᜕ϗ ), due to the lack of sufficient
knowledge of the legal requirements, the relevant employees misunderstood environmental
protection acceptance inspection and energy saving acceptance inspection could only be
completed after as-built acceptance inspection has been obtained and therefore did not complete
such inspection in a timely manner.
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Possible consequences of non-compliance
As advised by our PRC Legal Advisers, in relation to (i) the as-built acceptance inspection
(ംʈ᜕ϗ ), pursuant to Regulations on the Administration of Quality of Construction Works,
(ணʈ೻ሯඎ၍ଣૢԷ(2019ࠈࡌcommencement of use or operation without the requisite
inspection could subject us to a fine of an amount equivalent to 2% to 4% of the construction
contract. In relation to (ii) fire protection acceptance inspection ( ऊԣ᜕ϗ ), as advised by our
PRC Legal Advisers, pursuant to Fire Protection Law of the PRC (ج2021
͍)), commencement of use or operation without the requisite inspection may subject us to
an order of suspension of use and operation and/or a fine ranging from RMB30,000 to
RMB300,000. In relation to (iii) environmental protection acceptance inspection (ᚐ
᜕ϗ), commencement of use or operation without the requisite inspection may subject us to an
order of suspension of use and operation and/or a fine ranging from RMB200,000 to
RMB1,000,000 if rectified within the time limit. In relation to (iv) energy conservation
acceptance inspection ( ືঐ᜕ϗ ), commencement of use or operation without the requisite
inspection may subject us to an order of rectification and/or a fine ranging from RMB30,000 to
RMB50,000.
Likelihood of being penalised, latest status and remedial measures
As advised by the PRC Legal Advisers, we have obtained confirmation (the
“Confirmation ”) from the People’s Government of Boluo County (ִ݁confirming
that, among others, our construction in Boluo Industrial Park had satisfied the basic conditions
for commencement of operation and they acknowledged and agreed us to commence operation in
June 2024. It is also confirmed the People’s Government of Boluo County was not aware of any
non-compliance in relation to the construction, fire protection, environmental protection,
production safety and energy conservation which may lead to penalties by the People’s
Government of Boluo County nor by its subordinate body, and it agreed us to maintain the
current status of operation. As confirmed by our PRC Legal Advisers, the People’s Government
of Boluo County is the competent authority to govern its subordinate body, namely, the Housing
and Urban Rural Development Authority of Boluo County (ண҅ ) which has
the power of punishment for the abovementioned non-compliance.
As at the Latest Practicable Date, we had completed (i) as-built acceptance inspection
(ംʈ᜕ϗ ), (ii) fire protection acceptance inspection ( ऊԣ᜕ϗ ), (iii) environmental protection
acceptance inspection (ᚐ᜕ϗ ) and (iv) energy saving acceptance inspection ( ືঐ᜕
ϗ).
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Given that (i) we had completed as-built acceptance inspection ( ംʈ᜕ϗ ), fire protection
acceptance inspection ( ऊԣ᜕ϗ ), environmental protection acceptance inspection (ڭ
ᚐ᜕ϗ) and energy saving acceptance inspection ( ືঐ᜕ϗ ) as at the Latest Practicable Date,
(ii) we had not been imposed any administrative penalty for such non-compliance during the
Track Record Period, (iii) we have obtained the Confirmation from the People’s Government of
Boluo County (ִ݁as aforementioned, and (iv) our Controlling Shareholders, Mr.
Pan Yun and Mr. Guangshe Pan, have undertaken to indemnify our Group any loss resulting
from penalty or suspension of operation, our PRC Legal Advisers are of the view that the
likelihood of us being subject to administrative penalties which may have a material adverse
impact on our Group is relatively low. Our PRC Legal Advisers also considered that such
non-compliance does not constitute material non-compliance and would not have a material
impact on our business.
Considering (i) the opinion of our PRC Legal Advisers as aforementioned and (ii) that as at
the Latest Practicable Date, we had not been imposed any administrative penalty for such
non-compliance during the Track Record Period, our Directors are of the view, and the Sole
Sponsor concurs, that the non-compliance in relation to the absence of the aforementioned
filings of XJ Intelligence Factory would not materially and adversely affect our suitability for
listing.
To prevent future non-compliances with respect to relevant construction laws and
regulations, we have implemented and enhanced internal control measures, which include (i) for
similar construction works in the future, we will obtain the requisite licences and permits
(including but not limited to conducting as-built acceptance inspection and fire protection
acceptance inspection) as and when required by the laws and regulations and follow the requisite
procedures relating to construction and work completion of buildings; (ii) we will seek our PRC
legal advice on the issues relating to the compliance of construction laws and regulations; (iii)
we have established a set of policies to obtain permits for acceptance relevant to buildings and
land use; and (iv) our designated department to be led by Ms. Ji Ying, our executive Director
and vice general manager will monitor the implementation of the above measures and will check
whether there is any non-compliance going forward.
Having considered the facts and circumstances leading to the non-compliance incidents and
details and relevance of our Group’s internal control measures to avoid recurrence of the
non-compliance incidents, our Directors are of the view that, and the Sole Sponsor concurs, the
above measures are effective and adequate in preventing non-compliance with respect to
construction laws and regulations.
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U.S. Tax Payment and Filing
While we had made filings for federal and state income tax in California (i.e. the
incorporation place of the two U.S. subsidiaries), as the relevant personnel of the finance
department of our U.S. office did not possess sufficient knowledge of the complicated tax
system and laws in the U.S. that tax laws of different states may vary state by state, we did not
make filings and tax payment in other states to where the Group had shipped products during the
Track Record Period. It is estimated that the aggregate tax exposure (including unpaid yet due
tax, interest and potential penalty, together, the “ Historical Tax Exposure ”) during the Track
Record Period was less than USD30,000 in aggregate. Given the immaterial amount involved,
we are of the view, and the Sole Sponsor concurs, that (i) the aforementioned incidents are not
considered a material non-compliance and (ii) the relevant tax exposure is not considered a
material tax risk to our Group.
As advised by our U.S. Legal Advisers, there will be no civil nor criminal liability on our
Group nor our Directors if payment is made in a timely manner if so demanded and tax
authorities in the U.S. allow taxpayers to negotiate tax settlement for a lesser amount. We have
engaged a professional firm for rectifications to make necessary repayment and re-filing in the
U.S. As at 30 April 2025, rectification in relation to approximately USD24,000 out of the
Historical Tax Exposure has been done, with the remaining rectification expected to be
completed by August 2025, subject to administrative procedures and tax policies in different
states.
To avoid reoccurrence of similar incidents, we have adopted enhanced internal control
including (i) seeking professional advice for future tax filing and computation, (ii) maintaining a
register to record different natures of taxes to be filed, tax rates and computation basis, and (iii)
another financial officer at our Group level has been assigned to monitor the tax compliance in
the U.S. on a regular basis, including checking the aforementioned register, to ensure timely,
accurate and complete tax filing and payment.
RISK MANAGEMENT AND INTERNAL CONTROL
We are exposed to various risks during our operations. For details of risks, please see “Risk
Factors” in this prospectus. With the growth and expansion of our operations, potential risks
associated with our business increases. It is the responsibility of our Board to ensure that we
maintain sound and effective internal control measures to safeguard Shareholders’ investment
and the assets of our Group at all times. In order to identify, assess and control the risks that
may create impediments to the growth of our business, we have adopted, or expect to adopt
before the Listing, a series of internal control policies, and procedures designed to provide
reasonable assurance for achieving objectives, including effective and efficient operations,
reliable financial reporting and compliance with applicable laws and regulations and to
implement risk management policies to address various potential risks identified in relation to
our operations, including operational risks, credit risks, market risks, financial risk and legal
risks.
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Risk Management Structure
In our risk management structure, the Board of Directors is responsible for the overall risk
management of the Group and the effectiveness of such risk management structure. Accordingly,
their key responsibilities include, among others:
 assess and review the overall risk management structure of the Group and allocation
of work and responsibilities to the relevant departments;
 review risk management reports prepared by the relevant department;
 supervise, control and review material projects and other material matters arisen from
daily operations;
 evaluating the effectiveness of risk management practices and suggesting
improvements; and
 guiding and supervising risk management efforts across departments and subsidiaries.
Risk identification and evaluation
To effectively implement comprehensive risk management, under our policy, each
department collects risk-related information, including both historical data and future projections
and make risk assessments tailored to the nature of their specific operational risks. Each
department should also maintain comprehensive documentation at each critical stage. The
departmental assessment should cover reasons of changes of risks and conditions, potential
impact of such risk, projection of future development and recommendations. Each department
will submit their report to the risk management committee.
In our risk evaluation, general risk indicators to be employed will include (i) the level and
probability of risk occurrence, (ii) consequences and (iii) adequacy of existing control methods
will be taking into account. We will set risk alert threshold according to the nature of different
specific operational risks. We will continuously monitor level of risks. Specific attention will be
brought to changes in key risk indicator and where novel risks arise or there is a significant
change in existing risks. When such threshold is reached, all departments should actively
implement the designed risk response plans and report the implementation results to risk
management committee in a timely manner.
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In particular, we have taken certain measures and has established various structures and
policies as follows to strengthen our internal control and to manage our risks:
 a thorough examination by our Board of any material risks associated with any
material business decision before approving such decision;
 our Directors and senior management are required to keep track of day-to-day
operations and monitor any associated operational risks of our Group and to formulate
policies and resolutions to mitigate or resolve these risks;
 the engagement of an independent internal control consultant to assist our Group in
reviewing and to provide recommendations on improving our internal control system.
Taking into account the recommendation of such review by the independent internal
control consultant, we enhanced our internal control system accordingly;
 the establishment of the Audit Committee which will review our Group’s internal
control system and procedures for compliance with the requirements prescribed by the
applicable laws, rules and regulations;
 the appointment of Sinolink Securities (Hong Kong) Company Limited as our
Company’s compliance adviser pursuant to Rule 3A.19 of the Listing Rules upon the
Listing to advise it on compliance with the Listing Rules;
 the engagement of external legal advisers to advise our Group on compliance with and
to provide it with updates on the changes in the Listing Rules and the applicable laws,
rule and regulations from time to time and as required; and
 the provision of training to relevant employees in order to enhance their industry
knowledge and to encourage an encompassing culture of risk management ensuring
that relevant employees are aware of and responsible for risk management.
In addition to the risk management measures we had adopted as discussed above, we have
identified certain potential risks that are crucial to our operations and we have adopted
corresponding internal control measures to mitigate such risks.
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Maintenance of confidentiality
In order to protect the proprietary technology, know-how, trade secrets and other
intellectual property rights of our customers and us, in our agreements with our customers,
suppliers and subcontractors, it is a contractual obligation that information pertaining to our or
our customers’ design and commercial secrets are generally kept confidential from any third
parties or general public.
To enhance our intellectual protection, we also implement on site measures that we only
allow authorised person to export files from our server. Physical access to certain areas such as
laboratories and storage and data room is restricted and log-in is required in order to access data
stored in our server. Furthermore, we have entered into confidentiality agreements with our
employees pursuant to which any breach will lead to termination of employment and liabilities.
We have also devised confidential information management policy which classifies information
into different classes with different level of protection. Our policy also outlines the employees’
obligations to maintain confidentiality with respect to information pertaining to our operations
and production to prevent direct or indirect leakage of confidential information. Surveillance
cameras are installed in certain areas where confidential information is stored; and employees
are required to complete a document request form to be approved by designated personnel before
printing out any confidential confirmation such as technical drawings of our products.
Property Laws and Regulations Compliance
We have implemented the following internal control measures to ensure our compliance
with property laws and regulations:
 before we purchase any properties and enter into any new lease, our Directors and
senior management will conduct enhanced due diligence to ensure there are no title
issues and legal issues. The enhanced due diligence includes, among others, (i)
examining the relevant land use right certificates and building title ownership
documents; (ii) verifying such certificates and documents with the land administration
authority and building administration authority and confirming the ownership; (iii)
checking with building administration authority to ascertain whether any mortgage,
charge or other security are attached to the building; and (iv) conducting site visits;
 we will obtain the requisite licenses and permits, including but not limited to land use
right certificates and building ownership certificates, as and when required by the laws
and regulations and follow the requisite procedures relating to construction and work
completion of buildings;
 we will seek our PRC Legal Advisor’s opinion on the issues relating to title of
properties and compliance of property laws and regulations;
BUSINESS
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 we have established a set of policies and procedures for property purchase and leasing
arrangements to enhance our internal approval process;
 for self-construction projects, we have established a set of policies and procedures to
obtain relevant permits for acceptance, including but not limited to construction land
use planning permit and construction project planning permit, construction permit; and
 our Directors will be responsible for monitoring the implementation of the above
measures and ensuring compliance in the future.
Having considered the facts and circumstances leading to the non-compliance incidents
with respect to relevant property laws and regulations and details and relevance of our Group’s
internal control measures to avoid recurrence of the non-compliance incidents, our Directors are
of the view that, and the Sole Sponsor concurs, the above measures are effective and adequate.
BUSINESS ACTIVITIES IN COUNTRIES SUBJECT TO INTERNATIONAL SANCTIONS
The United States and other jurisdictions or organisations, including the EU, the United
Nations and Australia, have comprehensive or broad economic sanctions targeting certain
countries, or against industry sectors, groups of companies or persons, and/or organisations
within such countries. During the Track Record Period, we generated a small amount of our
revenue from the sales and/or deliveries of our products to customers located in the Relevant
Countries. Our revenue generated from sales and/or deliveries to the Relevant Countries
amounted to RMB5.0 million, RMB7.4 million and RMB5.9 million, representing 0.5%, 0.6%
and 0.4% of our total revenue for each of FY2022, FY2023 and FY2024, respectively. Other
than our sales and/or deliveries to the Relevant Countries, we did not sell or deliver our products
to any other countries subject to International Sanctions.
As advised by our International Sanctions Legal Advisers, our activities during the Track
Record Period did not appear to implicate restrictions under International Sanctions laws and
regulations. This conclusion is based on the fact that after full due diligence investigation of the
Group’s international business transactions, including all applicable customer and supplier
relationships, no transactions by the Group were observed that could be categorized as either
primary nor secondary sanctioned activity in the Relevant Countries. Further, given the scope of
our Global Offering and the expected use of proceeds as set out in this prospectus, our
International Sanctions Legal Advisers are of the view that the involvement by parties in the
Global Offering will not implicate any applicable International Sanctions on such parties,
including our Company and its subsidiaries, their respective investors, shareholders, directors
and employees and the Stock Exchange, the HKSCC and the SFC, or any person involved in the
Global Offering and accordingly, the sanction risk exposure to our Company and its subsidiaries,
their respective investors, shareholders, directors and employees and persons who might, directly
or indirectly, be involved in permitting the listing, trading and clearing of the H Shares
(including the Stock Exchange, its listing committee and related group companies, the HKSCC
and the SFC) is very low.
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Our Directors confirm that we have not been notified that any International Sanctions
would be imposed on us for our sales transactions to customers located in the Relevant
Countries during the Track Record Period. None of our customers from those Relevant Countries
are specifically identified on the SDN List by OFAC and our business activities do not involve
industries or sectors that are currently subject to International Sanctions and therefore are not
deemed to be prohibited activities under the relevant International Sanctions. As at the Latest
Practicable Date, we have completed the delivery of products to and ceased all our sales
transactions with customers located in the Relevant Countries. Our Directors confirm that we do
not intend to conduct any further business or sell any of our products to customers located in the
Relevant Countries or other countries subject to International Sanctions in the future. We had
adopted relevant internal control policy which involves internal control measures including (i)
risk identification process by assessment of and good recording keeping of customers’
background information and transactions, (ii) on-going monitoring of particulars and proceedings
of transactions and (iii) designation of senior management for regular monitoring and review of
effectiveness of relevant measures as well as regular reporting to the Board.
TRANSFER PRICING
During the Track Record Period, our Group’s intra-group transactions, which involved
subsidiaries in Hong Kong, the PRC and the U.S., primarily included tangible goods buy-sell,
with total revenue amount of RMB1,089.7 million, RMB1,251.8 million, and RMB1,583.9
million in FY2022, FY2023 and FY2024, respectively (collectively, the “ Covered
Transactions ”).
The following diagram sets forth our transaction flow in respect of the Covered
Transactions:
Third-party
suppliers
Payment
Group
companies
Third-party
entities Payment flow
Payment Payment Payment
Payment
Payment
Our Company
PRC
manufacturing
entities
PRC
trading entities
U.S.
trading entity
Hong Kong
trading entities
Third-party
customers
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The roles, functions and business activities of each of the relevant subsidiaries (the
“Relevant Subsidiaries ”) in our Group are as follows:
 Our Company – headquarters of our Group and primarily engaged in R&D, product
design, procurement, manufacture, quality control, inventory management, logistics,
marketing, sales, after-sales services, payment requests and receipts, and general
administrative management. It also bears market risks, R&D risks, production risks,
product liability risks, credit risks, exchange rate risks and some inventory risks. It
owns tangible assets and intangible assets such as patents and trademarks necessary
for production and office operation. It undertakes relatively comprehensive and
complex functions.
 PRC manufacturing entities – namely, X.J. Electronics (Shenzhen), X.J. Electrics
(Shenzhen), Innovative (Jiangyin), MeiNuoWei Electrics and X.J. Electrical
Appliances, which are primarily engaged in procurement, manufacture, quality control,
inventory management, logistics, after-sales services, general administrative
management, as well as some R&D, design and marketing of different categories of
products. They also bear production risks, inventory risks, product liability risks,
exchange rate risks, and some market risks and R&D risks. They own tangible assets
and intangible assets such as software, patents, and trademarks necessary for
production and office operation. They are similar in nature to manufacturers that
undertake certain risks.
 PRC trading entities – namely, Nawu Technology, Nuocheng Electronic Commerce and
Aigrentrading, which are primarily engaged in sales activities of OBM products on
e-commerce marketplaces, after-sales services, payment requests and receipts, general
administrative management and bearing some logistics costs. They also bear some
market risks, credit risks, exchange rate risks, limited product liability risks and
inventory risks. They own tangible assets and intangible assets such as trademarks
necessary for production and office operation. They are similar in nature to
distributors that undertake routine risks.
 Hong Kong trading entities – namely, THS Industrial and X.J. Group (HK), which are
primarily engaged in overseas sales activities of different categories of products,
marketing, payment requests and receipts, general administrative management, some
after-sales services and bearing some logistics costs. Comparing to PRC trading
entities, while Hong Kong trading entities also bear market risks, credit risks,
exchange rate risks and limited product liability risks, they do not engage in OBM
business and therefore do not hold inventory and do not bear inventory risks. They
own tangible assets necessary for production and office operation. It follows that they
are similar in nature to distributors that undertake limited risks.
BUSINESS
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 U.S. trading entity – namely, Weighmax, which is primarily engaged in sales activities
in the United States market, inventory management, logistics, payment requests and
receipts, general administrative management and some after-sales services. It bears
some market risks, credit risks, exchange rate risks, limited inventory risks and
limited product liability risks. It owns tangible assets and intangible assets such as
trademarks necessary for production and office operation. It is similar in nature to a
distributor that undertakes routine risks.
During the Track Record Period, Goodlife Global, PT Dingsheng, and X.J. Electrics
(Thailand) either had insignificant/no business operation or had no intra-group transactions. On
the other hand, while, X.J. Electrical Appliances, being the operating corporate entity of XJ
Intelligence Factory, was established in 2020, XJ Intelligence Factory was under construction
before June 2024 and therefore X.J. Electrical Appliances was only at its initial stage of
operation during the Track Record Period as it only commenced operation in June 2024.
Transfer Pricing Assessment
We have conducted transfer pricing review on the Covered Transactions of the Relevant
Subsidiaries based on the following guidelines, laws and regulations in the PRC, Hong Kong and
the United States:
 OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax
Administrations (the “ OECD Transfer Pricing Guidelines ”);
 the relevant transfer pricing laws and regulations in the PRC, including the
Announcement of the State Administration of Taxation on Matters Relating to the
Improvement of Affiliated Declaration and Contemporaneous Document Management
(ʮѓ ) and the
Announcement of the State Administration of Taxation on Promulgating the
Administrative Measures for Special Tax Investigation Adjustments and Mutual
Agreement Procedures (ʝ՘ਠ೻ҏ၍
ʮѓ);
 the relevant transfer pricing laws and regulations in Hong Kong, including Inland
Revenue (Amendment) (No. 6) Ordinance 2018 and Departmental Interpretation and
Practice Notes (DIPNs) No. 58, 59 and 60; and
 the relevant transfer pricing laws and regulations in the United States: Internal
Revenue Code (IRC) section 482.
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According to the OECD Transfer Pricing Guidelines, intra-group transactions should be
conducted on an arm’s length basis to avoid distorted taxable income in different jurisdictions.
We have adopted the transactional net margin method (“ TNMM ”) as the transfer pricing method
for reviewing the Covered Transactions. TNMM is commonly adopted to review intra-group
transactions involving tangible goods buy-sell and therefore would be the most appropriate
transfer pricing method to assess whether the transfer pricing arrangements related to the
Covered Transactions were consistent with the arm’s length principle.
Under TNMM, the ranges of reasonable profit levels are determined by reference to the
interquartile range of weighted average profit levels of comparable entities (the “ Comparable
Profit Level Range(s) ”). We have applied the net cost plus markup rates and the operating
margin rates of uncontrolled third-party comparable entities as the profit level indicators, to
provide a basis for the analysis of the controlled intra-group transactions involving our Group’s
manufacturing entities and trading entities, respectively. According to the OECD Transfer
Pricing Guidelines, if the profit level of an entity is not based on the arm’s length price, it is
necessary to consider whether any adjustment to the profit of the tested entity should be made to
achieve a profit level comparable with that under the arm’s length principle. Following the
OECD Transfer Pricing Guidelines, we engaged an independent transfer pricing consultant,
Beijing Tian Zhi Tax Agent Co., Ltd Shenzhen Branch (“ Transfer Pricing Consultant ”), to
conduct benchmark studies on the Covered Transactions (the “ Benchmark Study ”). The
following table set out the Comparable Profit Level Ranges adopted for the Benchmark Study:
Comparable Profit Level Range
in 2021 to 2023
(Note 1)
First quartile Median Third quartile
For the comparison with:
Our PRC and Hong Kong trading
entities 0.16% 1.41% 3.27%
Our US trading entities 1.81% 2.34% 4.73%
Our PRC and overseas manufacturing
entities (except for HNW
Electronics which produces PCBA
for internal use) 2.55% 4.99% 11.72%
HNW Electronics
(Note 2) 1.34% 3.64% 4.83%
Notes:
1. As informed by our Transfer Pricing Consultant, at the Latest Practicable Date, 2024 data of the majority
of comparable companies had not been released; therefore, there was no sufficient information for
updating the Benchmark Study to cover 2024.
2. As HNW Electronics does not produce home appliances, the applicable Comparable Profit Level Range
refers to the profit levels of comparable entities which are PCBA manufacturers.
BUSINESS
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Based on the Benchmark Study prepared based on representations made by and information
provided by the Company, our Transfer Pricing Consultant is of the view, and the Sole Sponsor
concurs, that our intra-group transactions in the PRC, Hong Kong and the United States during
the Track Record Period align with the arm’s length principles that no transfer pricing
adjustment that trigger additional tax was identified from applicable transfer pricing laws and
regulations perspective; and our Group as a whole is not exposed to the risk of underpayment of
corporate income tax in the PRC, Hong Kong and the United States where the Relevant
Subsidiaries are located during the Track Record Period.
During the Track Record Period and up to the Latest Practicable Date, we were not aware
of any inquiry, audit, investigation or challenge by any relevant tax authorities in the PRC, Hong
Kong and the United States in relation to our intra-group transactions.
Subsidiaries involved in transfer pricing arrangements need to comply with the applicable
laws and regulations in the relevant jurisdictions in which these subsidiaries operate imposing
requirements on transfer pricing documentation. According to the OECD Transfer Pricing
Guidelines, we are required to maintain master files which contain relevant information in
relation to, among others, organizational structure, business, intangibles, our inter-company
financial activities as well as financial and tax positions. We are also required to maintain local
files which contain transfer pricing analysis in the context of local tax system. Based on the
review of our records, we have prepared transfer pricing documents as required.
Based on the representations made by and information provided by the Company, our
Transfer Pricing Consultant is of the view, and the Sole Sponsor concurs, that we have complied
with all applicable transfer pricing laws and regulations in the PRC, Hong Kong and the United
States in all material respects, including transfer pricing documentation requirements, during the
Track Record Period.
THIRD-PARTY PAYMENT ARRANGEMENTS
Background
Certain customers (the “ Relevant Customer(s) ”) settled their payments through third-party
payors (the “ Third-party Payment Arrangement(s) ”). For FY2022 and FY2023 and FY2024,
there were 31, 18 and 10 Relevant Customers, respectively. During the Track Record Period,
third-party payors (“ Third-party Payors ”) primarily consisted of business partners of the
Relevant Customers who may be affiliated companies under the same corporate group of our
customers (such as fellow subsidiaries or shareholders of the customers), third-party financial
institutions, third-party procurement or logistic agencies, and customers of the Relevant
Customers. For FY2022 and FY2023 and FY2024, there were 38, 21 and 12 Third-party Payors,
respectively. The aggregate amounts of third-party payments were RMB37.5 million, RMB21.0
million and RMB6.5 million, respectively, representing 3.4%, 1.8% and 0.4% of our total
revenue for the corresponding years. Our Directors confirm that all Third-party Payors are
independent of our Group.
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During the Track Record Period, regardless of jurisdictions in which they are located, our
customers generally enters into sales contracts with our subsidiaries incorporated in the PRC or
Hong Kong and are requested to make their payments to the Group’s bank accounts in the PRC
or Hong Kong.
Reasons for Accepting Third-party Payment Arrangements
During the Track Record Period and up to the Latest Practicable Date, other than simply
accepting third-party payments, our Directors confirm that we had not proactively initiated any
Third-party Payment Arrangements. To the best knowledge of our Directors, the Relevant
Customers arranged third-party payments because (i) they may experience limited cash flow or
for better internal cashflow management from time to time and therefore the Relevant Customers
might procure their Third-party Payors to settle their payments earlier to prevent breaching their
payment obligations owed to us or (ii) to avoid the complexity of setting up or operating
accounts for overseas payment to Hong Kong/the PRC. On the other hand, from our perspective,
(i) third-party payments did not create significant inconvenience to us, (ii) it is beneficial for us
to receive payments from customers as early as possible, (iii) we could confirm the amounts of
third-party payments received with the Relevant Customer(s) and thereby mitigating the risks
associated with receiving third-party payments and (iv) our Directors believe, and Frost &
Sullivan confirmed, that it is not uncommon for home appliances importers to settle their
corporate transactions through third-party payors for administrative convenience and prompter
payment; in particular, it is not uncommon for sizable international home appliances importers to
settle their corporate transactions through their affiliated companies such as fellow subsidiaries
or shareholders under the same corporate group. Moreover, as advised by our Hong Kong Legal
Counsel and our PRC Legal Advisers, as the concept of payment by a third party itself is not
unlawful, the Third-party Payment Arrangements are not illegal arrangements. Therefore, we did
not object to Third-party Payment Arrangements initiated by the Relevant Customers.
Internal Control Measures and Cessation of Third-party Payment Arrangements
Historically, to manage risks associated with Third-party Payment Arrangements, during the
Track Record Period, as part of our internal control, for customers who were unable to directly
settle payments with us at the relevant time, we conducted verification procedures to ascertain
the relationship between the Third-party Payors and the Relevant Customers, including obtaining
confirmation from the Relevant Customers in which the relationship between third party payors
and the Relevant Customers was set out. It is also confirmed in the relevant confirmations that
the remittance payments are payments for goods. We had also conducted background search on
the internet to ascertain the relationship between the Third-party Payors and the Relevant
Customers as far as possible.
BUSINESS
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During the Track Record Period and up to the Latest Practicable Date, other than simply
accepting third-party payments, our Directors confirm that we had not proactively initiated any
of the Third-party Payment Arrangements. As further confirmed by our Directors, the Relevant
Customers would only inform us of the Third-party Payment Arrangements after the payments
have been settled by the Third-party Payors. Accordingly, to prevent re-occurrence of the
third-party payments in the future, we have enhanced our internal control measures for
monitoring deposits to our bank accounts:
(i) we have issued an internal notice to all our employees to prohibit them from accepting
payment under any third-party payment arrangements;
(ii) we have issued an notice to all customers that they shall settle their payments to us
directly;
(iii) our finance department has developed templates for managing the settlement of
accounts receivables which shall include transaction description, customer name,
payment date, account name of the customers, any third-party payment arrangement
involved and any irregularities noted; and
(iv) we have assigned personnel in our finance department for monitoring incoming
payment. In the event of re-occurrence of third-party payment arrangements, the
assigned personnel shall report to the department manager for further action.
To put an end to all Third-party Payment Arrangements, we have sent an email to all
present customers to remind them not to settle their payment through Third-party Payors. Our
Directors confirm that since the end of 2024 and up to the Latest Practicable Date, no payments
from customers were settled through Third-party Payors. Given the immaterial revenue
contribution from the Relevant Customers through Third-party Payment Arrangements during the
Track Record Period, our Directors are of the view that the cessation of Third-party Payment
Arrangements will not have any material impact on our business, results of operations and
financial performance.
Legal Implications relating to Third-party Payment Arrangements
During the Track Record Period, our products were mainly delivered to the U.S. However,
since our major operating subsidiaries are incorporated in the PRC or Hong Kong, it follows that
Hong Kong and the PRC would be the more appropriate and effective forum for Third-Party
Payors (in other jurisdictions) to enforce their right (if any) for refund of Third-Party Payments,
against us. Also, generally our customers (regardless of jurisdictions in which they are located)
enter into sales contracts with our subsidiaries incorporated in the PRC or Hong Kong and are
requested to make their payments to our bank accounts in the PRC or Hong Kong. Hong Kong
Legal Counsel’s and PRC Legal Advisers’ view as to the legal implications relating to
Third-party Payment Arrangements are therefore disclosed as follows.
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Legality
As advised by our Hong Kong Legal Counsel, there is no law prohibiting the Third-party
Payment Arrangements. It is a fundamental principle that one may make its own arrangement on
payment in any business transaction unless prohibited by the laws. Therefore, the Third-Party
Payment Arrangements are legal.
As advised by our PRC Legal Advisers, the Third-party Payment Arrangements are
assignments of liability from the Relevant Customers to the Third-party Payors. Our PRC Legal
Advisers are of the view that the Third-party Payment Arrangements do not contravene or
circumvent applicable laws or regulations in the PRC.
Possible claims from the Third-party Payors for return of funds
As advised by our Hong Kong Legal Counsel, while the Group and the Relevant Customers
had contractual relationship, there is no contractual relationship between the Group and the
Third-party Payors; therefore, the Third-party Payors (including their liquidators, if appointed)
certainly cannot sue based on contract. Moreover, while the Third-party Payors (including their
liquidators, if appointed) may sue if the money is paid under mistake or as a consequence of
some fraud or wrongful act of the payee, there is no evidence suggesting that those situations
occurred in the context of the Group. During the Track Record Period and up to the Latest
Practicable Date, we had not received any such request or claim from any Third-party Payor.
Our Hong Kong Legal Counsel therefore considered that the Third-party Payors (including their
liquidators, if appointed) will not have any possible claim against our Group in connection with
the Third-party Payment Arrangements. Based on the above, our Hong Kong Legal Counsel
advised that the litigation risks of the Group, including possible claims from the Third-party
Payors (or their liquidators, if appointed) are remote.
As advised by our PRC Legal Advisers, (i) the Third-party Payment Arrangements are
assignments of liability from the Relevant Customers to the Third-party Payors and (ii) the
Third-party Payment Arrangements without a delegation of payment letter and/or tri-party
payment agreement expose the transaction(s) to the risk of repayment to be claimed by the
Third-party Payors due to the lack of the consents of all relevant parties. However, given that it
is confirmed by the Relevant Customers that the relevant Third-party Payors were entrusted by
the Relevant Customers to make the Third-party Payment Arrangements and there had been no
dispute or potential dispute in relation to the Third-party Payment Arrangements, in the event of
a claim by the Third-party Payors, our Group would be able to reimburse and claim any loss
resulting from such claim by the Third-party Payors from the Relevant Customers. During the
Track Record Period and up to the Latest Practicable Date, no litigation or claim had been made
by the Third-party Payors in connection with the Third-party Payment Arrangements.
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Money laundering risks
Our Hong Kong Legal Counsel advised that, section 25(1) of the Organized and Serious
Crimes Ordinance (Chapter 455 of the Laws of Hong Kong) provides that a person commits an
offence if he or she deals with that property, knowing or having reasonable grounds to believe
that any property, in whole or in part, directly or indirectly, represents any person’s proceeds of
an indictable offence. The test is whether any reasonable person looking at the grounds would
believe that the property dealt with represents the proceeds of an indictable offence. Our Hong
Kong Legal Counsel considered the following:
(i) the business transactions involving the Third-party Payment Arrangements were
justifiable and genuine that the business transactions and payments were supported by
sales documents;
(ii) the business transactions involving the Third-party Payment Arrangements comprised
an insignificant portion of the overall business of the Group (not more than 0.7% for
each year during the Track Record Period);
(iii) the Relevant Customers were asked to give written confirmations to declare that their
relationships with the Third-party Payors and that there was no dispute or difference
regarding the authorization for payment by the Third-party Payors; and
(iv) the Third-party Payment Arrangements have been adopted many times for years with
no dispute, arising. During the Track Record Period and up to the Latest Practicable
Date, as confirmed by our Directors, our Group had not been subject to any dispute
nor investigation in relation to the legitimacy of the Third-party Payment
Arrangements.
Considering the above and that fact that the courts of Hong Kong will now take into
account the subjective and honest belief of an accused (i.e. our Group in the present case)
regarding the transaction in question, our Hong Kong Legal Counsel is of the view that there
was no ground for our Group to believe the Third-party Payment Arrangements as instructed by
the Relevant Customers involved the proceeds of an indictable offence. Therefore, the risk of
our Group being accused or prosecuted of money laundering is remote and it does not pose any
risk to our business.
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In accordance with our PRC Legal Advisers, Article 191 of the Criminal Law of the PRC
stipulates that whoever commits any of the following conducts to cover up or conceal the origin
and nature of any proceeds as well as any gains accrued by such proceeds of a drug crime, an
organized crime of gangland in nature, a terrorist crime, a crime of smuggling, a crime of
corruption or bribery, a crime of disrupting the order of financial administration, or a crime of
financial fraud shall commit the crime of money laundering: (1) providing any account for the
aforesaid funds; (2) converting property into cash, negotiable instruments, or denominated
securities; (3) transferring funds by bank transfer or any other means of payment and settlement;
(4) transferring assets across border; (5) otherwise covering up or concealing the origin and
nature of any proceeds of crime and gains accrued by such proceeds. Therefore, a company
commits the crime of money laundering only when it commits the related acts of assistance in
transferring the funds for the purpose of covering up or concealing the origin and nature of any
proceeds of the aforementioned crimes as well as any gains accrued by such proceeds.
Our Group and the Relevant Customers entered into contracts based on true declarations of
wills. We actually delivered goods to the Relevant Customers to fulfill orders placed by the
Relevant Customers. Third-party Payment Arrangements, although came from the Third-party
Payors, had been confirmed by the Relevant Customers as payments for goods under their
orders. Accordingly, our PRC Legal Advisers advised that there was no commitment of related
assisting acts in transferring the funds for the purpose of covering up or concealing the origin
and nature of any proceeds of the aforementioned crimes as well as any gains accrued by such
proceeds. Therefore, our PRC Legal Advisers are of the view that the risk of the Third-party
Payment Arrangements be deemed as money laundering under the Criminal Law of the PRC is
not high.
ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE
Governance
We are fully committed to integrating environmental, social and governance (“ ESG”)
considerations into our business operations for sustainable growth and better business resilience
in response to the transition to a low-carbon economy. We have established a robust ESG
governance structure.
Our Board has the overall and collective responsibility for the oversight of ESG issues with
an emphasis on the alignment with our Group’s future development and positioning.
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Delegated by the Board, an ESG working group, consisting of one Executive Director and
representatives from different business departments, has been established to assist the Board in
driving the planning, coordinating and implementing ESG initiatives and integrating
sustainability in our daily operation. The ESG working group members possess expertise and
knowledge in the management of ESG matters, such as employment and labour practices,
occupational health and safety, product responsibility, supply chain management and business
ethics. The ESG working group is responsible for keeping abreast of the latest ESG-related laws
and regulations, conducting materiality assessments of ESG-related issues and assessing how we
adapt our business in light of climate change, and continuously monitoring the implementation
of measures to address our ESG-related responsibilities. The ESG working group will also
prepare the ESG report of our Group on an annual basis for the approval of the Board. This will
allow our Board to analyse and disclose material ESG matters, risk management,
accomplishment and performance of our Group.
Our Group will comply with the ESG reporting requirements upon Listing pursuant to Rule
13.91 of the Listing Rules, and disclose qualitative and quantitative information and data
pursuant to Appendix C2 to the Listing Rules in its ESG Reporting Guide.
Identification and Management of ESG-Related Risks and Opportunities
The ESG working group is responsible for identifying, evaluating, prioritising and
managing material ESG-related risks and opportunities. Corresponding measures have been
formulated and implemented to mitigate material ESG-related risks and capture potential
ESG-related opportunities. The ESG working group submits an ESG risk and opportunity
assessment report to the Board. The Board regularly reviews the effectiveness of the ESG risk
management process and provides guidance when necessary and retains ultimate responsibility
for oversight of our Group’s risk management activities.
The ESG risk and opportunity assessment identifies material ESG risks and opportunities
relevant to our Groups, as either negative or positive, actual or potential, based on our business
nature, industry research, as well as with reference to local and international reporting
frameworks. The identified material ESG risks are evaluated by their likelihood and significance
in terms of business, strategic, and financial impacts, and are given inherent risk rating scores.
Residual risk rating scores are then produced by considering how our ESG-related risk control
measures may impact the significance and likelihood of the risks. The ESG risks are then ranked
and prioritised according to their residual risk rating scores. A similar methodology is devised to
evaluate the significance and likelihood of material ESG opportunities.
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Set forth below is a summary of identiﬁed material ESG-related risks and opportunities.
ESG-related risks Timeframe Potential impacts Our responses
Climate-related physical risks
Acute Risks
Climate change
leading to increased
severity and
frequency of
extreme weather
events (e.g.,
typhoons, heavy
rains, floods,
severe cold, and
heatwaves)
Short, medium
and long
term
 Damage to our
Group’s properties
or facilities,
increasing costs
for maintenance
and preventive
measures
 Potential threats to
employees’ safety
 We have established a climate change
policy and incorporated climate change
into our internal risk management
system, including emergency plans and
rescue drills in the events of extreme
weather events. We have also secured
appropriate insurance coverage for our
properties or facilities to mitigate the
potential financial losses due to damages
in extreme weather events.
 We closely monitor local weather
forecast and remind employees to take
preventive measures in the event of
adverse weather events to ensure
employee safety.
Climate-related transition risks
Policy and legal
risks
Evolving
climate-related laws
and regulations in
transition to a low-
carbon economy,
such as the new
climate- related
disclosure
requirements
introduced by the
Hong Kong Stock
Exchange
Medium to long
term
 Increased
compliance and
operating costs
 We have established an internal risk
management policy to closely monitor
and access the latest development in
laws, policies, and regulations, as well
as their impact on our Group’s
operations. We will proactively identity
and implement appropriate compliance
measures and adapt our business
strategies to mitigate the increased
compliance and operating costs resulting
from regulatory changes.
 We promptly communicate policy
updates to employees to ensure
compliance.
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ESG-related risks Timeframe Potential impacts Our responses
Market and
technology risks
Changes in consumer
preferences towards
products with lower
environmental
footprint due to
growing concern
over climate change
Medium to long
term
 Reduced revenue  We have established a research and
development centre to invest in and
promote the development of low-carbon
products.
 We have developed an environmentally
friendly production processes and have
obtained ISO50001:2018 Energy
Management System Certiﬁcation,
ISO14001:2015 Environmental
Management System Certiﬁcation, and
the Hubei Provincial (Provincial Level)
Green Factory Certiﬁcation.
 We integrate environmental
considerations into the designing and
marketing of our small home appliances,
emphasising sustainability component in
our product offerings.
Other ESG-related risks
Supply chain risks
in terms of
product quality
and supply
stability
Failure to meet
environmental,
food- grade, and
quality standards in
sales regions due to
poor supply chain
stability or poor
suppliers’ product
and service quality
Short, medium
and long
term
 Increased
reputational risks,
which may result
in reduced revenue
 We conduct thorough evaluations of
potential suppliers to assess their
ESG-related performance and perform
product quality inspections, ensuring
compliance with our requirements in
terms of raw material quality and supply
chain ESG performance.
 We require material suppliers to sign the
“Environmental Substance Compliance
Commitment” and the “Food-Grade
Compliance Declaration” to ensure that
all products provided to us, including
materials and additives used in
manufacturing, fully meet our product
quality requirements.
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ESG-related risks Timeframe Potential impacts Our responses
Occupational health
and safety risks
Failure to meet
occupational health
and safety
standards or
requirements
Short, medium
and long
term
 Increased
reputational risks
and compliance
costs, which may
result in reduced
revenue
 We have established and communicated
our occupational health and safety
policies to our employees. These include
conducting regular emergency drills and
safety inspections at our manufacturing
facilities, as well as providing relevant
training and health checks.
 We conduct regular assessments of our
production processes to ensure robust
safety measures are in place.
Accordingly, we have obtained
ISO45001:2018 Occupational Health and
Safety Management System Certification
in respect of our manufacturing
processes.
Talent attrition risk
Ineffective human
resource planning
or failure to
provide competitive
employees benefits,
leading to talent
attrition
Short, medium
and long
term
 Increased
operational risk in
terms of service
quality, which may
result in reduced
revenue
 We have developed an appropriate
employee compensation management
policy, which ensures the provision of
competitive compensation, and staff
beneﬁts.
 We have established a human resources
management policy to ensure that each
functional department is adequately
staffed to maintain operational efficiency.
Climate-related opportunities
Products and
services
Increased market
demand for energy-
saving small home
appliances
Short to
medium term
 Increased revenue
from sales of
energy-saving
small home
appliances
 We continue to engage in technological
breakthroughs and product upgrades and
development, as well as implement
quality control system, enabling us to
provide customers with energy-saving
and high-quality small home appliances.
 We have established a product quality
control system, which is certified with
ISO9001:2015 Quality Management
System Certification and ISO14001:2015
Environmental Management System
Certification.
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ESG-related risks Timeframe Potential impacts Our responses
Energy Source
Enhancing financial
and ESG
performance
through energy-
efficiency
initiatives
Medium to long
term
 Reduced energy
consumption and
costs through
engaging
renewable energy
projects
 Our Group actively responds to and
practices the national clean energy
policies. We will invest on certain
manufacturing properties for distributed
photovoltaic power generation energy
management facilities, which converts
clean, renewable solar energy into
electricity, enabling us to improve
energy efficiency and reduces carbon
footprint.
ESG Policy
We are committed to incorporating ESG factors into our business decision-making process.
As such, we have formulated a group-level ESG policy to guide our actions and measures to
enhance our sustainability performance.
Environmental Protection
Our environmental policy outlines our green practices and measures (as far as practicable),
with a focus on emission reduction, waste reduction, resource conservation, protection of
environmental and natural resources, as well as addressing climate change. In addition, we have
obtained the ISO14001:2015 Environmental Management System certification and
ISO50001:2018 Energy Management System certification in respect of small home appliance
manufacturing and management mechanism of our production facility in Hubei to ensure our
environmental management practices meet international standards and continuously improve our
environmental performance. We strictly adhere to local environmental protection laws and
regulations during production, managing wastewater, exhaust gases, and noise properly, and
arranging at least two annual monitoring sessions by third-party professional testing agencies to
ensure emissions comply with local emission standards.
Air Emissions Management
Our main sources of air emissions come from the production processes and logistics. We
have implemented different measures to manage the air emissions, such as using exhaust gas
treatment facilities to collect air emissions produced from production processes, and using
activated carbon filtration for purification before high-altitude discharge.
We are continuously exploring measures to minimise air emissions from our business
operations, including ensuring the proper maintenance of company vehicles and considering the
adoption of electric vehicles.
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Energy and Greenhouse Gas Emission Management
Our major sources of energy consumption and greenhouse gas (GHG) emissions (Scope 1
and Scope 2) come from fuel consumption (Scop e 1 – direct emissions) and purchased electricity
(Scop e 2 – energy indirect emissions). We actively respond to and strive to align with national
clean energy policies by investing in a distributed photovoltaic energy management facility in
our properties. The facility, through the distributed photovoltaic systems, converts clean,
renewable solar energy into electricity, providing long-term economic benefits for our Group. It
effectively reduces our carbon emissions, further expanding the use of green energy and laying a
solid foundation for our Group’s comprehensive green and low-carbon transformation.
Additionally, we have adopted a series of energy-saving measures, including using
energy-efficient equipment and LED lighting systems, utilising natural light, requiring
employees to turn off lights and electrical equipment before leaving, and considering the
possibility of replacing existing vehicles with electric vehicles in the future.
Water Management
The water consumption of our Group mainly comes from the use of municipal water in our
operations. To conserve water resources, we have adopted a series of water saving measures,
including purifying wastewater through treatment equipment for recycling, timely repairing
dripping taps, adopting water equipment that meets water efficiency label requirements, as well
as monitoring water consumption. We also remind employees to minimise water usage through
internal communication channels.
Waste Management and Resource Utilisation
Our non-hazardous waste primarily includes general industrial solid waste and household
waste. General industrial solid waste includes scraps, metal shavings, grinding wheels, and
collected dust, which are collected and handled by licensed third-parties for recycling or
disposal. Household waste is collected and taken up by local sanitation departments. Hazardous
waste includes used rags and gloves, waste paint pipes, used activated carbon, and paint cans.
Hazardous waste is temporarily stored in the plant’s hazardous waste storage areas before proper
handling by qualified third-party. To minimise waste generation and ensure proper waste
disposal, we have adopted relevant practices and measures, such as promoting waste recycling
through classification, reusing single-sided waste paper as needed, implementing double-sided
printing to reduce paper consumption, and reminding employees to minimise waste generation
through internal communication channels.
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Environmental Metrics and Targets
In 2024, our production facilities in Hubei, obtained provincial-level Green Factory
certification issued by Hubei Provincial Bureau of Economy and Information Technology ( ಳ̏
ʷᝂ ) in recognition of our performance in areas such as manufacturing facilities,
management systems, green energy engagement, and environmental impact. To further enhance
our ESG performance, we target to reach national-level green factory standards by 2030, which
primarily involve meeting the requirements across six dimensions including infrastructure,
management systems, energy and resource inputs, products, environmental emissions, and
overall performance, as stipulated in the General Principles for Assessment of Green Factory
 (GB/T 36132-2018).
Considering our business nature, we have also established the environmental targets below
to strengthen our sustainability efforts, assuming that we meet the expected business scale and
financial performance, including but not limited to the operation of production facilities in
Indonesia and the proposed production facilities in Thailand:
Key metrics Our targets
Electricity consumption
intensity (MWh/million
RMB revenue)
Using 2023 as the baseline year, we aim to reduce electricity
consumption intensity by 5% by 2030, with a reduction of
approximately 1% per annum on average from 2025 to 2030.
Water consumption
intensity (m3/ million
RMB revenue)
Using 2023 as the baseline year, we aim to reduce water
consumption intensity by 5% by 2030, with a reduction of
approximately 1% per annum on average from 2025 to 2030.
Use of green electricity We aim for at least 20% of our total electricity consumption
to come from green electricity by 2030, with an increase of
approximately 4% per annum on average from 2025 to 2030.
To achieve these environmental targets, we plan to adopt a holistic approach that includes,
but is not limited to, the following measures:
 Implementing LED lighting and energy-saving lamps in all production facilities and
office areas
 Using energy-efficient equipment and office appliances
 Creating an energy management center to monitor energy usage in real-time through
an intelligent data system
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 Implementing zoned lighting control and encouraging the utilization of natural light
 Optimizing production processes and technology
 Adopting water-saving equipment and raising employee awareness of water
conservation through various campaigns
 Establishing photovoltaic panels at production facilities and prioritizing the use of
renewable energy
The table below sets forth our GHG emissions and resource consumption during the Track
Record Period.
1
FY2022 FY2023 FY2024
Emissions 2
GHG emissions (tonnes CO 2 equivalent) 13,528.6 14,557.6 14,773.7
(i) Direct emissions (Scope 1)
(tonnes CO 2 equivalent) 2,458.3 2,254.0 2,020.0
(ii) Indirect emissions (Scope 2)
(tonnes CO 2 equivalent) 10,444.3 11,277.1 11,705.7
(iii) Other indirect emissions (Scope 3) 3
(tonnes CO 2 equivalent) 626.0 1,026.5 4 1,048.0
Total (Scopes 1, 2, 3) intensity
(tonnes CO 2 equivalent/
revenue in RMB million) 17.0 18.2 12.9
Use of Resources
Energy
Total (MWh) 28,952.2 29,214.4 28,741.8
(i) Purchased electricity (MWh) 17,119.0 18,484.0 19,186.5
(ii) Unleaded petrol (MWh) 555.4 629.4 656.5
(iii) Diesel (MWh) 589.8 759.7 718.5
(iv) Natural gas (MWh) 10,688.0 9,341.3 8,180.3
Intensity (MWh/revenue in RMB million) 36.3 36.5 25.1
Notes:
1. The data covers our Group’s core business operations.
2. The calculation of GHG emissions made reference to the GHG Protocol published by the World Business
Council for Sustainable Development (WBCSD) and the World Resources Institute (WRI). Scope 1
(Direct) emissions cover GHG emissions directly produced by business owned or controlled by our Group,
Scope 2 (Indirect) emissions cover GHG emissions of indirect energy resulted from purchased electricity
consumed by our operations, while Scope 3 (Other Indirect) emissions that occur in our Group’s value
chain.
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3. The Scope 3 emissions include the emissions generated from Category 6: business travel as well as
Category 7: employee commuting.
4. The increase in Scope 3 emissions in 2023 compared to 2022 was attributed to a rise in both the number of
employees and business travel expenses, resulting in higher emissions from Category 6 (Business Travel)
and Category 7 (Employee Commuting) under Scope 3.
FY2022 FY2023 FY2024
Use of Resources
Water
Total (m
3) 250,355.5 239,773.1 272,718.9
Intensity (m 3/revenue in RMB
million) 313.9 299.6 238.5
Social
We are committed to fostering a caring workplace culture that upholds diversity, equal
opportunities, health and safety and employee well-being.
Additionally, our factories obtained satisfactory result in Factory Capability and Capacity
Assessment (“ FCCA ”) as requested by our customers. We also appointed a third-party
certification agent for Business Social Compliance Initiative (“ BSCI ”) certification and
recognition in Sedex Members Ethical Trade Audits (“ SMETA ”) in responding our customers’
demands, in respect of our factory facilities, environmental protection, quality management
systems, human resources and training, occupational health and safety, non-discrimination,
prohibition of child labour, and business ethics.
Employment and Labour Practices
We aim to build an inclusive and diverse workplace. We uphold principles of equal
opportunity, diversity, and inclusiveness in all aspects of employment, including compensation,
recruitment, promotion, benefit, and welfare. We respect labour rights, and we strictly prohibit
the recruitment and use of child labour.
We actively provide internal and external training to equip our employees with professional
knowledge, skills, and competence. In addition, we strive to strengthen employee engagement by
regularly arranging leisure activities for our employees and maintaining two-way communication
with our employees, to increase their job satisfaction.
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Occupational Health and Safety
Maintaining a healthy and safe workplace remains our Group’s top priority. As part of our
efforts to uphold occupational health and safety standards, we have obtained the ISO45001:2018
Occupational Health and Safety Management System certification and Level 3 Safety Production
Standardisation Enterprise certification for our Hubei XJ Factory.
We strive to safeguard employees’ health and safety across all levels of business operation
by establishing and implementing health and safety policies and measures, including conducting
regular hazard inspections, and providing safety training, to ensure employee health and safety
at all levels of business operations.
Moreover, we have established safety production management policies that clearly outline
procedures for safety inspections, hazard identification and management, accident investigation
and handling, etc. Our Directors confirm that during the Track Record Period and up to the
Latest Practicable Date, we have not recorded any significant non-compliance or major incidents
related to occupational health and safety within our Group and any material personal injuries or
fatalities due to industrial accidents involving the Group’s employees, subcontractors, dispatched
staff or subcontracted staff.
To demonstrate our commitment to occupational health and safety, we have established the
following social targets:
Key metrics Our targets
Work-related fatalities Maintaining zero work-related fatalities for employees
Safety incidents Maintaining zero material safety incident for employees
Supply Chain Management
We have established a supplier management policy, with potential and existing suppliers
being evaluated on factors including employment practices, health and safety as well as
environmental protection. On-site inspections are conducted when necessary to ensure our
sustainability expectations are met.
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In addition, we require suppliers to sign a “Commitment to Ethical Business Conduct” to
regulate business behaviour, oppose commercial bribery, and maintain fair trade. To promote the
provision of more environmentally friendly products and services by suppliers, we require
material suppliers to sign an “Environmental Substance Compliance Commitment” and a
“Food-Grade Compliance Declaration” to ensure all products and materials provided, as well as
additives used in the manufacturing process, fully comply with relevant EU quality regulations,
including REACH standards, RoHS Directive, packaging material requirements under Directive
94/62/EC, and food-grade standards. We have also formulated a sustainable procurement policy
that requires prioritising the procurement of energy-efficient products, reusable materials, and
environmentally friendly or sustainability-promoting suppliers.
Product Responsibility
We are committed to delivering high-quality and safe products and services for our
customers. As such, we have obtained the ISO9001:2015 Quality Management Systems
certification in our production facility to strengthen our quality management practices. Our
products comply with various safety requirements, chemical and food-grade certifications, and
standards in different countries and regions. Additionally, we place great importance on product
quality testing and have established comprehensive quality control systems to effectively ensure
product quality.
To ensure customer satisfaction, we have formulated after-sales and complaint management
policies. During the Track Record Period, we have been assessed and obtained the AAA grade
After-Sales Service Integrity Certification, issued by a third party evaluation agent pursuant to
the national Corporate Credit Evaluation Criteria in China and did not receive any material
customer complaints. To protect customer privacy, we have developed a privacy policy covering
data and privacy requirements, including restricting user access to customer information. We
have developed relevant policies to guide employees to ensure the authenticity and reliability of
our promotional materials.
Business Ethics
We uphold the highest standards of business ethics, and strictly prohibit bribery, extortion,
fraud, money laundering and any other unethical practices. We have established preventive
measures, including anti-corruption policies, as well as implementing whistleblowing channels
for employees to report any potential misconduct that violates our ethical standards. The Board
is responsible for the oversight of these preventive measures and whistle-blowing procedures,
whereas senior management is responsible for implementing and monitoring the effectiveness of
these measures and procedures. As of the Latest Practicable Date, we were not aware of any
material non-compliance with any law or regulation or legal cases concerning bribery,
corruption, extortion, fraud and money laundering.
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Contribution to Community
We strive to contribute to the community and shoulder corporate social responsibility. For
example, we actively participate in rural revitalisation donations and charity donation activities
organised by the Red Cross Society of China. Additionally, in response to natural disasters and
other emergencies, we also actively respond to the social emergency (such as flood relief) and
emergency supplies donation. We will explore opportunities to establish focus areas for
community investment, as well as partnerships with social impact organisations where
appropriate.
Employee Information
The table below sets forth employee information:
Number of Employees
As at 31 December
2022 2023 2024
By gender
Male 1,023 1,123 1,117
Female 1,343 1,501 1,412
By employment type
Full-time 2,366 2,624 2,529
Part-time – – –
By age group
At or below 30 300 343 367
Between 31–50 1,718 1,876 1,815
At or above 51 348 405 347
By geographic location
Mainland China 2,360 2,618 2,518
United States 6 6 6
Indonesia – – 5
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Turnover Rate 1
By gender
Male 44.1% 49.6% 45.0%
Female 44.6% 45.9% 46.0%
By geographical location
Mainland China 44.5% 47.7% 45.7%
United States 14.3% – –
Indonesia – – –
Note:
1. The turnover rate is calculated by dividing the total number of employees in the designated categories who
left during each year, where applicable, of the Track Record Period (the “ Resigned Employees ”) by the
total number of the Resigned Employees and existing employees in the designated categories as of 31
December 2022, 2023 and 2024, and then multiplying by 100%.
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OUR CONTROLLING SHAREHOLDERS
Immediately prior to the Global Offering, our Company was held by Mr. Pan Yun, X.J.
Management (Qichun) and Qichun Hengxing as to approximately 54.07%, 26.39% and 19.54%,
respectively. X.J. Management (Qichun) is owned as to 70.37% and 29.63% by Mr. Pan Yun and
Mr. Guangshe Pan, respectively. Qichun Hengxing is an employee shareholding platform of our
Group, which is owned as to 47.50% by Mr. Pan Yun. Mr. Pan Yun is the sole general partner of
each of X.J. Management (Qichun) and Qichun Hengxing.
As such, Mr. Pan Yun, Mr. Guangshe Pan, X.J. Management (Qichun) and Qichun
Hengxing are considered to be a group of Controlling Shareholders, who collectively held 100%
of our total issued Shares as at the Latest Practicable Date.
Immediately following the completion of the Global Offering (assuming the Over-allotment
Option is not exercised), Mr. Pan Yun, Mr. Guangshe Pan, X.J. Management (Qichun) and
Qichun Hengxing will collectively hold approximately 75.00% of our total issued Shares.
Accordingly, Mr. Pan Yun, Mr. Guangshe Pan, X.J. Management (Qichun) and Qichun Hengxing
will remain as a group of Controlling Shareholders upon Listing.
Mr. Pan Yun is our executive Director, chairman of our Board and general manager of our
Company and Mr. Guangshe Pan is our executive Director. For biographical details of Mr. Pan
Yun and Mr. Guangshe Pan, please see “Directors, Supervisors and Senior Management –
Directors” in this prospectus. For details of Qichun Hengxing, please see “History, Development
and Corporate Structure – Employee Shareholding Platform” in this prospectus.
INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS
Having considered the following factors, our Directors are satisfied that we are capable of
carrying on our business independently of our Controlling Shareholders and their respective
close associates after Listing.
Management independence
Our Board comprises six executive Directors and three independent non-executive
Directors. Mr. Pan Yun, being one of our Controlling Shareholders, also serves as our executive
Director, the chairman of our Board and the general manager of our Company. Our Directors,
collectively with the support of our senior management of our Company, are responsible for the
day-to-day management of our business. For details, please see “Directors, Supervisors and
Senior Management” in this prospectus.
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Our Directors consider that our Board and senior management are able to perform the
management role in our Group independent of our Controlling Shareholders for the following
reasons:
(a) each Director is aware of his/her fiduciary duties as a Director which require, amongst
others, that he/she acts for the benefit and in the best interests of our Company and
does not allow any conflict between his/her duties as a Director and his/her personal
interests;
(b) in the event that any Director or any of his/her close associates has a material interest
in any transaction or arrangement or there is an actual or potential conflict of interest
arising out of any transaction or arrangement to be entered into between our Group
and any of our Directors or their respective associates, such Director(s) shall fully
disclose such matters to our Board and abstain from voting at the relevant meeting of
our Board in respect of such transactions and shall not be counted in the quorum. Our
Group has also adopted certain corporate governance measures for situations involving
conflict of interests, details of which are set out in the paragraph headed “Corporate
Governance Measures” in this section;
(c) three out of nine Directors are independent non-executive Directors with extensive
experience in various professions. They are appointed pursuant to the requirements of
the Listing Rules, who will bring independent judgment to the decision-making
process of our Board;
(d) connected transactions between our Group and our Controlling Shareholders are
subject to the rules and regulations under the Listing Rules including the rules relating
to annual reporting, review, announcement, circular and independent shareholders’
approval (where applicable); and
(e) our Board’s main functions include the approval of our Group’s overall business plans
and strategies, monitoring the implementation of such business plans, strategies and
policies, and the management of our Company. Our Board acts collectively by
majority decisions in accordance with the Articles and the applicable laws, and no
single Director is supposed to have any decision-making power unless otherwise
authorised by our Board.
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Operational independence
We have established our own organisational structure consisting of individual departments
with different functions for sales, R&D, financial management, operations (administration),
planning, procurement, quality control, production and audit. Each department is assigned
specific areas of responsibility. We have implemented a set of internal control mechanisms to
enhance the efficiency of our business operations. In addition to our sufficient assets, capital and
employees, we have obtained and possess all relevant licences, permits, approvals and
intellectual properties required to conduct our business independently. Furthermore, we have
independent access to our suppliers and customers.
During the Track Record Period, our Group leased eight units in Shenzhen from Mr. Pan
Yun as dormitories for our employees and we expect to continue with the leasing arrangements
after the Listing. For further details, please see “Connection Transactions” in this prospectus.
Given that (i) the Property Leasing Agreements are on normal commercial terms or better
after arm’s-length negotiations, and (ii) even if Mr. Pan Yun terminates such agreements, the
interruption to our operations would be mitigated by our ability to secure alternative leases in
the market, our Directors believe that leasing properties from Mr. Pan Yun would not cast doubts
on our operational independence.
Based on the above, our Directors are of the view that our Group can operate independently
of our Controlling Shareholders and their close associates upon Listing.
Financial independence
Our financial management department is responsible for handling the major finance
operations of our Group and is capable of making financial decisions independently according to
our own business needs. We manage our bank accounts independently, and do not share any
bank accounts with our Controlling Shareholders or their close associates. In addition, we have
sufficient capital to operate our business independently and have adequate internal resources to
support our daily operations.
During the Track Record Period, we had been capable of obtaining financing from third
parties without relying on any security provided by the members of our Controlling Shareholders
or their respective associates. Save for the personal guarantee given by our Controlling
Shareholders for our bank borrowings, there were no loans, guarantees or other forms of
collateral or security obtained from or provided by our Controlling Shareholders as at the Latest
Practicable Date. All guarantees provided by our Controlling Shareholders and their respective
close associates for our borrowings will be fully released before Listing.
Based on the above, our Directors consider that our Group is able to operate with financial
independence from our Controlling Shareholders and their close associates upon Listing.
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RULE 8.10 OF THE LISTING RULES
Our Controlling Shareholders, our Directors and their respective close associates confirm
that they do not have any interest in a business apart from our Group’s business which competes
or is likely to compete, directly or indirectly, with our Group’s business and would require
disclosure under Rule 8.10 of the Listing Rules.
CORPORATE GOVERNANCE MEASURES
Our Company will comply with the provisions of the Corporate Governance Code set out in
Appendix C1 to the Listing Rules, which sets out principles of good corporate governance. We
recognise the importance of good corporate governance in the protection of our Shareholders’
interests. We have adopted the following measures to safeguard good corporate governance
standards and to avoid potential conflict of interests between our Group and our Controlling
Shareholders:
(a) where a Shareholders’ meeting is to be held for considering proposed transactions in
which our Controlling Shareholders or any of his/its associates has a material interest,
our Controlling Shareholders will not vote on the resolutions and shall not be counted
towards the quorum in the voting;
(b) our Group has established internal control mechanisms to identify connected
transactions. Our Company will comply with the requirements in relation to connected
transactions under the Listing Rules upon Listing;
(c) we are committed that our Board should include a balanced composition of executive
and independent non-executive Directors. We have appointed three independent
non-executive Directors and we believe our independent non-executive Directors
possess sufficient experience and they are free of any business and/or other
relationship which could interfere in any material manner with the exercise of their
independent judgment and will be able to provide an impartial and external opinion to
protect the interests of our public Shareholders. We have also appointed three
Supervisors in accordance with the relevant PRC laws and regulations to supervise the
performance of the duties by our Board. For details of our independent non-executive
Directors and Supervisors, please see “Directors, Supervisors and Senior Management
– Directors” and “Directors, Supervisors and Senior Management – Supervisors” in
this prospectus;
(d) our Directors will operate in accordance with the Articles which require the interested
Director not to vote (nor be counted in the quorum) on any resolution of our Board
approving any contract or arrangement or other proposal in which he/she or any of
his/her close associates is materially interested except as permitted by the Articles;
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(e) where our Directors reasonably request the advice of independent professionals, such
as financial advisers, the appointment of such independent professionals will be made
at our Company’s expenses; and
(f) we have appointed Sinolink Securities (Hong Kong) Company Limited as our
compliance adviser, which will provide advice and guidance to us in respect of
compliance with the applicable laws and the Listing Rules, including various
requirements relating to directors’ duties and internal controls.
Based on the above, our Directors are satisfied that sufficient corporate governance
measures have been put in place to manage conflicts of interest that may arise between our
Group and our Controlling Shareholders, and to protect our minority Shareholders’ interests after
the Listing.
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ONE-OFF CONNECTED TRANSACTIONS
Property leasing agreements
During the Track Record Period, our Group entered into three property leasing agreements
(the “ Property Leasing Agreements ”) with Mr. Pan Yun, our executive Director, chairman of
our Board, general manager of our Company and one of our Controlling Shareholders in relation
to the leasing of eight units in Shenzhen (the “ Premises ”) as dormitories for our employees.
Details of the Property Leasing Agreements are set out below:
Date of
agreement Lessor Lessee Term of the lease Location of the Premises
Total gross
floor area
Monthly
rent
(sq. m.) (RMB)
30 January 2023 Mr. Pan Yun Nawu
Technology
20 January 2023 to
19 January 2026
Unit 11A, Haidu Garden, No. 2122
Shenyan Road, Tiandong Community,
Haishan Road, Yantian District,
Shenzhen City, PRC
107.00 5,000
30 January 2023 Mr. Pan Yun Nuocheng
Electronic
Commerce
20 January 2023 to
19 January 2026
Unit 25A, Haidu Garden, No. 2122
Shenyan Road, Tiandong Community,
Haishan Road, Yantian District,
Shenzhen City, PRC
107.00 5,000
1 January 2024 Mr. Pan Yun X.J. Electrics
(Shenzhen)
31 December 2023
to 30 December
2025
Units 11C/11F/20F/24A/24F/26A, Haidu
Garden, No. 2122 Shenyan Road,
Tiandong Community, Haishan Road,
Yantian District, Shenzhen City, PRC
621.96 33,000
The terms under the Property Leasing Agreements were determined after arm’s length
between Mr. Pan Yun and Nawu Technology, Nuocheng Electronic Commerce and X.J. Electrics
(Shenzhen), respectively, following their arm’s length negotiations with reference to market
prices of comparable properties of similar conditions in the vicinity. Our Directors are of the
view that the Property Leasing Agreements have been entered into on normal commercial terms
or better.
Reasons and benefits of the transaction
Historically, our Group leased the Premises from Mr. Pan Yun as dormitories for our
employees. To avoid unnecessary costs associated with searching for new premises and engaging
in prolonged negotiations with third-party property owners for lease agreements, our Group
intends to continue with the leasing arrangements after the Listing.
CONNECTED TRANSACTIONS
– 286 –


--- page 296 ---
In light of the foregoing, our Directors are of the view that the leasing arrangements are
fair and reasonable and in the interests of our Shareholders as a whole. Notwithstanding the
above, the Property Leasing Agreements do not affect our operational independence. For further
details, please see “Relationship with Our Controlling Shareholders – Independence from Our
Controlling Shareholders – Operational Independence” in this prospectus.
Accounting treatment and the Listing Rules implications
In accordance with IFRS 16 applicable to our Group and pursuant to the guidance issued by
the Stock Exchange, when an issuer enters into a lease transaction as a lessee and where the
lease is subject to an agreement with fixed terms, it is treated as a one-off transaction (i.e., an
acquisition of capital assets). As such, the transactions under the Property Leasing Agreements
will be recognised as acquisitions of right-of-use assets and constitute one-off transactions of
our Company before the Listing and will not be classified as continuing connected transactions
under Chapter 14A of the Listing Rules. Accordingly, the reporting, annual review,
announcement, circular and independent shareholders’ approval requirements with regard to
continuing connected transactions in Chapter 14A of the Listing Rules will not be applicable to
the Property Leasing Agreements.
The balance of the lease liabilities in relation to the Premises according to IFRS 16 as at 31
December 2024 amounted to approximately RMB446,000.
CONNECTED TRANSACTIONS
– 287 –


--- page 297 ---
OVERVIEW
Our Board of Directors consists of nine Directors, including six executive Directors and
three independent non-executive Directors. Our Board is responsible, and has general authority
for, the management and operation of our Group. Our Directors are appointed for a term of three
years and shall be subject to re-election upon expiry of their terms of office.
Our supervisory committee consists of three Supervisors. The shareholder Supervisors were
elected at the Shareholders’ meetings, while the employee Supervisor was elected by our
employees. Our Supervisors are appointed for a term of three years and shall be subject to
re-election upon expiry of their terms of office.
Our senior management consists of four members who are responsible for the day-to-day
management of our Group’s business.
The following table sets forth the key information about our Directors, Supervisors and
senior management members:
DIRECTORS
Name Age
Date of joining
our Group
Date of
Appointment as
Director Position(s) Roles and responsibilities
Relationship with
other Director(s),
Supervisor(s)
and/or senior
management
Executive Directors
Mr. Pan Yun
(ᆙʪ)
67 23 July 2012 23 July 2012 Executive Director, chairman
of our Board and general
manager
Responsible for the overall
strategic planning and
supervision, and the
day-to-day management
and operation of our Group
Father of Mr.
Guangshe Pan
Mr. Guangshe
Pan
40 22 December
2016
3 May 2017 Executive Director Responsible for the overall
management and operation
of Weighmax
Son of Mr. Pan Yun
Ms. Ji Ying
(Λ጑)
54 23 July 2012 23 July 2012 Executive Director and vice
general manager
Responsible for the overall
administration,
procurement and asset
management of our Group
Nil
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 288 –


--- page 298 ---
Name Age
Date of joining
our Group
Date of
Appointment as
Director Position(s) Roles and responsibilities
Relationship with
other Director(s),
Supervisor(s)
and/or senior
management
Ms. Li
Youxiang
(࠰)
46 23 July 2012 23 July 2012 Executive Director and vice
general manager
Responsible for the overall
sales management of our
Group
Nil
Mr. Xu Xiping
(୚̻)
51 23 July 2012 23 July 2012 Executive Director Responsible for the overall
strategic planning and
supervision, shareholder
interests and compliance of
our Group
Nil
Ms. Hu Yan
(ܗߡ)
47 23 July 2012 3 November
2018
Executive Director, secretary
to our Board, chief
financial officer and one
of our joint company
secretaries
Responsible for the overall
financial management,
corporate governance and
shareholder relations of
our Group and secretarial
affairs of our Board
Nil
Independent Non-executive Directors
Dr. Huang
Hanxiong
(රဏඪ)
61 3 May 2017 16 November
2020
Independent non-executive
Director
Responsible for supervising
the management of our
Group, providing
independent opinion and
judgment to our Board
Nil
Dr. Li Jiannan
(ҽ਄Ӳ)
57 16 November
2020
16 November
2020
Independent non-executive
Director
Responsible for supervising
the management of our
Group, providing
independent opinion and
judgment to our Board
Nil
Dr. Gu
Zhaoyang
(ᚥಃජ)
59 5 September
2024
5 September
2024
Independent non-executive
Director
Responsible for supervising
the management of our
Group, providing
independent opinion and
judgment to our Board
Nil
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 289 –


--- page 299 ---
Executive Directors
Mr. Pan Yun ( ᆙʪ), aged 67, founded our Company in July 2012 and was since then a
Director, the chairman of our Board and our general manager. Mr. Pan was redesignated from a
Director to an executive Director on 24 September 2024 and is primarily responsible for the
overall strategic planning and supervision, and the day-to-day management and operation of our
Group. Mr. Pan is also the chairman of our strategic committee.
Mr. Pan has been serving in various roles in our subsidiaries, including (i) a director and
the chairman of the board of X.J. Electrics (Shenzhen), X.J. Electronics (Shenzhen), Innovative
(Jiangyin) and MeiNuoWei Electrics since August 2002, June 2004, December 2004 and
February 2017, respectively; (ii) a director of X.J. Group (HK) since June 2014; (iii) a director,
the chairman of the board and the general manager of X.J. Electrical Appliances since October
2020; (iv) an executive director and the general manager of Aigrentrading since June 2023; and
(v) a director and the chief executive officer of PT Dingsheng since August 2023. From June
2017 to April 2019, Mr. Pan was also a director of THS Industrial and was mainly responsible
for the overall management and operation of THS Industrial.
Mr. Pan has over 35 years of experience in business management and over 24 years of
experience in the electrical home appliances manufacturing industry. The following table
summarises Mr. Pan’s professional experience:
Name of company
Principal business
activities
Last position
held Roles and responsibilities
Period of
services
Xiangjiang Plastic
Products
Production and sales of
plastic products (since
February 1990) and
electrical home
appliances (since April
2001)
Director and
chairman of
the board
Responsible for the overall
management and
operation
From February
1990 to
February 2010
Jikai Plastic Products Production and sales of
plastic products
Director and
chairman of
the board
Responsible for the overall
management and
operation
From May 1997
to May 2012
X.J. Group Limited
(Ϫ਷ყණྠ (ಥ)
ʮ̡ )
Sales of electrical home
appliances
Director Responsible for the overall
management and
operation
From August
2003 to March
2021
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 290 –


--- page 300 ---
In January 2015, Mr. Pan assumed the role of the honorary president of the Second Council
of Qichun Branch of Huanggang Chamber of Commerce* (ଣԫึ ).
From May 2015 to December 2018 and from January 2023 to December 2026, Mr. Pan served as
the vice president of the Fourth and Sixth Council of Shenzhen Chamber of Commerce for
Import & Export* ( ଉέ̹ආ̈ɹਠึଣԫึ ), respectively. Since November 2015, Mr. Pan has
been the president of Guangdong Jiangsu Jiangyin Chamber of Commerce* (ϪᘽϪ௕ਠ
ึଣԫึ ). From January 2017 to December 2020, Mr. Pan served as a member of the 10th
Committee of Huanggang City Chinese People’s Political Consultative Conference (“ CPPCC ”)*
(ึ ) and a member of the 15th Committee of Jiangyin
City CPPCC* (ึ ). From September 2017 to
September 2022, he was a member of Jiangyin Development Advisory Committee* (ፔ
ึ ).
Mr. Pan was an executive committee of the First Executive Committee Council of the
Shijing Street Chamber of Commerce in Pingshan District* (֣
ੂ։ึଣԫึ ) from January 2019 to December 2024. In December 2021, Mr. Pan was the
executive vice president of Shenzhen Wuxi Chamber of Commerce* ( ଉέ̹ೌ፼ਠึ ) and later
served as the vice president of Shenzhen Chamber of Commerce for Import & Export* ( ଉέ̹
ආ̈ɹਠึ ) from December 2021 to December 2022. In January 2022, Mr. Pan was honoured as
the honorary president of the Third Council of Hubei Qichun Chamber of Commerce of
Shenzhen City* (ଣԫึ ).
Mr. Pan was awarded the honorary title of “Entrepreneur Actively Supporting the Work of
the Communist Party of China (“ CPC”)”* (࢕by Shenzhen Municipal
Private Enterprise Economic Working Committee of the CPC* (ࡰ
ึ) in June 2008. In December 2015, he received the “Outstanding Entrepreneurs Valued and
Supported the Work of the CPC of the City”* (࢕award from
the Organisational Department of Huanggang Municipal Committee of the CPC* (̹։
ଡ଼ᔌ௅) and the Non-public Enterprise Working Committee of Huanggang Municipal Committee
of the CPC* (ʮΆุʈ։ ). In January 2018, Mr. Pan was awarded Hometown
Construction Contribution Award* (ண্ᘠᆤ ) by Hubei Qichun Chamber of Commerce of
Shenzhen City* (ਠึ ). In April 2018, Mr. Pan was honoured as the “Labour
Model of Huanggang City”* (̹௶ਗᅼᇍ ) by Huanggang Municipal Committee of the
CPC* (ึ ) and the government of Huanggang City. In January 2024, Mr. Pan
was awarded the “Award for 2023 Outstanding Contribution”* (্̈ᘠᆤ ) by Hubei
Qichun Chamber of Commerce of Shenzhen City.
Mr. Pan obtained a master’s degree in business administration from Sofia University in the
U.S. in October 2023 through online courses.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 291 –


--- page 301 ---
Mr. Guangshe Pan , aged 40, joined our Company as a Director in May 2017 and was
redesignated as an executive Director on 24 September 2024. Mr. Pan is mainly responsible for
the overall management and operation of Weighmax. Mr. Pan has over nine years of experience
in business management and in the electrical home appliances manufacturing industry. Mr. Pan
has been the sole director, chief executive officer, secretary, and chief financial officer of
Weighmax since March 2016, and the sole director and chief executive officer of Goodlife
Global since November 2021. Since April 2024, Mr. Pan has been a director of X.J. Electrics
(Thailand).
Mr. Pan completed a higher education programme in international business at China Youth
University of Political Sciences (ኪ৫ ) in July 2006. He obtained a bachelor’s
degree in business management from Central College in the U.S. in June 2009.
Ms. Ji Ying ( Λ጑), aged 54, joined our Company as a Director and a vice general manager
in July 2012. Ms. Ji was redesignated from a Director to an executive Director on 24 September
2024. Ms. Ji is responsible for the overall administration, procurement and asset management of
our Group. Ms. Ji is also a member of our remuneration committee and a member of our
nomination committee.
Ms. Ji has been serving in various roles in our subsidiaries, including (i) a director of X.J.
Electrics (Shenzhen), X.J. Electronics (Shenzhen), Innovative (Jiangyin), X.J. Group (HK),
MeiNuoWei Electrics, X.J. Electrical Appliances, PT Dingsheng and X.J. Electrics (Thailand)
since August 2002, June 2004, December 2004, June 2014, March 2017, October 2020, August
2023 and April 2024, respectively; and (ii) a director and general manager of HNW Electronics
since June 2021. From June 2017 to April 2019, Ms. Ji was a director of THS Industrial and was
mainly responsible for the overall management of THS Industrial.
Ms. Ji has over 23 years of experience in business management and over 24 years of
experience in the electrical home appliances manufacturing industry. From May 1994 to
November 2010, Ms. Ji was an accounting staff of Xiangjiang Plastic Products and was
responsible for the financial operations of Xiangjiang Plastic Products. Ms. Ji was also a director
of Xiangjiang Plastic Products from April 2002 to November 2010 and was responsible for the
administration and human resources of Xiangjiang Plastic Products. From June 1997 to June
2012, Ms. Ji was an accounting staff of Jikai Plastic Products and was mainly responsible for the
accounting and finance of Jikai Plastic Products. From August 2003 to March 2021, Ms. Ji was a
director of X.J. Group Limited and was responsible for the overall management of X.J. Group
Limited.
Ms. Ji completed a higher education programme in finance at Wuhan University (ဏɽኪ )
in July 1993 through attending long distance learning courses.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 292 –


--- page 302 ---
Ms. Li Y ouxiang (࠰) aged 46, joined our Company as a Director in July 2012 and
became our vice general manager in May 2017. Ms. Li was redesignated from a Director to an
executive Director on 24 September 2024. Ms. Li is responsible for the overall sales
management of our Group. Ms. Li is also a member of our strategic committee.
Ms. Li has been serving in various roles in our subsidiaries, including (i) a director of X.J.
Group (HK), Innovative (Jiangyin), MeiNuoWei Electrics and X.J. Electrical Appliances since
June 2014, February 2017, March 2017 and October 2020, respectively; and (ii) an executive
director and general manager of Nuocheng Electronic Commerce since June 2023. From
February 2010 to July 2012, Ms. Li was a business manager of X.J. Electrics (Shenzhen) and
was responsible for the sales management of X.J. Electrics (Shenzhen). From June 2017 to April
2019, Ms. Li was a director of THS Industrial and was responsible for the overall management
of THS Industrial.
Ms. Li has over 24 years of experience in business management and in the electrical home
appliances manufacturing industry. Ms. Li was a sales manager of Xiangjiang Plastic Products
from October 2000 to November 2010 and was mainly responsible for the overseas sales
management of Xiangjiang Plastic Products.
Ms. Li obtained a bachelor’s degree in economics from Zhejiang Gongshang University
Hangzhou College of Commerce (ψਠኪ৫ ) in the PRC in July 2000. She
obtained the qualification as an Intermediate Economist (ࢪin economy and finance
by Ministry of Human Resources and Social Security of Shenzhen* (ღ
௅) in November 2009.
Mr. Xu Xiping (୚̻ ), aged 51, joined our Company as a Director in July 2012 and was
our vice general manager from March 2014 to February 2016. Mr. Xu was redesignated from a
Director to an executive Director on 24 September 2024 and is responsible for the overall
strategic planning and supervision, shareholder interests and compliance of our Group. Mr. Xu
has been a director of X.J. Electrical Appliances since October 2020 and a technical consultant
of the outsourcing centre of Shenzhen Branch since June 2021. From October 2004 to June 2007
and from March 2016 to March 2017, Mr. Xu was the vice general manager of X.J. Electronics
(Shenzhen) and was primarily responsible for overseeing the production of X.J. Electronics
(Shenzhen). From July 2007 to March 2014, Mr. Xu was the general manager of X.J. Electrics
(Shenzhen) and was responsible for the overall management of X.J. Electrics (Shenzhen).
Mr. Xu has over 27 years of experience in business management and over 24 years of
experience in the electrical home appliances manufacturing industry. Mr. Xu was the manager of
the injection moulding department of Xiangjiang Plastic Products from June 1997 to October
2004 and was primarily responsible for the management of the injection moulding department.
Mr. Xu completed his high school studies at Jiangxi Province Zhangshu No. 2 Middle
School* (ᅶዓୋɚʕኪ ) in Jiangxi Province, the PRC, in July 1992.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 293 –


--- page 303 ---
Ms. Hu Y an (ܗߡ)aged 47, joined our Company as a Supervisor in July 2012 until May
2017, when she was appointed as a secretary to our Board and the chief financial officer of our
Company. Ms. Hu was appointed as a Director in November 2018 and one of our joint company
secretaries on 9 September 2024. She was redesignated from a Director to an executive Director
on 24 September 2024 and is primarily responsible for the overall financial management,
corporate governance and shareholder relations of our Group and secretarial affairs of our Board.
Ms. Hu has over 21 years of experience in accounting and finance and in the electrical
home appliances manufacturing industry. From March 2004 to November 2005, Ms. Hu
successively worked as the vice financial manager and the financial manager of X.J. Electrics
(Shenzhen), and was mainly responsible for supervising and managing the financial operations
of X.J. Electrics (Shenzhen). From December 2005 to April 2014, Ms. Hu was the vice general
manager of X.J. Electronics (Shenzhen) and was responsible for the financial management of
X.J. Electronics (Shenzhen). From July 2012 to May 2017, she was a Supervisor of our
Company. Since November 2018, Ms. Hu has been a director of X.J. Electronics (Shenzhen).
Ms. Hu has been a director of THS Industrial, X.J. Electrical Appliances and X.J. Electrics
(Thailand) since April 2019, October 2020 and April 2023, respectively. From December 2019 to
November 2020, Ms. Hu was the general manager of Aigrentrading and was primarily
responsible for overseeing the overall operation of Aigrentrading.
Ms. Hu obtained a diploma in accounting at Jiangxi Technical College of Manufacturing
(ϪГႡிᔖุҦஔኪ৫ ) (formerly known as Jiangxi Mechanical Engineering University* ( ϪГ
ዚ૛ᔖʈɽኪ )) in July 1999. She obtained the qualification of Junior Accountant from the
Ministry of Finance of the PRC (௅ ) in June 2005. Ms. Hu obtained the
qualification as the secretary to the board of directors from the SZSE in July 2017. In July 2018,
she obtained a bachelor’s degree in accounting from Renmin University of China ( ʕ਷ɛ͏ɽ
ኪ) through attending long distance learning courses.
Independent non-executive Directors
Dr. Huang Hanxiong ( රဏඪ ), aged 61, was appointed as our independent Director from
May 2017 to March 2019 and was reappointed since November 2020. Dr. Huang was
redesignated as our independent non-executive Director on 24 September 2024 and is primarily
responsible for supervising the management of our Group, providing independent opinion and
judgment to our Board. Dr. Huang is also the chairman of our nomination committee, a member
of our audit committee and a member of our strategic committee.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 294 –


--- page 304 ---
Dr. Huang has over 36 years of experience in the plastic machinery industry and education.
Since 1989, Dr. Huang successively worked as a lecturer, a vice professor and a professor at
South China University of Technology (ଣʈɽኪ ). From 1998 to 2008, he was the dean of
the College of Industrial Equipment and Control Engineering ( ʈุༀ௪ၾછՓʈ೻ኪ৫ ) and
was mainly responsible for the overall administration of the college. Since March 2015, Dr.
Huang has been a professor at School of Mechanical & Automotive Engineering ( ዚ૛ၾӛԓʈ
೻ኪ৫). From May 2014 to July 2017, Dr. Huang was the independent non-executive director of
Yizumi Holdings Co., Ltd. (ʮ̡ ) (formerly known as Guangdong Yizumi
Precision Machinery Co., Ltd. (ʮ̡ )), a company listed on the
SZSE (stock code: 300415) and is primarily engaged in design, development, production, sales
and services of injection moulding machines, die casting machines, rubber machines and robot
automation systems.
Dr. Huang obtained a bachelor’s degree in plastic machinery at South China University of
Technology (ଣʈɽኪ ) (formerly known as South China Institute of Technology* (ʈኪ
৫)) in July 1984. Dr. Huang obtained a master’s degree and a doctoral degree in engineering
from South China University of Technology in June 1989 and April 1996, respectively.
Dr. Li Jiannan ( ҽ਄Ӳ ), aged 57, was appointed as our independent Director since
November 2020 and was redesignated as our independent non-executive Director on 24
September 2024. Dr. Li is primarily responsible for supervising the management of our Group,
providing independent opinion and judgment to our Board. Dr. Li is also the chairman of our
remuneration committee, a member of our audit committee and a member of our nomination
committee.
Dr. Li has over 21 years of experience in the legal and arbitration sectors. Since April
2004, Dr. Li successively worked as a lecturer, a vice professor and a professor at Jinan
University Law School (ኪ৫ ). Dr. Li has also been an arbitrator of Guangzhou
Arbitration Commission (ึ ) since August 2006 and has been a part-time lawyer at
Guang Dong J&J Law Firm (הsince January 2022.
Since September 2022, Dr. Li has been an independent non-executive director of
Guangzhou Fanmei Laboratory System Technology Co., Ltd. (ࠢ
ʮ̡) and is mainly engaged in the development, design, implementation, operation and
maintenance services of laboratory environmental control system and related laboratory
equipment sales.
Dr. Li completed a higher education programme in financial accounting at Hunan
University of Finance and Economics (຾᏶ኪ৫ ) (formerly known as Hunan College of
Finance and Economics* (ࣧin July 1988. Dr. Li qualified as a lawyer in the
PRC in August 1996. In July 1997 and June 2002, he obtained a master’s degree and a doctoral
degree of law in international law from Wuhan University (ဏɽኪ ) respectively.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 295 –


--- page 305 ---
Dr. Gu Zhaoyang ( ᚥಃජ ), aged 59, was appointed as an independent Director on 5
September 2024 and was redesignated as our independent non-executive Director on 24
September 2024. Dr. Gu is primarily responsible for supervising the management of our Group,
providing independent opinion and judgment to our Board. Dr. Gu is also the chairman of our
audit committee and a member of our remuneration committee.
Dr. Gu has over 25 years of experience in business and accounting related education and is
currently a Certified Public Accountant (non-practicing) in the U.S. and a Professor of
Accountancy and Director of MBA in Finance (FMBA) Programme at the Business School of the
Chinese University of Hong Kong (“ CUHK ”). From August 2013 to July 2020, Dr. Gu was the
Director of School of Accountancy of the CUHK. From September 1999 to June 2002, Dr. Gu
was an Assistant Professor of Industrial Administration (Accounting) at the Graduate School of
Industrial Administration, Carnegie Mellon University.
Dr. Gu graduated from the Department of Foreign Languages of Tsinghua University with a
bachelor’s degree in English in July 1988. He obtained a master’s degree in economics from
Tulane University, the USA in August 1993 and obtained a Ph.D. in accounting in August 1999.
Dr. Gu has served as an independent non-executive director of Shanghai Pharmaceuticals
Holding Co., Ltd. (stock code: 601607.SH, 2607.HK) since June 2019, an independent
non-executive director of Jiangsu Expressway Company Limited (stock code: 600377.SH,
0177.HK) since June 2024, an independent non-executive director of Bank of Tianjin Co., Ltd.
(ʮ̡ ) (stock code: 1578.HK) since September 2024 and an independent
non-executive director of Luda Technology Group Limited (NYSE: LUD) since February 2025.
SUPERVISORS
Name Age
Date of
joining our
Group
Date of
Appointment as
Supervisor Position Roles and responsibilities
Relationship
with other
Director(s),
Supervisor(s)
and/or senior
management
Mr. Yip Hung Tung
(؇ߎ)
56 23 July 2012 23 July 2012 Chairman of our
supervisory
committee
Responsible for supervising
the Board and daily
operation of our Group
Nil
Mr. Shi Chuanlai
(̦ෂԸ)
51 13 December
2016
20 March 2018 Supervisor Responsible for supervising
the Board and daily
operation of our Group
Nil
Ms. Yi Hongliang
(Ԅ)
42 23 July 2012 23 July 2012 Supervisor Responsible for supervising
the Board and daily
operation of our Group
Nil
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 296 –


--- page 306 ---
Mr. Yip Hung Tung (؇ߎ) aged 56, has been our a Supervisor, the chairman of our
supervisory committee and the president of the R&D centre of our Company since July 2012. He
is mainly responsible for supervising the Board and daily operation of our Group. Mr. Yip has
over 21 years of experience in business management. From September 2003 to June 2012, Mr.
Yip was the general manager of the R&D centre of X.J. Electrics (Shenzhen) and was primarily
responsible for overseeing the R&D team of X.J. Electrics (Shenzhen).
Mr. Shi Chuanlai ( ̦ෂԸ ), aged 51, was appointed as a Supervisor in March 2018 and has
been re-appointed as a Supervisor in June 2023. He is mainly responsible for supervising the
Board and daily operation of our Group. Mr. Shi worked at X.J. Electrics (Shenzhen) as the head
of injection moulding from October 2003 to January 2006 and the vice general manager from
January 2006 to August 2010. Since December 2014, he has been the general manager and a
director of X.J. Electrics (Shenzhen) and is responsible for the overall operation and
management of X.J. Electrics (Shenzhen). Mr. Shi was also the vice general manager of X.J.
Electronics (Shenzhen) from August 2010 to February 2014 and was primarily responsible for
the quality management of X.J. Electronics (Shenzhen).
Mr. Shi has over 26 years of experience in business management. Prior to joining our
Group, Mr. Shi was the manager of Xiangjiang Plastic Products from September 1998 to October
2003 and was mainly responsible for the management of injection moulding production.
Ms. Yi Hongliang (Ԅ ), aged 42, was appointed as a Supervisor in July 2012 and has
been re-appointed as a Supervisor in June 2023. She is mainly responsible for supervising the
Board and daily operation of our Group. Ms. Yi has also been a supervisor of MeiNuoWei
Electrics and X.J. Electrical Appliances since March 2017 and October 2020, respectively. She
has been the president of the outsourcing centre of Shenzhen Branch since August 2020 and is
responsible for the development and execution of outsourced processing strategies.
Ms. Yi has over 20 years of experience in procurement and business management. From
December 2004 to July 2006, Ms. Yi worked as a procurement staff at Fujian Sanfang TV Co.,
Ltd.* (ʮ̡ ), a company principally engaged in the production and sales of
small colour televisions, portable DVD players and LCD televisions and was responsible for the
implementation of procurement plans, and selection and management of vendors. From August
2006 to May 2009, Ms. Yi worked as the vice procurement manager at X.J. Group Limited and
was mainly responsible for the development and implementation of procurement strategies of
X.J. Group Limited. From May 2009 to February 2014, Ms. Yi served as the manager of the
general management department of X.J. Group Limited and was responsible for the day-to-day
administrative, human resources and legal affairs of X.J. Group Limited. From April 2014 to
August 2020, she was the president of the quality control centre of X.J. Group Limited and was
primarily responsible for establishing and maintaining the quality management system of X.J.
Group Limited.
Ms. Yi obtained a bachelor’s degree in accounting from Hunan Agricultural University ( ಳ
ุ༵ɽኪ ) in the PRC in June 2012.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 297 –


--- page 307 ---
SENIOR MANAGEMENT
Our senior management consists of Mr. Pan Yun, Ms. Ji Ying, Ms. Li Youxiang and Ms. Hu
Yan. For their biographical information, please see “– Directors – Executive Directors” in this
section.
DISCLOSURE REQUIRED PURSUANT TO RULE 13.51(2) OF THE LISTING RULES
Mr. Pan Yun was a director and/or general manager and/or partner of the following
companies or partnerships before their respective deregistration or termination:
Name of
company
Place of
incorporation
Principal business
activity
prior to dissolution
Date of
dissolution Position(s)
Means for
dissolution
Reasons of
dissolution
MeiNuoWei Electronics
(Shenzhen) Co., Ltd.*
(ཥɿ (ଉέ)ࠢ
ʮ̡)
The PRC Dormant 10 March
2004
Director and
chairman of
the board
Deregistered Dormant
Shenzhen Yinsipai Trading
Co., Ltd.*
(ࠢ
ʮ̡)( “ Shenzhen
Yinsipai ”)
The PRC Dormant 12 June 2010 Director and
chairman of
the board
Deregistered Dormant
Xiangjiang Plastic Products The PRC Production and sales of
plastic products and
electrical home
appliances
4 November
2010
Director and
chairman of
the board
Deregistered Cessation of
business
Jikai Plastic Products The PRC Production and sales of
plastic products
5 June 2012 Director and
chairman of
the board
Deregistered Cessation of
business
Jiangyin Xiangjie
Electronics Co., Ltd.*
(ࠢ
ʮ̡)
The PRC Dormant 26 June 2015 Executive
director
Deregistered Dormant
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 308 ---
Name of
company
Place of
incorporation
Principal business
activity
prior to dissolution
Date of
dissolution Position(s)
Means for
dissolution
Reasons of
dissolution
Jiangyin Xiangjiang Plastic
Products Technology
Consulting Co., Ltd.*
(Ҧ
ʮ̡ )
(“Jiangyin Xiangjiang ”)
The PRC Dormant 13 December
2016
Executive
director and
general
manager
Deregistered Dormant
Fenyi Chuangxing
Investment Partnership
(Limited Partnership)*
(௴ጳҳ༟ΥྫΆ
ุ(Υྫ ))
The PRC Investment holding 26 July 2019 General
partner
Deregistered Cessation of
business
Xinyu Aigeli Investment
Management Co., Ltd.*
(ᘆҳ༟၍ଣϞ
ʮ̡) (formerly known
as Hubei Aigeli
Investment Management
Co., Ltd.*
(ᘆҳ༟၍ଣϞ
ʮ̡)) (“ Aigeli
Investment ”)
The PRC Investment holding 26 July 2019 Director,
chairman of
the board
and general
manager
Deregistered Cessation of
business
X.J. Group Limited Hong Kong Sales of electrical home
appliances
26 March
2021
Director Deregistered Cessation of
business
Shanghai Yaoming
Investment Management
Office (General
Partnership) (ҳ
ה( ౷ஷΥྫ ))
The PRC Dormant 29 June 2021 Partner Deregistered Dormant
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 309 ---
Mr. Pan confirmed that (i) each of the above companies and partnerships was solvent and
inactive, and had no outstanding claims or liabilities at the time of their respective deregistration
or revocation; (ii) there was no wrongful act on his part leading to the deregistration of the
above companies and revocation of the above partnerships; (iii) he is not aware of any actual or
potential claim which has been or will be made against him as a result of the respective
deregistration of the above companies or revocation of the above partnerships; and (iv) the
above companies and partnerships had no material non-compliance prior to their respective
deregistration or revocation.
Mr. Guangshe Pan was a director and/or manager of the following companies before their
deregistration:
Name of
company
Place of
incorporation
Principal business activity
prior to dissolution
Date of
dissolution Position(s)
Means for
dissolution
Reasons of
dissolution
X.J. Group (USA) The U.S. Sales of electronic scales 21 December
2016
Director, chief
executive
officer and
chief
financial
officer
Deregistered Cessation of
business
U.S. Pro
Appliances, Inc.
The U.S. Sales of electrical home
appliances
28 May 2017 Director, chief
executive
officer and
chief
financial
officer
Deregistered Cessation of
business
Lucky Capital
Holding LLC
The U.S. Dormant 25 March 2021 Manager Deregistered Dormant
Mr. Pan Guangshe confirmed that (i) the above companies were solvent and inactive, and
had no outstanding claims or liabilities at the time of their deregistration; (ii) there was no
wrongful act on his part leading to the deregistration of the above companies; (iii) he is not
aware of any actual or potential claim which has been or will be made against him as a result of
the deregistration of the above companies; and (iv) the above companies had no material
non-compliance prior to their deregistration.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 310 ---
Ms. Ji Ying was a director of the following companies before their respective
deregistration:
Name of
company
Place of
incorporation
Principal business activity
prior to dissolution
Date of
dissolution Position
Means for
dissolution
Reasons of
dissolution
Shenzhen Yinsipai The PRC Dormant 12 June 2010 Director Deregistered Dormant
Xiangjiang Plastic
Products
The PRC Production and sales of plastic
products and electrical home
appliances
4 November
2010
Director Deregistered Cessation of
business
Aigeli Investment The PRC Investment holding 26 July 2019 Director Deregistered Cessation of
business
X.J. Group
Limited
Hong Kong Sales of electrical home
appliances
26 March 2021 Director Deregistered Cessation of
business
Ms. Ji confirmed that (i) each of the above companies was solvent and inactive, and had no
outstanding claims or liabilities at the time of their respective deregistration; (ii) there was no
wrongful act on her part leading to the deregistration of the above companies; (iii) she is not
aware of any actual or potential claim which has been or will be made against her as a result of
the respective deregistration of the above companies; and (iv) the above companies had no
material non-compliance prior to their respective deregistration.
Ms. Li Youxiang was a director of the following company before its deregistration:
Name of
company
Place of
incorporation
Principal business
activity prior to
dissolution
Date of
dissolution Position
Means for
dissolution
Reasons of
dissolution
Aigeli Investment The PRC Investment holding 26 July 2019 Director Deregistered Cessation of
business
Ms. Li confirmed that (i) the above company was solvent and inactive, and had no
outstanding claims or liabilities at the time of its deregistration; (ii) there was no wrongful act
on her part leading to the deregistration of the above company; (iii) she is not aware of any
actual or potential claim which has been or will be made against her as a result of the
deregistration of the above company; and (iv) the above company had no material
non-compliance prior to its deregistration.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 311 ---
Mr. Xu Xiping was a director of the following company before its respective deregistration:
Name of
company
Place of
incorporation
Principal business
activity prior to
cessation of business
Date of
dissolution Position
Means for
dissolution
Reasons of
dissolution
Aigeli Investment The PRC Investment holding 26 July 2019 Director Deregistered Cessation of
business
Mr. Xu confirmed that (i) the above company was solvent and inactive, and had no
outstanding claims or liabilities at the time of its respective deregistration; (ii) there was no
wrongful act on his part leading to the deregistration of the above company; (iii) he is not aware
of any actual or potential claim which has been or will be made against him as a result of the
respective deregistration of the above company; and (iv) the above company had no material
non-compliance prior to its respective deregistration.
Ms. Yi Hongliang was a supervisor of the following company before its deregistration:
Name of
company
Place of
incorporation
Principal business
activity prior to
dissolution
Date of
dissolution Position
Means for
dissolution
Reasons of
dissolution
Aigeli Investment The PRC Investment holding 26 July 2019 Supervisor Deregistered Cessation of
business
Ms. Yi confirmed that (i) the above company was solvent and inactive, and had no
outstanding claims or liabilities at the time of its deregistration; (ii) there was no wrongful act
on her part leading to the deregistration of its company; (iii) she is not aware of any actual or
potential claim which has been or will be made against her as a result of the deregistration of
the above company; and (iv) the above company had no material non-compliance prior to its
deregistration.
GENERAL
Save as disclosed above and in “Substantial Shareholders” and “Statutory and General
Information – D. Disclosure of Interests” in Appendix VII to this prospectus, each of our
Directors and Supervisors confirms with respect to him/her that:
(i) does not hold other positions in our Company or other members of our Group as at the
Latest Practicable Date;
(ii) did not hold other long positions or short positions in the Shares, underlying Shares,
debentures of our Company or any associated corporation (within the meaning of Part
XV of the SFO) as at the Latest Practicable Date;
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 312 ---
(iii) had no other relationship with any Directors, Supervisors, senior management or
substantial shareholders or Controlling Shareholders of our Company as at the Latest
Practicable Date;
(iv) did not hold any other directorships in the three years prior to the Latest Practicable
Date in any public companies of which the securities are listed on any securities
market in Hong Kong and/or overseas;
(v) does not have any interest in any business which competes or is likely to compete,
directly or indirectly, with our Group, which is disclosable under the Listing Rules;
(vi) to the best knowledge, information and belief of our Directors and Supervisors, having
made all reasonable enquiries, there are no other matters concerning our Director’s
and Supervisors’ appointment that need to be brought to the attention of our
Shareholders and the Stock Exchange or shall be disclosed pursuant to Rules 13.51(2)
of the Listing Rules as at the Latest Practicable Date; and
(vii) to the best of the knowledge, information and belief of our Directors and Supervisors,
having made all reasonable enquiries, there are no other matters with respect to the
appointment of our Directors and Supervisors that needs to be brought to the attention
of our Shareholders.
Each of our Directors confirm that he or she (i) obtained the legal advice referred to under
Rule 3.09D of the Listing Rules on 9 September 2024; and (ii) understood his or her obligations
as a director of a listed issuer under the Listing Rules.
Each of our independent non-executive Directors confirm (i) his independence as regards
each of the factors referred to in Rule 3.13(1) to (8) of the Listing Rules; (ii) that he had no past
or present financial or other interest in the business of our Company or our subsidiaries or any
connection with any core connected person of our Company under the Listing Rules as at the
Latest Practicable Date; and (iii) that there are no other factors that may affect his independence
at the time of his appointment.
JOINT COMPANY SECRETARIES
Ms. Hu Y an (ܗߡ)please see “– Directors – Executive Directors” in this section for
details.
Mr. Ng Chun Hoi ( юऔ》 ), aged 39, was appointed as one of the joint company
secretaries of our Company on 9 September 2024. Mr. Ng is a Certified Public Accountant of the
Hong Kong Institute of Certified Public Accountants and a member of the Hong Kong Institute
of Accredited Accounting Technicians.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 313 ---
Mr. Ng has over 14 years of experience in the audit field and currently is a senior
accounting manager at a law firm. Mr. Ng was a senior accountant at Venture Smart Services
Limited (ʮ̡ ) and Anue Group (ʮ̡ ) from June 2019 to
August 2023 and from March 2017 to June 2019, respectively. From March 2011 to March 2012
and from April 2012 to May 2016, Mr. Ng was an Audit & Account Junior and an Audit
Semi-Senior at Eric C W Ko & Company (הrespectively. From May 2009
to September 2010, Mr. Ng was an assistant accountant at Ronald W.F. Chan & Co. (ࠇ
ה.)
Mr. Ng obtained his bachelor’s degree in business administration (accounting and finance)
from Napier University in the United Kingdom in January 2010.
BOARD COMMITTEES
Our Board delegates certain responsibilities to various committees. In accordance with the
relevant PRC laws and regulations and the Corporate Governance Code, Appendix C1 to the
Listing Rules, our Company has established four Board committees, namely the audit committee,
the remuneration committee, the nomination committee and the strategic committee.
Audit committee
Our audit committee consists of Dr. Gu Zhaoyang, Dr. Huang Hanxiong and Dr. Li Jiannan.
Dr. Gu Zhaoyang is the chairman of the audit committee, who is an independent non-executive
Director with the appropriate accounting and related financial management expertise as required
under Rules 3.10(2) and 3.21 of the Listing Rules. The primary duties of our audit committee
include, but not limited to, the following:
(i) to review the performance of external auditors and making recommendations to our
Board on the appointment, reappointment and removal of external auditors;
(ii) to coordinate communication between our Company and external auditors, review and
monitor the external auditor’s independence and objectivity and the effectiveness of
the audit process;
(iii) to develop and implement policy on engaging an external auditor to supply non-audit
services;
(iv) to review our Company’s accounting policies, financial condition and reporting
procedures, review financial statements, annual and half-year reports of our Company
and ensure compliance with the relevant accounting standards, laws, and regulations;
and
(v) to oversee internal control procedures of our Company.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 314 ---
Remuneration committee
Our remuneration committee consists of Dr. Li Jiannan, Ms. Ji Ying and Dr. Gu Zhaoyang.
Dr. Li Jiannan is the chairman of our remuneration committee. The primary duties of our
remuneration committee include, but not limited to, the following:
(i) to make recommendations on the remuneration policy for our Directors, Supervisors
and senior management and on the establishment of a formal and transparent
procedure for developing remuneration policy;
(ii) to review and approve the management’s remuneration proposals with reference to our
Board’s corporate goals and objectives;
(iii) to evaluate performance of our Board and senior management and make
recommendations as to year-end bonus for our Board’s approval;
(iv) to make recommendations to the board on the remuneration packages of individual
executive directors and senior management;
(v) to consider salaries paid by comparable companies, time commitment and
responsibilities and employment conditions elsewhere in our Group;
(vi) to ensure none of our Directors is involved in deciding his/her own remuneration; and
(vii) to review and/or approve matters relating to share schemes under Chapter 17 of the
Listing Rules.
Nomination committee
Our nomination committee consists of Dr. Huang Hanxiong, Ms. Ji Ying and Dr. Li
Jiannan. Dr. Huang Hanxiong is the chairman of our nomination committee. The primary duties
of our nomination committee include, but not limited to, the following:
(i) to formulate and review selection criteria and procedures for our Directors and senior
management;
(ii) to review the structure, size and composition of our Board on a regular basis;
(iii) to identify individuals suitably qualified to become Board members;
(iv) to assess the independence of our independent non-executive Directors; and
(v) to make recommendations to our Board on relevant matters relating to the appointment
or reappointment of our Directors.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 315 ---
Strategic committee
Our strategic committee consists of Mr. Pan Yun, Dr. Huang Hanxiong and Ms. Li
Youxiang. Mr. Pan Yun is the chairman of our strategic committee. The primary duties of our
strategic committee include, but not limited to, the following:
(i) to research and recommend to our Board long-term development and strategic plans of
our Company;
(ii) to research and recommend to our Board significant investment and financing
schemes, and major capital operations and asset management projects of our Company
which are subject to the approval from our Board according to the Articles of
Association;
(iii) to research and recommend to our Board matters that are material to the development
of our Company;
(iv) to check the implementation of the aforementioned matters that are approved via
Board meetings or Shareholders’ meetings; and
(v) to deal with other strategic matters that are authorised by our Board.
BOARD DIVERSITY POLICY
We have adopted a board diversity policy (the “ Board Diversity Policy ”) which sets out
the objective and approach to achieve and maintain diversity of our Board in order to enhance
the effectiveness of our Board. Pursuant to the Board Diversity Policy, we seek to achieve
diversity of our Board through the consideration of a number of factors when selecting
candidates to our Board, including but not limited to professional experience, skills, knowledge,
gender, age, cultural and education background, ethnicity and length of service. Our Company
recognises and embraces the benefits of having a diverse Board and sees increasing diversity at
the Board level, including gender diversity, as an essential element in maintaining our
Company’s competitive advantage and enhancing its ability to attract talents and to retain and
motivate employees. We have also taken and will continue to take steps to promote gender
diversity at all levels of our Company, including but not limited to our Board and the senior
management levels.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 316 ---
Our Directors have a balanced mix of knowledge and skills. They completed studies in
various majors including but without limitation to business management, accounting, finance and
legal studies. The ages of our Directors range from 40 years old to 67 years old, and we have
both male and female representatives on the Board. Our nomination committee will review and
assess the composition of the Board and make recommendations to the Board on appointment of
members of the Board. Meanwhile, our nomination committee will consider the benefits of all
aspects of diversity, including without limitation, professional experience, skills, knowledge,
education background, age, gender, cultural background, ethnicity and length of service, in order
to maintain an appropriate range and balance of talents, skills, experience and diversity of
perspectives on the Board.
COMPLIANCE ADVISER
We have appointed Sinolink Securities (Hong Kong) Company Limited as our compliance
adviser upon the Listing pursuant to Rules 3A.19 and 19A.05 of the Listing Rules. Pursuant to
Rule 3A.23 of the Listing Rules, our Compliance Adviser will advise us when we consult our
Compliance Adviser in the following circumstances:
(i) before the publication of any regulatory announcement, circular or financial report;
(ii) where a transaction, which might be a notifiable or connected transaction under the
Listing Rules, is contemplated by our Group, including share issues and share
repurchases;
(iii) where our Group proposes to use the proceeds of the Global Offering in a manner
different from that detailed in this prospectus or where our Group’s business activities,
developments or results of operation deviate from any forecast, estimate or other
information in this prospectus; and
(iv) where the Stock Exchange makes an inquiry of our Company regarding unusual
movements in the price or trading volume of the Shares.
The terms of appointment of our Compliance Adviser shall commence on the Listing Date
and end on the date on which our Group complies with Rule 13.46 of the Listing Rules in
respect of our financial results for the first full financial year commencing after the Listing Date
and such appointment may be subject to extension by mutual agreement.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 317 ---
COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
Our Group considers that appointing Mr. Pan Yun as both the chairman of our Board and
the general manager of our Company will provide us with strong and consistent leadership,
resulting in more effective planning and management of our Group. Pursuant to code provision
C.2.1 of Appendix C1 to the Listing Rules, the roles of chairperson and chief executive should
be separate and should not be performed by the same individual. However, in view of Mr. Pan
Yun’s extensive industry experience, personal profile and critical role in our Group’s historical
development, we believe that it would be beneficial for our Group’s business prospects if Mr.
Pan Yun continues to act as both the chairman of our Board and the general manager of our
Company upon Listing.
Save as disclosed above, we are in compliance with all applicable code provisions as set
out in the Corporate Governance Code as contained in Appendix C1 to the Listing Rules.
REMUNERATION POLICY
Our Directors, Supervisors and senior management receive their remuneration in the form
of Directors’ or Supervisors’ salary and allowances, discretionary bonuses, retirement benefit
scheme contributions and other benefits in kind (if applicable).
The aggregate amounts of remuneration (including fees, salaries, allowances and benefits in
kind, discretionary bonus and contributions to defined contribution plans) for our Directors and
Supervisors was approximately RMB6.3 million for FY2022, RMB6.8 million for FY2023 and
RMB7.4 million for FY2024. None of our Directors or Supervisors waived any remuneration
during the aforesaid periods.
For FY2022, FY2023 and FY2024, the five highest paid individuals of our Company
included four, four and four Directors respectively. The aggregate remuneration (including
salaries, allowances and benefits in kind and contributions to defined contribution plans) paid to
our Group’s five highest remuneration individuals were approximately RMB4.9 million, RMB5.3
million and RMB5.7 million, respectively.
Under the arrangements currently in force, we estimate that the aggregate amounts of
remuneration, excluding discretionary bonus, of our Directors and Supervisors for the year
ending 31 December 2025 to be RMB7.5 million. The actual remuneration of Directors and
Supervisors in 2025 may be different from the expected remuneration.
During the Track Record Period, no emolument was paid by our Group to any of our
Directors, Supervisors or the five highest paid individuals (including Directors and employees)
as an inducement to join or upon joining our Group or as compensation for loss of office. None
of our Directors or Supervisors has waived or agreed to waive any emoluments during the Track
Record Period.
Save as disclosed above, no other payments of remuneration have been made, or are
payable, in respect of the Track Record Period, by our Group to or on behalf of any of our
Directors or Supervisors.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 318 ---
SUBSTANTIAL SHAREHOLDERS
So far as our Directors are aware, immediately following the completion of the Global
Offering and without taking into account any Shares which may be issued pursuant to the
exercise of the Over-allotment Option, the following persons will have an interest or short
position in the Shares or underlying Shares which would fall to be disclosed to our Company
and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or
will be, directly or indirectly, interested in 10% or more of the nominal value of any class of
share capital carrying rights to vote in all circumstances at general meetings of our Company:
Shares held as at the Latest
Practicable Date and immediately
prior to the Global Offering (1)
Shares held immediately following
the completion of the Global
Offering (assuming the
Over-allotment Option
is not exercised) (1)
Name of
Shareholder
Capacity/
Nature of interest Class of Shares Number
Approximate
percentage in
the total share
capital of our
Company Number
Approximate
percentage in
the total share
capital of our
Company
Mr. Pan Yun Beneficial Interest Domestic Unlisted
Shares
110,659,509 (L) 54.07% 110,659,509 (L) 40.55%
Interest in controlled
corporation
(2)
Domestic Unlisted
Shares
94,000,000 (L) 45.93% 94,000,000 (L) 34.45%
Ms. Cao Chengling Interest of spouse (3) Domestic Unlisted
Shares
204,659,509 (L) 100.00% 204,659,509 (L) 75.00%
X.J. Management
(Qichun)
Beneficial Interest Domestic Unlisted
Shares
54,000,000 (L) 26.39% 54,000,000 (L) 19.79%
Qichun Hengxing Beneficial Interest Domestic Unlisted
Shares
40,000,000 (L) 19.54% 40,000,000 (L) 14.66%
SUBSTANTIAL SHAREHOLDERS
– 309 –


--- page 319 ---
Notes:
1. The letter “L” denotes the entity/person’s long position (as defined under Part XV of the SFO) in such
Shares.
2. As at the Latest Practicable Date, X.J. Management (Qichun) and Qichun Hengxing were owned by Mr.
Pan Yun as to 70.37% and 47.50%, respectively. Mr. Pan Yun was the sole general partner of X.J.
Management (Qichun) and Qichun Hengxing. X.J. Management (Qichun) and Qichun Hengxing were
interested in 54,000,000 Domestic Unlisted Shares and 40,000,000 Domestic Unlisted Shares, respectively.
Accordingly, Mr. Pan Yun is deemed to be interested in the Domestic Unlisted Shares held by X.J.
Management (Qichun) and Qichun Hengxing under the SFO.
3. Ms. Cao Chengling is the spouse of Mr. Pan Yun and is deemed to be interested in the Shares in which Mr.
Pan Yun is interested under the SFO.
Save as disclosed herein, our Directors are not aware of any persons who will, immediately
following the completion of the Global Offering and without taking into account any Shares
which may be issued pursuant to the exercise of the Over-allotment Option, have an interest or
short position in the Shares or underlying Shares which would fall to be disclosed to our
Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the
SFO, or, will be, directly or indirectly, interested in 10% or more of the nominal value of any
class of share capital carrying rights to vote in all circumstances at general meetings of our
Company or any other member of our Group. Our Directors are not aware of any arrangement
which may at a subsequent date result in a change of control of our Company.
SUBSTANTIAL SHAREHOLDERS
– 310 –


--- page 320 ---
THE CORNERSTONE PLACING
We have entered into cornerstone investment agreements (each a “ Cornerstone Investment
Agreement ”, and together the “ Cornerstone Investment Agreements ”) with the cornerstone
investors set out below (each a “ Cornerstone Investor ”, and together the “ Cornerstone
Investors ”), pursuant to which the Cornerstone Investors have agreed to, subject to certain
conditions, subscribe, or cause their designated entities to subscribe, at the Offer Price for such
number of Offer Shares (rounded down to the nearest whole board lot of 1,000 H Shares) as set
out in the tables below (the “ Cornerstone Placing ”).
Assuming an Offer Price of HK$2.86 per H Share, being the low-end of the indicative
Offer Price range set out in this prospectus, the total number of Offer Shares to be subscribed
for by the Cornerstone Investors would be 30,016,000 H Shares, representing approximately
44.00% of the Offer Shares and approximately 11.00% of the total issued share capital of our
Company immediately upon completion of the Global Offering (assuming the Over-allotment
Option is not exercised).
Assuming an Offer Price of HK$3.11 per H Share, being the midpoint of the indicative
Offer Price range set out in this prospectus, the total number of Offer Shares to be subscribed
for by the Cornerstone Investors would be 27,603,000 H Shares, representing approximately
40.46% of the Offer Shares and approximately 10.12% of the total issued share capital of our
Company immediately upon completion of the Global Offering (assuming the Over-allotment
Option is not exercised).
Assuming an Offer Price of HK$3.35 per Offer Share, being the high-end of the indicative
Offer Price range set out in this prospectus, the total number of Offer Shares to be subscribed
for by the Cornerstone Investors would be 25,626,000 H Shares, representing approximately
37.56% of the Offer Shares and approximately 9.39% of the total issued share capital of our
Company immediately upon completion of the Global Offering (assuming the Over-allotment
Option is not exercised).
Our Company is of the view that the Cornerstone Placing provides an impression of
commitment, confidence and interests of the Cornerstone Investors in our Group’s business and
prospect and help to raise the profile of our Company. Our Company became acquainted with (i)
Hubei Shunjie Investment (Hong Kong) Co., Limited ( ಳ̏නઠҳ༟ (ಥ)ʮ̡ )( “ Shunjie
Investment ”), (ii) Hong Kong Xinghuang Holdings Limited (ʮ̡ )
(“Xinghuang Holdings ”) and (iii) Hong Kong Yunxing Technology Trade Management Co.,
Limited (ʮ̡ )( “ Yunxing Technology ”) through the business
network of our Group.
CORNERSTONE INVESTORS
–3 1 1–


--- page 321 ---
The Cornerstone Placing will form part of the International Offering, and, the Cornerstone
Investors and their respective close associates will not subscribe for any Offer Shares under the
Global Offering (other than pursuant to the Cornerstone Investment Agreements). The Offer
Shares to be subscribed by the Cornerstone Investors will rank pari passu in all respects with
the fully paid H Shares in issue following the Global Offering of the Company and will be
counted towards the public float of our Company under Rule 8.08 of the Listing Rules. The
three largest public Shareholders will not hold more than 50% of the Shares held in public hands
at the time of the Listing in compliance with Rule 8.08(3) and Rule 8.24 of the Listing Rules.
Immediately following the completion of the Global Offering, the Cornerstone Investors or
their close associates will not, by virtue of their cornerstone investments, have any Board
representation in our Company; and none of the Cornerstone Investors and their close associates
will become a substantial Shareholder of our Company. Other than a guaranteed allocation of the
relevant Offer Shares at the final Offer Price, the Cornerstone Investors do not have any
preferential rights under each of their respective Cornerstone Investment Agreements, as
compared with other public Shareholders. There are no side arrangements or agreements between
our Company and the Cornerstone Investors or any benefit, direct or indirect, conferred on the
Cornerstone Investors by virtue of or in relation to the Global Offering, other than a guaranteed
allocation of the relevant Offer Shares at the final Offer Price, following the principles as set out
in Chapter 4.15 of the Guide for New Listing Applicants.
To the best knowledge of our Company, each of the Cornerstone Investors and their
beneficial owners is (i) an Independent Third Party and is not our connected person (as defined
under the Listing Rules); (ii) not accustomed to take instructions from our Company or any of
our Directors, Supervisors, chief executive, our Controlling Shareholders, substantial
Shareholders or existing Shareholders or any of their subsidiaries or their respective close
associates in relation to the acquisition, disposal, voting or other disposition of the Shares
registered in their name or otherwise held by them; (iii) not financed directly and indirectly by
our Company or any of our Directors, Supervisors, chief executive of our Company, our
Controlling Shareholders, substantial Shareholders, existing Shareholders or any of their
subsidiaries or their respective close associates; and (iv) independent of the other Cornerstone
Investors, our Group, our connected persons and their respective associates, and is not an
existing Shareholder or a close associate of our Group.
To the best knowledge of our Company and as confirmed by each of the Cornerstone
Investors, each of the Cornerstone Investors make independent investment decisions, and their
subscription under the Cornerstone Placing would be financed by its own internal financial
resources and it has sufficient funds to settle its respective investment under the Cornerstone
Placing. None of the Cornerstone Investors or their holding companies is listed on any stock
exchange, and each of the Cornerstone Investors has confirmed that all necessary approvals have
been obtained with respect to the Cornerstone Placing and that no specific approval from any
stock exchange or its shareholders or other regulatory authorities is required for the relevant
Cornerstone Placing.
CORNERSTONE INVESTORS
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The Cornerstone Investors have agreed to pay for the relevant Offer Shares that they have
subscribed before dealings in the Company’s H Shares commence on the Stock Exchange. Each
of the Cornerstone Investors has agreed that our Company and the Overall Coordinators in their
sole discretion may defer the delivery of all or part of the Offer Shares it will subscribe to on a
date later than the Listing Date. Where delayed delivery takes place, each of the Cornerstone
Investors that may be affected by such delayed delivery has agreed that it shall nevertheless pay
for the relevant Offer Shares before the Listing. There is no deferred settlement arrangement for
all of the Cornerstone Investors under their respective Cornerstone Investment Agreement.
The total number of Offer Shares to be subscribed by the Cornerstone Investors may be
affected by reallocation of the Offer Shares between the International Offering and the Hong
Kong Public Offering. If the total demand for H Shares in the Hong Kong Public Offering falls
within the circumstance as set out in the section headed “Structure of the Global Offering – The
Hong Kong Public Offering – Reallocation” in this prospectus, our Company and the Overall
Coordinators have the absolute discretion, but not obliged, to deduct the number of Offer Shares
to be subscribed by the Cornerstone Investors on a pro rata basis under the Hong Kong Public
Offering pursuant to Practice Note 18 of the Listing Rules. Further, each of the Cornerstone
Investors has agreed that in the event that the requirements under Rule 8.08(3) of the Listing
Rules, which stipulates that no more than 50% of the Shares in public hands can be beneficially
owned by the three largest public shareholders of the Company, may not be complied with on
the Listing Date, the number of the H Shares to be subscribed for by the Cornerstone Investors
may be adjusted to ensure compliance with Rule 8.08(3) of the Listing Rules. Details of the
actual number of Offer Shares to be allocated to the Cornerstone Investors will be disclosed in
the allotment results announcement of our Company to be published on or around 24 June 2025.
THE CORNERSTONE INVESTORS
The information about our Cornerstone Investors set forth below has been provided by the
Cornerstone Investors in connection with the Cornerstone Placing.
Shunjie Investment
Shunjie Investment is a limited liability incorporated in Hong Kong on 10 March 2025 and
is principally engaged in management consulting, investment and trading. Shunjie Investment is
a wholly-owned subsidiary of Hubei Shunjie Tourism Co., Ltd* (ʮ̡ ), which
is indirectly wholly-owned by the State-owned Assets Operation Centre of Qichun County* ( ⧮
ጤ਷Ϟ༟ପ༶ᐄʕː ) in Hubei Province, and is in turn directly under Qichun County
People’s Government* (ִ݁.)
CORNERSTONE INVESTORS
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Xinghuang Holdings
Xinghuang Holdings is a limited liability incorporated in Hong Kong on 10 March 2025
and is principally engaged in management consulting, investment and trading. Xinghuang
Holdings is a wholly-owned subsidiary of the State-owned Assets Management Co., Ltd. of
Huanggang City* (ʮ̡ ) in Hubei Province, which is wholly-owned by
the Huanggang Municipal People’s Government State-owned Assets Supervision and
Administration Commission* (ึ ).
Yunxing Technology
Yunxing Technology is a limited liability incorporated in Hong Kong on 10 April 2025 and
is principally engaged in management consulting, investment and trading. Yunxing Technology is
a wholly-owned subsidiary of Hubei Xingfulong Technology Co., Ltd.* (ʮ
̡)( “ Xingfulong Technology ”). Xingfulong Technology is owned as to 67% and 33% by
Hangzhou Gongwang Wine Co., Ltd.* (ʮ̡ )( “ Gongwang Wine ”) and
Xinjiang Hualing Wogou Supply Chain Co., Ltd.* (ʮ̡ )( “ Hualing
Wogou ”), respectively. Gongwang Wine is owned as to 80% and 20% by Shenzhen Xinmingyuan
Investment Co., Ltd.* (ʮ̡ )( “ Xinmingyuan Investment ”) and Xu Xiaoyu
(஢ʃ༃), respectively. Xinmingyuan Investment is owned as to 90% and 10% by Beijing Mishu
Digital Asset Management Co., Ltd.* (ʮ̡ )( “ Mishu Digital ”) and
Tian Guirong (࢙respectively. Mishu Digital is owned as to 95% and 5% by Shanghai
Siqing Industrial Development Center* (ʕː )( “ Siqing Industrial ”) and Cao
Haijing ( ૎ऎവ), respectively. Siqing Industrial is wholly-owned by Xu Tiantian (଩଩).
Hualing Wogou is owned as to 47.89%, 28.17% and 23.94% by Wu Dongliang ( юಊᆃ), Wang
Xinyang ( ˮอජ) and Shanghai Aiyue E-commerce Co., Ltd.* (ʮ̡ )
(“Aiyue E-commerce ”), respectively. Aiyue E-commerce is owned as to 65% and 35% by Miao
Meihong (ߎߕand Xue Jianbing (ж), respectively.
CORNERSTONE INVESTORS
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The table below sets forth the details of the Cornerstone Placing:
Based on an Offer Price of HK$2.86 per H Share
(being the low-end of the Offer Price range)
Assuming the Over-allotment
Option is not exercised
Assuming the Over-allotment
Option is exercised in full
Cornerstone Investor
Subscription
amount (1)
(RMB)
Number of
Offer Shares (2)
Approximate
% of the total
number of the
Offer Shares
Approximate
% of the total
Shares
immediately
upon the
completion of
the Global
Offering
Approximate
% of the total
number of the
Offer Shares
Approximate
% of the total
Shares
immediately
upon the
completion of
the Global
Offering
Shunjie Investment 40,000,000 15,008,000 22.00% 5.50% 19.13% 5.30%
Xinghuang Holdings 30,000,000 11,256,000 16.50% 4.12% 14.35% 3.98%
Yunxing Technology 10,000,000 3,752,000 5.50% 1.37% 4.78% 1.33%
Total 80,000,000 30,016,000 44.00% 11.00% 38.26% 10.60%
Based on an Offer Price of HK$3.11 per H Share
(being the midpoint of the Offer Price range)
Assuming the Over-allotment
Option is not exercised
Assuming the Over-allotment
Option is exercised in full
Cornerstone Investor
Subscription
amount (1)
(RMB)
Number of
Offer Shares (2)
Approximate
% of the total
number of the
Offer Shares
Approximate
% of the total
Shares
immediately
upon the
completion of
the Global
Offering
Approximate
% of the total
number of the
Offer Shares
Approximate
% of the total
Shares
immediately
upon the
completion of
the Global
Offering
Shunjie Investment 40,000,000 13,802,000 20.23% 5.06% 17.59% 4.88%
Xinghuang Holdings 30,000,000 10,351,000 15.17% 3.79% 13.19% 3.66%
Yunxing Technology 10,000,000 3,450,000 5.06% 1.26% 4.40% 1.22%
Total 80,000,000 27,603,000 40.46% 10.12% 35.18% 9.75%
CORNERSTONE INVESTORS
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Based on an Offer Price of HK$3.35 per H Share
(being the high-end of the Offer Price range)
Assuming the Over-allotment
Option is not exercised
Assuming the Over-allotment
Option is exercised in full
Cornerstone Investor
Subscription
amount (1)
(RMB)
Number of
Offer Shares (2)
Approximate
% of the total
number of the
Offer Shares
Approximate
% of the total
Shares
immediately
upon the
completion of
the Global
Offering
Approximate
% of the total
number of the
Offer Shares
Approximate
% of the total
Shares
immediately
upon the
completion of
the Global
Offering
Shunjie Investment 40,000,000 12,813,000 18.78% 4.70% 16.33% 4.53%
Xinghuang Holdings 30,000,000 9,610,000 14.09% 3.52% 12.25% 3.39%
Yunxing Technology 10,000,000 3,203,000 4.70% 1.17% 4.08% 1.13%
Total 80,000,000 25,626,000 37.56% 9.39% 32.66% 9.05%
Notes:
(1) Inclusive of brokerage of 1.0%, SFC transaction levy of 0.0027%, Stock Exchange trading fee of
0.00565% and AFRC transaction levy of 0.00015%.
(2) Subject to rounding down to the nearest whole board lot of 1,000 Offer Shares. Calculated based on the
exchange rate set out in the section headed “Information about this Prospectus and the Global Offering –
Exchange Rate Conversion”.
CLOSING CONDITIONS
The obligation of each Cornerstone Investor to subscribe for the Offer Shares under the
respective Cornerstone Investment Agreement is subject to, among other things, the following
closing conditions:
(a) the Underwriting Agreements for the Hong Kong Public Offering and the International
Offering being entered into and having become effective and unconditional (in
accordance with their respective original terms or as subsequently waived or varied by
agreement of the parties thereto) by no later than the time and date as specified in the
Underwriting Agreements, and neither of the aforesaid Underwriting Agreements
having been terminated;
(b) the Offer Price having been agreed upon between our Company and the Sole
Sponsor-Overall Coordinator (for itself and on behalf of the Underwriters);
CORNERSTONE INVESTORS
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(c) the Stock Exchange having granted the approval for the listing of, and permission to
deal in, the H Shares (including the H Shares subscribed for by the Cornerstone
Investors) as well as other applicable waivers and approvals, and such approval,
permission or waiver having not been revoked prior to the commencement of dealings
in the H Shares on the Stock Exchange;
(d) no laws shall have been enacted or promulgated by any governmental authority which
prohibits the consummation of the transactions contemplated in the Global Offering or
in the respective Cornerstone Investment Agreements and there shall be no orders or
injunctions from a court of competent jurisdiction in effect precluding or prohibiting
consummation of such transactions; and
(e) the respective acknowledgements, representations, warranties, undertakings and
confirmations of relevant Cornerstone Investor under the respective Cornerstone
Investment Agreement are accurate and true in all respects and not misleading and that
there is no material breach of the Cornerstone Investment Agreement on the part of
the relevant Cornerstone Investor.
RESTRICTIONS ON THE CORNERSTONE INVESTORS
Each of Shunjie Investment, Xinghuang Holdings and Yuxing Technology has agreed that it
will not, and will cause its affiliates not to, whether directly or indirectly, at any time during the
period of five years, three years and three years, respectively, from (and inclusive of) the Listing
Date (the “ Lock-up Period ”), dispose of, in any way, any of the Offer Shares or any interest in
any company or entity holding such Offer Shares that they have purchased pursuant to the
relevant Cornerstone Investment Agreement, save for certain limited circumstances, such as
transfers to any of its wholly-owned subsidiaries who will be bound by the same obligations of
such Cornerstone Investor, including the Lock-up Period restriction.
CORNERSTONE INVESTORS
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SHARE CAPITAL
As at the Latest Practicable Date, the registered capital of our Company is
RMB204,659,509, divided into 204,659,509 Domestic Unlisted Shares with a nominal value of
RMB1.00 each.
Assuming that the Over-allotment Option is not exercised, the share capital of our
Company immediately following the completion of the Global Offering will be increased to
RMB272,879,509 and set out as follows:
Number of Shares Description of Shares
Approximate % of
the Enlarged Share
Capital after the
Global Offering
204,659,509 Domestic Unlisted Shares 75.00%
68,220,000 H Shares to be issued under the Global
Offering
25.00%
272,879,509 100%
Assuming that the Over-allotment Option is exercised in full, the share capital of our
Company immediately following the completion of the Global Offering will be increased to
RMB283,112,509 and set out as follows:
Number of Shares Description of Shares
Approximate % of
the Enlarged Share
Capital after the
Global Offering
204,659,509 Domestic Unlisted Shares 72.29%
68,220,000 H Shares to be issued under the Global
Offering
24.10%
10,233,000 H Shares to be issued upon full exercise of
the Over-allotment Option
3.61%
283,112,509 100%
SHARE CAPITAL
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PUBLIC FLOAT REQUIREMENTS
Rules 8.08(1)(a) and (b) of the Listing Rules provides that there must be an open market in
the securities for which listing is sought. It normally means that the minimum public float of a
listed issuer must at all times be at least 25% of the issuer’s total issued share capital.
Based on the information in the above tables, our Company will meet the public float
requirement under the Listing Rules after the completion of the Global Offering (whether or not
the Over-allotment Option is exercised in full). We will make appropriate disclosure of our
public float and confirm the sufficiency of our public float in successive annual reports after the
Listing.
OUR SHARES
The H Shares in issue following the completion of the Global Offering and the Domestic
Unlisted Shares are ordinary Shares in the share capital of our Company, and are considered as
one class of Shares. However, apart from certain qualified domestic institutional investors in the
PRC, qualified PRC investors under the Shanghai-Hong Kong Stock Connect, the
Shenzhen-Hong Kong Stock Connect or other persons who are entitled to hold our H Shares
pursuant to the relevant PRC laws and regulations or upon approvals of any competent
authorities, including our existing Shareholders who may convert their Domestic Unlisted Shares
into H Shares upon completion of filing with the CSRC, H Shares generally may not be
subscribed for by or traded between legal or natural persons of the PRC.
The Domestic Unlisted Shares and H Shares will rank pari passu with each other in all
respects and, in particular, will rank equally for all dividends or distributions declared, paid or
made after the date of this prospectus.
All dividends for H Shares will be denominated and declared in Renminbi, and paid in
Hong Kong dollars or Renminbi, whereas all dividends for Domestic Unlisted Shares will be
paid in Renminbi. Other than cash, dividends could also be paid in the form of shares.
CONVERSION OF OUR DOMESTIC UNLISTED SHARES INTO H SHARES
Our Domestic Unlisted Shares are unlisted Shares which are currently not listed or traded
on any stock exchange.
According to stipulations by the State Council securities regulatory authority and the
Articles of Association, the Domestic Unlisted Shares may be converted into H Shares. Such
converted Shares may be listed or traded on an overseas stock exchange provided that the
conversion and trading of such converted Shares shall only be effected after all requisite internal
approval process have been duly completed and the approval from the relevant PRC regulatory
authorities (including the CSRC) and the relevant overseas stock exchange have been obtained.
SHARE CAPITAL
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In addition, such conversion and trading shall in all respects comply with the regulations
prescribed by the State Council securities regulatory authority and the regulations, requirements
and procedures prescribed by the relevant overseas stock exchange.
If any of the Domestic Unlisted Shares are to be converted to H Shares and to be traded on
the Stock Exchange, such conversion requires the approval of the relevant PRC regulatory
authorities, including the CSRC. Approval of the Stock Exchange is required for the listing of
such converted Shares on the Stock Exchange. Subject to fulfilling the procedures below, our
Company may apply for the listing of all or any portion of the Domestic Unlisted Shares on the
Stock Exchange as H Shares before any proposed conversion so that the conversion process can
be completed promptly upon notice to the Stock Exchange and delivery of shares for entry on
the H Share register. As any listing of additional Shares after our Company’s initial listing on
the Stock Exchange is ordinarily considered by the Stock Exchange to be a purely administrative
matter, it does not require prior application for listing as at the time of our Company’s initial
listing in Hong Kong. A vote by our Shareholders in general meeting is not required for the
listing and trading of the converted Shares on an overseas stock exchange. Any listing of the
converted Shares on the Stock Exchange after the initial listing is subject to prior notification by
way of announcement to inform Shareholders and the public of any proposed conversion.
After all the requisite approvals have been obtained, the relevant Domestic Unlisted Shares
will be withdrawn from the Domestic Unlisted Share register, and our Company will re-register
such Shares on the H Share register maintained in Hong Kong and instruct the H Share Registrar
to issue H Share certificates. Registration on the H Share register of our Company will be on the
conditions that (i) the H Share Registrar lodges with the Stock Exchange a letter confirming the
entry of the relevant H Shares on the H Share register and the due dispatch of H Share
certificates; and (ii) the admission of the H Shares to be traded on the Stock Exchange complies
with the Listing Rules and the General Rules of HKSCC and the HKSCC Operational Procedures
in force from time to time. Until the converted Shares are re-registered on the H Share register
of our Company, such Shares would not be listed as H Shares.
RESTRICTIONS OF SHARE TRANSFER
In accordance with the PRC Company Law, the shares issued prior to any public offering of
shares by a company cannot be transferred within one year from the date on which such publicly
offered shares are listed and traded on the relevant stock exchange. As such, the Shares issued
by our Company prior to the issue of H Shares will be subject to such statutory restriction on
transfer within a period of one year from the Listing Date.
SHARE CAPITAL
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Our Directors, Supervisors and members of the senior management of our Company shall
declare their shareholdings in our Company and any changes in their shareholdings. Shares
transferred by our Directors, Supervisors and members of the senior management each year
during their term of office shall not exceed 25% of their total respective shareholdings in our
Company. The Shares that the aforementioned persons held in our Company cannot be
transferred within one year from the date on which the shares are listed and traded, nor within
half a year after they leave their positions in our Company. The Articles of Association may
contain other restrictions on the transfer of the Shares held by our Directors, Supervisors and
members of senior management of our Company.
For details of the lock-up undertaking given by our Controlling Shareholders pursuant to
Rule 10.07 of the Listing Rules, please see “Underwriting – Underwriting Arrangements –
Undertakings to the Stock Exchange – Undertaking by our Controlling Shareholders” in this
prospectus.
INCREASE IN SHARE CAPITAL
As advised by our PRC Legal Advisers, pursuant to the Articles of Association and subject
to the requirements of the relevant PRC laws and regulations, our Company, upon the Listing of
our H Shares, is eligible to enlarge its share capital by issuing either new H Shares or new
Domestic Unlisted Shares on condition that such proposed issuance shall be approved by a
special resolution of Shareholders in general meeting conducted in accordance with the
provisions of the Articles of Association and that such issuance complies with the Listing Rules
and other relevant laws and regulations of Hong Kong. To adopt a special resolution of
Shareholders in general meeting, more than the two thirds votes represented by the Shareholders
(including proxies) present at the general meeting must be exercised in favour of the resolution.
GENERAL MANDATE TO ISSUE SHARES
Subject to the completion of the Global Offering, pursuant to the Shareholders resolutions
of our Company passed on 24 September 2024, our Board was granted with a general mandate to
allot and issue Shares at any time within a period up to the date of the conclusion of the next
annual general meeting of the Shareholders or the date on which the Shareholders pass a special
resolution to revoke or change such mandate, whichever is earlier, upon such terms and
conditions and for such purposes and to such persons as our Board in their absolute discretion
deem fit, and to make necessary amendments to the Articles of Association, provided that, the
number of Shares to be issued shall not exceed 20% of the number of the Shares (including any
sale or transfer of the treasury Shares out of treasury) in issue as at the Listing Date.
SHARE CAPITAL
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CIRCUMSTANCES UNDER WHICH GENERAL MEETINGS ARE REQUIRED
For details of circumstances under which our Shareholders’ general meetings are required,
please see “Appendix V – Summary of the Articles of Association” in this prospectus.
REGISTRATION OF SHARES NOT LISTED ON THE OVERSEAS STOCK EXCHANGE
According to the Guidelines for the “Full Circulation” Program for Domestic Unlisted
Shares of H-share Listed Companies (H΅͡ሗ “ஷ”ˏ )
announced by the CSRC, the domestic shareholders of unlisted shares shall handle share transfer
registration business in accordance with the relevant business rules of the China Securities
Depository and Clearing Corporation Limited (ப΂ʮ̡ ) (the “ CSDC ”).
Further, H-share companies should submit the relevant status reports to the CSRC within 15
days after the transfer registration with the CSDC of the shares involved in the application is
completed.
SHARE CAPITAL
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The following discussion and our analysis should be read in conjunction with our
consolidated financial statements and the notes thereto included in the Accountants’ Report in
Appendix I to this prospectus which has been prepared in accordance with IFRS, and the
selected historical financial information and operating data included elsewhere in this
prospectus.
The following discussion and analysis contains certain forward-looking statements that
involve risks and uncertainties. These statements are based on assumptions and analysis made
by us in light of our experience and perception of historic trends, current conditions and
expect future developments, as well as other factors we believe are appropriate under the
circumstances. However , whether actual outcomes and developments will meet our
expectations and predictions depends on a number of risks and uncertainties over which we
do not have control. For further information, you should see “Risk factors” and
“Forward-looking statements” in this prospectus.
OVERVIEW
We are a manufacturer of lifestyle household goods in the PRC. We mainly operate on
ODM/OEM basis and have built a customer portfolio comprising globally reputable and long
standing names, such as Walmart, Telebrands, SEB, Sensio, Hamilton Beach and Philips etc.
According to the F&S Report, we were the 10th largest company with a market share of 0.8% in
terms of export value in 2024 in the small kitchen appliance industry in the PRC.
(1) Our electric
kettles had a market share of approximately 24.6% and 59.6% in the respective category
classified by the General Administration of Customs of the PRC in terms of export volume from
the PRC to the U.S. and Canada, respectively, in 2024. Our motor-driven products such as
mixers had a market share of approximately 3.8% in the respective category classified by the
General Administration of Customs of the PRC in terms of export volume from the PRC to the
U.S. in 2024.
We focus on research and development, design, manufacturing and sales of electric home
appliances and non-electric household goods. Our electric home appliances consist of three
categories, namely (i) electro-thermic appliances, such as electric griddles, air fryers and kettles,
(ii) motor-driven appliances, such as blenders, mixers and electric can openers and (iii)
electronic appliances such as digital scales, humidifiers and laser projector lights. We also offer
non-electric household goods such as garden hoses and cookware.
For further information about our Group’s business and operations, please see “Business” in
this prospectus.
(1) According to Frost & Sullivan, small kitchen appliance accounted for the largest share of the global small home
appliance industry.
FINANCIAL INFORMATION
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During the Track Record Period, we shipped most of our products to North America and
Europe as per the request of our ODM/OEM customers, while a small portion of our products
were shipped to Oceania, South America, Africa, the PRC and other Asian countries, including
Korea, Japan and Saudi Arabia. Leveraging our experience and knowledge in the industry and
capabilities we have developed throughout the last two decades, as a strategic approach, in 2016,
we started our OBM business to design, develop, manufacture and sell home appliances under
our own brands. For FY2022, FY2023 and FY2024, the total revenue of our Group amounted to
RMB1,097.0 million, RMB1,188.3 million and RMB1,501.5 million, respectively. The net profit
of our Group for the same years were RMB80.3 million, RMB121.5 million and RMB140.4
million, respectively.
BASIS OF PRESENTATION OF HISTORICAL FINANCIAL INFORMATION
The historical financial information has been prepared based on the accounting policies set
out in note 4 of the Accountants’ Report in Appendix I to this prospectus, which conform with
the IASs and IFRSs issued by the IASB, amendments to IFRSs and the related interpretations
issued by the IASB, which are effective for the accounting period beginning on 1 January 2024
throughout the Track Record Period.
The historical financial information has been prepared under the historical cost convention
except for certain financial instruments which have been measured at fair value at the end of
each of period of the Track Record Period.
KEY FACTORS AFFECTING OUR GROUP’S RESULTS OF OPERATION AND
FINANCIAL CONDITION
The results of operations and financial condition during the Track Record Period have been
and will continue to be affected by a number of factors, including those set forth in the section
headed “Risk Factors” in this prospectus.
We have set out below the key factors affecting our Group’s results of operation and
financial condition.
The economy and consumer demand in overseas markets
Given our ODM/OEM business represented the major portion of our revenue, consumer
demand for products that we manufactured for our ODM/OEM customers, in particular, products
shipped to North America and Europe will affect our Group’s results of operations.
FINANCIAL INFORMATION
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During the Track Record Period, we have derived a significant portion of our revenue from
sales of products shipped to North America and Europe, which accounted for 92.0%, 93.0% and
93.0% of our Group’s revenue for FY2022, FY2023 and FY2024, respectively. Our Group’s
financial performance mainly relies on general economic conditions in the North America and
Europe and their impacts on consumer confidence and spending.
Economic factors in the North America and Europe, such as inflation and unemployment
level, interest rates, financial market volatility, recession, and other factors affecting consumer
spending behaviour such as acts of terrorism or major epidemics could reduce demand for our
Group’s products.
Fluctuation in foreign exchange rate
Our consolidated financial results are affected by currency exchange rate fluctuations.
During the Track Record Period, our export sales to regions outside of the PRC are usually
denominated in USD. On the other hand, our costs, including our transactions with our top five
suppliers in each year during the Track Record Period, are general denominated in RMB.
Accordingly, fluctuations in exchange rate of USD and RMB may affect our price
competitiveness and harm our business operation and financial performance. For FY2022,
FY2023 and FY2024, we recorded a net foreign exchange gain of RMB14.4 million, RMB9.9
million and RMB16.7 million, respectively.
Furthermore, our multi-country operations subject us to foreign exchange fluctuations on
translation from functional currencies of our foreign operation to our presentation currency (i.e.
RMB). We have subsidiaries in the United States, Indonesia, and Thailand, and most of our
foreign operations are denominated in its local currency which is different from our presentation
currency. Therefore, we are exposed to foreign currency risks related to exchange differences
arising on translation of foreign operations. For FY2022, FY2023 and FY2024, we recorded
positive exchange differences arising on translation of foreign operations of RMB1.5 million,
RMB0.3 million and RMB0.9 million, respectively. As a result of foreign currency fluctuations,
it could be more difficult to detect underlying trends in our business and results of operations
and we may record negative exchange differences arising on translation of foreign operations.
During the Track Record Period, we have entered into foreign currency forward contracts
with a view to manage risks associated with foreign exchange fluctuations. For FY2022, we
incurred loss from disposal of foreign currency forward contracts in the amount of RMB8.0
million. All of our foreign currency forward transactions have been settled by FY2022.
Currently, our Group does not have a foreign exchange hedging policy. However, the
management of our Group will monitor foreign exchange exposure and will consider hedging
significant foreign exchange exposure should the need arise.
FINANCIAL INFORMATION
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--- page 335 ---
Reliance on major customers
A majority of our revenue is derived from a limited number of customers. For FY2022,
FY2023 and FY2024, sales to our five largest customers accounted for 62.4%, 72.4% and 77.9%
of our total revenue for each year, respectively and sales to our largest customer for FY2022,
FY2023 and FY2024 accounted for 21.3%, 28.5% and 24.1% of our total revenue of the
corresponding years, respectively. During the Track Record Period, one of our major customers,
namely, Telebrands was the only customer of our garden hoses which represented 16.5%, 18.7%,
19.0% of our total revenue, for FY2022, FY2023 and FY2024, respectively.
Our current concentration on a few major customers exposes us to the risks of substantial
losses if such major customers stop engaging in businesses with us or significantly reduce orders
to us, which may in turn cause material fluctuations or declines in our revenue and have a
material and adverse effect on our business, financial condition and results of operations.
The Sino-U.S. and global trade tension may adversely affect our business, financial
conditions and results of operation
During the Track Record Period, a significant portion of our revenue was derived from the
sale of our products to the U.S. as shipment destination, while all of our products are
manufactured in the PRC. During the Track Record Period, sales of our products with the U.S.
as the shipment destination accounted for 68.8%, 80.6% and 76.5% of our total revenue,
respectively.
Since 2018, the Office of the U.S. Trade Representative has released different lists of
Chinese imported goods to be the subject of different level of tariffs. Recently, such trade
tension has escalated further to a global context that does not only affect China but also the
other countries. The development of Sino-U.S. and global trade tension has been highly
unpredictable. In relation to Chinese goods, since early 2025, applicable tariff rose from 10%
and once reached 145% in April 2025 yet subsequently lowered to 30% with the release of the
512 Joint Announcement. In relation to Thailand and Indonesia, where we were setting up new
production facilities, applicable tariff once reached 36% and 32% on 7 April 2025 and
subsequently lowered to 10% as the US government announced a 90-day pause on tariff imposed
on Thailand and Indonesia on 9 April 2025. It is uncertain and unpredictable the higher tariff on
China, Thailand and Indonesia will resume or go even higher in the future. Although, as advised
by our U.S. Legal Advisers, the liability for payment for the U.S. import duties belongs to the
importer of the goods (i.e. our customers), our sales to the U.S. in the future may be affected in
light of the significant uncertainties to the development of the Sino-U.S. and the global trade
tension. Any trade restrictions imposed by the U.S. on our products (regardless they are shipped
from China, Thailand or Indonesia) may significantly increase our U.S. customers’ purchase
costs of our products and hence lower our competitiveness.
FINANCIAL INFORMATION
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Any further escalation in the Sino-U.S. and the global trade tensions could negatively
impact our sales into the U.S. and other markets, whether due to tariffs, duties, export controls,
restrictions on market access, other regulatory measures or the consequential impact on the
macro-economy or demand of lifestyle household goods. Consequently, our business, results of
operations and financial condition may be adversely and materially affected.
For details, please see “Risk Factors – Risks Relating to Our Industry and Business – The
Sino-U.S. and global trade tension may adversely affect our business, financial conditions and
results of operation” in this prospectus.
Price Volatility of raw materials
Our cost of raw materials represented the majority of our cost of sales. For FY2022,
FY2023 and FY2024, our total cost of materials consumed amounted to RMB600.5 million,
RMB619.9 million and RMB836.5 million, respectively, representing 68.8%, 68.7% and 71.3%
of our total cost of sales in the respective years. Our raw materials for production may be
subject to price fluctuations. During the Track Record Period, we closely monitored the prices of
our raw materials in order to better manage our production costs. However, to the extent we
cannot pass on the price increases in these raw materials to our customers, our business
operations and financial performance could be adversely affected.
Please see “Sensitivity analysis” in this section below for a sensitivity analysis, which
illustrates the impact of hypothetical fluctuation in material costs on our profit before tax during
the Track Record Period.
MATERIAL ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES
AND JUDGEMENTS
The discussion and analysis of our Group’s financial position and results of operations as
included in this prospectus are based on the consolidated financial statements prepared using the
material accounting policies set forth in note 4 of the Accountants’ Report set out in Appendix I
to this prospectus, which conform with IFRS accounting standards issued by the IASB.
In the application of our Group’s accounting policies, the management of our Group is
required to make judgements, estimates and assumptions about the carrying amounts of assets
and liabilities that are not readily apparent from other sources. The estimates and underlying
assumptions are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised if the revision
affects only that period, or in the period of the revision and future periods if the revision affects
both current and future periods.
FINANCIAL INFORMATION
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Below are accounting policies and estimates that our Directors consider to be the most
significant, the details of which are set forth in notes 4 and 5 of the Accountants’ Report set out
in Appendix I to this prospectus.
Revenue Recognition
All revenue from contracts with customers within the scope of IFRS 15 are recognised at a
point in time.
Our Group sells electric home appliances and non-electric household goods directly to
customers through offline channels and online channels.
Revenue is recognised when control of the goods has been transferred, being when the
goods have been shipped to the customers’ specific location (delivery for offline channel and at
the point the goods are delivered to and accepted by the customers for online channel). Our
Group requires an advance payment or grants the customers a credit period from 30 days to 135
days based on the assessed credit worthiness of the customers. A contract liability is recognised
for advance payments received for sales in which revenue has yet been recognised.
Leases
A contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration. Our Group assesses whether a
contract is or contains a lease based on the definition under IFRS 16 “Lease” at inception of the
contract. Such contract will not be reassessed unless the terms and conditions of the contract are
subsequently changed.
Our Group as a lessee
Our Group applies the short-term lease recognition exemption to leases for staff quarters
and warehouses that have a lease term of 12 months or less from the commencement date and do
not contain a purchase option. Lease payments on short-term leases are recognised as expense on
a straight-line basis over the lease term.
In respect of right-of-use assets, the cost of right-of-use assets includes the amount of the
initial measurement of the lease liability and any lease payments made at or before the
commencement date. Right-of-use assets are measured at cost, less any accumulated depreciation
and impairment losses, and adjusted for any remeasurement of lease liabilities.
Right-of-use assets are depreciated on a straight-line basis over the shorter of their
estimated useful lives and the lease terms. Our Group presents right-of-use assets as a separate
line item on the consolidated statements of financial position.
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Refundable rental deposits paid are accounted under IFRS 9 “Financial Instruments” and
initially measured at fair value. Adjustments to fair value at initial recognition are considered as
additional lease payments and included in the cost of right-of-use assets.
In respect of lease liabilities, at the commencement date of a lease, our Group recognises
and measures the lease liability at the present value of lease payments that are unpaid at that
date. In calculating the present value of lease payments, our Group uses the incremental
borrowing rate at the lease commencement date as the interest rate implicit in the lease is not
readily determinable.
The lease payments include fixed payments less any lease incentives receivable. After the
commencement date, lease liabilities are adjusted by interest accretion and lease payments.
Our Group remeasures lease liabilities (and makes a corresponding adjustment to the
related right-of-use assets) when the lease term has changed, in which case the related lease
liability is remeasured by discounting the revised lease payments using a revised discount rate at
the date of reassessment.
Our Group presents lease liabilities as a separate line item on the consolidated statements
of financial position.
Our Group accounts for a lease modification as a separate lease if: (i) the modification
increases the scope of the lease by adding the right to use one or more underlying assets; and
(ii) the consideration for the leases increases by an amount commensurate with the stand-alone
price for the increase in scope and any appropriate adjustments to that stand-alone price to
reflect the circumstances of the particular contract; a lease contract is modified and the lease
modification is not accounted for as a separate lease.
For a lease modification that is not accounted for as a separate lease, our Group remeasures
the lease liability based on the lease term of the modified lease by discounting the revised lease
payments using a revised discount rate at the effective date of the modification. Our Group
accounts for the remeasurement of lease liabilities by making corresponding adjustments to the
relevant right-of-use assets.
Property, plant and equipment
Property, plant and equipment are tangible assets that are held for use in the production or
supply of goods or services, or for administrative purposes (other than construction in progress).
Property, plant and equipment are stated in the consolidated statements of financial position at
cost less subsequent accumulated depreciation and subsequent accumulated impairment losses, if
any.
FINANCIAL INFORMATION
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Buildings, machinery and equipment in the course of construction for production, supply or
administrative purposes are carried at cost, less any recognised impairment loss. Costs include
any costs directly attributable to bringing the asset to the location and condition necessary for it
to be capable of operating in the manner intended by management, including costs of testing
whether the related assets is functioning properly and, for qualifying assets, borrowing costs
capitalised in accordance with our Group’s accounting policy. Depreciation of these assets, on
the same basis as other property assets, commences when the assets are ready for their intended
use.
Depreciation is recognised so as to write off the cost of assets other than construction in
progress less their residual values over their estimated useful lives, using the straight-line
method. The estimated useful lives, residual values and depreciation method are reviewed at the
end of each reporting period, with the effect of any changes in estimate accounted for a
prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future
economic benefits are expected to arise from the continued use of the asset. Any gain or loss
arising on the disposal or retirement of an item of property, plant and equipment is determined
as the difference between the sales proceeds and the carrying amount of the asset and is
recognised in profit or loss.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost of inventories are
determined on the weighted average method. Net realisable value represents the estimated
selling price for inventories less all estimated costs of completion and costs necessary to make
the sale. Costs necessary to make the sale include incremental costs directly attributable to the
sale and non-incremental costs which our Group must incur to make the sale.
Net realisable value of inventories
Net realisable value of inventories is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and costs necessary to make the sale.
Our Group assess the net realisable value of inventories as well as the required amount of
write-down of inventory provision at the end of each reporting period, which involves
significant judgement on determination of the estimated selling prices, costs to completion and
costs necessary to make the sale.
FINANCIAL INFORMATION
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Foreign currencies
In preparing the financial statements of each individual group entity, transactions in
currencies other than the functional currency of that entity (foreign currencies) are recognised at
the rates of exchange prevailing on the dates of the transactions. At the end of each reporting
period, monetary items denominated in foreign currencies are retranslated at the rates prevailing
at that date. Non-monetary items carried at fair value that are denominated in foreign currencies
are retranslated at the rates prevailing on the date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not
retranslated.
Exchange differences arising on the settlement of monetary items, and on the re-translation
of monetary items, are recognised in profit or loss in the period in which they arise.
For the purposes of presenting the Historical Financial Information, the assets and
liabilities of our Group’s operations are translated into the presentation currency of our Group
(i.e. RMB) using exchange rates prevailing at the end of each reporting period. Income and
expenses items are translated at the average exchange rates for the period, unless exchange rates
fluctuate significantly during that period, in which case the exchange rates at the date of
transactions are used. Exchange differences arising, if any, are recognised in other
comprehensive income and accumulated in equity under the heading of translation reserves.
Financial instruments
Financial assets and financial liabilities are recognised when a group entity becomes a
party to the contractual provisions of the instrument. All regular way purchases or sales of
financial assets are recognised and derecognised on a trade date basis.
Regular way purchases or sales are purchases or sales of financial assets that require
delivery of assets within the time frame established by regulation or convention in the market
place.
Financial assets and financial liabilities are initially measured at fair value except for trade
receivables arising from contracts with customers which are initially measured in accordance
with IFRS 15 “Revenue from Contracts with Customers”. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than
financial assets at FVTPL) are added to or deducted from the fair value of the financial assets or
financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable
to the acquisition of financial assets at FVTPL are recognised immediately in profit or loss.
FINANCIAL INFORMATION
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The effective interest method is a method of calculating the amortised cost of a financial
asset or financial liability and of allocating interest income and interest expense over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash
receipts and payments (including all fees and points paid or received that form an integral part
of the effective interest rate, transaction costs and other premiums or discounts) through the
expected life of the financial asset or financial liability, or, where appropriate, a shorter period,
to the net carrying amount on initial recognition.
Provision of ECL for trade receivables
Trade receivables of our Group with significant balances and credit-impaired are assessed
for ECL individually. In addition, our Group uses practical expedient in estimating ECL on trade
receivables which are not assessed individually using a provision matrix. The provision rates are
based on ageing of debtors as groupings of various debtors taking into consideration our Group’s
historical default rates and forward-looking information that is reasonable and supportable
available without undue costs or effort. At each reporting date, the historical observed default
rates are reassessed and changes in the forward-looking information are considered.
The provision of ECL is sensitive to changes in estimates. The information about the ECL
and our Group’s trade receivables are disclosed in note 36 of the Accountants’ Report set out in
Appendix I to this prospectus.
RESULTS OF OPERATIONS
Our Group’s consolidated statements of profit or loss and other comprehensive income
during the Track Record Period are summarised below, which have been extracted from the
Accountants’ Report set out in Appendix I to this prospectus.
FY2022 FY2023 FY2024
RMB’000 RMB’000 RMB’000
Revenue 1,096,965 1,188,321 1,501,510
Cost of sales (873,095) (902,300) (1,172,986)
Gross profit 223,870 286,021 328,524
Other income 23,215 22,149 19,382
Impairment losses under expected credit
loss (“ ECL”) model, net of reversal (1,610) (2,494) (865)
Other gains and losses 8,602 9,798 10,646
Selling expenses (24,188) (28,274) (34,560)
Administrative expenses (87,714) (90,071) (111,184)
Research and development expenses (31,981) (34,447) (36,426)
Other expenses (3,806) (3,470) (1,839)
Listing expenses – – (370)
Finance costs (14,467) (12,519) (11,993)
FINANCIAL INFORMATION
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FY2022 FY2023 FY2024
RMB’000 RMB’000 RMB’000
Profit before tax 91,921 146,693 161,315
Income tax expense (11,660) (25,231) (20,890)
Profit for the year 80,261 121,462 140,425
Other comprehensive income (expense):
Item that may be reclassified subsequently
to profit or loss:
Exchange differences arising on
translation of foreign operations 1,493 306 871
Fair value loss, net of ECL and
reclassification adjustments upon
derecognition of trade receivables at
fair value through other comprehensive
income (“ FVTOCI ”) – – (20)
Other comprehensive income (“ OCI”) for
the year 1,493 306 851
Total comprehensive income for the year 81,754 121,768 141,276
Earnings per share
– Basic (RMB) 0.39 0.59 0.69
PRINCIPAL COMPONENTS OF RESULTS OF OPERATIONS
Revenue
We are a manufacturer of lifestyle household goods in the PRC. During the Track Record
Period, we focus on the manufacture and export sales of lifestyle household goods on ODM or
OEM model which contributed more than 90% of our total revenue. In addition to ODM/OEM
operation, we also operated OBM business under which we design, manufacture and sell brands
under our self-owned brands.
FINANCIAL INFORMATION
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By Business Model
The following table sets forth the breakdown of the revenue of our Group by ODM, OEM
and OBM basis during the Track Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
ODM 938,536 85.6 1,056,623 88.9 1,289,950 86.0
OEM 97,056 8.8 81,992 6.9 170,407 11.3
OBM 61,373 5.6 49,706 4.2 41,153 2.7
Total 1,096,965 100.0 1,188,321 100.0 1,501,510 100.0
Note: Revenue from our OBM business represents revenue generated from Aigrentrading, Nawu Technology,
Nuocheng E-Commerce and Weighmax. Revenue from our ODM and OEM business represents revenue
generated from other subsidiaries of our Group.
ODM business
During the Track Record Period, revenue from our ODM business accounted for the
majority of our revenue. For FY2022, FY2023 and FY2024, our ODM sales amounted to
RMB938.5 million, RMB1,056.6 million and RMB1,290.0 million, respectively, which accounted
for 85.6%, 88.9% and 86.0%, respectively, of our total revenue during the same year.
The sales from ODM business increased from RMB938.5 million in FY2022 to
RMB1,056.6 million in FY2023, due to the increases in sales of blenders, air fryers and electric
griddles to Walmart, increase in sales of blenders to Sensio, increase in sales of garden hoses to
Telebrands and sales of electric kettles to one of our customers, partially offset by the absence
of sales of hand-held mixers to TGI in FY2023, which accounted for the majority of our sales of
ODM products to TGI in FY2022. As we initiated product upgrade for garden hoses in FY2022,
our sales of older version of garden hoses have decreased during the same year. The sales
volume of our garden hoses increased rapidly in FY2023 following its upgrade in FY2022.
FINANCIAL INFORMATION
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Our sales from ODM business increased from RMB1,056.6 million in FY2023 to
RMB1,290.0 million in FY2024, which was primarily due to the increase in sales of slow
cookers and can opener to Sensio, the sales of a new product, i.e. heating plate to RJ in FY2024
and increase in sales of garden hoses and laser projector lights sold to Telebrands, partially
offset by decrease in sales of waffle machines to Walmart and decrease in sales of mixers and
rice cookers to another customer. Having established a strong relationship with Sensio, one of
our top five customers during each year of the Track Record Period, Sensio began ordering
ODM slow cookers from us in FY2024, demonstrating their recognition of our capabilities.
OEM business
Our sales from OEM business amounted to RMB97.1 million, RMB82.0 million and
RMB170.4 million for FY2022, FY2023 and FY2024, respectively, which accounted for 8.8%,
6.9% and 11.3%, respectively, of our total revenue for the same year. Our sales from OEM
business decreased from RMB97.1 million for FY2022 to RMB82.0 million for FY2023,
primarily due to a significant drop in sales of electric heaters to one of our major OEM
customers, leading to a significant decrease in revenue from this customer, which accounted for
22.3% of our total revenue from OEM business for FY2022. Our sales from OEM business
increased from RMB82.0 million in FY2023 to RMB170.4 million in FY2024, which was
primarily due to the increase in sales of slow cookers to Sensio, increase in sales of electric
heaters to one of the customers, partially offset by decrease in sales of weighing scales to one of
the customers.
OBM business
For FY2022, FY2023 and FY2024, our OBM sales amounted to RMB61.4 million,
RMB49.7 million and RMB41.2 million, respectively, which accounted for 5.6%, 4.2% and
2.7%, respectively, of our total revenue during the same year. The overall decrease in our
revenue from OBM business throughout the Track Record Period was primarily due to a
decrease in our number of OBM products sold, mainly because our strategic emphasis has been
placed on our ODM and OEM business, with limited resources allocated to our OBM business.
For FY2022, FY2023 and FY2024, our number of OBM products sold amounted to
approximately 1.1 million units, 0.8 million units and 0.6 million units, respectively.
FINANCIAL INFORMATION
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By Product Type
We derived our revenue primarily from the manufacturing and sale of lifestyle household
goods categorised into two categories: (i) electric home appliances and (ii) non-electric
household goods. Electric home appliances are further categorised into (i) electro-thermic
appliances, (ii) motor-driven appliances and (iii) electronic appliances. Non-electric household
goods are further categorised into (i) garden hoses and (ii) others. The following table sets forth
the breakdown of the revenue of our Group by product type during the Track Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
Electric home
appliances
– Electro-thermic
appliances 459,013 41.8 499,099 42.0 757,883 50.5
– Motor-driven
appliances 317,623 29.0 321,937 27.1 315,560 21.0
– Electronic
appliances 122,997 11.2 111,570 9.4 115,066 7.7
Subtotal 899,633 82.0 932,606 78.5 1,188,509 79.2
Non-electric
household goods
– Garden hose 181,460 16.5 221,788 18.7 285,118 19.0
– Others
(Note) 15,872 1.5 33,927 2.8 27,883 1.8
Subtotal 197,332 18.0 255,715 21.5 313,001 20.8
Total 1,096,965 100.0 1,188,321 100.0 1,501,510 100.0
Note: Others include cookware, cleaning tools and other household goods etc.
FINANCIAL INFORMATION
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Electro-thermic appliances
Electro-thermic appliances primarily include electric griddle, air fryer and kettle, which
represented the largest portion of our revenue during the Track Record Period among different
product types, representing 41.8%, 42.0% and 50.5% of our total revenue for FY2022, FY2023
and FY2024, respectively. Our total sales of electro-thermic appliances increased from
RMB459.0 million for FY2022 to RMB499.1 million for FY2023, primarily attributable to the
increases in sales of our electric kettles and air fryers, partially offset by a decrease in sales of
our electric heaters. Our total sales of electro-thermic appliances increased from RMB499.1
million for FY2023 to RMB757.9 million for FY2024, mainly due to the increase in sales of
slow cooker, including ODM slow cookers, which Sensio began to order from us in FY2024 and
electric kettles and sale of a new products, i.e. heating plate, partially offset by decrease in sales
of waffle machines.
Motor-driven appliances
Motor-driven appliances primarily include blender, mixer and electric can opener. For
FY2022, FY2023 and FY2024, revenue generated from this product category represented 29.0%,
27.1% and 21.0% of our total revenue, respectively. Our total sales of motor-driven appliances
increased from RMB317.6 million for FY2022 to RMB321.9million for FY2023, primarily
attributable to the increases in sales of our blenders, electric knives and electric can openers,
partially offset by decrease in sales of our hand-held mixers in FY2023, as our major buyer of
our hand-held mixers for FY2022 did not make any purchase of hand-held mixer in FY2023. Our
total sales of motor-driven appliances decreased from RMB321.9 million for FY2023 to
RMB315.6 million for FY2024, primarily attributable to the decrease in sales of blender and ice
cream machine, partially offset by the increase in sales of electric can opener, juicer and electric
grinder.
Electronic appliances
Electronic appliances primarily include digital scale, humidifier and laser projector light.
For FY2022, FY2023 and FY2024, revenue generated from this product category represented
11.2%, 9.4% and 7.7% of our total revenue, respectively. Our total sales of electronic appliances
decreased from RMB123.0 million for FY2022 to RMB111.6 million for FY2023, primarily
attributable to the decrease of sales of our digital scales, such as platform scales and kitchen
scales, as well as our salt grinders and knife sharpeners. Our total sales of electronic appliances
remained stable at RMB111.6 million for FY2023 and RMB115.1 million for FY2024,
respectively.
FINANCIAL INFORMATION
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Garden hose
Most of our revenue under the non-electric household goods came from sales of garden
hoses during the Track Record Period. For FY2022, FY2023 and FY2024, revenue generated
from this product category represented 16.5%, 18.7% and 19.0% of our total revenue,
respectively. Sales from garden hoses increased from RMB181.5 million for FY2022 to
RMB221.8 million for FY2023, reflecting the success of its upgrade in FY2022. Sales from
garden hoses increased from RMB221.8 million for FY2023 to RMB285.1 million for FY2024,
primarily attributable to the continued growth in sales of our garden hoses due to increased
demand from customer and decrease in selling price.
Others
Others include our cookware, cleaning tools and other household goods. For FY2022,
FY2023 and FY2024, revenue generated from this product category represented 1.5%, 2.8% and
1.8% of our total revenue, respectively.
By shipping destination
The table below sets out the breakdown of our sales of products by shipping destination of
our products during the Track Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
North America
The U.S. 755,142 68.8 958,315 80.6 1,148,669 76.5
Others
(Note) 25,987 2.4 35,634 3.0 107,647 7.2
Europe 227,672 20.8 111,730 9.4 139,551 9.3
Oceania 44,073 4.0 28,834 2.4 57,219 3.8
Asia (excluding
mainland China) 26,331 2.4 35,833 3.0 34,258 2.3
South America 8,527 0.8 12,228 1.0 7,369 0.5
Africa 552 0.1 759 0.1 476 0.0
Mainland China 8,681 0.7 4,988 0.5 6,321 0.4
Total 1,096,965 100.0 1,188,321 100.0 1,501,510 100.0
Note: Others include Canada and Mexico.
FINANCIAL INFORMATION
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Based on the delivery destinations of our products requested by our customers, our
products were exported to more than 70 countries and regions worldwide. During the Track
Record Period, North America was our largest market, which contributed 71.2%, 83.6% and
83.7% of our total revenue, respectively. Europe was our second largest market during the Track
Record Period, which accounted for 20.8%, 9.4% and 9.3% of our total revenue, respectively.
Sales of products shipped to North America
Sales of our products shipped to North America increased by RMB212.8 million from
RMB781.1 million in FY2022 to RMB993.9 million in FY2023, which was mainly attributable
to the increase of sales from Telebrands and Walmart, which accounted for approximately 77.5%
of our increase in sales of products shipped to North America in FY2023, compared with
FY2022. The increase in sales from Telebrands in FY2023 was mainly attributable to increase in
sales of garden hoses following its upgrade in FY2022. Our revenue from Walmart increased in
FY2023, primarily due to increase in sales of blenders, air fryers and electric griddles to
Walmart in the year.
Sales of our products shipped to North America increased by RMB262.4 million from
RMB993.9 million in FY2023 to RMB1,256.3 million in FY2024, which was mainly attributable
to the increase in sales of slow cookers to Sensio, including ODM slow cookers, which Sensio
began to order from us in FY2024, as well as the sales of heating plate to RJ which was not sold
in FY2023.
Sales of products shipped to Europe
Sales of our products shipped to Europe decreased by RMB116.0 million from RMB227.7
million in FY2022 to RMB111.7 million in FY2023 mainly attributable to that sales from TGI
and one of our customers declined significantly in FY2023. The decrease in sales from TGI was
mainly due to absence of sales of hand-held mixers in FY2023, which we sold to TGI in
FY2022. The decrease in sales from the other customer mentioned in FY2023 was mainly due to
absence of revenue from the majority of products we sold to that customer in FY2022. We noted
a relatively low gross profit margin from that customer, and scaled down our business with that
customer since FY2023.
Sales of our products shipped to Europe increased by RMB27.9 million from RMB111.7
million in FY2023 to RMB139.6 million in FY2024, which was mainly attributable to the
increase in sales of air fryers, electric griddle and blenders.
Sales of products shipped to Oceania
Sales of our products shipped to Oceania decreased by RMB15.3 million from RMB44.1
million in FY2022 to RMB28.8 million in FY2023, which was mainly attributable to the
decrease in sales of electric heaters from one of our customers.
FINANCIAL INFORMATION
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Sales of our products shipped to Oceania increased by RMB28.4 million from RMB28.8
million in FY2023 to RMB57.2 million in FY2024, which was mainly attributable to increase in
sales of garden hoses to Telebrands and increase in sales of slow cookers and blenders to
another customer.
Sales of products shipped to Asia (excluding mainland China)
Sales of our products shipped to Asia (excluding mainland China) increased by RMB9.5
million from RMB26.3 million in FY2022 to RMB35.8 million in FY2023, which was mainly
attributable to sales of our blenders from a new customer increase in sales of our toasters and
blenders from another customer in FY2023, partially offset by decrease in sales from few of our
customers.
Sales of our products shipped to Asia (excluding mainland China) decreased by RMB1.5
million from RMB35.8 million for FY2023 to RMB34.3 million for FY2024 mainly due to
increase of sales of egg cooker and toaster to a multinational conglomerate, partially offset by
the decrease in sales of blender to one customer.
Sales of products delivered to Mainland China
Sales of our products delivered to Mainland China further decreased by RMB3.7 million
from RMB8.7 million in FY2022 to RMB5.0 million in FY2023, mainly attributable to the
decrease in our sales from our OBM products sold at various e-commerce market places. In
FY2024, our sales from products shipped to Mainland China increased by RMB1.3 million or
26.0% compared to FY2023. The overall downward trend of our revenue contributed from the
Mainland China market was due to that our strategic emphasis has been placed on overseas
market, with less resources allocated to our business in the Mainland China market.
Cost of sales
The following table sets forth the breakdown of the cost of sales of our Group during the
Track Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
Cost of materials
consumed 600,522 68.8 619,946 68.7 836,537 71.3
Direct labour cost 120,837 13.8 114,543 12.7 145,696 12.4
Overhead 93,121 10.7 93,104 10.3 93,918 8.0
Subcontracting fees 35,148 4.0 50,742 5.6 69,214 5.9
Others 23,467 2.7 23,965 2.7 27,621 2.4
Total 873,095 100.0 902,300 100.0 1,172,986 100.0
FINANCIAL INFORMATION
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--- page 350 ---
Cost of materials consumed constitutes the majority of our cost of sales including metal
and plastic raw materials, components and accessories. Direct labour cost mainly consists of
wages for our production employees. Overhead mainly consists of depreciation cost of our
leasehold lands, properties, plants and equipment, indirect labour cost and utilities.
Subcontracting fees mainly represented service fees we paid to our subcontractors for certain
production processes we outsourced. Others mainly represented transportation cost of our
products
For FY2022, FY2023 and FY2024, our cost of sales represented 79.6%, 75.9% and 78.1%
of our total revenue for the corresponding year, respectively.
Cost of materials consumed was the largest component of our cost of sales during the Track
Record Period, which accounted for 68.8%, 68.7% and 71.3% of our total cost of sales for the
FY2022, FY2023 and FY2024, respectively. During the Track Record Period, fluctuations of our
cost of materials consumed was generally in line with the trend of sales of our products.
Gross Profit and Gross Profit Margin
By Business Model
The following table sets forth the breakdown of the gross profit and gross profit margin
(calculated by dividing gross profit by revenue of the business model) of our Group by business
model during the Track Record Period:
FY2022 FY2023 FY2024
Gross
Profit
Gross
profit
margin
Gross
Profit
Gross
profit
margin
Gross
Profit
Gross
profit
margin
RMB’000 % RMB’000 % RMB’000 %
ODM 185,347 19.7 252,129 23.9 275,186 21.3
OEM 18,282 18.8 14,450 17.6 36,461 21.4
OBM 20,241 33.0 19,442 39.1 16,877 41.0
Total 223,870 20.4 286,021 24.1 328,524 21.9
FINANCIAL INFORMATION
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--- page 351 ---
ODM business
Our gross profit from ODM business increased by 36.0% from RMB185.3 million for
FY2022 to RMB252.1 million for FY2023, primarily attributable to an increase in sales from
ODM business and its improved gross profit margin during the same year. Our gross profit
margin of ODM business increased from 19.7% for FY2022 to 23.9% for FY2023, primarily due
to the lower raw materials cost which led to the overall increase in gross profit margins of our
major product categories, except for garden hoses. Our gross profit margin of sales from garden
hoses decreased primarily attributable to that in FY2023 we sold several types of garden hoses
previously not sold in FY2022, which have a relatively low gross profit margin compared with
other types of garden hoses we sold in FY2023.
Our gross profit from ODM business increased by 9.2% from RMB252.1 million for
FY2023 to RMB275.2 million for FY2024, primarily attributable to the increase in sales from
ODM business, partially offset by the decrease in its gross profit margin. Our gross profit
margin of ODM business decreased from 23.9% for FY2023 to 21.3% for FY2024, primarily
attributable to the decrease in gross profit margins of our motor-driven appliances and garden
hoses. The decrease in gross profit margins of our garden hoses was mainly attributable to the
decrease in average selling price of our garden hoses, following negotiations with our customer
taking into account the trend of appreciation of the USD against RMB as well as the bulk
volume of order such customer had placed with us in recent years. The decrease in gross profit
margins of our motor-driven appliances was mainly attributable to the increase in average costs
of two types of our blenders, the sales of which account for more than 50% of our total sales of
blenders in FY2024 from ODM business, and the sale of a type of blender with relatively low
profit margin which was not sold in FY2023.
OEM business
Our gross profit from OEM business further decreased by 20.8% from RMB18.3 million for
FY2022 to RMB14.5 million for FY2023 primarily due to the decrease in both sales from OEM
business and its gross profit margin. The gross profit margin of our OEM business decreased
slightly from 18.8% for FY2022 to 17.6% for FY2023 mainly attributable to the decrease of
gross profit margin of our electro-thermic appliances. Such decrease was primarily due to (i) the
decrease in sales of our electric heaters to one of our customers, which had a higher gross profit
margin and (ii) increase in sales to a renowned multinational conglomerate, with a negative
gross profit margin. We offered our products at a low price to foster our relationship with the
multinational conglomerate.
Our gross profit from OEM business increased by 151.7% from RMB14.5 million for
FY2023 to RMB36.5 million for FY2024, primarily attributable to the increase in sales from
OEM business and the increase in its gross profit margin. The increase in the gross profit margin
for the OEM business was mainly due to the improved profitability of our electro-thermic
appliances, including our slow cookers.
FINANCIAL INFORMATION
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--- page 352 ---
OBM business
Our gross profit from OBM business decreased throughout the Track Record Period, which
was in line with the decline in our revenue from OBM business during the same period.
However, the gross profit margin of our OBM business showed an upward trend from FY2022 to
FY2023 mainly because of the improvement of gross profit margin of postal scales, revenue
from which accounted for over 50% of our total revenue from OBM business during the same
period. Gross profit margin of our OBM business remained relatively stable at 39.1% for
FY2023 and 41.0% for FY2024.
By Product Type
The following table sets forth the breakdown of the gross profit and gross profit margin
(calculated by dividing gross profit by revenue of the product type) of our Group by product
type during the Track Record Period:
FY2022 FY2023 FY2024
Gross
Profit
Gross
profit
margin
Gross
Profit
Gross
profit
margin
Gross
Profit
Gross
profit
margin
RMB’000 % RMB’000 % RMB’000 %
Electric home
appliances
– Electro-thermic
appliances 63,665 13.9 88,944 17.8 133,501 17.6
– Motor-driven
appliances 50,132 15.8 67,057 20.8 54,851 17.4
– Electronic
appliances 35,201 28.6 38,650 34.6 39,451 34.3
Subtotal 148,998 16.6 194,651 20.9 227,803 19.2
Non-electric
household goods
– Garden hose 72,876 40.2 85,082 38.4 94,629 33.2
– Others
(Note) 1,996 12.6 6,288 18.5 6,092 21.8
Subtotal 74,872 37.9 91,370 35.7 100,721 32.2
Total/Overall gross
profit margin 223,870 20.4 286,021 24.1 328,524 21.9
Note: Others include cookware, cleaning tools and other household goods etc.
FINANCIAL INFORMATION
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--- page 353 ---
Electro-thermic appliances
Our gross profit from sales of electro-thermic appliances increased by 39.6% from
RMB63.7 million for FY2022 to RMB88.9 million for FY2023 as a result of an increase in sales
of electro-thermic appliances and the improved gross profit margin. Despite that our customers
negotiated with us to reduce the selling price of our major products considering the trend of
appreciation of the USD against RMB for FY2023, our gross profit margin of sales from
electro-thermic appliances increased to 17.8% for the same year. This was mainly because price
of our key raw materials decreased in 2023 and that the decrease in the average cost of sales of
electro-thermic appliances outweighed the decrease in average selling price of electro-thermic
appliances in FY2023.
Our gross profit from sales of electro-thermic appliances increased by 50.2% from
RMB88.9 million for FY2023 to RMB133.5 million for FY2024, which was primarily
attributable to the increase in sales of this type of product during the same period. The gross
profit margin from sales of electro-thermic appliances remained stable at 17.8% and 17.6% for
FY2023 and FY2024, respectively.
Motor-driven appliances
Our gross profit from sales of motor-driven appliances increased by 33.9% from RMB50.1
million for FY2022 to RMB67.1 million for FY2023 as a result of an increase in sales of
motor-driven appliances and the improved gross profit margin. Despite that our customers
negotiated with us to reduce the selling price of our major products considering the trend of
appreciation of the USD against RMB for FY2023, our gross profit margin of sales from
motor-driven appliances increased to 20.8% for the same year. This was mainly because price of
our key raw materials decreased in FY2023 and that the decrease in the average cost of sales of
motor-driven appliances outweighed the decrease in average selling price of motor-driven
appliances in FY2023.
Our gross profit from sales of motor-driven appliances decreased by 18.2% from RMB67.1
million for FY2023 to RMB54.9 million for FY2024, which was primarily attributable to the
decrease in sales, as well as reduction in gross profit margin for this type of product. The gross
profit margin of motor-driven appliances decreased from 20.8% for FY2023 to 17.4% for
FY2024, which was mainly due to the sales of new types of blender sold to a customer, which
account for more than 50% of our sales of blenders in FY2024, such blenders has a relatively
high production costs, leading to a low gross profit margin.
FINANCIAL INFORMATION
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--- page 354 ---
Electronic appliances
Our gross profit from sales of electronic appliances further increased by 9.9% to RMB38.7
million for FY2023, primarily attributable to the increase in gross profit margin from sales of
electronic appliances, partially offset by the decrease in our sales of electronic appliances during
the same year. Our gross profit margin of sales from electronic appliances increased from 28.6%
for FY2022 to 34.6% for FY2023, primarily reflected by the increases in gross profit margin of
digital scale sold to Amazon and laser projector lights sold to Telebrands.
Our gross profit from sales of electronic appliances increased by 2.1% from RMB38.7
million for FY2023 to RMB39.5 million for FY2024, which was primarily attributable to the
increase in sales of this type of product during the same period. The gross profit margin from
sales of electronic appliances remained stable at 34.6% and 34.3% for FY2023 and FY2024,
respectively.
Garden hose
Our gross profit from sales of garden hoses increased by 16.7% from RMB72.9 million for
FY2022 to RMB85.1 million for FY2023, primarily attributable to the increase in our sales of
garden hoses during the same year, partially offset the decrease in gross profit margin from sales
of garden hoses. Our gross profit margin of sales from garden hoses decreased slightly from
40.2% for FY2022 to 38.4% for FY2023 primarily due to that in FY2023 we sold a type of
garden hose previously not sold in FY2022, which has a relatively low gross profit margin
compared with other types of garden hoses we sold.
Our gross profit from sales of garden hoses increased by 11.2% from RMB85.1 million for
FY2023 to RMB94.6 million for FY2024, which was primarily attributable to the increase in
sales of garden hoses, partially offset by decrease in gross profit margin from sales of garden
hoses in FY2024. The gross profit margin from sales of garden hoses decreased from 38.4% to
33.2%, which was primarily attributable to that the decrease of average selling price of garden
hoses for FY2024 as compared with FY2023 following negotiations with our customer taking
into account the trend of appreciation of the USD against RMB as well as the bulk volume of
order such customer had placed with us in recent years.
FINANCIAL INFORMATION
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--- page 355 ---
By shipping destination
The following table sets forth the breakdown of the gross profit and gross profit margin of
our Group by shipping destination of our products during the Track Record Period:
FY2022 FY2023 FY2024
Gross
Profit
(loss)
Gross
profit
margin
Gross
Profit
(loss)
Gross
profit
margin
Gross
Profit
(loss)
Gross
profit
margin
RMB’000 % RMB’000 % RMB’000 %
North America (Note) 175,185 22.4 257,460 25.9 295,409 23.5
Europe 33,239 14.6 16,688 14.9 19,612 14.1
Oceania 8,130 18.4 4,509 15.6 11,447 20.0
Asia (excluding
mainland China) 3,762 14.3 4,060 11.3 1,835 5.4
South America 1,473 17.3 2,519 20.6 1,658 22.5
Africa 115 20.8 259 34.1 79 16.6
Mainland China 1,966 22.6 526 10.5 (1,516) (24.0)
Total 223,870 20.4 286,021 24.1 328,524 21.9
Note: North America includes the U.S., Canada and Mexico.
Products shipped to North America
Our gross profit from sales of products shipped to North America increased from
RMB175.2 million in FY2022 to RMB257.5 million in FY2023, primarily attributable to the
increase in our sales of products shipped to North America in FY2023 and the increase in gross
profit margin on sales of products shipped to North America during the same year. Our gross
profit margin for products shipped to North America increased from 22.4% in FY2022 to 25.9%
in FY2023, mainly attributable to the relatively low prices of our key raw materials, which led
to the overall increase in gross profit margins of our various product categories, except for our
garden hoses. Our gross profit margin on sales of garden hoses decreased primarily attributable
to that in FY2023 we sold a type of garden hose previously not sold in FY2022, which has a
relatively low gross profit margin compared with other types of garden hoses we sold.
FINANCIAL INFORMATION
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--- page 356 ---
Our gross profit from sales of products shipped to North America increased from
RMB257.5 million for FY2023 to RMB295.4 million for FY2024, primarily attributable to the
increase in our sales of products shipped to North America for FY2024, partially offset by
decrease in gross profit margin from sale of products shipped to North America from 25.9% for
FY2023 to 23.5% for FY2024. The decline in gross profit margin was mainly due to a reduced
gross profit margin for garden hoses sold to Telebrands in FY2024, as well as decreased in gross
profit margin for blenders sold to Walmart in FY2024. Additionally, the introduction of a type of
blender with low gross profit margin sold to Walmart in FY2024, which was previously not sold
in FY2023, also contributed to the decrease in the gross profit margin.
Products shipped to Europe
Our gross profit from sales of products shipped to Europe decreased from RMB33.2 million
in FY2022 to RMB16.7 million in FY2023, primarily attributable to the decrease in our sales of
products shipped to Europe during FY2023. Our gross profit margin on sale of products shipped
to Europe remained stable at 14.6% and 14.9% in FY2022 and FY2023, respectively.
Our gross profit from sales of products shipped to Europe increased from RMB16.7 million
for FY2023 to RMB19.6 million for FY2024, primarily attributable to the increase in our sales
of products shipped to Europe during FY2024. Our gross profit margin from sale of products
shipped to Europe remained stable at 14.9% and 14.1% in FY2023 and FY2024, respectively.
Products shipped to Oceania
Our gross profit from sales of products shipped to Oceania decreased from RMB8.1 million
in FY2022 to RMB4.5 million in FY2023, primarily attributable to the decrease in sales of
products shipped to Oceania in FY2023 and the decrease of gross profit margin on sales of
products shipped to Oceania during the same year. Our gross profit margin on sale of products
shipped to Oceania decreased from 18.4% in FY2022 to 15.6% in FY2023, mainly because sales
of our electric heaters and heater stands to the aforesaid key customer of FY2021 and FY2022
decreased significantly or dropped to zero in FY2023, leading to a decrease our overall gross
profit and gross profit margin in FY2023.
Our gross profit from sales of products shipped to Oceania increased from RMB4.5 million
for FY2023 to RMB11.4 million for FY2024. Such growth was primarily driven by an increase
in sales of products shipped to Oceania during FY2024, as well as an improved gross profit
margin for these products from 15.6% for FY2023 to 20.0% for FY2024. The improvement of
gross profit margin was mainly due to that we started to sell garden hoses which had higher
gross profit margin compared with other products we sold to Telebrands with Oceania as
shipping destination, since the fourth quarter of FY2023.
FINANCIAL INFORMATION
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--- page 357 ---
Products shipped to Asia (excluding mainland China)
Our gross profit from sales of products shipped to Asia (excluding mainland China)
increased from RMB3.8 million in FY2022 to RMB4.1 million in FY2023, primarily attributable
to the increase in sales of products shipped to Asia (excluding mainland China) in FY2023,
partially offset by decrease in gross profit margin on sales of products shipped to Asia
(excluding mainland China) during the same year.
Our gross profit from sales of products shipped to Asia (excluding mainland China)
decreased from RMB4.1 million for FY2023 to RMB1.8 million for FY2024, which was
primarily attributable to the decrease in sales shipped to Asia (excluding mainland China), as
well as a decreased gross profit margin for FY2024.
Our gross profit margin on sale of products shipped to Asia (excluding mainland China)
decreased from 14.3% in FY2022 to 11.3% in FY2023 and further decreased to 5.4% in FY2024.
Such decrease was mainly due to the increase of sales from a multinational conglomerate in
FY2023 and FY2024, as we recorded a negative profit margin on sales of products to that
customer throughout the Track Record Period. We offered our products at a relatively low price
to foster our relationship with that customer.
Products delivered to Mainland China
Our gross profit from sales of products delivered to Mainland China decreased from
RMB2.0 million in FY2022 to RMB0.5 million in FY2023, primarily attributable to the decrease
in sales of products delivered to Mainland China in FY2023 and the decrease in gross profit
margin on sales of products delivered to Mainland China during the same year. Our gross profit
margin on sale of products delivered to Mainland China decreased from 24.6% in FY2021 to
22.6% in FY2022 and further decreased to 10.5% in FY2023. Such decrease was mainly
attributed to the price reductions of our products under our Aigoli and Weighmax brands, aiming
at boosting our sales, in face of fierce market competition. These price reductions led to lower
gross profit margins and, in some cases, negative profit margins on sales to several online
platforms.
Our gross profit from sales of products delivered to Mainland China decreased from
RMB0.5 million for FY2023 to a gross loss of RMB1.5 million for FY2024, primarily
attributable to the decrease in gross profit margin for products shipped to Mainland China,
partially offset by increase in sales for these products.
The turnaround of positive gross profit margin from sales of products delivered to
Mainland China from 10.5% for FY2023 to a negative gross profit margin of 24.0% was mainly
attributable to sales of toaster and electric kettle to a new customer in FY2024 at a low price.
FINANCIAL INFORMATION
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--- page 358 ---
Sensitivity analysis
Our gross profit, gross profit margin and profit before tax are affected by our cost of sales.
Our cost of raw materials represented the majority of our cost of sales, which accounted for
68.8%, 68.7% and 71.3% of our total cost of sales in FY2022, FY2023 and FY2024,
respectively. For illustration purpose, we set out below a sensitivity analysis of the estimated
increase/decrease in our profit before tax for the respective year with reference to a hypothetical
change in our cost of raw materials during the Track Record Period, assuming all other factors
remain unchanged:
Hypothetical Fluctuation in our cost of raw materials
Impact on our profit before tax
FY2022 FY2023 FY2024
RMB’000 RMB’000 RMB’000
Hypothetical increase/ decrease
in cost of raw materials:
5% (30,026) (30,997) (41,827)
10% (60,052) (61,995) (83,654)
15% (90,078) (92,992) (125,480)
-5% 30,026 30,997 41,827
-10% 60,052 61,995 83,654
-15% 90,078 92,992 125,480
Our financial performance has also been impacted by fluctuations in foreign currency
exchange rates as most of our sales was export sales denominated in USD while our cost of
sales, including our transactions with our top five suppliers in each year during the Track Record
Period, were generally denominated in RMB during the Track Record Period. In the event of
fluctuations in the foreign exchange rate of USD and RMB, our results of operations and
financial condition may be affected.
FINANCIAL INFORMATION
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--- page 359 ---
Other income
The following table sets forth the breakdown of the other income of our Group during the
Track Record Period:
FY2022 FY2023 FY2024
RMB’000 RMB’000 RMB’000
Government grants
– related to expense items 13,117 7,890 4,267
– related to assets 163 163 163
13,280 8,053 4,430
Interest income 6,081 10,168 11,650
Compensation income from
customers 344 7 118
Sales of materials, mouldings
and scraps 2,342 2,793 1,946
Rental income 924 647 951
Others 244 481 287
23,215 22,149 19,382
The government grants primarily consist of subsidies provided by local authorities in the
PRC, such as those aiming to encourage exports, and to support listings on local exchanges.
These government grants are typically awarded on a one-off basis once specific conditions are
met. For instance, recipients may need to achieve a certain value of exported goods within a
year or to reach a particular phase in the listing process, such as filing of listing application and
related documents with local exchanges or the CSRC.
Other income principally comprises (i) government grants, (ii) interest income, (iii)
compensation income from customers and (iv) sales of materials, mouldings and scraps.
Our compensation income mainly included compensation fee for materials we prepared but
not used for orders from Sensio, one of our top five customers in each year during the Track
Record Period. The orders were subsequently canceled, resulting in the compensation.
Other income from sales of materials, mouldings and scraps primarily consists of income
generated from selling of materials such as stainless steel, mouldings used in the manufacture of
products such as waffle machine and toasters and our unused materials such as aluminum scraps
and copper wire coil.
FINANCIAL INFORMATION
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--- page 360 ---
Impairment losses under expected credit loss (“ECL”) model, net of reversal
The following table sets forth the breakdown of impairment losses under ECL model, net of
reversal, of our Group during the Track Record Period:
FY2022 FY2023 FY2024
RMB’000 RMB’000 RMB’000
Impairment losses recognised
(reversed) on:
– Trade receivables 2,450 2,015 1,143
– Trade receivables at fair value
through other comprehensive
income (“ FVTOCI ”) 127 190 (318)
– Other receivables (967) 289 40
1,610 2,494 865
We record impairment loss and reversal of impairment loss under ECL model, which
represented the impairment losses recognised or reversed on our trade and bills receivables,
trade receivables at FVTOCI and other receivables.
Other gains and losses
The following table sets forth the breakdown of other gains or losses of our Group during
the Track Record Period.
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Gain from wealth management
products measured at FVTPL 2,874 561 –
Gain from termination of lease
contracts 12 15 –
Loss from foreign currency forward
contracts (8,004) – –
Gain on disposal of property, plant
and equipment 53 7 51
Net foreign exchange gains 14,386 9,939 16,706
Impairment losses recognised on
investment property – – (2,000)
Loss on trade receivables at FVTOCI
reclassified from equity upon
derecognition – – (3,597)
Others (719) (724) (514)
8,602 9,798 10,646
FINANCIAL INFORMATION
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--- page 361 ---
Other gains or losses of our Group principally comprises (i) gain from wealth management
products measured at FVTPL, (ii) loss from foreign currency forward contracts, which we
entered into with a view to manage risks associated with foreign exchange fluctuations, (iii) net
foreign exchange gain or losses and (iv) others, which include provision for litigations, gain
from termination of lease contracts, compensation paid by us and gain or loss on disposal of
property, plant and equipment.
Selling expenses
The following table sets forth the breakdown of the selling expenses of our Group during
the Track Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
Staff cost 9,733 40.2 10,435 36.9 12,615 36.5
Marketing and
promotion expenses 10,214 42.2 9,037 32.0 7,359 21.3
Testing and inspection
fees 2,777 11.5 3,651 12.9 5,477 15.8
Export insurance cost 920 3.8 2,074 7.3 4,446 12.9
Traveling and
entertainment
expenses 375 1.6 1,554 5.5 2,112 6.1
Others 169 0.7 1,523 5.4 2,551 7.4
Total 24,188 100.0 28,274 100.0 34,560 100.0
For FY2022, FY2023 and FY2024, our selling expenses represented 2.2%, 2.4% and 2.3%
of our total revenue for the corresponding year, respectively.
Our selling expenses primarily include (i) staff cost for our sales and marketing staff, (ii)
marketing and promotion expense which includes fees paid to ecommerce market place, (iii) fees
for product testing and inspection services, (iv) export insurance costs, (v) traveling and
entertainment expenses and (vi) others.
FINANCIAL INFORMATION
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--- page 362 ---
Administrative expenses
The following table sets forth the breakdown of the administrative expenses of our Group
during the Track Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
Staff cost 47,107 53.7 45,282 50.3 52,587 47.3
Depreciation and
amortisation
expenses 15,007 17.1 16,160 17.9 21,582 19.4
Office expenses 7,209 8.2 8,505 9.4 10,469 9.4
Travelling and
entertainment
expenses 2,347 2.7 4,096 4.5 4,707 4.2
Rental and utilities 4,296 4.9 3,108 3.5 3,951 3.6
Labour Fees 2,500 2.9 2,491 2.8 3,001 2.7
Professional fees 2,822 3.2 2,878 3.2 3,544 3.2
Tax and surplus 2,461 2.8 2,581 2.9 4,134 3.7
Bank charges 927 1.1 692 0.8 1,371 1.2
Others 3,038 3.5 4,278 4.7 5,838 5.3
Total 87,714 100.0 90,071 100.0 111,184 100.0
For FY2022, FY2023 and FY2024, our administrative expenses represented 8.0%, 7.6% and
7.4% of our total revenue for the corresponding year, respectively.
Our administrative expenses primarily include (i) staff cost for our managerial and
administrative staff, (ii) depreciation and amortisation expenses, (iii) office expenses, which
include purchase of office equipments and fees paid for enterprise management software, (iv)
travelling and entertainment expense, (v) rental and utilities, (vi) labour fees, (vii) professional
fees, include fees paid for legal services, (viii) tax and surplus, (ix) bank charges and (x) others.
FINANCIAL INFORMATION
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Research and Development Expenses
The following table sets forth the breakdown of our Group’s research and development
expenses during the Track Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
Staff cost 20,206 63.2 19,577 56.9 21,908 60.1
Direct costs 5,591 17.5 6,651 19.3 7,281 20.0
Depreciation expenses 4,399 13.8 3,549 10.3 3,622 9.9
Rental, utilities and
property
management fee 727 2.3 1,006 2.9 1,132 3.1
Others 1,058 3.2 3,664 10.6 2,483 6.8
Total 31,981 100.0 34,447 100.0 36,426 100.0
For FY2022, FY2023 and FY2024, our research and development expenses represented
2.9%, 2.9% and 2.4% of our total revenue for the corresponding year, respectively.
Our research and development expenses primarily include (i) staff costs for our R&D staff;
(ii) direct costs, which mainly represent expenses for raw materials used in R&D purposes, (iii)
depreciation expenses, (iv) rental, utilities and property management fee and (v) others.
Other expenses
The following table sets forth the breakdown of the other expenses of our Group during the
Track Record Period:
FY2022 FY2023 FY2024
RMB’000 % RMB’000 % RMB’000 %
Professional Fees 3,686 96.8 3,280 94.5 1,356 73.7
Donation 120 3.2 190 5.5 483 26.3
Total 3,806 100.0 3,470 100.0 1,839 100.0
FINANCIAL INFORMATION
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For FY2022, FY2023 and FY2024, our other expenses represented 0.3%, 0.3% and 0.1% of
our total revenue for the corresponding year, respectively.
Our other expenses include (i) professional fees incurred in connection with our previous A
share listing attempt, which was terminated in 2024 and (ii) donations.
Finance Costs
The following table sets forth the breakdown of the finance costs of our Group during the
Track Record Period:
FY2022 FY2023 FY2024
RMB’000 RMB’000 RMB’000
Interest on borrowings 13,014 14,689 11,809
Interest on lease liabilities 2,361 2,629 2,722
Total borrowing costs 15,375 17,318 14,531
Less: amounts capitalised in the cost
of qualifying assets (908) (4,799) (2,538)
14,467 12,519 11,993
The finance costs principally comprise of (i) interest on borrowings; (ii) interest on lease
liabilities, less the amounts capitalised in the cost of qualifying assets.
Income tax expenses
For FY2022, FY2023 and FY2024, our Group recorded income tax expenses of RMB11.7
million, RMB25.2 million and RMB20.9 million, respectively. We are subject to varying tax
rates in different jurisdictions. See note 11 to the Accountants’ Report set out in Appendix I to
this prospectus.
Our Company and most of our subsidiaries are located in the PRC. In PRC, pursuant to the
Enterprise Income Tax Law and Implementation Regulation of the Enterprise Income Tax Law,
the tax rate of our PRC subsidiaries was 25% during the Track Record Period.
Our Company enjoyed preferential tax treatments, due to preferential tax policies for being
approved as High and New Technology Enterprise ( ৷อҦஔΆุ ). According to the Enterprise
Income Tax Law and Implementation Regulation of the Enterprise Income Tax Law, our
Company was subject to Enterprise Income Tax rate of 15% during the Track Record Period. We
have been awarded “High and New Technology Enterprise” since 2016.
FINANCIAL INFORMATION
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Our Hong Kong subsidiaries domiciled in Hong Kong are subject to a two-tiered income
tax rate for taxable income earned in Hong Kong effectively since 1 April 2018. The first 2
million Hong Kong dollars of profits earned by the qualifying group entity are subject to be
taxed at an income tax rate of 8.25%, while the remaining profits will continue to be taxed at
the existing tax rate, 16.5%.
Pursuant to the applicable U.S. federal and state income tax laws, our U.S. subsidiaries
have provided income taxes on their federal and state taxable income at the 21% U.S. federal
statutory corporate income tax rate and states statutory corporate tax rates of up to 8.84%
throughout the Track Record Period, respectively.
Our effective income tax rate, which was calculated by dividing our income tax expense of
each year by our profit before tax of the corresponding year, was 12.7%, 17.2% and 12.9% in
FY2022, FY2023 and FY2024, respectively.
Our Directors confirm that, during the Track Record Period and up to the Latest Practicable
Date, we had no material disputes or unresolved tax issues with the relevant tax authorities.
PERIOD-TO-PERIOD COMPARISON OF RESULTS OF OPERATIONS
FY2024 compared to FY2023
Revenue
The revenue of our Group increased by RMB313.2 million or 26.4% from RMB1,188.3
million for FY2023 to RMB1,501.5 million for FY2024, which was primarily due to the increase
in revenue from sales of electro-thermic appliances of RMB258.8 million and increase in
revenue from sales of garden hoses of RMB63.3 million. The increase in revenue from sales of
electro-thermic appliances for FY2024 was primarily due to the increase in sales of slow
cookers, including ODM slow cookers, which Sensio began to order from us in FY2024 and
electric kettles and sale of a new product, i.e. heating plate, partially offset by decrease in sales
of waffle machines. The increase in revenue from sales of garden hoses for FY2024 was mainly
attributable to the continued growth in sales of garden hoses, during FY2024.
The above increases were partially offset by decrease in sales of motor-driven appliances
such as blender and ice cream machine and decrease in sales of other products.
Costs of sales
The costs of sales of our Group increased by RMB270.7 million or 30.0% from RMB902.3
million for FY2023 to RMB1,173.0 million for FY2024, which was primarily due to the
increases in our total sales. The growth rate of our cost of sales was higher than that of our
revenue, which was mainly attributable to the change of our sales structure, as we sold more
products with relatively low gross profit margins in FY2024.
FINANCIAL INFORMATION
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Gross profit and Gross Profit Margin
The gross profit of our Group increased by RMB42.5 million or 14.9% from RMB286.0
million for FY2023 to RMB328.5 million for FY2024, which was primarily due to revenue
growth for most of our product categories, save for motor-driven appliances and others, partially
offset by a decrease in our overall gross profit margin.
The decrease in our overall gross profit margin was mainly due to the decrease in gross
profit margin for our motor-driven appliances and garden hoses in FY2024, primarily
attributable to new blenders with low gross profit margin sold in FY2024, as well as a reduction
in the average selling price of garden hoses following negotiations with our customer taking into
account the trend of appreciation of the USD against RMB as well as the bulk volume of order
such customer had placed with us in recent years.
Other income
The other income of our Group decreased by RMB2.7 million or 12.2% from RMB22.1
million for FY2023 to RMB19.4 million for FY2024. Such decrease was mainly due to the
absence of specific special government subsidies, previously available in FY2023 and that less
export foreign exchange rewards were issued in FY2024 as compared to FY2023.
Impairment losses under expected credit loss model, net of reversal
Our impairment losses under expected credit loss model, decreased from RMB2.5 million
for FY2023 to RMB0.9 million for FY2024, primarily due to the decrease of impairment losses
on trade receivables.
Other gains and losses
Our other gains and losses increased from RMB9.8 million for FY2023 to RMB10.6 million
for FY2024, which was primarily attributable to the increase in net foreign exchange gains,
partially offset by (i) impairment losses recognised on investment property and (ii) loss on trade
receivables at FVTOCI reclassified from equity upon derecognition.
Selling expenses
The selling expenses of our Group increased by RMB6.3 million from RMB28.3 million for
FY2023 to RMB34.6 million for FY2024. Such increase was mainly the result of increase in (i)
staff costs of RMB2.2 million, and (ii) increase in export insurance costs of RMB2.4 million.
FINANCIAL INFORMATION
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Administrative expenses
The administrative expenses of our Group increased by RMB21.1 million or 23.4% from
RMB90.1 million for FY2023 to RMB111.2 million for FY2024, which was primarily
attributable to the increase in (i) staff costs of RMB7.3 million, (ii) depreciation and
amortization expenses of RMB5.4 million and (iii) office expenses of RMB2.0 million.
The increase in administrative staff costs was in line with our growth of revenue and
increase in number of administrative staff for FY2024.
Research and Development Expenses
Our Group’s research and development expenses increased by RMB2.0 million or 5.8%
from RMB34.4 million for FY2023 to RMB36.4 million for FY2024, which was primarily
attributable to the increase in research and development staff costs of RMB2.3 million, partially
offset by decrease in other research and development expenses.
Other Expenses
Our Group’s other expenses decreased by RMB1.7 million or 48.6%, from RMB3.5 million
for FY2023 to RMB1.8 million for FY2024, which was mainly attributable to the decrease of
professional fees in connection to our previous A share listing attempt. We voluntarily withdrew
our A share listing application in the first half of 2024. For details, please see “History,
Development and Corporate Structure – Previous A Share Listing Attempt” in this prospectus.
Finance Costs
Our finance costs for FY2023 and FY2024 remained stable at RMB12.5 million and
RMB12.0 million, respectively.
Profit before tax
As a result of the foregoing, our profit before tax increased from RMB146.7 million for
FY2023 to RMB161.3 million for FY2024.
Income tax expenses
The income tax expenses of our Group decreased by 17.1% from RMB25.2 million for
FY2023 to RMB20.9 million for FY2024, mainly due to the over provision in prior years in
respect of PRC Enterprise Income Tax in the amount of RMB6.3 million. Such amount
represents the overcharged tax in prior years and, as notified by the relevant tax authority in
FY2024, was deductible against the tax payable in FY2024.
FINANCIAL INFORMATION
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Profit for the year
As a result of the foregoing, profit for the year increased by RMB18.9 million or 15.6%
from RMB121.5 million for FY2023 to RMB140.4 million for FY2024.
FY2023 compared to FY2022
Revenue
The revenue of our Group increased by RMB91.3 million or 8.3% from RMB1,097.0
million for FY2022 to RMB1,188.3 million for FY2023, which was primarily attributable to an
overall higher sales of our product categories, except for electronic appliances. Revenue from
our electro-thermic appliances increased in FY2023 primarily due to the increases in sales of
electric kettles and air fryers, partially offset by less sales of electric heaters. Revenue from
garden hoses increased in FY2023 as we initiated product upgrade for garden hose in FY2022
and during the same year, our sales of older version of garden hoses have decreased. Following
its upgrade in FY2022, the sales volume of our garden hoses increased rapidly in FY2023. The
increase of sales from our other non-electric household goods was mainly because more door
stop, hooks and cleaning tools were sold in FY2023. Sales from our motor-driven appliances
also increased in FY2023 was primarily due to more sales of blenders, electric knives and
electric can openers, partially offset by a decrease in sales of hand-held mixers.
The above increases were partially offset by the decrease in sales from electronic
appliances. In particular, there was a decrease in sales of electronic scales, salt grinders and
knife sharpeners.
Cost of Sales
The cost of sales of our Group increased by RMB29.2 million or 3.3% from RMB873.1
million for FY2022 to RMB902.3 million for FY2023. The growth rate of our cost of sales in
FY2023 was lower than that of our revenue during the same year was primarily due to the
decrease in price of our major raw materials in FY2023 which outpaced the decrease in the
average selling prices of our products. Considering the trend of appreciation of the USD against
RMB and the decrease in price our raw materials, our customers negotiated with us to reduce the
selling price of our major products.
Gross profit and Gross Profit Margin
The gross profit of our Group increased by RMB62.1 million or 27.7% from RMB223.9
million for FY2022 to RMB286.0 million for FY2023, which was primarily due to revenue
growth in most product categories and the improvement of our overall gross profit margin. The
lower raw materials cost led to an overall increase in gross profit margins of our various product
categories in FY2023, except for garden hoses. Our gross profit margin of sales from garden
hose decreased slightly from 40.2% for FY2022 to 38.4% for FY2023 primarily due to that in
FY2023 we sold a type of garden hose previously not sold in FY2022, which has a relatively
low gross profit margin compared with other types of garden hoses we sold.
FINANCIAL INFORMATION
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Other income
The other income of our Group decreased by RMB1.1 million or 4.7% from RMB23.2
million for FY2022 to RMB22.1 million for FY2023, which was primarily attributable to the
absence of government grant in relation to our previous A share listing attempt for FY2023,
partially offset by the increase in interest income from bank deposits.
Impairment losses under expected credit loss model, net of reversal
Our impairment losses under expected credit loss model, included an increase from an
impairment loss of RMB1.6 million for FY2022 to an impairment loss of RMB2.5 million for
FY2023. This increase was primarily due to the turnaround from the impairment losses reversal
on other receivables in FY2022 to impairment losses recognised on other receivables in FY2023.
Other gains and losses
Our Group recorded other gains of RMB8.6 million and RMB9.8 million for FY2022 and
FY2023, respectively. The increase in other gains was primarily because our Group did not
record a loss from foreign currency forward contracts in FY2023, unlike in FY2022, where we
recorded a loss of RMB8.0 million from foreign currency forward contracts, which was partially
offset by (i) decrease in net gain from wealth management products at FVTPL; and (ii) decrease
in net foreign exchange gains.
Selling expenses
The selling expenses of our Group increased by RMB4.1 million or 16.9% from RMB24.2
million for FY2022 to RMB28.3 million for FY2023. Such increase was mainly due to the
increase in the sales of our products, reflected by the increases in (i) export insurance costs of
RMB1.2 million, (ii) testing and inspection fees of RMB0.9 million and (iii) other expenses of
RMB1.4 million. Our export insurance costs increased in FY2023 primarily as a result of the
reduction in government subsidies associated with export credit insurance.
Administrative expenses
The administrative expenses of our Group increased by RMB2.4 million or 2.7% from
RMB87.7 million for FY2022 to RMB90.1 million for FY2023. Such increase was mainly due to
the increase in the sales of our products, reflected by the increases in (i) office expenses and (ii)
travelling and entertainment expenses, partially offset by the decrease in staff cost for our
managerial and administrative staff.
Despite our revenue increased in FY2023, as compared with FY2022, our managerial and
administrative staff costs decreased in FY2023, which was primarily attributable to decrease in
salary of managerial and administrative staff. Such decrease was in line with the decrease in
number of managerial and administrative staff, including staff in charge of warehouse
management.
FINANCIAL INFORMATION
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Research and development expenses
Our Group’s research and development expenses increased by RMB2.4 million or 7.5%
from RMB32.0 million for FY2022 to RMB34.4 million for FY2023, primarily due to increase
in other expenses (including designing expenses for various research and development projects).
Other Expenses
Our Group’s other expenses decreased by RMB0.3 million or 7.9% from RMB3.8 million
for FY2022 to RMB3.5 million for FY2023, mainly attributable to the decrease of professional
fees incurred in connection to our previous A share listing attempt.
Finance Costs
Our Group recorded net finance costs of RMB14.5 million and RMB12.5 million for
FY2022 and FY2023, respectively. Such decrease was primarily attributable to the increase of
the amounts capitalised in the costs of construction in progress of RMB3.9 million primarily
arisen from the construction of our XJ Intelligence Factory.
Profit before tax
As a result of the foregoing, our profit before tax increased from RMB91.9 million in
FY2022 to RMB146.7 million in FY2023.
Income tax expenses
The income tax expenses of our Group increased by RMB13.5 million or 115.4% from
RMB11.7 million for FY2022 to RMB25.2 million for FY2023, which was due to the increase in
profit before tax for FY2023.
Profit for the Y ear
As a result of the foregoing, profit for the year increased by RMB41.2 million or 51.3%
from RMB80.3 million in FY2022 to RMB121.5 million in FY2023.
FINANCIAL INFORMATION
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DISCUSSION OF CERTAIN KEY ITEMS OF STATEMENTS OF FINANCIAL POSITION
Property, plant and equipment
Our property, plant and equipment mainly represent buildings, machinery and equipment,
motor vehicles, electronic equipment, leasehold improvement and construction in progress. As at
31 December 2022, 2023 and 2024, the carrying value of our property, plant and equipment
amounted to RMB322.7 million, RMB433.7 million and RMB503.7 million, respectively. Such
increase throughout the Track Record Period was primarily due to the construction of our XJ
Intelligence Factory and purchase of machinery and equipment.
Right-of-use assets
Our right-of-use assets mainly consisted of leasehold lands and leased properties. Leased
terms of our leased properties are fixed with various period, from 1 to 10 years. During the
Track Record Period, we leased certain properties from Mr. Pan Yun, and for details, please see
“Connected Transactions” in this prospectus.
As at 31 December 2022, 2023 and 2024, the carrying amounts of our right-of-use assets
was RMB111.5 million, RMB119.8 million and RMB100.0 million, respectively.
Our right-of-use assets increased from RMB111.5 million as at 31 December 2022 to
RMB119.8 million as at 31 December 2023, primarily due to addition of lease in respect of our
Indonesia Factory. Our right-of-use assets decreased from RMB119.8 million as at 31 December
2023 to RMB100.0 million as at 31 December 2024, primarily due to the depreciation charge in
respect of our leasehold lands and leased properties.
FINANCIAL INFORMATION
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Inventories
The following table sets forth details of our inventories as at the dates indicated:
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Raw materials 69,211 62,323 75,195
Work in progress 67,265 63,978 74,869
Finished goods 43,209 41,865 64,942
Goods in transit 21,562 42,382 27,308
201,247 210,548 242,314
Less: provision (27,509) (36,933) (34,957)
173,738 173,615 207,357
Our inventories (before net of provision) increased by 4.6% to RMB210.5 million as at 31
December 2023, which were generally in line with the fluctuation in our revenue during the
same period. Our inventories (before net of provision) increased to RMB242.3 million as at 31
December 2024, as we actively stocked up on inventories due to more sales orders on hand.
Our Group assesses the net realisable value of inventories as well as the required amount of
write-down of inventory provision at the end of each reporting period.
As at 31 December 2022, 2023 and 2024, we recorded inventory provisions in the amount
of RMB27.5 million, RMB36.9 million and RMB35.0 million, respectively.
Our inventory provision increased as at 31 December 2023, primarily attributable to: (i) the
upgrading of our older garden hoses and (ii) cancellation of order for our kettles and toasters by
a customer, leading us to make inventory provisions for the affected products. Subsequently, our
inventory provision decreased as at 31 December 2024, following the sale of part of the
inventories for which we had made provisions as at 31 December 2023.
FINANCIAL INFORMATION
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The following is an ageing analysis of our Group’s inventories:
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Within and 6 months 132,541 156,336 193,083
Between 6 months and 1 year 18,326 9,804 7,220
Between 1 and 2 years 25,118 13,864 9,916
Between 2 and 3 years 8,434 14,014 7,055
Over 3 years 16,828 16,530 25,040
Total 201,247 210,548 242,314
Inventories are stated at the lower of cost and net realisable value. As at 31 December
2022, 2023 and 2024, our inventories aged over one year amounted to RMB50.4 million,
RMB44.4 million and RMB42.0 million, representing 25.0%, 21.1% and 17.3% of our
inventories during the respective years.
We assess the net realisable value of inventories as well as the required amount of
write-down of inventory provision at the end of each reporting period, which involves
significant judgement on determination of the estimated selling prices, costs to completion and
costs necessary to make the sale.
The provision for inventories is affected by multiple factors, including but not limited to
the aging of inventories and the expected life cycle of our products. In particular, the net
realisable value of the inventories decreases along with the aging of inventories and the
reduction of product life cycle.
Our Directors consider that there is no recoverability issue for the inventories aged over
one year and the provision for inventories are sufficient, considering (i) our historical sales
performance, in particular, during the Track Record Period, we had not encountered any material
impairment loss that have materially and adversely affected our business operations caused by
slow-moving inventories; (ii) for inventories in stock as at 31 December 2022, 2023 and 2024,
we have made provision account for over 55%, 70% and 70% of our inventories aged over 1
year, stated at the lower of cost and net realisable value and (iii) we may sell slow moving
inventories at a discount.
FINANCIAL INFORMATION
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The following table sets forth our Group’s inventory turnover days for the years indicated:
FY2022 FY2023 FY2024
Inventory turnover days (note) 88 71 60
Note: Inventory turnover days are calculated based on the average of the beginning and ending balance of
inventory (net of provision) divided by the cost of sales for the relevant year multiplied by number of days
in the relevant year (i.e. 365 days for FY2022, FY2023 and FY2024). Average inventory is calculated as
the sum of the beginning balance and ending balance for the relevant year, divided by two.
We recorded the highest inventories turnover days of 88 days for FY2022, and our
inventory turnover days decreased to 71 days for FY2023, which was primarily due to a higher
average balance of inventories for FY2022. Our inventory turnover days further decreased to 60
days for FY2024, primarily attributable to the increased consumption of raw materials,
components and accessories purchased to meet the need for our sales growth in FY2024.
As of the Latest Practicable Date, RMB79.5 million, or 32.8%, of our inventories as at 31
December 2024 had been subsequently sold.
Trade and bills receivables
The following table sets forth details of our trade and bills receivables as at the dates
indicated:
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Trade receivables 135,154 150,596 241,286
Bills receivable 168 – –
Less: allowance for ECL (2,486) (4,503) (5,646)
132,836 146,093 235,640
Trade receivables at FVTOCI 11,479 15,750 2,145
Total 144,315 161,843 237,785
During the Track Record Period, our trade and bill receivables fluctuated generally in line
with trends of our revenue. Our trade and bill receivables increased from RMB144.3 million for
31 December 2022 to RMB161.8 million and RMB237.8 million as at 31 December 2023 and 31
December 2024, respectively.
FINANCIAL INFORMATION
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The following table sets out the turnover days of trade and bills receivables for the years
indicated:
FY2022 FY2023 FY2024
Trade and bills receivables
turnover days (note) 63 49 50
Note: Trade and bills receivables turnover days are calculated based on the average of the beginning and ending
balance of trade and bills receivables (including trade receivables, bills receivables and trade receivables
of FVTOCI) divided by revenue for the relevant year multiplied by number of days in the relevant year
(i.e. 365 days for FY2022, FY2023 and FY2024). Average trade and bills receivables are calculated as the
sum of the beginning balance and ending balance for the relevant year, divided by two.
We typically require an advance payment or offer a credit period from 30 days to 135 days
to our customers based on their assessed credit worthiness. For FY2022, FY2023 and FY2024,
our trade receivables turnover days were 63 days, 49 days and 50 days, respectively. The
relatively lower opening balance of our trade and bill receivables in FY2023 resulting in a lower
average balance of our trade and bill receivables and a shorter trade receivable turnover days of
49 days in FY2023 compared to that of FY2022. Our trade receivable turnover days for FY2024
remained stable at 50 days, compared to that of FY2023.
As at 31 December 2022, 31 December 2023 and 31 December 2024, the ageing analysis of
the trade receivables presented based on dates of delivery of good, which approximated the
respective revenue recognition dates, is as follows:
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Within 1 year 141,733 161,620 238,585
1–2 years 4,537 938 776
2–3 years 338 3,529 840
Over 3 years 25 259 3,230
146,633 166,346 243,431
As Latest Practicable Date, RMB233.3 million, or 98.1%, of trade and bills receivables as
at 31 December 2024 was settled.
FINANCIAL INFORMATION
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Prepayments and Other Receivables
Our Group’s prepayments primarily consist of (i) receivables for payments made on behalf
of customers, (ii) other tax recoverable, (iii) prepayments, (iv) receivables from suppliers for
litigation settlement, (v) prepaid professional fee, (vi) rental and other deposits (vii) refundable
deposits for land and (viii) others.
Our receivables from suppliers for litigation settlement primarily consist of receivables
from a third party, due to the third party’s failure to deliver the agreed-upon quantity of goods
stipulated under a procurement contract entered into between the third party and us in 2020. Our
receivables for litigation settlement increased by RMB451,000 from RMB6.8 million as at 31
December 2022 to RMB7.3 million as at 31 December 2023, and remained at RMB7.3 million as
at 31 December 2024. The RMB451,000 represents a deposit made by our Group, which is to be
returned by another third party, following its failure to install elevators within an agreed
timeframe. The Directors confirmed that the Group has demanded the return of the receivables
from the parties, but to no avail, as of the Latest Practicable Date, the third party responsible for
elevator installation was subject to multiple litigations; meanwhile, our Group’s litigations with
the other third party was still ongoing. Receivables from suppliers related to litigation
settlements was recognised, given that it represents the amount already paid to and to be
recovered from the third parties. However, having considered that the Group has not yet been
able to recover the receivables from one third party and that litigation with other third party was
still ongoing as of the Latest Practicable Date, a full provision has been made under the
Expected Credit Loss (ECL) model for both matters.
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Other tax recoverable 17,739 29,080 42,135
Prepayments 5,806 3,771 8,017
Prepaid professional fee 1,218 1,356 –
Deferred issue costs – – 15,085
Receivables for payments made on
behalf of customers – – 24,957
Receivables from suppliers for
litigation settlement 6,823 7,274 7,274
Rental and other deposits 3,916 4,442 6,150
Refundable deposits for land
use rights 2,000 2,000 2,000
Others 3,629 1,262 2,600
41,131 49,185 108,218
Less: Allowance for ECL (7,026) (7,315) (7,355)
34,105 41,870 100,863
FINANCIAL INFORMATION
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Our prepayments and other receivables increased from RMB34.1 million for FY2022 to
RMB41.9 million for FY2023, mainly attributable to the increase of other tax recoverable from
RMB17.7 million to RMB29.1 million. Other tax recoverable mainly consist of refundable value
added tax paid on export goods and prepaid V AT that has not been deducted. Other tax
recoverable increased significantly as at 31 December 2023 as compared to other tax recoverable
as at 31 December 2022 primarily due to that (i) there was a time lag for export tax rebate at the
end of 2023; and (ii) the construction of our XJ Intelligence Factory increased our input V AT,
which has not been deducted at the end of 2023.
Our prepayments and other receivables increased from RMB41.9 million as at 31 December
2023 to RMB100.9 million as at 31 December 2024, mainly attributable to the (i) increase in
other tax recoverable by RMB13.1 million which was mainly due to payment of a portion of
construction fees for XJ Intelligence Factory; (ii) deferred issue costs of RMB15.1 million,
which was due to capitalization of listing fees and (iii) receivables for payments made on behalf
of customers of RMB25.0 million, which represents transportation fees paid on behalf of
Telebrands, the only customer of our garden hoses.
As at the Latest Practicable Date, RMB62.2 million or 57.5% of our Group’s prepayments
and other receivables as at 31 December 2024 has been settled.
Trade and bills payables
Our trade and bills payables mainly represented the outstanding amounts payable by us to
our supplier of production materials and subcontracting fees. During the Track Record Period,
we mainly settled our bills with suppliers through bank transfer and the credit period on
purchases of goods and services granted to our Group by our suppliers was within 120 days. We
may also settle our purchases for production materials by way of bills.
The table below sets out the breakdowns of our trade and bills payables as at the dates
indicated below:
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Trade payables 192,270 257,273 264,457
Bills payables 16,527 17,357 28,017
208,797 274,630 292,474
FINANCIAL INFORMATION
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Our trade and bills payables increased by 31.5% from RMB208.8 million as at 31
December 2022 to RMB274.6 million as at 31 December 2023, primarily due to an increase in
our purchase of production materials from our suppliers and subcontracting fees, which was in
line with the increase of sales during the same period. Our trade and bills payables further
increased by 6.5% to RMB292.5 million as at 31 December 2024 as we actively stocked up on
production materials due to more sales orders on hand.
As at 31 December 2022, 2023 and 2024, the ageing analysis of our Group’s trade payables
based on the date of goods and services received at the end of each year is as follows:
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Within 1 year 186,790 254,672 262,081
1–2 years 3,572 371 104
2–3 years 344 558 251
Over 3 years 1,564 1,672 2,021
192,270 257,273 264,457
The following table sets out the trade and bills payables turnover days for the years
indicated:
FY2022 FY2023 FY2024
Trade and bills payables turnover
days
(note) 105 98 89
Note: Trade and bills payables turnover days are calculated based on the average of the beginning and ending
balance of trade and bills payables divided by the cost of sales for the relevant year multiplied by number
of days in the relevant year (i.e. 365 days for FY2022, FY2023 and FY2024). Average trade and bills
payables are calculated as the sum of the beginning balance and ending balance for the relevant year,
divided by two.
Trade and bills payables turnover days remained relatively stable at 105 days, 98 days and
89 days for FY2022, FY2023 and FY2024, respectively, which fell within the range of credit
periods granted by our suppliers.
As at the Latest Practicable Date, RMB277.0 million, or 94.7%, of our Group’s trade and
bills payables as at 31 December 2024 has been settled.
FINANCIAL INFORMATION
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Other payables and accruals
Our payables and accruals consist of (i) accrued employees’ benefits; (ii) payables for
acquisition of property, plant and equipment; (iii) other accrued charges; (iv) settlement payables
to suppliers on behalf of customers; (v) other taxes payable; (vi) deposits received and (vii)
others. Our settlement payables to suppliers on behalf of customers primarily consist of (i) the
prepayment from Telebrands for settlement of customs duties on Telebrands’ behalf for goods
purchased by Telebrands, and (ii) the payables to shipping agents responsible for transporting
Telebrands’ goods. As confirmed by the Directors, such arrangement was initiated by Telebrands
during the pandemic when their staff were working remotely. The Group agreed to continue such
practice post-pandemic, to foster its relationship with Telebrands, which is one of its major
customers. As advised by Frost & Sullivan, it is not uncommon to adopt such settlement
arrangement. The Directors confirmed that as of the Latest Practicable Date, there have been no
difficulty in recovering the customs duties and shipping fees from Telebrands. As advised by our
PRC Legal Advisers, the above arrangement is not prohibited under PRC laws.
The table below sets out the breakdowns of our other payables and accruals as at the dates
indicated below:
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Accrued employees’ benefits 17,310 21,201 23,020
Payables for acquisition of property,
plant and equipment 31,493 70,270 15,916
Other accrued charges 4,869 4,813 6,434
Settlement payables to suppliers on
behalf of customers 5,113 2,009 4,688
Other taxes payable 4,108 3,607 2,766
Deposits received 757 929 871
Accrued issue costs – – 4,775
Others 322 401 436
63,972 103,230 58,906
Our Group’s other payables and accruals amounted to RMB64.0 million, RMB103.2 million
and RMB58.9 million as at 31 December 2022, 2023 and 2024, respectively. The change in the
amount of other payables and accruals as at 31 December 2022, 2023 and 2024 was mainly
attributable to the payables for acquisition of property, plant and equipment incurred for the
construction of XJ Intelligence Factory that we began in 2020.
Our other payables and accruals decreased as at 31 December 2024, which was mainly due
to the fact that we had completed the construction of our XJ Intelligence Factory.
FINANCIAL INFORMATION
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As of the Latest Practicable Date, RMB45.3 million or 76.9% of our Group’s other
payables and accruals as at 31 December 2024 has been settled.
Contract liabilities
Contract liabilities represented our obligations to provide the contracted products to
customers. Our contract liabilities mainly arise from the advance payment made by customers
while the underlying products are not yet to be provided. As at 31 December 2022, 2023 and
2024, we recorded contract liabilities of RMB36.3 million, RMB59.3 million and RMB43.5
million, respectively.
As of the Latest Practicable Date, RMB28.6 million or 65.7% of the outstanding balance of
our contract liabilities as at 31 December 2024 was recognised as revenue.
Net Current Assets
The following table sets forth the details of current assets and current liabilities of our
Group as at the respective dates indicated.
As at 31 December
As at
30 April
20252022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current assets
Inventories 173,738 173,615 207,357 233,396
Income tax recoverable 252 3,093 2,491 3,590
Trade and bills receivables 132,836 146,093 235,640 222,473
Prepayments and other receivables 30,598 37,837 96,669 108,723
Trade receivables at fair value
through other comprehensive
income (“ FVTOCI ”) 11,479 15,750 2,145 18,014
Pledged and restricted bank deposits – – 145 145
Bank balances and cash 381,560 548,338 474,154 490,330
730,463 924,726 1,018,601 1,076,672
Current liabilities
Trade and bills payables 208,797 274,630 292,474 307,865
Other payables and accruals 63,972 103,230 58,906 52,459
Income tax payable 6,497 9,010 8,082 883
Borrowings 115,112 129,294 207,055 255,154
Lease liabilities 19,679 23,636 19,806 16,731
Contract liabilities 36,261 59,338 43,508 29,729
Deferred income 163 163 163 163
450,481 599,301 629,994 662,984
Net current assets 279,982 325,425 388,607 413,688
FINANCIAL INFORMATION
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Our Group had net current assets positions at the end of each reporting period and as at 30
April 2025. Despite the substantial amount of investment for the construction of XJ Intelligence
Factory, our net current assets demonstrated an upward trend throughout the Track Record
Period and further increased for the four-month period ended 30 April 2025. This was primarily
due to that we did not declare or pay any dividend during the Track Record Period and
continuously invested our internally generated cash flow into our Group’s production and
operation.
Our Group’s net current assets increased by 16.2% from RMB280.0 million as at 31
December 2022 to RMB325.4 million as at 31 December 2023, mainly due to an increase in
bank balances and cash of RMB166.8 million which was partially offset by an increase in trade
and bills payables of RMB65.8 million and an increase in other payables and accruals of
RMB39.3 million.
Our Group’s net current assets increased by 19.4% from RMB325.4 million as at 31
December 2023 to RMB388.6 million as at 31 December 2024, mainly due to an increase of
trade and bills receivables of RMB89.5 million and decrease in other payables and accruals of
RMB44.3 million, which was partially offset by increase in borrowings of RMB77.8 million.
Our net current assets increased by 6.5% from RMB388.6 million as at 31 December 2024
to RMB413.7 million as at 30 April 2025. Such increase was mainly due to increase in
inventories of RMB26.0 million, increase in trade receivables at fair value through other
comprehensive income of RMB15.9 million, increase in bank balances and cash of RMB16.2
million and decrease in contract liabilities of RMB13.8 million, partially offset by increase in
borrowings of RMB48.1 million.
INDEBTEDNESS
As of 30 April 2025, being the most recent practicable date for the purpose of the statement
of indebtedness, we had total indebtedness of RMB466.5 million, including (i) borrowings of
RMB421.1 million; and (ii) lease liabilities of RMB45.4 million.
FINANCIAL INFORMATION
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The following table sets out our Group’s indebtedness excluding contingent liabilities as at
the respective dates:
As at 31 December
As at
30 April
20252022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current liabilities
Borrowings 115,112 129,294 207,055 255,154
Lease liabilities 19,679 23,636 19,806 16,731
134,791 152,930 226,861 271,885
Non-current liabilities
Borrowings 65,312 117,502 116,036 165,928
Lease liabilities 39,443 46,346 32,693 28,625
104,755 163,848 148,729 194,553
Borrowings
Our borrowings represents (i) secured and guaranteed; (ii) unsecured and guaranteed; and
(iii) secured and unguaranteed bank loans. The following table sets out our Group’s borrowings
as at the respective dates:
As at 31 December
As at
30 April
20252022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Secured and guaranteed 122,856 183,417 154,918 –
Unsecured and guaranteed 57,568 63,379 – –
Secured and unguaranteed – – 75,063 308,650
Unsecured and unguaranteed – – 93,110 112,432
Total borrowings 180,424 246,796 323,091 421,082
FINANCIAL INFORMATION
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--- page 383 ---
Our borrowings increased by RMB98.0 million from RMB323.1 million as at 31 December
2024 to RMB421.1 million as at 30 April 2025, primarily due to increase in loan for the purpose
of settling construction fees for the construction of XJ Intelligence Factory.
At the end of each reporting period, our secured bank borrowings were secured by bank
deposits, trade receivables, property, plant and equipment, investment properties and leasehold
land, and all of them were guaranteed by Mr. Pan Yun, our Controlling Shareholder and/or his
spouse, Ms. Cao Chengling. As of 30 April 2025, we had bank borrowings of RMB421.1
million, among which, RMB308.7 million were secured by the assets of the Group and
unguaranteed, RMB112.4 million were unsecured and unguaranteed. For details, please see note
28 to the Accountants’ Report in Appendix I to this prospectus.
The annual interest rates of our Group’s fixed rate bank borrowings ranged from
4.35–10.89% for bank borrowings as at 31 December 2022, ranged from 3.90–6.83% for bank
borrowings as at 31 December 2023 and ranged from 2.80–5.99% for bank borrowings as at 31
December 2024.
The Directors confirm that there was no material delay or default in the repayment of bank
borrowings and our Group did not have any difficulties in obtaining bank borrowings during the
Track Record period and up to the Latest Practicable Date.
The Directors confirm that as at the Latest Practicable Date, there was no material covenant
on any of the outstanding debt and there was no breach of any covenants during the Track
Record Period and up to the Latest Practicable Date. The Directors further confirm that our
Group did not have any material default in payment of trade and other payables and accruals,
bank loans and other borrowings or breach of covenants during the Track Record Period and up
to the Latest Practicable Date.
As at the Latest Practicable Date, our Group had unutilised banking facilities amounted to
RMB451.7 million.
FINANCIAL INFORMATION
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--- page 384 ---
LEASE LIABILITIES
The following table sets forth details of our lease liabilities as at the dates indicated:
As at 31 December
As at
30 April
20252022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Lease liabilities payable:
Within one year 19,679 23,636 19,806 16,731
Within a period of more than one year but
not more than two years 19,269 17,152 12,740 12,546
Within a period of more than two years
but not more than five years 20,174 21,061 14,130 10,936
Over five years – 8,133 5,823 5,143
Total lease liabilities 59,122 69,982 52,499 45,356
Less: Amount due for settlement within
12 months shown under current
liabilities (19,679) (23,636) (19,806) (16,731)
Amount due for settlement after 12
months shown under non-current
liabilities 39,443 46,346 32,693 28,625
As of 30 April 2025, we had lease liabilities of RMB45.4 million, among which, RMB0.8
million were unsecured and unguaranteed, RMB44.6 million were secured and unguaranteed.
FINANCIAL INFORMATION
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--- page 385 ---
Except as disclosed above, and apart from intra-group liabilities and normal trade payables,
as of 30 April 2025, we did not have any material mortgages, charges, debentures, loan capital,
debt securities, loans, bank overdrafts or other similar indebtedness, finance lease or hire
purchase commitments, liabilities under acceptances (other than normal trade bills), acceptance
credits, which are either guaranteed, unguaranteed, secured or unsecured, or guarantees, or
material contingent liabilities. Our Directors confirm that there has not been any material change
in our indebtedness since 30 April 2025 and up to the date of this prospectus.
CAPITAL COMMITMENTS
The following table sets forth a summary of our capital commitments as of the dates
indicated:
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Capital expenditure contracted for but not
provided for in the Historical Financial
Information
– Property, plant and equipment 208,223 86,947 20,224
LIQUIDITY AND CAPITAL RESOURCES
During the Track Record Period, our operations were generally financed through a
combination of internally generated cash flows and bank borrowings. Our Directors believe that
in the long term, our operations will be funded primarily by cash generated from operations and
bank and other borrowings, the net proceeds from the Listing and, if necessary, additional equity
financing when the needs come.
FINANCIAL INFORMATION
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--- page 386 ---
The following table sets forth the selected cash flow data from the consolidated statements
of cash flows for the years as indicated:
FY2022 FY2023 FY2024
RMB’000 RMB’000 RMB’000
Operating cash flows before
movements in working capital
changes 168,075 215,977 217,278
Change in working capital (note) 62,297 52,827 (124,395)
Income tax paid (5,908) (26,014) (21,595)
Net cash generated from operating
activities 224,464 242,790 71,288
Net cash used in investing activities (116,446) (112,103) (170,411)
Net cash (used in) generated from
financing activities (108,484) 24,598 7,030
Net (decrease)/increase in cash and
cash equivalents (466) 155,285 (92,093)
Effect of foreign exchange rate
changes 17,149 11,493 17,909
Cash and cash equivalents at the
beginning of year 364,877 381,560 548,338
Cash and cash equivalents at
the end of year, represented by
bank balances and cash 381,560 548,338 474,154
Note: Represents change in working capital items, including, inventories, trade and bill receivables, trade
receivables at FVTOCI, prepayments and other receivables, restricted bank deposits, trade and bill
payables, other payables and accruals and contract liabilities
Net cash generated from operating activities
Our cash flow from operating activities consists of revenue mainly from our export to
overseas. Cash flow from operating activities reflects: (i) profit before tax adjusted for non-cash
and non-operating items, such as finance costs, depreciation of property, plant and equipment
and right-of-use assets, and net foreign exchange gain or loss; and (ii) the effects of movements
in working capital.
Net cash generated from operating activities in FY2024 was RMB71.3 million, which was
primarily attributable to our profit before tax for FY2024 of RMB161.3 million adjusted by
certain non-cash and working capital items, including (i) positive adjustments, which primarily
included, depreciation of property, plant and equipment of RMB43.9 million, depreciation of
right-of-use assets of RMB26.9 million and financial costs of RMB12.0 million, and (ii)
negative adjustments, which primarily included, interest income of RMB11.7 million and net
foreign exchange gains of RMB16.7 million.
FINANCIAL INFORMATION
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--- page 387 ---
Net cash generated from operating activities in FY2023 was RMB242.8 million, which was
primarily attributable to our profit before tax for FY2023 of RMB146.7 million adjusted by
certain non-cash and working capital items, including (i) positive adjustments, which primarily
included, depreciation of property, plant and equipment of RMB40.0 million, depreciation of
right-of-use assets of RMB24.9 million and increase in trade and bills payables of RMB65.8
million, primarily due to increase in our purchase of production materials from our suppliers and
subcontracting fees, and (ii) negative adjustments, which primarily included interest income of
RMB10.2 million and increase in trade and bills receivables of RMB15.3 million, which was in
line with our revenue growth.
Net cash generated from operating activities in FY2022 was RMB224.5 million, which was
primarily attributable to our profit before tax for FY2022 of RMB91.9 million adjusted by
certain non-cash and working capital items, including (i) positive adjustments, which primarily
include depreciation of property, plant and equipment of RMB47.1 million, depreciation of
right-of-use assets of RMB23.7 million, decrease in inventories of RMB66.2 million, decrease in
trade and bills receivables of RMB68.5 million, which was in line with our decrease in revenue,
decrease in prepayments and other receivables of RMB17.8 million, and (ii) negative
adjustments, which primarily included decrease in trade and bills payables of RMB84.9 million,
primarily due to decrease in our purchase of production materials from our suppliers and
subcontracting fees.
Net cash used in investing activities
Our cash outflows from investing activities primarily consisted of purchase of property,
plant and equipment, purchase of wealth management products at fair value through profit or
loss. Our cash inflows from investing activities primarily consisted of redemption of wealth
management products at fair value through profit or loss.
Net cash used in investing activities in FY2024 was RMB170.4 million, which was
primarily attributable to purchase of property, plant and equipment of RMB165.3 million
including payment of construction fees of XJ Intelligence Factory.
Net cash used in investing activities in FY2023 was RMB112.1 million, which was
primarily attributable to purchase of property, plant and equipment of RMB124.5 million and
purchase of wealth management products at FVTPL of RMB239.0 million, partially offset by
proceeds from redemption of wealth management products at FVTPL of RMB239.6 million.
Net cash used in investing activities in FY2022 was RMB116.4 million, which was
primarily attributable to purchase of wealth management products at FVTPL of RMB461.0
million and purchase of property, plant and equipment of RMB121.6 million, partially offset by
proceeds from redemption of wealth management products at FVTPL of RMB463.9 million.
FINANCIAL INFORMATION
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--- page 388 ---
Net cash generated from (used in) financing activities
Our cash inflows from financing activities consisted of amounts received from new
borrowing raised. Our cash outflows from financing activities consisted of interest paid for lease
liabilities, repayment of lease liabilities, interest paid for borrowings and repayment of
borrowings.
Net cash generated from financing activities in FY2024 was RMB7.0 million, which was
primarily attributable to new borrowing raised of RMB587.6 million, partially offset by
repayment of borrowings of RMB531.0 million and repayment of lease liabilities of RMB24.8
million.
Net cash generated from financing activities in FY2023 was RMB24.6 million, which was
primarily attributable to new borrowing raised of RMB380.9 million, partially offset by
repayment of lease liabilities RMB23.2 million and repayment of borrowings of RMB316.3
million.
Net cash used in financing activities in FY2022 was RMB108.5 million, which was
primarily attributable to repayment of borrowings of RMB569.8 million and repayment of lease
liabilities of RMB22.9 million, partially offset by new borrowings raised of RMB500.9 million.
WORKING CAPITAL
The Directors are of the opinion that, taking into consideration our Group’s internal
resources, the banking facilities presently available to our Group, and the estimated net proceeds
from the Global Offering, our Group has sufficient working capital for our Group’s present
requirements for at least the next 12 months commencing from the date of this prospectus.
CAPITAL EXPENDITURES
The capital expenditure of our Group primarily consists of expenditures on buildings and
machinery and equipment. The capital expenditures of our Group amounted to RMB139.7
million, RMB168.2 million and RMB114.7 million for FY2022, FY2023 and FY2024,
respectively.
FINANCIAL INFORMATION
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--- page 389 ---
The table below sets forth a breakdown of our historical capital expenditures for the
periods indicated.
FY2022 FY2023 FY2024
RMB’000 RMB’000 RMB’000
Buildings – – 11,564
Machinery and equipment 12,410 16,436 26,453
Motor vehicles 166 626 1,075
Electronic equipment 523 1,538 1,624
Leasehold improvement 426 1,192 1,298
Construction in progress 126,208 148,435 72,692
Total 139,733 168,227 114,706
The capital expenditures incurred during the Track Record Period mainly represented
additions of plant, machinery and construction of our XJ Intelligence Factory, which was
completed in FY2024. We financed our capital expenditures primarily through our cash
generated from our operating activities and bank loans.
CONTINGENT LIABILITIES
As of the Latest Practicable Date, we did not have any material contingent liabilities.
OFF-BALANCE SHEET ARRANGEMENTS OR COMMITMENTS
Subsequent to the Track Record Period and up to the Latest Practicable Date, our Group
did not have any off-balance sheet arrangements or commitments.
FINANCIAL INFORMATION
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--- page 390 ---
KEY FINANCIAL RATIOS
For the year ended/As at 31 December
2022 2023 2024
Current ratio (1) 1.6 times 1.5 times 1.6 times
Quick ratio (2) 1.2 times 1.3 times 1.3 times
Return on equity (3) 12.1% 15.5% 15.2%
Return on total assets (4) 6.6% 7.8% 8.2%
Gearing ratio (5) 27.2% 31.4% 34.9%
Notes:
(1) Current ratio is calculated by dividing current assets with current liabilities as at the end of the respective
year.
(2) Quick ratio is calculated by dividing total current assets net of inventory with current liabilities as at the
end of the respective year.
(3) Return on equity is calculated by profit for the year attributable to owners of our Company divided by
equity attributable to owners of our Company as at the end of the respective year multiplied by 100%.
(4) Return on total assets is calculated by profit for the year attributable to owners of our Company divided by
total assets as at the end of the respective year multiplied by 100%.
(5) Gearing ratio is calculated based on the total borrowings divided by total equity as at the end of respective
year multiplied by 100%.
Current ratio
Our current ratio remained relatively stable at 1.6 times, 1.5 times and 1.6 times as at 31
December 2022, 2023 and 2024.
Quick ratio
Our quick ratio remained relatively stable at 1.2 times, 1.3 times and 1.3 times as at 31
December 2022, 2023 and 2024.
Return on equity
Our Group’s return on equity increased from 12.1% for FY2022 to 15.5% for FY2023. Such
increase was primarily due to the growth of our profit outpaced that of our total equity during
FY2023.
Our Group’s return on equity remained relatively stable at 15.2% for FY2024.
FINANCIAL INFORMATION
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--- page 391 ---
Return on total assets
Our return on total assets increased from 6.6% for FY2022 to 7.8% for FY2023 and further
increased to 8.2% for 2024, which primarily attributable to the increase in our net profit during
FY2023 and FY2024, outweighed the increase in our total assets.
Gearing ratio
Our gearing ratio increased from 27.2% as at 31 December 2022 to 31.4% as at 31
December 2023, mainly because the increase in our borrowings outpaced the increase in our
equity. Our borrowings increased significantly by 36.8% primarily due to increased long-term
bank loans which was used to finance the construction of XJ Intelligence Factory in FY2023.
Our Group’s gearing ratio remained relatively stable at 34.9% for FY2024.
MATERIAL RELATED PARTY TRANSACTIONS
We enter into transactions with our related parties from time to time. For details relating to
our related party transactions, please see “Connected Transactions” and Note 37 to the
Accountants’ Report set out in Appendix I to this prospectus. The Directors are of the view that
our transactions with related parties during the Track Record Period were conducted in the
ordinary course of business and on an arm’s length basis, and they did not distort our results of
operations or make our historical results not reflective of our future performance.
FINANCIAL RISKS
Our business activities expose us to a variety of financial risks including foreign exchange
risks, credit risks and liquidity risks. For details of our financial risk management, please see
Note 36 of the Accountants’ Report included in Appendix I to this prospectus.
FINANCIAL INFORMATION
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PROPERTY INTERESTS AND PROPERTY V ALUATION
Our property valuer, A VISTA Group, has valued certain of our Group’s properties as at 31
March 2025. Details of the valuation are summarised in Appendix III to this prospectus. The
following table sets out the fair value of our Group’s property interest as at 31 December 2024
and their net book value as at 31 December 2024, details of which is set out in notes 17 and 19
of the Accountants’ Report in Appendix I to this prospectus for further details:
G r o u pI–P r operty interests held for owner occupation by our Group in the PRC
RMB’000
Net book value of the property as at 31 December 2024 365,381
Net valuation surplus/(loss) N/A
Valuation as at 31 March 2025 No Commercial
Value
Note
Note: According to the Valuation Report in Appendix III to this prospectus, no commercial value was assigned to
the property since X.J. Electrical Appliances has yet to obtain proper title certificates of building
ownership due to certain law deficiencies. As confirmed by our Directors, based on the circumstances as at
Latest Practicable Date, our Group targeted to obtain the relevant title certificates of XJ Intelligence
Factory by the end of June 2025. For reference purposes, our property Valuer is of the opinion that the
estimated value of the property as at 31 March 2025 would be RMB375,130,000, assuming the property
could be freely transferred in the market.
Group II – Property interests held for investment by our Group in the PRC
RMB’000
Net book value of the property as at 31 December 2024 11,631
Less: Movements for the three months ended 31 March 2025
– Depreciation and amortization (unaudited) (193)
Net valuation surplus/(loss) (798)
Valuation as at 31 March 2025 10,640
FINANCIAL INFORMATION
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--- page 393 ---
UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS OF OUR GROUP ATTRIBUTABLE TO OWNERS OF OUR
COMPANY
The following unaudited pro forma statement of adjusted consolidated net tangible assets of
our Group attributable to owners of our Company prepared in accordance with paragraph 4.29 of
the Listing Rules is set out below to illustrate the effect of the Global Offering (as defined in
this prospectus) on the audited consolidated net tangible assets of our Group attributable to
owners of our Company at 31 December 2024 as if the Global Offering had taken place on that
date.
The unaudited pro forma statement of adjusted consolidated net tangible assets of our
Group attributable to owners of our Company has been prepared for illustrative purposes only
and, because of its hypothetical nature, it may not give a true picture of the consolidated net
tangible assets of our Group attributable to owners of our Company as at 31 December 2024 or
any future dates following the Global Offering.
The following unaudited pro forma statement of adjusted consolidated net tangible assets of
our Group attributable to owners of our Company is prepared based on the audited consolidated
net tangible assets of our Group attributable to owners of our Company as at 31 December 2024
as derived from the Accountants’ Report, the text of which is set out in Appendix I to this
prospectus, and adjusted as described below:
Audited
consolidated
net tangible
assets of our
Group
attributable to
owners of our
Company as at
31 December
2024 (1)
Estimated net
proceeds from
Global
Offering (2)
Unaudited pro
forma adjusted
consolidated
net tangible
assets of our
Group
attributable to
owners of our
Company as at
31 December
2024
Unaudited pro forma adjusted
consolidated net tangible assets
of our Group attributable to
owners of our Company as at
31 December 2024
per Share
RMB’000 RMB’000 RMB’000 RMB (3) HK$(4)
Based on an Offer
Price of HK$2.86
per Offer Share 926,086 143,889 1,069,975 3.92 4.25
Based on an Offer
Price of HK$3.35
per Offer Share 926,086 173,186 1,099,272 4.03 4.37
FINANCIAL INFORMATION
– 384 –


--- page 394 ---
Notes:
(1) The amount is calculated based on the audited consolidated net assets of our Group attributable to owners
of our Company amounted to RMB926,211,000 as at 31 December 2024, with adjustment for intangible
assets of our Group attributable to owners of our Company as at 31 December 2024 of RMB125,000 as
extracted from the Accountants’ Report set forth in Appendix I to this prospectus.
(2) The estimated net proceeds from the Global Offering are based on 68,220,000 H shares to be issued at the
Offer Price of HK$2.86 and HK$3.35 per Offer Share, being the low end and high end of the indicated
Offer Price range respectively, after deduction of the estimated listing expenses and share issue costs
(including underwriting fees and other related expenses) incurred or expected to be incurred by the Group
subsequent to 31 December 2024, other than those expenses which had been recognised in profit or loss
prior to 31 December 2024. It does not take into account (i) any Shares which may be allotted and issued
upon the exercise of the Over-allotment Option or (ii) any Shares which may be issued or repurchased by
our Company pursuant to the general mandates.
For the purpose of calculating, the estimated net proceeds from the Global Offering, the amount
denominated in Hong Kong dollars has been converted into Renminbi at an exchange rate of HK$1 to
RMB0.9226, which was the exchange rate prevailing on 7 March 2025 with reference to the rate published
by the People’s Bank of China. No representation is made that Hong Kong dollar amounts have been,
could have been or may be converted to Renminbi, or vice versa, at that rate or at any other rates or at all.
(3) The number of shares used for the calculation of unaudited pro forma adjusted consolidated net tangible
assets of our Group attributable to owners of our Company per Share is based on 272,879,509 Shares
comprising 204,659,509 Shares in issue as at 31 December 2024 and 68,220,000 H Shares to be issued,
assuming the Global Offering had been completed on 31 December 2024. It does not take into account (i)
any Shares which may be allotted and issued upon the exercise of the Over-allotment Option or (ii) any
Shares which may be issued or repurchased by our Company pursuant to the general mandates.
(4) The unaudited pro forma adjusted consolidated net tangible assets of our Group attributable to owners of
our Company per Share is converted from Renminbi to Hong Kong dollars at the rate of HK$1 to
RMB0.9226, which was the exchange rate prevailing on 7 March 2025 with reference to the rate published
by the People’s Bank of China. No representation is made that the Renminbi amounts have been, would
have been or may be converted to Hong Kong dollars, or vice versa, at that date or at any other rates or at
all.
(5) No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets of our
Group attributable to owners of our Company as at 31 December 2024 to reflect any operating result or
other transactions of our Group entered into subsequent to 31 December 2024.
(6) Certain property interests of the Group as at 31 March 2025 have been valued by A VISTA Valuation
Advisory Limited, an independent property valuer. By comparing the valuation of the Group’s property
interests of approximately RMB401,570,000 provided by A VISTA Valuation Advisory Limited and the
carrying amounts of these properties of approximately RMB368,428,000 as at 31 December 2024, the
valuation surplus is approximately RMB33,142,000 as at 31 March 2025, which was not reflected in the
above adjusted consolidated net tangible assets of the Group attributable to owners of the Company as at
31 December 2024. The revaluation surplus has not been included in the Historical Financial Information
as at 31 December 2024 as set out in Appendix I to this prospectus. If the revaluation surplus was recorded
in the Group’s consolidated financial statements, the annual depreciation of the Group would increase by
approximately RMB1,337,000.
FINANCIAL INFORMATION
– 385 –


--- page 395 ---
LISTING EXPENSES
The total listing expenses are expected to be HK$40.4 million, which is approximately
19.0% of the gross proceeds from the Global Offering (assuming Over-allotment Option will not
be exercised and based on an Offer Price of HK$3.11 per Offer Share, being the mid-point of the
indicative Offer Price range) with (i) an amount of approximately HK$35.7 million being
directly attributable to the issuance of H Shares will be deducted from our equity upon
completion of the Global Offering; and (ii) approximately HK$0.4 million was charged to our
consolidated statements of profit or loss and other comprehensive income for the year ended 31
December 2024, with an additional HK$4.3 million to be charged thereafter. Such listing
expenses comprise underwriting-related expenses of HK$10.6 million and non-underwriting
expenses of HK$29.8 million, which includes (i) professional fees paid and payable to the legal
advisers, and the reporting accountants of HK$16.9 million, and (ii) fees paid and payable to
other working parties and other expenses in relation to the Listing and the Global Offering of
HK$12.9 million.
For FY2022, FY2023 and FY2024, listing expenses charged to our consolidated statements
of profit or loss and other comprehensive income amounted to nil, nil and RMB0.4 million,
respectively. The listing expenses above are our Directors’ best estimate as of the Latest
Practicable Date and for reference only, and the actual amount may differ from this estimate.
DISTRIBUTABLE RESERVES
As at 31 December 2024, we had RMB575.9 million of retained earnings available for
distribution to our Shareholders.
DIVIDENDS AND DIVIDEND POLICY
During the Track Record Period, we did not declare or distribute any dividend.
In order to return capital to our Shareholders in line with our growth, we have adopted in
our general dividend policy a dividend payout ratio of no less than 30% of our annual
distributable net profit of the immediately preceding year for each of the three financial years
upon Listing (including the year of the Listing) (the “ Initial Period ”). After the Initial Period,
pursuant to such general policy, we will determine the dividend payout ratio with reference to
our results of operations, cash flows, financial condition, operating and capital expenditure
requirements, distributable profits and other factors that our Directors may consider relevant. We
may declare and pay dividends by way of cash or by other means that we consider appropriate.
The dividend payout ratio will be decided by our Board at their discretion and distribution of
dividends will be subject to Shareholders’ approval. In addition, our dividend policy will also be
subject to our Articles of Association, the PRC Company Law and any other applicable law and
regulations.
FINANCIAL INFORMATION
– 386 –


--- page 396 ---
NO MATERIAL ADVERSE CHANGE
Our Directors confirm that, save for the estimated non-recurring Listing expenses, up to the
date of this prospectus, there has been no material adverse change in our financial operational
and/or trading position or prospects of our Group since 31 December 2024, which is the end date
of the period reported on in the Accountants’ Report in Appendix I to this prospectus, and there
is no event since 31 December 2024 and up to the date of this prospectus which would
materially affect the information shown in the Accountants’ Report in Appendix I to this
prospectus.
DISCLOSURE REQUIRED UNDER THE LISTING RULES
Our Directors have confirmed that as at the Latest Practicable Date, there are no
circumstances that would give rise to a disclosure requirement under Rule 13.13 to Rule 13.19
of the Listing Rules.
FINANCIAL INFORMATION
– 387 –


--- page 397 ---
FUTURE PLANS
For a detailed description of our future plans, please see “Business – Our Strategies” in this
prospectus.
USE OF PROCEEDS
We estimate that we will receive net proceeds from the Global Offering, after deducting the
underwriting fees and expenses payable by us in the Global Offering, of approximately
HK$171.8 million (i.e. approximately RMB158.5 million), assuming (i) an Offer Price of
HK$3.11 per H Share, being the midpoint of the indicative Offer Price range, and (ii) no
exercise of the Over-allotment Option. In line with our strategies, we intend to use our net
proceeds from the Global Offering for the purposes in the amounts and timeframe set forth
below:
For the
period from
1 January 2025 to
31 December 2025
For the
period from
1 January 2026 to
31 December 2026
After
1 January 2027 Total
Approximate %
of net proceeds
(RMB million) (RMB million) (RMB million) (RMB million)
Set up our Thailand Factory to enhance our
global presence
– Acquisition of land 3.1 – – 3.1 2.0
– Construction and renovation of production
space 26.7 – – 26.7 16.8
– Acquisition and installation of machines and
equipment 20.7 15.8 – 36.6 23.1
Subtotal 50.5 15.8 – 66.4 41.9
Increase the level of automation and
digitalisation
– Acquisition and installation of machines and
equipment 5.0 17.0 3.1 25.1 15.8
Set up a new R&D Centre
– Construction and renovation of the R&D centre 4.9 11.3 – 16.2 10.2
– Acquisition of equipment and software – 12.7 4.6 17.3 10.9
– Procurement of materials and consumables for
R&D 0.4 9.3 4.9 14.6 9.2
– Recruitment of staff – 5.6 5.4 11.0 6.9
Subtotal 5.3 38.9 14.9 59.1 37.3
General working capital 7.9 – – 7.9 5.0
Total 68.8 71.7 18.0 158.5 100.0
FUTURE PLANS AND USE OF PROCEEDS
– 388 –


--- page 398 ---
 approximately RMB66.4 million (i.e. approximately HK$71.9 million), representing
41.9% of the net proceeds will be used for setting up our Thailand Factory to enhance
our global presence. Net proceeds will be used for paying the relevant suppliers
directly or by repaying a loan designated for the same use
(Note) . In particular,
 approximately RMB3.1 million (i.e. approximately HK$3.4 million) will be used
for acquiring a parcel of land in Rayong Province, Thailand;
 approximately RMB26.7 million (i.e. approximately HK$28.9 million) will be
used for the construction and renovation of production space in the Thailand
Factory; and
 approximately RMB36.6 million (i.e. approximately HK$39.6 million) will be
used for the acquisition and installation of machines and equipment.
For the reasons, timetable, costs involved and other details of our plan of setting up the
Thailand Factory, please see “Business – Our Strategies – Set up our Thailand Factory to
enhance our global presence” in this prospectus.
 approximately RMB25.1 million (i.e. approximately HK$27.2 million), representing
15.8% of the net proceeds will be used for increasing the level of automation and
digitalisation for sustainable growth. In particular, such proceeds will be used for
acquiring and installing machines and equipment.
For details of our plan of increasing the level of automation and digitalisation for
sustainable growth, please see “Business – Our Strategies – Increase the level of automation and
digitalisation” in this prospectus.
 approximately RMB59.1 million (i.e. approximately HK$64.1 million), representing
37.3% of the net proceeds will be used for setting up a new R&D Centre. In
particular:
 approximately RMB16.2 million (i.e. approximately HK$17.6 million) will be
used for the construction and renovation of the R&D centre;
 approximately RMB17.3 million (i.e. approximately HK$18.8 million) will be
used for acquiring equipment and software for R&D activities;
Note: On 31 March 2025, we entered into an agreement with a licensed bank, an Independent Third Party, for a loan
facility up to RMB100.0 million designated for setting up our Thailand Factory. The loan carries a fixed interest
rate to be determined on the date of drawdown with reference to the loan prime rate in China or the U.S. secured
overnight financing rate and matures one year after the drawdown date but in no event later than 15 February
2027. As at the Latest Practicable Date, we had drawn down RMB23.6 million of such loan.
FUTURE PLANS AND USE OF PROCEEDS
– 389 –


--- page 399 ---
 approximately RMB14.6 million (i.e. approximately HK$15.8 million) will be
used for the procurement of materials and consumables for R&D; and
 approximately RMB11.0 million (i.e. approximately HK$11.9 million) will be
used for the recruitment of 59 staff including technicians, electronics engineers
and software engineers.
For details of setting up a new R&D Centre, please see “Business – Our Strategies – Set up
a new R&D Centre” in this prospectus.
 approximately RMB7.9 million (i.e. approximately HK$8.6 million), representing
5.0% of the net proceeds will be used for the general working capital of our Group.
The above allocation of the net proceeds will be adjusted on a pro rata basis in the event
that the Offer Price is fixed at a higher or lower level compared to the mid-point of the
indicative Offer Price range or the Over-allotment Option is exercised.
Our Directors consider that our Group has a genuine funding need taking into account our
internal and external resources and recent changes in the regulatory and economic environment.
As at 30 April 2025, our cash and cash equivalents amounted to RMB490.3 million.
Our monthly operating cost (excluding impairment losses and other losses), which is
mainly consisted of our cost of sales, selling expenses, administrative expenses, research and
development expenses, other operating expenses and finance costs, for FY2022, FY2023 and
FY2024 amounted to RMB86.3 million, RMB89.3 million and RMB114.1 million, respectively.
As at 30 April 2025, we had current liabilities of RMB663.0 million, which mainly
consisted of trade and bill payables and borrowings. There can be no assurance that we will
receive full payments from our customers before we are required to settle the current liabilities
and therefore our Directors consider that it is financially prudent for our Group to maintain
sufficient immediately available cash and bank balances that are in the similar amount of our
current liabilities at any point in time.
Although our Group has obtained banking facilities, our Directors believe that it is
necessary for us to maintain a disciplined financial strategy without exposing our Group to
aggressive gearing in order to achieve sustainable growth and a cash level sufficient to support
our Group’s existing operations, in particular, given the rapidly changing geopolitical condition.
Our gearing ratio as at 31 December 2022, 2023 and 2024 was approximately 27.2%, 31.4% and
34.9%, respectively. The gearing ratio increased significantly from 2022 to 2024 as our
borrowings increased significantly primarily due to the increased long-term bank loans which
were used to finance the construction of XJ Intelligence Factory for FY2023. Given the increase
in gearing ratio during the Track Record Period, our Group prefers equity fund raising over bank
borrowing to fund our future growth as the latter will inevitably place undue financial burden on
our Group in terms of cash flow for both repayment and interest expenses. There is also the risk
FUTURE PLANS AND USE OF PROCEEDS
– 390 –


--- page 400 ---
of calling loan on demand by the banks under the terms of the current facilities letters. If the
loans are demanded in a short period of time, our Group’s current liabilities will increase, which
will negatively affect our financial position. The bank borrowing entails contractual principal
repayment and interest payment obligations. In contrast, equity financing does not involve
recurring interest expenses and repayment of principal, allowing our Group to have better
control over the cash flow for business expansion.
Along with the implementation of our expansion plan, it is expected that the operation
costs and minimum working capital required will increase. Based on all of the aforesaid, our
Directors consider that our Group has a genuine funding need taking into account our internal
and external resources and recent changes in the regulatory and economic environment.
If the Offer Price is determined at HK$3.35 per Offer Share, being the high end of the
Offer Price range stated in this prospectus, after deducting the underwriting fees and expenses
payable by us in respect with the Global Offering, we will receive net proceeds of approximately
HK$187.3 million, assuming that the Over-allotment Option is not exercised.
If the Offer Price is determined at HK$2.86 per Offer Share, being the low end of the Offer
Price range stated in this prospectus, after deducting the underwriting fees and expenses payable
by us in connection with the Global Offering, we will receive net proceeds of approximately
HK$155.6 million, assuming that the Over-allotment Option is not exercised.
If the Over-allotment Option is exercised in full, we will receive the additional net
proceeds from approximately HK$27.8 million (assuming an Offer Price of HK$2.86 per Offer
Share, being the low end of the indicative Offer Price range) to HK$32.6 million (assuming an
Offer Price of HK$3.35 per Offer Share, being the high end of the indicative Offer Price range),
after deducting the underwriting fees and expenses payable by us in connection with the Global
Offering.
To the extent that the net proceeds of the Global Offering are not immediately used for the
above purposes or if we are unable to effect any part of our future development plans as
intended, to the extent permitted by applicable law and regulations, we will only deposit those
net proceeds into short-term interest-bearing accounts at licenced commercial banks and/or other
authorised financial institutions (as defined under the SFO or applicable laws and regulations in
other jurisdictions). In such event, we will comply with the appropriate disclosure requirements
under the Listing Rules. Our Directors consider that the net proceeds from the Global Offering
together with the internal resources of our Group will be sufficient to finance the
implementation of our Group’s business plans as set out in this section.
FUTURE PLANS AND USE OF PROCEEDS
– 391 –


--- page 401 ---
HONG KONG UNDERWRITERS
Sinolink Securities (Hong Kong) Company Limited
CCB International Capital Limited
ABCI Securities Company Limited
CMB International Capital Limited
CMBC Securities Company Limited
First Fidelity Capital (International) Limited
UZen Securities Limited
Valuable Capital Limited
UNDERWRITING
This prospectus is published solely in connection with the Hong Kong Public Offering. The
Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters on a
conditional basis. The International Offering is expected to be fully underwritten by the
International Underwriters subject to the terms and conditions of the International Underwriting
Agreement. If, for any reason, the Offer Price is not agreed between the Sole Sponsor-Overall
Coordinator (on behalf of the Underwriters) and our Company, the Global Offering will not
proceed and will lapse.
The Global Offering comprises the Hong Kong Public Offering of initially 6,822,000 Hong
Kong Offer Shares and the International Offering of initially 61,398,000 International Offer
Shares, subject, in each case, to reallocation on the basis as described in “Structure of the
Global Offering”.
UNDERWRITING ARRANGEMENTS
Hong Kong Public Offering
Hong Kong Underwriting Agreement
Pursuant to the Hong Kong Underwriting Agreement, we are offering 6,822,000 Hong Kong
Offer Shares (subject to reallocation) for subscription by the public in Hong Kong on the terms
and subject to the conditions in this prospectus at the Offer Price.
Subject to (a) the Stock Exchange granting approval for the listing of, and permission to
deal in, the H Shares in issue and to be issued pursuant to the Global Offering as mentioned in
this prospectus and such approval not having been withdrawn; and (b) the conditions set out in
the Hong Kong Underwriting Agreement being satisfied (or, as the case may be, waived), the
Hong Kong Underwriters have agreed, severally but not jointly, to subscribe, or procure
subscribers to subscribe, for the Hong Kong Offer Shares which are being offered but are not
taken up under the Hong Kong Public Offering on the terms and subject to the conditions set out
in this prospectus and the Hong Kong Underwriting Agreement.
UNDERWRITING
– 392 –


--- page 402 ---
The Hong Kong Underwriting Agreement is conditional on and subject to, among other
things, the International Underwriting Agreement having been signed and becoming
unconditional and not having been terminated in accordance with its terms.
Grounds for termination of the Hong Kong Underwriting Agreement
If any of the events set out below shall occur at any time prior to 8:00 a.m. (Hong Kong
time) on the Listing Date, the Sole Sponsor-Overall Coordinator (for itself and on behalf of the
Hong Kong Underwriters) in its sole and absolute discretion may, by giving notice or in writing
to our Company to terminate the Hong Kong Underwriting Agreement with immediate effect:
(a) there develops, occurs, exists or comes into force:
(i) any new law or regulation or any change in existing laws or regulations or any
change in the interpretation or application thereof by any court or other
competent authority in Hong Kong, the PRC or any other jurisdiction(s) relevant
to our Company and our subsidiaries (collectively, the “ Specific Jurisdictions ”)
or any other similar event which in the sole and absolute opinion of the Sole
Sponsor-Overall Coordinator (for itself and on behalf of the Hong Kong
Underwriters) has or is likely to have a material adverse effect on the business or
financial conditions or prospects of our Group or which may be expected to
adversely affect the business or financial condition or prospects of our Group in
a material way; or
(ii) any change (whether or not permanent) in national, regional, international,
financial, military, industrial or economic conditions or prospects, stock market,
fiscal or political conditions, regulatory or market conditions and matters and/or
disasters in any Specific Jurisdictions or any other similar event which in the
sole and absolute opinion of the Sole Sponsor-Overall Coordinator (for itself and
on behalf of the Hong Kong Underwriters) has or is likely to have a material
adverse effect on the business or financial conditions or prospects of our Group
or which may be expected to adversely affect the business or financial condition
or prospects of our Group in a material way; or
(iii) without prejudice to sub-paragraph (i) of paragraph (a) above, the imposition of
any moratorium, suspension or restriction on trading in securities generally on
the Stock Exchange due to exceptional financial circumstances or otherwise; or
(iv) any event, or series of events, beyond the control of the Hong Kong Underwriters
(including, without limitation, acts of government, strikes, lockout, fire,
explosion, flooding, civil commotion, acts of war or acts of God or accident) in
the sole and absolute opinion of the Sole Sponsor-Overall Coordinator (for itself
and on behalf of the Hong Kong Underwriters) would or might have a material
adverse effect on any member of our Group or its present or prospective
shareholders in their capacity as such; or
UNDERWRITING
– 393 –


--- page 403 ---
(v) any change or development occurs involving a prospective change in taxation or
in exchange control or the implementation of any exchange controls in any
Specific Jurisdiction(s) which in the sole and absolute opinion of the Sole
Sponsor-Overall Coordinator (for itself and on behalf of the Hong Kong
Underwriters) would or might have a material adverse effect on any member of
our Group or its present or prospective shareholders in their capacity as such in a
material way; or
(vi) any litigation or claim of material importance to the business, financial or
operations of our Group being threatened or instituted against any member of our
Group, our substantial shareholders, or any Directors; or
(vii) the imposition of economic sanctions, in whatever form, directly or indirectly, in
any Specific Jurisdiction(s); or
(viii)any governmental or regulatory commission, board, body, authority or agency, or
any stock exchange, self-regulatory organisation or other non-government
regulatory authority, or any court, tribunal or arbitrator, whether national, central,
federal, provincial, state, regional, municipal, local, domestic or foreign, or a
political body or organisation in any Specific Jurisdiction(s) commencing any
investigation or other action, or announcing an intention to investigate or take
other action, against any members of our Group or Director; or
(ix) order or petition for the winding up of any members of our Group or any
composition or arrangement made by any members of our Group with its
creditors or a scheme of arrangement entered into by any members of our Group
or any resolution for the winding up of any members of our Group or the
appointment of a provisional liquidator, receiver or manager over all or part of
the material assets or undertaking of any members of our Group or anything
analogous thereto occurring in respect of any members of our Group; or
(x) any such event, which, individually, or in the aggregate, in the sole and absolute
opinion of the Sole Sponsor-Overall Coordinator (for itself and on behalf of the
Hong Kong Underwriters), (I) has or may have a material adverse effect on the
success of the Global Offering, or the level of applications under the Hong Kong
Public Offering or the level of interest under the International Offering; or (II)
has or will or may have a material adverse effect on the assets, liabilities,
business, prospects, trading or financial position of our Group as a whole; or (III)
makes it inadvisable or impracticable to proceed with the Global Offering; or
(IV) has or will or may have the effect of making any part of the Hong Kong
Underwriting Agreement (including underwriting) incapable of performance in
accordance with its terms or preventing the processing of applications and/or
payments pursuant to the Global Offering or pursuant to the underwriting thereof;
or
UNDERWRITING
– 394 –


--- page 404 ---
(b) there comes to the notice of the Sole Sponsor-Overall Coordinator (for itself and on
behalf of the Hong Kong Underwriters) any matter or event showing any of the
representations and warranties contained in the Hong Kong Underwriting Agreement
to be untrue or inaccurate or, if repeated immediately after the occurrence thereof,
would be untrue or inaccurate in any respect considered by the Sole Sponsor-Overall
Coordinator (for itself and on behalf of the Hong Kong Underwriters) in its sole and
absolute opinion to be material or showing any of the obligations or undertakings
expressed to be assumed by or imposed on our Company or the covenantors under the
Hong Kong Underwriting Agreement not to have been complied with in any respect
considered by the Sole Sponsor-Overall Coordinator (for itself and on behalf of the
Hong Kong Underwriters) in its sole and absolute opinion to be material; or
(c) there comes to the notice of the Sole Sponsor-Overall Coordinator (for itself and on
behalf of the Hong Kong Underwriters) any breach on the part of our Company or any
of the covenantors of any provisions of the Hong Kong Underwriting Agreement in
any respect which is considered by the Sole Sponsor-Overall Coordinator (for itself
and on behalf of the Hong Kong Underwriters) in its sole and absolute opinion to be
material; or
(d) any statement contained in this prospectus, notices, advertisements, announcements,
application proof prospectus, post hearing information pack, the submissions,
documents or information provided to the Sole Sponsor-Overall Coordinator (for itself
and on behalf of the Hong Kong Underwriters), the Stock Exchange, the legal advisers
to the Sole Sponsor and the Underwriters and any other parties involved in the Global
Offering which in the sole and absolute opinion of the Sole Sponsor-Overall
Coordinator (for itself and on behalf of the Hong Kong Underwriters) has become or
been discovered to be untrue, incorrect, incomplete or misleading in any material
respect; or
(e) matters have arisen or have been discovered which would, if this prospectus, notices,
advertisements, announcements, application proof prospectus, post hearing information
pack was to be issued at that time, constitute, in the sole and absolute opinion of the
Sole Sponsor-Overall Coordinator (for itself and on behalf of the Hong Kong
Underwriters) a material omission of such information; or
(f) there is any material adverse change or prospective material adverse change in the
business or in the financial or trading position or prospects of our Group which in the
sole and absolute opinion of the Sole Sponsor-Overall Coordinator (for itself and on
behalf of the Hong Kong Underwriters) is material; or
UNDERWRITING
– 395 –


--- page 405 ---
(g) the approval of the Listing Committee of the Stock Exchange of the listing of, and
permission to deal in, the H Shares in issue or to be issued pursuant to the Global
Offering is refused or not granted, other than subject to customary conditions, on or
before 8:00 a.m. (Hong Kong time) on the Listing Date, or if granted, the approval is
subsequently withdrawn, qualified (other than by customary conditions) or withheld;
or
(h) any expert, who has given opinion or advice which are contained in this prospectus,
has withdrawn its respective consent to the issue of this prospectus with the inclusion
of its reports, letters, opinions or advices and references to its name included in the
form and context in which it respectively appears prior to the issue of this prospectus;
or
(i) our Company withdraws this prospectus (and/or any other documents issued or used in
connection with the Global Offering) or the Global Offering; or
(j) there comes to the notice of the Sole Sponsor-Overall Coordinator or any of the
Underwriters any information, matter or event which in the sole and absolute opinion
of the Sole Sponsor-Overall Coordinator (for itself and on behalf of the Hong Kong
Underwriters) would cast any serious doubt on the integrity or reputation of any
Director or the reputation of our Group.
Undertakings to the Stock Exchange
Undertaking by our Company
Pursuant to Rule 10.08 of the Listing Rules, we have undertaken to the Stock Exchange
that, no further Shares or securities convertible into our equity securities (whether or not of a
class already listed) may be issued by us or form the subject of any agreement to such an issue
by us within six months from the Listing Date (whether or not such issue of our Shares or our
securities will be completed within six months from the Listing Date), except pursuant to the
Global Offering (including the Over-allotment Option) or under any of the circumstances
prescribed by Rule 10.08 of the Listing Rules.
UNDERWRITING
– 396 –


--- page 406 ---
Undertaking by our Controlling Shareholders
Pursuant to Rule 10.07(1) of the Listing Rules, each of the Controlling Shareholders
undertakes to the Stock Exchange and to our Company that except pursuant to the Global
Offering (including the Over-allotment Option), they will not at any time:
(a) during the period commencing on the date by reference to which disclosure of his/its
interests in our Company is made in this prospectus and ending on the date falling six
months from the Listing Date (the “ First Six-month Period ”), he/it shall not dispose
of, or enter into any agreement to dispose of or otherwise create any options, rights,
interests or encumbrances in respect of, any of the securities of our Company in
respect of which he/it is shown by this prospectus to be the beneficial owners; or
(b) in the six-month period commencing on the expiry of the First Six-month Period set
out in paragraph (a) above, dispose of, or enter into any agreement to dispose of or
otherwise create any options, rights, interests or encumbrances in respect of, any of
the securities mentioned in paragraph (a) if, immediately following such disposal or
upon the exercise or enforcement of such options, rights, interests or encumbrances,
he/it would cease to be a controlling shareholder of our Company for the purposes of
the Listing Rules.
Pursuant to Note (3) to Rule 10.07(2) of the Listing Rules, each of our Controlling
Shareholders has further undertaken to the Stock Exchange and to our Company that within the
period commencing on the date by reference to which disclosure of his/its shareholdings is made
in this prospectus and to the date which is 12 months from the Listing Date, he/it will:
(a) when he/it pledges or charges any securities of our Company or interests therein
beneficially owned by him/it in favour of any authorised institution pursuant to Note
(2) to Rule 10.07(2) of the Listing Rules, immediately inform our Company of such
pledge or charge together with the number of securities so pledged or charged; and
(b) when he/it receives indications, either verbal or written, from the pledgee or chargee
that any of the securities of our Company pledged or charged will be disposed of,
immediately inform our Company of such indications.
Under Note 3 to Rule 10.07(2) of the Listing Rules, our Company is required to inform the
Stock Exchange as soon as practicable after we have been informed of the matters referred to in
(a) or (b) above by any of our Controlling Shareholders and disclose such matters by way of an
announcement in compliance with the Listing Rules.
UNDERWRITING
– 397 –


--- page 407 ---
Undertakings pursuant to the Hong Kong Underwriting Agreement
Lock-up on the Controlling Shareholders
Each of our Controlling Shareholders, jointly and severally, has given an undertaking to
each of our Company, the Sole Sponsor, the Sole Sponsor-Overall Coordinator, the Overall
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the CMIs and the Hong Kong
Underwriters that, except pursuant to the Global Offering (including pursuant to the exercise of
the Over-Allotment Option) or otherwise in compliance with the Listing Rules, without the prior
written consent of the Sole Sponsor-Overall Coordinator (for itself and on behalf of the Hong
Kong Underwriters):
(i) during the period commencing on the date of the Hong Kong Underwriting Agreement
and ending on, and including, the date that is six months after the Listing Date (the
“First Six Month Period ”), none of them will, and each of them will procure that
none of his/its close associates will not (a) sell, offer to sell, contract or agree to sell,
mortgage, charge, pledge, hypothecate, lend, grant or sell any option, warrant, contract
or right to purchase, grant or purchase any option, warrant, contract or right to sell, or
otherwise transfer or dispose of or create an encumbrance over, or agree to transfer or
dispose of or create an encumbrance over, either directly or indirectly, conditionally or
unconditionally, any Shares or any other securities of our Company or any interest
therein (including, without limitation, any securities convertible into or exchangeable
or exercisable for or that represent the right to receive, or any warrants or other rights
to purchase, any Shares, as applicable) beneficially owned by him/her/it as at the
Listing Date (the “ Locked-up Securities ”), or deposit any Locked-up Securities with
a depositary in connection with the issue of depositary receipts, or (b) enter into any
swap or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of any Locked-up Securities), or (c) enter into
any transaction with the same economic effect as any transaction specified in (a) or
(b) above, or (d) offer to or agree to or announce any intention to effect any
transaction specified in (a), (b) or (c) above, in each case, whether any of the
transactions specified in (a), (b) or (c) above is to be settled by delivery of Shares or
such other securities of our Company or shares or other securities of such other
members of our Group, as applicable, or in cash or otherwise (whether or not the
settlement or delivery of Shares or such other securities will be completed within the
First Six Month Period); and
UNDERWRITING
– 398 –


--- page 408 ---
(ii) during the period of six months commencing on the date on which the First Six Month
Period expires and including, the date that is six months after the end of the First Six
Month Period (the “ Second Six Month Period ”), none of them will enter into any of
the transactions specified in (a), (b) or (c) under paragraph (i) above or offer to or
agree to or announce any intention to effect any such transaction if, immediately
following any sale, transfer or disposal or upon the exercise or enforcement of any
option, right, interest or encumbrance pursuant to such transaction, he/it will cease to
be a “controlling shareholder” (as the term is defined in the Listing Rules) of our
Company;
(iii) during the First Six-Month Period and Second Six-Month Period, each of them will (a)
if and when any of them or the relevant registered holder(s) pledges or charges any
Locked-up Securities, immediately inform our Company and the Sole Sponsor-Overall
Coordinator in writing of such pledge or charge together with the number of
Locked-up Securities so pledged or charged; or (b) if and when any of them or the
relevant registered holder(s) receives indications, either verbal or written, from any
pledgee or chargee that any of the pledged or charged Locked-up Securities will be
disposed of, immediately inform our Company, the Sole Sponsor-Overall Coordinator
in writing of such indications; and
(iv) until the expiry of the Second Six Month Period, in the event that he/it enters into any
of the transactions specified in (a), (b) or (c) under paragraph (i) above or offers to or
agrees to or announces any intention to effect any such transaction, he/it will take all
reasonable steps to ensure that it will not create a disorderly or false market in the
securities of our Company.
Our Company undertakes to the Sole Sponsor, the Sole Sponsor-Overall Coordinator, the
Overall Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead
Managers, the CMIs and the Hong Kong Underwriters that upon receiving such information in
writing from any of the Controlling Shareholders, it will, as soon as practicable and if required
pursuant to the Listing Rules, notify the Stock Exchange and make a public disclosure in
relation to such information by way of an announcement.
For the avoidance of doubt, the aforesaid restrictions do not apply to (i) any additional
Shares or other securities of our Company or any interest therein acquired by any of the
Controlling Shareholders after the Listing; or (ii) any pledge or charge of any Shares or other
equity securities of our Company, as applicable, or any interest in any of the foregoing
(including, without limitation, any securities convertible into or exchangeable or exercisable for
or that represent the right to receive, or any warrants or other rights to purchase, any Shares or
other equity securities of our Company) after the Global Offering in favor of an authorized
institution as defined in the Banking Ordinance for a bona fide commercial loan.
UNDERWRITING
– 399 –


--- page 409 ---
Lock-up on our Company
Except for the offer and sale of the Offer Shares pursuant to the Global Offering (including
the additional H Shares which may be issued pursuant to the Over-allotment Option), our
Company undertakes to each of the Sole Sponsor, the Sole Sponsor-Overall Coordinator, the
Overall Coordinators, the Joint Bookrunners, the Joint Lead Managers, the CMIs and the Hong
Kong Underwriters not to, and to procure each member of our Group not to, without the prior
written consent of the Sole Sponsor-Overall Coordinator (for itself and on behalf of the Hong
Kong Underwriters) and unless in compliance with the requirements of the Listing Rules, at any
time during the period commencing on the date of the Hong Kong Underwriting Agreement and
ending on, and including, the last date of the First Six Month Period:
(i) allot, issue, sell, accept subscription for, offer to allot, issue or sell, contract or agree
to allot, issue or sell, mortgage, charge, pledge, hypothecate, lend, grant or sell any
option, warrant, contract or right to subscribe for or purchase, grant or purchase any
option, warrant, contract or right to allot, issue or sell, or otherwise transfer or dispose
of or create an encumbrance over, or agree to transfer or dispose of or create an
encumbrance over, either directly or indirectly, conditionally or unconditionally, any
Shares or any other securities of our Company or any shares or other securities of
such other members of our Group, as applicable, or any interest in any of the
foregoing (including, without limitation, any securities convertible into or
exchangeable or exercisable for or that represent the right to receive, or any warrants
or other rights to purchase, any Shares or any shares of such other members of our
Group, as applicable, or deposit any share capital or other securities of our Company,
as applicable, with a depositary in connection with the issue of depositary receipts); or
(ii) enter into any swap or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of Shares or any other securities of
our Company or any shares or other securities of such other members of our Group, as
applicable, or any interest in any of the foregoing (including, without limitation, any
securities convertible into or exchangeable or exercisable for or that represent the
right to receive, or any warrants or other rights to purchase, any Shares or any shares
of such members of our Group, as applicable); or
(iii) enter into any transaction with the same economic effect as any transaction specified
in paragraphs (i) or (ii) above; or
(iv) offer to or agree to or announce any intention to effect any transaction specified in
paragraphs (i), (ii) or (iii) above,
in each case, whether any of the transactions specified in paragraphs (i), (ii) or (iii) above is to
be settled by delivery of Shares or such other securities of our Company or shares or other
securities of such members of our Group, as applicable, or in cash or otherwise (whether or not
the issue of Shares or such other securities will be completed within the aforesaid period),
provided that the foregoing restrictions shall not apply to the issue of the H Shares by our
Company pursuant to the Global Offering.
UNDERWRITING
– 400 –


--- page 410 ---
In the event that, during the Second Six Month Period, our Company enters into any of the
transactions specified in paragraphs (i), (ii) or (iii) above or offers to or agrees to or announces
any intention to effect any such transaction, our Company shall take all reasonable steps to
ensure that it will not create a disorderly or false market in the securities of our Company. Each
of our Company, our Controlling Shareholders undertakes to each of the Sole Sponsor, the Sole
Sponsor-Overall Coordinator, the Overall Coordinators, the Joint Bookrunners, the Joint Lead
Managers, the CMIs and the Hong Kong Underwriters to procure our Company to comply with
the undertakings in this paragraph.
Maintenance of public float
Our Company agrees and undertakes to each of the Sole Sponsor, the Sole Sponsor-Overall
Coordinator, the Overall Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the
Joint Lead Managers, the CMIs and the Hong Kong Underwriters, that it will not, and each of
the Controlling Shareholders further undertake to each of the Sole Sponsor, the Sole
Sponsor-Overall Coordinator, the Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers, the CMIs and the Hong Kong Underwriters to procure
that our Company will not, effect any purchase of Shares, or agree to do so, which may reduce
the holdings of H Shares held by the public (as defined in Rule 8.24 of the Listing Rules) below
the minimum public float requirements specified in the Listing Rules or any waiver granted and
not revoked by the Stock Exchange on or before the date falling six months after the Listing
Date without first having obtained the prior written consent of the Sole Sponsor-Overall
Coordinator (for itself and on behalf of the Hong Kong Underwriters).
The International Offering
The International Underwriting Agreement
In connection with the International Placing, it is expected that our Company and the
International Underwriters will enter into the International Underwriting Agreement. Under the
International Underwriting Agreement, our Company will offer our International Offer Shares for
subscription and purchase by professional, institutional and other investors at the Offer Price
payable in full on subscription and purchase in Hong Kong dollars, on and subject to the terms
and conditions set out in the International Underwriting Agreement and the placing documents.
It is expected that the International Underwriters will agree to severally underwrite for our
International Offer Shares. It is expected that pursuant to the International Underwriting
Agreement, our Company and our Controlling Shareholders will give undertakings similar to
those given pursuant to the Hong Kong Underwriting Agreement in the paragraph headed
“Undertakings pursuant to the Hong Kong Underwriting Agreement” under this section.
UNDERWRITING
– 401 –


--- page 411 ---
Over-allotment Option
Our Company is expected to grant to the International Underwriters the Over-allotment
Option exercisable by the Sole Sponsor-Overall Coordinator, on behalf of the International
Underwriters, at any time until the 30th day after the last day for the lodging of applications
under the Hong Kong Public Offering, to require our Company to allot and issue up to an
aggregate of 10,233,000 additional H Shares, representing 15% of the Offer Shares, at the Offer
Price per Offer Share under the International Offering, solely to cover over-allocations, if any,
under the International Offering. For further details of the Over-allotment Option, please see
“Structure of the Global Offering” in this prospectus.
Commissions and expenses
The Underwriters will receive an underwriting commission of 5.0% of the aggregate Offer
Price of all the Offer Shares (including any Offer Shares to be issued pursuant to the exercise of
the Over-allotment Option)(the “ Fixed Fee ”), out of which they will pay any sub-underwriting
commissions and other fees. As our Company will not pay the Underwriters any discretionary
incentive fee for the Global Offering (the “ Discretionary Fee ”), the ratio of the Fixed Fee and
Discretionary Fee is therefore 100:0.
For any unsubscribed Hong Kong Offer Shares reallocated to the International Offering, the
underwriting commission will not be paid to the Hong Kong Underwriters but will instead be
paid, at the rate applicable to the International Offering, to the relevant International
Underwriters.
Assuming the Over-allotment Option is not exercised, the aggregate commissions and fees,
together with the Stock Exchange listing fees, the SFC transaction levy, the Stock Exchange
trading fee and the AFRC transaction levy, legal and other professional fees and printing and all
other expenses relating to the Global Offering are estimated to be approximately HK$40.4
million (assuming an Offer Price of HK$3.11 per Offer Share (which is the midpoint of the
indicative Offer Price range stated in this prospectus) and will be paid by our Company.
UNDERWRITERS’ INTEREST IN OUR COMPANY
The Sole Sponsor will receive a sponsor fee of HK$5.5 million.
Our Company has appointed Sinolink Securities (Hong Kong) Company Limited as our
compliance adviser pursuant to Rule 3A.19 of the Listing Rules for the period commencing on
the Listing Date and ending on the date on which our Company complies with Rule 13.46 of the
Listing Rules in respect of our financial results for the first financial year commencing after the
Listing Date, or until the agreement is terminated, whichever is earlier.
UNDERWRITING
– 402 –


--- page 412 ---
Save for the interests and obligations under the Underwriting Agreements and as disclosed
in this prospectus, as at the Latest Practicable Date, none of the Overall Coordinators and the
Underwriters is interested legally or beneficially in the shares of any of our Group’s members or
has any right or option (whether legally enforceable or not) to subscribe for or purchase or to
nominate persons to subscribe for or purchase securities in any members of our Group nor any
interest in this Global Offering.
INDEPENDENCE OF THE SOLE SPONSOR
The Sole Sponsor satisfies the independence criteria applicable to sponsors set out in Rule
3A.07 of the Listing Rules.
ACTIVITIES BY SYNDICATE MEMBERS
The underwriters of the Hong Kong Public Offering and the International Offering
(together, the “ Syndicate Members ”) and their affiliates may each individually undertake a
variety of activities (as further described below) which do not form part of the underwriting.
The Syndicate Members and their affiliates are diversified financial institutions with
relationships in countries around the world. These entities engage in a wide range of commercial
and investment banking, brokerage, funds management, trading, hedging, investing and other
activities for their own account and for the account of others. In the ordinary course of their
various business activities, the Syndicate Members and their respective affiliates may purchase,
sell or hold a broad array of investments and actively trade securities, derivatives, loans,
commodities, currencies, credit default swaps and other financial instruments for their own
account and for the accounts of their customers. Such investment and trading activities may
involve or relate to assets, securities and/or instruments of our Company and/or persons and
entities with relationships with our Company and may also include swaps and other financial
instruments entered into for hedging purposes in connection with our Group’s loans and other
debt.
In relation to issues by Syndicate Members or their affiliates of any listed securities having
the Shares as their underlying securities, whether on the Stock Exchange or on any other stock
exchange, the rules of the exchange may require the issuer of those securities (or one of its
affiliates or agents) to act as a market maker or liquidity provider in the security, and this will
also result in hedging activity in the Shares in most cases.
Such activities may affect the market price or value of our Shares, the liquidity or trading
volume in our Shares and the volatility of the price of our Shares, and the extent to which this
occurs from day to day cannot be estimated.
UNDERWRITING
– 403 –


--- page 413 ---
It should be noted that when engaging in any of these activities, the Syndicate Members
will be subject to certain restrictions, including the following:
(a) the Syndicate Members must not, in connection with the distribution of the Offer
Shares, effect any transactions (including issuing or entering into any option or other
derivative transactions relating to the Offer Shares), whether in the open market or
otherwise, with a view to maintaining the market price of any of the Offer Shares at
levels other than those which might otherwise prevail in the open market; and
(b) the Syndicate Members must comply with all applicable laws and regulations,
including the market misconduct provisions of the SFO, including the provisions
prohibiting insider dealing, false trading, price rigging and stock market manipulation.
Certain of the Syndicate Members or their respective affiliates have provided from time to
time, and expect to provide in the future, investment banking and other services to our Company
and our affiliates for which such Syndicate Members or their respective affiliates have received
or will receive customary fees and commissions.
UNDERWRITING
– 404 –


--- page 414 ---
THE GLOBAL OFFERING
This prospectus is published in connection with the Hong Kong Public Offering as part of
the Global Offering. The Global Offering comprises:
(i) the Hong Kong Public Offering of initially 6,822,000 H Shares (subject to reallocation
as mentioned below) in Hong Kong as described in “– The Hong Kong Public
Offering” below; and
(ii) the International Offering of initially 61,398,000 H Shares (subject to reallocation as
mentioned below and the Over-allotment Option) outside the United States (including
to professional and institutional investors within Hong Kong) in offshore transactions
in reliance on Regulation S, as described in “– International Offering” below.
Investors may apply for Offer Shares under the Hong Kong Public Offering or apply for or
indicate an interest for Offer Shares under the International Offering, but may not do both.
The Offer Shares will represent approximately 25% of the enlarged issued share capital of
our Company immediately after completion of the Global Offering without taking into account
the exercise of the Over-allotment Option. Assuming the Over-allotment Option is exercised in
full, the Offer Shares will represent approximately 27.7% of the enlarged issued share capital of
our Company immediately after completion of the Global Offering and the exercise of the
Over-allotment Option as set out in the section headed “Over-allotment Option” below.
The number of Offer Shares to be offered under the Hong Kong Public Offering and the
International Offering may be subject to reallocation as described in “– The Hong Kong Public
Offering – Reallocation” below.
THE HONG KONG PUBLIC OFFERING
Number of Offer Shares Initially Offered
Our Company is initially offering 6,822,000 Offer Shares for subscription by the public in
Hong Kong at the Offer Price, representing 10% of the total number of Offer Shares initially
available under the Global Offering. Subject to the reallocation of Offer Shares between the
International Offering and the Hong Kong Public Offering, the Hong Kong Offer Shares will
represent approximately 2.5% of our Company’s enlarged issued share capital immediately after
completion of the Global Offering, assuming that the Over-allotment Option is not exercised.
STRUCTURE OF THE GLOBAL OFFERING
– 405 –


--- page 415 ---
The Hong Kong Public Offering is open to members of the public in Hong Kong as well as
to institutional and professional investors. Professional investors generally include brokers,
dealers, companies (including fund managers) whose ordinary business involves dealing in
shares and other securities and corporate entities which regularly invest in shares and other
securities.
Completion of the Hong Kong Public Offering is subject to the conditions as set out in
“– Conditions of the Hong Kong Public Offering” below.
Allocation
Allocation of Offer Shares to investors under the Hong Kong Public Offering, both in
relation to pool A and B, will be based solely on the level of valid applications received under
the Hong Kong Public Offering. The basis of allocation in each pool may vary, depending on the
number of Hong Kong Offer Shares validly applied for by applicants. Such allocation may, if
necessary, be made on the basis of balloting, which would mean that certain applicants may
receive a higher allocation than others who have applied for the same number of Hong Kong
Offer Shares, and those applicants who are not successful in the ballot may not receive any
Hong Kong Offer Shares.
The total number of Hong Kong Offer Shares initially available under the Hong Kong
Public Offering (after taking account of any reallocation referred to below) is to be divided
equally into two pools for allocation purposes: 3,411,000 Hong Kong Offer Shares for pool A
and 3,411,000 Hong Kong Offer Shares for pool B. The Hong Kong Offer Shares in pool A will
be allocated on an equitable basis to successful applicants who have applied for Hong Kong
Offer Shares with an aggregate subscription price of HK$5 million (excluding the brokerage fee,
SFC transaction levy, AFRC transaction levy and the Stock Exchange trading fee payable) or
less. The Hong Kong Offer Shares in pool B will be allocated on an equitable basis to applicants
who have applied for Hong Kong Offer Shares with an aggregate subscription price of more than
HK$5 million (excluding the brokerage fee, SFC transaction levy, AFRC transaction levy and the
Stock Exchange trading fee payable) and up to the total value in pool B.
Investors should be aware that applications in pool A and applications in pool B may
receive different allocation ratios. If Hong Kong Offer Shares in one (but not both) of the pools
are undersubscribed, the surplus Hong Kong Offer Shares will be transferred to the other pool to
satisfy demand in that other pool and be allocated accordingly. For the purpose of this paragraph
only, the “price” for Offer Shares means the price payable on application therefor (without
regard to the Offer Price as finally determined). Applicants can only receive an allocation of
Hong Kong Offer Shares from either pool A or pool B but not from both pools and may only
apply for Hong Kong Offer Shares in either pool A or pool B. In addition, multiple or suspected
multiple applications and any application for more than 3,411,000 Hong Kong Offer Shares,
being the maximum number of Hong Kong Offer Shares initially comprised in each pool in the
Hong Kong Public Offering, are liable to be rejected.
STRUCTURE OF THE GLOBAL OFFERING
– 406 –


--- page 416 ---
Reallocation
The allocation of Offer Shares between the Hong Kong Public Offering and the
International Offering is subject to reallocation under the Listing Rules. Paragraph 4.2 of
Practice Note 18 of the Listing Rules requires a clawback mechanism to be put in place, which
would have the effect of increasing the number of the Hong Kong Offer Shares to certain
percentages of the total number of Offer Shares offered in the Global Offering if certain
prescribed total demand levels are reached. Assuming that the Over-allotment Option is not
exercised, the allocation of the Offer Shares shall be subject to reallocation on the following
basis:
(a) where the International Offer Shares are fully subscribed or oversubscribed and:
(i) if the Hong Kong Offer Shares are undersubscribed, the Sole Sponsor-Overall
Coordinator has the authority (but not the obligation) in their absolute discretion
to reallocate all or any unsubscribed Hong Kong Offer Shares to the International
Offering, in such proportions as the Sole Sponsor-Overall Coordinator deems
appropriate to satisfy demand under the International Offering;
(ii) if the Hong Kong Offer Shares are not undersubscribed but the number of Offer
Shares validly applied for the Hong Kong Public Offering represents less than 15
times the number of the Offer Shares initially available for subscription under the
Hong Kong Public Offering, then up to 6,822,000 Offer Shares may be
reallocated to the Hong Kong Public Offering from the International Offering, so
that the total number of the Offer Shares available under the Hong Kong Public
Offering will be increased to 13,644,000 Offer Shares, representing 20% of the
number of the Offer Shares initially available under the Global Offering;
(iii) if the number of Offer Shares validly applied for under the Hong Kong Public
Offering represents 15 times or more but less than 50 times the number of the
Offer Shares initially available for subscription under the Hong Kong Public
Offering, then Offer Shares will be reallocated to the Hong Kong Public Offering
from the International Offering, so that the total number of the Offer Shares
available under the Hong Kong Public Offering will be increased to 20,466,000
Offer Shares, representing 30% of the Offer Shares initially available under the
Global Offering;
STRUCTURE OF THE GLOBAL OFFERING
– 407 –


--- page 417 ---
(iv) if the number of Offer Shares validly applied for under the Hong Kong Public
Offering represents 50 times or more but less than 100 times the number of the
Offer Shares initially available for subscription under the Hong Kong Public
Offering, then Offer Shares will be reallocated to the Hong Kong Public Offering
from the International Offering, so that the total number of the Offer Shares
available under the Hong Kong Public Offering will be increased to 27,288,000
Offer Shares, 40% of the Offer Shares initially available under the Global
Offering; and
(v) if the number of Offer Shares validly applied for under the Hong Kong Public
Offering represents 100 times or more than the number of the Offer Shares
initially available for subscription under the Hong Kong Public Offering, then
Offer Shares will be reallocated to the Hong Kong Public Offering from the
International Offering, so that the total number of the Offer Shares available
under the Hong Kong Public Offering will be increased to 34,110,000 Offer
Shares, representing 50% of the Offer Shares initially available under the Global
Offering.
(b) where the International Offer Shares are undersubscribed:
(i) if the Hong Kong Offer Shares are undersubscribed, the Global Offering will not
proceed unless the Underwriters would subscribe or procure subscribers for their
respective applicable proportions of the Offer Shares being offered which are not
taken up under the Global Offering on the terms and conditions of this
prospectus and the Underwriting Agreements; and
(ii) if the Hong Kong Offer Shares are oversubscribed, irrespective of the number of
times the number of Offer Shares initially available for subscription under the
Hong Kong Public Offering, then up to 6,822,000 Offer Shares may be
reallocated to the Hong Kong Public Offering from the International Offering, so
that the total number of the Offer Share available under the Hong Kong Public
Offering will be increased to 13,644,000 Offer Shares, representing 20% of the
number of the Offer Shares initially available under the Global Offering (before
any exercise of the Over-allotment Option).
In addition, the Sole Sponsor-Overall Coordinator may reallocate the Offer Shares from the
International Offering to the Hong Kong Public Offering to satisfy valid applications under the
Hong Kong Public Offering. In accordance with Chapter 4.14 of the Guide for New Listing
Applicants published by the Stock Exchange, if such reallocation is done other than pursuant to
Practice Note 18 of the Listing Rules, the maximum total number of Offer Shares that may be
allocated to the Hong Kong Public Offering following such reallocation shall be not more than
double the initial allocation to the Hong Kong Public Offering (i.e. 13,644,000 Offer Shares).
STRUCTURE OF THE GLOBAL OFFERING
– 408 –


--- page 418 ---
In the event of a reallocation of the Offer Shares from the International Offering to the
Hong Kong Public Offering in the circumstances under paragraphs (a)(ii), (a)(iii), (a)(iv), (a)(v)
or (b)(ii) above, the number of Offer Shares allocated to the International Offering will be
correspondingly reduced. In each case, the additional Offer Shares reallocated to the Hong Kong
Public Offering will be allocated between pool A and pool B and the number of Offer Shares
allocated to the International Offering will be correspondingly reduced in such manner and
proportions as the Sole Sponsor-Overall Coordinator deems appropriate.
In the event of a reallocation of the Offer Shares between the Hong Kong Public Offering
and the International Offering in the circumstances under paragraphs (a)(ii) or (b)(ii) above, the
final Offer Price shall be fixed at the low end of the indicative Offer Price range (i.e. HK$2.86
per Offer Share) stated in this prospectus in accordance with Chapter 4.14 of the Guide for New
Listing Applicants published by the Stock Exchange.
Details of any reallocation of Offer Shares between the Hong Kong Public Offering and the
International Offering will be disclosed in the results announcement of the Global Offering,
which is expected to be published on Tuesday, 24 June 2025.
Applications
Each applicant under the Hong Kong Public Offering will also be required to give an
undertaking and confirmation in the application submitted by him, her or it that he, she or it,
and any person(s) for whose benefit he, she or it is making the application have not applied for
or taken up, or indicated an interest for, and will not apply for or take up, or indicate an interest
for, any Offer Shares under the International Offering, and such applicant’s application is liable
to be rejected if the said undertaking and/or confirmation is breached and/or untrue (as the case
may be) or the applicant (and any person for whose benefit he, she or it is making the
application) has been or will be placed or allocated Offer Shares under the International
Offering.
The listing of the H Shares on the Stock Exchange is sponsored by the Sole Sponsor.
Applicants under the Hong Kong Public Offering may be required to pay, on application (subject
to application channels), the maximum Offer Price of HK$3.35 per Offer Share in addition to
any brokerage, SFC transaction levy, AFRC transaction levy and the Stock Exchange trading fee
payable on each Hong Kong Offer Share. If the Offer Price, as finally determined in the manner
described in the section headed “– Pricing of the Global Offering” below, is less than the
maximum Offer Price of HK$3.35 per Offer Share, appropriate refund payments (including the
brokerage, SFC transaction levy, AFRC transaction levy and the Stock Exchange trading fee
attributable to the surplus application monies) will be made to successful applicants (subject to
application channels), without interest. Further details are set out in “How to Apply for Hong
Kong Offer Shares”.
References in this prospectus to applications, application monies or the procedure for
application relate solely to the Hong Kong Public Offering.
STRUCTURE OF THE GLOBAL OFFERING
– 409 –


--- page 419 ---
THE INTERNATIONAL OFFERING
Number of Offer Shares Initially Offered
Subject to reallocation as described above, the International Offering will consist of an
aggregate of 61,398,000 Offer Shares, representing 90% of the Offer Shares under the Global
Offering and approximately 22.5% of our enlarged issued share capital immediately after the
completion of the Global Offering, assuming that the Over-allotment Option is not exercised.
Allocation
The International Offering will include selective marketing of Offer Shares to institutional
and professional investors and other investors anticipated to have a sizeable demand for such
Offer Shares. Professional investors generally include brokers, dealers, companies (including
fund managers) whose ordinary business involves dealing in shares and other securities and
corporate entities which regularly invest in shares and other securities.
Allocation of Offer Shares pursuant to the International Offering will be effected in
accordance with the “book-building” process described in the section headed “– Pricing of the
Global Offering” below and based on a number of factors, including the level and timing of
demand, the total size of the relevant investor’s invested assets or equity assets in the relevant
sector and whether or not it is expected that the relevant investor is likely to hold or sell its
Offer Shares, after the listing of the Offer Shares on the Stock Exchange. Such allocation is
intended to result in a distribution of the Offer Shares on a basis which would lead to the
establishment of a solid professional and institutional shareholder base to the benefit of our
Company and our Shareholders as a whole.
The Sole Sponsor-Overall Coordinator (for itself and on behalf of the Underwriters) may
require any investor who has been offered Offer Shares under the International Offering, and
who has made an application under the Hong Kong Public Offering, to provide sufficient
information to the Sole Sponsor-Overall Coordinator so as to allow it to identify the relevant
application under the Hong Kong Public Offering and to ensure that such investor is excluded
from any application of Offer Shares under the Hong Kong Public Offering.
STRUCTURE OF THE GLOBAL OFFERING
– 410 –


--- page 420 ---
OVER-ALLOTMENT OPTION
In connection with the Global Offering, our Company is expected to grant an
Over-allotment Option to the International Underwriters, exercisable by the Sole
Sponsor-Overall Coordinator (on behalf of the International Underwriters).
Pursuant to the Over-allotment Option, the International Underwriters have the right,
exercisable at any time from the date of the International Underwriting Agreement until 30 days
after the last date for lodging of applications under the Hong Kong Public Offering, to require
our Company to issue and allot up to an aggregate of 10,233,000 additional Offer Shares,
representing 15% of the initial Offer Shares, at the same price per Offer Share under the
International Offering to cover over-allocations in the International Offering, if any.
Assuming the Over-allotment Option is exercised in full, the additional Offer Shares will
represent approximately 3.6% of our Company’s enlarged issued share capital immediately
following the completion of the Global Offering and the exercise of the Over-allotment Option.
In the event that the Over-allotment Option is exercised, an announcement will be made.
STABILISATION
Stabilisation is a practice used by underwriters in some markets to facilitate the distribution
of securities. To stabilise, the underwriters may bid for, or purchase, the new securities in the
secondary market, during a specified period of time, to retard and, if possible, prevent any
decline in the market price of the securities below the Offer Price. In Hong Kong and certain
other jurisdictions, activity aimed at reducing the market price is prohibited and the price at
which stabilisation is effected is not permitted to exceed the Offer Price.
Sinolink Securities (Hong Kong) Company Limited has been appointed by us as the
Stabilising Manager for the purposes of the Global Offering in accordance with the Securities
and Futures (Price Stabilising) Rules made under the SFO. In connection with the Global
Offering, the Stabilising Manager, its affiliates or any person acting for it, on behalf of the
Underwriters, may, to the extent permitted by applicable laws of Hong Kong or elsewhere,
over-allocate or effect short sales or any other stabilising transactions with a view to stabilising
or maintaining the market price of the H Shares at a level higher than that which might
otherwise prevail in the open market. Short sales involve the sale by the Stabilising Manager of
a greater number of H Shares than the Underwriters are required to purchase in the Global
Offering. “Covered” short sales are sales made in an amount not greater than the Over-allotment
Option.
STRUCTURE OF THE GLOBAL OFFERING
–4 1 1–


--- page 421 ---
The Stabilising Manager may close out the covered short position by either exercising the
Over-allotment Option to purchase additional H Shares or purchasing H Shares in the open
market. In determining the source of the H Shares to close out the covered short position, the
Stabilising Manager will consider, among other things, the price of H Shares in the open market
as compared to the price at which they may purchase additional H Shares pursuant to the
Over-allotment Option. Stabilising transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of the H Shares while the
Global Offering is in progress. Any market purchases of the H Shares may be effected on any
stock exchange, including the Stock Exchange, any over-the-counter market or otherwise,
provided that they are made in compliance with all applicable laws and regulatory requirements.
However, there is no obligation on the Stabilising Manager, its affiliates or any person acting for
it to conduct any such stabilising activity, which if commenced, will be done at the absolute
discretion of the Stabilising Manager, its affiliates or any person acting for it and may be
discontinued at any time. Any such stabilising activity is required to be brought to an end within
30 days after the last day for the lodging of applications under the Hong Kong Public Offering.
Stabilising actions by the Stabilising Manager, its affiliates or any person acting for it, will
be entered into in accordance with the laws, rules and regulations in place in Hong Kong on
stabilisation. Stabilising actions permitted pursuant to the Securities and Futures (Price
Stabilising) Rules under the SFO include:
(a) over-allocation for the purpose of preventing or minimising any reduction in the H
Share market price;
(b) selling or agreeing to sell the H Shares so as to establish a short position in them for
the purpose of preventing or minimising any reduction in the H Share market price;
(c) purchasing or subscribing, or agreeing to purchase or subscribe, for the H Shares
pursuant to the Over-allotment Option in order to close out any position established
under (a) or (b) above;
(d) purchasing, or agreeing to purchase any H Shares for the sole purpose of preventing
or minimising any reduction in the H Share market price;
(e) selling, or agreeing to sell the H Shares to liquidate any position established as a
result of those purchases; and
(f) offering or attempting to do anything described in (b), (c), (d) or (e) above.
Specifically, prospective applicants for and investors in the Offer Shares should note that:
(a) the Stabilising Manager, its affiliates or any person acting for it, may, in connection
with the stabilising action, maintain a long position in the H Shares;
STRUCTURE OF THE GLOBAL OFFERING
– 412 –


--- page 422 ---
(b) the size of long position, and period for which the Stabilising Manager, its affiliates or
any person acting for it, will maintain such a long position, is at the discretion of the
stabilising manager and is uncertain;
(c) liquidation of any such long position by the Stabilising Manager may have an adverse
impact on the market price of the H Shares;
(d) stabilising action by the Stabilising Manager, its affiliates and persons acting for it
cannot be taken to support the price of the H Shares for longer than the stabilising
period, which will begin on the Listing Date and is expected to expire on the last
business day immediately before the 30th day after the last date for lodging
applications under the Hong Kong Public Offering. After this date when no further
stabilising action may be taken, demand for the H Shares, and therefore the price of
the H Shares, could fall;
(e) the price of the H Shares cannot be assured to stay at or above the Offer Price either
during or after the stabilising period by the taking of any stabilising action; and
(f) stabilising bids may be made or transactions effected in the course of the stabilising
action at any price at or below the Offer Price, which means that stabilising bids may
be made or transactions effected at a price below the price paid by applicants for, or
investors in, the H Shares.
Stabilising actions by the Stabilising Manager, or any person acting for it, will be entered
into in accordance with the laws, rules and regulations in place in Hong Kong on stabilisation.
Our Company will procure that an announcement in compliance with the Securities and
Futures (Price Stabilising) Rules will be made within seven days of the expiration of the
stabilising period.
In order to effect stabilisation actions, the Stabilising Manager will arrange cover of up to
an aggregate of 10,233,000 H Shares, representing up to 15% of the initial Offer Shares, through
delayed delivery arrangements with investors who have been allocated Offer Shares in the
International Offering. The delayed delivery arrangements (if specifically agreed by an investor)
relate only to the delay in the delivery of the Offer Shares to such investor and the Offer Price
for the Offer Shares allocated to such investor will be fully paid before dealings in the H Shares
on the Stock Exchange commence.
In connection with the Global Offering, the Stabilising Manager may over-allocate up to
and not more than an aggregate of 10,233,000 H Shares and cover such over-allocations by
(amongst other methods) exercising the Over-allotment Option, making purchases in the
secondary market at prices that do not exceed the Offer Price or by any combination of these
means.
STRUCTURE OF THE GLOBAL OFFERING
– 413 –


--- page 423 ---
PRICING OF THE GLOBAL OFFERING
The International Underwriters will be soliciting from prospective investors indications of
interest in acquiring Offer Shares in the International Offering. Prospective professional and
institutional investors will be required to specify the number of Offer Shares under the
International Offering they would be prepared to acquire either at different prices or at a
particular price. This process, known as “book-building” is expected to continue up to, and to
cease on or around, the last day for lodging applications under the Hong Kong Public Offering.
Pricing for the Offer Shares for the purpose of the various offerings under the Global
Offering will be fixed on the Price Determination Date, which is expected to be on Monday, 23
June 2025, by agreement between the Sole Sponsor-Overall Coordinator (on behalf of the
Underwriters) and our Company and the number of Offer Shares to be allocated under various
offerings will be determined shortly thereafter.
The Offer Price will not be more than HK$3.35 per Offer Share and is expected to be not
less than HK$2.86 per Offer Share unless otherwise announced, as further explained below, not
later than the morning of the last day for lodging applications under the Hong Kong Public
Offering. Prospective investors should be aware that the Offer Price to be determined on the
Price Determination Date may be, but is not expected to be, lower than the indicative Offer
Price range stated in this prospectus.
The Sole Sponsor-Overall Coordinator, on behalf of itself and the Underwriters, may, where
considered appropriate, based on the level of interest expressed by prospective professional and
institutional investors under the International Offering during the book-building process, and
with the consent of our Company, reduce the number of Offer Shares being offered in the Global
Offering and/or the indicative Offer Price range below that stated in this prospectus at any time
on or prior to the morning of the last day for lodging applications under the Hong Kong Public
Offering. In such a case, our Company will, as soon as practicable following the decision to
make such reduction, and in any event not later than the morning of the day which is the last
day for lodging applications under the Hong Kong Public Offering, cause there to be published
on the Stock Exchange’s website at www.hkexnews.hk and our Company’s website at
http://www.xjgroup.com notice of the reduction. Our Company will also, as soon as practicable
following the decision to make such change, issue a supplemental prospectus updating investors
of the change in the number of Offer Shares being offered under the Global Offering and/or the
Offer Price. The Global Offering must first be cancelled and subsequently relaunched on FINI
pursuant to the supplemental prospectus. Upon the issue of such a notice and supplemental
prospectus, the revised number of Offer Shares and/or the Offer Price range will be final and
conclusive and the Offer Price, if agreed upon by the Sole Sponsor-Overall Coordinator (on
behalf of the Underwriters) and our Company, will be fixed within such revised Offer Price
range.
STRUCTURE OF THE GLOBAL OFFERING
– 414 –


--- page 424 ---
Before submitting applications for the Hong Kong Offer Shares, applicants should have
regard to the possibility that any notice of a reduction in the number of Offer Shares being
offered under the Global Offering and/or the indicative Offer Price range may not be made until
the day which is the last day for lodging applications under the Hong Kong Public Offering.
Such notice will also include confirmation or revision, as appropriate, of the working capital
statement and the Global Offering statistics as currently set out in this prospectus, and any other
financial information which may change as a result of such reduction. In the absence of any such
notice published, the number of Offer Shares will not be reduced and/or the Offer Price, if
agreed upon with our Company and the Sole Sponsor-Overall Coordinator (on behalf of the
Underwriters), will under no circumstances be set outside the Offer Price range as described in
this prospectus.
In the event of a reduction in the number of Offer Shares being offered under the Global
Offering, the Sole Sponsor-Overall Coordinator may at its discretion reallocate the number of
Offer Shares to be offered under the Hong Kong Public Offering and the International Offering,
provided that the number of Offer Shares comprised in the Hong Kong Public Offering shall not
be less than 10% of the total number of Offer Shares in the Global Offering. The Offer Shares to
be offered in the International Offering and the Offer Shares to be offered in the Hong Kong
Public Offering may, in certain circumstances, be reallocated as between these offerings at the
discretion of the Sole Sponsor-Overall Coordinator.
The final Offer Price, indications of interest in the Global Offering, the results of
applications and the basis of allocation of Offer Shares available under the Hong Kong Public
Offering, are expected to be made available through a variety of channels in the manner
described in “How to Apply for Hong Kong Offer Shares – B. Publication of Results.”.
HONG KONG UNDERWRITING AGREEMENT
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters
under the terms of the Hong Kong Underwriting Agreement, subject to agreement on the Offer
Price between the Sole Sponsor-Overall Coordinator (on behalf of the Underwriters) and us on
the Price Determination Date and is conditional upon the International Underwriting Agreement
being signed and becoming unconditional.
Our Company expects enter into the International Underwriting Agreement relating to the
International Offering on or around the Price Determination Date.
These underwriting arrangements, and the respective Underwriting Agreements, are
summarised in the section headed “Underwriting”.
STRUCTURE OF THE GLOBAL OFFERING
– 415 –


--- page 425 ---
ADMISSION OF THE H SHARES TO CCASS
All necessary arrangements have been made enabling the H Shares to be admitted into
CCASS.
If the Stock Exchange grants the listing of, and permission to deal in, the H Shares and our
Company complies with the stock admission requirements of HKSCC, the H Shares will be
accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with
effect from the date of commencement of dealings in the H Shares on the Stock Exchange or any
other date HKSCC chooses. Settlement of transactions between participants of the Stock
Exchange is required to take place in CCASS on the second settlement day after any trading day.
All activities under CCASS are subject to the General Rules of CCASS and CCASS
Operational Procedures in effect from time to time.
DEALING
Assuming that the Hong Kong Public Offering becomes unconditional at or before 8:00
a.m. on Wednesday, 25 June 2025, it is expected that dealings in the H Shares on the Stock
Exchange will commence at 9:00 a.m. on Wednesday, 25 June 2025. Our H Shares will be traded
in board lots of 1,000 H Shares each. The stock code of our H Shares is 2619.
CONDITIONS OF THE HONG KONG PUBLIC OFFERING
Acceptance of all applications for Hong Kong Offer Shares pursuant to the Hong Kong
Public Offering will be conditional on, among others:
(a) the Listing Committee granting listing of, and permission to deal in, the H Shares,
including the Offer Shares being offered pursuant to the Global Offering, and
additional Offer Shares which may be made available pursuant to the exercise of the
Over-allotment Option, and such listing and permission not subsequently having been
revoked prior to the commencement of dealings in the H Shares on the Stock
Exchange;
(b) the Offer Price having been fixed on the Price Determination Date;
(c) the execution and delivery of the International Underwriting Agreement on or around
the Price Determination Date; and
(d) the obligations of the Underwriters under each of the respective Underwriting
Agreements becoming and remaining unconditional and not having been terminated in
accordance with the terms of the respective Underwriting Agreements,
STRUCTURE OF THE GLOBAL OFFERING
– 416 –


--- page 426 ---
in each case on or before the dates and times specified in the respective Underwriting
Agreements (unless and to the extent such conditions are validly waived on or before such dates
and times) and in any event not later than the 30th day after the date of this prospectus.
If, for any reason, the Offer Price is not agreed between our Company and the Sole
Sponsor-Overall Coordinator (on behalf of the Underwriters) on or before 12:00 noon on
Monday, 23 June 2025 the Global Offering will not proceed and will lapse.
The consummation of each of the Hong Kong Public Offering and the International
Offering is conditional upon, among other things, the other offering becoming unconditional and
not having been terminated in accordance with its terms.
If the above conditions are not fulfiled or waived prior to the times and dates specified, the
Global Offering will lapse and the Stock Exchange will be notified immediately. Notice of the
lapse of the Hong Kong Public Offering will be published by our Company on the Stock
Exchange’s website at www.hkexnews.hk and on our Company’s website at
http://www.xjgroup.com on the next day following such lapse. In such eventuality, all
application monies will be returned, without interest, on the terms set out in the section headed
“How to Apply for the Hong Kong Offer Shares”. In the meantime, all application monies will
be held in separate bank account(s) with the receiving bank or other licensed bank(s) in Hong
Kong licensed under the Banking Ordinance (Chapter 155 of the Laws of Hong Kong).
H Share certificates for the Offer Shares will only become valid evidence of title at 8:00
a.m. on Wednesday, 25 June 2025, provided that (i) the Global Offering has become
unconditional in all respects; and (ii) neither of the Underwriting Agreements has been
terminated in accordance with their terms. Investors who trade Offer Shares prior to the receipt
of H Share certificate or prior to the H Share certificates becoming valid evidence of title do so
entirely at their own risks.
STRUCTURE OF THE GLOBAL OFFERING
– 417 –


--- page 427 ---
IMPORTANT NOTICE TO INVESTORS
OF Hong Kong Offer Shares
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong Public Offer
and below are the procedures for application.
This prospectus is available at the website of the Stock Exchange at www.hkexnews.hk
under the “HKEXnews > New Listings > New Listing Information” section, and our
website at http://www.xjgroup.com.
The contents of this prospectus are identical to the prospectus as registered with the Registrar
of Companies in Hong Kong pursuant to Section 342C of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance.
A. APPLICATION FOR HONG KONG OFFER SHARES
1. Who Can Apply
You can apply for Hong Kong Offer Shares if you or the person(s) for whose benefit
you are applying for:
 are 18 years of age or older; and
 have a Hong Kong address (for the HK eIPO White Form service only) ;
 are outside the United States, and are not a U.S. person (as defined in Regulation
S under the U.S. Securities Act); and
 are not a legal or natural mainland China person (except qualified domestic
institutional investors).
Unless permitted by the Listing Rules or a waiver and/ or consent has been granted by
the Stock Exchange to us, you cannot apply for any Hong Kong Offer Shares if you or the
person(s) for whose benefit you are applying for:
 are an existing Shareholder or close associates; or
 are a Director or any of his/ her close associates.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 418 –


--- page 428 ---
2. Application Channels
The Hong Kong Public Offer period will begin at 9:00 a.m. on Tuesday, 17 June
2025 and end at 12:00 noon on Friday, 20 June 2025 (Hong Kong time).
To apply for Hong Kong Offer Shares, you may use one of the following application
channels:
Application
Channel Platform Target Investors Application Time
HK eIPO
White
Form
www.hkeipo.hk Investors who would
like to receive a
physical H Share
certificate. Hong
Kong Offer Shares
successfully applied
for will be allotted
and issued in your
own name.
From 9:00 a.m. on
Tuesday, 17 June
2025 to
11:30 a.m. on
Friday, 20 June
2025, Hong Kong
time.
The latest time for
completing full
payment of
application monies
will be 12:00 noon
on Friday, 20 June
2025, Hong Kong
time.
HKSCC
EIPO
channel
Your broker or
custodian who is a
HKSCC Participant
will submit an EIPO
application on your
behalf through
HKSCC’s FINI
system in
accordance with
your instruction
Investors who would
not like to receive a
physical H Share
certificate. Hong
Kong Offer Shares
successfully applied
for will be allotted
and issued in the
name of HKSCC
Nominees, deposited
directly into CCASS
and credited to your
designated HKSCC
Participant’s stock
account.
Contact your broker
or custodian for the
earliest and latest
time for giving such
instructions, as this
may vary by broker
or custodian.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 419 –


--- page 429 ---
The HK eIPO White Form service and the HKSCC EIPO channel are facilities
subject to capacity limitations and potential service interruptions and you are advised not to
wait until the last day of the application period to apply for Hong Kong Offer Shares.
For those applying through the HK eIPO White Form service, once you complete
payment in respect of any application instructions given by you or for your benefit through
the HK eIPO White Form service to make an application for Hong Kong Offer Shares, an
actual application shall be deemed to have been made. If you are a person for whose
benefit the electronic application instructions are given, you shall be deemed to have
declared that only one set of electronic application instructions has been given for your
benefit. If you are an agent for another person, you shall be deemed to have declared that
you have only given one set of electronic application instructions for the benefit of the
person for whom you are an agent and that you are duly authorised to give those
instructions as an agent.
For the avoidance of doubt, giving an application instruction under the HK eIPO
White Form service more than once and obtaining different payment reference numbers
without effecting full payment in respect of a particular reference number will not
constitute an actual application.
If you apply through the HK eIPO White Form service, you are deemed to have
authorised the HK eIPO White Form Service Provider to apply on the terms and
conditions in this prospectus, as supplemented and amended by the terms and conditions of
the HK eIPO White Form service.
By instructing your broker or custodian to apply for the Hong Kong Offer Shares on
your behalf through the HKSCC EIPO Channel, you (and, if you are joint applicants, each
of you jointly and severally) are deemed to have instructed and authorised HKSCC to cause
HKSCC Nominees (acting as nominee for the relevant HKSCC Participants) to apply for
Hong Kong Offer Shares on your behalf and to do on your behalf all the things stated in
this prospectus and any supplement to it.
For those applying through HKSCC EIPO channel, an actual application will be
deemed to have been made for any application instructions given by you or for your benefit
to HKSCC (in which case an application will be made by HKSCC Nominees on your
behalf) provided such application instruction has not been withdrawn or otherwise
invalidated before the closing time of the Hong Kong Public Offer.
HKSCC Nominees will only be acting as a nominee for you and neither HKSCC nor
HKSCC Nominees shall be liable to you or any other person in respect of any actions taken
by HKSCC or HKSCC Nominees on your behalf to apply for Hong Kong Offer Shares or
for any breach of the terms and conditions of this prospectus.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 420 –


--- page 430 ---
3. Information Required to Apply
You must provide the following information with your application:
For Individual Applicants For Corporate Applicants
 Full name(s)
2 as shown on
your identity document
 Identity document’s issuing
country or jurisdiction
 Identity document type, with
order of priority:
i. Hong Kong identity card
(“HKID ”) card; or
ii. National identification
document; or
iii. Passport; and
 Identity document number
 Full name(s) 2 as shown on your identity
document
 Identity document’s issuing country or
jurisdiction
 Identity document type, with order of
priority:
i. Legal entity identifier (“ LEI”)
registration document; or
ii. Certificate of incorporation; or
iii. Business registration certificate; or
iv. Other equivalent document; and
 Identity document number
Notes:
1. If you are applying through the HK eIPO White Form service, you are required to provide a valid
e-mail address, a contact telephone number and a Hong Kong address. You are also required to
declare that the identity information provided by you follows the requirements as described in Note
2 below. In particular, where you cannot provide a HKID number, you must confirm that you do not
hold a HKID card. The number of joint applicants may not exceed four. If you are a firm, the
applicant must be in the individual members’ names.
2. The applicant’s full name as shown on their identity document must be used and the surname, given
name, middle and other names (if any) must be input in the same order as shown on the identity
document. If an applicant’s identity document contains both an English and Chinese name, both
English and Chinese names must be used. Otherwise, either English or Chinese names will be
accepted. The order of priority of the applicant’s identity document type must be strictly followed
and where an individual applicant has a valid HKID card (including both Hong Kong Residents and
Hong Kong Permanent Residents), the HKID number must be used when making an application to
subscribe for shares in a public offer. Similarly for corporate applicants, a LEI number must be used
if an entity has a LEI certificate.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 421 –


--- page 431 ---
3. If the applicant is a trustee, the client identification data (“ CID”) of the trustee, as set out above,
will be required. If the applicant is an investment fund (i.e. a collective investment scheme, or CIS),
the CID of the asset management company or the individual fund, as appropriate, which has opened
a trading account with the broker will be required, as above.
4. The maximum number of joint account holders on FINI is capped at 4
1 in accordance with market
practice.
5. If you are applying as a nominee, you must provide: (i) the full name (as shown on the identity
document), the identity document’s issuing country or jurisdiction, the identity document type; and
(ii), the identity document number, for each of the beneficial owners or, in the case(s) of joint
beneficial owners, for each joint beneficial owner. If you do not include this information, the
application will be treated as being made for your benefit.
6. If you are applying as an unlisted company and (i) the principal business of that company is dealing
in securities; and (ii) you exercise statutory control over that company, then the application will be
treated as being for your benefit and you should provide the required information in your application
as stated above. “Unlisted company” means a company with no equity securities listed on the Stock
Exchange or any other stock exchange.
“Statutory control” means you:
 control the composition of the board of directors of our company;
 control more than half of the voting power of our company; or
 hold more than half of the issued share capital of our company (not counting any part of it
which carries no right to participate beyond a specified amount in a distribution of either
profits or capital).
For those applying through HKSCC EIPO channel, and making an application under
a power of attorney, we and the Overall Coordinators, as our agent, have discretion to
consider whether to accept it on any conditions we think fit, including evidence of the
attorney’s authority.
Failing to provide any required information may result in your application being
rejected.
1 Subject to change, if our Company’s Articles of Incorporation and applicable company law prescribe a lower cap.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 432 ---
4. Permitted Number of Hong Kong Offer Shares for Application
Board lot size : 1,000
Permitted number of
Hong Kong Offer
Shares for application
and amount payable
on application/
successful allotment
: Hong Kong Offer Shares are available for application
in specified board lot sizes only. Please refer to the
amount payable associated with each specified board
lot size in the table below.
The maximum Offer Price is HK$3.35 per H Share.
If you are applying through the HKSCC EIPO
channel, you are required to pre-fund your
application based on the amount specified by your
broker or custodian, as determined based on the
applicable laws and regulations in Hong Kong.
By instructing your broker or custodian to apply for
the Hong Kong Offer Shares on your behalf through
the HKSCC EIPO Channel, you (and, if you are
joint applicants, each of you jointly and severally)
are deemed to have instructed and authorised
HKSCC to cause HKSCC Nominees (acting as
nominee for the relevant HKSCC Participants) to
arrange payment of the final Offer Price, brokerage,
SFC transaction levy, the Stock Exchange trading fee
and the AFRC transaction levy by debiting the
relevant nominee bank account at the Designated
Bank for your broker or custodian.
If you are applying through the HK eIPO White
Form service, you may refer to the table below for
the amount payable for the number of H Shares you
have selected. You must pay the respective maximum
amount payable on application in full upon
application for Hong Kong Offer Shares.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 433 ---
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
1,000 3,383.79 20,000 67,675.70 100,000 338,378.48 2,000,000 6,767,569.50
2,000 6,767.57 25,000 84,594.62 200,000 676,756.96 2,500,000 8,459,461.88
3,000 10,151.36 30,000 101,513.54 300,000 1,015,135.43 3,000,000 10,151,354.26
4,000 13,535.14 35,000 118,432.47 400,000 1,353,513.90 3,411,000
(1) 11,542,089.78
5,000 16,918.93 40,000 135,351.39 500,000 1,691,892.38
6,000 20,302.71 45,000 152,270.32 600,000 2,030,270.86
7,000 23,686.49 50,000 169,189.23 700,000 2,368,649.33
8,000 27,070.27 60,000 203,027.09 800,000 2,707,027.80
9,000 30,454.06 70,000 236,864.93 900,000 3,045,406.28
10,000 33,837.84 80,000 270,702.78 1,000,000 3,383,784.76
15,000 50,756.78 90,000 304,540.62 1,500,000 5,075,677.13
(1) Maximum number of Hong Kong Offer Shares you may apply for and this is 50% of the Hong Kong
Offer Shares initially offered.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee
and AFRC transaction levy. If your application is successful, brokerage will be paid to the Exchange
Participants (as defined in the Listing Rules) or to the HK eIPO White Form Service Provider (for
applications made through the application channel of the HK eIPO White Form service) while the
SFC transaction levy, the Stock Exchange trading fee and the AFRC transaction levy will be paid to
the SFC, the Stock Exchange and the AFRC, respectively.
5. Multiple Applications Prohibited
You or your joint applicant(s) shall not make more than one application for your own
benefit, except where you are a nominee and provide the information of the underlying
investor in your application as required under the paragraph headed “– A. Applications for
Hong Kong Offer Shares – 3. Information Required to Apply” in this section. If you are
suspected of submitting or cause to submit more than one application, all of your
applications will be rejected.
Multiple applications made either through (i) the HK eIPO White Form service, (ii)
HKSCC EIPO channel, or (iii) both channels concurrently are prohibited and will be
rejected. If you have made an application through the HK eIPO White Form service or
HKSCC EIPO channel, you or the person(s) for whose benefit you have made the
application shall not apply for any Global Offer Shares.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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The H Share Registrar would record all applications into its system and identify
suspected multiple applications with identical names and identification document numbers
according to the Best Practice Note on Treatment of Multiple/Suspected Multiple
Applications (“ Best Practice Note ”) issued by the Federation of Share Registrars Limited.
Since applications are subject to personal information collection statements,
identification document numbers displayed are redacted.
6. Terms and Conditions of An Application
By applying for Hong Kong Offer Shares through the HK eIPO White Form service
or HKSCC EIPO channel, you (or as the case may be, HKSCC Nominees will do the
following things on your behalf):
(i) undertake to execute all relevant documents and instruct and authorise us and/or
the Overall Coordinators, as our agents, to execute any documents for you and to
do on your behalf all things necessary to register any Hong Kong Offer Shares
allocated to you in your name or in the name of HKSCC Nominees as required
by the Articles of Association, and (if you are applying through the HKSCC
EIPO channel) to deposit the allotted Hong Kong Offer Shares directly into
CCASS for the credit of your designated HKSCC Participant’s stock account on
your behalf;
(ii) confirm that you have read and understand the terms and conditions and
application procedures set out in this prospectus and the designated website of
the HK eIPO White Form service (or as the case may be, the agreement you
entered into with your broker or custodian), and agree to be bound by them;
(iii) (if you are applying through the HKSCC EIPO channel) agree to the
arrangements, undertakings and warranties under the participant agreement
between your broker or custodian and HKSCC and observe the General Rules of
HKSCC and the HKSCC Operational Procedures for giving application
instructions to apply for Hong Kong Offer Shares;
(iv) confirm that you are aware of the restrictions on offers and sales of shares set
out in this prospectus and they do not apply to you, or the person(s) for whose
benefit you have made the application;
(v) confirm that you have read this prospectus and any supplement to it and have
relied only on the information and representations contained therein in making
your application (or as the case may be, causing your application to be made)
and will not rely on any other information or representations;
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--- page 435 ---
(vi) agree that the Relevant Persons (2), the H Share Registrar and HKSCC will not be
liable for any information and representations not in this prospectus and any
supplement to it;
(vii) agree to disclose the details of your application and your personal data and any
other personal data which may be required about you and the person(s) for whose
benefit you have made the application to us, the Relevant Persons, the H Share
Registrar, HKSCC, HKSCC Nominees, the Stock Exchange, the SFC and any
other statutory regulatory or governmental bodies or otherwise as required by
laws, rules or regulations, for the purposes under the paragraph headed “– G.
Personal Data – 3. Purposes and 4. Transfer of personal data” in this section;
(viii) agree (without prejudice to any other rights which you may have once your
application (or as the case may be, HKSCC Nominees’ application) has been
accepted) that you will not rescind it because of an innocent misrepresentation;
(ix) agree that subject to Section 44A(6) of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, any application made by you or HKSCC
Nominees on your behalf cannot be revoked once it is accepted, which will be
evidenced by the notification of the result of the ballot by the H Share Registrar
by way of publication of the results at the time and in the manner as specified in
the paragraph headed “– B. Publication of Results” in this section;
(x) confirm that you are aware of the situations specified in the paragraph headed
“– C. Circumstances In Which You Will Not Be Allocated Hong Kong Offer
Shares” in this section;
(xi) agree that your application or HKSCC Nominees’ application, any acceptance of
it and the resulting contract will be governed by and construed in accordance
with the laws of Hong Kong;
(xii) agree to comply with the Companies Ordinance, the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, the Articles of Association and laws of any
place outside Hong Kong that apply to your application and that neither we nor
the Relevant Persons will breach any law inside and/ or outside Hong Kong as a
result of the acceptance of your offer to purchase, or any action arising from
your rights and obligations under the terms and conditions contained in this
prospectus;
(2) As defined in the Prospectus, Relevant Persons would include the Sole Sponsor, the Overall Coordinators, the
Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Joint Underwriters, any of their
or our Company’s respective directors, officers, employees, partners, agents, advisers and any other parties
involved in the Global Offering.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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(xiii) confirm that (a) your application or HKSCC Nominees’ application on your
behalf is not financed directly or indirectly by our Company, any of the directors,
chief executives, substantial Shareholder(s) or existing shareholder(s) of our
Company or any of its subsidiaries or any of their respective close associates;
and (b) you are not accustomed or will not be accustomed to taking instructions
from our Company, any of the directors, chief executives, substantial
shareholder(s) or existing shareholder(s) of our Company or any of its
subsidiaries or any of their respective close associates in relation to the
acquisition, disposal, voting or other disposition of the Shares registered in your
name or otherwise held by you;
(xiv) warrant that the information you have provided is true and accurate;
(xv) confirm that you understand that we and the Overall Coordinators will rely on
your declarations and representations in deciding whether or not to allocate any
Hong Kong Offer Shares to you and that you may be prosecuted for making a
false declaration;
(xvi) agree to accept Hong Kong Offer Shares applied for or any lesser number
allocated to you under the application;
(xvii) declare and represent that this is the only application made and the only
application intended by you to be made to benefit you or the person for whose
benefit you are applying;
(xviii) (if the application is made for your own benefit) warrant that no other
application has been or will be made for your benefit by giving electronic
application instructions to HKSCC directly or indirectly or through the
application channel of the HK eIPO White Form service or by any one as your
agent or by any other person; and
(xix) (if you are making the application as an agent for the benefit of another person)
warrant that (1) no other application has been or will be made by you as agent
for or for the benefit of that person or by that person or by any other person as
agent for that person by giving electronic application instructions to HKSCC
and the HK eIPO White Form Service Provider and (2) you have due authority
to give electronic application instructions on behalf of that other person as its
agent.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 437 ---
B. PUBLICATION OF RESULTS
Results of Allocation
You can check whether you are successfully allocated any Hong Kong Offer Shares
through:
Platform Date/ Time
Applying through the HK eIPO White Form service or HKSCC EIPO channel:
Website From the “Allotment Results” page
at www.hkeipo.hk/IPOResult (or
www.tricor.com.hk/ipo/result )
with a “search by ID” function.
The full list of (i) wholly or
partially successful applicants
using the HK eIPO White Form
service and HKSCC EIPO
channel, and (ii) the number of
Hong Kong Offer Shares
conditionally allotted to them,
among other things, will be
displayed at
www.hkeipo.hk/IPOResult or
www.tricor.com.hk/ipo/result .
24 hours, from 11:00 p.m. on
Tuesday, 24 June 2025 to 12:00
midnight on
Monday, 30 June 2025
(Hong Kong time)
The Stock Exchange’s website at
www.hkexnews.hk and our
website at
http://www.xjgroup.com which
will provide links to the above
mentioned websites of the H
Share Registrar.
No later than 11:00 p.m. on
Tuesday, 24 June 2025
(Hong Kong time).
Telephone +852 3691 8488 – the allocation
results telephone enquiry line
provided by the H Share
Registrar
between 9:00 a.m. and 6:00 p.m.,
from Wednesday, 25 June 2025 to
Monday, 30 June 2025 (Hong
Kong time) on a business day
For those applying through HKSCC EIPO channel, you may also check with your
broker or custodian from 6:00 p.m. on Monday, 23 June 2025 (Hong Kong time).
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 438 ---
HKSCC Participants can log into FINI and review the allotment result 6:00 p.m. on
Monday, 23 June 2025 (Hong Kong time) on a 24-hour basis and should report any
discrepancies on allotments to HKSCC as soon as practicable.
Allocation Announcement
We expect to announce the results of the final Offer Price, the level of indications of
interest in the Global Offer, the level of applications in the Hong Kong Public Offer and
the basis of allocations of Hong Kong Offer Shares on the Stock Exchange’s website at
www.hkexnews.hk and our website at http://www.xjgroup.com by no later than 11:00 p.m.
on Tuesday, 24 June 2025 (Hong Kong time).
C. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED HONG KONG
OFFER SHARES
You should note the following situations in which Hong Kong Offer Shares will not be
allocated to you or the person(s) for whose benefit you are applying for:
1. If your application is revoked:
Your application or the application made by HKSCC Nominees on your behalf may be
revoked pursuant to Section 44A(6) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance.
2. If we or our agents exercise our discretion to reject your application:
We, the Overall Coordinators, the H Share Registrar and their respective agents and
nominees have full discretion to reject or accept any application, or to accept only part of
any application, without giving any reasons.
3. If the allocation of Hong Kong Offer Shares is void:
The allocation of Hong Kong Offer Shares will be void if the Stock Exchange does
not grant permission to list the Shares either:
 within three weeks from the closing date of the application lists; or
 within a longer period of up to six weeks if the Stock Exchange notifies us of
that longer period within three weeks of the closing date of the application lists.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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4. If:
 you make multiple applications or suspected multiple applications. You may refer
to the paragraph headed “– A. Applications for Hong Kong Offer Shares – 5.
Multiple Applications Prohibited” in this section on what constitutes multiple
applications;
 your application instruction is incomplete;
 your payment (or confirmation of funds, as the case may be) is not made
correctly;
 the Underwriting Agreements do not become unconditional or are terminated;
 we or the Overall Coordinators believe that by accepting your application, it or
we would violate applicable securities or other laws, rules or regulations.
5. If there is money settlement failure for allotted H Shares:
Based on the arrangements between HKSCC Participants and HKSCC, HKSCC
Participants will be required to hold sufficient application funds on deposit with their
Designated Bank before balloting. After balloting of Hong Kong Offer Shares, the
Receiving Bank will collect the portion of these funds required to settle each HKSCC
Participant’s actual Hong Kong Public Offer Share allotment from their Designated Bank.
There is a risk of money settlement failure. In the extreme event of money
settlement failure by a HKSCC Participant (or its Designated Bank), who is acting on your
behalf in settling payment for your allotted H shares, HKSCC will contact the defaulting
HKSCC Participant and its Designated Bank to determine the cause of failure and request
such defaulting HKSCC Participant to rectify or procure to rectify the failure.
However, if it is determined that such settlement obligation cannot be met, the
affected Hong Kong Offer Shares will be reallocated to the Global Offer. Hong Kong Offer
Shares applied for by you through the broker or custodian may be affected to the extent of
the settlement failure. In the extreme case, you will not be allocated any Hong Kong Offer
Shares due to the money settlement failure by such HKSCC Participant. None of us, the
Relevant Persons, the H Share Registrar and HKSCC is or will be liable if Hong Kong
Offer Shares are not allocated to you due to the money settlement failure.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 440 ---
D. DESPATCH/COLLECTION OF H SHARE CERTIFICATES AND REFUND OF
APPLICATION MONIES
You will receive one H Share certificate for all Hong Kong Offer Shares allotted to you
under the Hong Kong Public Offer (except pursuant to applications made through the HKSCC
EIPO channel where the H Share certificates will be deposited into CCASS as described below).
No temporary document of title will be issued in respect of the Shares. No receipt will be
issued for sums paid on application.
H Share certificates will only become valid at 8:00 a.m. on Wednesday, 25 June 2025
(Hong Kong time), provided that the Global Offer has become unconditional and the right of
termination described in the section headed “Underwriting” has not been exercised. Investors
who trade Shares prior to the receipt of H Share certificates or the H Share certificates becoming
valid do so entirely at their own risk.
The right is reserved to retain any H Share certificate(s) and (if applicable) any surplus
application monies pending clearance of application monies.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 441 ---
The following sets out the relevant procedures and time:
HK eIPO White Form service HKSCC EIPO channel
Despatch/collection of H Share certificate 3
For application of
1,000,000 Hong
Kong Offer
Shares or more
Collection in person at H Share
Registrar, Tricor Investor
Services Limited, at 17/F, Far
East Finance Centre, 16
Harcourt Road, Hong Kong
Time: from 9:00 a.m. to
1:00 p.m. on Wednesday,
25 June 2025 (Hong Kong
time)
If you are an individual, you
must not authorise any other
person to collect for you. If
you are a corporate applicant,
your authorised representative
must bear a letter of
authorisation from your
corporation stamped with your
corporation’s chop.
Both individuals and authorised
representatives must produce,
at the time of collection,
evidence of identity
acceptable to the H Share
Registrar.
Note: If you do not collect your H
Share certificate(s) personally
within the time above, it/they will
be sent to the address specified in
your application instructions by
ordinary post at your own risk
H Share certificate(s) will be
issued in the name of HKSCC
Nominees, deposited into
CCASS and credited to your
designated HKSCC
Participant’s stock account
No action by you is required
3 Except in the event of a tropical cyclone warning signal number 8 or above, a black rainstorm warning and/or an
“extreme conditions” announcement issued after a super typhoon in force in Hong Kong in the morning on
Tuesday, 24 June 2025 rendering it impossible for the relevant share certificates to be dispatched to HKSCC in a
timely manner, our Company shall procure the H Share Registrar to arrange for delivery of the supporting
documents and H Share certificates in accordance with the contingency arrangements as agreed between them.
You may refer to “– E. Bad Weather Arrangements” in this section.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 442 ---
HK eIPO White Form service HKSCC EIPO channel
For application of
less than
1,000,000 Hong
Kong Offer
Shares
Your H Share certificate(s) will
be sent to the address
specified in your application
instructions by ordinary post
at your own risk
Date: Tuesday, 24 June 2025
Refund mechanism for surplus application monies paid by you
Date Wednesday, 25 June 2025 Subject to the arrangement
between you and your broker
or custodian
Responsible party H Share Registrar Your broker or custodian
Application monies
paid through
single bank
account
HK eIPO White Form e-Auto
Refund payment instructions
to your designated bank
account
Your broker or custodian will
arrange refund to your
designated bank account
subject to the arrangement
between you and it
Application monies
paid through
multiple bank
accounts
Refund cheque(s) will be
despatched to the address as
specified in your application
instructions by ordinary post
at your own risk
E. BAD WEATHER ARRANGEMENTS
The Opening and Closing of the Application Lists
The application lists will not open or close on Friday, 20 June 2025 if, there is:
 a tropical cyclone warning signal number 8 or above;
 a black rainstorm warning; and/or
 Extreme Conditions
(collectively, “ Bad Weather Signals ”),
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Friday, 20 June
2025.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 443 ---
Instead they will open between 11:45 a.m. and 12:00 noon and/or close at 12:00 noon on
the next business day which does not have Bad Weather Signals in force at any time between
9:00 a.m. and 12:00 noon.
Prospective investors should be aware that a postponement of the opening/closing of the
application lists may result in a delay in the listing date. Should there be any changes to the
dates mentioned in the section headed “Expected Timetable” in this prospectus, an
announcement will be made and published on the Stock Exchange’s website at
www.hkexnews.hk and our website at http://www.xjgroup.com of the revised timetable.
If a Bad Weather Signal is hoisted on Tuesday, 24 June 2025, the H Share Registrar will
make appropriate arrangements for the delivery of the H Share certificates to the CCASS
Depository’s service counter so that they would be available for trading on Wednesday, 25 June
2025.
If a Bad Weather Signal is hoisted on Tuesday, 24 June 2025, for application of less than
1,000,000 Hong Kong Offer Shares, the despatch of physical H Share certificate(s) will be made
by ordinary post when the post office re-opens after the Bad Weather Signal is lowered or
cancelled (e.g. in the afternoon of Tuesday, 24 June 2025 or on Wednesday, 25 June 2025).
If a Bad Weather Signal is hoisted on Wednesday, 25 June 2025, for application of
1,000,000 Hong Kong Offer Shares or more, physical H Share certificate(s) will be available for
collection in person at the H Share Registrar’s office after the Bad Weather Signal is lowered or
cancelled (e.g. in the afternoon of Wednesday, 25 June 2025 or on Thursday, 26 June 2025).
Prospective investors should be aware that if they choose to receive physical H Share
certificates issued in their own name, there may be a delay in receiving the H Share
certificates.
F. ADMISSION OF THE H SHARES INTO CCASS
If the Stock Exchange grants the listing of, and permission to deal in, the H Shares on the
Stock Exchange and we comply with the stock admission requirements of HKSCC, the H Shares
will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in
CCASS with effect from the date of commencement of dealings in the H Shares or any other
date HKSCC chooses. Settlement of transactions between Exchange Participants is required to
take place in CCASS on the second settlement day after any trading day.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 444 ---
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC
Operational Procedures in effect from time to time.
All necessary arrangements have been made enabling the H Shares to be admitted into
CCASS.
You should seek the advice of your broker or other professional advisor for details of the
settlement arrangement as such arrangements may affect your rights and interests.
G. PERSONAL DATA
The following Personal Information Collection Statement applies to any personal data
collected and held by our Company, the H Share Registrar, the receiving bank and the
Relevant Persons about you in the same way as it applies to personal data about applicants
other than HKSCC Nominees. This personal data may include client identifier(s) and your
identification information. By giving application instructions to HKSCC, you acknowledge
that you have read, understood and agree to all of the terms of the Personal Information
Collection Statement below.
1. Personal Information Collection Statement
This Personal Information Collection Statement informs the applicant for, and
holder of, Hong Kong Offer Shares, of the policies and practices of our Company and
the H Share Registrar in relation to personal data and the Personal Data (Privacy)
Ordinance (Chapter 486 of the Laws of Hong Kong).
2. Reasons for the collection of your personal data
It is necessary for applicants and registered holders of Hong Kong Offer Shares to
ensure that personal data supplied to our Company or its agents and the H Share
Registrar is accurate and up-to-date when applying for Hong Kong Offer Shares or
transferring Hong Kong Offer Shares into or out of their names or in procuring the
services of the H Share Registrar.
Failure to supply the requested data or supplying inaccurate data may result in your
application for Hong Kong Offer Shares being rejected, or in the delay or the inability of
our Company or the H Share Registrar to effect transfers or otherwise render their
services. It may also prevent or delay registration or transfers of Hong Kong Offer
Shares which you have successfully applied for and/or the despatch of Share
certificate(s) to which you are entitled.
It is important that applicants for and holders of Hong Kong Offer Shares inform
our Company and the H Share Registrar immediately of any inaccuracies in the personal
data supplied.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 445 ---
3. Purposes
Your personal data may be used, held, processed, and/or stored (by whatever
means) for the following purposes:
 processing your application and refund cheque and HK eIPO White Form
e-Auto Refund payment instruction(s), where applicable, verification of
compliance with the terms and application procedures set out in this
prospectus and announcing results of allocation of Hong Kong Offer Shares;
 compliance with applicable laws and regulations in Hong Kong and elsewhere;
 registering new issues or transfers into or out of the names of the holders of
the H Shares including, where applicable, HKSCC Nominees;
 maintaining or updating the register of members of our Company;
 verifying identities of applicants for and holders of the H Shares and
identifying any duplicate applications for the Shares;
 facilitating Hong Kong Offer Shares balloting;
 establishing benefit entitlements of holders of the H Shares, such as dividends,
rights issues, bonus issues, etc.;
 distributing communications from our Company and its subsidiaries;
 compiling statistical information and profiles of the holder of the H Shares;
 disclosing relevant information to facilitate claims on entitlements; and
 any other incidental or associated purposes relating to the above and/or to
enable our Company and the H Share Registrar to discharge their obligations
to applicants and holders of the H Shares and/or regulators and/or any other
purposes to which applicants and holders of the H Shares may from time to
time agree.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 446 ---
4. Transfer of personal data
Personal data held by our Company and the H Share Registrar relating to the
applicants for and holders of Hong Kong Offer Shares will be kept confidential but our
Company and the H Share Registrar may, to the extent necessary for achieving any of
the above purposes, disclose, obtain or transfer (whether within or outside Hong Kong)
the personal data to, from or with any of the following:
 our Company’s appointed agents such as financial advisers, receiving bank and
overseas principal share registrar;
 HKSCC or HKSCC Nominees, who will use the personal data and may
transfer the personal data to the H Share Registrar, in each case for the
purposes of providing its services or facilities or performing its functions in
accordance with its rules or procedures and operating FINI and CCASS
(including where applicants for the Hong Kong Offer Shares request a deposit
into CCASS);
 any agents, contractors or third-party service providers who offer
administrative, telecommunications, computer, payment or other services to
our Company or the H Share Registrar in connection with their respective
business operation;
 the Stock Exchange, the SFC and any other statutory regulatory or
governmental bodies or otherwise as required by laws, rules or regulations,
including for the purpose of the Stock Exchange’s administration of the
Listing Rules and the SFC’s performance of its statutory functions; and
 any persons or institutions with which the holders of Hong Kong Offer Shares
have or propose to have dealings, such as their bankers, solicitors, accountants
or brokers etc.
5. Retention of personal data
Our Company and the H Share Registrar will keep the personal data of the
applicants and holders of Hong Kong Offer Shares for as long as necessary to fulfil the
purposes for which the personal data were collected. Personal data which is no longer
required will be destroyed or dealt with in accordance with the Personal Data (Privacy)
Ordinance (Chapter 486 of the Laws of Hong Kong).
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 447 ---
6. Access to and correction of personal data
Applicants for and holders of Hong Kong Offer Shares have the right to ascertain
whether our Company or the H Share Registrar hold their personal data, to obtain a copy
of that data, and to correct any data that is inaccurate. Our Company and the H Share
Registrar have the right to charge a reasonable fee for the processing of such requests.
All requests for access to data or correction of data should be addressed to our Company
and the H Share Registrar, at their registered address disclosed in the section headed
“Corporate information” in this prospectus or as notified from time to time, for the
attention of our company secretary, or the H Share Registrar for the attention of the
privacy compliance officer.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 448 ---
The following is the text of a report set out on pages I-1 to I-82, received from the
Company’ s reporting accountants, Deloitte Touche Tohmatsu, Certified Public Accountants,
Hong Kong, for the purpose of incorporation in this prospectus.
ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF X.J. ELECTRICS (HU BEI) CO., LTD AND SINOLINK SECURITIES
(HONG KONG) COMPANY LIMITED
Introduction
We report on the historical financial information of X.J. Electrics (Hu Bei) Co., Ltd
ʮ̡ (the “ Company ”) and its subsidiaries (together, the “ Group ”) set
out on pages I-4 to I-82, which comprises the consolidated statements of financial position of
the Group as at 31 December 2022, 2023 and 2024, the statements of financial position of the
Company as at 31 December 2022, 2023 and 2024, and the consolidated statements of profit or
loss and other comprehensive income, the consolidated statements of changes in equity and the
consolidated statements of cash flows of the Group for each of the three years ended 31
December 2024 (the “ Track Record Period ”) and material accounting policy information and
other explanatory information (together, the “ Historical Financial Information ”). The
Historical Financial Information set out on pages I-4 to I-82 forms an integral part of this report,
which has been prepared for inclusion in the prospectus of the Company dated 17 June 2025 (the
“Prospectus ”) in connection with the proposed global offering of H shares of the Company on
the Main Board of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”).
Directors’ responsibility for the Historical Financial Information
The directors of the Company (the “ Directors ”) are responsible for the preparation of the
Historical Financial Information that gives a true and fair view in accordance with the basis of
preparation set out in Note 2 to the Historical Financial Information, and for such internal
control as the Directors determine is necessary to enable the preparation of the Historical
Financial Information that is free from material misstatement, whether due to fraud or error.
Reporting accountants’ responsibility
Our responsibility is to express an opinion on the Historical Financial Information and to
report our opinion to you. We conducted our work in accordance with Hong Kong Standard on
Investment Circular Reporting Engagements 200 “Accountants’ Reports on Historical Financial
Information in Investment Circulars” issued by the Hong Kong Institute of Certified Public
Accountants (the “ HKICPA ”). This standard requires that we comply with ethical standards and
plan and perform our work to obtain reasonable assurance about whether the Historical Financial
Information is free from material misstatement.
APPENDIX I ACCOUNTANTS’ REPORT
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Our work involved performing procedures to obtain evidence about the amounts and
disclosures in the Historical Financial Information. The procedures selected depend on the
reporting accountants’ judgement, including the assessment of risks of material misstatement of
the Historical Financial Information, whether due to fraud or error. In making those risk
assessments, the reporting accountants consider internal control relevant to the entity’s
preparation of Historical Financial Information that gives a true and fair view in accordance with
the basis of preparation set out in Note 2 to the Historical Financial Information in order to
design procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. Our work also
included evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well as evaluating the overall presentation of the
Historical Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion, the Historical Financial Information gives, for the purposes of the
accountants’ report, a true and fair view of the Group’s financial position as at 31 December
2022, 2023 and 2024, of the Company’s financial position as at 31 December 2022, 2023 and
2024, and of the Group’s financial performance and cash flows for the Track Record Period in
accordance with the basis of preparation set out in Note 2 to the Historical Financial
Information.
Report on matters under the Rules Governing the Listing of Securities on the Stock
Exchange and the Companies (Winding Up and Miscellaneous Provisions) Ordinance
Adjustments
In preparing the Historical Financial Information, no adjustments to the Underlying
Financial Statements as defined on page I-3 have been made.
Dividends
We refer to Note 15 to the Historical Financial Information which states that no dividend
was declared or paid by the Company or its subsidiaries in respect of the Track Record Period.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
17 June 2025
APPENDIX I ACCOUNTANTS’ REPORT
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HISTORICAL FINANCIAL INFORMATION OF THE GROUP
Preparation of Historical Financial Information
Set out below is the Historical Financial Information which forms an integral part of this
accountants’ report.
The consolidated financial statements of the Group for the Track Record Period, on which
the Historical Financial Information is based, have been prepared in accordance with the IFRS
Accounting Standards as issued by International Accounting Standards Board (the “ IASB ”) and
were audited by us in accordance with Hong Kong Standards on Auditing issued by the HKICPA
(“Underlying Financial Statements ”).
The Historical Financial Information is presented in Renminbi (“ RMB”) and all values are
rounded to the nearest thousand (RMB’000) except when otherwise indicated.
APPENDIX I ACCOUNTANTS’ REPORT
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CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Y ear ended 31 December
Notes 2022 2023 2024
RMB’000 RMB’000 RMB’000
Revenue 6 1,096,965 1,188,321 1,501,510
Cost of sales (873,095) (902,300) (1,172,986)
Gross profit 223,870 286,021 328,524
Other income 7 23,215 22,149 19,382
Impairment losses under expected credit
loss (“ ECL”) model, net of reversal 8 (1,610) (2,494) (865)
Other gains and losses 9 8,602 9,798 10,646
Selling expenses (24,188) (28,274) (34,560)
Administrative expenses (87,714) (90,071) (111,184)
Research and development expenses (31,981) (34,447) (36,426)
Other expenses (3,806) (3,470) (1,839)
Listing expenses – – (370)
Finance costs 10 (14,467) (12,519) (11,993)
Profit before tax 91,921 146,693 161,315
Income tax expense 11 (11,660) (25,231) (20,890)
Profit for the year 12 80,261 121,462 140,425
Other comprehensive income
(expense):
Items that may be reclassified
subsequently to profit or loss:
Exchange differences arising on
translation of foreign operations 1,493 306 871
Fair value loss, net of ECL and
reclassification adjustments upon
derecognition of trade receivables at
fair value through other comprehensive
income (“ FVTOCI ”) – – (20)
Other comprehensive income (“ OCI”) for
the year 1,493 306 851
Total comprehensive income
for the year 81,754 121,768 141,276
Earnings per share
– Basic (RMB) 16 0.39 0.59 0.69
APPENDIX I ACCOUNTANTS’ REPORT
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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION OF THE GROUP
As at 31 December
Notes 2022 2023 2024
RMB’000 RMB’000 RMB’000
Non-current assets
Property, plant and equipment 17 322,676 433,746 503,725
Right-of-use assets 18 111,454 119,842 100,004
Investment properties 19 1,768 16,056 13,166
Intangible assets 20 116 98 125
Deferred tax assets 21 13,648 14,103 14,482
Prepayments for non-current assets 24(a) 2,142 2,688 17,682
Prepayments and other receivables 24(b) 3,507 4,033 4,194
Pledged and restricted bank deposits 25 35,000 35,000 35,000
490,311 625,566 688,378
Current assets
Inventories 22 173,738 173,615 207,357
Income tax recoverable 252 3,093 2,491
Trade and bills receivables 23(a) 132,836 146,093 235,640
Prepayments and other receivables 24(b) 30,598 37,837 96,669
Trade receivables at FVTOCI 23(b) 11,479 15,750 2,145
Pledged and restricted bank deposits 25 – – 145
Bank balances and cash 25 381,560 548,338 474,154
730,463 924,726 1,018,601
Current liabilities
Trade and bills payables 26 208,797 274,630 292,474
Other payables and accruals 27 63,972 103,230 58,906
Income tax payable 6,497 9,010 8,082
Borrowings 28 115,112 129,294 207,055
Lease liabilities 29 19,679 23,636 19,806
Contract liabilities 30 36,261 59,338 43,508
Deferred income 31 163 163 163
450,481 599,301 629,994
Net current assets 279,982 325,425 388,607
Total assets less current liabilities 770,293 950,991 1,076,985
APPENDIX I ACCOUNTANTS’ REPORT
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As at 31 December
Notes 2022 2023 2024
RMB’000 RMB’000 RMB’000
Non-current liabilities
Borrowings 28 65,312 117,502 116,036
Lease liabilities 29 39,443 46,346 32,693
Deferred income 31 2,371 2,208 2,045
107,126 166,056 150,774
Net assets 663,167 784,935 926,211
Capital and reserves
Share capital 32 204,660 204,660 204,660
Reserves 458,507 580,275 721,551
Total equity 663,167 784,935 926,211
APPENDIX I ACCOUNTANTS’ REPORT
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STATEMENTS OF FINANCIAL POSITION OF THE COMPANY
As at 31 December
Notes 2022 2023 2024
RMB’000 RMB’000 RMB’000
Non-current assets
Property, plant and equipment 17 92,047 86,411 79,172
Right-of-use assets 18 15,032 14,657 14,278
Investment properties 19 1,560 1,443 1,326
Investments in subsidiaries 39 371,369 368,369 518,369
Deferred tax assets 21 2,304 3,625 1,837
Prepayments for non-current assets 24(a) 189 356 48
Prepayments and other receivables 24(b) 150 150 150
482,651 475,011 615,180
Current assets
Inventories 22 52,851 49,333 55,863
Trade and bills receivables 23(a) 191,080 133,698 244,409
Prepayments and other receivables 24(b) 8,486 7,467 25,419
Amounts due from subsidiaries 37(a)(i) 44,576 75,330 32,966
Bank balances and cash 25 26,332 104,157 115,592
323,325 369,985 474,249
Current liabilities
Trade and bills payables 26 67,252 61,082 68,681
Other payables and accruals 27 12,439 11,843 15,462
Income tax payable 3,885 2,261 4,988
Amounts due to subsidiaries 37(a)(ii) 21,921 37,072 173,679
Borrowings 28 52,469 38,378 57,148
Lease liabilities 29 70 73 73
Contract liabilities 30 21,214 314 175
Deferred income 31 163 163 163
179,413 151,186 320,369
Net current assets 143,912 218,799 153,880
Total assets less current liabilities 626,563 693,810 769,060
APPENDIX I ACCOUNTANTS’ REPORT
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As at 31 December
Notes 2022 2023 2024
RMB’000 RMB’000 RMB’000
Non-current liability
Deferred income 31 2,371 2,208 2,045
2,371 2,208 2,045
Net assets 624,192 691,602 767,015
Capital and reserves
Share capital 32 204,660 204,660 204,660
Reserves 32 419,532 486,942 562,355
Total equity 624,192 691,602 767,015
APPENDIX I ACCOUNTANTS’ REPORT
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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share
capital
Share
premium
Capital
reserve
FVTOCI
reserve
Translation
reserve
Statutory
reserve
Retained
profits Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(note ii) (note i)
At 1 January 2022 204,660 112,713 2,502 – (875) 8,125 254,288 581,413
Profit for the year –––––– 80,261 80,261
Other comprehensive income
for the year –––– 1,493 – – 1,493
Total comprehensive income
for the year –––– 1,493 – 80,261 81,754
Transfer to statutory reserve ––––– 5,943 (5,943) –
At 31 December 2022 204,660 112,713 2,502 – 618 14,068 328,606 663,167
Profit for the year –––––– 121,462 121,462
Other comprehensive income
for the year –––– 3 0 6–– 3 0 6
Total comprehensive income
for the year –––– 3 0 6– 121,462 121,768
Transfer to statutory reserve ––––– 7,045 (7,045) –
At 31 December 2023 204,660 112,713 2,502 – 924 21,113 443,023 784,935
APPENDIX I ACCOUNTANTS’ REPORT
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Share
capital
Share
premium
Capital
reserve
FVTOCI
reserve
Translation
reserve
Statutory
reserve
Retained
profits Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(note ii) (note i)
At 31 December 2023 204,660 112,713 2,502 – 924 21,113 443,023 784,935
Profit for the year –––––– 140,425 140,425
Other comprehensive
(expense)/income for the year – – – (20) 871 – – 851
Total comprehensive
(expense)/income for the year – – – (20) 871 – 140,425 141,276
Transfer to statutory reserve ––––– 7,542 (7,542) –
At 31 December 2024 204,660 112,713 2,502 (20) 1,795 28,655 575,906 926,211
Notes:
(i) It represents the statutory reserve of the Company in the People’s Republic of China (the “ PRC”). Pursuant to
applicable PRC regulations, PRC entity is required to appropriate 10% of its profit after tax (after offsetting
prior year losses) to the statutory reserve until such reserve reaches 50% of its registered capital. Transfers to
this reserve must be made before distribution of dividends to shareholders. Upon approval by relevant
authorities, the statutory reserve can be utilised to offset the accumulated losses or to increase the paid-up capital
of the relevant entity.
(ii) It represents the waiver of an amount due to the controlling shareholder of the Company which is accounted for
as deemed capital contribution from a shareholder.
APPENDIX I ACCOUNTANTS’ REPORT
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CONSOLIDATED STATEMENTS OF CASH FLOWS
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
OPERATING ACTIVITIES
Profit before tax 91,921 146,693 161,315
Adjustments for:
Depreciation of property, plant and equipment 47,138 40,015 43,868
Depreciation of right-of-use assets 23,735 24,941 26,872
Depreciation of investment properties 201 726 890
Amortisation of intangible assets 18 18 21
Impairment losses under ECL model, net of
reversal 1,610 2,494 865
Gain on disposal of property, plant and equipment (53) (7) (51)
Gain from termination of lease contracts (12) (15) –
Loss from foreign currency forward contracts 8,004 – –
Impairment losses recognised on investment
property – – 2,000
Gain from wealth management products measured
at fair value through profit or loss (“ FVTPL ”) (2,874) (561) –
Release of deferred income (163) (163) (163)
Finance costs 14,467 12,519 11,993
Interest income (6,081) (10,168) (11,650)
Write-down (reversal of write-down) of
inventories 4,550 9,424 (1,976)
Net foreign exchange gains (14,386) (9,939) (16,706)
Operating cash flows before movements in
working capital 168,075 215,977 217,278
Decrease (increase) in inventories 66,179 (9,301) (31,766)
Decrease (increase) in trade and bills receivables 68,501 (15,274) (90,690)
Decrease (increase) in trade receivables at
FVTOCI 13,517 (4,461) 13,903
Decrease (increase) in prepayments and other
receivables 17,785 (7,528) (42,240)
Increase in restricted bank deposits – – (145)
(Decrease) increase in trade and bills payables (84,878) 65,833 37,118
(Decrease) increase in other payables and accruals (8,571) 481 5,255
(Decrease) increase in contract liabilities (10,236) 23,077 (15,830)
Cash generated from operations 230,372 268,804 92,883
Income tax paid (5,908) (26,014) (21,595)
Net cash from operating activities 224,464 242,790 71,288
APPENDIX I ACCOUNTANTS’ REPORT
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Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
INVESTING ACTIVITIES
Interest received 6,081 10,168 11,650
Proceeds from redemption of wealth management
products at FVTPL 463,883 239,561 –
Proceeds from disposal of property, plant and
equipment 2,359 2,150 903
Rental and other refundable deposits received – – 5,973
Withdraw of pledged bank deposits for
borrowings 2,274 – –
Payments for rental and other refundable deposits (387) (526) (7,681)
Purchase of property, plant and equipment (121,643) (124,456) (165,333)
Payment for non-current assets – – (15,923)
Settlement of foreign currency forward contracts (8,004) – –
Purchase of wealth management products at
FVTPL (461,009) (239,000) –
Net cash used in investing activities (116,446) (112,103) (170,411)
FINANCING ACTIVITIES
New borrowings raised 500,932 380,916 587,642
Interest paid for lease liabilities (2,361) (2,629) (2,722)
Repayment of lease liabilities (22,882) (23,195) (24,825)
Interest paid for borrowings (14,390) (14,225) (11,794)
Repayment of borrowings (569,783) (316,269) (530,961)
Payment for accrued issue costs – – (10,310)
Net cash (used in) from financing activities (108,484) 24,598 7,030
Net (decrease) increase in cash and cash
equivalents (466) 155,285 (92,093)
Effect of foreign exchange rate changes 17,149 11,493 17,909
Cash and cash equivalents at the beginning of
the year 364,877 381,560 548,338
Cash and cash equivalents at the end
of the year, represented by bank balances
and cash 381,560 548,338 474,154
APPENDIX I ACCOUNTANTS’ REPORT
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NOTES TO THE FINANCIAL INFORMATION
1. INFORMATION
The Company was incorporated in the PRC as a joint stock company with limited liability. The controlling
shareholder of the Company are Mr. Pan Yun and Mr. Guangshe Pan, son of Mr. Pan Yun (collectively the “ Controlling
shareholders ”). The addresses of the registered office and principal place of business of the Company are the same as
the registered office in the PRC and the headquarter in the PRC as stated in the section headed “Corporate
Information” of the Prospectus.
The Group is principally engaged in the businesses of research and development, design, manufacturing and sales
of electric home appliances and non-electric household goods throughout the Track Record Period. Details of the
subsidiaries are disclosed in Note 39.
The Historical Financial Information is presented in RMB, which is also the functional currency of the Company.
The statutory consolidated financial statements of the Company for the years ended 31 December 2022 prepared
in accordance with the relevant accounting principles in the PRC were audited by BDO China Shu Lun Pan Certified
Public Accountants LLP (ה( ౷ஷΥྫ )) which was the certified public accountants registered in
the PRC. The statutory consolidated financial statements of the Company for the years ended 31 December 2023 and
2024 prepared in accordance with the relevant accounting principles in the PRC were audited by Shenzhen Yuehua
Certified Public Accountants LLP (ה( ౷ஷΥྫ )) which was the certified public accountants
registered in the PRC.
2. BASIS OF PREPARATION OF HISTORICAL FINANCIAL INFORMATION
The Historical Financial Information has been prepared based on the accounting policies which conform with
IFRS Accounting Standards issued by the IASB.
3. APPLICATION OF IFRS ACCOUNTING STANDARDS
For the purpose of preparing and presenting the Historical Financial Information for the Track Record Period, the
Group has consistently applied the accounting policies which conform with IFRS Accounting Standards, amendments to
IFRS Accounting Standards and the related interpretations issued by the IASB, which are effective for the accounting
period beginning on 1 January 2024 throughout the Track Record Period.
New and amendments to IFRS Accounting Standards in issue but not yet effective
The Group has not early applied the following new and amendments to IFRS Accounting Standards that
have been issued but are not yet effective:
Amendments to IFRS 9 and IFRS 7 Amendments to the Classification and
Measurement of Financial Instruments
3
Amendments to IFRS 9 and IFRS 7 Contracts Referencing Nature-dependent
Electricity 3
Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture 1
Amendments to IFRS Accounting Standards Annual Improvements to IFRS Accounting
Standards – V olume 11 3
Amendments to IAS 21 Lack of Exchangeability 2
IFRS 18 Presentation and Disclosure in Financial
Statements 4
1 Effective for annual periods beginning on or after a date to be determined.
2 Effective for annual periods beginning on or after 1 January 2025.
3 Effective for annual periods beginning on or after 1 January 2026.
4 Effective for annual periods beginning on or after 1 January 2027.
APPENDIX I ACCOUNTANTS’ REPORT
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IFRS 18 sets out requirements on presentation and disclosures in financial statements, will replace IAS 1
“Presentation of Financial Statements”. This new IFRS Accounting Standard, while carrying forward many of the
requirements in IAS 1, introduces new requirements to present specified categories and defined subtotals in the
statement of profit or loss; provide disclosures on management-defined performance measures in the notes to the
financial statements and improve aggregation and disaggregation of information to be disclosed in the financial
statements. In addition, some IAS 1 paragraphs have been moved to IAS 8 and IFRS 7. Minor amendments to IAS 7
“Statement of Cash Flows” and IAS 33 “Earnings per Share” are also made.
IFRS 18, and amendments to other standards, will be effective for annual periods beginning on or after 1 January
2027, with early application permitted. The application of the new standard is expected to affect the presentation of the
statement of profit or loss and disclosures in the future financial statements. The Group is in the process of assessing
the detailed impact of IFRS 18 on the Group’s consolidated financial statements.
Except as described above, the Directors anticipate that the application of the amendments to IFRS Accounting
Standards will have no material impact on the Group’s financial position and performance in the foreseeable future.
4. MATERIAL ACCOUNTING POLICY INFORMATION
The Historical Financial Information has been prepared in accordance with the accounting policies which
conform with IFRS Accounting Standards issued by the IASB. For the purpose of preparation of the Historical
Financial Information, information is considered material if such information is reasonably expected to influence
decisions made by primary users. In addition, the Historical Financial Information includes applicable disclosures
required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“ Listing
Rules ”) and by the Hong Kong Companies Ordinance.
Basis of consolidation
The Historial Financial Information incorporates the financial statements of the Company and entities
controlled by the Group. Control is achieved when the Company:
 has power over the investee;
 is exposed, or has rights, to variable returns from its investment with the investee; and
 has the ability to use its power to affect its returns.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control listed above.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies in line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.
Investments in subsidiaries
Investments in subsidiaries are stated in the statements of financial position of the Company at cost less
any identified impairment loss.
Revenue from contracts with customers
Information about the Group’s accounting policies relating to contracts with customers is provided in
Notes 6 and 30.
APPENDIX I ACCOUNTANTS’ REPORT
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Leases
The Group assesses whether a contract is or contains a lease based on the definition under IFRS 16
“Lease” at inception of the contract. Such contract will not be reassessed unless the terms and conditions of the
contract are subsequently changed.
The Group as a lessee
Short-term leases
The Group applies the short-term lease recognition exemption to leases for staff quarters and warehouses
that have a lease term of 12 months or less from the commencement date and do not contain a purchase option.
Lease payments on short-term leases are recognised as expense on a straight-line basis over the lease term.
Right-of-use assets
The cost of right-of-use assets includes the amount of the initial measurement of the lease liability and any
lease payments made at or before the commencement date.
Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liabilities.
Right-of-use assets are depreciated on a straight-line basis over the shorter of their estimated useful lives
and the lease terms.
The Group presents right-of-use assets as a separate line item on the consolidated statements of financial
position.
Refundable rental deposits
Refundable rental deposits paid are accounted under IFRS 9 “Financial Instruments” and initially measured
at fair value. Adjustments to fair value at initial recognition are considered as additional lease payments and
included in the cost of right-of-use assets.
Lease liabilities
At the commencement date of a lease, the Group recognises and measures the lease liability at the present
value of lease payments that are unpaid at that date. In calculating the present value of lease payments, the
Group uses the incremental borrowing rate at the lease commencement date as the interest rate implicit in the
lease is not readily determinable.
The lease payments include fixed payments less any lease incentives receivable.
After the commencement date, lease liabilities are adjusted by interest accretion and lease payments.
The Group remeasures lease liabilities (and makes a corresponding adjustment to the related right-of-use
assets) when the lease term has changed, in which case the related lease liability is remeasured by discounting
the revised lease payments using a revised discount rate at the date of reassessment; a lease contract is modified
and the lease modification is not accounted for as a separate lease (see below for the accounting policy for “lease
modifications”.
The Group presents lease liabilities as a separate line item on the consolidated statements of financial
position.
APPENDIX I ACCOUNTANTS’ REPORT
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Foreign currencies
In preparing the financial statements of each individual group entity, transactions in currencies other than
the functional currency of that entity (foreign currencies) are recognised at the rates of exchange prevailing on
the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign
currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are
denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was
determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not
retranslated.
Exchange differences arising on the settlement of monetary items, and on the re-translation of monetary
items, are recognised in profit or loss in the period in which they arise.
For the purposes of presenting the Historical Financial Information, the assets and liabilities of the
Group’s operations are translated into the presentation currency of the Group (i.e. RMB) using exchange rates
prevailing at the end of each reporting period. Income and expenses items are translated at the average exchange
rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange
rates at the date of transactions are used. Exchange differences arising, if any, are recognised in OCI and
accumulated in equity under the heading of translation reserve.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets until such time as the assets are substantially ready for their intended use or
sale.
Any specific borrowing that remain outstanding after the related asset is ready for its intended use or sale
is included in the general borrowing pool for calculation of capitalisation rate on general borrowings. Investment
income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets
is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Government grants
Government grants are not recognised until there is reasonable assurance that the Group will comply with
the conditions attaching to them and that the grants will be received.
Government grants are recognised in profit or loss on a systematic basis over the periods in which the
Group recognises as expenses the related costs for which the grants are intended to compensate. Specifically,
government grants whose primary condition is that the Group should purchase, construct or otherwise acquire
non-current assets are recognised as deferred income in the consolidated statements of financial position and
transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.
Government grants related to income that are receivable as compensation for expenses or losses already
incurred or for the purpose of giving immediate financial support to the Group with no future related costs are
recognised in profit or loss in the period in which they become receivable. Such grants are presented under
“other income”.
APPENDIX I ACCOUNTANTS’ REPORT
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Employee benefits
Retirement benefit costs
Payments to defined contribution retirement benefit plans are recognised as an expense when employees
have rendered service entitling them to the contributions.
Short-term employee benefits
Short-term employee benefits are recognised at the undiscounted amount of the benefits expected to be
paid as and when employees rendered the services. All short-term employee benefits are recognised as an
expense unless another IFRS Accounting Standard requires or permits the inclusion of the benefit in the cost of
an asset.
A liability is recognised for benefits accruing to employees (such as wages and salaries) after deducting
any amount already paid.
Taxation
Income tax expense represents the sum of the current and deferred income tax expense.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before
tax because of income or expense that are taxable or deductible in other years, and items that are never taxable
or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of each reporting period.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities
in the Historical Financial Information and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are
generally recognised for all deductible temporary differences to the extent that it is probable that taxable profit
will be available against which those deductible temporary differences can be utilised. Such deferred tax assets
and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a
business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the
accounting profit and at the time of the transaction does not give rise to equal taxable and deductible temporary
differences.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in
subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from
deductible temporary differences associated with such investments are only recognised to the extent that it is
probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary
differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the
asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of each reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow
from the manner in which the Group expects, at the end of each reporting period, to recover or settle the carrying
amount of its assets and liabilities.
APPENDIX I ACCOUNTANTS’ REPORT
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For the purposes of measuring deferred tax for leasing transactions in which the Group recognises the
right-of-use assets and the related lease liabilities, the Group first determines whether the tax deductions are
attributable to the right-of-use assets or the lease liabilities.
For leasing transactions in which the tax deductions are attributable to the lease liabilities, the Group
applies IAS 12 “Income Taxes” requirements to lease liabilities and the related assets separately. The Group
recognises a deferred tax asset related to lease liabilities to the extent that it is probable that taxable profit will
be available against which the deductible temporary difference can be utilised and a deferred tax liability for all
taxable temporary differences.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities and when they relate to income taxes levied to the same taxable entity by the
same taxation authority.
Property, plant and equipment
Property, plant and equipment are tangible assets that are held for use in the production or supply of goods
or services, or for administrative purposes (other than construction in progress). Property, plant and equipment
are stated in the consolidated statements of financial position at cost less subsequent accumulated depreciation
and subsequent accumulated impairment losses, if any.
Buildings, machinery and equipment in the course of construction for production, supply or administrative
purposes are carried at cost, less any recognised impairment loss. Costs include any costs directly attributable to
bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended
by management, including costs of testing whether the related assets is functioning properly and, for qualifying
assets, borrowing costs capitalised in accordance with the Group’s accounting policy. Depreciation of these
assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Depreciation is recognised so as to write off the cost of assets other than construction in progress less their
residual values over their estimated useful lives, using the straight-line method. The estimated useful lives,
residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any
changes in estimate accounted for a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or
retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in profit or loss.
Research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Expenditure on development activities is recognised as an expense in the period in which it is incurred when it
results in no internally-generated intangible asset.
Investment properties
Investment properties are properties held to earn rentals and/or for capital appreciation.
Investment properties are initially measured at cost, including any directly attributable expenditure.
Subsequent to initial recognition, investment properties are stated at cost less subsequent accumulated
depreciation and any accumulated impairment losses. Depreciation is recognised so as to write off the cost of
investment properties over their estimated useful lives and after taking into account of their estimated residual
value, using the straight-line method.
APPENDIX I ACCOUNTANTS’ REPORT
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Impairment on property, plant and equipment, right-of-use assets, and intangible assets
At the end of each reporting period, the Group reviews the carrying amounts of its property, plant and
equipment, right-of-use assets, intangible assets with finite useful lives to determine whether there is any
indication that these assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the relevant asset is estimated in order to determine the extent of the impairment loss (if any).
The recoverable amount of property, plant and equipment, right-of-use assets, and intangible assets are
estimated individually. When it is not possible to estimate the recoverable amount individually, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
In testing a cash-generating unit for impairment, corporate assets are allocated to the relevant
cash-generating unit when a reasonable and consistent basis of allocation can be established, or otherwise they
are allocated to the smallest group of cash generating units for which a reasonable and consistent allocation basis
can be established. The recoverable amount is determined for the cash-generating unit or group of
cash-generating units to which the corporate asset belongs, and is compared with the carrying amount of the
relevant cash-generating unit or group of cash-generating units.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset (or a
cash-generating unit) for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (or a cash-generating unit) is reduced to its recoverable amount. For
corporate assets or portion of corporate assets which cannot be allocated on a reasonable and consistent basis to
a cash-generating unit, the Group compares the carrying amount of a group of cash-generating units, including
the carrying amounts of the corporate assets or portion of corporate assets allocated to that group of
cash-generating units, with the recoverable amount of the group of cash-generating units. In allocating the
impairment loss, the impairment loss is allocated to the assets on a pro-rata basis based on the carrying amount
of each asset in the unit or the group of cash-generating units. The carrying amount of an asset is not reduced
below the highest of its fair value less costs of disposal (if measurable), its value in use (if determinable) and
zero. The amount of the impairment loss that would otherwise have been allocated to the asset is allocated pro
rata to the other assets of the unit or the group of cash-generating units. An impairment loss is recognised
immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit
or a group of cash-generating units) is increased to the revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset (or a cash-generating unit or a group of cash-generating units) in
prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost of inventories are determined on
the weighted average method. Net realisable value represents the estimated selling price for inventories less all
estimated costs of completion and costs necessary to make the sale. Costs necessary to make the sale include
incremental costs directly attributable to the sale and non-incremental costs which the Group must incur to make
the sale.
APPENDIX I ACCOUNTANTS’ REPORT
– I-19 –


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Financial instruments
Financial assets and financial liabilities are recognised when a group entity becomes a party to the
contractual provisions of the instrument. All regular way purchases or sales of financial assets are recognised and
derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that
require delivery of assets within the time frame established by regulation or convention in the market place.
Financial assets and financial liabilities are initially measured at fair value except for trade receivables
arising from contracts with customers which are initially measured in accordance with IFRS 15 “Revenue from
Contracts with Customers”. Transaction costs that are directly attributable to the acquisition or issue of financial
assets and financial liabilities (other than financial assets at FVTPL) are added to or deducted from the fair value
of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets at FVTPL are recognised immediately in profit or loss.
The effective interest method is a method of calculating the amortised cost of a financial asset or financial
liability and of allocating interest income and interest expense over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future cash receipts and payments (including all fees and points
paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or
discounts) through the expected life of the financial asset or financial liability, or, where appropriate, a shorter
period, to the net carrying amount on initial recognition.
Financial assets
Classification and subsequent measurement of financial assets
Financial assets that meet the following conditions are subsequently measured at amortised cost:
 the financial asset is held within a business model whose objective is to collect contractual cash
flows; and
 the contractual terms give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Financial assets that meet the following conditions are subsequently measured at FVTOCI:
 the financial asset is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling the financial assets; and
 the contractual terms give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
All other financial assets are subsequently measured at FVTPL.
(i) Amortised cost and interest income
Interest income is recognised using the effective interest method for financial assets measured
subsequently at amortised cost and trade receivables subsequently measured at FVTOCI. Interest income is
calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for
financial assets that have subsequently become credit-impaired. For financial assets that have subsequently
become credit-impaired, interest income is recognised by applying the effective interest rate to the amortised cost
of the financial asset from the next reporting period. If the credit risk on the credit-impaired financial instrument
improves so that the financial asset is no longer credit-impaired, interest income is recognised by applying the
effective interest rate to the gross carrying amount of the financial asset from the beginning of the reporting
period following the determination that the asset is no longer credit-impaired.
APPENDIX I ACCOUNTANTS’ REPORT
– I-20 –


--- page 468 ---
(ii) Trade receivables classified at FVTOCI
Subsequent changes in the carrying amounts for trade receivables classified as at FVTOCI as a result of
interest income calculated using the effective interest method are recognised in profit or loss. All other changes
in the carrying amount of these trade receivables are recognised in OCI and accumulated under the heading of
FVTOCI reserve. Impairment allowances are recognised in profit or loss with corresponding adjustment to OCI
without reducing the carrying amounts of these trade receivables. The amounts that are recognised in profit or
loss are the same as the amounts that would have been recognised in profit or loss if these trade receivables had
been measured at amortised cost. When these trade receivables are derecognised, the cumulative gains or losses
previously recognised in OCI are reclassified to profit or loss.
(iii) Financial assets at FVTPL
Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI or
designated as FVTOCI are measured at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair
value gains or losses recognised in profit or loss. The net gain or loss recognised in profit or loss excludes any
dividend or interest earned on the financial asset and is included in the “other gains and losses” line item.
Impairment of financial assets subject to impairment assessment under IFRS 9
The Group performs impairment assessment under ECL model on financial assets (including trade and bills
receivables, other receivables, pledged and restricted bank deposits and bank balances and cash) which are
subject to impairment assessment under IFRS 9. The amount of ECL is updated at each reporting date to reflect
changes in credit risk since initial recognition.
Lifetime ECL represents the ECL that will result from all possible default events over the expected life of
the relevant instrument. In contrast, 12-month ECL (“ 12m ECL ”) represents the portion of lifetime ECL that is
expected to result from default events that are possible within 12 months after the reporting date. Assessment is
done based on the Group’s historical credit loss experience, and factors that are specific to the debtors, general
economic conditions and an assessment of both the current conditions at the reporting date as well as the forecast
of future conditions.
The Group always recognises lifetime ECL for trade receivables. The ECL on these assets are assessed
individually for debtors with significant balances and credit-impaired and collectively for the remaining debtors
using a provision matrix with appropriate groupings.
For all other instruments, the Group measures the loss allowance equal to 12m ECL, unless there has been
a significant increase in credit risk since initial recognition, in which case the Group recognises lifetime ECL.
The assessment of whether lifetime ECL should be recognised is based on significant increases in the likelihood
or risk of a default occurring since initial recognition.
(i) Significant increase in credit risk
In assessing whether the credit risk has increased significantly since initial recognition, the Group
compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a
default occurring on the financial instrument as at the date of initial recognition. In making this assessment, the
Group considers both quantitative and qualitative information that is reasonable and supportable, including
historical experience and forward-looking information that is available without undue cost or effort.
APPENDIX I ACCOUNTANTS’ REPORT
– I-21 –


--- page 469 ---
In particular, the following information is taken into account when assessing whether credit risk has
increased significantly:
 an actual or expected significant deterioration in the financial instrument’s external (if available) or
internal credit rating;
 significant deterioration in external market indicators of credit risk, e.g. a significant increase in the
credit spread, the credit default swap prices for the debtor;
 existing or forecast adverse changes in business, financial or economic conditions that are expected
to cause a significant decrease in the debtor’s ability to meet its debt obligations;
 an actual or expected significant deterioration in the operating results of the debtor;
 an actual or expected significant adverse change in the regulatory, economic, or technological
environment of the debtor that results in a significant decrease in the debtor’s ability to meet its
debt obligations.
Irrespective of the outcome of the above assessment, the Group presumes that the credit risk has increased
significantly since initial recognition when contractual payments are more than 30 days past due, unless the
Group has reasonable and supportable information that demonstrates otherwise.
The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a
significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of
identifying significant increase in credit risk before the amount becomes past due.
(ii) Definition of default
For internal credit risk management, the Group considers an event of default occurs when information
developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors,
including the Group, in full (without taking into account any collaterals held by the Group).
Irrespective of the above, the Group considers that default has occurred when a financial asset is more
than 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more
lagging default criterion is more appropriate.
(iii) Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the
estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is
credit-impaired includes observable data about the following events:
 significant financial difficulty of the issuer or the borrower;
 a breach of contract, such as a default or past due event;
 the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s
financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not
otherwise consider;
 it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation.
APPENDIX I ACCOUNTANTS’ REPORT
– I-22 –


--- page 470 ---
(iv) Write-off policy
The Group writes off a financial asset when there is information indicating that the counterparty is in
severe financial difficulty and there is no realistic prospect of recovery, for example, when the counterparty has
been placed under liquidation or has entered into bankruptcy proceedings. Financial assets written off may still
be subject to enforcement activities under the Group’s recovery procedures, taking into account legal advice
where appropriate. A write-off constitutes a derecognition event. Any subsequent recoveries are recognised in
profit or loss.
(v) Measurement and recognition of ECL
The measurement of ECL is a function of the probability of default, loss given default (i.e. the magnitude
of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss
given default is based on historical data and forward-looking information. Estimation of ECL reflects an
unbiased and probability-weighted amount that is determined with the respective risks of default occurring as the
weights. The Group uses a practical expedient in estimating ECL on trade receivables using a provision matrix
taking into consideration historical credit loss experience and forward-looking information that is available
without undue cost or effort.
Generally, the ECL is the difference between all contractual cash flows that are due to the Group in
accordance with the contract and the cash flows that the Group expects to receive, discounted at the effective
interest rate determined at initial recognition.
Lifetime ECL for trade receivables are considered on a collective basis taking into consideration past due
information and relevant credit information such as forward looking macroeconomic information.
For collective assessment, the Group takes into consideration the following characteristics when
formulating the grouping:
 Past-due status;
 Nature, size and industry of debtors; and
 External credit ratings where available.
The grouping is regularly reviewed by management to ensure the constituents of each group continue to
share similar credit risk characteristics.
Interest income is calculated based on the gross carrying amount of the financial asset unless the financial
asset is credit-impaired, in which case interest income is calculated based on amortised cost of the financial
asset.
Except for trade receivables that are measured at FVTOCI, the Group recognises an impairment gain or
loss in profit or loss for all financial instruments by adjusting their carrying amount, with the exception of trade
and other receivables, where the corresponding adjustment is recognised through a loss allowance account. For
trade receivables are measured at FVTOCI, the loss allowance is recognised in OCI and accumulated in the
FVTOCI reserve without reducing the carrying amounts of these trade receivables. Such amount represents the
changes in the FVTOCI reserve in relation to accumulated loss allowance.
APPENDIX I ACCOUNTANTS’ REPORT
– I-23 –


--- page 471 ---
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset
expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the
asset to another entity. If the Group retains substantially all the risks and rewards of ownership of a transferred
financial asset, the Group continues to recognise the financial asset and also recognises a collateralised
borrowing for the proceeds received.
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s
carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.
On derecognition of trade receivables at FVTOCI, the cumulative gain or loss previously accumulated in
the FVTOCI reserve is reclassified to profit or loss.
Financial liabilities and equity
Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Financial liabilities
Financial liabilities including trade and bills payables, amounts due to subsidiaries, other payables and
borrowings are subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged,
cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and
the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised
in profit or loss.
5. KEY SOURCES OF ESTIMATION UNCERTAINTY
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at
the end of each reporting period that may have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next twelve months.
Net realisable value of inventories
As at 31 December 2022, 2023 and 2024, the carrying amount of the Group’s inventories is
RMB173,738,000, RMB173,615,000, and RMB207,357,000, respectively. During the years ended 31 December
2022 and 2023, a write-down of inventories of RMB4,550,000 and RMB9,424,000 was recognised or in profit or
loss, respectively. During the year ended 31 December 2024, a reversal of write-down of inventories of
RMB1,976,000 was recognised or in profit or loss.
Net realisable value of inventories is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and costs necessary to make the sale.
The Group assesses the net realisable value of inventories as well as the required amount of write-down of
inventory provision at the end of each reporting period, which involves significant judgement on determination
of the estimated selling prices, costs to completion and costs necessary to make the sale.
APPENDIX I ACCOUNTANTS’ REPORT
– I-24 –


--- page 472 ---
Provision of ECL for trade receivables
Trade receivables of the Group with significant balances and credit-impaired are assessed for ECL
individually.
In addition, the Group uses practical expedient in estimating ECL on trade receivables which are not
assessed individually using a provision matrix. The provision rates are based on ageing of debtors as groupings
of various debtors taking into consideration the Group’s historical default rates and forward-looking information
that is reasonable and supportable available without undue costs or effort. At each reporting date, the historical
observed default rates are reassessed and changes in the forward-looking information are considered.
The provision of ECL is sensitive to changes in estimates. The information about the ECL and the Group’s
trade receivables are disclosed in Note 36.
6. REVENUE AND SEGMENT INFORMATION
(i) Disaggregation of revenue from contracts with customers
Types of goods
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Electric home appliances
– Electro-thermic appliances 459,013 499,099 757,883
– Motor-driven appliances 317,623 321,937 315,560
– Electronic appliances 122,997 111,570 115,066
899,633 932,606 1,188,509
Non-electric household goods
– Garden hose 181,460 221,788 285,118
– Others (note) 15,872 33,927 27,883
197,332 255,715 313,001
1,096,965 1,188,321 1,501,510
Note: Others include cookware, cleaning tools and other household goods etc.
APPENDIX I ACCOUNTANTS’ REPORT
– I-25 –


--- page 473 ---
Shipping destination
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Overseas
– North America
– The United States of America (the “ U.S. ”) 755,142 958,315 1,148,669
– Others (note) 25,987 35,634 107,647
– Europe 227,672 111,730 139,551
– Oceania 44,073 28,834 57,219
– Asia (excluding the mainland China) 26,331 35,833 34,258
– South America 8,527 12,228 7,369
– Africa 552 759 476
Domestic
–Mainland China 8,681 4,988 6,321
1,096,965 1,188,321 1,501,510
Note: Others include Canada and Mexico.
Timing of revenue recognition
All revenue from contracts with customers within the scope of IFRS 15 are recognised at a point in
time.
(ii) Performance obligations for contracts with customers and revenue recognition policies
The Group sells electric home appliances and non-electric household goods directly to customers mainly
through offline channels and also via online channels.
Revenue is recognised when control of the goods has been transferred, being when the goods have been
shipped to the customers’ specific location (delivery) (for offline channels) and at the point the goods are
delivered to and accepted by the customers (for online channels). The Group requires an advance payment or
grants the customers a credit period from 30 days to 135 days based on the assessed credit worthiness of the
customers. A contract liability is recognised for advance payments received for sales in which revenue has yet
been recognised.
(iii) Transaction price allocated to the remaining performance obligation for contracts with customers
The contracts for selling electric home appliances and non-electric household goods are for period of one
year or less. As permitted under IFRS 15, the transaction price allocated to these unsatisfied contracts is not
disclosed.
APPENDIX I ACCOUNTANTS’ REPORT
– I-26 –


--- page 474 ---
(iv) Segment information
Information reported to the executive directors of the Company, being the chief operating decision makers,
for the purposes of resource allocation and performance assessment focuses on revenue analysis by products. No
other discrete financial information is provided other than the Group’s results and financial position as a whole.
Accordingly, only entity-wide disclosures, major customers and geographic information are presented.
Geographical information
The details of the Group’s revenue from external customers by shipping destination of the products
are set out in Note 6(i).
The Group’s operations are located in the PRC (country of domicile), the U.S., Thailand and
Indonesia. Information about the Group’s non-current assets (excluding deferred tax assets and financial
assets) is presented based on the geographical location of the assets.
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
The PRC 433,169 555,934 602,076
Indonesia – 13,227 15,234
Thailand – – 15,946
The U.S. 4,987 3,269 1,446
438,156 572,430 634,702
(v) Information about major customers
Revenue from customers of the corresponding years contributing over 10% of the total revenue of the
Group are as follow:
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Customer A (note i) 223,746 282,148 361,741
Customer B (note ii) 233,390 338,166 316,679
Customer C (note iii) N/A N/A 269,047
Notes:
(i) The customer is a group of companies under the same control of an independent third party.
(ii) The customer is a group of companies under the same holding company.
(iii) The corresponding revenue did not contribute over 10% of the total revenue of the Group for the
years ended 31 December 2022 and 2023.
APPENDIX I ACCOUNTANTS’ REPORT
– I-27 –


--- page 475 ---
7. OTHER INCOME
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Government grants
– related to expense items (note) 13,117 7,890 4,267
– related to assets (Note 31) 163 163 163
13,280 8,053 4,430
Interest income 6,081 10,168 11,650
Compensation income from customers 344 7 118
Sales of materials, mouldings and scraps 2,342 2,793 1,946
Rental income 924 647 951
Others 244 481 287
23,215 22,149 19,382
Note: The amount mainly represents various subsidies received from the PRC government authorities.
Unconditional government grants are recognised in profit and loss when received.
8. IMPAIRMENT LOSSES UNDER ECL MODEL, NET OF REVERSAL
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Impairment losses recognised (reversed) on:
– Trade receivables 2,450 2,015 1,143
– Trade receivables at FVTOCI 127 190 (318)
– Other receivables (967) 289 40
1,610 2,494 865
APPENDIX I ACCOUNTANTS’ REPORT
– I-28 –


--- page 476 ---
9. OTHER GAINS AND LOSSES
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Gain from wealth management products measured at
FVTPL 2,874 561 –
Gain from termination of lease contracts 12 15 –
Loss from foreign currency forward contracts (8,004) – –
Gain on disposal of property, plant and equipment 53 7 51
Net foreign exchange gains 14,386 9,939 16,706
Impairment losses recognised on investment property – – (2,000)
Loss on trade receivables at FVTOCI reclassified from
equity upon derecognition – – (3,597)
Others (719) (724) (514)
8,602 9,798 10,646
10. FINANCE COSTS
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Interest on borrowings 13,014 14,689 11,809
Interest on lease liabilities 2,361 2,629 2,722
Total borrowing costs 15,375 17,318 14,531
Less: amounts capitalised in the cost of qualifying
assets (908) (4,799) (2,538)
14,467 12,519 11,993
During the years ended 31 December 2022, 2023 and 2024, the weighted average capitalisation rate on the
borrowing is 4.5%, 4.3% and 4.2%, respectively, per annum.
APPENDIX I ACCOUNTANTS’ REPORT
– I-29 –


--- page 477 ---
11. INCOME TAX EXPENSE
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Current tax:
– PRC Enterprise Income Tax 11,730 25,357 27,522
– Hong Kong 762 154 –
– U.S. 341 175 66
12,833 25,686 27,588
Over provision in prior years:
– PRC Enterprise Income Tax – – (6,319)
Deferred tax (note 21) (1,173) (455) (379)
11,660 25,231 20,890
PRC Enterprise Income Tax
Under the Law of the PRC on Enterprise Income Tax (the “ EIT Law ”) and Implementation Regulation of
the EIT Law, the tax rate of the PRC subsidiaries is 25% during the Track Record Period.
The Company has been accredited as the High New Tech Enterprises for a term of three years from 2022
to 2024. According to the EIT Law for High New Tech Enterprises, the Company was subject to Enterprise
Income Tax rate of 15% during the Track Record Period.
Hong Kong
The Company’s subsidiaries domiciled in Hong Kong are subject to a two-tiered income tax rate for
taxable income earned in Hong Kong effectively since 1 April 2018. The first 2 million Hong Kong dollars of
profits earned by the qualifying group entity are subject to be taxed at an income tax rate of 8.25%, while the
remaining profits will continue to be taxed at the existing tax rate, 16.5%.
U.S.
Pursuant to the applicable U.S. federal and state income tax laws, the U.S. subsidiaries have provided
income taxes on their federal and state taxable income at the 21% U.S. federal statutory corporate income tax
rate and states statutory corporate tax rates of up to 8.84% throughout the Track Record Period, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
– I-30 –


--- page 478 ---
The tax charge for the Track Record Period can be reconciled to the profit before tax per the consolidated
statements of profit or loss and other comprehensive income as follows:
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Profit before tax 91,921 146,693 161,315
Tax at the domestic income tax rate of 15% 13,788 22,004 24,197
Tax effect of expenses not deductible for tax
purposes 608 2,444 1,139
Effect of different tax rates of the subsidiaries 3,020 6,165 7,602
Tax effect of deductible temporary differences or
tax losses not recognised 944 1,303 1,471
Utilisation of deductible temporary differences or
tax losses previously not recognised – (96) (224)
Additional deduction of research and
development expenses (note) (6,700) (6,589) (6,976)
Over provision in respect of prior years – – (6,319)
11,660 25,231 20,890
Note: According to the relevant laws and regulations promulgated by the State Administration of Taxation
of the PRC that have been effective from 2018 onwards, enterprises engaging in research and
development activities are entitled to claim 175% and 200% of their research and development
expenditures incurred as tax deductible expenses when determining their assessable profits for the
period from 1 January 2022 to 30 September 2022 and for the period from 1 October 2022 to 31
December 2024, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
– I-31 –


--- page 479 ---
12. PROFIT FOR THE YEAR
Profit for the year has been arrived at after charging (crediting):
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Directors’ and supervisors’ emoluments (Note 13) 6,292 6,817 7,386
Other staffs costs (excluding directors’ and supervisors’
emoluments)
– Salaries, bonus and other allowances 190,469 193,927 212,387
– Discretionary bonus 3,590 5,022 6,874
– Retirement benefits scheme contributions 13,275 12,732 18,687
Total staff costs 213,626 218,498 245,334
Capitalised in inventories (136,581) (143,203) (158,223)
77,045 75,295 87,111
Depreciation of property, plant and equipment 47,138 40,015 43,868
Depreciation of investment properties 201 726 890
Depreciation of right-of-use assets 24,475 25,682 27,180
Amortisation of intangible assets 18 18 21
Total depreciation and amortisation 71,832 66,441 71,959
Capitalised in inventories (49,273) (43,500) (41,773)
Capitalised in construction in progress (740) (741) (308)
21,819 22,200 29,878
Impairment losses recognised on investment property
included in other gains and losses – – 2,000
Auditor’s remuneration 1,000 1,000 80
Listing expenses – – 370
Other expenses
– Professional fees (note) 3,686 3,280 1,356
– Donation 120 190 483
3,806 3,470 1,839
Lease expense related to short-term leases 1,481 670 548
Write-down (reversal of write-down) of inventories,
included in cost of sales 4,550 9,424 (1,976)
Cost of inventories recognised as an expense 873,095 902,300 1,172,986
Note: The amount represents the professional fees incurred in connection with the application for the Company’s
A-share listing, which was terminated in 2024.
APPENDIX I ACCOUNTANTS’ REPORT
– I-32 –


--- page 480 ---
13. DIRECTORS’ AND SUPERVISORS’ EMOLUMENTS
Details of the emoluments paid or payable to the directors and supervisors of the Company during the Track
Record Period disclosed pursuant to the applicable Listing Rules and the Hong Kong Companies Ordinance are as
follows:
Fees
Salaries,
bonus and
other
allowances
Discretionary
bonus
(note i)
Retirement
benefit
scheme
contributions Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
For the year ended 31 December 2022
Executive directors:
Mr. Pan Yun – 649 60 – 709
Mr. Guangshe Pan – 2,254 – – 2,254
Ms. Ji Ying – 547 60 – 607
Ms. Li, Youxiang – 547 60 5 612
Mr. Xu Xiping – 270 15 5 290
Ms. Hu Yan – 549 60 5 614
Independent non-executive directors:
Mr. Chen Yong (note ii) 5 0––– 5 0
Dr. Huang Hanxiong 5 0––– 5 0
Dr. Li Jiannan 5 0––– 5 0
Supervisors:
Mr. Yip Hung Tung – 390 35 4 429
Mr. Shi Chuanlai – 307 70 5 382
Ms. Yi Hongliang – 215 25 5 245
150 5,728 385 29 6,292
For the year ended 31 December 2023
Executive directors:
Mr. Pan Yun – 666 120 – 786
Mr. Guangshe Pan – 2,327 – – 2,327
Ms. Ji Ying – 555 120 – 675
Ms. Li, Youxiang – 565 120 5 690
Mr. Xu Xiping – 273 23 5 301
Ms. Hu Yan – 555 120 5 680
Independent non-executive directors:
Mr. Chen Yong (note ii) 5 0––– 5 0
Dr. Huang Hanxiong 5 0––– 5 0
Dr. Li Jiannan 5 0––– 5 0
Supervisors:
Mr. Yip Hung Tung – 402 75 4 481
Mr. Shi Chuanlai – 321 120 5 446
Ms. Yi Hongliang – 216 60 5 281
150 5,880 758 29 6,817
APPENDIX I ACCOUNTANTS’ REPORT
– I-33 –


--- page 481 ---
Fees
Salaries,
bonus and
other
allowances
Discretionary
bonus
(note i)
Retirement
benefit
scheme
contributions Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
For the year ended 31 December 2024
Executive directors:
Mr. Pan Yun – 824 180 – 1,004
Mr. Guangshe Pan – 1,894 – – 1,894
Ms. Ji Ying – 688 180 – 868
Ms. Li, Youxiang – 691 180 8 879
Mr. Xu Xiping – 296 35 8 339
Ms. Hu Yan – 686 180 8 874
Independent non-executive directors:
Mr. Chen Yong (note ii) 3 3––– 3 3
Dr. Gu Zhaoyang (note iii) 2 8––– 2 8
Dr. Huang Hanxiong 5 0––– 5 0
Dr. Li Jiannan 5 0––– 5 0
Supervisors:
Mr. Yip Hung Tung – 422 75 8 505
Mr. Shi Chuanlai – 348 138 8 494
Ms. Yi Hongliang – 280 80 8 368
161 6,129 1,048 48 7,386
Notes:
(i) The discretionary bonus is determined based on the Group’s performance, performance of the relevant
individual within the Group and comparable market statistics.
(ii) Mr. Chen Yong resigned as an independent non-executive director of the Company on 4 September 2024.
(iii) Dr. Gu Zhaoyang was appointed as an independent director of the Company on 5 September 2024 and
redesignated as an independent non-executive director on 24 September 2024.
The executive directors’ emoluments shown above were paid for their services in connection with the
management of affairs of the Group and the Company during the Track Record Period.
The independent non-executive directors’ emoluments shown above were for their services as directors of the
Company.
The supervisors’ emoluments shown above were for their services as supervisors of the Company.
During the Track Record Period, none of the directors nor the supervisors of the Company had waived any
emoluments.
APPENDIX I ACCOUNTANTS’ REPORT
– I-34 –


--- page 482 ---
14. FIVE HIGHEST PAID EMPLOYEES
The five highest paid individuals of the Group included four, four and four directors during the years ended 31
December 2022, 2023 and 2024, respectively, details of whose remuneration are set out above. Details of the
remuneration for the remaining one, one and one highest paid individual during the years ended 31 December 2022,
2023 and 2024, respectively, are as follows:
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Salaries, bonus and other allowances 616 702 861
Discretionary bonus 40 100 200
Retirement benefit scheme contributions 5 5 8
661 807 1,069
The number of the highest paid employees who are not the directors or supervisors whose remuneration fell
within the following bands is as follows:
Y ear ended 31 December
2022 2023 2024
No. of
employees
No. of
employees
No. of
employees
Emolument bands
Nil to Hong Kong dollar (“ HK$”)1,000,000 1 1 –
HK$1,000,000 to HK$1,500,000 – – 1
111
No emoluments had been paid by the Group to any of the directors or the supervisors or the five highest paid
individuals as an inducement to join or upon joining the Group or as compensation for loss of office.
15. DIVIDENDS
No dividend was paid or proposed by the Company and its subsidiaries during the Track Record Period.
APPENDIX I ACCOUNTANTS’ REPORT
– I-35 –


--- page 483 ---
16. EARNINGS PER SHARE
The calculation of the basic earnings per share attributable to owners of the Company is based on the following
data:
Earnings figures are calculated as follows:
Y ear ended 31 December
2022 2023 2024
Profit for the year attributable to owners of the
Company for basic earnings per share (RMB’000) 80,261 121,462 140,425
Number of shares:
Weighted average number of ordinary shares for the
purpose of basic earnings per share (’000) 204,660 204,660 204,660
No diluted earnings per share for the Track Record Period were presented as there were no potential ordinary
shares in issue for the Track Record Period.
APPENDIX I ACCOUNTANTS’ REPORT
– I-36 –


--- page 484 ---
17. PROPERTY, PLANT AND EQUIPMENT
The Group
Buildings
Machinery
and
equipment
Motor
vehicles
Electronic
equipment
Leasehold
improvement
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
COST
At 1 January 2022 156,752 365,870 14,909 26,855 15,529 18,503 598,418
Additions – 12,410 166 523 426 126,208 139,733
Transfers – 7,45 2––– (7,452) –
Transfers from investment properties (Note 19) 4,21 9––––– 4,219
Transfers to investment properties (Note 19) (2,083) ––––– (2,083)
Disposals – (7,366) (284) (354) – – (8,004)
Exchange adjustments – – 13 5––– 1 3 5
At 31 December 2022 158,888 378,366 14,926 27,024 15,955 137,259 732,418
Additions – 16,436 626 1,538 1,192 148,435 168,227
Transfers – 8,39 8––– (8,398) –
Transfers to investment properties (Note 19) (16,272) ––––– (16,272)
Disposals (586) (7,230) (792) (550) – – (9,158)
Exchange adjustments – – 2 7––– 2 7
At 31 December 2023 142,030 395,970 14,787 28,012 17,147 277,296 875,242
Additions 11,564 26,453 1,075 1,624 1,298 72,692 114,706
Transfers 327,594 20,11 3––– (347,707) –
Disposals – (2,688) (614) (305) – – (3,607)
Exchange adjustments – (15) 24 (2) – – 7
At 31 December 2024 481,188 439,833 15,272 29,329 18,445 2,281 986,348
DEPRECIATION AND IMPAIRMENT
At 1 January 2022 53,493 270,352 9,823 21,695 13,213 – 368,576
Provided for the year 7,105 35,170 1,489 1,867 1,507 – 47,138
Transfers from investment properties (Note 19) 1,67 0––––– 1,670
Transfers to investment properties (Note 19) (1,979) ––––– (1,979)
Eliminated on disposals – (5,105) (269) (324) – – (5,698)
Exchange adjustments – – 3 5––– 3 5
At 31 December 2022 60,289 300,417 11,078 23,238 14,720 – 409,742
Provided for the year 6,582 30,011 1,074 1,309 1,039 – 40,015
Transfers to investment properties (Note 19) (1,258) ––––– (1,258)
Eliminated on disposals (557) (5,183) (752) (523) – – (7,015)
Exchange adjustments – – 1 2––– 1 2
At 31 December 2023 65,056 325,245 11,412 24,024 15,759 – 441,496
Provided for the year 14,078 26,872 1,093 1,064 761 - 43,868
Eliminated on disposals – (1,911) (558) (286) – – (2,755)
Exchange adjustments – (1) 16 (1) – – 14
At 31 December 2024 79,134 350,205 11,963 24,801 16,520 – 482,623
CARRYING V ALUES
At 31 December 2022 98,599 77,949 3,848 3,786 1,235 137,259 322,676
At 31 December 2023 76,974 70,725 3,375 3,988 1,388 277,296 433,746
At 31 December 2024 402,054 89,628 3,309 4,528 1,925 2,281 503,725
APPENDIX I ACCOUNTANTS’ REPORT
– I-37 –


--- page 485 ---
The Company
Buildings
Machinery
and
equipment
Motor
vehicles
Electronic
equipment
Leasehold
improvement Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
COST
At 1 January 2022 114,920 91,012 2,303 11,166 481 219,882
Additions – 5,562 11 109 – 5,682
Transfers from investment properties (Note 19) 4,21 9–––– 4,219
Disposals – (646) (66) (267) – (979)
At 31 December 2022 119,139 95,928 2,248 11,008 481 228,804
Additions – 5,749 – 591 791 7,131
Disposals (586) (1,642) – (308) – (2,536)
At 31 December 2023 118,553 100,035 2,248 11,291 1,272 233,399
Additions – 2,449 – 195 1,208 3,852
Disposals – (983) – – – (983)
At 31 December 2024 118,553 101,501 2,248 11,486 2,480 236,268
DEPRECIATION AND IMPAIRMENT
At 1 January 2022 38,863 71,233 1,809 9,694 467 122,066
Provided for the year 5,548 7,503 158 578 14 13,801
Transfers from investment properties (Note 19) 1,67 0–––– 1,670
Eliminated on disposals – (466) (63) (251) – (780)
At 31 December 2022 46,081 78,270 1,904 10,021 481 136,757
Provided for the year 5,631 6,402 118 298 150 12,599
Eliminated on disposals (557) (1,519) – (292) – (2,368)
At 31 December 2023 51,155 83,153 2,022 10,027 631 146,988
Provided for the year 5,631 4,670 70 272 313 10,956
Eliminated on disposals – (848) – – – (848)
At 31 December 2024 56,786 86,975 2,092 10,299 944 157,096
CARRYING V ALUES
At 31 December 2022 73,058 17,658 344 987 – 92,047
At 31 December 2023 67,398 16,882 226 1,264 641 86,411
At 31 December 2024 61,767 14,526 156 1,187 1,536 79,172
APPENDIX I ACCOUNTANTS’ REPORT
– I-38 –


--- page 486 ---
The Group’s and the Company’s property, plant and equipment are stated at cost less subsequent
accumulated depreciation and accumulated impairment losses, if any.
Transfers to, or from, investment property are made when, and only when, there is a change in use,
evidenced by (i) commencement of owner-occupation, for a transfer from investment property to owner-occupied
property; (ii) end of owner-occupation, for a transfer from owner-occupied property to investment property.
The above items of property, plant and equipment except for construction in progress are depreciated on a
straight-line basis over the useful lives as follows:
Buildings 20 years
Machinery and equipment 3 to 10 years
Motor vehicles 8 years
Electronic equipment 3 to 5 years
Leasehold improvement Over the shorter of lease term or 5 years
The Group is in the process of obtaining the property ownership certificates of buildings with carrying
amounts of nil, nil, and RMB331,424,000 as at 31 December 2022, 2023 and 2024, respectively.
Details of the pledged property, plant and equipment are disclosed in Note 28.
18. RIGHT-OF-USE ASSETS
The Group
Leasehold
lands
Leased
properties Total
RMB’000 RMB’000 RMB’000
As at 31 December 2022
Carrying amounts 53,704 57,750 111,454
As at 31 December 2023
Carrying amounts 52,479 67,363 119,842
As at 31 December 2024
Carrying amounts 51,254 48,750 100,004
APPENDIX I ACCOUNTANTS’ REPORT
– I-39 –


--- page 487 ---
Leasehold
lands
Leased
properties Total
RMB’000 RMB’000 RMB’000
For the year ended 31 December 2022
Depreciation charge 1,225 23,250 24,475
Capitalised in construction in progress (740) – (740)
485 23,250 23,735
For the year ended 31 December 2023
Depreciation charge 1,225 24,457 25,682
Capitalised in construction in progress (741) – (741)
484 24,457 24,941
For the year ended 31 December 2024
Depreciation charge 1,225 25,955 27,180
Capitalised in construction in progress (308) – (308)
917 25,955 26,872
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Expense relating to short-term leases 1,481 670 548
Total cash outflow for leases 26,724 26,494 28,095
Addition to right-of-use assets 63,528 34,121 7,298
APPENDIX I ACCOUNTANTS’ REPORT
– I-40 –


--- page 488 ---
The Company
Leasehold
land
Leased
properties Total
RMB’000 RMB’000 RMB’000
As at 31 December 2022
Carrying amounts 14,964 68 15,032
As at 31 December 2023
Carrying amounts 14,586 71 14,657
As at 31 December 2024
Carrying amounts 14,208 70 14,278
For the year ended 31 December 2022
Depreciation charge 378 820 1,198
For the year ended 31 December 2023
Depreciation charge 378 854 1,232
For the year ended 31 December 2024
Depreciation charge 378 857 1,235
The Group and the Company lease warehouses and various offices for its operations. Lease terms are
negotiated by the Group and the Company on an individual basis and contain a wide range of different terms and
conditions. The terms are fixed with various period, from 1 to 10 years. In determining the lease term and
assessing the length of the non-cancellable period, the Group and the Company apply the definition of a contract
and determines the period for which the contract is enforceable.
The Group regularly entered into short-term leases for staff quarters and warehouses. As at 31 December
2022, 2023 and 2024, the portfolio of short-term leases is similar to the portfolio of short-term leases to which
the short-term lease expense disclosed above.
In addition, the Group and the Company own several industrial buildings where its manufacturing facilities
are primarily located and office buildings. The Group and the Company are the registered owner of these
property interests, including underlying leasehold lands. Lump sum payments were made upfront to acquire these
property interests. The leasehold land components of these owned properties are presented separately, for which
the Group and the Company have obtained the land use right certificates. Details of the pledged leasehold lands
are disclosed in Note 28.
The lease agreements do not impose any covenants other than the security interests in the leased assets
that are held by the lessor. Leased properties may not be used as security for borrowing purposes.
APPENDIX I ACCOUNTANTS’ REPORT
– I-41 –


--- page 489 ---
19. INVESTMENT PROPERTIES
The Group
Investment
properties
RMB’000
COST
As at 1 January 2022 8,766
Transfers from property, plant and equipment (Note 17) 2,083
Transfers to property, plant and equipment (Note 17) (4,219)
As at 31 December 2022 6,630
Transfers from property, plant and equipment (Note 17) 16,272
As at 31 December 2023 and 31 December 2024 22,902
DEPRECIATION
As at 1 January 2022 4,352
Charge for the year 201
Transfers from property, plant and equipment (Note 17) 1,979
Transfers to property, plant and equipment (Note 17) (1,670)
As at 31 December 2022 4,862
Charge for the year 726
Transfers from property, plant and equipment (Note 17) 1,258
As at 31 December 2023 6,846
Charge for the year 890
As at 31 December 2024 7,736
IMPAIRMENT
As at 1 January 2022, 31 December 2022, 31 December 2023 –
Provided for the year 2,000
As at 31 December 2024 2,000
CARRYING V ALUES
At 31 December 2022 1,768
At 31 December 2023 16,056
At 31 December 2024 13,166
APPENDIX I ACCOUNTANTS’ REPORT
– I-42 –


--- page 490 ---
The Company
Investment
property
RMB’000
COST
As at 1 January 2022 6,682
Transfers to property, plant and equipment (Note 17) (4,219)
As at 31 December 2022, 31 December 2023 and 31 December 2024 2,463
DEPRECIATION
As at 1 January 2022 2,372
Charge for the year 201
Transfers to property, plant and equipment (Note 17) (1,670)
As at 31 December 2022 903
Charge for the year 117
As at 31 December 2023 1,020
Charge for the year 117
As at 31 December 2024 1,137
CARRYING V ALUES
At 31 December 2022 1,560
At 31 December 2023 1,443
At 31 December 2024 1,326
The above investment properties are measured using the cost model and represent office units and industrial
buildings located in the PRC and are depreciated on a straight-line basis over 20 years.
As at 31 December 2022, 2023 and 2024, the fair value of the Group’s investment properties are
RMB14,510,000, RMB26,420,000 and RMB24,150,000 and the fair value of the Company’s investment properties are
RMB3,640,000, RMB3,490,000 and RMB3,160,000, respectively. The fair value has been arrived at based on a
valuation carried out by an independent qualified professional valuer not connected with the Group.
The fair value was determined based on the income approach, taking into considerations the term value of the
property by capitalising the rental income over the existing lease terms and the reversionary value by capitalising the
current market rental income of the property until the end of the land use right terms. In estimating the fair value of the
property, the highest and best use of the property is their current use. The fair value of the Group’s investment property
as at 31 December 2022, 2023 and 2024 is grouped into Level 3 of fair value measurement. There has been no change
from the valuation technique used in the Track Record Period.
Details of the pledged investment properties of the Group are disclosed in Note 28.
APPENDIX I ACCOUNTANTS’ REPORT
– I-43 –


--- page 491 ---
20. INTANGIBLE ASSETS
The Group
Software
RMB’000
COST
As at 1 January 2022, 31 December 2022 and 31 December 2023 177
Additions 48
As at 31 December 2024 225
AMORTISATION
As at 1 January 2022 43
Charge for the year 18
As at 31 December 2022 61
Charge for the year 18
As at 31 December 2023 79
Charge for the year 21
As at 31 December 2024 100
CARRYING V ALUES
At 31 December 2022 116
At 31 December 2023 98
At 31 December 2024 125
The above intangible assets have finite useful lives. Such intangible assets are amortised on a straight-line basis
over the following periods:
Software 10 years
APPENDIX I ACCOUNTANTS’ REPORT
– I-44 –


--- page 492 ---
21. DEFERRED TAXATION
For the purpose of presentation in the consolidated statements of financial position, deferred tax assets and
liabilities have been offset. The following is the analysis of the deferred tax balances for financial reporting purposes:
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Deferred tax assets 13,648 14,103 14,482 2,304 3,625 1,837
The Group
Provision of
write-down
of
inventories
Provision
for
impairment
of property,
plant and
equipment
ECL
provision
Lease
liabilities
Right-of-
use assets Tax losses Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2022 4,187 2,102 1,727 4,588 (4,333) 3,276 928 12,475
Credit (charge) to profit or loss 1,131 (137) 282 10,393 (10,297) (51) (148) 1,173
At 31 December 2022 5,318 1,965 2,009 14,981 (14,630) 3,225 780 13,648
Credit (charge) to profit or loss 2,081 – 202 2,255 (1,942) (2,542) 401 455
At 31 December 2023 7,399 1,965 2,211 17,236 (16,572) 683 1,181 14,103
(Charge) credit to profit or loss (228) – (105) (4,428) 4,678 1,817 (1,355) 379
At 31 December 2024 7,171 1,965 2,106 12,808 (11,894) 2,500 (174) 14,482
APPENDIX I ACCOUNTANTS’ REPORT
– I-45 –


--- page 493 ---
The Company
Provision of
write-down
of
inventories
Provision
for
impairment
of property,
plant and
equipment
ECL
provision Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2022 508 1,121 2 654 2,285
(Charge) credit to profit or loss (74) (18) 250 (139) 19
At 31 December 2022 434 1,103 252 515 2,304
Credit to profit or loss 668 – 124 529 1,321
At 31 December 2023 1,102 1,103 376 1,044 3,625
Charge to profit or loss (426) – (141) (1,221) (1,788)
At 31 December 2024 676 1,103 235 (177) 1,837
The Group has unused tax losses of RMB21,179,000, RMB16,244,000 and RMB26,777,000 available for offset
against future profits as at 31 December 2022, 2023 and 2024, respectively. A deferred tax asset has been recognised in
respect of RMB12,899,000, RMB2,740,000 and RMB10,253,000 of such losses as at 31 December 2022, 2023 and
2024, respectively. No deferred tax asset has been recognised on the tax losses of remaining RMB8,280,000,
RMB13,504,000 and RMB16,524,000 of such losses as at 31 December 2022, 2023 and 2024, respectively due to the
unpredictability of future profit streams. The unrecognised tax losses with expiry dates are disclosed in the following
table.
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
2023 1,07 2–––––
2024 780 78 0––––
2025 2,264 1,878 1,73 2–––
2026 1,586 1,586 1,17 1–––
2027 2,578 2,578 2,24 3–––
2028 – 4,111 4,11 1–––
2029 – – 1,97 2–––
Indefinitely – 2,571 5,29 5–––
8,280 13,504 16,52 4–––
APPENDIX I ACCOUNTANTS’ REPORT
– I-46 –


--- page 494 ---
22. INVENTORIES
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Raw materials 69,211 62,323 75,195 25,225 12,171 16,241
Work in progress 67,265 63,978 74,869 13,987 11,815 19,753
Finished goods 43,209 41,865 64,942 8,024 5,698 12,206
Goods in transit 21,562 42,382 27,308 8,506 26,998 12,169
201,247 210,548 242,314 55,742 56,682 60,369
Less: provision (27,509) (36,933) (34,957) (2,891) (7,349) (4,506)
173,738 173,615 207,357 52,851 49,333 55,863
23. TRADE AND BILLS RECEIV ABLES/TRADE RECEIV ABLES AT FVTOCI
(a) Trade and bills receivables
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables 135,154 150,596 241,286 192,756 136,207 245,979
Bills receivable 16 8–––––
Less: allowance for
ECL (2,486) (4,503) (5,646) (1,676) (2,509) (1,570)
132,836 146,093 235,640 191,080 133,698 244,409
Details of the trade receivables for goods sold to the subsidiaries of the Company included in the table
above are set out in Note 37.
As at 1 January 2022, the carrying amount of trade and bills receivables net of allowance for ECL from
contracts with customers of the Group and the Company amounted to RMB203,782,000 and RMB124,817,000,
respectively.
APPENDIX I ACCOUNTANTS’ REPORT
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Ageing of trade receivables is prepared based on the dates of delivery of goods, which approximated the
respective revenue recognition dates, as follows:
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year 130,698 146,164 236,440 189,915 133,698 244,414
1–2 years 4,093 924 776 2,799 533 –
2–3 years 338 3,249 840 42 1,934 499
Over 3 years 25 259 3,230 – 42 1,066
135,154 150,596 241,286 192,756 136,207 245,979
The normal credit term to the customers ranged between 30 to 135 days.
As at 31 December 2022, 2023 and 2024, included in the Group’s trade receivables balance are debtors
with aggregate carrying amount of RMB25,664,000, RMB30,737,000 and RMB49,577,000 which are past due as
at the reporting date.
Out of the past due 90 days or more balances, RMB715,000, RMB223,000 and RMB2,462,000 is not
considered as in default due to the historical and expected subsequent repayment from the debtors and the
remaining trade receivables due 90 days or more amounting to RMB4,649,000, RMB4,149,000 and
RMB4,350,000 has become credit-impaired. The Group does not hold any collateral over these balances.
Details of the pledged trade receivables and impairment assessment of trade and bills receivables are set
out in Notes 28 and 36, respectively.
(b) Trade receivables at FVTOCI
The Group
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Trade receivables at FVTOCI 11,479 15,750 2,145
As at 1 January 2022, trade receivables at FVTOCI from contracts with customers amounted to
RMB25,123,000.
APPENDIX I ACCOUNTANTS’ REPORT
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The amounts represent the trade receivables that were held under the “hold to collect and sell” business
model, whose objective is achieved by both collecting contractual cash flows and factoring trade receivables to
the banks without recourse. Hence theses trade receivables are measured at FVTOCl. In the opinion of the
Directors, when the trade receivables are factored to banks, the Group transfers substantially all the risks and
rewards of ownership to banks, and accordingly the related trade receivables are derecognised. The ageing
analysis of the trade receivables at FVTOCI based on the dates of delivery of goods is as follows:
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Within 1 year 11,035 15,456 2,145
1–2 years 444 14 –
2–3 years – 280 –
11,479 15,750 2,145
24. PREPAYMENTS FOR NON-CURRENT ASSETS/PREPAYMENTS AND OTHER RECEIV ABLES
(a) Prepayments for non-current assets
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Prepayments for
purchase of
– Property, plant and
equipment 2,142 2,688 1,807 189 356 48
– Freehold land – – 15,875 – – –
2,142 2,688 17,682 189 356 48
APPENDIX I ACCOUNTANTS’ REPORT
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(b) Prepayments and other receivables
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Other tax recoverable 17,739 29,080 42,135 4,347 3,311 3,961
Prepayments 5,806 3,771 8,017 347 185 2,045
Prepaid professional fee 1,218 1,356 – 1,218 1,356 –
Deferred issue costs – – 15,085 – – 15,085
Receivables for payments
made on behalf of
customers – – 24,957 – – –
Receivables from suppliers
for litigation settlement 6,823 7,274 7,274 – – –
Rental and other deposits 3,916 4,442 6,150 369 369 1,927
Refundable deposits for
land use rights 2,000 2,000 2,000 2,000 2,000 2,000
Others 3,629 1,262 2,600 355 396 551
41,131 49,185 108,218 8,636 7,617 25,569
Less: allowance for ECL (7,026) (7,315) (7,355) – – –
34,105 41,870 100,863 8,636 7,617 25,569
Analysed for reporting
purposes as:
Current assets 30,598 37,837 96,669 8,486 7,467 25,419
Non-current assets 3,507 4,033 4,194 150 150 150
34,105 41,870 100,863 8,636 7,617 25,569
Details of impairment assessment of other receivables are set out in Note 36.
APPENDIX I ACCOUNTANTS’ REPORT
– I-50 –


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25. PLEDGED AND RESTRICTED BANK DEPOSITS AND BANK BALANCES AND CASH
The ranges of fixed interest rates/market rates on the pledged and restricted bank deposits/bank balances and
cash are as follows:
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
%%%%%%
Fixed-rate pledged and
restricted bank deposits 1.30 1.30 1.3 0–––
Variable-rate bank balances 0.00–1.76 0.00–4.30 0.00–4.25 0.01–1.76 0.01–4.30 0.01–4.25
The deposits amounting to RMB35,000,000, RMB35,000,000, and RMB35,000,000 have been pledged to banking
facilities with revolving credit and are therefore classified as non-current assets as at 31 December 2022, 2023 and
2024, respectively. The pledged bank deposits will be released upon the settlement of relevant borrowings or the end of
agreement period. The Group’s restricted bank deposits of RMB145,000 as at 31 December 2024 are frozen due to an
ongoing litigation case involving immaterial claims.
Details of impairment assessment and pledge of bank deposits are set out in Notes 36 and 28, respectively.
26. TRADE AND BILLS PAYABLES
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade payables 192,270 257,273 264,457 67,252 61,082 68,681
Bills payables 16,527 17,357 28,01 7–––
208,797 274,630 292,474 67,252 61,082 68,681
APPENDIX I ACCOUNTANTS’ REPORT
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The following is the ageing analysis of trade payables based on the date of goods and services received at the
end of each reporting period:
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year 186,790 254,672 262,081 65,094 60,464 68,191
1–2 years 3,572 371 104 1,574 159 13
2–3 years 344 558 251 23 166 21
Over 3 years 1,564 1,672 2,021 561 293 456
192,270 257,273 264,457 67,252 61,082 68,681
The credit period on purchases of goods and services of the Group and Company is within 120 days. All the bills
payable with maturity within one year.
27. OTHER PAYABLES AND ACCRUALS
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Accrued employees’
benefits 17,310 21,201 23,020 5,253 6,270 6,786
Payables for acquisition of
property, plant and
equipment 31,493 70,270 15,916 3,613 1,821 720
Other accrued charges 4,869 4,813 6,434 1,496 2,255 1,851
Settlement payables to
suppliers on behalf of
customers 5,113 2,009 4,68 8–––
Other taxes payable 4,108 3,607 2,766 1,703 1,077 1,098
Deposits received 757 929 871 284 345 222
Accrued issue costs – – 4,775 – – 4,775
Others 322 401 436 90 75 10
63,972 103,230 58,906 12,439 11,843 15,462
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 500 ---
28. BORROWINGS
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Bank loans:
Secured and guaranteed 122,856 183,417 154,918 17,299 – –
Unsecured and guaranteed 57,568 63,379 – 35,170 38,378 28,426
Secured and unguaranteed – – 75,06 3–––
Unsecured and
unguaranteed – – 93,110 – – 28,722
180,424 246,796 323,091 52,469 38,378 57,148
The carrying amounts of
the above borrowings are
repayable*:
– Within one year 115,112 129,294 207,055 52,469 38,378 57,148
– Within a period of
more than one year
but not exceeding
two years 13,062 29,375 38,67 9–––
– Within a period of
more than two years
but not exceeding
five years 39,187 88,127 77,35 7–––
– Within a period of
more than five years 13,06 3–––––
180,424 246,796 323,091 52,469 38,378 57,148
Less: amounts due within
one year shown
under current
liabilities (115,112) (129,294) (207,055) (52,469) (38,378) (57,148)
Amounts shown under
non-current liabilities 65,312 117,502 116,03 6–––
* The amounts due are based on scheduled repayment dates set out in the loan agreements.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 501 ---
The exposure of the borrowings are as follows:
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Fixed-rate borrowings 112,256 103,676 168,173 52,469 38,378 57,148
Variable-rate borrowings 68,168 143,120 154,91 8–––
180,424 246,796 323,091 52,469 38,378 57,148
The Group’s variable-rate borrowings carry interest at Loan Prime Rate (“ LPR”). Interest is reset every 12
months.
The range of effective interest rates (which are also equal to contracted interest rates) on the borrowings is as
follows:
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
%%%%%%
Effective interest rate:
Fixed-rate borrowings 4.35–10.89 3.90–6.83 2.80–5.99 4.35–5.45 4.30–4.40 2.80–3.45
Variable-rate borrowings 4.30–4.45 4.20 3.35–3.9 5–––
The borrowings had been secured by the pledge of the Group’s and the Company’s assets. The carrying amounts
of the respective assets are as follows:
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Bank deposits 35,000 35,000 35,00 0–––
Trade receivables 19,581 6,577 9,20 1–––
Property, plant and
equipment 219,591 352,868 376,014 73,058 67,397 36,550
Investment properties 1,768 1,651 208 1,560 1,443 –
Leasehold lands 52,675 51,492 46,163 14,964 14,586 10,060
328,615 447,588 466,586 89,582 83,426 46,610
Note: The Company’s pledged assets as at 31 December 2023 and 2024 were pledged for bank loans of its
subsidiaries. The Company’s pledged assets as at 31 December 2022 were for bank loans of the Company
and its subsidiaries.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 502 ---
Details of the guarantees for the borrowings are as follows:
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Maximum amounts under
banking facilities
guaranteed by:
Mr. Pan Yun and/or
Ms. Cao Chengling
(note) 895,027 868,274 400,000 173,500 173,500 –
Note: Ms. Cao Chengling is the spouse of Mr. Pan Yun, one of the Controlling shareholders.
The guarantees for the borrowings provided by Mr. Pan Yun and/or Ms. Cao Chengling as at 31 December 2024
were released in January 2025.
Certain of the Company’s borrowings at the end of each reporting period are guaranteed by certain subsidiaries.
The Group’s borrowings that are denominated in currencies other the functional currencies of the relevant group
entities are set out below:
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
United States Dollars
(“US$”) 13,875 4,867 6,53 2–––
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 503 ---
29. LEASE LIABILITIES
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Lease liabilities payable:
Within one year 19,679 23,636 19,806 70 73 73
Within a period of more
than one year but not
more than two years 19,269 17,152 12,74 0–––
Within a period of more
than two years but not
more than five years 20,174 21,061 14,13 0–––
Over five years – 8,133 5,82 3–––
59,122 69,982 52,499 70 73 73
Less: amount due for
settlement within
12 months shown
under current
liabilities (19,679) (23,636) (19,806) (70) (73) (73)
Amount due for settlement
after 12 months shown
under non-current
liabilities 39,443 46,346 32,69 3–––
The weighted average incremental borrowing rates applied to lease liabilities is 4.80%, 4.80% and 4.65% as at
31 December 2022, 2023 and 2024, respectively.
30. CONTRACT LIABILITIES
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Sales of goods 36,261 59,338 43,508 21,214 314 175
As at 1 January 2022, the Group’s and the Company’s contract liabilities amounted to RMB46,497,000 and
RMB7,018,000, respectively.
Revenue recognised during each reporting period with performance obligation satisfied includes the entire
amount of contract liability at the beginning of each reporting period.
Details of the contract liabilities for goods sold to the subsidiaries of the Company included in the table above
are set out in Note 37.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 504 ---
31. DEFERRED INCOME
The Group The Company
As at 31 December As at 31 December
2022 2023 2024 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Assets-related government
subsidies 2,534 2,371 2,208 2,534 2,371 2,208
Less: amount due for
settlement within
12 months shown
under current
liabilities (163) (163) (163) (163) (163) (163)
2,371 2,208 2,045 2,371 2,208 2,045
Deferred income consists of government grants provided by the relevant PRC government authorities for the
purposes of financing the purchase of buildings and machinery and the related expenses to be incurred for the
development of new products or technology. The amounts are recognised as income to match with related expenses or
on systematic basis over the useful lives of the relevant assets upon completing inspection by the related government
authorities.
32. SHARE CAPITAL
Number of
shares Share capital
RMB’000
Ordinary shares of RMB1 each
Registered, issued and fully paid
At 1 January 2022, 31 December 2022, 31 December 2023 and
31 December 2024 204,659,509 204,660
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 505 ---
Reserves of the Company:
Below table sets out the details of the reserves of the Company:
Share
premium
Capital
reserve
(note)
Statutory
reserve
Retained
profits Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2022 112,713 171,137 8,125 73,255 365,230
Profit for the year – – – 54,302 54,302
Transfer to statutory reserve – – 5,943 (5,943) –
At 31 December 2022 112,713 171,137 14,068 121,614 419,532
Profit for the year – – – 67,410 67,410
Transfer to statutory reserve – – 7,045 (7,045) –
At 31 December 2023 112,713 171,137 21,113 181,979 486,942
Profit for the year – – – 75,413 75,413
Transfer to statutory reserve – – 7,542 (7,542) –
At 31 December 2024 112,713 171,137 28,655 249,850 562,355
Note: Capital reserve of the Company represents deemed contribution from certain shareholders of the
Company, including (i) the difference between the aggregated net asset values of certain subsidiaries
acquired under common control in 2016 and the aggregated consideration paid; and (ii) waiver of an
amount due to the controlling shareholder of the Company of RMB2,502,000 during the year ended 31
December 2021.
33. CAPITAL COMMITMENTS
The Group
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Capital expenditure contracted for but not provided for
in the Historical Financial Information
– Property, plant and equipment 208,223 86,947 20,224
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 506 ---
34. RETIREMENT BENEFIT SCHEME
The employees of the Group’s subsidiaries in the PRC are members of a state-managed defined contribution
retirement scheme operated by the PRC government. The PRC subsidiary is required to contribute a certain percentage
of their payroll to the retirement benefit scheme subject to certain cap as governed by the social fund bureau. The only
obligation of the Group with respect to the retirement benefit scheme is to make the required contributions under the
scheme.
A subsidiary in the U.S. maintains multiple qualified contributory savings plans as allowed under Section 401(k)
of the Internal Revenue Code in the U.S.. These plans are defined contribution plans covering substantially all its
qualifying employees and provide for voluntary contributions by employees, subject to certain limits. The contributions
are made by both the employees and the employer. The employees’ contributions are primarily based on specified
dollar amounts or percentages of employee compensation. The employer’s contributions are primarily based on the
smaller of three percent of the employees’ compensation and the half of the employees’ contributions.
The total retirement benefits scheme contributions to those plans recognised as employee benefit charged to
profit or loss and capitalised as inventories, amounting to RMB13,304,000, RMB12,761,000 and RMB18,735,000 for
each of the three years ended 31 December 2022, 2023 and 2024, respectively, representing contributions paid to the
retirement benefits scheme by the Group.
35. CAPITAL RISK MANAGEMENT
The Group and the Company manages its capital to ensure that entities in the Group and the Company will be
able to continue as a going concern with maximising the return to shareholders through the optimisation of the debt and
equity balance. The Group’s and the Company’s overall strategy remains unchanged during the Track Record Period.
The capital structure of the Group and the Company consists of net debts, which includes the borrowings and
lease liabilities disclosed in Notes 28 and 29, respectively, net of bank balances and cash and total equity, mainly
comprising issued share capital, share premium and retained profits.
The management reviews the capital structure on a regular basis. As part of this review, the management
considers the cost of capital and the risks associated with the capital. Based on recommendations of the management,
the Group will balance its overall capital structure through the payment of dividends, new share issues and share
buy-backs as well as the issue of new debt or the redemption of existing debt.
APPENDIX I ACCOUNTANTS’ REPORT
– I-59 –


--- page 507 ---
36. FINANCIAL INSTRUMENTS
(a) Categories of financial instruments
The Group
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Financial assets
Amortised cost 558,738 737,094 780,565
Trade receivables at FVTOCI 11,479 15,750 2,145
570,217 752,844 782,710
Financial liabilities
Amortised cost 431,775 599,848 648,685
The Company
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Financial assets
Amortised cost 264,712 315,950 397,445
Financial liabilities
Amortised cost 147,125 141,028 307,086
(b) Financial risk management objectives and policies
The Group’s major financial instruments include trade and bills receivables, trade receivables at FVTOCI,
other receivables, pledged and restricted bank deposits, bank balances and cash, trade and bills payables, other
payables and borrowings. The Company’s major financial instruments include trade and bills receivables, other
receivables, amounts due from subsidiaries, bank balances and cash, trade and bills payables, other payables,
amounts due to subsidiaries and borrowings. Details of the financial instruments are disclosed in respective
notes. The risks associated with these financial instruments include market risk (currency risk and interest rate
risk), credit risk, and liquidity risk. The policies on how to mitigate these risks are set out below. The
management of the Group and the Company manages and monitors these exposures to ensure appropriate
measures are implemented in a timely and effective manner.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 508 ---
Market risk
(i) Currency risk
The Group’s and the Company’s exposure to foreign currency risk related primarily to bank balances
and cash, trade receivables, other receivables, trade payables, other payables and borrowings that are
denominated in HK$, US$ and Great Britain Pound (“ GBP”).
The carrying amounts of the Group’s and the Company’s foreign currencies denominated monetary
assets and liabilities at the end of each reporting period are as follows:
The Group
Assets
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
US$ 274,407 244,629 299,856
HK$ 413 430 442
274,820 245,059 300,298
Liabilities
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
US$ 19,302 7,059 11,369
GBP 1,384 2,019 –
20,686 9,078 11,369
The Company
Assets
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
US$ 172,097 148,364 255,455
HK$ 2 2 2
172,099 148,366 255,457
The Group and the Company currently do not have a foreign exchange hedging policy. However, the
management of the Group and the Company monitors foreign exchange exposure and will consider hedging
significant foreign exchange exposure should the need arise.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 509 ---
Sensitivity analysis
The following table details the Group’s and the Company’s sensitivity to a 5% increase and
decrease in RMB against US$. 5% is the sensitivity rate used when reporting foreign currency risk
internally to key management personnel and represents management’s assessment of the reasonably
possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign
currency denominate monetary items and adjusts their translation at the end of each reporting period
for a 5% change in foreign currency rates. A negative number below indicates an decrease in
post-tax profit where RMB strengthen 5% against US$. For a 5% weakening of RMB against US$
there would be an equal and opposite impact on the post-tax profit and the amounts below would be
positive.
The Group
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
US$ (10,037) (9,114) (11,943)
The Company
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
US$ (7,314) (6,305) (10,857)
During the Track Record Period, the currency exposure of RMB against HK$ and GBP is
immaterial, and accordingly, no sensitivity analysis is disclosed.
(ii) Interest risk
The Group and the Company are exposed to fair value interest rate risk in relation to pledged and
restricted bank deposits (see Note 25), fixed-rate bank borrowings (see Note 28 for details of these
borrowings) and lease liabilities (see Note 29 for details). The Group and the Company are exposed to
cash flow interest rate risk in relation to variable-rate bank balances (see Note 25 for details).
Furthermore, the Group is exposed to cash flow interest rate risk in relation to variable-rate bank
borrowings (see Note 28 for details). The cash flow interest rate risk is mainly concentrated on the
fluctuation of interest rates on bank balances of the Group and the Company and LPR arising from the
Group’s borrowings. The Group aims at keeping borrowings at variable rates. The Group manages its
interest rate exposures by assessing the potential impact arising from any interest rate movements based on
interest rate level and outlook. The management will review the proportion of borrowings in fixed and
floating rates and ensure they are within reasonable range.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 510 ---
Sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates at
the end of each reporting period. The analysis is prepared assuming the financial instruments
outstanding at the end of the reporting period were outstanding for the whole year. A 50 basis point
increase or decrease in variable-rate bank borrowings are used when reporting interest rate risk
internally to key management personnel and represents management’s assessment of the reasonably
possible change in interest rates. Bank balances are excluded from sensitivity analysis as the
management considers that the exposure of cash flow interest rate risk arising from variable-rate
bank balances is insignificant.
If interest rates had been 50 basis point higher/lower and all other variables were held
constant, the Group’s post-tax profit for the year would decrease/increase by RMB256,000,
RMB537,000 and RMB581,000 for the years ended 31 December, 2022, 2023 and 2024,
respectively. This is mainly attributable to the Group’s exposure to interest rates on its variable-rate
borrowings.
Credit risk and impairment assessment
Credit risk refers to the risk that the Group’s and the Company’s counterparties default on their
contractual obligations resulting in financial losses to the Group and the Company. The Group’s and the
Company’s credit risk exposures are primarily attributable to trade and bills receivables, trade receivables
at FVTOCI, pledged and restricted bank deposits, bank balances, other receivables and amounts due from
subsidiaries. The Group does not hold any collateral or other credit enhancements to cover its credit risks
associated with its financial assets.
Trade receivables arising from contracts with customers and trade receivables at FVTOCI
In order to minimise the credit risk, the management of the Group has delegated a team responsible
for determination of credit limits, credit approvals and other monitoring procedures to ensure that
follow-up action is taken to recover overdue debts. In this regard, the management considers that the
Group’s credit risk is significantly reduced.
The Group’s concentration of credit risk by shipping destination is mainly in North America, which
accounted for 76%, 74% and 79% of the total trade receivables as at 31 December 2022, 2023 and 2024,
respectively. The Group has concentration of credit risk as 49%, 29% and 40% of the total trade
receivables was due from the Group’s largest customer as at 31 December 2022, 2023 and 2024,
respectively. The Group has concentration of credit risk as 89%, 80% and 82% of the total trade
receivables was due from the Group’s five largest customers as at 31 December 2022, 2023 and 2024,
respectively.
For trade receivables, the Group has applied the simplified approach of IFRS 9 to measure the loss
allowance at lifetime ECL. Except for items that are subject to individual evaluation, which are assessed
for impairment individually, the remaining trade receivables are grouped based on shared credit risk
characteristics by reference to the Group’s ageing of outstanding balances. Details of the quantitative
disclosures are set out below in this note.
APPENDIX I ACCOUNTANTS’ REPORT
– I-63 –


--- page 511 ---
Bills receivables
Bills receivables were all bank-issued notes. Since the issuers were reputable banks of good credit
quality, the management of the Group considered the credit risk of these bank issued bills is insignificant
and no impairment was provided on them for the year ended 31 December 2022.
Other receivables
For other receivables, the management makes periodic individual assessment on the recoverability of
other receivables based on historical settlement records, past experience, and also quantitative and
qualitative information that is reasonable and supportive forward-looking information. The management
believes that there are no significant increase in credit risk of these amounts since initial recognition and
the Group and the Company provided impairment based on 12m ECL except for certain other receivables
have been measured based on lifetime ECL with significant increase in credit risk or credit-impaired.
Details of the quantitative disclosures are set out below in this note.
Pledged and restricted bank deposits/bank balances
Credit risk on pledged and restricted bank deposits/bank balances is limited because the
counterparties are reputable banks with high credit ratings assigned by credit agencies. The Group and the
Company assessed 12m ECL for pledged and restricted bank deposits/bank balances by reference to
information relating to probability of default and loss given default of the respective credit rating grades
published by external credit rating agencies. Based on the average loss rates, the 12m ECL on pledged and
restricted bank deposits/bank balances is considered to be insignificant and therefore no loss allowance
was recognised.
The Group’s and the Company’s internal credit risk grading assessment comprises the following
categories:
Internal
credit rating Description Trade receivables
Financial assets other
than trade receivables
Low risk The counterparty has a low risk of default Lifetime ECL –
not credit-impaired
12m ECL
Doubtful There have been significant increases in
credit risk since initial recognition through
information developed internally or
external resources
Lifetime ECL –
not credit-impaired
Lifetime ECL –
not credit-impaired
Loss There is evidence indicating the asset is
credit-impaired
Lifetime ECL –
credit-impaired
Lifetime ECL –
credit-impaired
Write-off There is evidence indicating that the debtor is
in severe financial difficulty and the Group
and the Company has no realistic prospect
of recovery
Amount is written off Amount is written off
APPENDIX I ACCOUNTANTS’ REPORT
– I-64 –


--- page 512 ---
The tables below detail the credit risk exposures of the Group’s and the Company’s financial assets,
which are subject to ECL assessment:
The Group
As at 31 December 2022
External/
internal
credit rating
12m or
lifetime ECL
Average loss
rate
Gross carrying
amount
Impairment
loss allowance
RMB’000 RMB’000
Debt instruments at
FVTOCI
Trade receivables at
FVTOCI
note ii 12m ECL 1.11% 11,608 129
Financial assets at
amortised cost
Bank balances AAA/BBB+
note i
12m ECL N/A 381,560 –
Pledged and restricted
bank deposits
AAA/BBB+
note i
12m ECL N/A 35,000 –
Trade receivables note ii Lifetime ECL (not
credit-impaired)
0.11% 130,505 149
Lifetime ECL
(credit-impaired)
50.27% 4,649 2,337
Bills receivables note i 12m ECL N/A 168 –
Other receivables note iii 12m ECL (not
credit-impaired)
N/A 9,342 –
Lifetime ECL
(credit-impaired)
100.00% 7,026 7,026
568,250 9,512
APPENDIX I ACCOUNTANTS’ REPORT
– I-65 –


--- page 513 ---
As at 31 December 2023
External/
internal
credit rating
12m or
lifetime ECL
Average loss
rate
Gross carrying
amount
Impairment
loss allowance
RMB’000 RMB’000
Debt instruments at
FVTOCI
Trade receivables at
FVTOCI
note ii 12m ECL 1.99% 16,069 319
Financial assets at
amortised cost
Bank balances AAA/BBB+
note i
12m ECL N/A 548,338 –
Pledged and restricted
bank deposits
AAA/BBB+
note i
12m ECL N/A 35,000 –
Trade receivables note ii Lifetime ECL (not
credit-impaired)
0.24% 146,447 354
Lifetime ECL
(credit-impaired)
100.00% 4,149 4,149
Other receivables note iii 12m ECL (not
credit-impaired)
N/A 7,663 –
Lifetime ECL
(credit-impaired)
100.00% 7,315 7,315
748,912 11,818
APPENDIX I ACCOUNTANTS’ REPORT
– I-66 –


--- page 514 ---
As at 31 December 2024
External/
internal
credit rating
12m or
lifetime ECL
Average loss
rate
Gross carrying
amount
Impairment
loss allowance
RMB’000 RMB’000
Debt instruments at
FVTOCI
Trade receivables at
FVTOCI
note ii 12m ECL 0.05% 2,166 1
Financial assets at
amortised cost
Bank balances AAA/BBB+
note i
12m ECL N/A 474,154 –
Pledged and restricted
bank deposits
AAA/BBB+
note i
12m ECL N/A 35,145 –
Trade receivables note ii Lifetime ECL (not
credit-impaired)
0.55% 236,936 1,296
Lifetime ECL
(credit-impaired)
100.00% 4,350 4,350
Other receivables note iii 12m ECL (not
credit-impaired)
N/A 35,626 –
Lifetime ECL
(credit-impaired)
100.00% 7,355 7,355
793,566 13,001
APPENDIX I ACCOUNTANTS’ REPORT
– I-67 –


--- page 515 ---
The Company
As at 31 December 2022
External/
internal
credit rating
12m or
lifetime ECL
Average loss
rate
Gross carrying
amount
Impairment
loss allowance
RMB’000 RMB’000
Financial assets at
amortised cost
Bank balances AAA/BBB+
note i
12m ECL N/A 26,332 –
Amounts due from
subsidiaries
note iii 12m ECL N/A 44,576 –
Trade receivables note ii Lifetime ECL
(not credit-impaired)
0.01% 189,424 11
Lifetime ECL
(credit-impaired)
49.97% 3,332 1,665
Other receivables note iii 12m ECL
(not credit-impaired)
N/A 2,724 –
266,388 1,676
As at 31 December 2023
External/
internal
credit rating
12m or
lifetime ECL
Average loss
rate
Gross carrying
amount
Impairment
loss allowance
RMB’000 RMB’000
Financial assets at
amortised cost
Bank balances AAA/BBB+
note i
12m ECL N/A 104,157 –
Amounts due from
subsidiaries
note iii 12m ECL N/A 75,330 –
Trade receivables note ii Lifetime ECL
(not credit-impaired)
N/A 133,698 –
Lifetime ECL
(credit-impaired)
100.00% 2,509 2,509
Other receivables note iii 12m ECL
(not credit-impaired)
N/A 2,765 –
318,459 2,509
APPENDIX I ACCOUNTANTS’ REPORT
– I-68 –


--- page 516 ---
As at 31 December 2024
External/
internal
credit rating
12m or
lifetime ECL
Average loss
rate
Gross carrying
amount
Impairment
loss allowance
RMB’000 RMB’000
Financial assets at
amortised cost
Bank balances AAA/BBB+
note i
12m ECL N/A 115,592 –
Amounts due from
subsidiaries
note iii 12m ECL N/A 32,966 –
Trade receivables note ii Lifetime ECL
(not credit-impaired)
0.002% 244,415 6
Lifetime ECL
(credit-impaired)
100.00% 1,564 1,564
Other receivables note iii 12m ECL
(not credit-impaired)
N/A 4,478 –
399,015 1,570
Notes:
(i) The counterparties are reputable banks with high credit ratings and the risk of default on
liquid funds is limited.
(ii) For trade receivables, the Group and the Company applied the simplified approach in IFRS 9
to measure the loss allowance at lifetime ECL. Except for receivables from debtors with
significant balances or credit-impaired, which are assessed individually, the Group and the
Company determine the ECL on the remaining trade receivables on a collective basis using
provision matrix, grouped by the ageing of the trade receivables. As part of the Group’s credit
risk management, the Group uses the ageing of the trade receivables to assess the impairment
for its trade receivables in relation to its operation because these customers have common risk
characteristics that are representative of the customers’ abilities to pay all amounts due in
accordance with the contractual terms. The Group’s trade receivables at amortised cost with
significant balances or credit-impaired with gross carrying amounts of RMB109,287,000,
RMB113,011,000 and RMB189,887,000 as at 31 December 2022, 2023 and 2024, respectively,
were assessed individually. The remaining trade receivables are assessed based on provision
matrix, and the impairment losses recognised were insignificant.
The estimated loss rates used in the provision matrix are estimated based on historical credit
loss experience of debtors taking into consideration the historical default rates and are
adjusted for forward-looking information that is available without undue cost or effort. The
grouping is regularly reviewed by management to ensure relevant information about specific
debtors is updated.
The Company’s trade receivables are mainly from the subsidiaries, as disclosed in Note 37.
Both the receivables from subsidiaries and the trade receivables that are credit-impaired are
assessed individually.
APPENDIX I ACCOUNTANTS’ REPORT
– I-69 –


--- page 517 ---
The following table shows the movement in lifetime ECL that has been recognised for trade
receivables under the simplified approach.
The Group
Lifetime
ECL not
credit-
impaired
Lifetime
ECL credit-
impaired Total
RMB’000 RMB’000 RMB’000
As at 1 January 2022 38 5 43
Transfer to credit-impaired (3) 3 –
Impairment loss recognised 119 2,331 2,450
Write-off – (2) (2)
Exchange adjustments (5) – (5)
As at 31 December 2022 149 2,337 2,486
Transfer to credit-impaired (59) 59 –
Impairment loss recognised 262 1,753 2,015
Exchange adjustments 2 – 2
As at 31 December 2023 354 4,149 4,503
Transfer to credit-impaired (6) 6 –
Impairment loss recognised 948 195 1,143
As at 31 December 2024 1,296 4,350 5,646
APPENDIX I ACCOUNTANTS’ REPORT
– I-70 –


--- page 518 ---
The Company
Lifetime
ECL not
credit-
impaired
Lifetime
ECL credit-
impaired Total
RMB’000 RMB’000 RMB’000
As at 1 January 2022 2 – 2
Impairment loss recognised 9 1,665 1,674
As at 31 December 2022 11 1,665 1,676
Transfer to credit-impaired (11) 11 –
Impairment loss recognised – 833 833
As at 31 December 2023 – 2,509 2,509
Impairment loss recognised (reversal) 6 (945) (939)
As at 31 December 2024 6 1,564 1,570
(iii) For the purposes of internal credit risk management, the ECL on other receivables of the
Group and the Company, as well as the non-trade amounts due from subsidiaries of the
Company, is assessed individually. All of the Group’s impairment losses are for other
receivables that are credit-impaired, which include the receivables from suppliers for litigation
settlement as disclosed in Note 24.
Liquidity risk
In the management of the liquidity risk, the Group and the Company monitor and maintains a level
of bank balances and cash deemed adequate by the management to finance the operations of the Group and
the Company, and mitigate the effects of fluctuations in cash flows. The management monitors the
utilisation of borrowings, if necessary.
The following table details the Group’s and the Company’s remaining contractual maturity for its
financial liabilities and lease liabilities. The table has been drawn up based on the undiscounted cash flows
of financial liabilities and lease liabilities based on the earliest date on which the Group can be required to
pay. The maturity dates for other non-derivative financial liabilities are based on the agreed repayment
dates.
APPENDIX I ACCOUNTANTS’ REPORT
– I-71 –


--- page 519 ---
The table includes both interest and principal cash flows. To the extent that interest flows are
floating rate, the undiscounted amount is derived based on management’s best estimates at the end of each
reporting period.
The Group
Weighted
average
effective
interest rate
On demand/
less than 1
year
1 year to 2
years
2 years to 5
years over 5 years
Total
undiscounted
cash flow
Carrying
amount
% RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 31 December 2022
Borrowings 5.11 120,006 16,108 43,659 13,390 193,163 180,424
Trade and bills payables – 208,79 7––– 208,797 208,797
Other payables – 42,55 4––– 42,554 42,554
Lease liabilities 4.80 21,981 20,656 20,966 – 63,603 59,122
393,338 36,764 64,625 13,390 508,117 490,897
As at 31 December 2023
Borrowings 4.27 166,222 33,944 94,209 – 294,375 246,796
Trade and bills payables – 274,63 0––– 274,630 274,630
Other payables – 78,42 2––– 78,422 78,422
Lease liabilities 4.80 26,369 18,859 23,379 9,011 77,618 69,982
545,643 52,803 117,588 9,011 725,045 669,830
As at 31 December 2024
Borrowings 3.63 215,170 43,494 81,825 – 340,489 323,091
Trade and bills payables – 292,47 4––– 292,474 292,474
Other payables – 33,12 0––– 33,120 33,120
Lease liabilities 4.65 21,741 13,935 15,647 6,373 57,696 52,499
562,505 57,429 97,472 6,373 723,779 701,184
APPENDIX I ACCOUNTANTS’ REPORT
– I-72 –


--- page 520 ---
The Company
Weighted
average
effective
interest rate
On demand/
less than 1
year
1 year to 2
years
2 years to 5
years over 5 years
Total
undiscounted
cash flow
Carrying
amount
% RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 31 December 2022
Borrowings 4.87 54,09 4––– 54,094 52,469
Trade and bills payables – 67,25 2––– 67,252 67,252
Other payables – 5,48 3––– 5,483 5,483
Amounts due to subsidiaries – 21,92 1––– 21,921 21,921
Lease liabilities 4.80 7 0––– 7 0 7 0
148,82 0––– 148,820 147,195
As at 31 December 2023
Borrowings 4.37 39,63 2––– 39,632 38,378
Trade and bills payables – 61,08 2––– 61,082 61,082
Other payables – 4,49 6––– 4,496 4,496
Amounts due to subsidiaries – 37,07 2––– 37,072 37,072
Lease liabilities 4.80 7 3––– 7 3 7 3
142,35 5––– 142,355 141,101
As at 31 December 2024
Borrowings 3.21 58,49 9––– 58,499 57,148
Trade and bills payables – 68,68 1––– 68,681 68,681
Other payables – 7,57 8––– 7,578 7,578
Amounts due to subsidiaries – 173,67 9––– 173,679 173,679
Lease liabilities 4.80 7 3––– 7 3 7 3
308,51 0––– 308,510 307,159
APPENDIX I ACCOUNTANTS’ REPORT
– I-73 –


--- page 521 ---
(c) Transfers of financial assets
The following shows the Group’s financial assets that were transferred to banks by discounting on a full
recourse basis. As the Group has not transferred the significant risks and rewards, it continues to recognise the
full carrying amount and has recognised the cash received on the transfer as a collateralised borrowing (see Note
28).
Trade receivables
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Carrying amount of transferred assets 19,581 6,577 9,201
Carrying amount of associated liabilities (13,875) (4,867) (6,532)
Net position 5,706 1,710 2,669
(d) Fair value measurements of financial instruments
Fair value of the Group’s financial assets measured at fair value on a recurring basis
Some of the Group’s financial assets are measured at fair value at the end of each reporting period.
The following table gives information about how the fair values of these financial assets are determined
(in particular, the valuation technique and inputs used), as well as the level of the fair value hierarchy into
which the fair value measurements are categorised (levels 1 to 3) based on the degree to which the inputs
to the fair value measurements is observable.
Set out below is the information about how the fair values of the Group’s financial instruments that
are measured at fair value are determined, including the valuation technique and inputs used:
Financial
assets
As at 31 December Fair value
hierarchy
Valuation
technique and
key input(s)
Significant
unobservable input2022 2023 2024
RMB’000 RMB’000 RMB’000
Trade
receivables at
FVTOCI
11,479 15,750 2,145 Level 3 Discounted cash flow
Risk-adjusted
discount rate and
cash flow are key
inputs
Discount rate
A change in the unobservable input would not change the fair value of the relevant financial
instrument significantly, no sensitivity analysis is disclosed.
Fair value of financial instruments that are recorded at amortised cost
The fair values of financial assets and financial liabilities of the Group are determined in accordance
with generally accepted pricing models based on discounted cash flow analysis. The management consider
that the carrying amounts of financial assets recorded at amortised cost in the Historical Financial
Information approximate their fair values.
APPENDIX I ACCOUNTANTS’ REPORT
– I-74 –


--- page 522 ---
Reconciliation of Level 3 fair value measurements
The following table presents the changes in level 3 financial instruments during the Track Record
Period:
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
At 1 January 25,123 11,479 15,750
Addition 316,665 428,200 364,329
Settlements (330,182) (423,739) (378,232)
Fair value changes through OCI,
net of ECL and reclassification
adjustment to profit or loss (127) (190) 298
At 31 December 11,479 15,750 2,145
37. RELATED PARTY TRANSACTIONS
Saved for those disclosed in Note 28, during the Track Record Period, the Group and the Company entered into
the following transactions/balances with the related parties:
(a) Related party balances
(i) Amounts due from subsidiaries
The Company
As at 31 December
Name of related parties 2022 2023 2024
RMB’000 RMB’000 RMB’000
X.J. Electrical Appliances Co., Ltd.*
(“X.J. Electrical Appliances ”)
ʮ̡ 44,000 74,000 32,466
X.J. Group (HK) Limited
(“X.J. Group (HK) ”)
Ϫཥኜ (ಥ)ʮ̡ 576 1,330 –
Aigrentrading Co., Ltd.*
(“Aigrentrading ”)
ʮ̡ – – 500
44,576 75,330 32,966
The amounts are non-trade in nature, unsecured, interest-free and repayable on demand.
* For identification purpose only
APPENDIX I ACCOUNTANTS’ REPORT
– I-75 –


--- page 523 ---
(ii) Amounts due to subsidiaries
The Company
As at 31 December
Name of related parties 2022 2023 2024
RMB’000 RMB’000 RMB’000
X. J. Electronics (Shenzhen) Co., Ltd.*
(“X.J. Electronics (Shenzhen) ”)
ཥɿ (ଉέ)ʮ̡ 21,921 37,072 50,473
X. J. Electrics (Shenzhen) Co., Ltd.*
(“X.J. Electrics (Shenzhen) ”)
௫ཥኜ (ଉέ)ʮ̡ – – 49,995
Innovative (Jiangyin) Electronics Co., Ltd.*
(“Innovative (Jiangyin) ”)
۾(Ϫ௕)ʮ̡ – – 35,058
MeiNuoWei Electrics (HuiZhou) Co., Ltd.*
(“MeiNuoWei Electrics ”)
ʮ̡ – – 32,915
X.J. Group (HK) – – 5,007
Weighmax Group – – 90
PT Dingsheng Electrics Indonesia
(“PT Dingsheng ”) – – 94
X.J. Electrics (Thailand) Co., Ltd. – – 47
21,921 37,072 173,679
The amount is non-trade in nature, unsecured, interest-free and repayable on demand.
* For identification purpose only
APPENDIX I ACCOUNTANTS’ REPORT
– I-76 –


--- page 524 ---
(iii) Trade receivables
The Company
As at 31 December
Name of related parties 2022 2023 2024
RMB’000 RMB’000 RMB’000
X.J. Group (HK) 170,856 120,089 206,876
THS Industrial Limited
(“THS Industrial ”) – 1,762 24,721
X.J. Electronics (Shenzhen) 3,963 1,039 565
X.J. Electrics (Shenzhen) 8,423 4,576 4,137
Innovative (Jiangyin) 56 – 21
Aigrentrading 4,711 5,238 5,930
MeiNuoWei Electrics 220 323 180
HNW Electronics (Shenzhen) Co., Ltd.*
(“HNW Electronics ”)
ʮ̡ 874 528 226
Shenzhen Nawu Technology Co., Ltd.*
(“Nawu Technology ”)
ʮ̡ 131 131 131
PT Dingsheng – – 1,204
X.J. Electrical Appliances – – 37
189,234 133,686 244,028
The amounts are in trade nature, unsecured, non-interest bearing and repayable on demand.
* For identification purpose only
(iv) Contract liabilities
The Company
As at 31 December
Name of related parties 2022 2023 2024
RMB’000 RMB’000 RMB’000
THS Industrial 20,985 – –
Innovative (Jiangyin) – 2 –
20,985 2 –
APPENDIX I ACCOUNTANTS’ REPORT
– I-77 –


--- page 525 ---
(b) Related party transactions
(i) Assignment of patents
During the Track Record Period, Mr. Pan Yun assigned three patents to the Company without
consideration.
(ii) Leases
Lease liabilities
The Group
As at 31 December
Name of related party 2022 2023 2024
RMB’000 RMB’000 RMB’000
Mr. Pan Yun 66 240 446
Interest on lease liabilities
The Group
Y ear ended 31 December
Name of related party 2022 2023 2024
RMB’000 RMB’000 RMB’000
Mr. Pan Yun 7 15 31
(iii) Compensation of key management personnel
The remuneration of directors and supervisors of the Company during the Track Record Period is as
follows:
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Salaries, bonus and other allowances 5,878 6,030 6,290
Discretionary bonus 385 758 1,048
Retirement benefit scheme contributions 29 29 48
6,292 6,817 7,386
The remuneration of directors and supervisors is determined by the remuneration committee having
regard to the performance of individuals and market trends.
APPENDIX I ACCOUNTANTS’ REPORT
– I-78 –


--- page 526 ---
38. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
Borrowings
Lease
liabilities
Accrued
issue costs Total
RMB’000 RMB’000 RMB’000 RMB’000
As at 1 January 2022 249,276 18,332 – 267,608
Financing cash flows (83,241) (25,243) – (108,484)
New leases entered – 63,528 – 63,528
Lease modified – (28) – (28)
Interest expenses 13,014 2,361 – 15,375
Exchange adjustments 1,375 172 – 1,547
As at 31 December 2022 180,424 59,122 – 239,546
Financing cash flows 50,422 (25,824) – 24,598
New leases entered – 34,121 – 34,121
Lease modified – (30) – (30)
Interest expenses 14,689 2,629 – 17,318
Exchange adjustments 1,261 (36) – 1,225
As at 31 December 2023 246,796 69,982 – 316,778
Financing cash flows 44,887 (27,547) (10,310) 7,030
New leases entered – 7,298 – 7,298
Interest expenses 11,809 2,722 – 14,531
Non-cash transactions (note) 19,274 – – 19,274
Deferred issue costs (Note 24) – – 15,085 15,085
Exchange adjustments 325 44 – 369
As at 31 December 2024 323,091 52,499 4,775 380,365
Note: The amount represents the drawdown of bank borrowings used for direct settlement of the Group’s
obligations to its suppliers, as agreed upon between the bank and the Group.
39. PARTICULARS OF SUBSIDIARIES OF THE COMPANY
The Company
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Unlisted investments, at cost less impairment (note) 371,369 368,369 518,369
Note: The increase in investments in subsidiaries at 31 December 2024 was due to the further capital
contribution to X.J. Electrical Appliances, a subsidiary of the Company, of RMB150,000,000 during the
year ended 31 December 2024.
APPENDIX I ACCOUNTANTS’ REPORT
– I-79 –


--- page 527 ---
General information of subsidiaries
As at the date of approval of these consolidated financial statements, details of the subsidiaries directly
and indirectly held by the Company are set out below:
Name of
subsidiaries
Place and date of
incorporation/
establishment
Issued
paid up/
registered
capital
Proportion of ownership interest/ voting
rights held by the Group
as at 31 December
At date of
approval of
these
consolidated
financial
statements Principal activities
2022 2023 2024
Directly owned
Innovative (Jiangyin)
(notes i ,v&v i )
The PRC
5 September
2000
RMB36,432,000 100% 100% 100% 100% Manufacture, processing
and sales of electronic
devices
X.J. Electrics (Shenzhen)
(notes i , v & vii)
The PRC
12 August 2002
RMB6,366,600 100% 100% 100% 100% Research, design,
production and sales of
electro-thermic
appliances and
motor-driven appliances
Aigrentrading
(note iv)
The PRC
26 April 2013
RMB8,000,000 100% 100% 100% 100% Operation of online stores
on e-commerce
platforms
X.J. Electronics
(Shenzhen)
(notes i , v & vii)
The PRC
7 June 2004
RMB6,250,000 100% 100% 100% 100% Research, design,
production and sales of
electro-thermic
appliances and
motor-driven appliances
MeiNuoWei Electrics
(note si&v i )
The PRC
9 March 2017
RMB20,000,000 100% 100% 100% 100% Research, design,
production and sales of
electro-thermic
appliances and
motor-driven appliances
HNW Electronics
(note iv)
The PRC
2 June 2020
RMB2,000,000 100% 100% 100% 100% Manufacture and sale of
lifestyle household
goods
X.J. Electrical Appliances
(notes i, v &vii)
The PRC
23 October 2020
RMB200,000,000 100% 100% 100% 100% Production and sales of
electro-thermic
appliances and
motor-driven appliances
APPENDIX I ACCOUNTANTS’ REPORT
– I-80 –


--- page 528 ---
Name of
subsidiaries
Place and date of
incorporation/
establishment
Issued
paid up/
registered
capital
Proportion of ownership interest/ voting
rights held by the Group
as at 31 December
At date of
approval of
these
consolidated
financial
statements Principal activities
2022 2023 2024
X.J. Group (HK)
(notes ii & viii)
Hong Kong
30 June 2014
US$1,290,000 100% 100% 100% 100% Sales of our products to
international customers
Weighmax Group
(notes iii & vi)
The U.S.
30 March 2016
US$1,000,000 100% 100% 100% 100% Sales of lifestyle
household goods
Indirectly owned
Shenzhen Nuocheng
Electronic Commerce
Co. Ltd.*
ଉέ̹ፕ༐ཥɿਠਕϞ
ʮ̡
(note iv)
The PRC
20 January 2020
RMB500,000 100% 100% 100% 100% Operation of online stores
on e-commerce
platforms
Nawu Technology
(note iv)
The PRC
22 January 2020
RMB500,000 100% 100% 100% 100% Operation of online stores
on e-commerce
platforms
THS Industrial
(notes ii & viii)
Hong Kong
26 June 2017
HK$10,000 100% 100% 100% 100% Sales of our products to
international customers
Goodlife Global Imports
Inc
(note iv)
The U.S.
19 November
2021
US$50,000 100% 100% 100% 100% Sales of lifestyle
household goods
PT Dingsheng
(note iv)
Indonesia
8 August 2023
Rp10,000,000,000 N/A 100% 100% 100% Manufacture and sale of
lifestyle household
goods
X.J. Electrics (Thailand)
Co., Ltd. (note iv)
Thailand
23 April 2024
THB100,000,000 N/A N/A 100% 100% Manufacture and sale of
lifestyle household
goods
* For identification purpose only
APPENDIX I ACCOUNTANTS’ REPORT
– I-81 –


--- page 529 ---
Notes:
(i) The statutory financial statements of the subsidiaries for the year ended 31 December 2022 prepared
in accordance with the relevant accounting principles in the PRC were audited by BDO China Shu
Lun Pan Certified Public Accountants LLP (ה( ౷ஷΥྫ )) which was the
certified public accountants registered in the PRC.
(ii) The statutory financial statements of the subsidiaries prepared in accordance with Hong Kong
Financial Reporting Standards were audited by Huang Tak Wai Certified Public Accountant
(Practising) which was the certified public accountants registered in the Hong Kong for the years
ended 31 December 2022 and 2023.
(iii) The statutory financial statements of the subsidiaries for the years ended 31 December 2022 and
2023 prepared in accordance with relevant accounting principles generally accepted in the U.S. were
audited by Cheung & Chu, CPA and Spectrum Accountancy Corp., certified public accountants
registered in the U.S..
(iv) No statutory financial statements have been prepared for these entities since the date of
incorporation as these entities were not subject to any statutory audit requirements under the
relevant rules and regulations in their jurisdiction of incorporation.
(v) The statutory financial statements of the subsidiaries for the year ended 31 December 2023 prepared
in accordance with the relevant accounting principles in the PRC were audited by Shenzhen Yuehua
Certified Public Accountants LP (ה( ౷ஷΥྫ )) which was the certified public
accountants registered in the PRC.
(vi) No statutory financial statements for the year ended 31 December 2024 have been prepared for these
entities as these entities were not subject to any statutory audit requirements under the relevant rules
and regulations in their jurisdiction of incorporation.
(vii) The statutory financial statements of the subsidiaries for the year ended 31 December 2024 prepared
in accordance with the relevant accounting principles in the PRC were audited by Shenzhen Yuehua
Certified Public Accountants LP (ה( ౷ஷΥྫ )) which was the certified public
accountants registered in the PRC.
(viii) At the date of approval of these consolidated financial statements, the statutory financial statements
of these entities for the year ended 31 December 2024 are not yet issued.
All the subsidiaries of the Company are limited liability companies. All subsidiaries have adopted 31
December, as their financial year end date.
None of the subsidiaries had issued any debt securities during the Track Record Period.
40. EVENT AFTER THE END OF THE REPORTING PERIOD
Subsequent to the Track Record Period, the U.S. government has raised and adjusted tariff imposed on imports
from China. In addition to China, the U.S. government also imposed tariffs in a global context, including on imports
from Thailand and Indonesia, where the Group operates. These events are considered non-adjusting subsequent events.
Accordingly, the Historical Financial Information for the Track Record Period has not been adjusted. Given the
unpredictability of the development of Sino-U.S. and the global trade tensions, the management of the Group is
continuing to assess the impact of the above events on the financial position and results of the Group for future
periods.
41. SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements of the Group, the Company or any of its subsidiaries have been prepared in
respect of any period subsequent to 31 December 2024.
APPENDIX I ACCOUNTANTS’ REPORT
– I-82 –


--- page 530 ---
The information set out in this Appendix does not form part of the accountants’ report on
the historical financial information of the Group for the three years ended 31 December 2024
(the “ Accountants’ Report ”) prepared by Deloitte Touche Tohmatsu, Certified Public
Accountants, Hong Kong, the reporting accountants of the Company, as set out in Appendix I to
this prospectus, and is included herein for information only.
The unaudited pro forma financial information should be read in conjunction with the
section headed “Financial Information” in this prospectus and the Accountants’ Report set out
in Appendix I to this prospectus.
A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS OF THE GROUP ATTRIBUTABLE TO OWNERS OF THE
COMPANY
The following unaudited pro forma statement of adjusted consolidated net tangible assets of
the Group attributable to owners of the Company prepared in accordance with paragraph 4.29 of
the Listing Rules is set out below to illustrate the effect of the Global Offering (as defined in
this prospectus) on the audited consolidated net tangible assets of the Group attributable to
owners of the Company as at 31 December 2024 as if the Global Offering had taken place on
that date.
The unaudited pro forma statement of adjusted consolidated net tangible assets of the
Group attributable to owners of the Company has been prepared for illustrative purposes only
and, because of its hypothetical nature, it may not give a true picture of the consolidated net
tangible assets of the Group attributable to owners of the Company as at 31 December 2024 or
any future dates following the Global Offering.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-1 –


--- page 531 ---
The following unaudited pro forma statement of adjusted consolidated net tangible assets of
the Group attributable to owners of the Company is prepared based on the audited consolidated
net tangible assets of the Group attributable to owners of the Company as at 31 December 2024
as derived from the Accountants’ Report, the text of which is set out in Appendix I to this
prospectus, and adjusted as described below:
Audited
consolidated
net tangible
assets of the
Group
attributable
to owners of
the Company
as at
31 December
2024
Estimated
net proceeds
from Global
Offering
Unaudited
pro forma
adjusted
consolidated
net tangible
assets of the
Group
attributable
to owners of
the Company
as at
31 December
2024
Unaudited pro forma
adjusted consolidated net
tangible assets of the Group
attributable to owners of the
Company
as at 31 December 2024
per Share
RMB’000
(note 1)
RMB’000
(note 2)
RMB’000 RMB
(note 3)
HK$
(note 4)
Based on an Offer
Price of HK$2.86
per Offer Share 926,086 143,889 1,069,975 3.92 4.25
Based on an Offer
Price of HK$3.35
per Offer Share 926,086 173,186 1,099,272 4.03 4.37
Notes:
(1) The amount is calculated based on the audited consolidated net assets of the Group attributable to owners
of the Company amounted to RMB926,211,000 as at 31 December 2024, with adjustment for intangible
assets of the Group attributable to owners of the Company as at 31 December 2024 of RMB125,000 as
extracted from the Accountants’ Report set forth in Appendix I to this prospectus.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-2 –


--- page 532 ---
(2) The estimated net proceeds from the Global Offering are based on 68,220,000 H Shares to be issued at the
Offer Price of HK$2.86 and HK$3.35 per Offer Share, being the low end and high end of the indicated
Offer Price range respectively, after deduction of the estimated listing expenses and share issue costs
(including underwriting fees and other related expenses) incurred or expected to be incurred by the Group
subsequent to 31 December 2024, other than those expenses which had been recognised in profit or loss
prior to 31 December 2024. It does not take into account (i) any Shares which may be allotted and issued
upon the exercise of the Over-allotment Option or (ii) any Shares which may be issued or repurchased by
the Company pursuant to the general mandates.
For the purpose of calculating the estimated net proceeds from the Global Offering, the amount
denominated in Hong Kong dollars has been converted into Renminbi at an exchange rate of HK$1 to
RMB0.9226, which was the exchange rate prevailing on 7 March 2025 with reference to the rate published
by the People’s Bank of China. No representation is made that Hong Kong dollar amounts have been,
could have been or may be converted to Renminbi, or vice versa, at that rate or at any other rates or at all.
(3) The number of shares used for the calculation of unaudited pro forma adjusted consolidated net tangible
assets of the Group attributable to owners of the Company per Share is based on 272,879,509 Shares,
comprising 204,659,509 Shares in issue as at 31 December 2024 and 68,220,000 H Shares to be issued,
assuming the Global Offering had been completed on 31 December 2024. It does not take into account (i)
any Shares which may be allotted and issued upon the exercise of the Over-allotment Option or (ii) any
Shares which may be issued or repurchased by the Company pursuant to the general mandates.
(4) The unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to owners of
the Company per Share is converted from Renminbi to Hong Kong dollars at the rate of HK$1 to
RMB0.9226, which was the exchange rate prevailing on 7 March 2025 with reference to the rate published
by the People’s Bank of China. No representation is made that the Renminbi amounts have been, would
have been or may be converted to Hong Kong dollars, or vice versa, at that date or at any other rates or at
all.
(5) No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets of the
Group attributable to owners of the Company as at 31 December 2024 to reflect any operating result or
other transactions of the Group entered into subsequent to 31 December 2024.
(6) Certain property interests of the Group as at 31 March 2025 have been valued by A VISTA Valuation
Advisory Limited, an independent property valuer. By comparing the valuation of the Group’s property
interests of approximately RMB401,570,000 provided by A VISTA Valuation Advisory Limited and the
carrying amounts of these properties of approximately RMB368,428,000 as at 31 December 2024, the
valuation surplus is approximately RMB33,142,000 as at 31 March 2025, which was not reflected in the
above adjusted consolidated net tangible assets of the Group attributable to owners of the Company as at
31 December 2024. The revaluation surplus has not been included in the Historical Financial Information
as at 31 December 2024 as set out in Appendix I to this prospectus. If the revaluation surplus was recorded
in the Group’s consolidated financial statements, the annual depreciation of the Group would increase by
approximately RMB1,337,000.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-3 –


--- page 533 ---
B. INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE
COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following is the text of the independent reporting accountants’ assurance report
received from Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong, the
reporting accountants of the Company, in respect of the Group’ s unaudited pro forma financial
information prepared for the purpose of incorporation in this prospectus.
INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE
COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION
To the Directors of X.J. Electrics (Hu Bei) Co., Ltd
We have completed our assurance engagement to report on the compilation of unaudited
pro forma financial information of X.J. Electrics (Hu Bei) Co., Ltdʮ̡
(the “ Company ”) and its subsidiaries (hereinafter collectively referred to as the “ Group ”) by
the directors of the Company (the “ Directors ”) for illustrative purposes only. The unaudited pro
forma financial information consists of the unaudited pro forma statement of adjusted
consolidated net tangible assets as at 31 December 2024 and related notes as set out on pages
II-1 to II-3 of Appendix II to the prospectus issued by the Company dated 17 June 2025 (the
“Prospectus ”). The applicable criteria on the basis of which the Directors have compiled the
unaudited pro forma financial information are described on pages II-1 to II-3 of Appendix II to
the Prospectus.
The unaudited pro forma financial information has been compiled by the Directors to
illustrate the impact of the Global Offering (as defined in the Prospectus) on the Group’s
financial position as at 31 December 2024 as if the Global Offering had taken place at 31
December 2024. As part of this process, information about the Group’s financial position has
been extracted by the Directors from the Group’s historical financial information for each of the
three years ended 31 December 2024, on which an accountants’ report set out in Appendix I to
the Prospectus has been published.
Directors’ Responsibilities for the Unaudited Pro Forma Financial Information
The Directors are responsible for compiling the unaudited pro forma financial information
in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the “ Listing Rules ”) and with reference to Accounting
Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment
Circulars” (“ AG 7 ”) issued by the Hong Kong Institute of Certified Public Accountants (the
“HKICPA ”).
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-4 –


--- page 534 ---
Our Independence and Quality Management
We have complied with the independence and other ethical requirements of the “Code of
Ethics for Professional Accountants” issued by the HKICPA, which is founded on fundamental
principles of integrity, objectivity, professional competence and due care, confidentiality and
professional behaviour.
Our firm applies Hong Kong Standard on Quality Management (HKSQM) 1 “Quality
Management for Firms that Perform Audits or Reviews of Financial Statements, or Other
Assurance or Related Services Engagements” issued by the HKICPA, which requires the firm to
design, implement and operate a system of quality management including policies and
procedures regarding compliance with ethical requirements, professional standards and
applicable legal and regulatory requirements.
Reporting Accountants’ Responsibilities
Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing
Rules, on the unaudited pro forma financial information and to report our opinion to you. We do
not accept any responsibility for any reports previously given by us on any financial information
used in the compilation of the unaudited pro forma financial information beyond that owed to
those to whom those reports were addressed by us at the dates of their issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance
Engagements 3420 “Assurance Engagements to Report on the Compilation of Pro Forma
Financial Information Included in a Prospectus” issued by the HKICPA. This standard requires
that the reporting accountants plan and perform procedures to obtain reasonable assurance about
whether the Directors have compiled the unaudited pro forma financial information in
accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the
HKICPA.
For purposes of this engagement, we are not responsible for updating or reissuing any
reports or opinions on any historical financial information used in compiling the unaudited pro
forma financial information, nor have we, in the course of this engagement, performed an audit
or review of the financial information used in compiling the unaudited pro forma financial
information.
The purpose of unaudited pro forma financial information included in an investment
circular is solely to illustrate the impact of a significant event or transaction on unadjusted
financial information of the Group as if the event had occurred or the transaction had been
undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not
provide any assurance that the actual outcome of the event or transaction at 31 December 2024
would have been as presented.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-5 –


--- page 535 ---
A reasonable assurance engagement to report on whether the unaudited pro forma financial
information has been properly compiled on the basis of the applicable criteria involves
performing procedures to assess whether the applicable criteria used by the Directors in the
compilation of the unaudited pro forma financial information provide a reasonable basis for
presenting the significant effects directly attributable to the event or transaction, and to obtain
sufficient appropriate evidence about whether:
 the related pro forma adjustments give appropriate effect to those criteria; and
 the unaudited pro forma financial information reflects the proper application of those
adjustments to the unadjusted financial information.
The procedures selected depend on the reporting accountants’ judgement, having regard to
the reporting accountants’ understanding of the nature of the Group, the event or transaction in
respect of which the unaudited pro forma financial information has been compiled, and other
relevant engagement circumstances.
The engagement also involves evaluating the overall presentation of the unaudited pro
forma financial information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion:
(a) the unaudited pro forma financial information has been properly compiled on the basis
stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the unaudited pro forma financial
information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
17 June 2025
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-6 –


--- page 536 ---
The following is the text of a letter , a summary of values and valuation certificates
prepared for the purpose of incorporation in this prospectus received from AVISTA V aluation
Advisory Limited, an independent valuer , in connection with its valuation as at 31 March 2025
of the property interests held by the Company.
17 June 2025
The Board of Directors
X.J. Electrics (Hu Bei) Co., Ltd (ʮ̡ )
7/F, Building 7, Haijinger Road,
Shatoujiao Bonded Zone, Yantian District,
Shenzhen City, China
Dear Sirs/Madams,
INSTRUCTIONS
In accordance with the instructions of X.J. Electrics (Hu Bei) Co., Ltd (΅
ʮ̡ ) (the “ Company ”) and its subsidiaries (hereinafter together referred to as the
“Group ”) for us to carry out the valuation of the property interests (the “ Properties ”) located in
the People’s Republic of China (the “ PRC”) held by the Group, we confirm that we have carried
out inspection, made relevant enquiries and searches and obtained such further information as
we consider necessary for the purpose of providing you with our opinion of the market value of
the Properties as at 31 March 2025 (the “ Valuation Date ”).
BASIS OF V ALUATION AND V ALUATION STANDARDS
Our valuation is carried out on a market value basis, which is defined by the Royal
Institution of Chartered Surveyors as “ the estimated amount for which an asset or liability
should exchange on the valuation date between a willing buyer and a willing seller in an arm’ s
length transaction, after proper marketing and where the parties had each acted knowledgeably,
prudently and without compulsion ”.
APPENDIX III V ALUATION REPORT
– III-1 –


--- page 537 ---
In valuing the Properties, we have complied with all the requirements set out in Chapter 5
and Practice Note 12 of the Rules Governing the Listing of Securities issued by The Stock
Exchange of Hong Kong Limited (the “ Listing Rules ”), the RICS Valuation – Global Standards
2024 published by the Royal Institution of Chartered Surveyors (“ RICS ”) and the International
Valuation Standards published from time to time by the International Valuation Standards
Council.
CATEGORISATION OF PROPERTY INTERESTS
In the course of our valuation, the appraised Properties have been categorized according
firstly to type of interests held by the Company, which in turn being classified into the following
groups:
Grou p I – Property interests held for owner occupation by the Company in the PRC
Group II – Property interests held for investment by the Company in the PRC
V ALUATION ASSUMPTIONS
Our valuation of the Properties excludes an estimated price inflated or deflated by special
terms or circumstances such as atypical financing, sale and leaseback arrangement, special
considerations or concessions granted by anyone associated with the sale, or any element of
special value or costs of sale and purchase or offset for any associated taxes.
No allowance has been made in our report for any charges, mortgages or amounts owing on
any of the Properties valued nor for any expenses or taxation which may be incurred in effecting
a sale. Unless otherwise stated, it is assumed that the Properties are free from encumbrances,
restrictions and outgoings of an onerous nature, which could affect their values.
In the course of our valuation of the Properties in the PRC, we have relied on the advice
given by the Group and its legal advisers, being Zhong Lun Law Firm (הthe
“PRC Legal Advisers ”), regarding the titles to the Properties.
In valuing the Properties, we have relied on a legal opinion regarding the Properties
provided by the PRC Legal Advisers dated 17 June 2025 (the “ PRC Legal Opinion ”). Unless
otherwise stated, the Group has legally obtained the land use rights of the Properties.
No environmental impact study has been ordered or made. Full compliance with applicable
national, provincial and local environmental regulations and laws is assumed.
APPENDIX III V ALUATION REPORT
– III-2 –


--- page 538 ---
V ALUATION METHODOLOGY
In valuing the property interests in Group I, due to the nature of the buildings and
structures of the subject property, there are no market sales comparables readily available. We
have valued the property interests on the basis of their depreciated replacement cost.
Depreciated replacement cost is defined as “ the current cost of replacing an asset with its
modern equivalent asset less deduction for physical deterioration and all relevant forms of
obsolescence and optimisation ”. It is based on an estimation of the market value for the existing
use of the land, plus the current cost of replacement (reproduction) of the building, including the
improvements, less deductions for physical deterioration and all relevant forms of obsolescence
and optimisation.
The property interests in Group II have been valued by the income approach. The income
approach takes into considerations of the term value of the property by capitalizing the rental
income over the existing lease terms and the reversionary value by capitalizing the current
market rental income of the property until the end of the land use right terms. The current
market rent adopted in determining the reversionary value is based on the findings of rental
comparables in the locality which share similar characteristics with the subject property. When
determining the parameter of capitalisation rate or market yield, reference has been made to the
current sale price and rental income of the properties in the locality which share similar
characteristics with the subject properties. The income approach estimates the value of the
property by taking into consideration the existing rental level and current market condition,
without specifically involving the forecasting of future profits.
We have assigned no commercial value to the property interests for which the Group has
not possessed either the land titleship or the building ownership documents.
TITLE INVESTIGATION
We have been provided with copies of documents in relation to the title of the Properties in
the PRC. Where possible, we have examined the original documents to verify the existing title to
the Properties in the PRC and any material encumbrance that might be attached to the Properties
or any tenancy amendment. All documents have been used for reference only and all dimensions,
measurements and areas are approximate. In the course of our valuation, we have relied
considerably on the PRC Legal Opinion given by the PRC Legal Advisers, concerning the
validity of the title of the Properties in the PRC.
SITE INVESTIGATION
We have inspected the exteriors and, where possible, the interior of the subject properties.
The site inspection was carried out on 8 August 2024 by Arya Lin (Assistant Manager). She is a
public valuer with more than 3 years’ experience in valuation of properties in the PRC.
APPENDIX III V ALUATION REPORT
– III-3 –


--- page 539 ---
In the course of our inspection, we did not note any serious defects. However, we have not
carried out an investigation on site to determine the suitability of ground conditions and services
for any development thereon, nor have we conducted structural surveys to ascertain whether the
subject properties are free of rot, infestation, or any other structural defects. Additionally, no
tests have been carried out on any of the utility services. Our valuation has been prepared on the
assumption that these aspects are satisfactory. We have further assumed that there is no
significant pollution or contamination in the locality which may affect any future developments.
SOURCE OF INFORMATION
Unless otherwise stated, we shall rely to a considerable extent on the information provided
to us by the Group or the PRC Legal Advisers or other professional advisers on such matters as
statutory notices, planning approvals, zoning, easements, tenures, completion date of buildings,
development proposal, identification of the properties, particulars of occupation, site areas, floor
areas, matters relating to tenure, tenancies and all other relevant matters.
We have had no reason to doubt the truth and accuracy of the information provided to us by
the Group. We have also sought confirmation from the Group that no material factors have been
omitted from the information supplied. We consider that we have been provided with sufficient
information to reach an informed view and we have no reason to suspect that any material
information has been withheld.
We have not carried out detailed measurements to verify the correctness of the areas in
respect of the properties but have assumed that the areas shown on the title documents and
official site plans handed to us are correct. All documents and contracts have been used as
reference only and all dimensions, measurements and areas are approximations. No on-site
measurement has been taken.
LIMITING CONDITION
Wherever the content of this report is extracted and translated from the relevant documents
supplied in Chinese context and there are discrepancies in wordings, those parts of the original
documents will take prevalent.
APPENDIX III V ALUATION REPORT
– III-4 –


--- page 540 ---
CURRENCY
Unless otherwise stated, all monetary amounts stated in this report are in Renminbi (RMB).
Our valuations are summarized below, and the valuation certificates are attached.
Yours faithfully,
For and on behalf of
A VISTA Valuation Advisory Limited
Vincen t C B Pang
MRICS CF A FCP A FCP A Australia
RICS Registered V aluer
Managing Partner
Note: Mr. Vincen t C B Pang is a member of Royal Institution of Chartered Surveyors (RICS) and a registered valuer of
RICS. He has over 10 years’ experience in valuation of properties including Hong Kong, the PRC, the U.S., and
East and Southeast Asia.
APPENDIX III V ALUATION REPORT
– III-5 –


--- page 541 ---
SUMMARY OF V ALUES
G r o u pI–P r operty interests held for owner occupation by the Company in the PRC
No. Property
Market value
in existing
state as at
31 March
2025
Interest
Attributable
to the
Company
Market value
Attributable
to the
Company
as at
31 March
2025
RMB RMB
1. He’an Avenue, Yuanzhou Town, Boluo County,
Huizhou City, Guangdong Province, the PRC
(ᕄձτɽ༸ )
No
Commercial
Value
100% No
Commercial
Value
Sub-total: No
Commercial
Value
No
Commercial
Value
Group II – Property interests held for investment by the Company in the PRC
No. Property
Market value
in existing
state as at
31 March
2025
Interest
Attributable
to the
Company
Market value
Attributable
to the
Company
as at
31 March
2025
RMB RMB
2. Unit 2407, Block 11, Phase II,
Tianan Yungu Industrial Park, Xuegang North Road,
Longgong District, Shenzhen City,
Guangdong Province, the PRC
(ଉέ̹Ꮂ੪ਜ௛੪̏༩
˂τථԋପุ෤ɚಂ 11ಊ2407܃)
10,640,000 100% 10,640,000
Sub-total: 10,640,000 10,640,000
Grand-total: 10,640,000 10,640,000
APPENDIX III V ALUATION REPORT
– III-6 –


--- page 542 ---
V ALUATION CERTIFICATE
G r o u pI–P r operty interests held for owner occupation by the Company in the PRC
No. Property Description and tenure
Particulars of
occupancy
Market value in
existing state as
at 31 March
2025
RMB
1. He’an Avenue,
Yuanzhou Town,
Boluo County,
Huizhou City,
Guangdong
Province,
the PRC
(޲؇
౉ψ̹
ᕄ
ձτɽ༸ )
The property comprises two 7-storey
industrial buildings and two 10-storey
dormitory buildings over a 1-storey
basement, with a total gross floor area
of approximately 147,069.00 sq.m.
The property was held for owner
occupation as at the Valuation Date.
As advised by the Group, the property
was completed in 2024.
The classification, usage and area
details are set out in Note 6.
The property is located in Boluo County
of Huizhou City, with approximately 6.0
km to Boluo Yuanzhou Bus Terminal
and 93.5 km to Shenzhen Bao’an
International Airport.
The land use rights of the property have
been granted for a term expiring on
23 December 2070 for industrial use.
The property was
occupied by the
Group as at the
Valuation Date
manufacturing
purpose.
No Commercial
Value
Notes:
1. Pursuant to a Real Estate Ownership Certificate (for land) – Yue (2021) Bo Luo Xian Bu Dong Chan Quan Di
No. 0022926 issued by the Boluo Municipal Bureau of Natural Resources ( ௹ᖯጤІ್༟๕҅ ), the land use
rights of the property with a total site area of approximately 49,979.00 sq.m. have been granted to X.J. Electrical
Appliances (Huizhou) Co., Ltd. (ʮ̡ ,“ X.J. Electrical Appliances ”), in which the
Company holds a direct ownership stake of 100%, for a term expiring on 23 December 2070 for industrial use.
2. Pursuant to a Construction Land Planning Permit – Bo Zi Ran Zi Di Zi Di No. 4413222021-0267, permission for
the planning of a land parcel with a total site area of approximately 49,979.00 sq.m. has been granted to X.J.
Electrical Appliances.
APPENDIX III V ALUATION REPORT
– III-7 –


--- page 543 ---
3. Pursuant to 7 Construction Works Planning Permits – Bo Zi Ran Zi Jian Zi Di No. 4413222021-1308 to
4413222021-1314, in favour of X.J. Electrical Appliances, the construction work of the property with a total
gross floor area of approximately 147,441.00 sq.m. has been approved for construction.
As confirmed by the Group, the property comprises a portion of the abovementioned permits.
4. Pursuant to a Construction Work Commencement Permit – No. 441322202112170301 in favour of X.J. Electrical
Appliances, permission has been given by the relevant local authority to commence the construction work of the
property with a total gross floor area of approximately 147,441.00 sq.m.
As confirmed by the Group, the property comprises a portion of the abovementioned permit.
5. As advised by the Group, the title certificates of building ownership of the property have not been obtained.
6. In undertaking our valuation, we have assigned no commercial value to the property since X.J. Electrical
Appliances has yet to obtain proper title certificates of building ownership due to certain law deficiencies as
mentioned in Note 8(c). For reference purposes, we are of the opinion that the estimated value of the property as
at the Valuation Date would be RMB375,130,000, assuming the property could be freely transferred in the
market.
7. As advised by the Group, the details of the property are set out as below:
Classification Usage Gross Floor Area
No. of Car
Parking Spaces
(sq.m.)
Grou p I – Property interests
held for owner occupation by
the Company in the PRC
Industrial 116,820.00 –
Dormitory 20,850.00 –
Amenity Facilities 1,143.00 –
Basement 8,256.00 230
Total: 147,069.00 230
8. We have been provided with the PRC Legal Opinion, which contains, inter alia, the following:
a. X.J. Electrical Appliances legally obtained the land use rights of the property, but had not yet obtained the
building ownership of the property;
b. X.J. Electrical Appliances has the right to occupy or use the land use rights of the property;
c. There are certain legal deficiencies as X.J. Electrical Appliances commenced production before completing
the as-built acceptance filings (ࣩfire protection acceptance filings (ࣩ,)
environmental protection acceptance filings (ࣩand energy conservation acceptance
filing (ࣩHowever, due to the following:
i. X.J. Electrical Appliances has completed the environmental protection acceptance filings, the energy
conservation acceptance filings procedures, the as-built acceptance filings, as well as the fire
protection acceptance filing;
ii. X.J. Electrical Appliances has not been subjected to any administrative penalties by governmental
authorities;
APPENDIX III V ALUATION REPORT
– III-8 –


--- page 544 ---
iii. The Boluo County People’s Government (ִ݁the “ Government ”) has issued a
document certifying X.J. Electrical Appliances meets the basic requirements for production. The
Government is aware of and has agreed X.J. Electrical Appliances to commence production in June
2024. No violations or illegal activities in construction projects, fire safety, environmental
protection, safety production, energy conservation, or other areas requiring administrative penalties
by the Government or other relevant authorities have been discovered. The Government agrees X.J.
Electrical Appliances in maintaining its current production status; and
iv. The actual controllers of the Company, Mr. Pan Yun and Mr. Guangshe Pan, have committed to
bearing all losses that may arise from fines or production suspension due to the aforementioned
matters.
The deficiencies in the construction procedures do not constitute significant violations. The risk of
administrative penalties is deemed low, with no significant adverse impact foreseen on the Company’s
production and operations, and does not present a significant legal obstacle to this issuance.
d. The property has been pledged to Industrial and Commercial Bank of China Limited, Boluo Branch ( ʕ਷
ʮ̡௹ᖯ˕Б ); and
e. The land use rights of the property has not been subject to any other encumbrances.
9. In the course of our valuation, we assume that the property is transferable without legal impediment.
10. Our valuation has been made on the following basis and analysis:
In our valuation of the land use rights, we have considered and analyzed 6 land sale comparables in the vicinity.
The adjusted site values of the land sales range from RMB1,010 to RMB1,020 per sq.m. for industrial use. The
unit rate adopted in the valuation is consistent with the unit rates of the relevant comparables after due
adjustments in terms of location, time, and size, etc.
Regarding the building portion, the current replacement cost of the building is assessed by determining the
construction cost of a modern substitute building with the same service capacity as the building which is being
valued. The adjusted replacement costs range from RMB2,040 per sq.m. to RMB2,190 per sq.m. for industrial
buildings, from RMB2,080 per sq.m. to RMB3,190 per sq.m. for dormitory buildings and from RMB3,070 per
sq.m. to RMB3,760 per sq.m. for basement based on our research of the local construction costs. The
replacement cost adopted in the valuation is consistent with the findings of our research.
APPENDIX III V ALUATION REPORT
– III-9 –


--- page 545 ---
V ALUATION CERTIFICATE
Group II – Property interests held for investment by the Company in the PRC
No. Property Description and tenure
Particulars of
occupancy
Market value in
existing state as
at 31 March
2025
RMB
2. Unit 2407, Block
11,
Phase II,
Tianan Yungu
Industrial Park,
Xuegang North
Road,
Longgong
District,
Shenzhen City,
Guangdong
Province,
the PRC
(޲؇
ଉέ̹Ꮂ੪ਜ
௛੪̏༩
˂τථԋପุ෤
ɚಂ11ಊ2407܃)
The property comprises an office unit
with a total gross floor area of
approximately 499.02 sq.m. located on
the 24th floor of a 34-storey industrial
office building within an industrial park,
namely Tianan Yungu Industrial Park.
The property was held for investment as
at the Valuation Date.
As advised by the Group, the property
was completed in 2019.
The property is located at Xuegang
North Road in Longgang District of
Shenzhen City, with approximately 11.0
km to Shenzhen North Station of
Guangzhou-Shenzhen-Hong Kong
Express Rail Link and 34.6 km to
Shenzhen Bao’an International Airport.
The land use rights of the property have
been granted for a term expiring on
28 September 2065 for industrial use.
The property was
leased to a tenant
for office use as
at the Valuation
Date.
10,640,000
(100% interest
attributable to the
Company:
10,640,000)
Notes:
1. Pursuant to a sale and purchase agreement dated 17 March 2021 betweenʮ̡ and
X.J. Electrics (Shenzhen) Co., Ltd. (௫ཥኜ (ଉέ)ʮ̡ ,“ X.J. Electrics (Shenzhen) ”), in which the
Company holds a direct ownership stake of 100%, an office unit with a total gross floor area of approximately
499.02 sq.m. have been contracted to be purchased by X.J. Electrics (Shenzhen) at a total consideration of
RMB16,317,954.
2. Pursuant to a Real Estate Ownership Certificate – Yue (2021) Shen Zhen Shi Bu Dong Chan Quan Di No.
0135366 issued by the Shenzhen Real Estate Registration Centre ( ଉέ̹ʔਗପᛆ೮াʕː ), the land use rights
of the property with a total site area of approximately 30,051.31 sq.m. for a term expiring on 28 September 2065
for industrial use and the building ownership of the property with a total gross floor area of approximately
499.02 sq.m. for industrial research and development use have been vested in X.J. Electrics (Shenzhen).
APPENDIX III V ALUATION REPORT
– III-10 –


--- page 546 ---
3. Pursuant to a tenancy agreement, the property with a gross floor area of approximately 499.02 sq.m. had been
leased to an independent third party with a total monthly rent of RMB39,922, inclusive of value-added tax but
exclusive of management fees and utility fees, for a term with the expiry date on 1 April 2028.
4. We have been provided with the PRC Legal Opinion, which contains, inter alia, the following:
a. X.J. Electrics (Shenzhen) legally obtained the land use rights and the building ownership of the property;
b. X.J. Electrics (Shenzhen) has the right to occupy or use the property under the terms of the Real Estate
Ownership Certificate;
c. The property has been pledged to Industrial and Commercial Bank of China Limited, Boluo Branch ( ʕ਷
ʮ̡௹ᖯ˕Б ); and
d. The property has not been subjected to any other encumbrances.
5. In the course of our valuation, we assume that the property is transferable without legal impediment.
6. Our valuation has been made on the following basis and analysis:
In the course of our valuation of the property, we have made references to various relevant rental evidence in the
locality which has similar characteristics as the subject property such as nature, use, size, and accessibility. The
adjusted unit rents of the comparables range from RMB99 to RMB114 per sq.m. per month. The market yield
assumed by us is 5.0%.
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--- page 547 ---
THE PRC
The PRC Legal System
The PRC legal system is based on Constitution of the People’s Republic of China ( ʕശɛ
, the “ Constitution ”), which was adopted on 20 September 1954 and
subsequently amended on 17 January 1975, 5 March 1978, 4 December 1982, 12 April 1988, 29
March 1993, 15 March 1999, 14 March 2004 and 11 March 2018. The PRC legal system is made
up of written laws, administrative regulations, local regulations, autonomous regulations,
separate regulations, rules and regulations of State Council departments, rules and regulations of
local governments, laws of special administrative regions and international treaties of which the
PRC government is a signatory and other regulatory documents. Court judgments do not
constitute legally binding precedents, although they are used for the purposes of judicial
reference and guidance.
The National People’s Congress (the “ NPC”) and its Standing Committee are empowered to
exercise the legislative power of the State in accordance with the Constitution and the
Legislation Law of the People’s Republic of China (, the “ Legislation
Law”), which was adopted on 13 March 2023. The NPC has the power to formulate and amend
basic laws governing state authorities, civil, criminal and other matters. The Standing Committee
of the NPC formulates and amends laws other than those required to be enacted by the NPC and
to supplement and amend parts of the laws enacted by the NPC during the adjournment of the
NPC, provided that such supplements and amendments are not in conflict with the basic
principles of such laws.
The State Council is the highest organ of state administration and has the power to
formulate administrative regulations based on the Constitution and laws.
The people’s congresses of the provinces, autonomous regions and municipalities and their
respective standing committees may formulate local regulations based on the specific
circumstances and actual needs of their respective administrative areas, provided that such local
regulations do not contravene any provision of the Constitution, laws or administrative
regulations. The people’s congresses of cities divided into districts and their respective standing
committees may formulate local regulations on aspects such as urban and rural construction and
management, environmental protection and historical cultural protection based on the specific
circumstances and actual needs of such cities, provided that such local regulations do not
contravene any provision of the Constitution, laws, administrative regulations and local
regulations of their respective provinces or autonomous regions. If the law provides otherwise
on the matters concerning formulation of local regulations by cities divided into districts, those
provisions shall prevail. Such local regulations will become enforceable after being reported to
and approved by the standing committees of the people’s congresses of the relevant provinces or
autonomous regions but such local regulations shall conform with the Constitution, laws,
administrative regulations, and the relevant local regulations of the relevant provinces or
autonomous regions. The standing committees of the people’s congresses of the provinces or
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS
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--- page 548 ---
autonomous regions examine the legality of local regulations submitted for approval, and such
approval should be granted within four months if they are not in conflict with the Constitution,
laws, administrative regulations and local regulations of such provinces or autonomous regions.
Where, during the examination for approval of local regulations of cities divided into districts
by the standing committees of the people’s congresses of the provinces or autonomous regions,
conflicts are identified with the rules and regulations of the people’s governments of the
provinces or autonomous regions concerned, a handling decision should be made by the standing
committees of the people’s congresses of provinces or autonomous regions to resolve the issue.
People’s congresses of national autonomous areas have the power to enact autonomous
regulations and separate regulations in light of the political, economic and cultural
characteristics of the ethnic groups in the areas concerned. The autonomous regulations and
separate regulations of an autonomous region shall come into force after being reported to and
approved by the Standing Committee of the NPC. The autonomous regulations and separate
regulations of an autonomous prefecture or an autonomous county shall come into force after
being reported to and approved by the standing committee of the people’s congress of the
province, autonomous region, or municipality directly under the Central Government.
The ministries and commissions of the State Council, the People’s Bank of China, National
Audit Office and the subordinate institutions with administrative functions directly under the
State Council may formulate departmental rules within the jurisdiction of their respective
departments based on the laws and administrative regulations, and the decisions and orders of
the State Council. The people’s governments of the provinces, autonomous regions,
municipalities and cities or autonomous prefectures divided into districts may formulate rules
and regulations based on the laws, administrative regulations and local regulations of such
provinces, autonomous regions and municipalities.
According to the Constitution and the Legislation Law, the power to interpret laws is
vested in the Standing Committee of the NPC. Pursuant to the Resolution of the Standing
Committee of the NPC Providing an Improved Interpretation of the Law (ɽึ੬
Ӕᙄ ) implemented on 10 June 1981, the Supreme People’s
Court has the power to give interpretation on issues related to the application of laws and
decrees in a court trial, and issues related to the application of laws and decrees in a prosecution
process of a procuratorate should be interpreted by the Supreme People’s Procuratorate. If there
is any disagreement in principle between Supreme People’s Court’s interpretations and Supreme
People’s Procuratorate’s interpretations, such issues shall be reported to the Standing Committee
of the NPC for interpretation or judgment. The other issues related to laws and decrees other
than the abovementioned should be interpreted by the State Council and the competent
authorities. The State Council and its ministries and commissions are also vested with the power
to give interpretations of the administrative regulations and departmental rules which they have
promulgated. At the regional level, the power to interpret regional laws is vested in the regional
legislative and administrative authorities which promulgate such laws.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS
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--- page 549 ---
The PRC Judicial System
Under the Constitution and the Law of Organisation of the People’s Courts of the People’s
Republic of China ( ), which is adopted on 21 September
1954 and subsequently amended on 5 July 1979, 2 September 1983, 2 December 1986,
31 October 2006 and 26 October 2018, the PRC judicial system is made up of the Supreme
People’s Court, the local people’s courts, the military courts and other special people’s courts.
The local people’s courts are comprised of the basic people’s courts, the intermediate
people’s courts and the higher people’s courts. The basic people’s courts may set up civil,
criminal and economic divisions, and certain people’s tribunals based on the facts of the region,
population and cases. The intermediate people’s courts have divisions similar to those of the
basic people’s courts and may set up other special divisions if needed. These two levels of
people’s courts are subject to supervision by people’s courts at higher levels. The Supreme
People’s Court is the highest judicial authority in the PRC. It supervises the administration of
justice by the people’s courts at all levels and special people’s courts. The Supreme People’s
Procuratorate is authorised to supervise the judgment and ruling of the people’s courts at all
levels which have been legally effective, and the people’s procuratorate at a higher level is
authorised to supervise the judgment and ruling of a people’s court at lower levels which have
been legally effective.
Under the Civil Procedure Law of the People’s Republic of China ( ʕശɛ͏΍ձ਷͏ԫ
), which is adopted on 9 April 1991 and subsequently amended on 28 October 2007, 31
August 2012, 27 June 2017, and 1 September 2023, which became effective from 1 January
2024, a people’s court takes the rule of the second instance as the final rule. A party may appeal
against the judgment or ruling of the first instance of a local people’s court. The people’s
procuratorate may present a protest to the people’s court at the next higher level in accordance
with the procedures stipulated by the laws. In the absence of any appeal by the parties and any
protest by the people’s procuratorate within the stipulated period, the judgments or rulings of the
people’s court are final. Judgments or rulings of the second instance of the intermediate people’s
courts, the higher people’s courts and the Supreme People’s Court, and judgments or rulings of
the first instance of the Supreme People’s Court are final. However, if the Supreme People’s
Court finds some definite errors in a legally effective judgment, ruling or conciliation statement
of the people’s court at any level, or if the people’s court at a higher level finds such errors in a
legally effective judgment, ruling or conciliation statement of the people’s court at a lower level,
it has the authority to review the case itself or to direct the lower-level people’s court to conduct
a retrial. If the chief judge of all levels of people’s courts finds some definite errors in a legally
effective judgment, ruling or conciliation statement, and considers a retrial is preferred, such
case shall be submitted to the judicial committee of the people’s court at the same level for
discussion and decision.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS
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--- page 550 ---
The Civil Procedure Law of the People’s Republic of China prescribes the conditions for
instituting a civil action, the jurisdiction of the people’s courts, the procedures for conducting a
civil action, and the procedures for enforcement of a civil judgment or ruling. All parties to a
civil action conducted within the PRC must abide by the PRC Civil Procedure Law. Generally, a
civil case is initially heard by the court located in the defendant’s place of domicile. The court
of jurisdiction in respect of a civil action may also be chosen by explicit agreement among the
parties to a contract, provided that the people’s court having jurisdiction should be located at
places substantially connected with the disputes, such as the plaintiff ‘s or the defendant’s place
of domicile, the place where the contract is executed or signed or the place where the object of
the action is located, provided that the provisions regarding the level of jurisdiction and
exclusive jurisdiction shall not be violated.
A foreign individual, a person without nationality, a foreign enterprise or a foreign
organisation is given the same litigation rights and obligations as a citizen, a legal person or
other organisations of the PRC when initiating actions or defending against litigations at a PRC
court. Should a foreign court limit the litigation rights of PRC citizens or enterprises, the PRC
court may apply the same limitations to the citizens and enterprises of such foreign country. A
foreign individual, a person without nationality, a foreign enterprise or a foreign organisation
must engage a PRC lawyer in case he or it needs to engage a lawyer for the purpose of initiating
actions or defending against litigations at a PRC court. In accordance with the international
treaties to which the People’s Republic of China is a signatory or participant or according to the
principle of reciprocity, a people’s court and a foreign court may request each other to serve
documents, conduct investigation and collect evidence and conduct other actions on its behalf.
All parties to a civil action shall perform the legally effective judgments and rulings. If any
party to a civil action refuses to abide by a judgment or ruling made by a people’s court or an
award made by an arbitration tribunal in the PRC, the other party may apply to the people’s
court for the enforcement of the same within two years subject to application for postponed
enforcement or revocation. If a party fails to satisfy within the stipulated period a judgment
which the court has granted an enforcement approval, the court may, upon the application of the
other party, mandatorily enforce the judgment on the party.
Where a party applies for enforcement of a judgment or ruling made by a people’s court,
and the opposite party or his property is not within the territory of the PRC, the applicant may
directly apply to a foreign court with jurisdiction for recognition and enforcement of the
judgment or ruling. A foreign judgment or ruling may also be recognised and enforced by the
people’s court in accordance with the PRC enforcement procedures if the PRC has entered into,
or acceded to, international treaties with the relevant foreign country, which provided for such
recognition and enforcement, or if the judgment or ruling satisfies the court’s examination
according to the principle of reciprocity, unless the people’s court considers that the recognition
or enforcement of such judgment or ruling would violate the basic legal principles of the PRC,
its sovereignty or national security, or against the social and public interests.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS
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--- page 551 ---
The PRC Securities Laws and Regulations
The PRC has promulgated a number of regulations that relate to the issue and trading of
shares and disclosure of information. In October 1992, the State Council established the
Securities Committee and the CSRC. The Securities Committee is responsible for coordinating
the drafting of securities regulations, formulating securities-related policies, planning the
development of securities markets, directing, coordinating and supervising all securities-related
institutions in the PRC and administering the CSRC. The CSRC is the regulatory arm of the
Securities Committee and is responsible for the drafting of regulatory provisions of securities
markets, supervising securities companies, regulating public offerings of securities by PRC
companies in the PRC or overseas, regulating the trading of securities, compiling
securities-related statistics and undertaking relevant research and analysis. In April 1998, the
State Council consolidated the two departments and reformed the CSRC.
The Interim Provisional Regulations on the Administration of Share Issuance and Trading
(၍ଣᅲБૢԷ ) stipulates the public offerings of equity securities, trading in
equity securities, the acquisition of listed companies, deposit, clearing and transfer of listed
equity securities, the disclosure of information with respect to a listed company, investigation,
penalties and dispute settlement.
On 25 December 1995, the State Council promulgated the Regulations of the State Council
Concerning Domestic Listed Foreign Shares of Joint Stock Limited Companies (ٰ׵
 ). These regulations principally govern the issue,
subscription, trading and declaration of dividends and other distributions of domestic listed
foreign shares and disclosure of information of joint stock limited companies having domestic
listed foreign shares.
The Securities Law of the People’s Republic of China (, the
“PRC Securities Law ”) took effect on 1 July 1999 and was revised as of 28 August 2004, 27
October 2005, 29 June 2013, 31 August 2014 and 28 December 2019, respectively. The PRC
Securities Law, which was revised on 28 December 2019 and came into effect on 1 March 2020,
is divided into 14 chapters and 226 articles, regulating, among other things, the issue and trading
of securities, the listing of securities, and takeovers of listed companies.
Article 224 of the PRC Securities Law provides that domestic enterprises which, directly or
indirectly, issue securities or list and trade their securities outside the PRC shall comply with the
relevant regulations of the State Council. Currently, the issue and trading of foreign issued
securities (including shares) are principally governed by the regulations and rules promulgated
by the State Council and the CSRC.
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--- page 552 ---
Arbitration and Enforcement of Arbitral Award
The Arbitration Law of the People’s Republic of China () (the
“PRC Arbitration Law ”) was enacted by the Standing Committee of the NPC on 31 August
1994, which became effective on 1 September 1995 and was amended on 27 August 2009 and 1
September 2017, respectively. It is applicable to, among other matters, economic disputes
involving foreign parties where all parties have entered into a written agreement to resolve
disputes by arbitration before an arbitration committee constituted in accordance with the PRC
Arbitration Law. The PRC Arbitration Law provides that an arbitration committee may, before
the promulgation of arbitration regulations by the PRC Arbitration Association, formulate
interim arbitration rules in accordance with the PRC Arbitration Law and the PRC Civil
Procedure Law. Where the parties have agreed to settle disputes by means of arbitration, a
people’s court will refuse to handle a legal proceeding initiated by one of the parties at such
people’s court, unless the arbitration agreement is invalid.
Under the PRC Arbitration Law and PRC Civil Procedure Law, an arbitral award shall be
final and binding on the parties involved in the arbitration. If any party fails to comply with the
arbitral award, the other party to the award may apply to a people’s court for its enforcement.
The people’s court can issue a ruling prohibiting the enforcement of an arbitral award made by
an arbitration commission after verification by collegial bench formed by the people’s court if
there is any procedural irregularity (including but not limited to irregularity in the composition
of the arbitration tribunal or arbitration proceedings, the jurisdiction of the arbitration
commission, or the making of an award on matters beyond the scope of the arbitration
agreement).
Any party seeking to enforce an award of a foreign affairs arbitral body of the PRC against
a party who or whose property is not located within the PRC shall apply to a foreign court with
jurisdiction over the case for recognition and enforcement of the award. Likewise, an arbitral
award made by a foreign arbitral body may be recognised and enforced by a PRC court in
accordance with the principle of reciprocity or any international treaties concluded or acceded to
by the PRC.
The PRC acceded to the Convention on the Recognition and Enforcement of Foreign
Arbitral Awards ( , the “ New Y ork Convention ”) adopted on 10
June 1958 pursuant to a resolution passed by the Standing Committee of the NPC on 2
December 1986. The New York Convention provides that all arbitral awards made in a state
which is a party to the New York Convention shall be recognised and enforced by other parties
thereto subject to their rights to refuse enforcement under certain circumstances, including where
the enforcement of the arbitral award is against the public policy of that state. At the time of the
PRC’s accession to the Convention, the Standing Committee of the NPC declared that (i) the
PRC will only apply the Convention to the recognition and enforcement of arbitral awards made
in the territories of other parties based on the principle of reciprocity; and (ii) the New York
Convention will only be applied to disputes deemed under PRC laws to be arising from
contractual or non-contractual mercantile legal relations.
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--- page 553 ---
An arrangement for mutual enforcement of arbitral awards between Hong Kong and the
Supreme People’s Court of China was reached. The Supreme People’s Court of China adopted
the Arrangements on the Mutual Enforcement of Arbitral Awards between the Mainland and the
Hong Kong Special Administrative Region (τ
ર) on 18 June 1999, which went into effect on 1 February 2000. The arrangement reflects the
spirit of the New York Convention. Under the arrangement, the awards by the Mainland arbitral
bodies in accordance with the PRC Arbitration Law may be enforced in Hong Kong, and the
awards by the Hong Kong arbitral bodies according to the Arbitration Ordinance of Hong Kong
SAR may also be enforced in the Mainland China. If the Mainland court finds that the
enforcement of awards made by the Hong Kong arbitral bodies in the Mainland will be against
public interests of the Mainland, or the court of Hong Kong SAR decides that the enforcement
of the arbitral awards in Hong Kong SAR will be against public policies of Hong Kong SAR, the
awards may not be enforced. The Supreme People’s Court of China adopted the Supplementary
Arrangements on the Mutual Enforcement of Arbitral Awards between the Mainland and the
Hong Kong Special Administrative Region (ʝੂБ
໾̂τર) (the “ Supplementary Arrangements ”) on 9 November 2020. According
to the Supplementary Arrangements, before or after the acceptance of an application for
enforcement of an arbitration award, the relevant court may, upon application and in accordance
with the law of the place where the arbitration award is enforced, adopt preservation or
enforcement measures.
Judicial Judgment and its Enforcement
According to the Arrangement on Reciprocal Recognition and Enforcement of Judgments in
Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special
Administrative Region (ʝႩ̙ձੂБ͏ਠԫ
τર) (the “ Arrangement ”) promulgated by the Supreme People’s Court on 25
January 2024 and implemented on 29 January 2024, the Arrangement applies to the reciprocal
recognition and enforcement of legally effective judgments in civil and commercial matters
between the courts of Hong Kong and the PRC. In respect of judgments for the award of
property, reciprocal recognition and enforcement of judgments includes both monetary and
non-monetary rulings. the scope of recognition and enforcement by the courts of the Mainland
and of the HKSAR shall include the property awarded, the corresponding interest, costs,
payment for late compliance, or interest for late compliance awarded in the judgment, but shall
not include taxes and penalties.
The PRC Company Law, The Trial Measures and The Guidelines
Company Law of the People’s Republic of China () (the “ PRC
Company Law ”) was adopted by the 5th meeting of the SCNPC on 29 December 1993 and came
into effect on 1 July 1994. It was amended on 25 December 1999, 28 August 2004, 27 October
2005, 28 December 2013, 26 October 2018, and 29 December 2023 respectively. The latest
revised PRC Company Law was implemented on 1 July 2024.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS
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--- page 554 ---
The Trial Measures which were promulgated by the CSRC on 17 February 2023 and came
into effect on 31 March 2023, and were applicable to the overseas offering and listing of PRC
domestic companies’ securities.
The Guidelines for Articles of Association of Listed Companies (ˏ) the
“Guidelines ”) which were issued by the CSRC on 16 December 1997, latest revised on 28
March 2025 and came into effect on the same date, providing the guidelines for the Articles of
Association. As such, the contents provided in the Guidelines are set out in the Articles of
Association of the Company, the summary of which is set out in the section entitled “Appendix
V – Summary of the Articles of Association” in this prospectus.
Set out below is a summary of the major provisions of the PRC Company Law, the Trial
Measures and the Guidelines applicable to the Company.
General
A joint stock limited company refers to an enterprise legal person incorporated in China
under the PRC Company Law with independent legal person properties and entitlements to such
legal person properties. The liability of the company for its own debts is limited to all the
properties it owns and the liability of its shareholders for the company is limited to the extent of
the shares they subscribe for.
Incorporation
A joint stock limited company may be established by promotion or subscription. A joint
stock limited company shall have a minimum of one but no more than 200 people as its
promoters, and over half of the promoters must be resident within the PRC. Companies
established by promotion are companies of which the registered capital is the total share capital
subscribed for by all the promoters registered with the company’s registration authorities. No
share offering shall be made before the shares subscribed for by the promoters are fully paid up.
If laws, administrative regulations and State Council decisions provide otherwise on paid-in
registered capital and the minimum registered capital, the company should follow such
provisions.
For companies incorporated by way of promotion, the promoters shall subscribe in writing
for the shares required to be subscribed for by them and pay up their capital contributions under
the articles of association. In the case of capital contributions to be made in non-cash assets, the
formalities for transfer of property rights shall be completed in accordance with the provisions
of the law. Promoters who fail to pay up their capital contributions in accordance with the
foregoing provisions shall be liable for compensation for the losses it causes to the company.
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Where a joint stock limited company is established by means of promotion, the convening
and voting procedures for the establishment meeting shall be prescribed by the articles of
association of the company or the agreement of the promoters. The Board shall, within 30 days
after the end of the establishment meeting of a company, authorise a representative to file an
application for registration of establishment with the company registration authority.
Share Capital
The promoters of a company may make a capital contribution in currencies, or on-monetary
assets such as in kind or intellectual property rights or land use rights which can be appraised
with monetary value and transferred lawfully, except for assets which are prohibited from being
contributed as capital by the laws or administrative regulations. If a capital contribution is made
in non-monetary assets, a valuation and verification of the fair value of the assets contributed
must be carried out.
The issuance of shares shall be conducted in a fair and equitable manner. The same class of
shares must carry equal rights. For shares issued at the same time and within the same class, the
conditions and price per share must be the same. The share offering price may be equal to or
greater than the nominal value of the share, but may not be less than the nominal value. A PRC
domestic company must file with the CSRC to offer its shares to the overseas public. According
to the Trial Measures, target investors of overseas offering and listing by domestic companies
shall be overseas investors, unless prescribed in the Trial Measures or otherwise stipulated by
the state.
Increase in Share Capital
Under the PRC Company Law, where a company is issuing new shares, resolutions shall be
passed at shareholder’s meeting in accordance with the articles of association in respect of the
class and amount of the new shares, the issue price of the new shares.
After new shares issued by the company has been paid up, the change must be registered
with the company registration authorities and a public announcement must be made accordingly.
Where an increase in registered capital of a company is made by means of an issue of new
shares, the subscription of new shares by shareholders shall be governed by the relevant
provisions on the payment of stock capital for the establishment of a joint stock limited
company.
Reduction of Share Capital
When a company needs to reduce its registered capital, it shall prepare a balance sheet and
an inventory of property. The company shall inform its creditors within 10 days from the date of
resolution of the shareholders’ meeting on reduction in registered capital, and make an
announcement in the newspaper or the National Enterprise Credit Information Publicity System
within 30 days.
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The creditors have the right to demand the company to settle the debts or provide
corresponding guarantees within 30 days from the date of receipt of the notice, or within 45
days from the date of the announcement if the notice has not been received.
Repurchase of Shares
No company may purchase its own shares except under any of the following circumstances:
(1) where the company’s registered capital is reduced;
(2) where it merges with another company holding its shares;
(3) where its shares are used for employee stock ownership plan or equity incentives;
(4) where any shareholder, who raises objections to the resolution of the shareholders’
meeting on the merger or split-up of the company, requests the company to purchase
its shares;
(5) where its shares are used for converting the corporate bonds into convertible stocks
issued by the company; or
(6) it is necessary for a listed company to maintain its company value and its
shareholders’ equity.
Where a company purchases its own shares under any of the circumstances as mentioned in
items (1) or (2) of the preceding paragraph, a resolution of the shareholders’ meeting shall be
adopted. Where a company purchases its own shares under any of the circumstances as
mentioned in items (3), (5) or (6) of the preceding paragraph, a resolution shall be adopted at
the Board meeting with the attendance of not less than two thirds of the directors, according to
the articles of association or the shareholders’ meeting of the company.
After the company purchases its own shares according to the aforementioned, the shares
purchased shall be written off within ten days as of the purchase date under the circumstance as
mentioned in item (1); the shares shall be transferred or written off within six months under the
circumstance as mentioned in item (2) or (4); and the shares held accumulatively by the
company shall not exceed 10% of the total shares issued and be transferred or written off within
three years under any of the circumstances as mentioned in item (3), (5) or (6).
Where a listed company purchases its own shares, it shall perform its obligation of
information disclosure according to the provisions of the PRC Securities Law. Where a listed
company purchases its own shares due to any of the circumstances as mentioned in items (3), (5)
or (6), such purchase shall be conducted by way of public centralised trading.
No company may accept the shares of its own as the subject matter of pledge.
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Transfer of Shares
The shares held by a shareholder may be transferred to other shareholders or to persons
other than the shareholders of the company. Where the articles of association of the company
have any restriction on the transfer of shares, the transfer shall be carried out in accordance with
the articles of association. The share transfer by a shareholder shall be conducted on a lawfully
established stock exchange or by any other means as prescribed by the State Council.
The shares shall be transferred by a shareholder in the form of endorsement or by any other
means prescribed by the relevant laws or administrative regulations. After the transfer, the
company shall record the name and domicile of the transferee in the register of shareholders.
The register of shareholders shall not be modified within 20 days before any shareholders’
meeting is held, or within 5 days prior to the benchmark date decided by the company for the
distribution of dividends. Where it is otherwise provided for in any law, administrative
regulation or by the securities regulatory authority of the State Council for the modification of
the register of shareholders of a listed company, such provisions shall prevail.
The shares issued before a company makes a public offering of shares shall not be
transferred within 1 year as of the day when the stocks of the company are listed and traded on
the stock exchange. Where it is otherwise provided for in any law, administrative regulation or
by the securities regulatory authority of the State Council for the transfer of shares held by the
shareholders or actual controllers of a listed company, such provisions shall prevail.
The directors, supervisors and senior management of the company shall declare to the
company the shares they hold and the changes thereof. During their term of office as determined
when they assume the posts, the shares transferred each year shall not exceed 25% of the total
shares they hold of the company. The shares of the company held by them shall not be
transferred within 1 year as of the day when the stocks of the company are listed and traded on
the stock exchange. Any of the aforesaid persons shall not transfer the shares of the company
held within six months after he/she leaves the position in the company. Any other restrictions on
the transfer of company shares held by directors, supervisors or senior management may be
specified in the articles of association.
Where the shares are pledged within the time limit for restricted transfer as provided for by
laws and administrative regulations, the pledgee may not exercise the pledge right within such
restricted period.
Under the PRC Company Law and the Guidelines, the rights of holders of ordinary shares
of a joint stock limited company include the right:
(1) to receive dividends and profit distributions in any other form in proportion to their
shareholdings;
(2) to lawfully require, convene, preside over or attend general meetings either in person
or by proxy and exercise the corresponding voting right;
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(3) to supervise, present suggestions on or make inquiries about the operations of the
company;
(4) to transfer, donate or pledge their shares in accordance with the laws, administrative
regulations and the articles of association;
(5) to consult and copy the articles of association, register of shareholders, minutes of
shareholders’ meetings, resolutions of Board meetings or meetings of Supervisory
Committee, as well as financial and accounting reports of a company;
where the shareholders who separately or aggregately hold 3% or more of the
company’s shares for 180 consecutive days or more, to request to consult the
accounting books or accounting vouchers of the company;
where the shareholders request to consult or copy the relevant materials of a
wholly-owned subsidiary of the company, the provisions of this item (5) shall apply;
(6) in the event of the termination or liquidation of the company, to participate in the
distribution of the remaining property of the company in proportion to the shares held
by them;
(7) to require the company to buy their shares in the event of their objection to
resolutions of the general meeting concerning merger or division of the company; and
(8) any other shareholders’ rights provided for in laws, administrative regulations, other
regulatory documents and the articles of association.
The obligations of shareholders include the obligation to abide by the articles of
association, to pay the subscription monies in respect of the shares subscribed for, to be liable
for the company’s debts and liabilities to the extent of the amount of his or her subscribed
shares and any other shareholder obligation specified in the articles of association.
Shareholders’ Meetings
The shareholders’ meeting is the authority of the company, which exercises its powers in
accordance with the PRC Company Law.
The shareholders’ meeting shall exercise the following functions and powers:
(1) electing and replacing directors and supervisors and deciding on their remunerations;
(2) reviewing and approving the reports of the Board;
(3) reviewing and approving the reports of the Supervisory Committee;
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(4) reviewing and approving the plans for profit distribution and making up losses of the
company;
(5) making resolutions on the increase or decrease of the registered capital of the
company;
(6) making resolutions on the issuance of corporate bonds;
(7) making resolutions on the merger, split-up, dissolution, liquidation or change of
corporate form of the company;
(8) amending the articles of association; and
(9) other functions and powers as prescribed in the articles of association.
The shareholders’ meeting may authorise the Board to make resolutions on the issuance of
corporate bonds.
An annual shareholders’ meeting shall be held every year. If any of the following
circumstances occurs, an interim shareholders’ meeting shall be held within two months:
(1) where the number of directors is less than two thirds of the number as provided for by
PRC Company Law or the articles of association;
(2) where the outstanding losses of the company amounted to one-third of the company’s
total capital stock;
(3) where shareholders individually or in aggregate holding 10% or more of the
company’s shares request the convening of an extraordinary meeting;
(4) where the Board deems it necessary;
(5) where the Supervisory Committee proposes; or
(6) any other circumstances as provided for in the articles of association.
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The shareholders’ meeting shall be convened by the Board and presided over by the
chairman of the Board. If the chairman is unable or fails to perform his/her duties, the meeting
shall be presided over by the deputy chairman. If the deputy chairman is unable or fails to
perform his/her duties, the meeting shall be presided over by a director jointly elected by more
than half of the directors. If the Board is unable or fails to perform the duties of convening the
shareholders’ meeting, the Board shall timely convene and preside over the meeting. If the
Supervisory Committee fails to convene and preside over the meeting, shareholders who
separately or aggregately hold more than 10% of the shares of the company for more than 90
consecutive days may convene and preside over the meeting by themselves.
The time and place of the meeting and the matters to be deliberated shall be notified to
each shareholder 20 days before a shareholders’ meeting is held. For an interim shareholders’
meeting, a notice shall be served 15 days in advance. The shareholders who separately or
aggregately hold more than 1% of the shares of the company may, 10 days before a
shareholders’ meeting is held, submit an interim proposal in writing to the Board. The contents
of the interim proposal shall fall within the scope of powers of the shareholders’ meeting, and
the proposal shall have a clear agenda and specific matters on which resolutions are to be made.
The Board shall, within 2 days after it receives such a proposal, notify other shareholders and
submit the interim proposal to the shareholders’ meeting for deliberation, unless the interim
proposal is in violation of any law, administrative regulation or the articles of association or
fails to fall into the scope of powers of the shareholders’ meeting. The company shall not raise
the shareholding proportion of the shareholder who brings forward any interim proposal.
The shareholders’ meeting shall not make any resolution on any matter not specified in the
notice.
Under the PRC Company Law, shareholders present at a shareholders’ meeting have one
vote for each share they hold, save that the company’s shares held by the company are not
entitled to any voting rights.
An accumulative voting system may be adopted for the election of directors and
supervisors at the shareholder’s meeting pursuant to the provisions of the articles of association
or a resolution of the shareholder’s meeting. Under the accumulative voting system, each share
shall be entitled to the number of votes equivalent to the number of directors or supervisors to
be elected at the shareholder’s meeting, and shareholders may consolidate their votes for one or
more directors or supervisors when casting a vote.
Under the PRC Company Law, resolutions of the shareholders’ meeting must be passed by
more than half of the voting rights held by shareholders present at the meeting, with the
exception of matters relating to merger, division or dissolution of the company, increase or
reduction of registered share capital, change of corporate form or amendments to the articles of
association, which in each case must be passed by at least two-thirds of the voting rights held by
the shareholders present at the meeting.
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Minutes shall be prepared in respect of matters considered at the shareholders’ meeting and
the chairperson and directors attending the meeting shall endorse such minutes by signature. The
minutes shall be kept together with the shareholders’ attendance register and the proxy forms.
Board
If the Board of the company has more than three members, it may include an employees’
representative of the company. Where a company has 300 or more employees, the Board shall
include the employees’ representatives of the company unless the Supervisory Committee has
been established and includes employees’ representatives of the company according to law. The
employees’ representatives in the Board shall be democratically elected by the employees
through the employees’ representative congress, employees’ congress or by other means.
The term of office of directors shall be prescribed in the articles of association, but each
term shall not exceed three years. After the term of office of a director expires, he/she may be
reelected to serve another term. Where a director is not reelected timely upon expiration of the
term of office, or the resignation of any director during his/her term of office results in the
number of members of the Board being less than the quorum, the original director shall, before a
newly elected director takes office, perform his/her duties as a director according to the laws,
administrative regulations and the articles of association. Where a director resigns, he/she shall
notify the company in written form, and the resignation shall become effective on the day when
the company receives the notice. However, under any of the circumstances as mentioned
previously, the director shall continue performing his/her duties.
Under the PRC Company Law, the Board shall exercise the following functions and
powers:
(1) convening the shareholders’ meeting and reporting its work to the shareholders’
meeting;
(2) executing the resolutions of the shareholders’ meeting;
(3) deciding the business plans and investment scheme of the company;
(4) formulating the plans for profit distribution and making up for loss of the company;
(5) formulating the plan for increasing or decreasing the registered capital, as well as the
plan for issuance of corporate bonds;
(6) formulating the plan for merger, division, dissolution, or change of corporate form of
the company;
(7) deciding the establishment of the internal management body of the company;
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(8) deciding the appointment or dismissal of the manager of the company and the
remuneration thereof, and, according to the nomination of the manager, deciding on
hiring or dismissing deputy managers and financial director of the company as well as
their remuneration;
(9) formulating the basic management rules of the company; and
(10) other functions and powers specified in the articles of association or granted by the
shareholders’ meeting.
Board meetings shall be convened at least twice each year. Notices of meeting shall be
given to all directors and supervisors 10 days before the meeting. Interim board meetings may
be proposed to be convened by shareholders representing more than 10% of the voting rights,
more than one-third of the directors or the Supervisory Committee. The chairman of the Board
shall convene the meeting within 10 days of receiving such proposal, and preside over the Board
meeting. The board may otherwise determine the means and the period of notice for convening
an interim board meeting. Board meetings shall be held only if more than half of the directors
are present. Resolutions of the board shall be passed by more than half of all directors. Each
director shall have one vote for a resolution to be approved by the board. Directors shall attend
board meetings in person. If a director is unable to attend for any reason, he/she may appoint
another director to attend the meeting on his/her behalf by a written power of attorney
specifying the scope of authorisation.
The directors shall be responsible for the resolutions made by the Board. Where a
resolution of the Board is in violation of any law, administrative regulation, article of
association or resolution of the shareholders’ meeting and causes any serious loss to the
company, the directors who participate in adopting such resolution shall be liable for
compensation to the company. If a director is proved to have expressed his/her objection to the
voting on such resolution and such objection has been recorded in the minutes, he/she may be
exempted from liability.
Under the PRC Company Law, under any of the following circumstances, anyone may not
act as a director of a company:
(1) having no capacity for civil conduct or having limited capacity for civil conduct;
(2) having been sentenced to any criminal penalty due to an offence of corruption,
bribery, encroachment of property, misappropriation of property or disrupting the
order of the socialist market economy, or having been deprived of political rights due
to a crime, where a five-year period has not elapsed since the expiration of execution
period; If he/she is pronounced for suspension of sentence, a two-year period has not
elapsed since the expiration of the suspension of sentence;
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(3) serving as a director, factory director or manager of a company or enterprise which
has been bankrupt and liquidated and being personally liable for the bankruptcy of
such company or enterprise, where a three-year period has not elapsed since the
completion of the bankruptcy and liquidation;
(4) acting as the legal representative of a company or enterprise whose business licence
has been revoked or which was ordered to close down due to any violation of the law
and being personally liable, where a three-year period has not elapsed since the date
of revocation of business licence or the order for closure; or
(5) being listed as a dishonest person subject to enforcement by the people’s court due to
his/her failure to pay off a relatively large amount of due debts.
Where a company elects or appoints a director to which any of the above circumstances
applies, such election or appointment shall be null and void. A director to which any of the
above circumstances applies during his/her term of office shall be released of his/her duties by
the company.
Under the PRC Company Law, the board shall appoint a chairman and may appoint a vice
chairman.
The chairman and the vice chairman shall be elected with approval of more than half of all
the directors. The chairman shall convene and preside over the Board meetings and check the
implementation of the resolutions of the Board. The deputy chairman shall assist the chairman in
work. If the chairman is unable or fails to perform his/her duties, the deputy chairman shall
perform such duties. If the deputy chairman is unable or fails to perform his/her duties, a
director jointly elected by more than half of the directors shall perform such duties.
Supervisory Committee
The Supervisory Committee shall comprise 3 members or more. The Supervisory
Committee shall consist of representatives of the shareholders and an appropriate proportion of
representatives of the company’s staff, of which the proportion of representatives of the
company’s staff shall not be less than one-third, and the actual proportion shall be determined in
the articles of association. Representatives of the company’s staff at the Supervisory Committee
shall be democratically elected by the company’s staff at the staff representative assembly,
general staff meeting or otherwise. Directors and senior executive shall not act concurrently as
supervisors.
Each term of office of a supervisor is three years and he/she may serve consecutive terms if
reelected. A supervisor shall continue to perform his/her duties as a supervisor in accordance
with the laws, administrative regulations and the articles of association until a duly re-elected
supervisor takes office, if re-election is not conducted in a timely manner upon the expiry of
his/her term of office or if the resignation of supervisors results in the number of supervisors
being less than the quorum.
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The Supervisory Committee shall exercise the following functions and powers:
(1) examining the financial affairs of the company;
(2) supervising the acts of the directors and senior management in the performance of
their duties, and proposing the removal of the directors and senior management who
have violated laws, administrative regulations, the articles of association or the
resolutions of the shareholders’ meeting;
(3) requiring the directors and senior management to correct their acts if such acts damage
the interests of the company;
(4) proposing to convene interim shareholders’ meetings, and convening and presiding
over the shareholders’ meeting when the Board fails to implement the duties to
convene and preside over the shareholders’ meeting as prescribed in PRC Company
Law;
(5) presenting proposals to the shareholders’ meetings;
(6) initiating lawsuits against the directors and senior management according to relevant
provisions of the PRC Company Law; and
(7) other functions and powers provided for in the articles of association.
Supervisors may attend the Board meetings and raise inquiries or suggestions concerning
the matters subject to resolutions to be adopted by the Board. If the Supervisory Committee
finds any abnormality in the operation of the company, it may carry out an investigation. If
necessary, it may hire an accounting firm to assist in its work at the expense of the company.
The Supervisory Committee shall appoint a chairman and may appoint a vice chairman. The
chairman and the vice chairman of the supervisory board shall be elected by more than half of
the supervisors. The chairman of the Supervisory Committee shall convene and preside over the
meetings of Supervisory Committee. Where the chairman of the Supervisory Committee is
unable or fails to perform his/her duties, the vice chairman of the supervisory board shall
convene and preside over the meetings of Supervisory Committee. Where the vice chairman of
the Supervisory Committee is unable or fails to perform his/her duties, a supervisor elected by
more than half of the supervisors shall convene and preside over such meetings.
Manager and Senior Management
Under the PRC Company Law, a company shall have a manager who shall be appointed or
removed by the Board. The manager shall be responsible to the Board and exercise his/her
functions and powers according to the articles of association or the authorisation of the Board.
The manager shall attend the Board meetings as a non-voting member.
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According to the PRC Company Law, senior management refers to the manager, deputy
manager, head of finance, secretary to the Board of a listed company and other personnel as
stipulated in the articles of association.
Duties of Directors, Supervisors and Senior Management
Directors, supervisors and senior management shall assume the obligation of loyalty to the
company and take measures to avoid the conflict between their own interests and those of the
company and may not seek any improper interests by taking advantage of their powers.
The directors, supervisors and senior management shall assume the duty of diligence to the
company. When performing their duties, they shall, for the best interests of the company,
exercise the reasonable care that shall be generally possessed by a manager.
The provisions of the preceding two paragraphs shall apply to the controlling shareholder
or actual controller of a company who does not serve as a director but actually executes the
affairs of the company.
No director, supervisor or senior executive may have any of the following acts:
(1) embezzling the property or misappropriating the funds of the company;
(2) depositing the funds of the company into an account opened in his/her own name or in
the name of any other individual;
(3) giving bribes or accepting any other illegal proceeds by taking advantage of his/her
power;
(4) taking commissions from the transactions between the company and any other person
into his/her own pocket;
(5) unlawfully disclosing the confidential information of the company; or
(6) other acts in violation of the obligation of loyalty to the company.
Where any director, supervisor or senior executive directly or indirectly concludes a
contract or conducts a transaction with his/her company, he/she shall report the matters relating
to the conclusion of the contract or transaction to the Board or shareholders’ meeting, which
shall be subject to the resolution of the Board or shareholders’ meeting according to the articles
of association.
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Where any of the near relatives of the directors, supervisors or senior management, or any
of the enterprises directly or indirectly controlled by the directors, supervisors or senior
management or any of their near relatives, or any of the related parties who has any other
related-party relationship with the directors, supervisors or senior management, concludes a
contract or conducts a transaction with the company, the provisions of the preceding paragraph
shall apply.
No director, supervisor or senior executive may take advantage of his/her position to seek
any business opportunity that belongs to the company for himself/herself or any other person
except under any of the following circumstances:
(1) where he/she has reported to the Board or the shareholders’ meeting and has been
approved by a resolution of the Board or the shareholders’ meeting according to the
articles of association; or
(2) where the company cannot make use of the business opportunity as stipulated by laws,
administrative regulations or the articles of association.
Where any director, supervisor or senior executive fails to report to the Board or the
shareholders’ meeting and obtain an approval by resolution of the Board or the shareholders’
meeting according to the articles of association, he/she may not engage in any business that is
similar to that of the company where he/she holds office for himself/herself or for any other
person.
The incomes derived by any director, supervisor or senior executive in violation of related
provisions of the PRC Company Law shall belong to the company.
If the shareholders’ meeting demands a director, supervisor or senior executive to attend the
meeting as a non-voting delegate, he/she shall do so and answer shareholders’ inquiries.
Where any director, supervisor or senior executive violates any law, administrative
regulation or the articles of association during the performance of duties and causes any loss to
the company, he/she shall be liable for compensation.
Where any director or senior executive is under the circumstance as mentioned in the
preceding provisions, the shareholders of a joint stock limited company separately or
aggregately holding 1% or more of the total shares of the company for 180 consecutive days or
more may request the Supervisory Committee in writing to initiate a lawsuit in the people’s
court. If any supervisor is under the circumstance in the preceding provisions, the aforesaid
shareholders may request the Board in writing to file a lawsuit with the people’s court.
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Where the Supervisory Committee or the Board refuses to initiate a lawsuit after it receives
a written request of the shareholders as mentioned in the preceding paragraph, or fails to file a
lawsuit within 30 days upon receipt of the request, or in an emergency, the failure to initiate a
lawsuit immediately will cause irreparable damage to the interests of the company, the
shareholders in the preceding paragraph shall have the right to directly initiate a lawsuit in the
people’s court in their own name for the interests of the company.
If others infringe upon the legitimate rights and interests of a company and cause losses to
the company, the shareholders of a joint stock limited company separately or aggregately
holding 1% or more of the total shares of the company for 180 consecutive days or more may
initiate a lawsuit in the people’s court in accordance with the related provisions of the PRC
Company Law.
If a director, supervisor or senior executive of a wholly-owned subsidiary of the company
is under the aforementioned circumstance, or if the legitimate rights and interests of a
wholly-owned subsidiary of the company are impaired by any other person, thus causing any
losses, shareholders of a joint stock limited company separately or aggregately holding 1% or
more of the total shares of the company for 180 consecutive days or more may request the
Supervisory Committee or the Board of the wholly-owned subsidiary in written form to initiate a
lawsuit in the people’s court or directly files a lawsuit with the people’s court in their own
name.
Finance and Accounting
A company shall establish its own financial and accounting systems according to the laws,
administrative regulations and the regulations of the competent financial departments of the
State Council. At the end of each financial year, a company shall prepare a financial report
which shall be audited by an accounting firm in accordance with the laws. The financial and
accounting reports shall be prepared in accordance with the laws, administrative regulations and
the regulations of the financial departments of the State Council.
The company’s financial reports shall be made available for shareholders’ inspection at the
company 20 days before the convening of an annual general meeting. A joint stock limited
company that makes public stock offerings shall publish its financial reports.
When a company distributes its after-tax profit for the current year, 10% of the profit shall
be accrued and included in the company’s statutory reserve. Such accrual is no longer required
when the accumulated amount of the company’s statutory reserve is more than 50% of the
company’s registered capital. Where the accumulative amount of the company’s statutory reserve
is not enough to make up for the losses of the previous year, the current year’s profits shall first
be used to make up for the losses before the statutory reserve is accrued according to the
provisions of the preceding paragraph.
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After having accrued statutory reserve from the after-tax profits, a company can also set
aside discretionary reserve from the after-tax profits upon a resolution made by the shareholders’
meeting.
The residual after-tax profits after a company has made up its losses and accrued reserve
can be distributed by the company in proportion to the shares held by its shareholders, except as
otherwise provided for in the company’s articles of association.
Profit shall not be distributed for a company’s shares held by this company.
Where a company distributes profits to shareholders in violation of the provisions of PRC
Company Law, the shareholders shall refund the profits distributed to the company, and the
shareholders and the liable directors, supervisors and senior management shall be held liable for
compensation if any loss is caused to the company.
The reserve of a company shall be used for making up losses, expanding the production and
business scale or increasing the registered capital of the company. Where the reserve of a
company is used for making up losses, the discretionary reserve and statutory reserve shall be
firstly used. If losses still cannot be made up, the capital reserve can be used according to the
relevant provisions. Where the statutory reserve is converted to increase registered capital, the
amount of such reserve retained shall not be less than 25% of the registered capital of the
company prior to the conversion.
The company shall have no accounting books other than the statutory books. No account
shall be opened in the name of any individual for the deposit of a company’s funds.
Appointment and Retirement of Auditors
Pursuant to the PRC Company Law, the engagement or dismissal of an accounting firm
responsible for the company’s auditing shall be determined by a shareholders’ meeting, the
Board or the Supervisory Committee in accordance with the articles of association. The
accounting firm should be allowed to make representations when the shareholders’ meeting, the
Board or the Supervisory Committee conduct a vote on the dismissal of the accounting firm. The
company should provide true and complete accounting documents, accounting books, financial
and accounting reports and other accounting information to the engaged accounting firm, and
shall not refuse, conceal or misrepresent.
Profit Distribution
According to the PRC Company Law, the residual after-tax profits after a company has
made up its losses and accrued reserve can be distributed by the company in proportion to the
shares held by its shareholders, except as otherwise provided for in the company’s articles of
association.
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Dividends
A company has the power in certain circumstances to withhold, and pay to the relevant tax
authorities, any tax payable under PRC laws on any dividends or other distributions payable to a
shareholder. Under PRC laws, the limitation period for an action to recover a debt (including the
recovery of dividends) is three years. A company must not exercise its powers to forfeit any
unclaimed dividend in respect of shares until after the expiry of the applicable limitation period.
Amendments to the Articles of Association
Pursuant to PRC Company Law, the resolution of a shareholders’ meeting regarding any
amendment to a company’s articles of association requires affirmative votes by at least
two-thirds of the votes held by shareholders attending the meeting.
Dissolution and Liquidation
Under the PRC Company Law, a company shall be dissolved for any of the following
reasons:
(1) the term of its operation set out in the articles of association has expired or other
events of dissolution specified in the articles of association have occurred;
(2) the shareholders’ meeting has resolved to dissolve the company;
(3) the company is dissolved by reason of its merger or division;
(4) the business licence of the company is revoked or the company is ordered to close
down or to be dissolved in accordance with the laws;
(5) the company is dissolved by a people’s court in response to the request of
shareholders who hold 10% or more of the voting rights of the company, on the
grounds that the operation and management of the company has suffered serious
difficulties that cannot be resolved through other means, rendering ongoing existence
of the company a cause for significant losses to the shareholders.
If any of the situations as mentioned in the preceding paragraph arises, a company shall
publicise the situations through the National Enterprise Credit Information Publicity System
within ten days.
Where a company falls under the circumstance as mentioned in item (1) or (2) above, and it
has not distributed the assets to its shareholders yet, it may survive by modifying its articles of
association or upon a resolution of the shareholders’ meeting. To modify its articles of
association or make a resolution of the shareholders’ meeting according to the provisions of the
preceding paragraph, the consent of two thirds or more of the voting rights of the shareholders
who attend the meeting of the shareholders’ meeting is required.
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Where a company is dissolved according to item (1), (2), (4) or (5) above, it shall be
liquidated. The directors, who are the liquidation obligors of the company, shall form a
liquidation committee to carry out liquidation within 15 days from the date of occurrence of the
cause of dissolution. The liquidation committee shall be composed of the directors, unless it is
otherwise provided for in the company’s articles of association or it is otherwise elected by the
shareholders’ meeting. The liquidation obligors shall be liable for compensation if they fail to
fulfil their obligations of liquidation in a timely manner, and thus any loss is caused to the
company or the creditors.
Where a company shall be liquidated in accordance with the preceding provision, and the
liquidation committee fails to be formed within the time limit or fails to carry out the liquidation
after its formation, any interested party may request the people’s court to designate relevant
persons to form a liquidation committee. The people’s court shall accept such request and
organise a liquidation committee to carry out the liquidation in a timely manner. Where a
company is dissolved according to item (4), the department or company registration authority
that made the decision to revoke the company’s business licence, ordered the company to close
down or dissolved the company may request the people’s court to designate relevant persons to
form a liquidation committee for liquidation of the company.
The liquidation committee may exercise following powers during the liquidation:
(1) to sort out the company’s assets and to prepare a statement of financial position and
an inventory of assets, respectively;
(2) to notify creditors by notice or public notices;
(3) to deal with any outstanding business related to the liquidation;
(4) to pay outstanding tax together with any tax arising during the liquidation process;
(5) to settle claims and liabilities;
(6) to distribute the company’s remaining assets after its debts have been paid off;
(7) to represent the company in any civil procedures.
The liquidation committee shall notify the company’s creditors within 10 days of its
establishment, and publish an announcement in newspapers or on the National Enterprise Credit
Information Publicity System within 60 days.
A creditor shall lodge his claim with the liquidation committee within 30 days of receipt of
the notification or within 45 days of the date of the announcement if he has not received any
notification. A creditor shall report all matters relevant to his claimed creditor’s rights and
furnish relevant evidence. The liquidation committee shall register such creditor’s rights. The
liquidation committee shall not make any settlement to creditors during the period of the claim.
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Upon disposal of the company’s property and preparation of the required statement of
financial position and inventory of assets, the liquidation committee shall draw up a liquidation
plan and submit this plan to a shareholders’ meeting or a people’s court for endorsement. The
remaining part of the company’s assets, after payment of liquidation expenses, employee wages,
social insurance expenses and statutory compensation, outstanding taxes and the company’s
debts, shall be distributed to shareholders in proportion to shares held by them. The company
shall continue to exist during the liquidation period, although it cannot conduct operating
activities that are not related to the liquidation. The company’s property shall not be distributed
to shareholders before repayments are made in accordance with the requirements described
above.
Upon liquidation of the company’s property and preparation of the required statement of
financial position and inventory of assets, if the liquidation committee becomes aware that the
company does not have sufficient assets to meet its liabilities, it shall file an application to a
people’s court for bankruptcy liquidation in accordance with the laws. After the people’s court
accepts the application for bankruptcy, the liquidation committee shall hand over the liquidation
matters to the bankruptcy administrator designated by the people’s court.
The members of the liquidation committee performing their duties of liquidation are
obliged to loyalty and diligence. Any member of the liquidation committee who neglects to fulfil
his/her liquidation duties, thus causing any loss to the company shall be liable for compensation,
and any member of the liquidation committee who cause any loss to any creditor due to his/her
intentional or gross negligence shall be liable for compensation.
Upon completion of the liquidation, the liquidation committee shall prepare a liquidation
report and submit it to the shareholders’ meeting or a people’s court for confirmation of its
completion and submit the same to the company registration authority to apply for deregistration
of the company. The members of the liquidation committee performing their duties of liquidation
are obliged to loyalty and diligence. Any member of the liquidation committee who neglects to
fulfil his/her liquidation duties, thus causing any loss to the company shall be liable for
compensation, and any member of the liquidation committee who cause any loss to any creditor
due to his/her intentional or gross negligence shall be liable for compensation.
Where, during the period of survival, a company has not incurred any debts or has paid off
all the debts, the company may, upon a commitment of all the shareholders, be deregistered
under the summary procedures according to the relevant provisions. The deregistration of a
company under the summary procedures shall be announced through the National Enterprise
Credit Information Publicity System for a period of no less than 20 days. If there is no objection
after the expiry of the announcement period, the company may apply for deregistration of the
company with the company registration authority within 20 days. For a company deregistered
under the summary procedures, its shareholders shall be jointly and severally liable for the debts
incurred before the deregistration if they have made untrue commitment thereof.
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Where, after three years since the business licence of a company is revoked, or the
company is ordered to close down or is revoked, the company fails to apply for its deregistration
with the company registration authority, the said authority may announce the company’s
deregistration through the National Enterprise Credit Information Publicity System for a period
of no less than 60 days. If there is no objection after the announcement period expires, the
company registration authority may deregister the company. The deregistration of a company
under such situation will not affect the liability of the original shareholders or liquidation
obligors.
Liquidation of a company declared bankrupt according to laws shall be processed in
accordance with the laws on corporate bankruptcy.
Overseas Listing
Pursuant to the Trial Measures, where an issuer submits an application for initial public
offering to competent overseas regulators, such issuer must file with the CSRC within three PRC
business days after such application is submitted.
Merger and Division
A merger agreement shall be signed by merging companies and the involved companies
shall prepare respective statements of financial position and inventory of assets. The companies
shall within 10 days of the date of passing the resolution approving the merger notify their
respective creditors and publicly announce the merger in newspapers or National Enterprise
Credit Information Publicity System within 30 days. A creditor may, within 30 days of receipt of
the notification, or within 45 days of the date of the announcement if he has not received the
notification, request the company to settle any outstanding debts or provide relevant guarantees.
In case of a merger, the credits and debts of the merging parties shall be assumed by the
surviving or the new company.
In case of a division, the company’s assets shall be divided and a statement of financial
position and an inventory of assets shall be prepared. When a resolution regarding the
company’s division is approved, the company should notify all its creditors within 10 days of
the date of passing such resolution and publicly announce the division in newspapers or National
Enterprise Credit Information Publicity System within 30 days. Unless an agreement in writing
is reached with creditors before the company’s division in respect of the settlement of debts, the
liabilities of the company which have accrued prior to the division shall be jointly borne by the
divided companies.
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THE U.S.
Corporate law: formation and compliance (California law)
Corporate law governs the creation, organisation, and operation of business entities. Each
state has its own corporate laws, and in California, business entities are regulated primarily by
the California Corporations Code. The choice of business entity is a critical decision for
entrepreneurs as it affects liability, taxation, and the ability to raise capital. Key types of
business entities include corporations, limited liability companies (LLCs), partnerships, and sole
proprietorships. Each entity type has different legal implications and is subject to various state
and federal laws.
Business entity formation
Businesses in California must file formation documents with the California Secretary of
State to legally form an entity. For corporations, this involves filing Articles of Incorporation,
while for LLCs, it involves filing Articles of Organisation. The formation documents generally
include key details such as the business name, purpose, registered agent, and address. For
corporations, they also include information as to the number of authorised shares.
Corporations must adopt bylaws, which outline the internal rules and governance structure,
including how directors are elected, how meetings are conducted, and how decisions are made.
LLCs operate under an operating agreement, which serves a similar function but is generally
more flexible, allowing LLC members to define their own governance rules.
California law also requires businesses to designate a registered agent to receive legal
documents on behalf of the entity. The registered agent must be a California resident or a
company authorised to do business in California.
In addition to filing formation documents, businesses are required to file Statements of
Information, providing updated details about the business’s directors, officers, and agents.
Statement of Information filing requirements vary depending on the type of entity (corporation
or limited liability company), jurisdiction of formation, and for corporations, if the entity is a
stock or nonprofit corporation. Statements of Information can be filed online at the California
Secretary of State website. Generally, CA Stock Corporations and Qualified Out-of-State
Corporations are required to file their Statement of Information yearly in the month of
registration with the California Secretary of State. California Nonprofit Corporations and all
Limited Liability Companies are required to file every two years in the month of registration in
even or odd years based on the year of registration. All businesses should file a Statement of
Information when information changes and must file a new Statement of Information when their
agent for service of process resigns or is no longer valid.
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Corporate governance
Corporate governance refers to the system by which companies are directed and controlled.
In California, corporate governance rules are primarily established by the California
Corporations Code. The law imposes fiduciary duties on corporate directors and officers to
ensure they act in the best interests of the corporation and its shareholders.
Key fiduciary duties include:
 Duty of care: Directors and officers must act with the care that a reasonably prudent
person would exercise in a similar situation. This includes staying informed about the
company’s operations and making decisions based on adequate information.
 Duty of loyalty: Directors and officers must prioritise the interests of the corporation
over their own personal interests. This includes avoiding conflicts of interest and not
engaging in self-dealing.
To maintain transparency and accountability, California law requires corporations to hold
annual meetings of shareholders and directors. These meetings provide a forum for discussing
important issues, such as electing directors and officers, approving major transactions, and
reviewing the company’s financial performance. Minutes of these meetings must be recorded and
retained as part of the corporate records. Alternatively, under Sections 307 and 603 of the
California Corporations Code, shareholders and directors of a corporation may choose to have
those actions required or permitted to be taken by the board or those actions that may be taken
at any annual or special meeting of shareholders also be taken without a meeting in the form of
written consents.
In terms of recordkeeping, California law mandates that corporations keep accurate and
complete books and records of accounts. This includes maintaining financial statements, board
meeting minutes, and shareholder records. Failure to comply with corporate governance
requirements can expose directors and officers to personal liability for breaches of fiduciary
duty.
Piercing the corporate veil
One of the primary reasons for incorporating a business is to protect shareholders from
personal liability for the company’s debts and obligations. However, under certain
circumstances, courts may “pierce the corporate veil,” meaning they will hold shareholders
personally liable for the company’s actions.
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In California, courts may pierce the corporate veil if they find that:
 The corporation was used to perpetrate fraud or was grossly undercapitalised.
 The corporation failed to follow corporate formalities, such as holding regular
meetings or maintaining proper records.
 There was a commingling of personal and corporate assets.
By adhering to the governance requirements outlined in the California Corporations Code,
businesses can reduce the risk of veil piercing and protect the personal assets of shareholders.
Tax law (federal and California law)
Taxation is one of the most significant regulatory areas for businesses, with obligations
arising at both the federal and state levels. In the U.S., businesses are subject to income taxes,
payroll taxes, and other taxes depending on the structure and location of the business.
Federal taxation (internal revenue code)
At the federal level, business taxation is governed by the Internal Revenue Code (IRC). The
taxation system depends on the legal structure of the business, with different rules applying to
C-Corporations, S-Corporations, LLCs, and partnerships.
C-Corporations are subject to “double taxation,” meaning the corporation pays taxes on its
income at a corporate rate, and shareholders are taxed again on dividends. The corporate tax rate
was reduced to a flat 21% following the passage of the Tax Cuts and Jobs Act (TCJA) in 2017.
In addition to corporate income taxes, C-Corporations must file annual returns using Form 1120.
Pass-through entities such as S-Corporations, LLCs, and partnerships do not pay income
taxes at the corporate level. Instead, the profits and losses of the business “pass through” to the
owners, who report the income on their personal tax returns. The IRS taxes these individuals at
their personal income tax rates, and they must file forms like Form 1065 (for partnerships) or
Form 1120S (for S-Corporations) to report their business activity.
There are certain limitations as to the identity and residential status of the shareholders of a
corporation that determine if it may elect to file as a S-Corporation. For example, a corporation
generally would not be allowed to elect a S-Corp status if any of its shareholders were foreign
residents or C-Corporations.
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In addition to income taxes, businesses are subject to a variety of federal payroll taxes,
including:
 Social Security and Medicare Taxes (FICA): Employers must withhold these taxes
from employee wages and contribute an equal amount on behalf of the employee.
 Federal Unemployment Tax (FUTA): Employers must also pay FUTA tax, which
funds unemployment benefits for workers who lose their jobs.
Federal payroll taxes are reported on forms such as Form 941 (Employer’s Quarterly
Federal Tax Return) and Form 940 (Annual FUTA Return).
California state taxation
In addition to federal taxes, businesses operating in California are subject to state taxes
administered by the Franchise Tax Board (FTB). The primary taxes include corporate income
tax, franchise tax, and LLC fees.
Corporate Income Tax: California imposes an 8.84% corporate income tax on the net
income of C-Corporations. This tax applies to corporations operating within the state, even if
they are incorporated elsewhere. Corporations must file Form 100 (California Corporation
Franchise or Income Tax Return) annually.
Franchise Tax: All corporations, including S-Corporations and LLCs taxed as corporations,
must pay a minimum annual franchise tax of $800, regardless of whether they are profitable.
This tax is intended to cover the privilege of doing business in California.
LLC Fees: In addition to the franchise tax, LLCs are subject to an additional fee based on
their total income from all sources derived from or attributable to California. The fee ranges
from $900 to $11,790, depending on the LLC’s gross receipts.
California also imposes various other taxes, such as sales and use tax, which applies to all
retail sales of goods and merchandise except those sales specifically exempted by law. The use
tax generally applies to the storage, use, or other consumption in California of goods purchased
from retailers in transactions not subject to the sales tax. Use tax may also apply to purchases
shipped to a California consumer from another state, including purchases made by mail order,
telephone, or Internet. The sales and use tax rate in a specific California location has three parts:
the state tax rate, the local tax rate, and any district tax rate that may be in effect.
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Payroll taxes
In addition to federal payroll taxes, California employers are responsible for paying state
payroll taxes, which fund various state programmes. These taxes include:
 State Disability Insurance (SDI): SDI is a state-mandated programme that provides
short-term disability benefits to workers who are unable to work due to
non-work-related injuries or illnesses. Employers are required to withhold SDI
contributions from employee wages.
 Unemployment Insurance (UI): California’s Unemployment Insurance programme
provides temporary financial assistance to workers who lose their jobs. Employers
must pay UI taxes based on a percentage of each employee’s wages, up to a certain
limit.
 Employment Training Tax (ETT): The Employment Training Tax is used to fund
job training programmes in California. It is paid by employers at a very low rate and
is included in the overall payroll tax calculations.
Employers in California report these payroll taxes on forms such as DE-9 (Quarterly
Contribution Return and Report of Wages) and DE-9C (Quarterly Contribution Return and
Report of Wages – Continuation), which are filed with the Employment Development
Department (EDD).
Labour and employment law (California law)
California is known for having some of the most employee-friendly labour and employment
laws in the country. These laws are designed to protect workers’ rights and regulate the
employer-employee relationship, covering everything from wage and hour rules to workplace
safety.
At-will employment
California operates under an at-will employment system, codified in California Labour
Code § 2922. This means that an employer can terminate an employee at any time, for any
reason, or for no reason, as long as it is not an illegal reason. Similarly, employees are free to
quit their jobs at any time without notice.
However, there are exceptions to the at-will doctrine. Employers cannot terminate
employees for reasons that violate state or federal anti-discrimination laws, or for engaging in
protected activities such as whistleblowing, taking family or medical leave, or reporting unsafe
working conditions.
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Wage and hour laws
California’s wage and hour laws are designed to protect workers from unfair pay practices.
These laws are governed by the California Labour Code and the Industrial Welfare Commission
(IWC) Wage Orders, which cover specific industries and occupations.
Key wage and hour rules include:
 Minimum wage: As of 2024, California’s state minimum wage is $16 per hour for
most employees. Some local jurisdictions, such as San Francisco and Los Angeles,
have enacted higher minimum wages.
 Overtime pay: California’s overtime law requires employers to pay non-exempt
employees 1.5 times their regular rate of pay for any hours worked beyond 8 hours in
a day or 40 hours in a week. Employers must pay double time for any hours worked
beyond 12 hours in a day.
 Meal and rest breaks: California mandates that non-exempt employees be provided
with a 30-minute unpaid meal break for every 5 hours worked, and a 10-minute paid
rest break for every 4 hours worked. Failure to provide these breaks entitles
employees to an additional hour of pay for each day a break is missed.
Workers’ compensation
All California employers are required to carry workers’ compensation insurance to cover
medical expenses and lost wages for employees who are injured on the job. The workers’
compensation system is a no-fault system, meaning employees do not need to prove employer
negligence to receive benefits.
The California Workers’ Compensation Act outlines the types of benefits available to
injured workers, including:
 Medical care: Workers’ compensation covers the all reasonable and necessary costs of
medical treatment related to the injury.
 Temporary disability benefits: These benefits provide partial wage replacement for
workers who are temporarily unable to perform their jobs due to an injury.
 Permanent disability benefits: If a worker suffers a permanent disability that impairs
their ability to work, they may be eligible for permanent disability benefits.
 Death benefits: If an employee dies as a result of a work-related injury, their
dependents may be entitled to death benefits.
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Failure to carry workers’ compensation insurance can result in severe penalties, including
fines and potential criminal charges.
Anti-discrimination laws
Both federal and state laws prohibit discrimination in the workplace. At the federal level,
anti-discrimination laws include:
 Title VII of the Civil Rights Act of 1964: Prohibits discrimination based on race,
colour, religion, sex, or national origin.
 Americans with Disabilities Act (ADA): Prohibits discrimination against individuals
with disabilities and requires employers to provide reasonable accommodations.
 Age Discrimination in Employment Act (ADEA) of 1967: protects certain applicants
and employees 40 years of age and older from discrimination on the basis of age in
hiring, promotion, discharge, compensation, or terms, conditions or privileges of
employment.
In California, the primary anti-discrimination law is the Fair Employment and Housing Act
(FEHA), which provides broader protections than federal law. FEHA prohibits discrimination
based on additional protected characteristics, including sexual orientation, gender identity,
marital status, and medical condition (cancer and genetic characteristics). It also applies to
smaller employers, covering those with five or more employees, compared to the 15-employee
threshold under federal law.
FEHA also requires employers to take proactive steps to prevent harassment in the
workplace. Employers with 5 or more employees are required to provide at least two hours of
classroom or other effective interactive training and education regarding sexual harassment to all
supervisory employees and at least one hour of classroom or other effective interactive training
and education regarding sexual harassment to all nonsupervisory employees in California.
Thereafter, each employer covered by this section shall provide sexual harassment training and
education to each employee in California once every two years. New nonsupervisory employees
shall be provided training within six months of hire. New supervisory employees shall be
provided training within six months of the assumption of a supervisory position.
Employees who believe they have been discriminated against can file a complaint with the
California Department of Fair Employment and Housing (DFEH), which investigates allegations
and may pursue enforcement actions.
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Family and medical leave
The federal Family and Medical Leave Act (FMLA) provides eligible employees with up to
12 weeks of unpaid leave per year for certain family and medical reasons, including the birth or
adoption of a child, a serious health condition, or caring for an immediate family member with a
serious health condition.
California has its own version of this law, the California Family Rights Act (CFRA), which
mirrors the FMLA but offers additional protections. Under CFRA, employees can take leave for
similar reasons as FMLA but are also protected from retaliation for exercising their leave rights.
In addition, California has a Paid Family Leave (PFL) programme, which provides partial
wage replacement to employees who take time off to care for a seriously ill family member, to
bond with a new child, or to participate in a qualifying event because of a family member’s
military deployment.
Intellectual property law (Federal law)
Intellectual property (IP) law protects the rights of individuals and entities to control the
use of their creations, inventions, and innovations. In the U.S., IP law is governed primarily at
the federal level, and there are several key areas of intellectual property protection, including
trademarks, patents, and copyrights.
Trademark law
Trademarks are protected under the Lanham Act, the primary federal statute governing
trademark registration and protection. A trademark is a word, name, symbol, or device used to
identify and distinguish goods or services from those offered by others.
Key provisions of trademark law include:
 Registration: Trademarks can be registered with the United States Patent and
Trademark Office (USPTO). While common law rights in trademarks can exist without
registration, federal registration provides several benefits, including nationwide
protection, the presumption of ownership, and the ability to bring an action for
infringement in federal court.
 Infringement: Trademark infringement occurs when another party uses a mark that is
confusingly similar to a registered mark in a way that causes confusion among
consumers. The owner of a trademark can file a lawsuit in federal court to stop the
infringement and seek damages.
 Dilution: Famous trademarks are also protected from dilution, which occurs when the
distinctiveness of a famous mark is weakened, even in the absence of direct
competition or likelihood of confusion.
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 Renewal: Trademarks must be renewed periodically to maintain their protection.
Federal trademarks must be renewed between the 5th and 6th year after registration
and then every 10 years after that.
Trademark owners have the exclusive right to use their marks in connection with the goods
or services for which the mark is registered. Unauthorised use of a mark can result in legal
action to enforce trademark rights.
Patent law
Patent law in the U.S. is governed by the Patent Act, and patents are issued by the USPTO.
Patents provide inventors with the exclusive right to make, use, sell, or import their inventions
for a limited period, in exchange for public disclosure of the invention.
There are three primary types of patents:
 Utility patents: These are the most common type of patent and are granted for new
and useful processes, machines, manufactures, or compositions of matter. Utility
patents last for 20 years from the filing date.
 Design patents: These patents protect the ornamental design of a functional item,
such as the shape of a bottle or the design of a piece of furniture. Design patents last
for 15 years from the date of issuance.
 Plant patents: These are granted for new and distinct varieties of plants that are
asexually reproduced. Plant patents last for 20 years from the filing date.
To obtain a patent, the invention must meet certain requirements, including novelty,
non-obviousness, and usefulness. Once granted, the patent owner has the exclusive right to
exploit the patented invention. Patent infringement occurs when another party makes, uses, or
sells a patented invention without permission, and the patent owner can sue for damages and
seek an injunction to stop the infringement.
Copyright law
Copyright protection is governed by the Copyright Act of 1976 and applies to original
works of authorship, including literary, artistic, musical, and architectural works. Copyright
protection is automatic upon the creation of a work, but registration with the U.S. Copyright
Office provides additional legal benefits, including the ability to bring a lawsuit for
infringement.
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Copyright law grants the author of a work several exclusive rights, including:
 The right to reproduce the work.
 The right to distribute copies of the work.
 The right to create derivative works.
 The right to publicly perform or display the work.
The duration of copyright protection depends on when the work was created. For works
created after 1 January 1978, copyright protection lasts for the life of the author plus 70 years.
For works made for hire, the copyright lasts for 95 years from first publication or 120 years
from creation, whichever is shorter.
Copyright infringement occurs when another party exercises one of the copyright owner’s
exclusive rights without permission. Remedies for copyright infringement can include statutory
damages, compensatory damages, and injunctive relief.
Environmental and safety regulations (California and federal law)
Environmental law in the United States is a combination of federal and state regulations
aimed at protecting the environment and ensuring public health and safety. Federal
environmental laws are administered by the Environmental Protection Agency (EPA), while
California enforces its own environmental regulations through the California Environmental
Protection Agency (CalEPA) and the California Air Resources Board (CARB).
Federal environmental regulations
At the federal level, the EPA is responsible for enforcing several key environmental laws,
including:
 The Clean Air Act (CAA): The Clean Air Act is the primary federal law governing
air pollution. It regulates emissions from stationary sources (e.g., factories) and
mobile sources (e.g., cars and trucks). The CAA establishes National Ambient Air
Quality Standards (NAAQS) to protect public health and welfare and requires states to
develop plans for achieving and maintaining these standards.
 The Clean Water Act (CW A): The Clean Water Act governs water pollution and
regulates discharges of pollutants into U.S. waters. The law establishes water quality
standards for surface waters and regulates activities such as the discharge of industrial
pollutants and the placement of dredged or fill material in wetlands.
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 The Resource Conservation and Recovery Act (RCRA): RCRA governs the disposal
of solid and hazardous waste. It sets standards for the generation, transportation,
treatment, storage, and disposal of hazardous waste, and establishes a framework for
managing non-hazardous waste.
 The Comprehensive Environmental Response, Compensation, and Liability Act
(CERCLA): Also known as Superfund, CERCLA authorises the federal government to
respond to releases or threatened releases of hazardous substances that may endanger
public health or the environment. It also establishes a fund to clean up contaminated
sites.
Violations of federal environmental laws can result in significant fines, penalties, and
cleanup costs. The EPA has the authority to enforce these laws through administrative actions,
civil lawsuits, and criminal prosecutions.
California environmental laws
California has a reputation for being a leader in environmental regulation, with many state
laws that are stricter than their federal counterparts. Key California environmental laws include:
 The California Environmental Quality Act (CEQA): CEQA requires state and local
agencies to evaluate the environmental impact of proposed projects and to mitigate or
avoid significant adverse effects on the environment. CEQA applies to both public and
private projects that require government approval and ensures that decision-makers
consider the environmental consequences of their actions.
 The California Global Warming Solutions Act (AB 32): AB 32, passed in 2006,
established a statewide goal to reduce greenhouse gas emissions to 1990 levels by
2020. The law gives CARB the authority to adopt regulations to achieve these
emissions reductions and to implement a cap-and-trade programme for major emitters
of greenhouse gases.
 The California Clean Air Act: This law gives CARB the authority to regulate air
pollution in the state and to adopt emissions standards for mobile sources that are
more stringent than federal standards. California is the only state with the authority to
set its own vehicle emissions standards, and other states are allowed to adopt
California’s standards.
California businesses must comply with both federal and state environmental regulations,
and failure to do so can result in penalties, enforcement actions, and civil or criminal liability.
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Commercial law and contracts (California and federal law)
Commercial law governs the transactions and relationships between businesses and
individuals in commercial activities. Contracts form the foundation of commercial law, and
businesses must comply with both federal and state contract laws.
Uniform Commercial Code (UCC)
The UCC is a set of laws adopted by all 50 states, including California, to regulate
commercial transactions. The UCC covers a wide range of transactions, including the sale of
goods, leases of personal property, negotiable instruments, and secured transactions.
Key articles of the UCC include:
 Article 2 (Sales): Article 2 governs the sale of goods. It establishes rules for contract
formation, performance, and remedies for breach of contract. Article 2 also provides
implied warranties, such as the warranty of merchantability and the warranty of fitness
for a particular purpose.
 Article 9 (Secured Transactions): Article 9 governs secured transactions, where a
lender takes a security interest in a debtor’s personal property to secure the payment
of a debt. Article 9 provides rules for the creation, perfection, and enforcement of
security interests.
In California, the UCC is codified in the California Commercial Code. Businesses engaged
in commercial transactions must comply with the provisions of the UCC to ensure the
enforceability of their contracts and the protection of their rights.
Contract law
Contract law is primarily governed by state law, and in California, contracts are regulated
by the California Civil Code. A contract is a legally enforceable agreement between two or more
parties, and it must meet certain elements to be valid:
 Offer and acceptance: One party must make an offer, and the other party must accept
the offer. The acceptance must mirror the terms of the offer, and any changes to the
terms constitute a counteroffer.
 Consideration: Each party must give something of value in exchange for the other
party’s promise. Consideration can take the form of money, goods, services, or a
promise to do (or refrain from doing) something.
 Capacity: The parties must have the legal capacity to enter into a contract. This
means they must be of legal age and have the mental ability to understand the terms
of the contract.
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 Legality: The contract must have a lawful purpose. Contracts for illegal activities,
such as gambling or the sale of illegal drugs, are void and unenforceable.
In California, certain contracts must be in writing to be enforceable, under the Statute of
Frauds. These include contracts for the sale of real estate, contracts that cannot be performed
within one year, and contracts for the sale of goods over $500.
When a contract is breached, the non-breaching party can seek remedies, including
damages, specific performance, or rescission. California courts will enforce valid contracts and
award remedies to the injured party.
Foreign investment regulations (federal law)
The U.S. government regulates foreign investments to protect national security and prevent
foreign entities from gaining control of critical industries. Key regulations governing foreign
investments include the Committee on Foreign Investment in the United States (CFIUS) and the
Foreign Corrupt Practices Act (FCPA).
Committee on Foreign Investment in the United States (CFIUS)
CFIUS is an interagency committee authorised to review transactions that could result in
foreign control of a U.S. business. CFIUS reviews transactions to determine whether they pose a
threat to national security and has the authority to block or unwind transactions that could harm
U.S. interests.
Transactions subject to CFIUS review include mergers, acquisitions, and investments that
give foreign entities control over U.S. businesses. While filing with CFIUS is voluntary in most
cases, certain transactions involving critical technologies, infrastructure, or personal data require
mandatory filing.
CFIUS has the authority to block transactions or require the parties to take mitigating
measures to address national security concerns. Failure to comply with CFIUS review
requirements can result in significant penalties. It is important to notice that generally, CFIUS
reviews are not by “statute of limitation,” meaning that CFIUS may theoretically impose
penalties against non-complying foreign investment activities at any time following such
investment activities.
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Foreign Corrupt Practices Act (FCPA)
The FCPA prohibits U.S. companies and individuals from bribing foreign officials to obtain
or retain business. The FCPA applies to U.S. companies, their officers, directors, employees, and
agents, as well as foreign companies listed on U.S. stock exchanges.
The FCPA has two main provisions:
 Anti-Bribery provisions: These provisions make it illegal to offer, promise, or give
anything of value to a foreign official to influence their decisions or actions in their
official capacity.
 Accounting provisions: These provisions require companies to maintain accurate
books and records and implement internal controls to prevent and detect bribery.
The U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC)
enforce the FCPA, and violations can result in significant fines and criminal penalties, including
imprisonment for individuals involved in the misconduct.
Consumer protection laws (federal and California law)
Consumer protection laws are designed to safeguard consumers from unfair, deceptive, and
fraudulent business practices. These laws are enforced at both the federal and state levels, with
key federal protections provided by the Federal Trade Commission (FTC) and state protections
provided by the California Consumer Protection Act.
Federal Consumer Protection (FTC Act)
The FTC Act is the primary federal law governing consumer protection. The FTC Act
prohibits “unfair or deceptive acts or practices” in commerce, and the FTC is responsible for
enforcing this law.
Key consumer protection provisions of the FTC Act include:
 Deceptive advertising: Businesses are prohibited from making false or misleading
claims about their products or services. Advertisements must be truthful, not
deceptive, and based on solid evidence.
 Unfair practices: The FTC defines an unfair practice as one that causes substantial
injury to consumers, cannot be reasonably avoided, and is not outweighed by benefits
to consumers or competition.
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 Privacy and data security: The FTC enforces privacy laws to protect consumers’
personal information from unauthorised use or disclosure. The FTC has brought
enforcement actions against companies for failing to protect consumer data and for
violating their privacy policies.
The FTC has broad authority to investigate businesses, bring enforcement actions, and
impose penalties for violations of consumer protection laws. Remedies for violations can include
cease-and-desist orders, monetary penalties, and consumer redress.
Import Tariffs Regulations
Manufactured goods imported from the PRC are generally subject to U.S. import duties.
The PRC is subject to the general rates applicable to most countries with which the U.S. does
not have a free-trade agreement (“ FTA”) in place. The rates of duty are set forth in the
Harmonized Tariff Schedule of the United States (“ HTS”) which identifies applicable duties for
all imported goods, organised by class and specific article. The HTS classifies all products
imported into the U.S. by reference to factors such as material composition, product name,
and/or intended function, with a specific tariff rate assigned to each category of products under
the HTS classification. It should be noted that embargoes, anti-dumping duties, countervailing
duties, and other specific matters administered by the U.S. Executive Branch are not contained
in the HTS.
There are a number of provisions of U.S. trade law which may allow or result in
modification of these duties. Sections 201 through 204 of the Trade Act of 1974, as amended (19
U.S.C.§§2251–2254) provide the authority and procedures for the U.S. to take various actions to
facilitate a domestic industry’s adjustment to import competition. For example, if the U.S.
International Trade Commission determines that an article is being imported in such increased
quantities so as to threaten domestic producers of similar products, the U.S. may, among other
things, increase or impose a duty, or a tariff-rate quota.
Currently, U.S. and China trade policy has given rise to the imposition of significant
additional tariffs on products imported into the United States from China under Sections 201 and
301 of the Trade Act. To date, four lists of products imported from China, identified by HTSUS
codes, have been issued with various tariff impositions. Recently, the U.S. government imposed
additional tariffs on specific products, including air fryers on List 3 (the “ Product List ”) to be
imported from China to the U.S.. Tariffs rate applicable to the Group’s products remained stable
during the Track Record Period.
On 1 February 2025, President Trump issued an executive order directing the U.S. to
impose new tariffs on all imports from China, to take effect on 4 February 2025. Since then,
President Trump issued several amendments to the executive order to adjust tariff applicable to
Chinese goods as well as imports from other East Asian countries, including Thailand and
Indonesia.
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Depending on the latest development of the trade negotiations between the U.S. and China,
the level and number of products subject to additional tariffs may change over time.
California consumer protection laws
California has some of the strongest consumer protection laws in the country, including the
California Consumers Legal Remedies Act (CLRA) and the Unfair Competition Law (UCL).
 The CLRA: The CLRA prohibits a wide range of deceptive and unfair business
practices in the sale of goods or services to consumers. These include false
advertising, bait-and-switch tactics, and misrepresentations about the quality or
characteristics of a product. The CLRA gives consumers the right to sue for damages,
injunctive relief, and attorney’s fees.
 The UCL: The UCL prohibits “unfair competition,” which includes unlawful, unfair,
or fraudulent business acts or practices. The UCL is a broad statute that allows
consumers, competitors, and government agencies to bring actions against businesses
for violating the law. Remedies under the UCL can include restitution, injunctive
relief, and civil penalties.
California also has a strong focus on protecting consumer privacy. The California
Consumer Privacy Act (CCPA) gives consumers the right to know what personal information
businesses collect about them, the right to have that information deleted, and the right to opt out
of the sale of their information.
THAILAND
Civil and Commercial Code of Thailand
Laws governing formation and incorporation of types of Thai business entity can be found
in the Civil and Commercial Code of Thailand (the “ CCC”). A private limited company is
formed through a process which leads to the registration of a Memorandum of Association and
Articles of Association (By-laws), as its constitutive documents. A company is formed with the
registered capital and divided into shares to be subscribed by the promoters or shareholders. The
liability of the shareholders being limited to the amount unpaid on the shares respectively held
by them.
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Incorporation and promoters
There must be a minimum of 3 (three) promoters for a private limited company who are
responsible for subscribing and registering the incorporation of the company with the DBD as it
is stated in Section 1097 of the CCC that any three or more persons may promote and form a
limited company by subscribing their names to a memorandum and otherwise complying with
the provisions of the CCC. The promoters must be individual persons (not juristic entities). The
promoters can be foreigners and/or Thai nationals. However, each promoter is required to be
among the company’s initial shareholders immediately upon the company’s registration and is
required to subscribe and hold a minimum of one share upon the company’s registration. They
are generally free to transfer those shares to existing shareholders or third parties, thereafter, if
they wish. However, the number of shareholders in a company shall always be remaining of not
less than 3 (three) shareholders (individual and/or juristic entities) as required by the CCC.
Noted that after 7 February 2023, the requirement of minimum shareholders of 3 persons
are reduced to 2 persons according to Section 1097 of the CCC.
Memorandum of Association
The Memorandum of Association of the company has to be filed with the DBD and must
include the name of the company that has been successfully reserved and approved by the DBD,
the physical address where the company will be located in Thailand, its business objectives, the
capital to be registered, and the names of the promoters.
Articles of Association
The Articles of Association are the regulations of the company concerning its internal
affairs such as shares, general meetings, voting rights, director and auditor, distribution of
dividends, dissolution etc. It is one of the most important corporate documents, the content of
which is determined and approved by at the statutory meeting or the general meeting of
shareholders with a special resolution (if later amended). A company may choose to either adopt
its own Articles of Association or refer to the relevant provisions of the CCC.
Registered capital
In general, the registered amount of the capital should be respectable enough and adequate
for the intended business operation. The registered capital will be divided into shares with the
same par value, which must not be less than THB 5 per share. All shares must be subscribed,
and at least 25% of the subscribed shares must be paid up. If the company intends to employ
foreigners, the minimum registered capital requirements for applying work permit may also
apply. The company must have registered capital of not less than THB 2 million with fully
paid-up for each one foreign employee, or THB 4 million share capital for two foreign
employees, or THB 6 million for three foreign employees respectively.
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Directors
A company shall be managed by at least one individual director under the control of the
general meeting of shareholders. There are currently no general restrictions on the nationality of
directors who control a Thai private limited company in Thailand. Therefore, a foreigner can be
a sole director of the company. By law, foreign director and Thai director are not treated
differently. However, foreign director needs a work permit to work in Thailand in order to
manage a company by all lawful means necessary within the scope stipulated in the
Memorandum of Association, Articles of Association, the resolutions of shareholders’ meetings,
and applicable Thai laws. Thus, foreign directors residing abroad should pay attention and apply
for a work permit to work in Thailand even if they only intend to attend a meeting or training.
Under Thai law, it specifies only the requirements of director and the board of directors for
companies (without having supervisor or board of supervisors). Therefore, a company in
Thailand is not required to have supervisor or board of supervisors which is subject to each
company’s management policy and organisation chart.
Shareholders and shareholders meeting
Every company is required to hold the annual general meeting (the “ AGM”) annually. The
extra-general meeting shall be held upon being called by the directors or one-fifth of the
shareholders.
Notice of every general meeting of shareholders shall be published at least once in a local
paper and be sent to every shareholder of the company by receipt acknowledge registered mail at
least seven days before the date of meeting unless, in case of the general meeting which has to
provide a special resolution, the notice shall be published in a local newspaper and be sent to
every shareholder of the company at least 14 days before the date of the meeting.
Shareholders representing not less than 25% of the capital of the company must present at
the shareholders’ meeting to constitute a quorum. A resolution shall be made by a majority vote;
in the case of a tied vote, the Chairman of the meeting shall be entitled to a casting vote.
According to the CCC, a supermajority vote of 75% of total shares is required for passing a
special resolution as required by law, i.e. amendment to the memorandum of association and
articles of association, increase or decrease of registered capital, dissolution, conversion to a
public company and subscription shares by payment in kind.
In addition, pursuant to Section 1171 of the CCC, the AGM shall be held within 6 months
after the registration and subsequently be held every 12 months.
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Share transfer
Under the CCC, the transfer of shares must be made in writing and signed by the transferor
and transferee whose signatures are certified by at least one witness (the “ Share Transfer
Instrument ”); otherwise, such transfer shall be void. The Share Transfer Instrument must
contain at least (i) the names of the transferor and transferee, and (ii) the numbers of the
transferred shares. The transfer of shares will become valid against the company and/or any third
party only upon its registration in the share register book specifying the details of the transfer
and the name and address of the transferee.
Share registered book
A company is required to prepare and keep a share registered book recording the history of
change of shareholders. It is important to note that any share transfers shall be invalid against a
company and third parties until such transfer is recorded in the share registered book. Share
registered book is presumed to be correct evidence of any matters directed or authorised by the
laws.
Under the CCC, in case a company fails to keep a share registered book in accordance with
Section 1138 and fails to have the share registered book opened for inspection by shareholders
upon their request in accordance with Section 1139, the Target Company shall be liable to a fine
not exceeding THB 20,000 under Section 10 and 11 of the Corporate Criminal Act.
Share certificate
Share certificates shall be issued and delivered by a limited company to each shareholder
for the share held by him. Share certificates shall be signed by at least one of the directors and
affixed to the limited company’s seal; moreover, the share certificate must contain a name of the
company, share number(s), the value of each share and if the shares have not been fully paid up,
the paid amount of each share shall be indicated therein.
Failure to provide share certificates for the shareholders containing the particulars as
specified in Section 1127 and Section 1128 would result in a fine not exceeding THB 10,000
pursuant to Section 8 of the Corporate Criminal Act.
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Foreign Business Act
Thai law imposes restrictions on foreigners engaging in certain business activities. The
principal law with respect to foreign participation in various business activities is the Foreign
Business Act (the “ FBA”). The FBA defines the definition of “foreigner” as (i) a non-Thai
natural person, (ii) a legal entity not incorporated in Thailand, (iii) a juristic entity incorporated
in Thailand with at least 50% (fifty percent) of share capital is owned by foreign individuals or
entities, and (iv) a limited partnership or a registered ordinary partnership that having the
managing partner or manager is a non-Thai natural person. Based on the aforesaid definition, a
private limited company which is owned by majority Thai nationals and/or entities with at least
more than half of the share capital shall be considered as a Thai private limited company and is
not subject to the FBA. Foreigners therefore are generally allowed to participate and own less
than 50% of shares capital unless otherwise particularly prescribed in specific law, in case the
Company intends to engage in any restricted businesses.
BOI Act
The Thailand Board of Investment (the “ BOI”) was set up under the Investment Promotion
Act (the “ Investment Act ”) for purpose of encouraging investment in Thailand through several
eligible business activities under the BOI promotion. Under the Investment Act, the Thai
government has granted full foreign ownership rights to foreign nationals who promised to make
major investments and transfer technology to Thailand. Generally, the BOI privileges are granted
for manufacturing activities as well as certain non-manufacturing activities of such activities fall
within the eligible activities as listed by the BOI. However, to qualify for the BOI privileges, the
foreign nationals are obligated to transfer into Thailand the specified capital, technology and
equipment technology within the period as set forth in its investment promotion certificate, and
strictly comply with the specific condition as set forth in the investment promotion certificate.
Land Code
The Land Code stipulates that foreigners may acquire land by virtue of the provisions of a
treaty giving the right to own immovable property, subject to the provisions of the Land Code
and, subject to the limitation on rights over land for religious purposes, foreigners may acquire
land for residence, commerce, industry, agriculture, burial, public charity or religion under the
conditions and procedures prescribed in ministerial regulations and with the permission of the
minister.
Social Security Act
The Social Security Act of B.E. 2533 (1990) (the “ Social Security Act ”) in Thailand, and
its amendments, established the Social Security Fund (the “ Fund ”) with the objective of
providing coverage for fund members under certain conditions.
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The stipulations of the Social Security Act apply to every company having one or more
employees. Persons insured under the provisions of the Fund include all employees from the age
of 15 years up through those not over 60 years.
A company having one or more employees must register with the Social Security Office for
the Fund within 30 days after hiring the first employee. If the company increases the number of
employees, it must submit a new employee registration form for each new employee.
Workmen Compensation Fund
The Workmen’s Compensation Fund was established under the Workmen’s Compensation
Act, B.E. 2537 (1994) to ensure that adequate compensation is paid when workers are injured,
become ill, or die as a result of their work, or as a result of illnesses arising out of the nature or
conditions of the work, or as the Department of the Interior may prescribe. This objective will
be achieved by requiring employers to register with and contribute to the Workers’
Compensation Fund and by having the Department of Labour Protection and Social Welfare pay
the above compensation that employers are required to pay under the Occupational Safety and
Health Act instead of employees. The contribution rate should be 0.2%–1%.
Labour Protection Act
The Thailand Labour Protection Act is a comprehensive law that sets out the rights and
obligations of employers and employees in the workplace. It aims to protect the welfare of
workers and ensure fair treatment.
Under section 108 of the Labour Protection Act, B.E. 2535 (1992), the Target Company
shall procure the work rules in Thai language upon the date the employer employed more than
ten (10) employees and shall disclose such work rules at the working place of the employee. As
from 4 April 2017, the work rules are not required to submit to the Labour Department in
accordance with the Order of the Head of the National Council for Peace and Order No. 21/2017
dated 4 April 2017 Governing Amendment of Laws for Ease of Doing Business.
Foreigners’ Working Management Emergency Decree
Pursuant to Section 8 of the Foreigners’ Working Management Emergency Decree B.E.
2560 (2017), a foreigner shall not carry out any work prescribed in the Notification issued under
section 7 paragraph one or carry out any work without a work permit.
The Revenue Code
The principal law with respect to tax implication in Thailand is the Revenue Code of
Thailand (the “ RC”) under governed by the Revenue Department.
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Corporate Income Tax (“CIT”)
According to the RC, in general, a company is subject to the CIT rate of 20 % on net
profit. In addition, with respect to small medium enterprises which a company that having its
paid-up registered capital at the end of the accounting period of not exceeding THB 5 million
and having annual revenue income from business operation not exceeding THB 30 million per
annum shall be entitled to reduction of CIT in which it will be exempted from CIT for the net
profit not over THB 300,000, and it will be subject to 15% CIT on net profit range between
THB 300,001–3,000,000, and 20% CIT on net profit exceeding THB 3,000,000.
V alue Added Tax (“VAT”)
V AT is an indirect consumption tax levied on the supply of goods and provision of services
by a V AT operator and on the import of goods or services. Any person (individual or juristic
entity) who conducts business in Thailand and its annual turnover exceeds THB 1.8 million is
required to register to be a V AT operator. A V AT operator is required to comply with V AT
requirements per the Revenue Code. Only a registered V AT operator is entitled to claim for
prepaid V AT credit or V AT refund.
There are also other applicable taxes, for example, the excise tax, withholding tax, special
business tax, land and building tax and stamp duty, etc. A company is required to file tax returns
to the Revenue Department on a regular basis, including monthly, annual and semi-annual
reports.
INDONESIA
Company Laws pursuant to Law No. 40 of 2007 concerning limited liability (the “Company
Law”)
Company Law governing formation and incorporation of a limited liability company (in
Indonesia namely as “Perseroan Terbatas”, hereinafter referred to as “ PT”). Establishment of a
PT shall be managed by a public notary and such establishment must be submitted to the
Ministry of Laws and Human Rights (“ MoLHR ”) to obtain ratification, upon its ratification the
PT will be recorded as a legitimate legal entity then have a legitimate rights to engage with third
parties. PT is allowed to be established for a limited period or unlimited period based on the
business types following the prevailing laws and regulations.
PT as a legal entity are managed by three different structure, which are general meeting of
shareholders (“ GMS”), board of directors, board of commissioners, each of them have a
different rights and obligations based on the Company Law and their constitutive documents in
form of Articles of Association. PT is formed with a registered capital and divided into shares to
be subscribed by the shareholders. The shareholders of a Company are not personally liable over
contracts made on behalf of the Company and are not liable over the losses of the Company
exceeding the shares they own.
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Shareholders
There must be a minimum of 2 (two) or more shareholders to establish a PT by subscribing
a sum of capital which will be divided into authorised capital, issued and paid up capital. These
capital will be divided into shares and each shares will have a nominal as determined by the
Company.
The establishment of PT is made by executing a deed of establishment made before by the
public notary. The shareholders can be in a form of individual or a PT, either foreigners or
Indonesian nationals, subject to the investment arrangement based on the relevant regulations
which will be further described below.
The Shareholders shall have the authorities which not vested in the Board of Directors or
the Board of Commissioners, within the limits set out under the Company Law and/or the
Articles of Association. The transfer of shares among the Shareholders are specified in the
Articles of Association and shall align with the Company Law.
For further information, Company Law has protected each Shareholders to be offered for
any additional new shares issued in a PT, meanwhile the Articles of Association may arrange
that prior to transfer the existing shares to the third parties, each Shareholders must offer the
shares to the others existing Shareholders.
Deed of establishment and articles of association
Deed of establishment
The Deed of Establishment has to be made by Indonesian Public Notary and shall be
submitted to the MoLHR for ratification matters. The Deed of Establishment must be made
pursuant to the Company Law, however the Company Law is grants the Shareholders a rights to
modify the rules and provisions specified on the Company Law, provided that such modification
will have higher requirements as specified on the Company Law. Pursuant to the Company Law,
the Deed of Establishment shall contain Articles of Association and others information regarding
the establishment matters.
Articles of association
Pursuant to Company Law, the Articles of Association apply as highest laws which shall be
obligated by the Shareholders, Board of Directors and Board of Commissioner on managing and
operating prior to conduct and take any legal action towards the Company.
The Articles of Association shall consist of:
(i) the name and place of domicile of the Company;
(ii) the purposes and objectives, as well as business activities of the Company;
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(iii) the duration of establishment of the Company;
(iv) the amount of authorised capital, issued capital and paid-up capital;
(v) the amount of shares, the classification of shares, if any, including the amount of
shares for each classification;
(vi) the rights attached to each shares, and the par value of each shares;
(vii) the name of position and number of members of the Board of Directors and the Board
of Commissioners;
(viii) the stipulation of a place and procedures for holding a EGMS;
(ix) the procedures for the appointment, replacement and dismissal of members of the
Board of Directors and the Board of Commissioners;
(x) the procedures for the appropriation of profit and distribution of dividends and shall
not contain;
(xi) provisions on the receipt of fixed interest rate on shares; or
(xii) provisions on the granting of personal benefits to the founder(s) or other parties.
Amendments to articles of association
The Articles of Association can be amended from time to time through held GMS or
Circular Resolution and shall be submitted to the MoLHR. There are three (3) types of approval
will be issued by the MoLHR depends on the amended articles on the Articles of Association.
The following are the change shall to obtain approval from the MoLHR:
(i) the name and/or place of domicile of the Company;
(ii) the purposes and objectives, as well as business activities of the Company;
(iii) the duration of establishment of the Company;
(iv) the amount of authorised capital;
(v) the reduction in issued and paid-up capital; and/or
(vi) the status of a private Company into a Publicly-Traded Company or vice versa.
Meanwhile, the amendments of Articles of Association other than the above mentioned is
only requires to be notified to the MoLHR.
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--- page 597 ---
Required capital
In theory, the capital of the Company shall be adequate and suffice to fund the business
activities and operation. By law, the authorised capital shall at least IDR50Million and 25% of
such authorised capital shall fully issued and paid up by the Shareholders to the Company no
later than 60 (sixty) calendar days since the ratification obtained from the MoLHR.
In this case, Company is foreign PT and the issued and paid-up shall at least IDR10Billion.
In addition, aside from minimum issued and paid-up capital, there also requirements for the
foreign limited company to comply with minimum investment value in nominal more than
IDR10Billion excluding land and building for each business licences.
Board of directors
A company shall be managed by at least 1 (one) individual director appointed and
terminated by the GMS along with the rights, obligations and limitations. In the event of
members of the Board of Directors consists of more than 1 (one) person, then every member of
the Board of Directors shall be authorised to represent the PT, unless stipulated otherwise under
the Articles of Association.
There are restrictions where the foreign directors is not allowed to serve, manage, control
and represent the PT for human resources matters. By law, foreign director and Indonesia
director are not treated differently. However, foreign director requires a work permit to work in
Indonesia.
The Board of Directors is responsible for the management of the PT and shall be carried
out in good faith and full responsibility. Each member of the Board of Directors shall be fully
and personally responsible for the losses of the PT if the person concerned is at fault or
negligent in carrying out his/her duties.
Board of commissioners
The Board of Commissioners is appointed and terminated by the GMS along with the
rights, obligations and limitations. The Board of Commissioners shall supervise toward Board of
Directors policies, performance of management in general, both in respect of the PT and the
business of the PT, and provide advice to the Board of Directors.
A Board of Commissioners consisting of more than 1 (one) member shall constitute a
council and every member of the Board of Commissioners cannot act on individually, but only
based on a resolution of the Board of Commissioners.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS
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--- page 598 ---
Shareholders and GMS
The GMS are consist of annual general meeting of shareholders (“ AGMS ”) that hold within
maximum period of 6 (six) months after the end of the fiscal year and the GMS shall be held at
any time based on the needs for the interest of the PT, such as changes to the composition of the
Board of Directors and Board of Commissioners, changes to the Company’s name, Company’s
domicile, duration of establishment and etc.
The GMS is held at the Company’s domicile or at the place where the Company carries out
its main business activities as determined in the Company’s Articles of Association. The GMS
may be conducted via teleconference, video teleconference or other electronic media. The
meeting invitation is made by letter or newspaper. However, there is another method of
shareholder meeting, namely the circular resolution, which all of the shareholders agree of the
meeting minutes.
The Board of Directors is required to issue a summons for a GMS within a maximum
period of 15 (fifteen) days from the date the request for holding a GMS is received. However, if
the Board of Directors does not issue a summons for a GMS, the Board of Commissioners may
issue a summons for a GMS itself within a maximum period of 15 (fifteen) days from the date
the request for holding a GMS is received. If the Board of Directors or the Board of
Commissioners does not issue a summons for a GMS, shareholders may submit a request for a
GMS to the Head of the District Court.
A GMS may be held if more than 1/2 (one half) of the total number of shares with voting
rights are present or represented unless otherwise stipulated in the articles of association.
However, if the quorum is not achieved, then a summons for a Second GMS must be made and
in the Second GMS, at least 1/3 (one third) of the shareholders with voting rights are
present/represented.
If, in the Second GMS, the quorum is not met, then an application may be made to the
district court whose jurisdiction covers the Company’s domicile at the Company’s request to
determine the quorum for the Third GMS.
The Second and Third GMS shall be held within a period of at least 10 (ten) days and at
the latest 21 (twenty one) days after the previous GMS was held.
In Indonesia, private companies must have at least 2 (two) shareholders. Shareholders,
either individually or represented by a power of attorney, are entitled to attend the GMS and
exercise their voting rights in accordance with the number of shares they own. In voting, the
votes cast by shareholders apply to all shares they own and shareholders are not entitled to grant
power of attorney to more than one proxy for a portion of the number of shares they own with
different votes. In voting, members of the Board of Directors, members of the Board of
Commissioners, and employees of the Company concerned are prohibited from acting as proxies
for shareholders.
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--- page 599 ---
Share transfer
Under the Company Law, the share transfer shall be made in writing, sign by the transferor
and transferee and drawn up in a deed of transfer. In the Articles of Association, PT may further
arrange additional requirement such as: i) obligation to first offer them to holders of certain
classification of shares or other shareholders, ii) obligation to first secure approval from GMS,
Board of Directors and Board of Commissioner, iii) obligation to first secure approval from the
authorised institutions in accordance with laws and regulations.
Shareholders registry
Directors shall create and maintain a shareholders registry which should at least contain: i)
the name and address of shareholders, ii) the amounts, numbers, and dates of acquisition of the
shares owned by shareholders and its classifications, in the event of more than one classification
of shares is issued; iii) the amount which is paid up for each share; iv) the name and address of
individuals or legal entities having pledge rights over shares or being the beneficiaries of
fiduciary security over the shares and the date of acquisition of the pledge rights or the date of
registration of the fiduciary security in question; and v) information on the payment of shares in
other forms.
Share certificate
In Indonesia, a share certificate is a document that serves as proof of ownership of shares
in a company. This certificate is issued by the company that issues the shares and acts as a
receipt for the purchase of shares.
The share certificate has several important functions, including:
(i) Proof of share ownership.
(ii) Protection of shareholder rights.
(iii) Facilitation of share ownership transfer.
(iv) Assistance for the company in tracking legitimate shareholders.
(v) Compliance with the Limited Liability Company Law (UUPT).
(vi) Promotion of transparency in corporate governance.
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--- page 600 ---
A share certificate typically contains essential information such as:
(i) The number of shares owned.
(ii) The purchase date.
(iii) The identification number of the shareholder.
(iv) The company number.
(v) The signature of an authorised party.
Foreign business regulations
Indonesian law imposes limitations on foreign investment in certain business activities as
stipulated in Presidential Regulation No. 49 of 2021 concerning Amendment To Regulation Of
The President Number 10 Of 2021 On Investment Business Fields (“ Perpres 49/21 ”).
Investment is consist of individual and business entity engaging in either domestic or
foreign investment. Perpres 49/21 classifies business sectors into several categories, namely:
(i) Business Sectors open for investment, which include priority sectors, sectors allocated
for partnerships with cooperatives and micro-middle scale, sectors with specific
requirements limiting foreign investment, and sectors fully open to foreign investment;
(ii) Business Sectors closed to investment; and
(iii) Activities that can only be conducted by the central government.
Indonesia investment authorities
The Ministry of Investment/ Indonesia Investment Coordinating Board (BKPM) is tasked
with assisting the President in managing government affairs related to investment, as well as
coordinating the implementation of policies and providing services in the field of investment in
accordance with the prevailing laws and regulations.
The Ministry has the authority to formulate and establish investment policies, coordinate
and synchronise the implementation of investment policies, develop regional investment
potential, and conduct investment promotion and cooperation.
Additionally, the Ministry is responsible for supervising the investment sector, assessing
and planning national investment, setting norms, standards, procedures, and criteria for services,
as well as managing state assets. The Ministry also oversees the implementation of tasks within
its scope and facilitates foreign investors, including the handling of licences and tax incentives,
through a one-stop integrated service and investment facilities.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS
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--- page 601 ---
Land law
In Indonesia, land ownership rights are regulated under Law No. 5 of 1960 on Basic
Agrarian Principles (“ Law 5/60 ”). UU 5/60 establishes several types of land rights, including
right of ownership ( hak milik ), right of cultivation ( hak guna-usaha ), right to building ( hak
guna-bangunan ), right to usage ( hak pakai ), and right to lease ( hak sewa ). Foreign nationals are
only permitted to obtain land rights in the form of right to use ( hak pakai ) and right to lease
(hak sewa ) for building purposes. To acquire other land rights, foreign nationals are required to
establish an Indonesian legal entity domiciled in Indonesia.
Social security and employment security
Law No. 24 of 2011 on the Social Security Agency (“ UU 24/11 ”) regulates social security
as a form of social protection to ensure that all citizens can meet their basic needs for a decent
life. In Indonesia, the agency responsible for administering social security as social security
agency (“ BPJS ”).
BPJS in Indonesia consists of two forms of social security: BPJS Health and BPJS
Employment. BPJS Health administers health insurance programmes, while BPJS Employment
manages programmes for work accident insurance, old-age benefits, pension benefits, death
benefits, and unemployment insurance.
Participation in the BPJS programmes is mandatory for everyone, including foreign
nationals working in Indonesia for at least 6 (six) months. Every company is also required to
register itself and its employees as participants in the relevant BPJS social security programmes.
If a company fails to register its employees, it will face administrative sanctions in the form of
written warnings, fines, and/or loss of access to certain public services.
Employment law
Indonesia has employment regulations governed by Law No. 13 of 2003 on Manpower in
conjunction with Law No. 6 of 2023 on the Enactment of Government Regulation in Lieu of
Law No. 2 of 2022 on Job Creation into Law (hereinafter referred to as the “ Employment
Law”). Under the Employment Law, employment agreements are categorised into two types:
Fixed-Term Employment Agreements (“ PKWT ”) and Indefinite-Term Employment Agreements
(“PKWTT ”). PKWT is designated for temporary work, including seasonal work or daily labour,
while PKWTT covers permanent employment.
Companies employing a minimum of 10 workers are required to establish either a Company
Regulation or a Collective Labour Agreement, which must be approved by the Minister of
Manpower. To facilitate this process, the approval of Company Regulations or Collective Labour
Agreements can be conducted online through the official website of the Ministry of Manpower.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS
– IV-55 –


--- page 602 ---
Additionally, companies are obligated to submit annual employment reports to the Minister
of Manpower. Failure to comply with this reporting requirement may result in criminal sanctions
in accordance with applicable regulations.
Foreign workers
In Indonesia, the employment of foreign workers (TKA) is strictly regulated by applicable
legal provisions. Any company wishing to employ foreign workers must obtain a Foreign Worker
Utilisation Plan (RPTKA) and process a notification for approval to employ foreign workers
issued by the Director General of Employment Placement and Expansion of Job Opportunities.
Additionally, companies are also required to secure a work visa and process a temporary stay
permit for the foreign workers concerned.
If foreign workers operate in Indonesia without a temporary stay permit with work status,
they may face administrative and/or criminal sanctions. These sanctions can include fines,
imprisonment, or even deportation from Indonesia
Business licence
In Indonesia, business operators are required to possess business licences to conduct any
business activities. The provisions regarding business licensing are governed by Government
Regulation No. 5 of 2021 on the Implementation of Risk-Based Business Licensing (“ PP 5/21 ”).
Business licensing is the legal authorisation granted to business operators to start and carry out
their business activities.
Business licensing is categorised based on the level of risk:
(i) Low risk, where business operators can conduct their business activities solely with a
Business Identification Number (NIB);
(ii) Medium risk, which requires companies to have an NIB and a Standard Certificate;
and
(iii) High risk, where companies are mandated to possess an NIB and a Business Licence.
For business activities classified as medium-high or high risk, an environmental impact
analysis is required.
The revenue code
The legal basis for taxation which applicable in Indonesia is Laws No. 7 year 2021
concerning the Harmonisation of Tax Regulations.
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--- page 603 ---
Corporate Income Tax (“CIT”)
In general, a PT in 2024 is subjected to a CIT rate of 22% of it’s fiscal net profit. However,
certain Taxpayers with a revenue below 4.8 billion Rupiah are entitled to use a CIT rate of 0.5%
of its gross income. This rate can be used by corporate taxpayers for 3 years from its company
date of registration.
V alue Added Tax (“VAT”)
V AT is an indirect consumption tax levied on the supply of goods (tangible and intangible),
services and import by a taxable employer.
Taxpayer both an individual or entity who conducts business in Indonesia in which its
annual revenue exceeds 4,8 Billion (Four Billion Eight Hundred Million Rupiahs) is required to
register to become a taxable employer. As of 2024, a taxable employer is required to collect V AT
at a rate of 11% of its tax base.
Only a registered taxable employer is entitled to claim for prepaid V AT credit and V AT
refund. There are also other applicable taxes, for example, the excise tax, withholding tax, land
and building tax, stamp duty and etc. A company is required to file the tax returns to Indonesia’s
Tax Office (ITO) on a monthly and annual basis.
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--- page 604 ---
This Appendix contains a summary of the principal provisions of the Company’ s Articles of
Association. The major objective of this Appendix is to provide potential investors with an
overview of the Company’ s Articles of Association, and therefore it may not contain all the
information that may be important to potential investors.
SHARES AND REGISTERED CAPITAL
Shares of the Company shall take the form of registered share certificates.
The shares of the Company shall be issued in accordance with the principles of open,
fairness and justice. Each share of the same class carries the same rights.
Shares of the same class and the same issuance are issued on the same conditions and at the
same price. A subscriber pays the same price for each of the Shares it/he/she subscribes for.
INCREASE, REDUCTION, REPURCHASE AND TRANSFER OF SHARES
Increase and Reduction of Shares
Based on its operation and development needs, in accordance with the relevant laws and
regulations, and subject to the special resolutions of the shareholders’ meeting, the Company
may increase its registered capital by any of the following ways:
(i) Issuing shares to unspecified targets;
(ii) Issuing shares to specific targets;
(iii) allocate shares to existing Shareholders;
(iv) distribution of bonus shares to existing Shareholders;
(v) conversion of capital reserve into share capital;
(vi) other means permitted by applicable laws, administrative regulations, the Listing
Rules and approved by related securities regulatory agencies.
The Company may reduce its registered capital. The reduction of registered capital shall
comply with the procedures stipulated in the PRC Company Law, the Listing Rules and other
relevant regulations as well as the Articles of Association.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
–V - 1–


--- page 605 ---
Repurchase of Shares
The Company may buy back its shares in accordance with the provisions of laws,
administrative regulations, departmental rules, the Listing Rules and the Articles of Association
under the following circumstances:
(i) reduction of the Company’s registered capital;
(ii) mergers with another company holding shares of the Company;
(iii) use of shares for employee shareholding scheme or equity incentives;
(iv) Shareholders who object to resolutions of the general meeting on merger or division of
the Company requesting the Company to purchase their shares;
(v) use of shares for conversion of corporate bonds issued by the Company which are
convertible into shares;
(vi) where it is necessary for the Company to preserve its value and Shareholders’ interest;
(vii) other situations where the company can buy back its shares in accordance with laws,
administrative regulations, departmental rules, normative documents, the Listing
Rules, and other securities regulatory rules of the place where the shares of the
Company are listed.
The Company shall not buy back its shares, except in one of the above circumstances.
Where the Company purchases its shares under the circumstances set forth in items (i) and
(ii) above, it shall be resolved at a shareholder’s meeting. Where the Company purchases its
shares under the circumstances set forth in items (iii), (v) and (vi) above, subject to compliance
with the securities regulatory rules of the place where the shares of the Company are listed, a
resolution thereon may, be resolved at a Board meeting that is attended by more than two-thirds
of the Directors according to the authorisation of the shareholders’ meeting.
Upon the purchase of its shares by the Company pursuant to the above provisions, under
the circumstance set forth in item (i), such shares shall be cancelled within 10 days from the day
of purchase; under the circumstances set forth in items (ii) and (iv), such shares shall be
transferred or cancelled within six months; under the circumstances set forth in items (iii), (v)
and (vi), the total number of shares held by the Company shall not exceed 10% of the total
issued shares of the Company, and shall be transferred or cancelled within three years.
With respect to overseas listed shares, if laws, administrative regulations or the securities
regulatory authority where the company’s shares are listed have other provisions on matters
related to the repurchase of shares, such provisions shall prevail.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
–V - 2–


--- page 606 ---
The Company may purchase its own shares by the centralised trading or by any other
means recognised by the laws, administrative regulations, the CSRC and the stock exchange(s)
of the place where the shares of the Company are listed, and shall comply with the applicable
laws, administrative regulations, departmental regulations and securities regulatory rules of the
place where the company’s shares are listed.
Transfer of Shares
Shares of the Company that were issued prior to a public issue shall not be transferred
within one year from the date on which shares of the Company are listed and traded on the stock
exchange.
Directors, Supervisors and senior management of the Company shall report to the Company
their holdings of shares of the Company and the changes thereof. During their term of office
confirmed at the assumption of the position, the shares transferred by any of them each year
shall not exceed 25% of the total shares of the Company held by them. The above personnel
shall not transfer the shares of the Company held by them within 6 months after the expiry of
their term of office. If the above personnel leave their posts before the expiration of their terms,
they shall continue to comply with the aforementioned restrictive provisions during the term
confirmed when they took office and within six months after the expiration of their terms. The
shares of the Company held by the aforesaid persons shall not be transferred within one year
from the date on which the shares of the Company are listed and traded. If the securities
regulatory authority where the company’s shares are listed have other provisions on matters
related to the restrictions on the transfer, such provisions shall prevail.
Where Directors, Supervisors, senior management and Shareholders holding 5% or above
shares of the Company sell the shares of the Company or other securities with an equity nature
within 6 months after purchasing the same, or purchase the shares of the Company or other
securities with an equity nature as held within 6 months after selling the same, the earnings
arising therefrom shall belong to the Company, and the Board of the Company shall recover such
earnings. However, the restriction shall not be applicable to a securities company holding 5% or
above of the shares of the Company as a result of its purchase of the remaining unsold shares
underwritten by it and other circumstances stipulated by the CSRC.
SHAREHOLDERS AND SHAREHOLDERS’ MEETINGS
Shareholders
The Company shall establish a register of members with the evidence provided by the
securities registration and settlement authority. The register of members shall be sufficient
evidence of the holding of the shares of the Company by the Shareholders. Shareholders shall
enjoy the rights and assume the obligations according to the class of the shares they hold.
Shareholders holding the same class of shares shall enjoy the same rights and assume the same
obligations.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
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--- page 607 ---
Shareholders of the Company shall enjoy the following rights:
(i) to speak and vote at the shareholders’ meeting, unless it is required by the Listing
Rules to waive voting rights on individual matters;
(ii) to receive dividends and other distributions in proportion to the shares they hold;
(iii) to request, convene, hold, attend or appoint a proxy to attend general meetings and
exercise the corresponding voting rights in accordance with laws;
(iv) to supervise, present suggestions on or make inquiries about the operations of the
Company;
(v) to transfer, gift or pledge the shares it holds in accordance with laws, administrative
regulations, departmental rules, normative documents, the Listing Rules, other
securities regulatory rules of the place where the shares of the Company are listed and
the Articles of Association;
(vi) to inspect the Articles of Association, register of members, record of bondholders,
minutes of general meetings, resolutions of Board meetings, resolutions of meetings of
the Supervisory Committee and the publicised financial reports, and shareholders in
compliance with the requirements may inspect the accounting books and accounting
evidence of the Company;
(vii) in the event of termination or liquidation of the Company, to participate in the
distribution of the remaining property of the Company in proportion with the number
of shares held by them;
(viii) to require the Company to purchase their shares in the event of objection to the
resolutions of the general meeting on merger or division of the Company;
(ix) to enjoy other rights stipulated by laws, administrative regulations, departmental rules,
the Listing Rules, other securities regulatory rules of the place where the shares of the
Company are listed and the Articles of Association.
If the procedure for convening a shareholders’ meeting or a Board meeting, or the voting
method used in such a meeting, violates any law, administrative regulations or the Articles of
Association, or if any resolution adopted includes content that violates the Articles of
Association, shareholders may, within 60 days from the date of adopting the resolution, request
the people’s court to annul it, except in cases where there are only minor defects in the
procedure for convening the meeting or the voting method used in the meeting, which had no
material impact on the resolution.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
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--- page 608 ---
Where the board of directors, shareholders and other stakeholders dispute the validity of a
resolution of a shareholders’ meeting, they shall promptly file a lawsuit with the court. Before
the court makes a judgement or ruling revoking the resolution, the stakeholders shall execute the
resolution of the shareholders’ meeting. The Company, its directors and senior management shall
perform their duties diligently to ensure the normal operation of the Company.
Shareholders of the Company shall assume the following obligations:
(i) to abide by the laws, administrative regulations, departmental rules, normative
documents, the Listing Rules, other securities regulatory rules of the place where the
shares of the Company are listed and the Articles of Association;
(ii) to pay subscription monies as per the shares subscribed for and the method of
subscription;
(iii) not to withdraw the share capitals unless prescribed otherwise in laws, administrative
regulations, departmental rules, normative documents, the Listing Rules, other
securities regulatory rules of the place where the shares of the Company are listed and
the Articles of Association;
(iv) not to abuse shareholders’ rights to impair the interests of the Company or other
shareholders; not to abuse the independent status of legal person or shareholders’
limited liabilities to impair the interests of the creditors of the Company;
(v) to assume other obligations prescribed by the laws, administrative regulations,
departmental rules, normative documents, the Listing Rules, other securities regulatory
rules of the place where the shares of the Company are listed and the Articles of
Association.
Shareholders of the Company who abuse their shareholders’ rights and thereby cause loss
on the Company or other Shareholders shall be liable for loss compensation according to the
laws. Where Shareholders of the Company abuse the Company’s position as an independent legal
person and the limited liabilities of shareholders for the purposes of evading repayment of debts,
thereby materially impairing the interests of the creditors of the Company, such Shareholders
shall be jointly and severally liable for the debts owed by the Company.
General Provisions for Shareholders’ Meeting
The shareholders’ meeting is the organ of authority of the Company and shall exercise the
following duties and powers in accordance with laws:
(i) to elect and replace Directors or Supervisors and to determine matters relating to the
remuneration of the Directors or Supervisors;
(ii) to consider and approve the reports of the Board;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
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--- page 609 ---
(iii) to consider and approve the reports of the Supervisory Committee;
(iv) to consider and approve the profit distribution plan and loss recovery plans of the
Company;
(v) to resolve on the increase or reduction of the registered capital of the Company;
(vi) to resolve on the issue of corporate bonds;
(vii) to resolve on the merger, division, dissolution, liquidation or change in corporate form
of the Company;
(viii) to amend the Articles of Association;
(ix) to resolve on the appointment and dismissal of accounting firms by the Company;
(x) to consider and approve the transaction specified in Article 39 of the Articles of
Association;
(xi) to consider and approve the guarantee matters specified in Article 40 of the Articles of
Association;
(xii) to consider matters relating to the purchase and sale by the Company within 12
months of material assets valued at more than 30% of the audited total assets of the
Company as at the most recent period;
(xiii) to consider transactions between the Company and its related parties that are required
to be submitted to the shareholders’ meeting for approval according to the Listing
Rules;
(xiv) to consider and approve matters relating to changes in the use of proceeds;
(xv) to consider share incentive scheme and employee stock ownership scheme;
(xvi) to consider other matters to be resolved by the shareholders’ meeting as required by
laws, administrative regulations, departmental rules, the Listing Rules, other securities
regulatory rules of the place where the shares of the Company are listed or the
Articles of Association.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
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--- page 610 ---
Transactions that occur in the Company (excluding financial assistance, providing
guarantees or cash assets donated to the Company, obtaining debt relief, and other transactions
that do not involve payment of consideration and do not carry any obligations), and meet the
following standards according to the definition and relevant calculation methods stipulated in the
Listing Rules, shall not only be approved by the Board, but also submitted to the shareholders’
meeting for review:
1. Main transactions;
2. Significant sales events;
3. Very significant acquisition matters;
4. Anti takeover actions.
The calculation method for the transaction amount involved in this provision shall be based
on the relevant provisions of Chapter 14 of the Listing Rules.
The financial assistance provided by the Company (including interest or interest free loans,
entrusted loans, etc.) should be submitted to the shareholders’ meeting for approval under the
Listing Rules. In addition to being approved by the Board, it should also be submitted to the
shareholders’ meeting for approval. If the funding target is a controlling subsidiary within the
scope of the Company’s consolidated financial statements, and the other Shareholders of the
controlling subsidiary do not include the Company’s controlling shareholder, actual controller,
and related parties, the provisions of the preceding paragraph may be exempted.
Without the approval of the Board or the shareholders’ meeting, the Company shall not
provide external guarantees. The following provision of external guarantees by the Company is
subject to the consideration and approval of the general meeting:
(i) the total amount of the external guarantees provided by the Company and its holding
subsidiaries exceeding 50% of the latest audited net assets;
(ii) the amount of the guarantees provided by the Company within twelve consecutive
months exceeding 30% of the latest audited total assets;
(iii) any guarantee provided by the Company after the total amount of external guarantees
for twelve consecutive months reaches or exceeds 50% of the latest audited net assets
and the total amount exceeds RMB50 million;
(iv) any guarantee to be provided to a recipient of such security whose asset to liability
ratio is over 70%;
(v) any single guarantee with an amount exceeding 10% of the latest audited net assets;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
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--- page 611 ---
(vi) the total amount of the external guarantees provided by the Company exceeding 30%
of the latest audited total assets;
(vii) any guarantee provided to shareholders, controllers, and their related parties;
(viii) any guarantee required by applicable laws, regulations, normative documents, the
Listing Rules, other securities regulatory rules of the place where the shares of the
Company are listed, and internal policies to be submitted to the shareholders’ meeting
for approval.
External guarantees other than those mentioned above shall be reviewed and approved by
the Board. When a guarantee is considered at the Board, it shall obtain the consent of more than
two-thirds of the Directors present at the Board meeting and the consent of more than two-thirds
of all independent directors. When the shareholders’ meeting deliberates on the guarantee
matters in item (ii) of the preceding paragraph, it must be approved by more than two-thirds of
the voting rights held by the attending Shareholders.
The shareholders’ meetings are classified into annual shareholders’ meetings and interim
shareholders’ meetings. The annual shareholders’ meetings shall be convened once a year within
six months from the end of the previous fiscal year.
The Company shall convene an interim shareholders’ meeting within two months from the
date of occurrence of any of the following circumstances:
(i) where the number of directors is less than two thirds of the number as provided for by
laws or the Articles of Association;
(ii) when the uncovered loss of the Company reaches one-third of its total share capital;
(iii) upon written request(s) by Shareholder(s) individually or collectively holding 10% or
above of the shares of the Company;
(iv) when the Board deems it necessary;
(v) when the Supervisory Committee proposes such a meeting be held;
(vi) when the independent directors is less than the statutory minimum requirement;
(vii) other circumstances required by the laws, administrative regulations, departmental
rules, the Listing Rules, other securities regulatory rules of the place where the shares
of the Company are listed or the Articles of Association.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
–V - 8–


--- page 612 ---
Summoning of Shareholders’ Meetings
A shareholders’ meeting shall be convened by the Board. The publication of shareholders’
meeting notices (including supplementary notices) shall comply with relevant laws, regulations
and securities regulatory rules of the place where the shares of the Company are listed.
The Supervisory Committee shall have the right to propose to the Board in writing to
convene an interim shareholders’ meeting. The Board shall, in accordance with relevant laws,
administrative regulations and the Articles of Association, give a written response on whether or
not it agrees to convene such an interim general meeting within 10 days after the receipt of the
proposal. If the Board agrees to convene an interim general meeting, it shall give a notice
convening such meeting within 5 days after it has so resolved. Any changes to be made to the
original request in the notice shall be subject to approval of the Supervisory Committee. If the
Board does not agree to convene an interim general meeting or fails to give a response within 10
days after the receipt of the proposal, the Supervisory Committee may convene and preside over
such meeting on its own.
Shareholders that hold, individually or collectively, 10% or more of the shares in the
Company shall have the right to request in writing the Board to convene an interim
shareholders’ meeting. The Board shall, in accordance with relevant laws, administrative
regulations, the Listing Rules and the Articles of Association, give a written response on whether
or not it agrees to convene such an interim shareholders’ meeting within 10 days after the
receipt of the proposal. If the Board agrees to convene an interim general meeting, it shall give a
notice convening such meeting within 5 days after it has so resolved. Any changes to be made to
the original request in the notice shall be subject to approval of the relevant Shareholders. If the
Board does not agree to convene an interim general meeting or fails to give a response within 10
days after the receipt of the proposal, the Shareholders that hold, individually or collectively,
10% or more of the shares of the Company may propose to the Supervisory Committee to
convene an interim shareholders’ meeting. If the Supervisory Committee agrees to convene an
interim shareholders’ meeting, it shall give a notice convening such meeting within 5 days after
it has so resolved. Any changes to be made to the original request in the notice shall be subject
to approval of the relevant Shareholders. If the Supervisory Committee fails to give the notice
convening such meeting within the period specified herein above, it shall be deemed to have
failed to convene and preside over such meeting. The Shareholders that hold, individually or
collectively, 10% or more of the shares in the Company for 90 days or more consecutively may
convene and preside over such meeting on their own. Before the announcement of the
shareholders’ meeting resolution, the total shareholding ratio of the Shareholders convening the
shareholders’ meeting shall not be less than 10%.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
–V - 9–


--- page 613 ---
The independent directors shall have the right to propose to the Board to convene an
interim shareholders’ meeting. The Board shall, in accordance with relevant laws, administrative
regulations, the Listing Rules and the Articles of Association, give a written response on whether
or not it agrees to convene such an interim general meeting within 10 days after the receipt of
the proposal. If the Board agrees to convene an interim general meeting, it shall give a notice
convening such meeting within 5 days after it has so resolved. If the Board does not agree to
convene the interim shareholders’ meeting, it shall give the reasons and issue an announcement.
Where the Supervisory Committee or the Shareholder(s) convene a shareholders’ meeting
on its or their own, the board and the secretary to the Board shall provide assistance. The Board
will provide the register of members as of the date of the share registration.
Any necessary expenses incurred in connection with the convening and holding of the
shareholders’ meeting by the Supervisory Committee or the shareholder(s) on its or their own
shall be borne by the Company.
Proposal and Notice of Shareholders’ Meetings
The content of proposals shall fall within the functions and powers of the shareholders’
meeting, have clear subject for discussion and specific matters to be resolved and comply with
relevant requirements of the laws, administrative regulations, the Listing Rules, other securities
regulatory rules of the place where the shares of the Company are listed and the Articles of
Association.
The Board, the Supervisory Committee or Shareholders that hold, individually or
collectively, 1% or more of the shares of the Company shall have the right to propose
resolutions. Shareholders that hold, individually or collectively, 1% or more of the Shares of the
Company may submit ad hoc proposals in writing to the convener 10 days before the convening
of the shareholders’ meeting. The convener shall give a supplemental notice of the shareholders’
meeting within 2 days upon receipt of the proposals and announce the contents of the ad hoc
proposals.
The convener shall notify all Shareholders by announcement 21 days before the annual
shareholders’ meeting (excluding the day of the notice and the meeting), and the convener shall
notify all Shareholders by announcement 15 days or 10 working days (whichever is longer)
before the interim shareholders’ meeting (excluding the day of the notice and the meeting).
A notice of a shareholders’ meeting shall include the following:
(i) the time, venue and duration of the meeting;
(ii) matters and proposals submitted to the meeting for consideration;
(iii) method of convening the meeting;
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--- page 614 ---
(iv) if any director, supervisor, general manager, or other senior management personnel
have a significant interest in the matter to be discussed, the nature and extent of their
interest shall be disclosed; if the impact of the discussed matter on the director,
supervisor, general manager, and other senior management as shareholders differs
from its impact on other shareholders of the same category, the difference should be
explained;
(v) materials necessary for shareholder voting;
(vi) a prominent written statement that all shareholders are entitled to attend shareholders’
meeting and are entitled to appoint in writing a proxy to attend and vote at the
meeting and that such proxy need not be a shareholder of the Company;
(vii) specify the delivery time and location of the proxy letter for voting at the meeting;
(viii) the name and telephone number of the regular contact person for the meeting;
(ix) voting time and voting procedures online or by other means;
(x) the record date of registration of shareholders entitled to attend the shareholders’
meeting;
(xi) other contents stipulated by laws, regulations, normative documents, the Listing Rules
and other securities regulatory rules of the place where the shares of the Company are
listed.
Convening of Shareholders’ Meetings
All shareholders registered on the share right registration date or their proxies shall be
entitled to attend the shareholders’ meetings and exercise voting rights in accordance with
relevant laws, regulations, the Listing Rules and the Articles of Association. Shareholder may
attend the general meeting in person, or appoint a proxy to attend or vote on behalf of such
Shareholder.
Individual Shareholders attending the meeting in person shall present his or her identity
card or other valid licence or certificate or stock account card that can prove his or her identity.
Proxies appointed to attend the meeting shall present valid proof of their identities and the
power of attorney from the appointing shareholder.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
–V - 1 1–


--- page 615 ---
Shareholder that is a legal person shall attend the meeting by its legal representative or by
proxies appointed by it. If a legal representative attends the meeting, he/she shall present a copy
of the corporate shareholder’s business licence (with official seal), his/her identity card, a valid
certificate proving his/her qualifications as a legal representative, and a securities account card.
Where the meeting is attended by proxy, he/she shall present his/her identity card and written
power of attorney issued by the legal representative of the corporate shareholder unit in
accordance with the law (except where the shareholder is a Recognised Clearing House (or its
nominees) as defined in the relevant regulations in force from time to time under Hong Kong
law or the securities regulatory rules of the place where the company’s shares are listed).
Where such Shareholder is a Recognised Clearing House (or its nominees), it may authorise
one or more persons or company representatives as it thinks fit to act as its representative(s) at
shareholders’ meeting and creditor meeting. However, if more than one person are so authorised,
the power of attorney shall specify the number and class of shares in respect of which each such
person is so authorised, and be signed by the person authorised by the Recognised Clearing
House. The person(s) so authorised will be entitled to exercise rights on behalf of the
Recognised Clearing House (or its nominees) (without being required to present share
certificate, notarised authorisation and/or further evidence of formal authorisation) and must
enjoy the same statutory rights as other shareholders, including the right to speak and vote, as if
such person was an individual shareholder of the Company.
The power of attorney issued by a Shareholder to appoint a proxy to attend any
shareholders’ meeting shall contain the following:
(i) the name of the principal, as well as the class and number of shares of the Company
held by him/her;
(ii) the name of the proxy;
(iii) specific instructions from shareholders, including instructions as to whether to vote
“for” or “against” or “abstained” from voting on, each item on the agenda of the
general meeting as an item for consideration thereat;
(iv) the date of issuance and term of validity of the power of attorney;
(v) the signature (or seal) of the shareholder. In the case of a corporate shareholder, the
seal of the legal person shall be affixed. In the case of a partnership enterprise
shareholder, the seal of the partnership enterprise shall be affixed and the executing
partner shall stamp or sign.
If the Shareholder does not give specific instructions on authorising a proxy to attend the
shareholders’ meeting, the power of attorney shall state whether the proxy may vote as he/she
thinks fit.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
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--- page 616 ---
If the power of attorney is sign by other personnel authorised by consignor, the power of
attorney for authorised signature or other authorization documents should be certified by a
notary. The power of attorney or other authorisation documents upon notarized shall, together
with the power of attorney for voting, be placed at the domicile of the Company or such other
location as specified in the notice of the meeting.
The directors or senior management who are required to attend the shareholders’ meeting
shall so attend and answer shareholders’ inquiries. Subject to compliance with the securities
regulatory rules of the place where the shares of the Company are listed, the aforementioned
persons may attend the meeting through the internet, video, telephone or other means with
equivalent effect.
A shareholders’ meeting shall be presided over by chairman of the Board. Where the
chairman of the Board is unable or fails to perform his/her duties, the meeting shall be presided
over by a Director jointly elected by more than half of the Directors. A shareholders’ meeting
convened by the Supervisory Committee shall be presided over by the chairman of the
Supervisory Committee. Where the chairman of the Supervisory Committee is unable or fails to
perform his/her duties, the meeting shall be presided over by a supervisor jointly elected by
more than half of the supervisors. A shareholders’ meeting convened by Shareholders shall be
presided over by a representative elected by convener(s). Where the host of the meeting violates
the rules of procedure and makes it impossible to continue the meeting, with the consent of more
than half of the shareholders present at the meeting with voting rights, the shareholders’ meeting
may elect a person to serve as the host of the meeting and continue the meeting.
Voting of Shareholders’ Meetings
Resolutions of a shareholders’ meeting are divided into ordinary resolutions and special
resolutions. Ordinary resolutions of a shareholders’ meeting shall be passed by votes
representing more than half of the voting rights held by Shareholders (including proxies thereof)
attending the shareholders’ meeting. Special resolutions of a shareholders’ meeting shall be
passed by votes representing more than two-thirds of voting rights held by Shareholders
(including proxies thereof) attending the shareholders’ meeting.
The following matters shall be passed by ordinary resolutions at a shareholders’ meeting:
(i) work reports of the Board and the Supervisory Committee;
(ii) profit distribution plans and plans for recovery of losses formulated by the Board;
(iii) appointment and dismissal of members of the Board and the Supervisory Committee,
their remunerations and methods of payment;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-13 –


--- page 617 ---
(iv) engagement, dismissal or non renewal of accounting firms and their remuneration;
(v) related transactions between the Company and its related parties that are required to
be submitted to shareholders’ meeting for approval according to the Listing Rules;
(vi) changes in the use of proceeds;
(vii) matters other than those required by the laws, administrative regulations, departmental
rules, normative documents, the Listing Rules, other securities regulatory rules of the
place where the shares of the Company are listed or the Articles of Association to be
passed by special resolution.
The following matters shall be passed by special resolutions at a general meeting:
(i) increase or reduction of registered capital of the Company;
(ii) issuance of bonds by the Company;
(iii) division, spin-off, merger, dissolution and liquidation of the Company;
(iv) the amendment of the Articles of Association;
(v) the purchase and sale of material assets or amount of guarantee provided by the
Company within one year valued at more than 30% of the audited total assets of the
Company as at the most recent period;
(vi) share incentive scheme and employee shareholding scheme;
(vii) other matters as required by the laws, administrative regulations, administrative
regulations, departmental rules, normative documents, the Listing Rules, other
securities regulatory rules of the place where the shares of the Company are listed or
the Articles of Association, and considered by the general meeting, by way of an
ordinary resolution, to be of a nature which may have a material impact on the
Company, shall be passed by a special resolution.
Shareholders (including proxies thereof) have the right to exercise their voting rights based
on the number of voting shares they represent. Each share is entitled to one vote.
The shares of the Company held by the Company do not carry voting rights, and shall not
be counted in the total number of voting shares represented by shareholders attending a
shareholders’ meeting.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-14 –


--- page 618 ---
Shareholders who purchase the voting shares of the Company in violation of the provisions
of Clause 1 and Clause 2 of Article 63 of the Securities Law shall not exercise the voting right
of the shares that exceed the prescribed ratio within 36 months after the purchase, and such
number shall not be counted in the total number of voting shares represented by shareholders
attending a general meeting. Where any shareholder is, under the Listing Rules, required to
abstain from voting on any particular resolution or restricted to voting only for (or only against)
any particular resolution, any votes cast by the shareholder (or his/her proxy) in contravention of
such requirement or restriction shall not be counted.
When a connected transaction is considered at a shareholders’ meeting, the related
Shareholders shall refrain from voting and the number of voting shares that they represent shall
not be counted the total number of valid voting shares. Announcement of resolutions of the
shareholders’ meeting shall fully disclose the voting of non-related Shareholders.
BOARD OF DIRECTORS
Directors
Directors of the Company shall be natural persons. A person may not serve as a Director of
the Company in case of any of the following circumstances:
(i) the person is without civil conduct capacity or with limited civil conduct capacity;
(ii) the person who has committed an offence of corruption, bribery, conversion of
property, misappropriation of property or sabotaging the market economic order of
socialism and has been punished therefor; or who has been deprived of his/her
political rights, in each case where less than five years have elapsed since the date of
the completion of implementation of such punishment or deprivation, two years have
not elapsed since the probation period was completed;
(iii) the person who is a former director, factory director or manager of a company or
enterprise which is insolvent and under liquidation and he/she is personally liable for
the insolvency of such company or enterprise, where less than three years have
elapsed since the date of the completion of such insolvency and liquidation of the
company or enterprise;
(iv) the person who is a former legal representative of a company or enterprise which has
had its business licence revoked or been ordered to shut down due to any violation of
the law, and where the person was personally responsible for the situation, and three
years have not elapsed since the date of revocation of business licence or shutdown
order;
(v) the person identified as a subject of enforcement for breach of trust by the people’s
court for failure to repay a significant amount of overdue debts;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-15 –


--- page 619 ---
(vi) The person has been subject to a ban from accessing to the securities market imposed
by the CSRC, and the term of prohibition has not expired;
(vii) other contents stipulated by laws, administrative regulations, departmental rules, the
Listing Rules and other securities regulatory rules of the place where the shares of the
Company are listed.
There are no provisions in the Articles of Association requiring Directors to hold any
qualification shares.
Directors shall be elected or replaced at the shareholders’ meeting. A Director shall serve a
term of three years and may serve consecutive terms if re-elected upon the expiration of their
terms. Subject to compliance with relevant laws and administrative regulations, the shareholders’
meeting may depose any director whose term has not expired by ordinary resolution.
The term of office of a director shall commence from the date of taking the position until
the expiry of the term of office of the current session of the Board. Where a re-election fails to
be carried out in a timely manner upon the expiry of the term of office of a Director, such
director shall continue to perform his/her duties as a director in accordance with the laws,
administrative regulations, departmental rules, the Listing Rules, other securities regulatory rules
of the place where the shares of the Company are listed and the Articles of Association until the
newly elected director assumes the office.
Senior management officers may serve concurrently as Directors, provided that the total
number of such Directors who concurrently serve as senior management officers and the
employee representatives shall not exceed a half of the total number of the Directors of the
Company.
Directors may resign prior to the expiration of their terms of office. The Directors who
resign shall submit to the Board a written report in relation to their resignation. Relevant
information shall be disclosed by the Board within 2 days. In the event that the resignation of
any Director results in the number of members of the Board falling below the statutory minimum
requirement, or the resignation of an independent director results in the number of independent
directors being less than 1/3 of the Board members, or there is no accounting professional
among the independent directors, the resigned Directors shall continue to perform his/her duties
in accordance with laws, administrative regulations, departmental rules and the Articles of
Association until the newly elected Director assumes the office.
Board of Directors
The Company has established a Board which shall be accountable to the shareholders’
meetings. The Board shall comprise nine Directors, with one chairman.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-16 –


--- page 620 ---
The Board shall exercise the following duties and powers:
(i) to convene shareholders’ meetings and report its work to the shareholders’ meetings;
(ii) to implement the resolutions of the shareholders’ meetings;
(iii) to formulate business operation plans and investment plans of the Company;
(iv) to formulate the profit distribution plans and plans for recovery of losses of the
Company;
(v) to formulate plans of the Company regarding increase or reduction of the registered
capital, issuance of bonds or other securities and listing;
(vi) to draft plans for major acquisitions of the Company, the purchase of Shares of the
Company, merger, division, dissolution or change in the form of the Company;
(vii) to determine on matters such as the company’s external investment, entrusted wealth
management, acquisition and sale of assets, asset mortgage, external guarantee
matters, related party transactions, and external donations authorised by the
shareholders’ meeting;
(viii) to determine the internal management structure of the Company;
(ix) to determine the appointment or dismissal of the manager of the Company, secretary
to the Board and other senior management and decide on their remuneration, rewards
and penalties; and based on the nomination of the manager, to determine the
appointment or dismissal of the senior management including vice manager(s) and
chief financial officer of the Company and determine their remuneration, rewards and
penalties;
(x) to formulate the basic management system of the Company;
(xi) to formulate proposals for any amendment of the Articles of Association;
(xii) to manage the information disclosure of the Company;
(xiii) to propose to the shareholders’ meeting for appointment or replacement of the
accounting firms which provide audit services to the Company;
(xiv) to listen to work reports of the manager of the Company and review his/her work;
(xv) other duties as stipulated in laws, administrative regulations, departmental rules,
securities regulatory rules of the place where the shares of the Company are listed and
the Articles of Association.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-17 –


--- page 621 ---
The Board shall have one chairman. The chairman of the Board shall be elected by more
than half of all the directors. The chairman of the Board shall exercise the following duties and
powers:
(i) to convene and preside over Board meetings, and to preside over shareholders’
meetings;
(ii) to supervise and examine the implementation of resolutions of the Board;
(iii) to sign company shares, bonds and other securities;
(iv) to sign important documents of the Board;
(v) to exercise the powers of the legal representative, and to sign documents that should
be signed by the legal representative of the Company;
(vi) to approve mortgage financing, loan guarantee and fixed assets investment within the
authorisation by the Board;
(vii) in the event of an emergency such as a natural disaster or other force majeure, to
exercise special disposal rights over the company’s affairs in accordance with the law
and the interests of the company, and report to the company’s Board and shareholders’
meeting afterwards;
(viii) to propose to the Board on the appointment or dismissal of the secretary of the Board;
(ix) other duties and powers granted by laws, administrative regulations, departmental
regulations, the Articles of Association or resolutions of the Board.
Where the chairman of the Board is unable or fails to perform his/her duties, the duties
shall be performed by a Director jointly elected by more than half of the Directors.
The Board shall hold at least four meetings per year, approximately once a quarter, which
shall be convened by the chairman and all Directors and Supervisors shall be notified in writing
14 days before the meeting.
The Board shall convene at least four meetings per year, approximately once a quarter, and
all Directors and Supervisors shall be notified in writing of each meeting 14 days prior to the
meeting. Shareholders representing more than one-tenth of the voting rights, more than one-third
of the directors or the Supervisory Committee, more than half of the independent directors may
propose to convene an interim Board meeting. The chairman of the Board shall convene and
preside over the interim meeting within 10 days from the receipt of the proposal. The Board
shall notify all Directors and Supervisors in writing 3 days before convening the interim meeting
of the Board.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-18 –


--- page 622 ---
The quorum of a Board meeting shall consist of more than one half of all Directors. A
resolution of the Board shall be passed by more than half of all Directors. When voting on the
resolutions of the Board, each Director shall have one vote.
Where a Director has any related relationship with the enterprise involved in the matter to
be decided at the meeting, he/she shall not exercise his/her voting rights on the resolution, nor
shall he/she exercise his/her voting rights on behalf of other Directors. Such a Board meeting
may be held only if more than one half of the Directors without a related relationship are
present, and the resolutions made at such a Board meeting shall require adoption by more than
one half of the Directors without a related relationship. If the number of non-related Directors in
presence is less than 3 persons, the matter shall be submitted to the shareholders’ meeting for
consideration.
Directors shall attend Board meetings in person. If any Director is unable to attend the
meeting for any reason, he/she may by a written power of attorney appoint another Director to
attend the meeting on his/her behalf. The power of attorney shall include the name of the proxy,
the subject, scope of authorisation and validity period, which shall be signed or officially sealed
by the appointing Director. Where a Director does not attend a Board meeting and does not
appointed a proxy to attend the meeting on his behalf, he/she shall be deemed to have waived
his/her voting right at the meeting. Independent directors cannot authorise non-independent
directors to attend and vote on their behalf.
MANAGERS AND OTHER SENIOR MANAGEMENT
The Company shall have one general manager, who shall be appointed or dismissed by the
Board. The Company may have deputy general managers as necessary. Deputy general managers
shall be nominated by the general manager and appointed or dismissed by the Board. The
Company’s general manager, deputy managers, chief financial officer, secretary to the Board and
other senior management designated by the Board are the senior management of the Company.
The circumstances of disqualification for Directors prescribed in Article 89 of the Articles
of Association shall also be applicable to senior management.
The general manager shall serve for a term of 3 years and may serve consecutive terms if
re-appointed.
The general manager shall report to the Board and exercise the following duties and
powers:
(i) to take charge of the production, operation and management of the Company, organise
the implementation of the Board’s resolutions, and report to the Board;
(ii) to organise the implementation annual business plans and investment plans of the
Company;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-19 –


--- page 623 ---
(iii) to draft the plans for establishment of the internal management organisation of the
Company;
(iv) to draft the basic management system of the Company;
(v) to formulate the rules and regulations of the Company;
(vi) to propose to the Board the appointment or dismissal of the deputy general manager
and chief financial officer of the Company;
(vii) to determine the appointment or dismissal of management personnel other than those
whose appointment or dismissal shall be determined by the Board;
(viii) other duties and powers as may be conferred by the Articles of Association or by the
Board.
The Company shall have a secretary to the Board, who is responsible for preparing for
shareholders’ meeting and Board meetings, maintaining documents and managing Shareholders’
information, as well as handling information disclosure matters.
SUPERVISORY COMMITTEE
Supervisors
The circumstances of disqualification for Directors prescribed in Article 89 of the Articles
of Association shall be applicable to Supervisors. Directors, the general manager, other senior
management and their spouses and immediate family members shall not concurrently serve as
Supervisors.
Supervisors shall comply with laws, administrative regulations and the Articles of
Association and shall assume the duties of honesty and due diligence towards the Company.
Supervisors shall not receive brides or other illegal income in abuse of the position or authority,
or embezzle the company assets.
A Supervisor shall serve for a term of 3 years and may serve consecutive terms if
re-appointed upon expiry of a term.
Where a re-election fails to be carried out in a timely manner upon the expiry of the term
of office of a Supervisor, or in the event that the resignation of the Supervisor during his/her
term of office results in the number of members of the Supervisory Committee falling below the
statutory minimum requirement, such Supervisor shall continue to perform his/her duties as a
Supervisor in accordance with the laws, administrative regulations and the Articles of
Association until the newly elected Supervisor assumes the office.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-20 –


--- page 624 ---
Supervisory Committee
The Company shall have a Supervisory Committee. The Supervisory Committee comprises
three Supervisors. It shall have one chairman, who shall be elected by more than half of all the
Supervisors. The chairman of the Supervisory Committee shall convene and preside over
Supervisory Committee meetings. Where the chairman of the Supervisory Committee is unable
or fails to perform his/her duties, the Supervisory Committee meetings shall be convened or
presided over by a Supervisor jointly elected by more than half of the Supervisors.
The Supervisory Committee shall include 2 representatives of Shareholders and 1 employee
representatives of the Company. The employee representatives of the Board of Supervisors shall
be elected at the employee representatives’ meeting, employee meeting or otherwise
democratically.
The Supervisory Committee shall exercise the following duties and powers:
(i) to review the periodic reports of the Company prepared by the Board and express its
written opinion;
(ii) to check the financial condition of the Company;
(iii) to monitor the performance of duties in the Company by Directors and senior
management and propose dismissal of Directors and senior management who have
violated laws, administrative regulations, departmental regulations, the Listing Rules,
other securities regulatory rules of the place where the shares of the Company are
listed, the Articles of Association or the resolutions of shareholders’ meetings;
(iv) to require Directors and the senior management to make corrections if their conduct
has damaged the interests of the Company;
(v) to propose the convening of interim shareholders’ meetings and, in the event that the
Board fails to perform the obligations to convene and preside over the shareholders’
meetings in accordance with PRC Company Law, to convene and preside over the
shareholders’ meetings;
(vi) supervise the implementation of the special committee of the Board and inspect
whether the members of the special committee of the Board fulfil their duties in
accordance with the rules of procedure;
(vii) to propose proposals to the general meetings;
(viii) to file lawsuit against Directors and senior management in accordance with the PRC
Company Law;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-21 –


--- page 625 ---
(ix) in case of any irregularity identified in the operations of the Company, investigations
may be conducted, and if necessary, professional institutions such as accounting firms
and law firms may be engaged to assist in their work at the expense of the Company;
(x) Other authorities prescribed in laws, administrative regulations, departmental rules,
the Listing Rules, other securities regulatory rules of the place where the shares of the
Company are listed and the Articles of Association.
The Supervisory Committee shall convene at least one meeting every six months.
Supervisors may propose to convene an interim meeting. Resolutions of the Supervisory
Committee shall be passed by more than half of the Supervisors.
FINANCIAL ACCOUNTING SYSTEM, DISTRIBUTION OF PROFITS AND AUDIT
Financial Accounting System
The Company shall formulate its financial and accounting systems in accordance with laws,
administrative regulations and requirements of relevant PRC authorities. The Company shall
prepare a financial accounting report at the end of each fiscal year and have it audited by an
accounting firm in accordance with relevant laws.
The Company shall report and disclose its annual reports and interim reports in accordance
with securities regulatory rules of the place where the shares of the Company are listed.
The Company shall not keep accounts other than those provided by law. Any assets of the
Company shall not be kept under any account opened in the name of any individual.
Profit distribution
When distributing after-tax profits of the year, the Company shall set aside 10% of its
after-tax profits for the Company’s statutory reserve fund. When the aggregate balance in the
statutory reserve fund has reached 50% or more of the Company’s registered capital, the
Company needs not make any further allocations to that fund. Where the Company’s statutory
reserve fund is not enough to make up losses of the Company for the preceding year, the current
year’s profits shall be applied firstly to make up the losses before being allocated to the
statutory reserve in accordance with the preceding provision. Subject to a resolution passed at a
shareholders’ meeting, after allocation has been made to the Company’s statutory reserve fund
from its after-tax profits, the Company may set aside funds for the discretionary reserve fund.
Except for those not distributed in proportion as prescribed in the Articles of Association, the
remaining after-tax profit, after recovery of losses and appropriation of statutory reserve funds,
shall be distributed to Shareholders in proportion to their shareholdings. Where the shareholders’
meeting distributes its profits before recovery of losses and appropriation of statutory reserve
funds to the shareholders in breach of the provisions of the preceding provision, Shareholders
must refund to the Company the profits distributed in violation of the provisions. No profit shall
be distributed in respect of the shares of the Company which are held by the Company.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-22 –


--- page 626 ---
The reserve fund of the Company shall be used for making up for the loss, expansion of the
operation or increase of capital of the Company. When using the reserve fund to cover its losses,
any discretionary reserve fund and statutory reserve fund shall first be used to cover such losses;
if there is still a shortfall, the capital reserve may be used in accordance with laws. When the
statutory reserve fund is capitalised, the retained portion of the fund shall not be less than 25%
of the registered capital of the Company before the capitalisation.
The Company may distribute profits in the form of cash, shares or in any other manner
permitted by laws and regulations.
Internal audit
The Company implements an internal audit system, which clearly defines the leadership
system, responsibilities and authorities, personnel allocation, funding support, application of
audit results and accountability for internal audit. The internal audit institution of the Company
conducts supervision and inspection on matters such as the Company’s business activities, risk
management, internal control, and financial information.
The internal audit institution reports to the Board. During the process of supervising and
inspecting the Company’s business activities, risk management, internal control, and financial
information, the internal audit institution shall accept the supervision and guidance of the Audit
Committee. Where the internal audit institution discovers relevant significant issues or leads, it
shall immediately report directly to the Audit Committee.
Appointment of an Accounting Firm
The Company shall appoint such accounting firm which has complied with the Securities
Law, the Listing Rules and other securities regulatory rules of the place where the shares of the
Company are listed for carrying out the audit for the accounting statements, net asset
verification, and other relevant consultancy services. The term of appointment shall be 1 year
and can be re-appointed.
The appointment and dismissal of accounting firm by the Company shall be subject to the
approval of shareholders’ meetings. The Board shall not appoint accounting firm before the
approval of the shareholders’ meeting.
The Company guarantees that it shall provide the appointed accounting firm with true and
complete accounting proofs, accounting books, financial and accounting reports and other
accounting information, and that it engages without any refusal, withholding, and
misrepresentation.
The auditing fee of the accounting firm shall be determined by the shareholders’ meeting.
In the event of termination of the appointment or non-renewal of appointment of an
accounting firm, the Company shall notify the accounting firm 60 days in advance; when the
shareholders’ meeting votes on termination of appointment of an accounting firm, the accounting
firm shall be allowed to make its representation.
An accounting firm proposing to resign shall state at a shareholders’ meeting whether the
Company has committed any improper act.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-23 –


--- page 627 ---
MERGER, DIVISION, CAPITAL INCREASE, CAPITAL REDUCTION, DISSOLUTION
AND LIQUIDATION
Merger, Division, Capital Increase and Capital Reduction
Merger of the Company may take the form of absorption or establishment of a new
company.
In case of merger by absorption, a company absorbs any other company and the absorbed
company is dissolved. In case of merger by new establishment, two or more companies merge
into a new one and the parties to the merger are dissolved.
Where the price paid for a merger does not exceed 10 % of the Company’s net assets, the
merger may be exempted from approval by resolution of a shareholders’ meeting, but subject to
approval by resolution of the Board.
If the Company is involved in a merger, the parties to the merger shall enter into a merger
agreement, and shall prepare a balance sheet and a property list. The Company shall notify its
creditors within 10 days as of the date of the resolution for the merger and shall make a public
announcement through a newspaper of the Company’s registered address or the National
Enterprise Credit Information Publicity System within 30 days. A creditor may within 30 days as
of the receipt of the notice or, in case where he/she fails to receive such notice within 45 days of
the date of the announcement, to demand the Company to repay its debts or provide guarantees
for such debts.
When the Company is merged, the claims and debts of each party to the merger shall be
succeeded to by the company surviving the merger or the new company established subsequent
to the merger.
Where there is a division of the Company, its assets shall be divided accordingly.
Where there is a division of the Company, a balance sheet and property list shall be
prepared. The Company shall notify its creditors within 10 days as of the date of the resolution
for the division and shall make a public announcement through a newspaper of the Company’s
registered address or the National Enterprise Credit Information Publicity System within 30
days.
Unless a written agreement has been entered into, before the division, by the Company and
its creditors in relation to the repayment of debts, debts of the Company prior to the division
shall be jointly assumed by the surviving companies after the division.
Where the Company needs to reduce its registered capital, it shall prepare a balance sheet
and property list.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-24 –


--- page 628 ---
The Company shall notify its creditors within 10 days as of the date of the resolution for
the reduction of its registered capital and shall make a public announcement through a
newspaper of the Company’s registered address or the National Enterprise Credit Information
Publicity System within 30 days. A creditor may within 30 days as of the receipt of the notice
or, in case where he/she fails to receive such notice within 45 days of the date of the
announcement, to demand the Company to repay its debts or provide guarantees for such debts.
Where the Company reduces its registered capital, it shall reduce the amount of capital
contribution or shares in accordance with the proportion of shares held by shareholders.
If the reduction of the registered capital is in violation of the PRC Company Law and other
relevant provisions, shareholders shall return the funds they have received and the reduced
capital contribution of the shareholders shall be restored to its original amount; in case of losses
caused to the Company, the shareholders and the liable directors and senior management
personnel shall be liable for compensation.
Where there is a merger or division of the Company, the Company shall, in accordance
with the laws, apply for change in its registration with the company registration authority for
any changes of its registered information caused thereby. Where the Company is dissolved, the
Company shall apply for cancellation of its registration in accordance with the laws. Where a
new company is established, the Company shall apply for registration of incorporation in
accordance with the laws.
Where there is an increase or reduction in the registered capital, the Company shall, in
accordance with the laws, apply for change in registration with the company registration
authority.
Dissolution and Liquidation
The Company shall be dissolved upon the occurrence of any of the following events:
(i) the business term stipulated in the Articles of Association expires or other cause of
dissolution provided in the Articles of Association;
(ii) a resolution on dissolution is passed by shareholders’ meeting;
(iii) dissolution is required due to the merger or division of the Company;
(iv) the business licence of the Company is revoked or the Company is ordered to close
down or dissolved in accordance with the laws;
(v) the Company suffers significant hardships in operation and management that cannot be
resolved through other means, and its continuation may cause substantial loss in
Shareholders’ interests, Shareholders representing 10% or above of the total voting
rights of the Company may plead the people’s court to dissolve the Company.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-25 –


--- page 629 ---
With regard to the occurrence of the situation described in item (i) and (ii) above, if assets
have not yet been distributed to shareholders, the Company may continue to exist by amending
the Articles of Association. Amendments to the Articles of Association pursuant to the preceding
paragraph shall be subject to the approval of Shareholders representing two-thirds or above of
the voting rights present at the shareholders’ meetings.
Where the Company is dissolved pursuant to item (i), (ii), (iv) or (v) above, it shall
establish a liquidation committee within 15 days as of the dissolution circumstance arises, and
the liquidation shall be thereby started. The liquidation committee shall comprise the Directors,
except where other persons are elected by resolution of a shareholders’ meeting. If the
liquidation obligor fails to perform the liquidation obligation in time and causes losses to the
Company or creditors, it shall be liable for compensation.
As of the date of its establishment, the liquidation committee shall notify the creditors
within 10 days and shall make a public announcement through a newspaper of the Company’s
registered address or the National Enterprise Credit Information Publicity System within 60
days. Creditors shall, within 30 days as of the receipt of the notice or, in case where he/she fails
to receive such notice, within 45 days as of the date of the announcement, declare their claims to
the liquidation committee.
Creditors shall provide explanations and evidence for their claims upon their declarations
of such claims. The liquidation committee shall record the creditors’ claims.
The liquidation committee shall not pay off any debts to any creditors during period of
credit declaration.
After checking the assets of the Company and preparing a balance sheet and property list,
the liquidation committee shall formulate a liquidation plan for the confirmation by general
meeting or the people’s court. The remaining properties of the Company, after the payment for
liquidation expenses, wages, social insurance premiums and statutory compensation of staffs,
taxes and debts of the Company, shall be distributed to the shareholders in proportion to their
shareholdings. During the liquidation period, the Company shall continue to exist but shall not
carry out any business activities unrelated to liquidation. The assets of the Company shall not be
distributed to the shareholders until the settlement of debts in accordance with the preceding
article.
If the liquidation committee, after checking the assets of the Company and preparing a
balance sheet and property list, finds that the assets of the Company are insufficient to pay off
its debts, it shall immediately file an application to the people’s court for bankruptcy. After the
people’s court accepts the bankruptcy application, the liquidation committee shall hand over
liquidation affairs to the administrator designated by the people’s court.
Upon completion of liquidation of the Company, the liquidation committee shall prepare a
liquidation report and submit the report to the shareholders’ meeting or the people’s court for
confirmation, and submit the report to the company registration authority to apply for
de-registration of the Company.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-26 –


--- page 630 ---
Where the Company is declared bankruptcy in accordance with law, it shall implement
bankruptcy liquidation in accordance with the relevant laws relating to bankruptcy of enterprise.
AMENDMENTS TO THE ARTICLE OF ASSOCIATION
The Company shall amend the Articles of Association in any of the following
circumstances:
(i) after amendments are made to the PRC Company Law or other relevant laws,
administrative regulations, departmental regulations, normative documents and the
Listing Rules, any term contained in the Articles of Association become inconsistent
with the said amendments;
(ii) if certain changes of the Company occur resulting in the inconsistency with certain
terms specified in the Articles of Association;
(iii) the shareholders’ meeting has resolved to amend the Articles of Association.
Where the amendments to the Articles of Association passed by resolutions of the
shareholders’ meetings require approval of the competent authorities, the amendments shall be
submitted to the relevant authorities for approval. Where the amendments involve registration
matters of the Company, the involved change shall be registered in accordance with the laws.
The Board shall amend the Articles of Association in accordance with the resolution of the
shareholders’ meetings on amendment to the Articles of Association and the examination and
approval opinions from relevant authorities.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-27 –


--- page 631 ---
1. TAXATION OF SECURITY HOLDERS
The taxation of income and capital gains of holders of H Shares is subject to the laws and
practices of the PRC and of jurisdictions in which holders of H Shares are resident or otherwise
subject to tax. The following summary of certain relevant taxation provisions is based on current
laws and practices, is subject to change and does not constitute legal or tax advice. The
discussion does not deal with all possible tax consequences relating to an investment in the H
Shares, nor does it take into account the specific circumstances of any particular investor, some
of which may be subject to special regulation. Accordingly, you should consult your own tax
adviser regarding the tax consequences of an investment in the H Shares. The discussion is
based upon laws and relevant interpretations in effect as of the date of this Prospectus, all of
which are subject to change and may have retrospective effect.
This discussion does not address any aspects of the PRC or Hong Kong taxation other than
income tax, capital tax, stamp duty and estate duty. Prospective investors are urged to consult
their financial advisers regarding the PRC, Hong Kong and other tax consequences of owning
and disposing of H Shares.
A. The PRC Taxation
Taxation on Dividends
– Individual Investor
Pursuant to the Individual Income Tax Law of the PRC (ה
), which was most recently amended on 31 August 2018 and the
Implementation Provisions of the Individual Income Tax Law of the PRC ( ʕശɛ͏
ૢԷ ), which was most recently amended on 18 December
2018 (hereinafter collectively referred to as the “ IIT Law ”), dividends distributed by
PRC enterprises are subject to individual income tax levied at a flat rate of 20%. For a
foreign individual who is not a resident of the PRC, the receipt of dividends from an
enterprise in the PRC is normally subject to individual income tax of 20% unless
specifically exempted by the tax authority of the State Council or reduced by relevant
tax treaty.
Pursuant to the Circular on Certain Policy Questions Concerning Individual
Income Tax ( ), which was issued by the MOF
and the SAT on 13 May 1994 and came into effect on the same date, the incomes
gained by individual foreigners from dividends and bonuses of enterprise with foreign
investment are exempt from individual income tax for the time being.
APPENDIX VI TAXATION AND FOREIGN EXCHANGE
– VI-1 –


--- page 632 ---
– Enterprise Investors
In accordance with the Enterprise Income Tax Law of the PRC ( ʕശɛ͏΍ձ
) issued by NPC on 16 March 2007 and most recently amended on
29 December 2018 and the Implementation Regulations for the Enterprise Income Tax
Law of the PRC (ૢԷ ) issued by the State
Council on 6 December 2007 and most recently amended on 23 April 2019, the rate of
enterprise income tax shall be 25%. A non-resident enterprise is generally subject to a
10% enterprise income tax on PRC-sourced income (including dividends received
from a PRC resident enterprise that issues shares in Hong Kong), if it does not have
an establishment or premise in the PRC or has an establishment or premise in the PRC
but its PRC-sourced income has no real connection with such establishment or
premise. The aforesaid income tax payable for non-resident enterprises are deducted at
source, where the payer of the income is required to withhold the income tax from the
amount to be paid to the non-resident enterprise.
The Circular of the SAT on Issues Relating to the Withholding and Remitting of
Enterprise Income Tax by PRC Resident Enterprises on Dividends Distributed to
Overseas Non-Resident Enterprise Shareholders of H Shares (ʕ਷
͏ΆุΣྤ̮ H ),
which was issued and implemented by the SAT on 6 November 2008, further clarified
that a PRC-resident enterprise must withhold enterprise income tax at a rate of 10%
on the dividends of 2008 and onwards that it distributes to overseas non-resident
enterprise shareholders of H Shares. In addition, the Response to Questions on
Levying Enterprise Income Tax on Dividends Derived by Non-resident Enterprise from
Holding Stock such as B Shares (͏Άุ՟੻ B੻
ҭᔧ), which was issued by the SAT and came into effect on 24 July 2009,
further provides that any PRC-resident enterprise whose shares are listed on overseas
stock exchanges must withhold and remit enterprise income tax at a rate of 10% on
dividends of 2008 and onwards that it distributes to non-resident enterprises. Such tax
rates may be further modified pursuant to the tax treaty or agreement that China has
entered into with a relevant country or area, where applicable.
APPENDIX VI TAXATION AND FOREIGN EXCHANGE
– VI-2 –


--- page 633 ---
Pursuant to the Arrangement between the Mainland and the Hong Kong Special
Administrative Region on the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion (τ
ર) (hereinafter referred to as the “ Arrangement ”), which was signed on 21 August
2006, the Chinese Government may levy taxes on the dividends paid by a
PRC-resident enterprise to Hong Kong residents (including resident individuals and
resident entities) in an amount not exceeding 10% of the total dividends payable by
the PRC-resident enterprise unless a Hong Kong resident directly holds 25% or more
of the equity interest in a PRC-resident enterprise, then such tax shall not exceed 5%
of the total dividends payable by the PRC-resident enterprise. The Fifth Protocol of
the Arrangement between the Mainland of China and the Hong Kong Special
Administrative Region on the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion (τ
), which came into effect on 6 December 2019, adds a criteria for the
qualification of entitlement to enjoy treaty benefits. Although there may be other
provisions under the Arrangement, the treaty benefits under the criteria shall not be
granted in the circumstance where relevant gains, after taking into account all relevant
facts and conditions, are reasonably deemed to be one of the main purposes for the
arrangement or transactions which will bring any direct or indirect benefits under this
Arrangement, except when the grant of benefits under such circumstance is consistent
with relevant objective and goal under the Arrangement. The application of the
dividend clause of tax agreements is subject to the requirements of PRC tax law and
regulation, such as the Notice of the SAT on the Issues Concerning the Application of
the Dividend Clauses of Tax Agreements (ૢಛ
).
– Tax Treaties
Non-resident investors residing in jurisdictions which have entered into treaties
or adjustments for the avoidance of double taxation with the PRC might be entitled to
a reduction of the Chinese enterprise income tax imposed on the dividends received
from PRC companies. The PRC currently has entered into Avoidance of Double
Taxation Treaties or Arrangements with a number of countries and regions including
Hong Kong Special Administrative Region, Macau Special Administrative Region,
Australia, Canada, France, Germany, Japan, Malaysia, the Netherlands, Singapore, the
United Kingdom and the United States. Non-PRC resident enterprises entitled to
preferential tax rates in accordance with the relevant taxation treaties or arrangements
are required to apply to the Chinese tax authorities for a refund of the enterprise
income tax in excess of the agreed tax rate, and the refund application is subject to
approval by the Chinese tax authorities.
APPENDIX VI TAXATION AND FOREIGN EXCHANGE
– VI-3 –


--- page 634 ---
Taxation on Share Transfer
– VAT and Local Additional Tax
According to the Interim Regulations of the PRC on Value-added Tax ( ʕശɛ
೼ᅲБૢԷ) which was promulgated by the State Council on
13 December 1993, and most recently amended on 19 November 2017, and the
Detailed Rules for the Implementation of the Interim Regulations of the PRC on
Value-Added Tax ( ) which was
promulgated by the MOF on 25 December 1993 and most recently amended on
28 October 2011, all enterprises and individuals that engage in the sale of goods, the
provision of processing, repair and replacement services, sales of service, intangible
assets and real estate and the importation of goods within the territory of the PRC
shall pay value-added tax at the rate of 0%, 6%, 11% and 17% for the different goods
it sells and different services it provides, except when specified otherwise.
According to the Circular on Comprehensively Promoting the Pilot Program of
the Collection of Value-added Tax in Lieu of Business Tax (પකᐄุ೼ҷ
), which was promulgated by the MOF and the SAT on
23 March 2016 and latest amended on 1 April 2019, entities and individuals engaged
in the services sale in the PRC are subject to V AT and “engaged in the services sale in
the PRC” means that the seller or buyer of the taxable services is located in the PRC.
It also provides that transfer of financial products, including transfer of the ownership
of marketable securities, shall be subject to V AT at 6% on the taxable revenue (which
is the balance of sales price upon deduction of purchase price), for a general or a
foreign V AT taxpayer. However, individuals who transfer financial products are
exempt from V AT, which is also provided in the third appendix of the Notice of the
MOF and the SAT on Implementing the Pilot Program of Replacing Business Tax with
Value-Added Tax in an All-round Manner, namely Provisions on the Transitional
Policies for the Pilot Collection of Value-added Tax in Lieu of Business Tax ( ᐄุ೼
 ). According to these regulations, if the holder is a
non-resident individual, the PRC V AT is exempted from the sale or disposal of H
shares; if the holder is a non-resident enterprise and the H-share buyer is an individual
or entity located outside China, the holder is not necessarily required to pay the PRC
V AT, but if the H-share buyer is an individual or entity located in China, the holder
may be required to pay the PRC V AT. However, it is still uncertain whether the
non-Chinese resident enterprises are required to pay the PRC V AT for the disposal of
H shares in practice.
APPENDIX VI TAXATION AND FOREIGN EXCHANGE
– VI-4 –


--- page 635 ---
Income Tax
– Individual Investors
Under the IIT Law and its implementation rules, individuals are subject to
individual income tax at a rate of 20% on gains realised on the sale of equity interests
in PRC resident enterprises. Pursuant to the Circular on Continuing the Temporary
Exemption of Individual Income Tax on Gains from Share Transfers by Individuals
( ), which was promulgated
by the MOF and the SAT and became effective on 30 March 1998, from 1 January
1997, income of individuals from the transfer of shares in listed companies continues
to be temporarily exempted from individual income tax. The SAT does not specify
whether to continue to exempt individuals from personal income tax on the income
from the transfer of shares in listed company.
– Enterprise Investors
In accordance with the EIT Law, a non-resident enterprise is generally subject to
enterprise income tax at the rate of a 10% on PRC-sourced income, including gains
derived from the disposal of equity interests in a PRC resident enterprise, if it does
not have an establishment or premise in the PRC or has an establishment or premise in
the PRC but its PRC-sourced income has no real connection with such establishment
or premise. Such income tax payable for non-resident enterprises are deducted at
source, where the payer of the income is required to withhold the income tax from the
amount to be paid to the non-resident enterprise. Such tax may be reduced or
exempted pursuant to relevant tax treaties or agreements on avoidance of double
taxation.
Stamp Duty
According to the Stamp Duty Law of the PRC ( )
promulgated by the SCNPC on 10 June 2021 and became effective on 1 July 2022, the
PRC stamp duty is applicable to the entities and individuals that conclude taxable
vouchers or conduct securities trading within the territory of the PRC, and the entities
and individuals outside the territory of the PRC that conclude taxable vouchers that
are used inside China. Therefore, the purchase and disposal of H shares by non-PRC
investors outside of the PRC does not apply to the relevant provisions of the Stamp
Duty Law of the PRC.
Estate Duty
According to PRC law, no estate duty is currently levied in the PRC.
APPENDIX VI TAXATION AND FOREIGN EXCHANGE
– VI-5 –


--- page 636 ---
B. Hong Kong taxation
Tax on dividends
Under the current practice of the Inland Revenue Department of Hong Kong, no
tax is payable in Hong Kong in respect of dividends paid by the Company.
Capital gains and profit tax
No tax is imposed in Hong Kong in respect of capital gains from the sale of H
Shares. However, trading gains from the sale of the H Shares by persons carrying on a
trade, profession or business in Hong Kong, where such gains are derived from or
arise in Hong Kong from such trade, profession or business will be subject to Hong
Kong profits tax, which is currently imposed at the maximum rate of 16.5% on
corporations and at the maximum rate of 15% on unincorporated businesses. Certain
categories of taxpayers (for example, financial institutions, insurance companies and
securities dealers) are likely to be regarded as deriving trading gains rather than
capital gains unless these taxpayers can prove that the investment securities are held
for long-term investment purposes.
Trading gains from sales of the H Shares effected on the Stock Exchange will be
considered to be derived from or arise in Hong Kong. Liability for Hong Kong profits
tax would thus arise in respect of trading gains from sales of H Shares effected on the
Stock Exchange realised by persons carrying on a business of trading or dealing in
securities in Hong Kong.
Stamp duty
Hong Kong stamp duty, currently charged at the ad valorem rate of 0.10% on the
higher of the consideration for or the market value of the H Shares, will be payable by
the purchaser on every purchase and by the seller on every sale of any Hong Kong
securities, including H Shares (in other words, a total of 0.2% is currently payable on
a typical sale and purchase transaction involving H Shares). In addition, a fixed stamp
duty of HK$5.00 is currently payable on any instrument of transfer of H Shares.
Where one of the parties is a resident outside Hong Kong and does not pay the ad
valorem duty due by it, the duty not paid will be assessed on the instrument of
transfer (if any) and will be payable by the transferee. If no stamp duty is paid on or
before the due date, a penalty of up to 10 times the duty payable may be imposed.
Estate duty
The Revenue (Abolition of Estate Duty) Ordinance 2005 abolished estate duty in
respect of deaths occurring on or after 11 February 2006.
APPENDIX VI TAXATION AND FOREIGN EXCHANGE
– VI-6 –


--- page 637 ---
2. PRINCIPAL TAXATION OF THE COMPANY IN THE PRC
Please see “Regulatory Overview” of this prospectus.
3. TAXATION OF THE COMPANY IN HONG KONG
The Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong) (“ IRO”) is an
ordinance for the purposes of imposing taxes on property, earnings and profits in Hong Kong.
The IRO provides, among others, that persons, which include corporations, partnerships, trustees
and bodies of persons, carrying on any trade, profession or business in Hong Kong are
chargeable to tax on all profits (excluding profits arising from the sale of capital assets) arising
in or derived from Hong Kong from such trade, profession or business.
Under the two-tiered profits tax rates regime in Hong Kong, the first HK$2 million of
profits of the qualifying group entity will be taxed at 8.25%, and profits above HK$2 million
will be taxed at 16.5%. The profits of a group entity not qualifying for the two-tiered profits tax
rates regime will continue to be taxed at a flat rate of 16.5%.
As our Group carries on certain trade and business in Hong Kong, our Group may be
subject to the profits tax regime under the IRO.
4. FOREIGN EXCHANGE
Foreign Exchange
The lawful currency of the PRC is Renminbi, which is currently subject to foreign
exchange control and cannot be freely converted into foreign currency. The SAFE, with the
authorisation of the People’s Bank of China (hereinafter referred to as “ PBOC ”), is
empowered with the functions of administering all matters relating to foreign exchange,
including the enforcement of foreign exchange control regulations. The Foreign Exchange
Administration Regulations ( ʕശɛ͏΍ձ਷̮ි၍ଣૢԷ ), which was promulgated by
the State Council on 29 January 1996 and most recently amended on 5 August 2008,
classifies all international payments and transfers into current items and capital items.
Current account items are subject to the reasonable examination of the veracity of
transaction documents and the consistency of the transaction documents and the foreign
exchange receipts and payments by financial institutions engaging in conversion and sale of
foreign currencies and supervision and inspection by the foreign exchange control
authorities. For capital account items, overseas organisations and overseas individuals
making direct investments in China shall, upon approval by the relevant authorities in
charge, process registration formalities with the foreign exchange control authorities.
Foreign exchange income received overseas can be repatriated or deposited overseas, and
foreign exchange and foreign exchange settlement funds under the capital account are
required to be used only for purposes as approved by the competent authorities and foreign
exchange administrative authorities. In the event that international revenues and
expenditure occur or may occur a material misbalance, or the national economy encounters
or may encounter a severe crisis, the State may adopt necessary safeguard and control
measures on international revenues and expenditure.
APPENDIX VI TAXATION AND FOREIGN EXCHANGE
– VI-7 –


--- page 638 ---
The Regulations for the Administration of Settlement, Sale and Payment of Foreign
Exchange ( ), which was promulgated by the PBOC on
20 June 1996 and implemented on 1 July 1996, removes other restrictions on convertibility
of foreign exchange under current items, while imposing existing restrictions on foreign
exchange transactions under capital account items.
According to the Announcement on Improving the Reform of the Renminbi Exchange
Rate Formation Mechanism (ʮѓ ), which was
issued by the PBOC and implemented on 21 July 2005, the PRC has started to implement a
managed floating exchange rate system in which the exchange rate would be determined
based on market supply and demand and adjusted with reference to a basket of currencies
since 21 July 2005. Therefore, the Renminbi exchange rate was no longer pegged to the
U.S. dollar. PBOC would publish the closing price of the exchange rate of the Renminbi
against trading currencies such as the U.S. dollar in the interbank foreign exchange market
after the closing of the market on each working day, as the central parity of the currency
against Renminbi transactions on the following working day.
According to the relevant laws and regulations in the PRC, PRC enterprises (including
foreign investment enterprises) which need foreign exchange for current item transactions
may, without the approval of the foreign exchange administrative authorities, effect
payment through foreign exchange accounts opened at the designated foreign exchange
bank, on the strength of valid transaction receipts and proof. Foreign investment enterprises
which need foreign exchange for the distribution of profits to their shareholders and PRC
enterprises which, in accordance with regulations, are required to pay dividends to their
shareholders in foreign exchange (such as our Company) may, on the strength of
resolutions of the board of directors or the shareholders’ meeting on the distribution of
profits, effect payment from foreign exchange accounts at the designated foreign exchange
bank, or effect exchange and payment at the designated foreign exchange bank.
According to the Decisions on Matters including Canceling and Adjusting a Batch of
Administrative Approval Items ( )
which was promulgated by the State Council on 23 October 2014, it decided to cancel the
approval requirement of the SAFE and its branches for the remittance and settlement of the
proceeds raised from the overseas listing of the foreign shares into RMB domestic
accounts.
APPENDIX VI TAXATION AND FOREIGN EXCHANGE
– VI-8 –


--- page 639 ---
According to the Circular of the State Administration of Foreign Exchange on Issues
concerning the Administration of Foreign Exchange Involved in Overseas Listing (̮
 ) issued by the SAFE and implemented
on 26 December 2014, a domestic company shall, within 15 business days from the date of
the end of its overseas listing issuance, register the overseas listing with the local branch
office of state administration of foreign exchange at the place of its establishment; the
proceeds from an overseas listing of a domestic company may be remitted to the domestic
account or deposited in an overseas account, but the use of the proceeds shall be consistent
with the content of the document and other disclosure documents. A domestic company
(except for bank financial institutions) shall present its certificate of overseas listing to
open a special account at a local bank for its initial public offering (or follow-on offering)
and repurchase business to handle the exchange, remittance and transfer of funds for the
business concerned.
According to the Notice of the SAFE on Further Simplifying and Improving Policies
for the Foreign Exchange Administration of Direct Investment (ආɓ
 ), which took effect on 1 June 2015 and was
amended on 30 December 2019, the confirmation of foreign exchange registration under
domestic direct investment and the confirmation of foreign exchange registration under
overseas direct investment shall be directly examined and handled by banks. SAFE and its
branch offices shall indirectly regulate the foreign exchange registration of direct
investment through banks.
According to the Circular on Reforming and Regulating Policies on the Control over
Foreign Exchange Settlement of Capital Accounts (ձ஝ᇍ༟͉
) which was promulgated by the SAFE and implemented on
9 June 2016, foreign currency earnings in capital account that relevant policies of
willingness exchange settlement have been clearly implemented on (including the recalling
of raised capital by overseas listing) may undertake foreign exchange settlement in the
banks according to actual business needs of the domestic institutions. The tentative
percentage of foreign exchange settlement for foreign currency earnings in capital account
of domestic institutions is 100%, subject to adjustment of the SAFE in due time in
accordance with international revenue and expenditure situations.
APPENDIX VI TAXATION AND FOREIGN EXCHANGE
– VI-9 –


--- page 640 ---
On 26 January 2017, Notice on Further Promoting the Reform of Foreign Exchange
Administration and Improving the Examination of Authenticity and Compliance (ආɓ
 ) was issued by SAFE to further expand
the scope of settlement for domestic foreign exchange loans, allow settlement for domestic
foreign exchange loans with export background under goods trading, allow repatriation of
funds under domestic guaranteed foreign loans for domestic utilisation, allow settlement for
domestic foreign exchange accounts of foreign institutions operating in the Free Trade Pilot
Zones, and adopt the model of full-coverage RMB and foreign currency overseas lending
management, where a domestic institution engages in overseas lending, the sum of its
outstanding overseas lending in RMB and outstanding overseas lending in foreign
currencies shall not exceed 30% of its owner’s equity in the audited financial statements of
the preceding year.
On 23 October 2019, the SAFE issued the Notice on Further Facilitating Cross-Board
Trade and Investment ( ), which canceled
restrictions on domestic equity investments made with capital funds by non-investing
foreign-funded enterprises. In addition, restrictions on the use of funds for foreign
exchange settlement of domestic accounts for the realisation of assets have been removed
and restrictions on the use and foreign exchange settlement of foreign investors’ security
deposits have been relaxed. Eligible enterprises in the pilot area are also allowed to use
revenues under capital accounts, such as capital funds, foreign debts and overseas listing
revenues for domestic payments without providing materials to the bank in advance for
authenticity verification on an item-by-item basis, while the use of funds should be true, in
compliance with applicable rules and conforming to the current capital revenue
management regulations.
APPENDIX VI TAXATION AND FOREIGN EXCHANGE
– VI-10 –


--- page 641 ---
A. FURTHER INFORMATION ABOUT OUR GROUP
1. Incorporation of our Company
Our Company was incorporated as a joint stock company with limited liability in the
PRC on 23 July 2012. Our registered office is located at Kai Di Road, Li Shizhen Industrial
Park, Qichun County, Hubei Province, the PRC.
Our Company has established a principal place of business in Hong Kong at Unit
2703B, 27/F, 148 Electric Road, North Point and was registered as a non-Hong Kong
company in Hong Kong under Part 16 of the Companies Ordinance on 10 October 2024.
Our Company has appointed Mr. Ng Chun Hoi as its authorised representative under the
Companies Ordinance for the acceptance of service of process and notices in Hong Kong.
The address for service of process on our Company in Hong Kong is the same as our
principal place of business in Hong Kong as set out above.
As our Company is incorporated in the PRC, we are subject to relevant laws and
regulations of the PRC. A summary of the relevant aspects of laws and regulations of the
PRC and our Articles of Association is set out in Appendices IV and V to this prospectus.
2. Changes in the share capital of our Company
As at the date of our incorporation, our registered capital was RMB30,000,000
consisting of 30,000,000 issued Domestic Unlisted Shares with a nominal value of
RMB1.00 each, which was fully paid up by our promoters. As at the Latest Practicable
Date, our registered capital was RMB204,659,509 consisting of 204,659,509 issued
Domestic Unlisted Shares with a nominal value of RMB1.00 each.
Immediately following the completion of the Global Offering, assuming that the
Over-allotment Option is not exercised, our issued share capital will be increased to
RMB272,879,509, divided into 204,659,509 Domestic Unlisted Shares and 68,220,000 H
Shares, with a nominal value of RMB1.00 each fully paid up or credited as fully paid up,
representing approximately 75.00% and 25.00% of our enlarged share capital, respectively.
As at the Latest Practicable Date, there had been no alteration in our share capital
within two years immediately preceding the date of this prospectus.
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-1 –


--- page 642 ---
3. Shareholders’ resolutions of our Company
Pursuant to the general meeting held on 24 September 2024, the following resolutions,
among others, were duly passed by our Shareholders:
(a) the issue by our Company of H Shares of nominal value of RMB1.00 each and
such H Shares be listed on the Stock Exchange;
(b) the number of H Shares to be issued before the exercise of the Over-allotment
Option shall be approximately 25% of the enlarged share capital of our Company
upon completion of the Global Offering (in fulfillment of the lowest applicable
public float requirement pursuant to the Listing Rules) and granting the
Underwriters the Over-allotment Option of no more than 15% of the above
number of H Shares to be issued;
(c) subject to the completion of the Global Offering, the conditional adoption of the
Articles of Association, which shall become effective on the Listing Date; and
(d) authorisation of our Board and its authorised persons to handle all matters
relating to, among other things, the Global Offering, the issue and listing of the
H Shares on the Stock Exchange.
4. Changes in the registered capital of our subsidiaries
The list of our subsidiaries is set out in Note 40 to the Accountants’ Report, the text
of which is set out in Appendix I to this prospectus.
Save as disclosed in the section headed “History, Development and Corporate
Structure – Corporate Development – Our Principal Subsidiaries” in this prospectus, there
has been no alteration in the share capital of any of our subsidiaries within the two years
immediately preceding the date of this prospectus.
5. Restriction on share repurchases
For details of the restrictions on share repurchases by our Company, please see
“Summary of the Articles of Association” which is set out in Appendix V to this
prospectus.
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-2 –


--- page 643 ---
B. FURTHER INFORMATION ABOUT OUR BUSINESS
1. Summary of material contracts
We have entered into the following contract (not being contracts entered into in the
ordinary course of business) within the two years immediately preceding the date of this
prospectus, which is or may be material:
(a) the agreement to Purchase and Sell Land dated 31 August 2024 entered into
between X.J. Electrics (Thailand) as purchaser and Amata City Rayong Company
Limited as vendor, a company incorporated and existing under the laws of
Thailand with its principal office at 2126 New Petchburi Road, Huay Kwang,
Bangkok 10310, Thailand, pursuant to which X.J. Electrics (Thailand) agreed to
acquire a parcel of land in Rayong, Thailand at the consideration of
THB149,314,000;
(b) the cornerstone investment agreement dated 5 June 2025 entered into among our
Company, Hubei Shunjie Investment (Hong Kong) Co., Limited ( ಳ̏නઠҳ
༟(ಥ)ʮ̡ ) and the Sole Sponsor-Overall Coordinator with respect to a
subscription for such number of H Shares of our Company (rounded down to the
nearest whole board lot of 1,000 Offer Shares) at the Offer Price in the aggregate
amount of RMB40,000,000 (inclusive of brokerage of 1.0%, SFC transaction levy
of 0.0027%, Stock Exchange trading fee of 0.00565% and AFRC transaction levy
of 0.00015%);
(c) the cornerstone investment agreement dated 5 June 2025 entered into among our
Company, Hong Kong Xinghuang Holdings Limited (ʮ̡ ) and
the Sole Sponsor-Overall Coordinator with respect to a subscription for such
number of H Shares of our Company (rounded down to the nearest whole board
lot of 1,000 Offer Shares) at the Offer Price in the aggregate amount of
RMB30,000,000 (inclusive of brokerage of 1.0%, SFC transaction levy of
0.0027%, Stock Exchange trading fee of 0.00565% and AFRC transaction levy of
0.00015%);
(d) the cornerstone investment agreement dated 5 June 2025 entered into among our
Company, Hong Kong Yunxing Technology Trade Management Co., Limited (࠰
ʮ̡ ) and the Sole Sponsor-Overall Coordinator with
respect to a subscription for such number of H Shares of our Company (rounded
down to the nearest whole board lot of 1,000 Offer Shares) at the Offer Price in
the aggregate amount of RMB10,000,000 (inclusive of brokerage of 1.0%, SFC
transaction levy of 0.0027%, Stock Exchange trading fee of 0.00565% and AFRC
transaction levy of 0.00015%); and
(e) the Hong Kong Underwriting Agreement.
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-3 –


--- page 644 ---
2. Our material intellectual property rights
(a) Trademarks
As at the Latest Practicable Date, we have registered the following trademarks
which we considered to be material to our business:
No. Trademark
Registered
Owner
Place of
Registration Classes
Registration
Number Validity Period
1.
 Our Company The PRC 7
9
33698020
33710019
From 21 May 2019 to
20 May 2029
2.
 Our Company The PRC 11
21
33696118
33717925
From 28 May 2019 to
27 May 2029
3.
 Our Company The PRC 21 23993170 From 21 April 2018 to
20 April 2028
4.
 Our Company The PRC 11 23993018 From 14 September
2018 to
13 September 2028
5.
Our Company The PRC 7 23992873 From 7 July 2018 to
6 July 2028
6.
 Our Company The PRC 11 14779966 From 7 July 2016 to 6
July 2026
7.
 Our Company The PRC 21 11348529 From 14 January 2014
to 13 January 2034
8.
 Our Company The PRC 11 11100055 From 7 November
2013 to 6 November
2033
9.
Our Company The PRC 11 14779910 From 7 July 2015 to
6 July 2025
10.
 Our Company The PRC 11
21
33716415
33703810
From 14 July 2020 to
13 July 2030
11.
 Our Company The PRC 7
11
21
24206832
24207015
24207391
From 14 May 2018 to
13 May 2028
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-4 –


--- page 645 ---
No. Trademark
Registered
Owner
Place of
Registration Classes
Registration
Number Validity Period
12.
 Our Company The PRC 9
11
14208282
14208316
From 28 April 2015 to
27 April 2035
13.
 Our Company The PRC 7 14208255 From 28 May 2015 to
27 May 2035
14.
 Our Company The PRC 9
11
7714917
7714919
From 14 March 2021
to 13 March 2031
15.
 Our Company The PRC 7 7714918 From 7 December 2020
to 6 December 2030
16.
 Our Company The PRC 11 5058332 From 21 November
2018 to 20
November 2028
17.
Our Company The PRC 9 5058331 From 21 March 2019
to 20 March 2029
18.
 Our Company The PRC 7 5058330 From 28 December
2018 to 27
December 2028
19.
Our Company The PRC 11 21686955 From 14 December
2017 to 13
December 2027
20.
Our Company The PRC 9 4905690 From 7 September
2018 to 6 September
2028
21.
Our Company The PRC 7 79315075 From 7 March 2025 to
6 March 2035
22.
 X.J. Electronics The PRC 7
11
4905688
4905691
From 7 September
2018 to 6 September
2028
23.
Innovative
(Jiangyin)
The PRC 9 4362522 From 28 May 2017 to
27 May 2027
24.
 Innovative
(Jiangyin)
The PRC 20
21
4362521
4362520
From 14 January 2018
to 13 January 2028
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-5 –


--- page 646 ---
No. Trademark
Registered
Owner
Place of
Registration Classes
Registration
Number Validity Period
25.
 Our Company The U.S. 7 5037356 From 6 September
2016 to 8 September
2026
26.
X.J. Electronics
(Shenzhen)
Australia 7
11
1609457
1609455
From 6 March 2024 to
5 March 2034
27.
 X.J. Electronics
(Shenzhen)
Australia 7 1609452 From 5 March 2024 to
4 March 2034
28.
 X.J. Electronics
(Shenzhen)
Australia 7
11
1609458
1609460
From 6 March 2024 to
5 March 2034
29.
 X.J. Electronics
(Shenzhen)
Germany 11 302014001571 From 5 March 2014 to
31 March 2034
30.
 X.J. Electronics
(Shenzhen)
United Kingdom 11 UK00003045495 From 29 February
2016 to 5 March
2034
31.
Weighmax The U.S. 9 3062395 From 28 February
2016 to 27 February
2026
32.
X.J. Electronics
(Shenzhen)
Australia 7
11
1609454
1609453
From 5 March 2024 to
4 March 2034
33.
 X.J. Electronics
(Shenzhen)
Germany 7
11
302014001574
302014001575
From 5 March 2024 to
31 March 2034
34.
 Our Company Hong Kong 7, 11,
17, 21
306560316 From 23 May 2024 to
22 May 2034
35.
 MeiNuoWei
Electrics
EU 7, 9, 11 018320082 From 12 October 2020
to 12 October 2030
36.
 MeiNuoWei
Electrics
The U.S. 7
9
11
6558982
6558981
6558926
From 16 November
2021 to 16
November 2027
37.
Weighmax The U.S. 9 5721527 From 9 April 2019 to
9 April 2029
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-6 –


--- page 647 ---
No. Trademark
Registered
Owner
Place of
Registration Classes
Registration
Number Validity Period
38.
 Nuocheng
Electronic
Commerce
The U.S. 11 7137217 From 15 August 2023
to 15 August 2033
39.
Our Company EU 7, 11 018893751 From 27 June 2023 to
27 June 2033
40.
 Nuocheng
Electronic
Commerce
The U.S. 7, 11 7493543
7493565
From 3 September
2024 to 3 September
2034
41.
Our Company Japan 7,11 6772325 From 22 January 2024
to 22 January 2034
42.
 Our Company EU 7, 11 018893778 From 27 June 2023 to
27 June 2033
43.
 Our Company Japan 7, 11 6772324 From 22 January 2024
to 22 January 2034
44.
 Weighmax The U.S. 9 7149093 From 29 August 2023
to 29 August 2033
(b) Patents
(i) As at the Latest Practicable Date, we have registered the following patents
which we considered to be material to our business:
No. Patent Registered owner Patent Number
Patent
Type
Place of
Registration Date of Application
1 Pan Our Company US D751,334 S Design The U.S. 9 September 2014
2 Foldable Pan Our Company US 9,492,034 B2 Invention The U.S. 12 September 2014
3 Water Tank
Type Electric
Steamer
Our Company US 9,717,363 B2 Invention The U.S. 17 September 2014
4 Scale with
Detachable
Protective Cover
Our Company US 9,903,752 B2 Invention The U.S. 21 November 2014
5ዚ Our Company ZL201520488146.5 Utility The PRC 8 July 2015
6ό͂ஐኜ
(XJ-15412)
Our Company ZL201530435490.3 Design The PRC 4 November 2015
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-7 –


--- page 648 ---
No. Patent Registered owner Patent Number
Patent
Type
Place of
Registration Date of Application
7ዱ Our Company ZL201530523206.8 Design The PRC 11 December 2015
8 Фᐵ˥၍ Our Company ZL201630022088.7 Design The PRC 21 January 2016
9ೞόФᐵ၍ Our Company ZL201620079380.7 Utility The PRC 27 January 2016
10ዚ
(XJ-14709)
Our Company ZL201630079464.6 Design The PRC 18 March 2016
11 ɪႊഐ࿴˸ʿ
ዚ
Our Company ZL201620297566.X Utility The PRC 11 April 2016
12फ़ Our Company ZL201630139507.5 Design The PRC 22 April 2016
13ᇞ
ዱଡ଼΁ʿༀུዱ
Our Company ZL201620488865.1 Utility The PRC 26 May 2016
14όФᐵ˥၍ Our Company ZL201620755043.5 Utility The PRC 18 July 2016
15 LED Light Bar Our Company US D801,568 S Design The U.S. 18 July 2016
16 Decorative Light Our Company US D810,987 S Design The U.S. 18 July 2016
17 Decorative Light Our Company US D810,988 S Design The U.S. 20 July 2016
18 ɓ၇ͣΈΈ๕ༀໄ
ʿዱՈ
Our Company ZL201610764158.5 Invention The PRC 30 August 2016
19ዚʿՉ᛻
Ⴁиഐ࿴
Our Company ZL201621054924.0 Utility The PRC 14 September 2016
20 ˥డ (12828) Our Company ZL201630500464.9 Design The PRC 12 October 2016
21 ˥డ (12830) Our Company ZL201630500481.2 Design The PRC 12 October 2016
22फ़ (82809) Our Company ZL201630500485.0 Design The PRC 12 October 2016
23 ཥᆠ˥డ (12831) Our Company ZL201630501567.7 Design The PRC 13 October 2016
24 ˌዱᄃ Our Company ZL201730023801.4 Design The PRC 20 January 2017
25ዱ Our Company ZL201730024057.X Design The PRC 20 January 2017
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-8 –


--- page 649 ---
No. Patent Registered owner Patent Number
Patent
Type
Place of
Registration Date of Application
26फ़ (82810) Our Company ZL201730068856.7 Design The PRC 10 March 2017
27঩ଡ଼΁ʿႋ঩
ቮ͛డ
Our Company ZL201710235880.4 Invention The PRC 12 April 2017
28঩ଡ଼΁ʿႋ঩
ቮ͛డ
Our Company ZL201720381941.3 Utility The PRC 12 April 2017
29 Kettle with Filter
Cup Lifting
Arrangement
Our Company US 10,251,508 B2 Invention The U.S. 12 May 2017
30 Фᐵ˥၍ (ό) Our Company ZL201730355987.3 Design The PRC 7 August 2017
31 Շ˪εɻᘟ
(22867)
Our Company ZL201730516929.4 Design The PRC 27 October 2017
32 εɻᘟ
(22868 ̬˪)
Our Company ZL201730517218.9 Design The PRC 27 October 2017
33 ཥႋᒢ
(12842
˙Җ)
Our Company ZL201730517219.3 Design The PRC 27 October 2017
34 ཥᆠ˥డ
(12847 1.7L)
Our Company ZL201730519593.7 Design The PRC 27 October 2017
35ᒢ
(32809A0/A1
&B0/B1)
Our Company ZL201730519595.6 Design The PRC 27 October 2017
36ዚ
(42866)
Our Company ZL201730519596.0 Design The PRC 27 October 2017
37फ़ (82812) Our Company ZL201730519597.5 Design The PRC 27 October 2017
38ࣰOur Company ZL201711042904.0 Invention The PRC 30 October 2017
39ஈଣኜ Our Company ZL201711174339.3 Invention The PRC 22 November 2017
40ݖ
ଡ଼΁
Our Company ZL201721580621.7 Utility The PRC 22 November 2017
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-9 –


--- page 650 ---
No. Patent Registered owner Patent Number
Patent
Type
Place of
Registration Date of Application
41ஈଣኜ Our Company ZL201721580622.1 Utility The PRC 22 November 2017
42࠮
ஈଣኜ
Our Company ZL201721597490.3 Utility The PRC 22 November 2017
43ଡ଼΁ Our Company ZL201721597496.0 Utility The PRC 22 November 2017
44ٙ
˥డ
Our Company ZL201721648782.5 Utility The PRC 29 November 2017
45 ˥၍ Our Company ZL201820232459.8 Utility The PRC 8 February 2018
46 Water Pipe Our Company US 10,480,691 B2 Invention The U.S. 8 February 2018
47 ཥटᘟ Our Company ZL201820483155.9 Utility The PRC 2 April 2018
48 ཥटᘟ
(՝Ҫ˓ಛ )
Our Company ZL201830142667.4 Design The PRC 10 April 2018
49 ཥᆠ˥డ Our Company ZL201830191419.9 Design The PRC 2 May 2018
50 ε̌ঐϘ᎛ዚ Our Company ZL201830191457.4 Design The PRC 2 May 2018
51 ཥᆠ˥డ
(ᒟ૰౺
ᜑͪ೿)
Our Company ZL201830191503.0 Design The PRC 2 May 2018
52 ཥᆠ˥డ
(ᒟ )
Our Company ZL201830191569.X Design The PRC 2 May 2018
53ዚ (42871A1) Our Company ZL201830191622.6 Design The PRC 2 May 2018
54ᆨཥᆠ˥డ
(ᆨ )
Our Company ZL201830390622.9 Design The PRC 19 July 2018
55 ཥᆠ˥డ (٤
ᆨ )
Our Company ZL201830391029.6 Design The PRC 19 July 2018
56 ཥᆠ˥డ Our Company ZL201821295203.8 Utility The PRC 10 August 2018
57ٙ
˥డ
Our Company ZL201821359123.4 Utility The PRC 22 August 2018
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-10 –


--- page 651 ---
No. Patent Registered owner Patent Number
Patent
Type
Place of
Registration Date of Application
58ᒢ Our Company ZL201830608670.0 Design The PRC 30 October 2018
59 ˬ̈́टᘟ
(22901)
Our Company ZL201930053455.3 Design The PRC 30 January 2019
60ό͂ஐኜ
(42846)
Our Company ZL201930080372.3 Design The PRC 28 February 2019
61ᒢ
(32828A-B)
Our Company ZL201930172368.X Design The PRC 16 April 2019
62 टᘟ (22901D0) Our Company ZL201930234326.4 Design The PRC 15 May 2019
63 Ϙ᎛ዚ Our Company ZL201920785573.8 Utility The PRC 28 May 2019
64ᒢ
(32828D/C)
Our Company ZL201930424099.1 Design The PRC 6 August 2019
65 Ovens [cooking]
(ˬ̈́टᘟ )
Our Company 007296298 Design EU 26 November 2019
66 Can Opener Our Company US D929,831 S Design The U.S. 21 January 2020
67 ɓ၇ዧΈଔટዚ Our Company ZL202010726592.0 Invention The PRC 25 July 2020
68 ɓ၇዆Җༀৣ
ༀৣ
ண௪
Our Company ZL202011019206.0 Invention The PRC 24 September 2020
69 Water Hose Our Company US D1,004,754 S Design The U.S. 2 March 2022
70 Nozzle Our Company US D1,010,770 S Design The U.S. 2 March 2022
71 Water Hose Our Company US D1,017,777 S Design The U.S. 3 March 2022
72 Three-way
Connector
Our Company US D1,017,776 S Design The U.S. 2 March 2022
73 Elbow Pipe
Coupling
Our Company US D1,019,909 S Design The U.S. 2 March 2022
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-11 –


--- page 652 ---
No. Patent Registered owner Patent Number
Patent
Type
Place of
Registration Date of Application
74๝ᆵ (࿡ᛌό
22953A)
Our Company ZL202230587760.2 Design The PRC 6 September 2022
75ᐕᄃ
(BT76801A)
Our Company ZL202230587662.9 Design The PRC 6 September 2022
76๝ᆵ Our Company ZL202222372665.8 Utility The PRC 6 September 2022
77 ˥၍ Our Company ZL202320516529.3 Utility The PRC 16 March 2023
78 ཥႋᒢ (12941A) Our Company ZL202330239654.X Design The PRC 26 April 2023
79 Ώ૷૸ዚෂਗ
ഐ࿴
Our Company ZL202321236077.X Utility The PRC 18 May 2023
80 ɓ၇ཥᆠ˥డ Our Company ZL202321373717.1 Utility The PRC 29 May 2023
81ᙃ
ᒟ
Our Company ZL202321373711.4 Utility The PRC 29 May 2023
82 ɓ၇̋ᆠછՓཥ༩
ʿ̋ᆠண௪
Our Company ZL202321431512.4 Utility The PRC 6 June 2023
83 ɓ၇՟าኜ Our Company ZL202321448902.2 Utility The PRC 7 June 2023
84 Automatic cookers
(ൄᒢ )
Our Company 015029241 Design EU 26 July 2023
85 Іਗሜଣᒢ Our Company 1761762 Design Japan 26 July 2023
86 ɓ၇̍ༀଷ Our Company ZL202322448859.6 Utility The PRC 7 September 2023
87ൄᒢ
(22978A)
Our Company ZL202330620918.6 Design The PRC 22 September 2023
88 Іਗሜଣᒢ Our Company 1773721 Design Japan 11 October 2023
89ᒢ (32860A1) Our Company ZL202330660460.7 Design The PRC 12 October 2023
90 ཥႋᒢ (ᙃ࿟ό
12959ACH)
Our Company ZL202330721217.1 Design The PRC 6 November 2023
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-12 –


--- page 653 ---
No. Patent Registered owner Patent Number
Patent
Type
Place of
Registration Date of Application
91 Air Fryers
(ᒢ )
Our Company 015040697 Design EU 10 November 2023
92 ཥटᘟ (22808D1) Our Company ZL202330814911.8 Design The PRC 11 December 2023
93ൄᒢ Our Company ZL202323661020.7 Utility The PRC 28 December 2023
94ൄᒢ Our Company ZL202323620977.7 Utility The PRC 28 December 2023
95ൄᒢ Our Company ZL202323661046.1 Utility The PRC 28 December 2023
96ൄ
ᒢ
Our Company ZL202323622643.3 Utility The PRC 28 December 2023
97 ˥၍ (ژOur Company ZL202430036876.6 Design The PRC 19 January 2024
98ᒢ
(32852A0)
Our Company ZL202430043243.8 Design The PRC 23 January 2024
99 ɓ၇ε̌ঐ଒පኜ
Ո
Our Company ZL202420252367.1 Utility The PRC 1 February 2024
100 ɓ၇଒පኜՈ Our Company ZL202420252372.2 Utility The PRC 1 February 2024
101 ˥၍ (62930A) Our Company ZL202430234068.0 Design The PRC 24 April 2024
102ᔠዚ (52818A1) Our Company ZL202430383657.5 Design The PRC 21 June 2024
103 ɓ၇˥၍ Our Company ZL202421522563.2 Utility The PRC 28 June 2024
104ᔠዚ (52816A1) Our Company ZL202430401736.4 Design The PRC 28 June 2024
105 Postal Scale Innovative (Jiangyin) US D742,264 S Design The U.S. 13 December 2013
106 फ़ (̔˪फ़
82821A)
Innovative (Jiangyin) ZL202030442316.2 Design The PRC 6 August 2020
107 ౽ঐʔᙔ፻फ़
(82822A)
Innovative (Jiangyin) ZL202030471657.2 Design The PRC 18 August 2020
108ɛ᜗फ़
(82823A)
Innovative (Jiangyin) ZL202030759475.5 Design The PRC 10 December 2020
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-13 –


--- page 654 ---
No. Patent Registered owner Patent Number
Patent
Type
Place of
Registration Date of Application
109 Weighing Scale Innovative (Jiangyin) US D957,975 S Design The U.S. 11 January 2021
110 ཥɿफ़ (82835A) Innovative (Jiangyin) ZL202130213515.0 Design The PRC 15 April 2021
111फ़ (82837A) Innovative (Jiangyin) ZL202430116838.1 Design The PRC 8 March 2024
112फ़ (82838A) Innovative (Jiangyin) ZL202430480948.6 Design The PRC 31 July 2024
113फ़ (82840A) Innovative (Jiangyin) ZL202430485763.4 Design The PRC 1 August 2024
114 ཥɿफ़ (82827A) MeiNuoWei Electrics ZL202030736262.0 Design The PRC 1 December 2020
115 ཥɿफ़ (82830A) MeiNuoWei Electrics ZL202030736261.6 Design The PRC 1 December 2020
116 ཥɿफ़ (82825A) MeiNuoWei Electrics ZL202030762862.4 Design The PRC 11 December 2020
117 ཥɿफ़ (82824A) MeiNuoWei Electrics ZL202030762863.9 Design The PRC 11 December 2020
118 ཥɿफ़ (82831A) MeiNuoWei Electrics ZL202030762873.2 Design The PRC 11 December 2020
119 ̔˪फ़ (82829A) MeiNuoWei Electrics ZL202030791404.3 Design The PRC 22 December 2020
120फ़ (82832A) MeiNuoWei Electrics ZL202030791403.9 Design The PRC 22 December 2020
121 ̔˪फ़ (82833A) MeiNuoWei Electrics ZL202130017768.0 Design The PRC 12 January 2021
122 Waffle Makers ( ఊ
ᄴૅᔷόശ˃ዚ )
MeiNuoWei Electrics 008429021 Design EU 8 February 2021
123फ़ (82826A
ᆨ̙ᘔન )
MeiNuoWei Electrics ZL202130123089.1 Design The PRC 8 March 2021
124 ๦ᒢ (˙Җ
22942A1)
MeiNuoWei Electrics ZL202130756802.6 Design The PRC 18 November 2021
125 ཥटᘟ
(22956A-8 ɛ)
MeiNuoWei Electrics ZL202230391907.0 Design The PRC 24 June 2022
126 ̷дɢ଒පᒢ
(22962A1)
MeiNuoWei Electrics ZL202230590784.3 Design The PRC 7 September 2022
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-14 –


--- page 655 ---
No. Patent Registered owner Patent Number
Patent
Type
Place of
Registration Date of Application
127 ཥटᘟ
(XJ-3K076Q0)
MeiNuoWei Electrics ZL202430055135.2 Design The PRC 26 January 2024
128 ˥၍(ʔᙔ፻
62929A)
MeiNuoWei Electrics ZL202430234058.7 Design The PRC 24 April 2024
129ෂਗ
ي࠮
ஈଣኜ
X.J. Electrics
(Shenzhen)
ZL201620897023.1 Utility The PRC 17 August 2016
130ᗝ˪ᔷਗഐ࿴
ዱ
X.J. Electrics
(Shenzhen)
ZL201621079902.X Utility The PRC 26 September 2016
131ᗝ˪ᔷਗഐ࿴
ዱ
X.J. Electrics
(Shenzhen)
ZL201610850682.4 Invention The PRC 26 September 2016
132ᒢ
(FW45393)
X.J. Electrics
(Shenzhen)
ZL201930390125.3 Design The PRC 22 July 2019
133 කᜦኜ (72840A1) X.J. Electrics
(Shenzhen)
ZL201930390244.9 Design The PRC 22 July 2019
134ዚ
(42901A0A1)
X.J. Electrics
(Shenzhen)
ZL201930560152.0 Design The PRC 15 October 2019
135ᒢ
(32830A, B, C)
X.J. Electrics
(Shenzhen)
ZL202030037905.2 Design The PRC 19 January 2020
136ጋኜ (42915) X.J. Electrics
(Shenzhen)
ZL202030711571.2 Design The PRC 23 November 2020
137 ɓ၇කᜦኜІਗ৾
ٙ
ༀໄ
X.J. Electrics
(Shenzhen)
ZL202023059534.1 Utility The PRC 17 December 2020
138 ɓ၇කᜦኜІਗ৾
˸
ʿༀໄ
X.J. Electrics
(Shenzhen)
ZL202011497209.5 Invention The PRC 17 December 2020
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-15 –


--- page 656 ---
No. Patent Registered owner Patent Number
Patent
Type
Place of
Registration Date of Application
139 Automatic Stop
Method and
Device for Can
Opener
X.J. Electrics
(Shenzhen)
US 11,827,504 B2 Invention The U.S. 4 January 2021
140ᙳό४ຟዚ
(42923A)
X.J. Electrics
(Shenzhen)
ZL202130213514.6 Design The PRC 15 April 2021
141ዚ
(42919A,
42919B)
X.J. Electrics
(Shenzhen)
ZL202130615207.0 Design The PRC 16 September 2021
142 ͂ஐኜ (ᙳό
42964A)
X.J. Electrics
(Shenzhen)
ZL202130615067.7 Design The PRC 16 September 2021
143ᙳό४ຟዚ
(BT46802A)
X.J. Electrics
(Shenzhen)
ZL202130737212.9 Design The PRC 10 November 2021
144ᙳόཥਗɠ X.J. Electrics
(Shenzhen)
ZL202130737260.8 Design The PRC 10 November 2021
145ɠՈϗॶଷ X.J. Electrics
(Shenzhen)
ZL202130737269.9 Design The PRC 10 November 2021
146ዚ X.J. Electrics
(Shenzhen)
ZL202221439515.8 Utility The PRC 9 June 2022
147 කᜦኜ (ጼ) X.J. Electrics
(Shenzhen)
ZL202230350083.2 Design The PRC 9 June 2022
148ዚ (ᙳό
42978A)
X.J. Electrics
(Shenzhen)
ZL202230551787.6 Design The PRC 23 August 2022
149ᙳό࿯͒ዚ X.J. Electrics
(Shenzhen)
ZL202222253205.3 Utility The PRC 25 August 2022
150 ࿯͒ዚ X.J. Electrics
(Shenzhen)
ZL202320756992.5 Utility The PRC 3 April 2023
151ዚ
(42984A)
X.J. Electrics
(Shenzhen)
ZL202330176030.8 Design The PRC 4 April 2023
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-16 –


--- page 657 ---
No. Patent Registered owner Patent Number
Patent
Type
Place of
Registration Date of Application
152ཥኜଡ଼ༀӻ୕ X.J. Electrics
(Shenzhen)
ZL202320825289.5 Utility The PRC 4 April 2023
153ۨ
ཥኜ͛ପᇞ
X.J. Electrics
(Shenzhen)
ZL202320755427.7 Utility The PRC 4 April 2023
154ᙳόᕐ࿯͒᎘
࿯͒ዚ
X.J. Electrics
(Shenzhen)
ZL202320971690.X Utility The PRC 20 April 2023
155ዚ (42980A0) X.J. Electrics
(Shenzhen)
ZL202330239648.4 Design The PRC 26 April 2023
156ዚ
(46813A)
X.J. Electrics
(Shenzhen)
ZL202330239621.5 Design The PRC 26 April 2023
157 Ώ૷૸ዚ
(42993A1)
X.J. Electrics
(Shenzhen)
ZL202330259716.3 Design The PRC 6 May 2023
158͜ೌᇞ
࿯͒ዚ
X.J. Electrics
(Shenzhen)
ZL202321126834.8 Utility The PRC 11 May 2023
159ዚ (48oz
ᆨཥɿό
43008C1)
X.J. Electrics
(Shenzhen)
ZL202430036322.6 Design The PRC 19 January 2024
160ዚ (1.5 ʺೞ
ᒟό43008A1,
43008B1)
X.J. Electrics
(Shenzhen)
ZL202430036362.0 Design The PRC 19 January 2024
161䆝όཥਗɠ
(46816A)
X.J. Electrics
(Shenzhen)
ZL202430054983.1 Design The PRC 26 January 2024
162ዚ
(43016A)
X.J. Electrics
(Shenzhen)
ZL202430259706.4 Design The PRC 6 May 2024
163ዚ
(43018A0/A1)
X.J. Electrics
(Shenzhen)
ZL202430259723.8 Design The PRC 6 May 2024
164ᙳόཥਗɠ
(43011A)
X.J. Electrics
(Shenzhen)
ZL202430383410.3 Design The PRC 21 June 2024
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-17 –


--- page 658 ---
No. Patent Registered owner Patent Number
Patent
Type
Place of
Registration Date of Application
165ɿʺ
ഐ࿴
X.J. Electrics
(Shenzhen)
ZL202421881400.3 Utility The PRC 5 August 2024
166ɠ
᎘Ꮸ಻ഐ࿴
X.J. Electrics
(Shenzhen)
ZL202421519213.0 Utility The PRC 28 June 2024
167 ༀུዱʿༀུ
ዱଡ଼
X.J. Electronics
(Shenzhen)
ZL201621034476.8 Utility The PRC 31 August 2016
168 ༀུዱʿༀུ
ዱଡ଼
X.J. Electronics
(Shenzhen)
ZL201610799129.2 Invention The PRC 31 August 2016
169 ଔટӻ୕ձༀ
ུዱ
X.J. Electronics
(Shenzhen)
ZL201621147116.9 Utility The PRC 21 October 2016
170ذ
ᒢ
X.J. Electronics
(Shenzhen)
3323327 Invention EU 29 December 2016
171 ശ˃ჳዚ
(FW45394)
X.J. Electronics
(Shenzhen)
ZL201930371250.X Design The PRC 12 July 2019
172 ശ˃ჳዚ (22906
ᕐᄴૅᔷό )
X.J. Electronics
(Shenzhen)
ZL201930417351.6 Design The PRC 2 August 2019
173 टᘟ (22912 ˬ̈́
टᘟ)
X.J. Electronics
(Shenzhen)
ZL201930536810.2 Design The PRC 29 September 2019
174 ˥డ (ዚ૛όʔᙔ
፻12893B ಛ)
X.J. Electronics
(Shenzhen)
ZL202030124261.0 Design The PRC 16 October 2019
175 ˥డ (ዚ૛όʔᙔ
፻12893A ಛ)
X.J. Electronics
(Shenzhen)
ZL201930562088.X Design The PRC 16 October 2019
176 ཥᆠ˥డ (ʔᙔ፻
ዚ૛ό12894A)
X.J. Electronics
(Shenzhen)
ZL201930562098.3 Design The PRC 16 October 2019
177 ཥटᘟ
(22907 ӻΐ)
X.J. Electronics
(Shenzhen)
ZL201930562092.6 Design The PRC 16 October 2019
178 ཥटᘟ
(22913 ӻΐ)
X.J. Electronics
(Shenzhen)
ZL201930562089.4 Design The PRC 16 October 2019
179 ཥᆠ˥డ (ᆨዚ
૛ό12895)
X.J. Electronics
(Shenzhen)
ZL201930562097.9 Design The PRC 16 October 2019
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-18 –


--- page 659 ---
No. Patent Registered owner Patent Number
Patent
Type
Place of
Registration Date of Application
180 ˬ̈́टᘟ (22912B) X.J. Electronics
(Shenzhen)
ZL201930571871.2 Design The PRC 21 October 2019
181ं
ଋʷኜ
X.J. Electronics
(Shenzhen)
ZL202020844298.5 Utility The PRC 19 May 2020
182ዚ (22921) X.J. Electronics
(Shenzhen)
ZL202030330353.4 Design The PRC 24 June 2020
183ዚ (22922) X.J. Electronics
(Shenzhen)
ZL202030330842.X Design The PRC 24 June 2020
184Ꮸ಻
ༀໄ
X.J. Electronics
(Shenzhen)
ZL202021522636.X Utility The PRC 25 July 2020
185 ɓ၇˥డడႊሯඎ
Ꮸ಻ʈༀ
X.J. Electronics
(Shenzhen)
ZL202021513654.1 Utility The PRC 25 July 2020
185 ቮ͛డ (12831D) X.J. Electronics
(Shenzhen)
ZL202030458470.9 Design The PRC 12 August 2020
187 Air Purifiers
(ंଋʷኜ )
X.J. Electronics
(Shenzhen)
008272561 Design EU 17 November 2020
188 Air Purifier X.J. Electronics
(Shenzhen)
US D953,505 S Design The U.S. 17 November 2020
189 εɻᘟ (Շ˪
22925A0)
X.J. Electronics
(Shenzhen)
ZL202030706479.7 Design The PRC 20 November 2020
190 ೎ஐኜ (12913A) X.J. Electronics
(Shenzhen)
ZL202030706478.2 Design The PRC 20 November 2020
191 ཥႋඵଷ
(12910A)
X.J. Electronics
(Shenzhen)
ZL202030706831.7 Design The PRC 20 November 2020
192 ཥᆠ˥డ (ᕐᄴ
12918A1.7 ʺ)
X.J. Electronics
(Shenzhen)
ZL202030759899.1 Design The PRC 10 December 2020
193 ശ˃ჳዚ (22927) X.J. Electronics
(Shenzhen)
ZL202030762124.X Design The PRC 11 December 2020
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-19 –


--- page 660 ---
No. Patent Registered owner Patent Number
Patent
Type
Place of
Registration Date of Application
194 ႋ঩ቮ͛డ
(12846G)
X.J. Electronics
(Shenzhen)
ZL202030789596.4 Design The PRC 21 December 2020
195 ႋ঩ቮ͛డ
(12846E)
X.J. Electronics
(Shenzhen)
ZL202030789599.8 Design The PRC 21 December 2020
196 Air Purifier X.J. Electronics
(Shenzhen)
US 11,781,765 B2 Invention The U.S. 28 January 2021
197फ़ (82828A) X.J. Electronics
(Shenzhen)
ZL202130073904.8 Design The PRC 2 February 2021
198 Electric Ovens
for cooking
(ཥटᘟ)
X.J. Electronics
(Shenzhen)
008491906 Design EU 9 April 2021
199 Electric Ovens
for cooking
(ཥटᘟ)
X.J. Electronics
(Shenzhen)
008490627 Design EU 9 April 2021
200 टᘟ (ؐ
22926A0)
X.J. Electronics
(Shenzhen)
ZL202130265992.1 Design The PRC 6 May 2021
201ዚ (12923A) X.J. Electronics
(Shenzhen)
ZL202130285894.4 Design The PRC 13 May 2021
202 ˥၍ (62916A) X.J. Electronics
(Shenzhen)
ZL202130588386.3 Design The PRC 7 September 2021
203 ᛃટ᎘ (Շஷટ᎘
-62917A)
X.J. Electronics
(Shenzhen)
ZL202130588380.6 Design The PRC 7 September 2021
204 ɧஷટ᎘
(62918A)
X.J. Electronics
(Shenzhen)
ZL202130588377.4 Design The PRC 7 September 2021
205 ε̌ঐᒢ
(12926A0A1)
X.J. Electronics
(Shenzhen)
ZL202130756804.5 Design The PRC 18 November 2021
206 ɓ၇ཥਗɠՈ
᎛
X.J. Electronics
(Shenzhen)
ZL202210026213.6 Invention The PRC 11 January 2022
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-20 –


--- page 661 ---
No. Patent Registered owner Patent Number
Patent
Type
Place of
Registration Date of Application
207 ཥटᘟ (22946A) X.J. Electronics
(Shenzhen)
ZL202230078957.3 Design The PRC 18 February 2022
208 ˥၍ X.J. Electronics
(Shenzhen)
ZL202230078398.6 Design The PRC 18 February 2022
209 टᘟᗟɿ
(22946A)
X.J. Electronics
(Shenzhen)
ZL202230082630.3 Design The PRC 21 February 2022
210᎛ᄼ͜Ո X.J. Electronics
(Shenzhen)
ZL202220442179.6 Utility The PRC 2 March 2022
211ᒢ (ዚ૛ό
32838A1)
X.J. Electronics
(Shenzhen)
ZL202230156079.2 Design The PRC 24 March 2022
212 ശ˃ჳዚ
(22952A)
X.J. Electronics
(Shenzhen)
ZL202230391897.0 Design The PRC 24 June 2022
213 ཥटᘟ
(22957A-4 ɛ)
X.J. Electronics
(Shenzhen)
ZL202230391890.9 Design The PRC 24 June 2022
214 નན (02839) X.J. Electronics
(Shenzhen)
ZL202230396797.7 Design The PRC 27 June 2022
215 ɓ၇ശ˃ዚ X.J. Electronics
(Shenzhen)
ZL202221673897.0 Utility The PRC 29 June 2022
216ێ
ശ˃ዚ
X.J. Electronics
(Shenzhen)
ZL202221658180.9 Utility The PRC 29 June 2022
217 ശ˃ჳዚ
(22950A1)
X.J. Electronics
(Shenzhen)
ZL202230519214.5 Design The PRC 10 August 2022
218ശ˃
ჳዚ
X.J. Electronics
(Shenzhen)
ZL202222105029.9 Utility The PRC 10 August 2022
219ᒢ X.J. Electronics
(Shenzhen)
ZL202230591885.2 Design The PRC 7 September 2022
220ᒢ͛ପᇞ X.J. Electronics
(Shenzhen)
ZL202320777381.9 Utility The PRC 6 April 2023
221 ശ˃ჳዚ͛ପᇞ X.J. Electronics
(Shenzhen)
ZL202320781300.2 Utility The PRC 7 April 2023
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-21 –


--- page 662 ---
No. Patent Registered owner Patent Number
Patent
Type
Place of
Registration Date of Application
222 ɓ၇ε̌ঐཥटᘟ X.J. Electronics
(Shenzhen)
ZL202320959183.4 Utility The PRC 18 April 2023
223 Electric Grills
(टᘟ)
X.J. Electronics
(Shenzhen)
015019191 Design EU 21 April 2023
224 ɓ၇ཥᆠ˥డ
͛ପᇞ
X.J. Electronics
(Shenzhen)
ZL202320991545.8 Utility The PRC 24 April 2023
225ᒢ X.J. Electronics
(Shenzhen)
ZL202330239008.3 Design The PRC 26 April 2023
226 ཥᆠ˥డ
(12942A)
X.J. Electronics
(Shenzhen)
ZL202330239079.3 Design The PRC 26 April 2023
227ं
ᒢ (32847A0)
X.J. Electronics
(Shenzhen)
ZL202330447112.1 Design The PRC 17 July 2023
228 Ώ૷૸ዚ
(43007A0A1)
X.J. Electronics
(Shenzhen)
ZL202330666447.2 Design The PRC 16 October 2023
229 ࿔ዮᒢ (ዚ૛ό
22982A)
X.J. Electronics
(Shenzhen)
ZL202330685238.2 Design The PRC 23 October 2023
230 ዚ૛ό࿔ዮᒢ X.J. Electronics
(Shenzhen)
ZL202330700777.9 Design The PRC 27 October 2023
231ᒢ X.J. Electronics
(Shenzhen)
ZL202330814909.0 Design The PRC 11 December 2023
232؎12968A) X.J. Electronics
(Shenzhen)
ZL202430293525.3 Design The PRC 17 May 2024
233 դਥዚ (12968A,
12969A)
X.J. Electronics
(Shenzhen)
ZL202430293496.0 Design The PRC 17 May 2024
234 Personal Blender
Assembly
Weighmax US D801,108 S Design The U.S. 17 August 2015
235 Balance Weighmax US D850,958 S Design The U.S. 15 March 2017
236 Balance Weighmax US D830,211 S Design The U.S. 15 March 2017
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-22 –


--- page 663 ---
(ii) As at the Latest Practicable Date, we have applied for the registration of the
following patents which we considered to be material to our business:
No. Patent Applicant
Application
Number
Patent
Type
Place of
Application Date of Application
1. Electric Cutter
Assembly
Our Company 17/669, 607 Invention The U.S. 11 February 2022
2. Packaging Box Our Company 18/470, 597 Invention The U.S. 11 May 2023
3. Storage Box Our Company 18/316,170 Utility The U.S. 11 May 2023
4. Electric Pot Our Company 18/337, 630 Invention The U.S. 20 June 2023
5. Heating Control
Circuit and
Heating
Equipment
Our Company 18/343, 403 Utility The U.S. 28 June 2023
6. Packing Box Our Company 29/910, 652 Design The U.S. 23 August 2023
7.ं
ᒢ (32852A0)
Our Company 2023306405798 Design The PRC 28 September 2023
8. Automatic
Cooking
Appliances
(22978A)
Our Company 30-2023-0039624 Design Korea 11 October 2023
9. ɓ၇଒පኜՈ Our Company 2024101455879 Invention The PRC 1 February 2024
10. Air Fryer Our Company 29, 927/686 Design The U.S. 5 February 2024
11. ɓ၇˥၍ Our Company 2024108664593 Invention The PRC 28 June 2024
12. ɓ၇ዱΈҳᅂༀ
ໄʿༀུଡ଼΁
Our Company 2024117502969 Invention The PRC 29 November 2024
13. Postal Scale Innovative
(Jiangyin)
29/943,633 Design The U.S. 22 May 2024
14. ࿯͒ዚ (̙ᙳό
42988A)
X.J. Electrics
(Shenzhen)
2023302120949 Design The PRC 18 April 2023
15.ٙ
ɠ᎘Ꮸ಻ഐ࿴
X.J. Electrics
(Shenzhen)
2024108655132 Invention The PRC 28 June 2024
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-23 –


--- page 664 ---
No. Patent Applicant
Application
Number
Patent
Type
Place of
Application Date of Application
16. ɓ၇ཥਗɠՈऊ
ༀໄ
X.J. Electronics
(Shenzhen)
202220065414.2 Utility The PRC 11 January 2022
17. Electric Cutter
Assembly
X.J. Electronics
(Shenzhen)
22154598.1 Invention EU 1 February 2022
18. टᘟ (ᔜ ) X.J. Electronics
(Shenzhen)
2023302236822 Design The PRC 21 April 2023
19. Oven X.J. Electronics
(Shenzhen)
29/890, 205 Design The U.S. 21 April 2023
(c) Software copyrights
As at the Latest Practicable Date, our Group was the registered owner of the
following software copyrights in the PRC which we considered to be material to our
business:
No. Software Name
Registered
Owner
Registration
Number
Date of
Registration
1. X.J. Electrics (Shenzhen) LED Street Light Remote
Network Control Management Software V1.0*
(௫LED ༩ዱჃ೻ၣഖછՓ၍ଣழ΁ V1.0)
X.J. Electrics
(Shenzhen)
2017SR003121 4 January 2017
2. X.J. Electrics (Shenzhen) LED Light Wireless WIFI
Intelligent Control Software V1.0* (௫LED
ዱೌᇞWIFI ౽ঐછՓழ΁ V1.0)
X.J. Electrics
(Shenzhen)
2017SR010962 12 January
2017
3. X.J. Electrics (Shenzhen) LED Lighting
Multi-Angle Light Control Software V1.0* (ܠ
௫LED೯ΈછՓழ΁ V1.0)
X.J. Electrics
(Shenzhen)
2017SR010970 12 January
2017
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-24 –


--- page 665 ---
No. Software Name
Registered
Owner
Registration
Number
Date of
Registration
4. X.J. Electrics (Shenzhen) LED Laser Light Digital
Modeling Energy-Saving Intelligent Control
Software V1.0* (௫LEDᅼືঐ
౽ঐછՓழ΁ V1.0)
X.J. Electrics
(Shenzhen)
2017SR023055 23 January
2017
5. X.J. Electrics (Shenzhen) Laser LED Lighting 3D
Virtual Design Simulation Software V1.0* (ܠ
ዱ LEDͷॆழ΁ V1.0)
X.J. Electrics
(Shenzhen)
2017SR023061 23 January
2017
6. X.J. Electrics (Shenzhen) LED Laser Light Dance
Lighting Effect Intelligent Control Software
V1.0* (௫LED౽ঐછՓ
ழ΁V1.0)
X.J. Electrics
(Shenzhen)
2017SR023647 23 January
2017
7. X.J. Electrics (Shenzhen) LED Laser Light Real
Effect Remote Monitoring APP Platform Software
V1.0* (௫LEDჃ೻္છ APP
̨̻ழ΁ V1.0)
X.J. Electrics
(Shenzhen)
2017SR023658 23 January
2017
8. X.J. Electrics (Shenzhen) LED Street Light Low
V oltage DC Power Supply System Software
V1.0* (௫LEDԶཥӻ୕ழ΁
V1.0)
X.J. Electrics
(Shenzhen)
2017SR042261 14 February
2017
(d) Domain names
As at the Latest Practicable Date, our Group was the registered proprietor of the
following domain names which we considered to be material to our business:
No. Domain name Registered Owner Validity Period
1. xjgroup.com Shenzhen Branch From 18 December 2001
to 19 December 2027
2. xjgroupltd.com X.J. Electronics
(Shenzhen)
From 11 October 2010
to 13 November 2027
3. xjgroup.cn Our Company From 3 December 2010
to 3 December 2030
4. xjappliance.com MeiNuoWei Electrics From 5 December 2010
to 5 December 2027
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-25 –


--- page 666 ---
No. Domain name Registered Owner Validity Period
5. xjhousewares.com Shenzhen Branch From 28 December 2010
to 28 December 2027
6. xjappliances.com X.J. Electronics
(Shenzhen)
From 20 January 2017
to 20 January 2028
7. meinuowei.cn MeiNuoWei Electrics From 26 November 2019
to 26 November 2027
8. aigoli.cn Aigrentrading From 26 November 2019
to 26 November 2026
9. xjscale.com X.J. Electronics
(Shenzhen)
From 29 November 2020
to 29 November 2027
10. thsgroupltd.com MeiNuoWei Electrics From 6 April 2021
to 6 April 2026
11. tumidy.com Nuocheng Electronic
Commerce
From 27 June 2023
to 27 June 2026
12. aigoli.com Our Company From 20 September 2023
to 20 September 2026
C. FURTHER INFORMATION ABOUT OUR DIRECTORS AND SUPERVISORS
1. Particulars of Directors’ and Supervisors’ contracts
Each of our Directors and Supervisors has entered into a service contract with our
Company. The service contracts may be renewed in accordance with the Articles of
Association and the applicable laws, rules and regulations.
Save as disclosed above, none of the Directors or Supervisors has or is proposed to
enter into a service contract with any member of our Group, other than contracts expiring
or determinable by the relevant employer within one year without the payment of
compensation (other than statutory compensation).
2. Remuneration of Directors and Supervisors
For details of the remuneration or benefits in kind paid to our Directors and
Supervisors during the Track Record Period, please see “Directors, Supervisors and Senior
Management” and Note 13 to the Accountants’ Report in Appendix I to this prospectus.
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-26 –


--- page 667 ---
During the Track Record Period, no fees were paid by our Group to any of our
Directors, Supervisors or the five highest paid individuals as an inducement to join us or as
compensation for loss of office, and there has been no arrangement under which a Director
or Supervisor has waived or agreed to waive any emoluments.
D. DISCLOSURE OF INTERESTS
1. Disclosure of interests of Directors, Supervisors and chief executive of our
Company
Immediately following the completion of the Global Offering, the interest and/or short
position (as applicable) of our Directors, Supervisors and chief executives of our Company
in the shares, underlying shares and debentures of our Company or its associated
corporations (within the meaning of Part XV of the SFO) which will be required to be
notified to our Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV
of the SFO (including interest or short positions which they were taken or deemed to have
under such provisions of the SFO) or which will be required, pursuant to section 352 of the
SFO, to be entered in the register referred to therein, or which will be required, pursuant to
the Model Code for Securities Transactions by Directors of Listed Issuers as set out in
Appendix C3 to the Listing Rules, to be notified to our Company and the Stock Exchange,
once the H Shares are listed, will be as follows:
Shares held as at the Latest
Practicable Date and immediately
prior to the Global Offering (1)
Shares held immediately following
the completion
of the Global Offering (assuming
the Over-allotment
Option is not exercised) (1)
Name of
Director,
Supervisor or
chief executive
of our Company
Nature of
interest
Class of
Shares Number
Approximate
percentage in
the total share
capital of our
Company Number
Approximate
percentage in
the total share
capital of our
Company
Mr. Pan Yun Beneficial Interest Domestic
Unlisted Shares
110,659,509 (L) 54.07% 110,659,509 (L) 40.55%
Interest in
controlled
corporation
(2)
Domestic Unlisted
Shares
94,000,000 (L) 45.93% 94,000,000 (L) 34.55%
Notes:
1. The letter “L” denotes the entity/person’s long position (as defined under Part XV of the SFO) in
such Shares.
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-27 –


--- page 668 ---
2. As at the Latest Practicable Date, X.J. Management (Qichun) and Qichun Hengxing were owned by
Mr. Pan Yun as to 70.37% and 47.50%, respectively. Mr. Pan Yun was the sole general partner of
X.J. Management (Qichun) and Qichun Hengxing. X.J. Management (Qichun) and Qichun Hengxing
were interested in 54,000,000 Domestic Unlisted Shares and 40,000,000 Domestic Unlisted Shares,
respectively. Accordingly, Mr. Pan Yun is deemed to be interested in the Domestic Unlisted Shares
held by X.J. Management (Qichun) and Qichun Hengxing under the SFO.
2. Disclosure of interests of substantial shareholders
Save as disclosed in the section headed “Substantial Shareholders” in this prospectus,
our Directors are not aware of any person (other than our Director, Supervisor or chief
executive of our Company) who will, immediately following completion of the Global
Offering (assuming that the Over-allotment Option is not exercised), have interests or short
positions in our Shares or underlying Shares which would be required to be disclosed to us
and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO,
or who is, directly or indirectly, interested in 10% or more of the nominal value of any
class of share capital carrying rights to vote in all circumstances at general meetings of any
member of our Group.
3. Disclaimers
Save as disclosed in the sections headed “Business” and “Substantial Shareholders” in
this prospectus and the paragraphs headed “C. Further Information about our Directors and
Supervisors” and “D. Disclosure of Interests” in this section:
(a) none of our Directors or chief executive has any direct or indirect interest in the
promotion of our Company, or in any assets which have within the two years
immediately preceding the date of this prospectus been acquired or disposed of
by or leased to any member of our Group, or are proposed to be acquired or
disposed of by or leased to any member of our Group;
(b) none of our Directors or Supervisors is materially interested in any contract or
arrangement subsisting at the date of this prospectus which is significant in
relation to the business of our Group taken as a whole;
(c) none of our Directors is interested in any business (other than the business of our
Group) which competes or is likely to compete, directly or indirectly, with our
business; and
(d) without taking into account any Shares which may be taken up under the Global
Offering, none of our Directors knows of any person (not being a Director or
chief executive of our Company) who will, immediately following completion of
the Global Offering, be interested in 10% or more of the nominal value of any
class of share capital carrying rights to vote in all circumstances at shareholders’
meetings of any member of our Group in the Shares or underlying Shares of our
Company.
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-28 –


--- page 669 ---
E. OTHER INFORMATION
1. Estate duty
Our Directors have been advised that no material liability for estate duty is likely to
fall on our Company or any member of our Group.
2. Litigation
As at the Latest Practicable Date, no member of our Group was engaged in any
litigation or arbitration of material importance and, so far as our Directors are aware, no
litigation or claim of material importance is pending or threatened by or against any
member of our Group.
3. Sole Sponsor
The Sole Sponsor satisfies the independence criteria applicable to sponsors set out in
Rule 3A.07 of the Listing Rules.
The Sole Sponsor has made an application on behalf of our Company to the Stock
Exchange for listing of, and permission to deal in the H Shares to be issued by us pursuant
to the Global Offering (including any H Shares which may be issued pursuant to the
exercise of the Over-allotment Option).
Pursuant to the engagement letter entered into between our Company and the Sole
Sponsor, we have agreed to pay the Sole Sponsors a fee of HK$5.5 million to act as the
sponsor of our Company in connection with the proposed listing on the Stock Exchange.
4. Preliminary expenses
Our Company did not incur any material preliminary expenses.
5. Promoters
The promoters of our Company are Mr. Pan Yun, Ms. Ji Ying, Ms. Li Youxiang, Mr.
Xu Xiping, Mr. Yi Jie, Mr. Hu Qingfeng, Mr. Ye Huanchun, Ms. Hu Yan, Mr. Zou
Chenghou, Mr. Geng Congen, Ms. Yan Li and Ms. Yi Hongliang.
Within the two years immediately preceding the date of this prospectus, no cash,
securities or other benefit has been paid, allotted or given nor is any proposed to be paid,
allotted or given to any promoters in connection with the Global Offering and the related
transactions described in this prospectus.
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-29 –


--- page 670 ---
6. Qualifications of experts
The qualifications of the experts, as defined under the Listing Rules, who have given
opinions in this prospectus, are as follows:
Name Qualification
Sinolink Securities (Hong Kong)
Company Limited
A licensed corporation to conduct type 1
(dealing in securities), type 2 (dealing in futures
contracts), type 4 (advising on securities), type
6 (advising on corporate finance) and type 9
(asset management) of the regulated activities
under the SFO
Zhong Lun Law Firm Legal advisers to our Company as to the PRC
law
Law Offices of Bin Li &
Associates
Legal advisers to our Company as to the U.S.
law
SEA Law Firm Legal advisers to our Company as to Indonesian
law
DTL Law Office Legal advisers to our Company as to Thailand
law
Stephen Peepels Legal advisers to our Company as to
international sanctions law
Yan Kwok Wing Barrister-at-law in Hong Kong
Frost & Sullivan (Beijing) Inc.,
Shanghai Branch Co.
Independent industry consultant
Deloitte Touche Tohmatsu Certified Public Accountants and Registered
Public Interest Entity Auditor
A VISTA Valuation Advisory
Limited
Independent property valuer
Beijing Tian Zhi Tax Agent Co.,
Ltd Shenzhen Branch
Independent transfer pricing consultant
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-30 –


--- page 671 ---
7. Consents of experts
Each of the parties named above has given and has not withdrawn its written consent
to the issue of this prospectus with the inclusion of its report and/or letter and/or opinion
and/or references to its name included herein in the form and context in which it is
respectively included.
As at the Latest Practicable Date, none of the experts named above has any
shareholding interests in any member of our Group or the right (whether legally
enforceable or not) to subscribe for or to nominate persons to subscribe for securities in
any member of our Group.
8. Taxation of holders of H Shares
(a) Hong Kong
The sale, purchase and transfer of H Shares are subject to Hong Kong stamp duty
if such sale, purchase and transfer are effected on the H Share register of members of
our Company, including in circumstances where such transactions are effected on the
Stock Exchange. The current rate of Hong Kong stamp duty for such sale, purchase
and transfer is 0.1% of the consideration or, if higher, the fair value of the H Shares
being sold or transferred.
(b) Consultation with professional advisers
Intending holders of the H Shares are recommended to consult their professional
advisers if they are in any doubt as to the taxation implications of subscribing for,
purchasing, holding or disposing of or dealing in the H Shares. It is emphasised that
none of our Company, our Directors, Supervisors or the other parties involved in the
Global Offering will accept responsibility for any tax effect on, or liabilities of,
holders of H Shares resulting from their subscription for, purchase, holding or disposal
of or dealing in the H Shares or exercise of any rights attaching to them.
9. Binding effect
This prospectus shall have the effect, if an application is made in pursuance hereof, of
rendering all persons concerned bound by all of the provisions (other than the penal
provisions) of Sections 44A and 44B of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance so far as applicable.
10. Related party transactions
Our Group entered into the related party transactions within the two years immediately
preceding the date of this prospectus as mentioned in Note 37 to the Accountants’ Report in
Appendix I to this prospectus.
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-31 –


--- page 672 ---
11. No material adverse change
Our Directors believe that there has been no material adverse change in the financial
or trading position since 31 December 2024 (being the date to which the latest audited
consolidated financial statements of the Group were prepared).
12. Miscellaneous
Save as disclosed in the sections headed “History, Development and Corporate
Structure”, “Business”, “Financial Information” and “Underwriting” in this prospectus and
the paragraph headed “A. Further Information about our Group” in this section:
(a) within the two years immediately preceding the date of this prospectus:
(i) no share or loan capital of our Company or any of its subsidiaries has been
issued or agreed to be issued or is proposed to be issued fully or partly paid
either for cash or a consideration other than cash;
(ii) no share or loan capital of our Company or any of our subsidiaries is under
option or is agreed conditionally or unconditionally to be put under option;
(iii) no commissions, discounts, brokerages or other special terms have been
granted or agreed to be granted in connection with the issue or sale of any
share of our Company or any of our subsidiaries; and
(iv) no commission has been paid or is payable for subscription, agreeing to
subscribe, procuring subscription or agreeing to procure subscription for any
share in or debentures of our Company;
(b) there are no founder, management or deferred shares or any debentures in our
Company or any of our subsidiaries;
(c) there has not been any interruption in the business of our Group which may have
or has had a significant effect on the financial position of our Group in the 12
months preceding the date of this prospectus;
(d) our Company has no outstanding convertible debt securities or debentures;
(e) there is no arrangement under which future dividends are waived or agreed to be
waived;
(f) save for our H Shares to be issued in connection with the Global Offering, none
of our equity and debt securities is listed or dealt with in any other stock
exchange nor is any listing or permission to deal being or proposed to be sought;
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-32 –


--- page 673 ---
(g) our Company currently does not intend to apply for the status of a sino-foreign
investment joint stock limited liability company and does not expect to be
subject to the Law of the PRC on Sino-foreign Equity Joint Ventures; and
(h) all necessary arrangements have been made to enable the H Shares to be admitted
into CCASS for clearing and settlement.
13. Bilingual prospectus
The English Language and Chinese language versions of this prospectus are being
published separately in reliance upon the exemption provided by section 4 of the
Companies (Exemption of Companies and Prospectuses from Compliance with Provisions)
Notice (Chapter 32L of the Laws of Hong Kong). In case of any discrepancies between the
English language version and Chinese language version of this prospectus, the English
language version shall prevail.
APPENDIX VII STATUTORY AND GENERAL INFORMATION
– VII-33 –


--- page 674 ---
DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES
The documents attached to a copy of this prospectus and delivered to the Registrar of
Companies in Hong Kong for registration were, amongst other documents, a copy of each of the
written consents referred to in “E. Other Information – 7. Consents of Experts” in Appendix VII
to this prospectus, and a certified copy of each of the material contracts referred to in “B.
Further Information about our Business – 1. Summary of Material Contracts” in Appendix VII to
this prospectus.
DOCUMENTS ON DISPLAY
The following documents will be published on the websites of the Stock Exchange
(www.hkexnews.hk ) and our Company ( www.xjgroup.com ) up to and including the date which
is 14 days from the date of this prospectus:
(a) the Articles of Association;
(b) the Accountants’ Report from Deloitte Touche Tohmatsu, the text of which is set out
in Appendix I to this prospectus;
(c) the report from Deloitte Touche Tohmatsu in relation to unaudited pro forma financial
information of our Group, the text of which is set out in Appendix II to this
prospectus;
(d) the valuation report from A VISTA Valuation Advisory Limited, the text of which is set
out in Appendix III to this prospectus;
(e) the audited consolidated financial statements of our Group for the years ended 31
December 2022, 2023 and 2024;
(f) the industry report prepared by Frost & Sullivan;
(g) the material contracts referred to in the paragraph headed “B. Further Information
about Our Business – 1. Summary of Material Contracts” in Appendix VII to this
prospectus;
(h) the written consents referred to in the paragraph headed “E. Other Information –
7. Consents of Experts” in Appendix VII to this prospectus;
(i) the PRC legal opinion issued by Zhong Lun Law Firm in respect of certain aspects of
our Group and the property interests of our Group in the PRC;
(j) the Indonesian legal due diligence report issued by SEA Law Firm in respect of
certain aspects of our subsidiary in Indonesia;
APPENDIX VIII DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES IN HONG KONG AND DOCUMENTS ON DISPLAY
– VIII-1 –


--- page 675 ---
(k) the Thai legal opinion issued by DTL Law Office in respect of certain aspects of our
subsidiary in Thailand;
(l) the U.S. legal opinions issued by Law Offices of Bin Li & Associates in respect of
certain aspects of our subsidiaries in the U.S.;
(m) the legal opinion issued by Yan Kwok Wing as to Hong Kong laws in respect of the
third party payments of our Group;
(n) the memorandum of advice issued by Stephen Peepels in respect of international laws
and regulations relating to trade sanctions and export controls of our Group;
(o) the service contracts referred to in the paragraph headed “C. Further Information
about Our Directors and Supervisors – 1. Particulars of Directors’ and Supervisors’
Contracts” in Appendix VII to this prospectus; and
(p) the PRC Company Law, the Trial Administrative Measures of Overseas Securities
Offering and Listing by Domestic Companies, together with their unofficial English
translations.
APPENDIX VIII DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES IN HONG KONG AND DOCUMENTS ON DISPLAY
– VIII-2 –


--- page 676 ---
湖北香江電器股份有限公司
X.J. ELECTRICS (HU BEI) CO., LTD
