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GLOBAL OFFERING
Sole Sponsor, Sole Overall Coordinator, Sole Global Coordinator, Sole Bookrunner and Joint Lead Manager
(A joint stock company with limited liability incorporated in the People's Republic of China)
Stock Code: 2 6 5 1
武漢大眾口腔醫療股份有限公司
Wuhan Dazhong Dental Medical Co., Ltd.
武漢大眾口腔醫療股份有限公司
Wuhan Dazhong Dental Medical Co., Ltd.


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IMPORTANT: If you are in any doubt about any of the contents of this prospectus, you should obtain independent professional advice.
Wuhan Dazhong Dental Medical Co., Ltd.
ʮ̡
(A joint stock company with limited liability incorporated in the People’ s Republic of China)
GLOBAL OFFERING
Number of Offer Shares under
the Global Offering
: 10,861,800 H Shares (subject to the
Over-allotment Option)
Number of Hong Kong Offer Shares : 1,086,200 H Shares (subject to
reallocation)
Number of International Offer Shares : 9,775,600 H Shares (subject to reallocation
and the Over-allotment Option)
Maximum Offer Price : HK$21.4 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 H Share
Stock Code : 2651
Sole Sponsor, Sole Overall Coordinator, Sole Global Coordinator,
Sole Bookrunner and Joint Lead Manager
Joint Lead Manager
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsib ility for the
contents of this prospectus, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss h owsoever 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 “Documents Delivered to the Registrar of Companies i n Hong Kong and on Display”
in Appendix VII to 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 K ong take no
responsibility for the contents of this prospectus or any of the other documents referred to above.
The Offer Price is expected to be determined by agreement between us and the Sole Overall Coordinator (for itself and on behalf of the Underwriters) on t he Price Determination
Date, which is expected to be on or about Monday, July 7, 2025 and, in any event, not later than 12:00 noon on Monday, July 7, 2025. The Offer Price will be no t more than HK$21.4
per Offer Share and is currently expected to be not less than HK$20.0 per Offer Share, unless otherwise announced. If, for any reason, the Offer Price is not agreed between us
and the Sole Overall Coordinator (for itself and on behalf of the Underwriters) by 12:00 noon on Monday, July 7, 2025, the Global Offering will not proce ed and will lapse.
Applicants for Hong Kong Offer Shares may be required to pay, on application (subject to application channels), the maximum Offer Price of HK$21.4 per Offer Share for each
Hong Kong Offer Share together with brokerage of 1.0%, SFC transaction levy of 0.0027%, Stock Exchange trading fee of 0.00565% and AFRC transaction le vy of 0.00015%,
subject to refund if the Offer Price as finally determined is less than HK$21.4 per Offer Share.
The Sole Overall Coordinator (for itself and on behalf of the Underwriters) may, where considered appropriate and with our consent, reduce the number of Offer Shares being offered
under 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 d ay for lodging applications
under the Hong Kong Public Offering. In such a case, notices of the reduction in the number of Hong Kong Offer Shares and/or the indicative Offer Price ra nge will be published
on the websites of the Stock Exchange at www.hkexnews.hk and our Company at www.chinadzyl.com not later than the morning of the day which is the last day for lodging
applications under the Hong Kong Public Offering. See sections headed “Structure of the Global Offering” and “How to Apply for Hong Kong Offer Shares” in this prospectus for
more details.
The obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Agreement are subject to termination by the Sole Overall Coordinator ( for itself and on behalf
of the Hong Kong Underwriters) if certain grounds for termination arise prior to 8:00 a.m. on the Listing Date. Such grounds are set out in “Underwritin g” in this prospectus.
Prior to making an investment decision, prospective investors should consider carefully all of the information set out in this prospectus, includin g the risk factors set out
in “Risk Factors.”
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 offe red, sold, pledged or
transferred within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U .S. Securities Act. The Offer
Shares are being offered and sold only outside the United States in offshore transactions in reliance on Regulation S.
ATTENTION
We have adopted a fully electronic application process for the Hong Kong Public Offering. We will not provide printed copies of this prospectus to the p ublic in relation
to the Hong Kong Public Offering.
This prospectus is available at the websites of the Stock Exchange at www.hkexnews.hk and our Company at www.chinadzyl.com . If you require a printed copy of this
prospectus, you may download and print from the website addresses above.
IMPORTANT
June 30, 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 www.chinadzyl.com . Y ou may download and print from
these website addresses if you want a printed copy of this prospectus.
To apply for the 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 stated above.
Please refer to the section headed “How to Apply for Hong Kong Offer Shares” in
this prospectus for further details of the procedures through which you can apply for the
Hong Kong Offer Shares electronically.
IMPORTANT
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Y our application through the HK eIPO White Form service or the HKSCC EIPO
channel must be for a minimum of 100 Hong Kong Offer Shares and in one of the numbers set
out in the table. 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. Y ou
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$
100 2,161.58 2,000 43,231.64 10,000 216,158.19 200,000 4,323,163.80
200 4,323.17 2,500 54,039.54 20,000 432,316.38 250,000 5,403,954.76
300 6,484.74 3,000 64,847.46 30,000 648,474.56 300,000 6,484,745.70
400 8,646.32 3,500 75,655.36 40,000 864,632.75 350,000 7,565,536.66
500 10,807.91 4,000 86,463.28 50,000 1,080,790.96 400,000 8,646,327.60
600 12,969.50 4,500 97,271.18 60,000 1,296,949.15 450,000 9,727,118.56
700 15,131.07 5,000 108,079.10 70,000 1,513,107.34 500,000 10,807,909.50
800 17,292.66 6,000 129,694.91 80,000 1,729,265.52 543,100
(1) 11,739,551.29
900 19,454.24 7,000 151,310.72 90,000 1,945,423.71
1,000 21,615.82 8,000 172,926.55 100,000 2,161,581.90
1,500 32,423.73 9,000 194,542.37 150,000 3,242,372.86
Notes:
(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 Global Offering, we
will issue an announcement on the website of our Company at www.chinadzyl.com and
the website of the Stock Exchange at www.hkexnews.hk .
Hong Kong Public Offering commences ....................... .9:00 a.m. on Monday,
June 30, 2025
Latest time for completing electronic applications via
the HK eIPO White Form service through the
designated website at www.hkeipo.hk (2) ..................... 1 1:30 a.m. on Friday,
July 4, 2025
Application lists of the Hong Kong Public Offering open (3) ......... 1 1:45 a.m. on Friday,
July 4, 2025
Latest time for (a) completing full payment of
application monies via the HK eIPO White Form
service, or;(b) giving electronic application
instructions to HKSCC (4) ............................... .12:00 noon on Friday,
July 4, 2025
If you are instructing your broker or custodian who is a HKSCC Participant to submit
HKSCC EIPO applications on your behalf through HKSCC’s FINI system in accordance with
your instruction, 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,
July 4, 2025
Expected Price Determination Date (5) ....................... o no r before 12:00 noon
Monday, July 7, 2025
Announcement of:
 the final Offer Price;
 the level of indications of interest in the International Offering;
 the level of applications in the Hong Kong Public Offering; and
 the basis of allocations of the Hong Kong Offer Shares
to be published on the website of our Company at
www.chinadzyl.com
(6) and the website of the
Stock Exchange at www.hkexnews.hk ................... n o later than 11:00 p.m. on
Tuesday, July 8, 2025
EXPECTED TIMETABLE (1)
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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:
 from “Allotment Results” page in 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 (7) ................... 1 1:00 p.m. on Tuesday,
July 8, 2025 to
12:00 midnight on
Monday,
July 14, 2025
 The Stock Exchange’s website at www.hkexnews.hk
and our website at www.chinadzyl.com (6) which will
provide links to the above mentioned websites of
the H Share Registrar .................................... n o later than
11:00 p.m. on Tuesday,
July 8, 2025
 from the allocation results telephone enquiry line by
calling +852 3691 8488 between 9:00 a.m. and
6:00 p.m. from ................................ W ednesday, July 9, 2025
to Monday, July 14,
2025 (excluding Saturday,
Sunday and public holidays
in Hong Kong)
 For those applying through HKSCC EIPO
channel, you may also check with your broker
or custodian from ............................... .6:00 p.m. on Monday,
July 7, 2025
H Share certificates in respect of wholly or partially successful
applications applied through HKSCC EIPO channel
pursuant to Hong Kong Public Offering to be
deposited into CCASS
(8)(9) ............................... o no r before Tuesday,
July 8, 2025
H Share certificates in respect of wholly or partially successful
applications applied through the HK eIPO White Form
service pursuant to Hong Kong Public Offering
to be dispatched
(8)(9) .................................... o no r before Tuesday,
July 8, 2025
EXPECTED TIMETABLE (1)
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HK eIPO White Form e-Auto Refund payment instructions/refund
checks in respect of wholly or partially successful applications
if the final Offer Price is less than the maximum Offer Price
per Offer Share initially paid on application (if applicable),
or wholly/partially unsuccessful applications to be
dispatched/collected on or before
(10) ...................... o no r before Wednesday,
July 9, 2025
Dealings in the H Shares on the Stock Exchange
expected to commence at (9) ........................... .9:00 a.m. on Wednesday,
July 9, 2025
Notes:
(1) Unless otherwise stated, all times and dates refer to Hong Kong local times and dates.
(2) Y ou will not be permitted to submit your application under the HK eIPO White Form service 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 an application 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 “black” rainstorm warning or a tropical cyclone warning signal number 8 or above and/or Extreme
Conditions (collectively, “Bad Weather Signal” ) in force in Hong Kong at any time between 9:00 a.m. and
12:00 noon on Friday, July 4, 2025, the application lists will not open or close on that day. For further details,
see “How to Apply for Hong Kong Offer Shares — E. Bad Weather Arrangements.”
(4) Applicants who apply for the Hong Kong Offer Shares by giving electronic application instructions to
HKSCC via HKSCC’s FINI system should refer to “How to Apply for Hong Kong Offer Shares — A.
Application for Hong Kong Offer Shares — 2. Application Channels” in this prospectus.
(5) The Price Determination Date is expected to be on or about Monday, July 7, 2025. If, for any reason, the Offer
Price is not agreed between the Sole Overall Coordinator (for itself and on behalf of the other Underwriters)
and us by 12:00 noon on Monday, July 7, 2025, the Global Offering will not proceed and will lapse.
(6) Neither of the websites nor any of the information contained on the websites forms part of this prospectus.
(7) 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 .
(8) H Share certificates will only become valid at 8:00 a.m. on the Listing Date provided that the Global Offering
has become unconditional and the right of termination described in “Underwriting — Underwriting
Arrangements and Expenses — Hong Kong Public Offering — Grounds for Termination” has not been
exercised. Investors who trade the H Shares on the basis of publicly available allocation details prior to the
receipt of H Share certificates or prior to the H Share certificates becoming valid evidence of title do so
entirely at their own risk.
(9) If a Bad Weather Signal in force is hoisted on Tuesday, July 8, 2025, the H Share Registrar will make
appropriate arrangements for the delivery of the H Share certificates to the HKSCC Depository’s service
counter so that they would be available for trading on Wednesday, July 9, 2025.
EXPECTED TIMETABLE (1)
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(10) Refund mechanism for surplus application monies paid by application via HKSCC EIPO channel is subject
to the arrangement between applicants and their broker or custodian.
Applicants who have applied for Hong Kong Offer Shares through the HKSCC EIPO channel should refer to
“How to Apply for Hong Kong Offer Shares — D. Dispatch/Collection of H Share Certificates and Refund of
Application Monies” for details.
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 designated bank account in
the form of HK eIPO White Form 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 favor of the applicant (or, in the case of joint applications, the first-named applicant) by
ordinary post at their own risk.
Further information is set out in “How to Apply for Hong Kong Offer Shares — D. Dispatch/Collection of H
Share Certificates and Refund of Application Monies.”
The above expected timetable is a summary only. For further details of the structure of
the Global Offering, including its conditions, and the procedures for applications for Hong
Kong Offer Shares, see “Structure of the Global Offering” and “How to Apply for Hong Kong
Offer Shares” in this prospectus.
If the Global Offering does not become unconditional or is terminated in accordance with
its terms, the Global Offering will not proceed. In such case, our Company will make an
announcement as soon as practicable thereafter.
EXPECTED TIMETABLE (1)
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IMPORTANT NOTICE TO INVESTORS
We have issued this prospectus solely in connection with the Hong Kong Public
Offering and the Hong Kong Offer Shares, and it does not constitute an offer to sell or
a solicitation of an offer to buy any security other than the Hong Kong Offer Shares
offered by this prospectus pursuant to the Hong Kong Public Offering. This prospectus
may not be used for the purpose of, and does not constitute, an offer or invitation in any
other jurisdiction or in any other circumstances. We have taken no action to permit a
public offering of the Offer Shares in any jurisdiction other than Hong Kong, and we have
taken no action to permit 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 jurisdictions 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 authorization by the relevant securities regulatory authorities or an
exemption therefrom.
You should only rely on the information contained in this prospectus to make your
investment decision. We have not authorized anyone to provide you with information that
is different from what is contained in this prospectus. Any information or representation
not made in this prospectus must not be relied on by you as having been authorized by
us, the Sole Sponsor , the Sole Overall Coordinator , the Sole Global Coordinator , the Sole
Bookrunner , the Joint Lead Managers, any of the Underwriters, any of our or their
respective directors, advisors, officers, employees, agents or representatives, or any other
person or party involved in the Global Offering.
Page
Expected Timetable ................................................. i v
Contents ......................................................... viii
Summary ......................................................... 1
Definitions ........................................................ 2 4
Glossary of Technical Terms ......................................... 3 9
Forward-Looking Statements ......................................... 4 2
Risk Factors ...................................................... 4 4
Waivers from Strict Compliance with the Listing Rules .................... 8 3
CONTENTS
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Information about This Prospectus and the Global Offering ................ 8 8
Directors, Supervisors and Parties Involved in the Global Offering .......... 9 2
Corporate Information .............................................. 9 7
Industry Overview ................................................. 9 9
Regulatory Overview ............................................... 1 2 3
History, Development and Corporate Structure .......................... 1 4 8
Business .......................................................... 1 6 9
Directors, Supervisors and Senior Management .......................... 2 7 2
Relationship with Our Controlling Shareholders ......................... 2 9 0
Connected Transactions ............................................. 2 9 5
Share Capital ..................................................... 2 9 9
Substantial Shareholders ............................................ 3 0 3
Financial Information ............................................... 3 0 5
Future Plans and Use of Proceeds ..................................... 3 7 2
Underwriting ...................................................... 3 8 2
Structure of the Global Offering ...................................... 3 9 6
How to Apply for Hong Kong Offer Shares ............................. 4 1 0
Appendix I — Accountants’ Report .............................. I - 1
Appendix II — Unaudited Pro Forma Financial Information .......... II-1
Appendix III — Taxation and Foreign Exchange ..................... III-1
Appendix IV — Summary of Principal Laws and Regulations .......... I V - 1
Appendix V — Summary of Articles of Association .................. V - 1
Appendix VI — Statutory and General Information .................. VI-1
Appendix VII — Documents Delivered to the Registrar of Companies
in Hong Kong and on Display ..................... VII-1
CONTENTS
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This summary is an overview of the information contained in this prospectus and
does not contain all the information that may be important to you. You should read the
whole document 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 section headed “Risk Factors” in this
prospectus. You should read that section carefully before you decide to invest in the Offer
Shares.
OVERVIEW
We are a private dental services provider in Central China with a focus on Hubei and
Hunan provinces, operating an expanding dental service network under the direct chain model
in this thriving market. We provide reliable and accessible dental care to communities,
dedicated to serving the general public. According to Frost & Sullivan, we ranked first among
all private dental services providers in Central China in terms of revenue generated therefrom
in 2024, occupying a market share of approximately 2.4%. Over the years, we have been
focusing our dental services on addressing the mass market demands, maintaining strong
presence in densely populated Central China.
Benefiting from years of efforts to expand our dental service network, the number of our
dental institutions in operation increased from 77 as of January 1, 2022 to 86 as of December
31, 2024, and further to 92 as of the Latest Practicable Date, including 4 for-profit dental
hospitals, 80 for-profit dental out-patient departments and 8 for-profit dental clinics covering
8 cities in Hubei and Hunan provinces. These three types of dental institutions are subject to
different regulatory requirements and standards mainly in terms of dental chairs, departments,
medical professionals and scale. See “Industry Overview — The Dental Services Market in
China — Participants of Dental Services Market in China.” Pursuing a single-brand strategy,
all of our dental institutions are operated under the unified brand name “ɽ଺ɹഢ”
together with a trademark of “
,” ensuring a cohesive and robust identity across our
multi-regional dental service network. Most of our dental institutions are located in or adjacent
to local communities, providing dental services to residents with ease of access.
We operate a Partnership Program primarily targeting seasoned medical professionals, to
underpin the expansion of our dental service network, maintain the cohesion and stability of
our core talent team and facilitate our talent team development, all of which constitute our
competitive advantages and make our dental service network an ideal entrepreneurial platform
for dentists. As of December 31, 2022, 2023 and 2024, 24, 32 and 37 dentists were minority
shareholders of our dental institutions under the Partnership Program, respectively. Upholding
the principle of “direct chain and direct partnerships (ટΥྫ),” the Partnership
Program has enriched our medical professional resources and fueled the expansion and
profitability of our dental service network. In addition, our professional talent team led by
seasoned dental experts and supported by our Technical Committee (ึ) consistently
delivers quality dental services with advanced medical capabilities.
SUMMARY
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We place significant importance on our dentist resources and maintain a stable and broad
dentist team. There were 280 dentists in total practicing at our dental service network as of
December 31, 2024. For the years ended December 31, 2022, 2023 and 2024, the retention rate
of dentists practicing at our dental service network for over three years reached approximately
87%, 89% and 90%, respectively. For the years ended December 31, 2022, 2023 and 2024, staff
costs for dentists amounted to RMB57.8 million, RMB65.8 million and RMB58.2 million,
accounting for 22.1%, 24.1% and 22.8% of our cost of sales for the same years, respectively.
We did not rely on any particular dentist during the Track Record Period. The revenue
contributed by our top five dentists in each year during the Track Record Period, in terms of
revenue contribution, accounted for approximately 8.0% to 10.0% of our total revenue each
year.
Our dental services consist of general dentistry services, implantology services and
orthodontics services, addressing oral health needs of customers of all ages. Leveraging our
community-focused dental care, we have accumulated a loyal customer base during the Track
Record Period. For the years ended December 31, 2022, 2023 and 2024, we served 276,310,
296,859 and 283,640 customers and recorded 708,651, 768,809 and 748,632 customer visits,
respectively, with average spending per customer visit of RMB578, RMB575 and RMB544,
respectively.
Our Business Model
During the Track Record Period, we generated revenue from provision of a
comprehensive range of dental services, including (i) general dentistry services, (ii)
implantology services, and (iii) orthodontics services. The following table sets forth a
breakdown of our revenue by business line for the years indicated:
Y ear ended December 31,
2022 2023 2024
RMB’000
%o f
revenue RMB’000
%o f
revenue RMB’000
%o f
revenue
General dentistry services /H1118/H1118212,526 51.9 237,088 53.7 217,321 53.4
Implantology services /H1118/H1118/H1118/H1118/H1118116,728 28.5 122,984 27.8 115,647 28.4
Orthodontics services /H1118/H1118/H1118/H1118/H111880,190 19.6 81,769 18.5 74,115 18.2
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118409,444 100.0 441,841 100.0 407,083 100.0
SUMMARY
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General Dentistry Services
As a customer-centric dental services provider located in densely populated areas and
adjacent to communities, we focus on the daily oral health of our customers. Through regular
oral health management and early intervention of dental diseases, we help customers mitigate
the risks of worsening symptoms and avoid costly treatments of serious diseases. As healthy
teeth and gums improve the comfort, appearance and confidence of customers, we believe
regular oral health management not only tackles customers’ basic and general dental problems
but also enhances their overall quality of life. Our general dentistry services mainly cover (i)
prosthodontics; (ii) oral medicine; (iii) oral surgery; and (iv) pedodontics. For the years ended
December 31, 2022, 2023 and 2024, we recorded 520,961, 549,907 and 516,570 customer visits
to general dentistry services, respectively, and the average spending per customer visit for
general dentistry services was RMB408, RMB431 and RMB421, respectively, for the same
years. See “Business — Our Dental Services — General Dentistry Services” for more details.
Implantology Services
Our implantology services aim to provide customers with a teeth replacement solution to
replace the natural teeth with implants and achieve improved functionality and aesthetics.
Through precise surgery and professional care, we can achieve successful implantation with
long-term stability of the implants. Our implantology treatments utilize different types of
dental equipment and consumables, mainly including cone beam computed tomography
machines, implant machines, ultrasonic bone scalpels, implant membrane tacks, implant
fixtures, bone grafts, abutments, drills and other dental tools for implants. For the years ended
December 31, 2022, 2023 and 2024, the number of customer visits to our implantology services
amounted to 59,763, 78,759 and 86,810, respectively, and the average spending per customer
visit for implantology services was RMB1,953, RMB1,562 and RMB1,332, respectively, for
the same years. See “Business — Our Dental Services — Implantology Services” for more
details.
Orthodontics Services
As an important specialty of dentistry, orthodontics not only focuses on the aesthetic
alignment of teeth but also, more importantly, aims to restore and maintain normal function of
mouth, such as chewing, speaking and facial aesthetics. Our orthodontic treatments use a range
of dental equipment and consumables, mainly including metal brackets, ceramic brackets, clear
aligners and other appliances. For the years ended December 31, 2022, 2023 and 2024, we had
127,927, 140,143 and 145,252 customer visits to our orthodontics services, respectively, and
the average spending per customer visit for orthodontics services was RMB627, RMB583 and
RMB510, respectively, for the same years. See “Business — Our Dental Services —
Orthodontics Services” for more details.
SUMMARY
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Our Market Opportunities
Driven by the rising public awareness of oral health and favorable policies, the dental
services market in China is expected to witness continual growth in market demand and
penetration. According to Frost & Sullivan, the market size of the dental services market in
China was RMB147.2 billion in 2024 and is expected to grow at a CAGR of 6.4% from 2024
to 2029, reaching RMB200.4 billion in 2029. In particular, the market size of the private dental
services market in China was RMB103.5 billion in 2024 and is expected to grow at a CAGR
of 7.0% from 2024 to 2029, reaching RMB145.0 billion in 2029.
The private dental services market in Central China represented 16.8% of the market
share of China’s private dental services market in 2024, constituting an essential component of
the national dental services market, with numerous untapped demands in this densely populated
region. According to Frost & Sullivan, the market size of the private dental services market in
Central China increased from RMB13.3 billion in 2022 to RMB17.4 billion in 2024 at a CAGR
of 14.4% and is expected to grow at a CAGR of 7.8% from 2024 to 2029, reaching RMB25.3
billion in 2029. In particular, in Hubei province, the number of public and private dental
institutions as of December 31, 2024 amounted to 0.7 thousand and 3.9 thousand, respectively,
which is expected to reach 0.9 thousand and 5.0 thousand as of December 31, 2029, growing
at a CAGR of 5.2% and 5.1% from 2024 to 2029, respectively. In Wuhan, the number of public
dental institutions is expected to remain stable at 0.3 thousand from 2024 to 2029, while the
number of private dental institutions is expected to increase at a CAGR of 2.9% from 1.3
thousand as of December 31, 2024 to 1.5 thousand as of December 31, 2029. In Hunan
province, the number of public and private dental institutions as of December 31, 2024
amounted to 0.7 thousand and 4.0 thousand, respectively, which is expected to reach 0.8
thousand and 5.1 thousand as of December 31, 2029, growing at a CAGR of 2.7% and 5.0%
from 2024 to 2029, respectively. For the years ended December 31, 2022, 2023 and 2024, our
total revenue amounted to RMB409.4 million, RMB441.8 million and RMB407.1 million,
respectively. Along with the market expansion of the thriving private dental services market in
Central China, our total revenue grew at a slower pace from 2022 to 2023. From 2023 to 2024,
we encountered challenges mainly caused by customers’ consumption downgrade resulting
from the slower-than-expected post-pandemic economic recovery, and fierce competition
among dental services providers under the downward pricing pressure brought by centralized
procurement policies. While the market size of the private dental services market in Central
China slightly increased from RMB17.2 billion in 2023 to RMB17.4 billion in 2024, we did not
fully capture the market growth opportunities and experienced moderate declines in revenue,
gross profit and net profit for the year ended December 31, 2024.
Going forward, as a private dental services provider in Central China with a focus on
Hubei and Hunan provinces, we are well positioned to enhance our competitiveness through
our distinctive branding strategy, experienced medical professionals, centralized cost control
measures, optimized resource allocation across our dental service network, standardized and
refined operational capabilities, as well as pragmatic and balanced expansion approach.
SUMMARY
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The following table sets forth a comparison of public dental institutions and our private
dental institutions.
Type of
institutions Public dental institutions * Our private dental institutions
Pricing
standards
Service
scopes
Government-guided pricing without
adjustment flexibility
Market-oriented pricing with differentiated
packages
Comprehensive treatment for dental
diseases, including complex diseases
and in-patient services
Daily dental care and treatment for common
dental diseases, implantology services,
orthodontics services, pediatric dentistry, etc.
Service
experience
Comparative
advantages
Longer waiting time for registration,
treatment and payment
Experienced in handling complex
cases and rich expert resources
Seamless, convenient and customized
service experiences in a comfortable
environment with personalized care
Customer-centric services, advanced
medical equipment and organized allocation
of resources under direct chain model
Note:
* Including both dental departments of public general hospitals and public dental hospitals.
For details of the pricing comparison of major dental services between our dental
institutions and public dental institutions in Hubei and Hunan provinces, see “Industry
Overview — Dental Services Market in Central China — Overview of the Dental Services
Market in Central China.”
Our Key Operational Performance
During the Track Record Period, taking advantage of our growing brand influence and
rich experience in operating dental institutions under a direct chain model, we maintain a
thriving dental service network and relatively stable business performance.
The following table sets forth our key operational data for the years indicated:
Y ear ended December 31,
2022 2023 2024
Number of new customers (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118168,479 171,991 150,527
By type of services
– General dentistry services /H1118/H1118/H1118/H1118/H1118/H1118/H1118165,137 167,784 146,794
– Implantology services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,295 2,171 1,946
– Orthodontics services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,477 2,367 1,933
SUMMARY
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Y ear ended December 31,
2022 2023 2024
Number of customers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118276,310 296,859 283,640
Customer visits (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118708,651 768,809 748,632
By type of services
– General dentistry services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118520,961 549,907 516,570
– Implantology services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111859,763 78,759 86,810
– Orthodontics services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118127,927 140,143 145,252
By type of dental institutions
– Dental hospitals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111886,338 86,560 87,256
– Dental out-patient departments /H1118/H1118/H1118/H1118544,032 597,519 586,202
– Dental clinics /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111878,281 84,730 75,174
Customer repurchase rate (2) (%) /H1118/H1118/H1118/H111823.6 22.7 23.1
By type of dental institutions
– Dental hospitals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826.3 26.3 25.9
– Dental out-patient departments /H1118/H1118/H1118/H111822.1 20.8 21.3
– Dental clinics /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819.3 19.7 20.1
Number of dental chairs as of the end
of the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118645 701 702
– Dental hospitals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111889 89 87
– Dental out-patient departments /H1118/H1118/H1118/H1118505 560 561
– Dental clinics /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851 52 54
Number of customer visits per dental
chair /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,099 1,097 1,066
Average spending per dental chair
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118635 630 580
– Dental hospitals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118720 752 714
– Dental out-patient departments /H1118/H1118/H1118/H1118642 623 573
– Dental clinics /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118412 496 434
Average utilization rate of
dentists (3) (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111881.5 86.5 85.2
Notes:
(1) New customers are customers who received dental services provided by us for the first time. The
decrease of our new customers in 2024 was mainly caused by a decrease of 12.5% in new customers of
our general dentistry services, as a result of (i) decreased customer flow due to the relocation of eight
dental institutions and the renovation of three dental institutions in Wuhan notwithstanding our efforts
to contain negative influence to the extent possible; (ii) our relatively conservative marketing strategy
outside Wuhan in reaction to slower-than-expected post-pandemic economic recovery; and (iii)
normalization of service demands in 2024 after experiencing a temporary demand surge during
post-pandemic recovery period in 2023. Due to the same reason, we experienced a decrease of 6.1% in
customer visits to general dentistry services, which resulted in the decrease of our total customer visits
in 2024. According to Frost & Sullivan, such decline aligned with broader industry trends among dental
services providers in Central China in the challenging market environment in 2024.
SUMMARY
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--- page 17 ---
(2) Representing the number of repurchase customers during the relevant year divided by the total number
of customers during the same year. Repurchase customers refer to customers who paid visits to our
dental institutions at any time during the relevant year and no more than 12 months had lapsed since
such customers’ previous visits to our dental institutions, excluding customers’ follow-up visits for the
same treatment.
(3) Representing the actual number of customer visits per dentist during the relevant year as a percentage
of the maximum service capacity of our dentists in the same year. The maximum service capacity of our
dentists represents the theoretical maximum number of customer visits of each dentist can serve during
the relevant year, which is calculated based on: (i) estimated 45 minutes per visit; (ii) the maximum
number of servicing hours of dentists being approximately 7.5 hours per clinic day; and (iii) 300
working days on average per year. Accordingly, each dentist can theoretically accommodate up to 10
customer visits on each working day. According to Frost & Sullivan, such calculation method is
generally in line with the industry norm, based on expert interviews and research on the prospectus and
annual reports of major dental services providers to confirm that the same calculation method for such
rate (i.e. formula and the assumption used therein, including the industry average (a) time spent by
dentists for a single customer visit, (b) dentists’ servicing hours per day and (c) dentists’ working days
per year) is adopted by major industry peers. The industry average utilization rate of dentists in the
private dental services industry in China was approximately 60%, 65% and 65% in 2022, 2023 and 2024,
respectively, according to the same source.
From 2023 to 2024, we encountered challenges mainly caused by customers’ consumption
downgrade resulting from the slower-than-expected post-pandemic economic recovery, and
fierce competition among dental services providers. To counter these macroeconomic pressures
and reinforce our industry leadership, we implemented centralized cost control measures, such
as utilizing online operating systems to visualize operational performance and refine resource
allocation to maximize cost efficiency and negotiating favorable pricing with suppliers for high
quality dental consumables as secured through our strengthened bargaining power with them.
We optimized resource allocation and encouraged experience-sharing among seasoned dental
experts across our service network. In particular, we established technical committees to amass
multiple dental experts with rich experience in clinical practices. These experts offer training
sessions and technical guidance, activating the experience-sharing and application of advanced
technologies in our dental service network, strengthening our capabilities to deal with
miscellaneous oral diseases or complex dental procedures while propelling the development of
our dental specialties. See “Business — Medical Professionals — Our Technical Committees”
for details. These efforts were supported by streamlining our centralized management structure,
ensuring agility and sustained competitiveness.
In 2024, as part of our strategic initiative to maintain proximity to customers and enhance
acquisition and retention, we relocated eight dental institutions in Wuhan, coinciding with the
expiration of certain leases. In addition, to upgrade service capacity and elevate customer
experience, we also renovated three dental institutions in Wuhan, in the same year. As the result
of such relocation and renovation, our customer flow experienced temporary decline.
Concurrently, in response to slower-than-expected post-pandemic economic recovery, we
scaled back marketing efforts outside Wuhan to maintain relatively stable profit margins while
sharpening our focus on service excellence and customer satisfaction. In addition, after
experiencing a temporary demand surge during post-pandemic recovery period in 2023, dental
service demands returned to normalized levels in 2024. As such, from 2023 to 2024, our total
customer visits decreased from 768,809 to 748,632, and our new customers decreased from
171,991 to 150,527. In the long term, we expect to witness growth in customer visits and new
customers, supported by optimized dental resource allocation, increased dentists and expanded
brand awareness.
SUMMARY
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--- page 18 ---
Meanwhile, in response to the region-specific policy developments, particularly the
implementation of centralized procurement policies in Hubei and Hunan provinces, as well as
the fierce market competition under the downward pricing pressure brought by such policies,
we made pricing adjustments, reducing the fees for implantology services by approximately
25% to 40% across all of our dental institutions in mid-2023. As a result, the average spending
per customer visit for our implantology services decreased from RMB1,562 in 2023 to
RMB1,332 in 2024. Simultaneously, we leveraged our centralized procurement framework to
optimize supply chain efficiency, negotiating favorable terms with key suppliers for high-
quality dental consumables. By enhancing cost control measures, we maintained the ability to
offer dental services at competitive prices while preserving stable gross margins even amid
revenue pressures. From 2023 to 2024, the average spending per customer visit for our general
dentistry services decreased from RMB431 to RMB421, while the average spending per
customer visit to our orthodontics services decreased from RMB583 to RMB510.
We maintained stability in our revenue stream and only recorded a slight decline in total
revenue, from RMB441.8 million for the year ended December 31, 2023 to RMB407.1 million
for the year ended December 31, 2024. Notably, our customer retention metrics demonstrated
improvement, with the customer repurchase rate rising from the year ended December 31, 2023
to the year ended December 31, 2024. This enhancement in customer loyalty reflected our
brand strength, service quality and timely adjusted pricing structure.
OUR COMPETITIVE STRENGTHS
We believe that the following competitive strengths contribute to our continuous
development and preeminent position in the dental services industry in Central China.
 As a private dental services provider operating under the direct chain model in
Central China, we serve the general public with reliable and accessible dental care,
capitalizing on years of development experience and deep insights into the industry.
 Centralized and refined operational capabilities of our headquarters empower our
dental institutions, ensuring operational efficiency and sustained profitability.
 Strategic Partnership Program and employee stock ownership platforms motivating
high-quality medical professionals and other talents, underpinning our business
growth while building our dental service network into a talent entrepreneurial
platform.
 Well-established scalable and replicable business model benefiting from organic
growth and strategic acquisitions.
 Preeminent professional talent team led by renowned dental experts, with medical
technologies as our core competitiveness.
 Unified management led by visionary and experienced management team utilizing
outstanding professional and managerial expertise.
For details, see “Business — Competitive Strengths.”
SUMMARY
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OUR BUSINESS STRATEGIES
We intend to further entrench our competitive strengths and implement the following
strategies in pursuit of our vision.
 Reinforce our dominant position in Central China, consistently increase our market
share, and expand our dental service network through establishments and
acquisitions.
 Persistently improve our dental service capabilities, cultivate advantageous
specialties and develop our Technical Committee to optimize dental technologies
and empower the professional growth of dentists.
 Strengthen our brand building and boost our brand influence by enhancing
customers’ service experience and satisfaction.
 Strive to accelerate our digitalization and informatization to empower our business
development.
For details, see “Business — Business Strategies.”
OUR SUPPLIERS AND CUSTOMERS
Our Suppliers
Our dental service network requires various products for its business operations, mainly
covering dental devices and pharmaceuticals. Our suppliers primarily comprise (i) suppliers of
the above products; (ii) marketing and promotion services providers as well as consulting
services providers; and (iii) software, hardware and services providers of informatization. We
mainly purchase from suppliers located in China, including domestic distributors that are
licensed to import dental tools and equipment manufactured by foreign manufacturers.
Our purchases from the five largest suppliers in each year of the Track Record Period
accounted for 49.9%, 44.9% and 42.4% of our total purchases during the same years,
respectively, and our purchases from the largest supplier accounted for 20.8%, 16.2% and
14.6% of our total purchases, respectively.
All of our five largest suppliers in each year of the Track Record Period are Independent
Third Parties. To the best of the knowledge of our Directors, none of our Directors, their
respective associates or any shareholder who owns more than 5% of our issued share capital
had any interest in any of our five largest suppliers in each year of the Track Record Period.
SUMMARY
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--- page 20 ---
Our Customers
Our customers during the Track Record Period were individuals in the PRC who received
dental services at our dental institutions. Our comprehensive dental services cover a broad
range of customers in all age groups. Given the dispersed base of our customers, we do not
have any customer concentration risk. Our business and profitability are not materially
dependent on any single individual customer. None of our individual customers accounted for
more than 0.1% of our total revenue for each year during the Track Record Period.
All of our five largest customers in each year of the Track Record Period are Independent
Third Parties. To the best of the knowledge of our Directors, none of our Directors, their
respective associates or any shareholder who owns more than 5% of our issued share capital
had any interest in any of our five largest customers in each year of the Track Record Period.
PRICING
To the extent allowed by the applicable regulatory requirements in China, as a private
dental services provider, we are generally entitled to set the prices of dental services of our
dental institutions at our own discretion. We price dental services based on certain factors,
including the complexity of the treatments, operating costs, local market conditions and the
pricing of both private and public dental institutions in the same region on similar dental
services. During our daily operations, we from time to time review our pricing to avoid
malicious competition caused by their unreasonable pricing or promotion.
Our dental institutions that are qualified as Medical Insurance Designated Medical
Institutions are required to charge medical fees in accordance with the pricing guidelines and
price ceilings set by the relevant government authorities for dental services eligible to be paid
through the public medical insurance programs. We regularly inspect the pricing of our
Medical Insurance Designated Medical Institutions to ensure compliance with local medical
insurance policies. The following table sets forth the number of Medical Insurance Designated
Medical Institutions by type of dental institutions as of the dates indicated:
As of December 31,
As of the
Latest
Practicable
Date2022 2023 2024
Dental hospitals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184444
Dental out-patient departments /H1118 53 58 56 52
Dental clinics /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184556
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111861 67 65 62
For details of our dental institutions, see “Business — Our Dental Service Network —
Development Stage of Our Dental Institutions.”
SUMMARY
–1 0–


--- page 21 ---
In recent years, the PRC government has been propelling the centralized procurement to
promote the transparency in the pricing of dental implantology consumables and services,
making the implantology service more affordable and accessible for the general public. In
response to such polices as well as the fierce competition under the downward pricing pressure
brought by such policies, we made timely pricing adjustments on our implantology services
and witnessed more customers access affordable dental services. For further details of
centralized procurement policies and pricing supervision, see “Regulatory Overview —
Regulations on the Reform of Medical Institutions.”
Please see “Business — Pricing” for details.
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 determining the
significance of a risk, you should read the “Risk Factors” section in its entirety before you
decide to invest in our Offer Shares. Some of the major risks that we face include:
 We operate in a highly competitive industry and such industry experienced
dampened growth and fluctuation in recent years. If we do not compete successfully
against existing or new competitors, our business, financial condition and results of
operations may be materially and adversely affected.
 We operate in a strictly regulated industry with strict compliance requirements in
health, safety and environmental laws and regulations, and are subject to on-going
compliance costs.
 Centralized procurement policies may further affect the pricing of our implantology
services, which may in turn affect our financial condition and results of operations.
 Regulatory pricing controls under the public medical insurance programs may
further affect the pricing of dental services provided by our Medical Insurance
Designated Medical Institutions, which may in turn affect our financial condition
and results of operations.
 If our dental institutions are unable to retain, attract and motivate sufficient
qualified dentists and other medical professionals, or if we fail to properly manage
the employment and service of the dentists and other medical professionals of our
dental institutions, our business and results of operations could be materially and
adversely affected.
SUMMARY
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--- page 22 ---
 If our dental institutions are unable to continue to attract and retain customers, foster
superior customer experience and maintain customer trust, our business, financial
condition and results of operations may be materially and adversely affected.
 The success of our business depends on our reputation and brand image. Any
negative publicity about us, any of our dental institutions, dentists or other medical
professionals practicing at our dental service network, the dental services industry
or the general healthcare industry could harm our reputation and brand image, which
could materially and adversely affect our business and prospects.
OUR CONTROLLING SHAREHOLDERS
As of the Latest Practicable Date, our Company was directly held as to approximately
1.24% by Mr. Y ao, 1.17% by Ms. Shen and 81.32% by Zhongshan Medical Investment, which
was in turn held by Mr. Y ao and Ms. Shen as to approximately 44.11% and 31.38%,
respectively. Pursuant to an acting-in-concert agreement entered into between Mr. Y ao and Ms.
Shen on June 3, 2014, Mr. Y ao and Ms. Shen agreed to act in concert in respect of their voting
rights in Zhongshan Medical Investment and our Company. See “History, Development and
Corporate Structure — Our Major Corporate Development — Early Development” for details.
Immediately upon completion of the Global Offering (assuming no exercise of the Over-
allotment Option), Mr. Y ao and Ms. Shen, directly and indirectly through Zhongshan Medical
Investment, will together be entitled to exercise the voting rights attaching to approximately
65.31% of our enlarged total issued share capital. Therefore, Mr. Y ao, Ms. Shen and Zhongshan
Medical Investment will be considered as a group of Controlling Shareholders after the Listing
for the purpose of the Listing Rules. See “Relationship with Our Controlling Shareholders” for
further details.
PRE-IPO INVESTMENTS
We received the Pre-IPO Investments from our Pre-IPO Investors, including the Series A
Investment from Zhongyuan Jiupai and Mr. Zhu Chao ( ϡ൴) and the Series B Investment from
CITIC Securities Investment, Zhongyuan Jiupai, Zhidao Capital, Mr. Li Jiansheng (͛),
Ms. Li Zhen ( ҽጲ), Mr. Chen Wei ( ௓ᙯ), Mr. Wang Hong ( ˮ҃) and Mr. Wang Qingsong ( ˮ
ؒڡDue to divergent views of certain of our investors on the proposed listing location of our
Company, we repurchased the Shares held by Zhongyuan Jiupai, Mr. Zhu Chao, CITIC
Securities Investment, Zhidao Capital, Mr. Li Jiansheng and Mr. Wang Qingsong on October
8, 2024. Immediately after completion of the Global Offering (assuming no exercise of the
Over-allotment Option), the current Pre-IPO Investors will hold approximately 1.05% of our
enlarged total issued share capital. See “History, Development and Corporate Structure —
Pre-IPO Investments” for further details.
SUMMARY
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--- page 23 ---
SUMMARY OF HISTORICAL AND FINANCIAL INFORMATION
The following tables set forth summary financial data from our consolidated financial
information for the Track Record Period, extracted from the Accountants’ Report set out in
Appendix I to this prospectus.
Summary of Consolidated Statements of Profit or Loss and Other Comprehensive Income
Items
The following table sets forth selected consolidated statements of profit or loss and other
comprehensive income for the years indicated:
Y ear ended December 31,
2022 2023 2024
(RMB’000)
Revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118409,444 441,841 407,083
Cost of sales /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(260,970) (273,615) (254,743)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118148,474 168,226 152,340
Selling and distribution expenses /H1118/H1118/H1118/H1118/H1118/H1118(41,709) (44,687) (40,473)
Administrative expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(33,992) (32,549) (34,875)
Research and development expenses /H1118/H1118/H1118(6,618) (6,823) (6,669)
Other expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,175) (1,885) (1,307)
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6,679) (5,507) (5,329)
Fair value (losses)/gains on redeemable
preference shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,336) (2,331) 1,716
Other income and gains /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,541 4,464 5,414
Profit before tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111863,506 78,908 70,817
Income tax expense /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(7,056) (11,870) (8,317)
Profit for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111856,450 67,038 62,500
Total comprehensive income for the
year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111856,450 67,038 62,500
Attributable to:
Owners of the parent /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111843,342 50,069 41,916
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,108 16,969 20,584
SUMMARY
–1 3–


--- page 24 ---
Our Financial Highlights
Benefiting from our highly standardized and refined direct chain model, our profitability
stands out among private dental services providers in China, according to Frost & Sullivan.
For the years ended December 31, 2022, 2023 and 2024, our gross profit margin was
36.3%, 38.1% and 37.4%, respectively. Our net profit increased by 18.8% from RMB56.5
million for the year ended December 31, 2022 to RMB67.0 million for the year ended
December 31, 2023, primarily due to the increase in revenue from our general dentistry and
implantology services. Our net profit margin increased from 13.8% in 2022 to 15.2% in 2023.
From 2023 to 2024, despite the challenging market conditions, such as the slower-than-
expected post-pandemic economic recovery and fierce competition among dental services
providers, we mitigated the negative impact on our profitability through our centralized cost
control measures, such as utilizing online operating systems to visualize operational
performance and refine resource allocation to maximize cost efficiency and negotiating
favorable pricing with suppliers for high quality dental consumables as secured through our
strengthened bargaining power with them. Our net profit reduced at a slower pace compared
to revenue, maintaining at RMB62.5 million in 2024. Our net profit margin increased from
15.2% in 2023 to 15.4% in 2024. Our net profit attributable to owners of the parent amounted
to RMB43.3 million, RMB50.1 million and RMB41.9 million for the years ended December
31, 2022, 2023 and 2024, respectively.
We believe our superior management capabilities and direct chain model would steadily
contribute to our profitability performance and lay a solid foundation for our future growth.
Non-IFRS Measures
To supplement our consolidated statements of profit or loss and other comprehensive
income presented in accordance with IFRS, we also use adjusted net profit (non-IFRS
measure), as an additional financial measure, which is not required by, or presented in
accordance with IFRS. We believe that the presentation of this non-IFRS measure facilitates
comparison of the operating performance from year to year. We believe that this measure
provides useful information to investors in understanding and evaluating our consolidated
results of operations in the same manner as they help our management. However, the use of
non-IFRS measure has limitations as an analytical tool, and you should not consider it in
isolation from, or as a substitute for analysis of, our results of operations or financial
conditions as reported under IFRS. In addition, the non-IFRS financial measure may be defined
differently from similar terms used by other companies.
We define adjusted net profit (non-IFRS measure), as net profit for the year adjusted by
adding (i) fair value losses or gains on redeemable preference shares; (ii) share-based payment
expenses; and (iii) listing expenses. Our redeemable preference shares represent shares issued
by us in connection with Series A Investment and Series B Investment to Independent Third-
Party investors. All special rights granted to such investors have been terminated in September
2024. We ceased to recognize any further loss on fair value changes of redeemable preference
shares thereafter, because there were no more redeemable preference shares upon the
termination of all special rights. See Note 26 and Note 30 to the Accountants’ Report set out
in Appendix I to this prospectus for details.
SUMMARY
–1 4–


--- page 25 ---
The following table reconciles our adjusted net profit (non-IFRS measure) for the years
indicated:
Y ear ended December 31,
2022 2023 2024
(RMB’000)
Net profit for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111856,450 67,038 62,500
Add:
Fair value losses/(gains) on redeemable
preference shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,336 2,331 (1,716)
Share-based payment expenses (1) /H1118/H1118/H1118/H1118/H1118/H11181,598 1,053 2,355
Listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 5,207
Adjusted net profit
(non-IFRS measure) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111859,384 70,422 68,346
Note:
(1) Representing expenses arising from Restricted Shares granted to our employees and former employees
under the Pre-IPO Restricted Share Scheme.
Revenue
Our revenue increased by 7.9% from RMB409.4 million for the year ended December 31,
2022 to RMB441.8 million for the year ended December 31, 2023, primarily attributable to the
increase in revenue generated from our general dentistry and implantology services. Our
revenue decreased by 7.9% from RMB441.8 million for the year ended December 31, 2023 to
RMB407.1 million for the year ended December 31, 2024. In particular, the decline in revenue
from general dentistry services was primarily caused by decreased customer visits and average
spending per customer visit for such services. In addition, our revenue from orthodontics
services declined along with the decrease in the average spending per customer visit for such
services from 2023 to 2024, primarily due to our voluntary price reduction and the reduced
customer visits by new customers. Moreover, we experienced decline in revenue from
implantology services due to decrease in average spending per implant tooth following our
pricing adjustment in mid-2023 mainly in response to the implementation of centralized
procurement policies, being fully reflected in 2024 as compared to 2023, and decrease in
implant teeth in 2024. See “Financial Information — Y ear to Y ear Comparison of Results of
Operations” for details of the fluctuation of our revenue during the Track Record Period.
SUMMARY
–1 5–


--- page 26 ---
Gross Profit and Gross Profit Margin
For the years ended December 31, 2022, 2023 and 2024, our gross profit amounted to
RMB148.5 million, RMB168.2 million and RMB152.3 million, respectively. The increase of
our gross profit in 2023 was generally in line with the growth of our revenue. The decrease of
our gross profit in 2024 was mainly caused by the decrease of our revenue in the same year.
For the years ended December 31, 2022, 2023 and 2024, our gross profit margin was 36.3%,
38.1% and 37.4%, respectively. See “Financial Information — Y ear to Y ear Comparison of
Results of Operations” for details.
To provide more information in relation to our profitability by each business line, we also
present operational profit and operational profit margin. For the years ended December 31,
2022, 2023 and 2024, our operational profit amounted to RMB272.1 million, RMB302.0
million and RMB280.2 million, respectively, generally in line with the fluctuation of our gross
profit during the same years. Our operational profit margin reached 66.4%, 68.4% and 68.8%
for the years ended December 31, 2022, 2023 and 2024, respectively. See “Financial
Information — Consolidated Statements of Profit or Loss and Other Comprehensive Income —
Gross Profit and Gross Profit Margin” for details.
Net Profit
Our net profit increased by 18.8% from RMB56.5 million in 2022 to RMB67.0 million
in 2023, primarily attributable to the increase in revenue from our general dentistry and
implantology services. Our net profit decreased by 6.8% from RMB67.0 million in 2023 to
RMB62.5 million in 2024, primarily due to the decrease in revenue from our general dentistry
services as a result of the decreased customer visits and average spending per customer visit
for such services.
See “Financial Information — Y ear to Y ear Comparison of Results of Operations” for
details.
Summary of Consolidated Statements of Financial Position
The following table sets forth our financial position as of the dates indicated:
As of December 31,
2022 2023 2024
(RMB’000)
Total non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118257,686 243,085 256,348
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118201,808 247,926 121,644
Total current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118127,645 248,208 135,096
Net current assets/(liabilities) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111874,163 (282) (13,452)
Total assets less current liabilities /H1118/H1118/H1118/H1118/H1118331,849 242,803 242,896
Total non-current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118190,000 71,651 83,887
Total liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118317,645 319,859 218,983
Net assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118141,849 171,152 159,009
SUMMARY
–1 6–


--- page 27 ---
We had net current liabilities of RMB0.3 million as of December 31, 2023, consisting of
current assets of RMB247.9 million and current liabilities of RMB248.2 million, while we
recorded net current assets of RMB74.2 million as of December 31, 2022. This was primarily
due to (i) an increase of RMB112.8 million in redeemable preference shares; (ii) an increase
of RMB4.6 million in other payables and accruals; and (iii) a decrease of RMB4.3 million in
prepayments, other receivables and other assets. This was partially offset by an increase of
RMB49.1 million in cash and cash equivalents. We had net current liabilities of RMB13.5
million as of December 31, 2024, consisting of current assets of RMB121.6 million and current
liabilities of RMB135.1 million, which represented an increase of RMB13.2 million from our
net current liabilities of RMB0.3 million as of December 31, 2023. This was primarily due to
(i) a decrease of RMB132.0 million in cash and cash equivalents; (ii) an increase of RMB21.7
million in other payables and accruals; and (iii) a decrease of RMB2.1 million in inventories.
For details, see “Financial Information — Discussion of Certain Key Items from Consolidated
Statements of Financial Position.”
Our net assets increased from RMB141.8 million as of December 31, 2022 to RMB171.2
million as of December 31, 2023, primarily due to total comprehensive income of RMB67.0
million in 2023, partially offset by (i) dividends declared of RMB36.6 million; and (ii)
dividends paid to non-controlling shareholders of RMB9.6 million. Our net assets decreased
from RMB171.2 million as of December 31, 2023 to RMB159.0 million as of December 31,
2024, primarily due to (i) dividends declared of RMB50.0 million; (ii) dividends paid to
non-controlling shareholders of RMB18.3 million; and (iii) capital deduction of RMB10.8
million, partially offset by total comprehensive income of RMB62.5 million in 2024. For
further details of our consolidated statements of changes in equity, see Accountants’ Report as
set out in Appendix I to this prospectus.
Summary of Consolidated Statements of Cash Flows
The following table sets forth a summary of our cash flows during the Track Record
Period:
Y ear ended December 31,
2022 2023 2024
(RMB’000)
Net cash flows from operating
activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118119,926 148,999 100,636
Net cash flows from/(used in) investing
activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,539 (16,789) (20,068)
Net cash flows used in financing
activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(98,406) (83,097) (212,605)
Net increase/(decrease) in cash and cash
equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111843,059 49,113 (132,037)
Cash and cash equivalents at the
beginning of the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118134,911 177,970 227,083
Cash and cash equivalents at the
end of the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118177,970 227,083 95,046
We recorded net operating cash inflow throughout the Track Record Period. For details,
see “Financial Information — Liquidity and Capital Resources — Cash Flows.”
SUMMARY
–1 7–


--- page 28 ---
Key Financial Ratios
The following table sets forth certain of our key financial ratios as of the dates or for the
years indicated:
Y ear ended December 31,
2022 2023 2024
Profitability ratios
Gross profit margin (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836.3 38.1 37.4
Net profit margin (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813.8 15.2 15.4
Adjusted net profit margin (non-IFRS
measure) (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814.5 15.9 16.8
Return on equity (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111841.2 42.8 37.9
Return on assets (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811.5 14.1 14.4
As of December 31,
2022 2023 2024
Liquidity ratios
Current ratio /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.6x 1.0x 0.9x
Quick ratio /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.5x 1.0x 0.9x
For calculation and analysis of our key financial ratios, see “Financial Information —
Key Financial Ratios.”
COMPETITION
We operate in the highly competitive and fragmented private dental services industry in
China, according to Frost & Sullivan. We generally compete with private and public dental
hospitals, out-patient departments and clinics as well as dental departments in general hospitals
located in the same geographic regions as our dental institutions. We typically compete on the
following key factors: quality of dental services, service experience, medical resources,
especially seasoned dentists, brand influence, customers’ accessibility, as well as pricing.
As the largest private dental services provider in Central China with a focus on Hubei and
Hunan provinces in terms of revenue generated therefrom in 2024, we believe we are well
positioned to serve the general public with reliable and accessible dental care, leveraging our
outstanding dentist resources, direct chain model, established brand awareness and continuous
efforts. See “Industry Overview” for a more detailed discussion regarding the industries and
markets where we operate.
SUMMARY
–1 8–


--- page 29 ---
OUTBREAK AND SPREAD OF COVID-19
During the Track Record Period, the COVID-19 pandemic caused imposition of various
containment measures to reduce offline activities in regions with high infection risks.
Customers with dental diseases or oral health needs reduced their visits to offline dental
institutions during the outbreak and spread of the pandemic. During the Track Record Period,
dental institutions in our dental service network experienced temporary operation suspension
at various times as precautionary measures to mitigate infection risks. During the Track Record
Period, 29 of our dental institutions in 7 cities temporarily suspended operations for 3 to 26
days, the majority of which suspended operations for less than 10 days. By the end of October
2022, all of such dental institutions resumed operations.
Our Directors consider that the negative impacts caused by the COVID-19 pandemic were
immaterial to the operational and financial performance of our Group during the Track Record
Period. We will continue to pay attention to any similar pandemic and take proper measures to
minimize any potential negative impact on our operations going forward.
COMPLIANCE AND LEGAL PROCEEDINGS
During the Track Record Period and up to the Latest Practicable Date, we were not
imposed any material administrative penalties. During the Track Record Period and up to the
Latest Practicable Date, we were not involved in any non-compliance incidents that had a
material adverse effect on our business, financial condition or results of operations.
Non-compliance Incidents
Historically, some of our subsidiaries did not complete the requisite fire safety filing with
the housing and urban-rural development department of local government and some of our
dental institutions did not obtain the Urban Sewage Disposal Drainage Licenses. For details,
see “Business — Compliance and Legal Proceedings — Non-compliance Incidents.” During
the Track Record Period and up to the Latest Practicable Date, we had not been imposed any
material administrative penalties by the relevant government authorities.
During the Track Record Period and up to the Latest Practicable Date, we were not
involved in any litigation, arbitration or administrative proceedings that could have a material
and adverse effect on our business, financial condition or results of operations. As of the Latest
Practicable Date, we were not a party to any ongoing material litigation, arbitration or
administrative proceedings. As of the same date, we were not aware of any claims or
proceedings contemplated by government authorities or third parties which would materially
and adversely affect our business. Our Directors are not involved in any actual or threatened
material claims or litigation.
SUMMARY
–1 9–


--- page 30 ---
RECENT DEVELOPMENT
Recent Business and Financial Performance
Subsequent to December 31, 2024 and up to the Latest Practicable Date, we expanded our
dental service network to serve more customers with reliable and accessible dental services.
During such period, we established 8 dental out-patient departments in Wuhan, Hubei province,
all of which are located in or adjacent to local communities. During the same period, we
voluntarily terminated the operations of 2 dental institutions based on our evaluation on the
market condition and future business strategies. As of the Latest Practicable Date, we had 92
dental institutions in operation in total.
In the first quarter of 2025, our operational and financial performance remained relatively
stable. Our service capacity enhanced along with our dedicated efforts in expanding dental
service network. Meanwhile, we refined our internal operational management through
improving informatization, which further contributed to our business growth. Despite the
impact brought by seasonality, particularly fewer customer visits shortly before and during the
Chinese New Y ear holiday in late January 2025, the total number of our customer visits only
recorded a slight decrease from 189,346 in the fourth quarter of 2024 to 175,141 in the first
quarter of 2025, attributable to our continuous efforts to expand service network while
enhancing service quality and experience. Meanwhile, the number of our new customers grew
by approximately 3% from 36,564 in the fourth quarter of 2024 to 37,553 in the first quarter
of 2025.
No Material Adverse Change
After performing sufficient due diligence work which our Directors consider appropriate
and after due and careful consideration, our Directors confirm that, up to the date of this
prospectus, (i) there had been no material adverse change in our business, the industry where
we operate, or market or regulatory environment to which we are subject; (ii) there has been
no material adverse change in our financial or trading position or prospects since December 31,
2024, being the date of the latest audited consolidated financial position of our Group as set
out in the Accountants’ Report in Appendix I to this prospectus; or (iii) there has been no event
since December 31, 2024 that would materially affect the information shown in the
Accountants’ Report set forth in Appendix I to this prospectus.
MAJOR REGULATORY DEVELOPMENT OF DENTAL SERVICES MARKET WHERE
WE FOCUS ON
In recent years, the government authorities at both national and provincial levels issued
a series of policies on effectively implementing centralized procurement and pricing
management for dental implants, with the aim to rationalize and promote the transparency in
the pricing of dental implantology consumables and services across the dental services
industry. In January 2023, Hunan Healthcare Security Administration (ღ҅), the
Health Commission of Hunan Province (ึ) and the Administration for
Market Regulation of Hunan Province (̹ఙ္ຖ၍ଣ҅) jointly promulgated the Notice
on Regulating the Pricing Items of Medical Services for Dental Implants and Adjusting the
Medical Service Charges (ஷ
SUMMARY
–2 0–


--- page 31 ---
) (the “ Hunan Notice ”), which became effective on January 31, 2023. In March 2023, the
Healthcare Security Administration of Hubei Province (ღ҅), the Health
Commission of Hubei Province (ึ) and the Administration for Market
Regulation of Hubei Province (̹ఙ္ຖ၍ଣ҅) jointly promulgated the Notice on
Effectively Integrating the Medical Service Items and Price Regulating for Dental Implants
() (the “ Hubei Notice ”), which
became effective on April 1, 2023. See “Regulatory Overview — Regulations on the Reform
of Medical Institutions — Notice on Conducting Special Governance of Medical Service
Charges and Consumables Price for Dental Implants.”
With the implementation of the centralized procurement policies, we made timely pricing
adjustments on our implantology services and witnessed decrease in revenue from
implantology services from the year ended December 31, 2023 to the year ended December 31,
2024. See “Financial Information — Y ear to Y ear Comparison of Results of Operations” for
details. Leveraging our comprehensive dental specialty deployment, improving resource
utilization efficiency, as well as the centralized management and economies of scale of our
service network, we expect to mitigate the negative impact of these policies on our overall
profitability.
GLOBAL OFFERING STATISTICS
Based on an Offer
Price of HK$20.0 per
H Share
Based on an Offer
Price of HK$21.4 per
H Share
Market capitalization of our Shares upon
completion of the Global Offering (1) /H1118/H1118/H1118/H1118HK$987.6 million HK$1,056.7 million
Market capitalization of our H Shares upon
completion of the Global Offering (2) /H1118/H1118/H1118HK$340.5 million HK$364.4 million
Unaudited pro forma adjusted consolidated
net tangible assets of the Group
attributable to equity shareholders of the
Company per Share
(3) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118HK$4.85 HK$5.15
Notes:
(1) The calculation of market capitalization is based on 49,379,042 Shares expected to be in issue
immediately following the completion of the Global Offering (assuming no exercise of the Over-
allotment Option).
(2) The calculation of market capitalization is based on 17,026,140 H Shares expected to be in issue
immediately following the completion of the Global Offering and the Conversion of Unlisted Shares
into H Shares (assuming no exercise of the Over-allotment Option).
(3) The unaudited pro forma adjusted consolidated net tangible asset value per Share as of December 31,
2024 is calculated after the adjustments referred to part A of “Appendix II — Unaudited Pro Forma
Financial Information” to this prospectus and on the basis of 49,379,042 Shares expected to be in issue
assuming that the Global Offering had been completed on December 31, 2024.
SUMMARY
–2 1–


--- page 32 ---
LISTING EXPENSES
Our listing expenses mainly include underwriting commissions, professional fees paid to
legal advisors, the Reporting Accountants and other professional parties for their services
rendered in relation to the Listing and the Global Offering.
The estimated total listing expenses (based on the mid-point of our indicative price range
for the Global Offering and assuming that the Over-allotment Option is not exercised) for the
Global Offering are approximately RMB36.0 million (HK$39.4 million), including (i)
underwriting commissions, SFC transaction levy, Stock Exchange trading fees and AFRC
transaction levy for all Offer Shares of approximately HK$9.0 million; and (ii) non-
underwriting related expenses of approximately HK$30.4 million, which consist of (a) fees and
expenses of legal advisors and reporting accountant of approximately HK$21.1 million; and (b)
sponsor fee and other fees and expenses of approximately HK$9.3 million, representing
approximately 4.1% of the gross proceeds of the Global Offering based on the same
assumptions. During the Track Record Period, we incurred listing expenses of RMB14.2
million (HK$15.6 million), of which (i) RMB5.2 million was recognized as administrative
expenses; and (ii) RMB9.0 million was directly recognized as deduction in equity. We expect
to incur additional listing expenses of approximately RMB5.0 million (HK$5.4 million) as
administrative expenses and approximately RMB16.8 million (HK$18.4 million) as a
deduction in equity directly upon the Listing.
Our Directors do not expect that such expenses will have a material adverse effect on our
results of operations for the year ending December 31, 2025.
DIVIDENDS
We are incorporated under the laws of the PRC. We do not currently have a formal
dividend policy or a predetermined dividend payout ratio. Any dividends we pay will be at the
discretion of our Directors and will depend on our future operations and earnings, capital
requirements and surplus, general financial condition, contractual restriction and other factors
which our Directors consider relevant. Our shareholders in a general meeting may approve any
declaration of dividends, which must not exceed the amount recommended by our Board.
For the years ended December 31, 2022, 2023 and 2024, our dividends paid amounted to
RMB39.0 million, RMB36.6 million and RMB30.6 million, respectively. We had non-trade
dividends payable of RMB19.4 million under our 2023 annual profit distribution plan as of
December 31, 2024, which had been fully settled in February 2025.
Under the applicable PRC laws and regulations, a PRC incorporated company is required
to set aside at least 10% of its after-tax profits each year, after making up previous years’
accumulated losses, if any, to contribute to certain statutory reserve funds until the aggregate
amount contributed to such funds reaches 50% of its registered capital. The company may pay
dividends out of after-tax profits after making up for accumulated losses and contributing to
SUMMARY
–2 2–


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statutory reserve funds as mentioned above. As advised by our PRC Legal Advisors, our
Company cannot pay dividends if we are in an accumulated loss position. Our PRC companies
will consider to conduct the dividend payments as such companies are in an accumulated profit
position.
No dividend shall be declared or payable except out of our profits lawfully available for
distribution. Our Directors have the absolute discretion to recommend any dividend subject to
our constitutional documents and the relevant laws. We cannot assure you that our Company
will be able to declare dividends of any amount each year or in any year.
USE OF PROCEEDS
We estimate the net proceeds of the Global Offering which we will receive, assuming an
Offer Price of HK$20.7 per Offer Share (being the mid-end of the Offer Price range stated in
this prospectus), will be approximately HK$185.5 million, after deducting the estimated
underwriting commissions and other fees and expenses payable by us in connection with the
Global Offering and assuming the Over-allotment Option is not exercised.
We intend to use the net proceeds of the Global Offering for the following purposes:
Approximately
HK$ in millions
Percentage of
Net Proceeds Future Plans
64.9 35.0% establishing new dental institutions in Central China
46.4 25.0% acquiring dental institutions in Central China
18.6 10.0% upgrading and renovating some of our existing dental
institutions
18.6 10.0% optimizing our information technology infrastructure
and information technology systems
18.6 10.0% developing our medical professional team to further
support the sustainable growth of our dental service
network
18.6 10.0% working capital and other general corporate purposes
For details, see “Future Plans and Use of Proceeds.”
SUMMARY
–2 3–


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In this prospectus, unless the context otherwise requires, the following terms shall
have the meanings set out below. Certain technical terms are explained in “Glossary of
Technical Terms.”
“Accountants’ Report” the accountants’ report of our Company for the Track
Record Period, the text of which is set out in Appendix I
to this prospectus
“AFRC” Accounting and Financial Reporting Council of
Hong Kong
“Articles of Association” the articles of association of our Company conditionally
adopted by our Shareholders on November 22, 2024 with
effect from the Listing Date, as amended 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
“Audit Committee” the audit committee of the Board
“Board” or “Board of Directors” our board of Directors
“Board of Supervisors” our board of Supervisors
“business day” a day on which banks in Hong Kong are generally open
for normal banking business to the public and which is
not a Saturday, Sunday, or public holiday in Hong Kong
“CAGR” compound annual growth rate
“Capital Market
Intermediary(ies)”
the capital market intermediary(ies) 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 4–


--- page 35 ---
“Chenzhou Hospital” Chenzhou Dazhong Furong Dental Hospital Co., Ltd. ( ₉
ʮ̡), a limited liability
company established in the PRC on December 13, 2019
and a subsidiary of our Company
“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” and the “PRC” do not apply to
Hong Kong, the Macau Special Administrative Region of
the PRC and Taiwan
“CITIC Securities Investment” CITIC Securities Investment Limited (ࠢ
ʮ̡), a limited liability company established in the PRC
on April 1, 2012 and one of our Pre-IPO Investors
“close associate(s)” has the meaning ascribed to it under the Listing Rules
“Companies (Winding up and
Miscellaneous Provisions)
Ordinance”
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
“Companies Ordinance” Companies Ordinance (Chapter 622 of the Laws of Hong
Kong), as amended, supplemented or otherwise modified
from time to time
“Company” or “our Company” Wuhan Dazhong Dental Medical Co., Ltd. (ဏɽ଺ɹഢ
ʮ̡), formerly known as Wuhan Dazhong
Dental Clinic Co., Ltd. (ʮ
̡) and Wuhan Dazhong Dental Clinic Co., Ltd. (ဏɽ
ʮ̡), established as a limited liability
company in the PRC on July 10, 2007 and converted into
a joint stock company with limited liability on
December 24, 2014
“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 Shareholder(s)” has the meaning ascribed thereto under the Listing Rules
and, unless the context otherwise requires, refers to
Mr. Y ao, Ms. Shen and Zhongshan Medical Investment
DEFINITIONS
–2 5–


--- page 36 ---
“Conversion of Unlisted Shares
into H Shares”
the conversion of 6,164,340 Unlisted Shares into H
Shares on a one-for-one basis upon the completion of
Global Offering. Filing of such conversion of Unlisted
Shares into H shares has been completed with the CSRC
on June 11, 2025 and an application for H Shares to be
listed on the Stock Exchange has been made to the Stock
Exchange
“core connected person(s)” has the meaning ascribed to it under the Listing Rules
“CSRC” China Securities Regulatory Commission ( ʕ਷ᗇՎ္ຖ
ึ)
“Customer Service Centre” the location specified by HKSCC from time to time at
which Investor Participants may give instructions (in
such form as HKSCC may require) in connection with the
HKSCC services available to them to HKSCC
“Director(s)” director(s) of our Company
“EIT” enterprise income tax
“EIT Law” PRC Enterprise Income Tax Law (ʕശɛ͏΍ձ਷Άุ
), as amended, supplemented or otherwise
modified from time to time
“Exchange Participant” a person (a) who, in accordance with the Listing Rules,
may trade on or through the Stock Exchange; and (b)
whose name is entered in a list, register or roll kept by the
Stock Exchange as a person who may trade on or through
the 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
“FIL” Foreign Investment Law of the PRC (ʕശɛ͏΍ձ਷
), as amended, supplemented or otherwise
modified from time to time
DEFINITIONS
–2 6–


--- page 37 ---
“FINI” “Fast Interface for New Issuance”, 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 market research and consulting company
“Frost & Sullivan Report” an independent market research report commissioned by
us and prepared by Frost & Sullivan for the purpose of
this prospectus
“Global Offering” the Hong Kong Public Offering and the International
Offering
“Group”, “our Group”, “our”,
“we” or “us”
our Company and its subsidiaries or, where the context so
requires (i) in respect of the periods before our Company
became the holding company of our present subsidiaries,
such subsidiaries as if they were subsidiaries of our
Company at the relevant time and (ii) where the context
refers to any time prior to its incorporation, the business
which its predecessors or the predecessors of its present
subsidiaries, or any one of them as the context may
require, were or was engaged in and which were
subsequently assumed by it
“Guide for New Listing
Applicants”
Guide for New Listing Applicants issued by the Stock
Exchange effective from January 1, 2024
“H Share(s)” Shares of the Company which an application has been
made for listing and permission to trade on the Stock
Exchange with nominal value of RMB1.00 each
“H Share Registrar” Tricor Investor Services Limited
“Hejian Baibuting” Wuhan Dazhong Hejian Baibuting Dental Out-patient
Department Co., Ltd. (ൢ௅
ʮ̡), a limited liability company established in the
PRC on August 12, 2019 and a subsidiary of our
Company
DEFINITIONS
–2 7–


--- page 38 ---
“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
“HK$” or “Hong Kong dollars” Hong Kong dollars, the lawful currency of Hong Kong
“HKSCC” Hong Kong Securities Clearing Company Limited
“HKSCC EIPO” the application for the Hong Kong Offer Shares to be
issued in the name of HKSCC Nominees and deposited
directly into CCASS to be credited to your designated
HKSCC Participant’s stock account through causing
HKSCC Nominees to apply on your behalf, including by
instructing your broker or custodian who is a HKSCC
Participant to give electronic application instructions via
HKSCC’s FINI system to apply for the Hong Kong Offer
Shares on your behalf
“HKSCC Nominees” HKSCC Nominees Limited, a wholly-owned subsidiary
of HKSCC
“HKSCC Operation Procedures” the operational procedures of HKSCC in relation to
CCASS, containing the practices, procedures and
administrative requirements relating to the operation and
functions of CCASS, 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
“Hong Kong” the Hong Kong Special Administrative Region of the
PRC
“Hong Kong Offer Shares” the 1,086,200 H Shares (subject to reallocation) being
offered by our Company for subscription pursuant to the
Hong Kong Public Offering
DEFINITIONS
–2 8–


--- page 39 ---
“Hong Kong Public Offering” the offer of the Hong Kong Offer Shares for subscription
by the public in Hong Kong (subject to the reallocation as
described in “Structure of the Global Offering”) at the
Offer Price (plus brokerage, SFC transaction levies,
AFRC transaction levy and Stock Exchange trading fees),
on and subject to the terms and conditions described in
this prospectus as further described in “Structure of the
Global Offering — The Hong Kong Public Offering”
“Hong Kong Underwriters” the underwriters of the Hong Kong Public Offering listed
in “Underwriting — Hong Kong Underwriters”
“Hong Kong Underwriting
Agreement”
the underwriting agreement dated June 26, 2025 relating
to the Hong Kong Public Offering and entered into by our
Company, our Controlling Shareholders, the Sole
Sponsor, the Sole Overall Coordinator, and the Hong
Kong Underwriters, as described in “Underwriting —
Underwriting Arrangements and Expenses — Hong Kong
Public Offering — Hong Kong Underwriting Agreement”
“IAS” International Accounting Standards
“IASB” International Accounting Standards Board
“IFRS” International Financial Reporting Standards as issued by
the IASB, which include IFRS Accounting standards, IAS
Standards and Interpretations developed by the IFRS
Interpretations Committee (IFRIC Interpretations) or its
predecessor body, the Standing Interpretations
Committee (SIC Interpretations)
“Independent Third Party(ies)” a person or entity which, to the best of our Directors’
knowledge, information, and belief, having made all
reasonable enquiries, is not a connected person of the
Company within the meaning of the Listing Rules
“International Offer Shares” the 9,775,600 H Shares initially offered by our Company
for subscription under the International Offering (subject
to reallocation) as described in “Structure of the Global
Offering”, together with, where relevant, any additional
H Shares which may be issued by our Company pursuant
to the exercise of the Over-allotment Option
DEFINITIONS
–2 9–


--- page 40 ---
“International Offering” the offer of the International Offer Shares by the
International Underwriters at the Offer Price outside the
United States in offshore transactions in accordance with
Regulation S or any other available exemption from
registration under the US Securities Act, as further
described in “Structure of the Global Offering”
“International Underwriters” the group of international underwriters 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 around the Price Determination Date by, among
others, our Company and the International Underwriters
in respect of the International Offering, as further
described in “Underwriting — The International
Offering”
“Jingzhou Dazhong” Jingzhou Dazhong Dental Medical Co., Ltd. ( ঠψɽ଺ɹ
ʮ̡), a limited liability company established
in the PRC on January 2, 2020 and a subsidiary of our
Company
“Joint Lead Managers” the joint lead managers as named in ‘‘Directors,
Supervisors, and Parties Involved in the Global
Offering’’
“Latest Practicable Date” June 21, 2025, being the latest practicable date for the
purpose of ascertaining certain information contained in
this prospectus prior to its publication
“Listing” listing of our H Shares on the main board of the Stock
Exchange
“Listing Date” the date, expected to be on or about Wednesday, July 9,
2025, on which our H Shares are listed and from which
dealings therein are permitted to take place on the Stock
Exchange
“Listing Rules” Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited, as amended,
supplemented or otherwise modified from time to time
DEFINITIONS
–3 0–


--- page 41 ---
“Main Board” the stock exchange (excluding the option market)
operated by the Stock Exchange which is independent
from and operated in parallel with the GEM of the Stock
Exchange
“MOF” Ministry of Finance of the PRC (௅)
“MOFCOM” Ministry of Commerce of the PRC ( ʕശɛ͏΍ձ਷ਠਕ
௅)
“Mr. Y ao” Mr. Y ao Xue (௛), our executive Director, chairman of
the Board and one of our Controlling Shareholders
“Ms. Shen” Ms. Shen Hongmin (ઽ) (formerly known as Shen
Hongmin ( ӏ҃ઽ)), our executive Director, vice
chairman of the Board, general manager and one of our
Controlling Shareholders
“Nanhu Dadao Out-patient
Department”
Wuhan Dazhong Dental Medical Co., Ltd. Hongshan
Nanhu Dadao Out-patient Department (ဏɽ଺ɹഢᔼ
ൢ௅), a branch of our
Company established in the PRC on October 23, 2017
“NA TCM” National Administration of Traditional Chinese Medicine
(ʕᔼᖹ၍ଣ҅)
“NDRC” National Development and Reform Commission of the
PRC (ึ)
“NEEQ” National Equities Exchange and Quotations ( Ό਷ʕʃΆ
΅ᔷᜫӻ୕)
“NHC” National Health Commission of the PRC ( ʕശɛ͏΍ձ
ึ)
“NHFPC” National Health and Family Planning Commission of the
PRC (ึ), the
predecessor of the NHC
“Nomination Committee” the nomination committee of the Board
DEFINITIONS
–3 1–


--- page 42 ---
“Offer Price” the final offer price per Offer Share (exclusive of
brokerage fee of 1%, SFC transaction levy of 0.0027%,
AFRC transaction levy of 0.00015% and Stock Exchange
trading fee of 0.00565%) of not more than HK$21.40 and
expected to be not less than HK$20.00, at which Offer
Shares are to be subscribed for and issued pursuant to the
Global Offering as described in “Structure of the Global
Offering”
“Offer Share(s)” the Hong Kong Offer Shares and the International Offer
Shares, collectively, and where relevant, together with
any additional H Shares to be issued by our Company
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 by the Sole
Global Coordinator (on behalf of the International
Underwriters) under the International Underwriting
Agreement, pursuant to which our Company may be
required to allot and issue up to an aggregate of
1,629,200 additional H Shares at the Offer Price, among
other things, as further described in “Structure of the
Global Offering”
“Overseas Listing Trial
Measures”
Trial Administrative Measures of the Overseas Securities
Offering and Listing by Domestic Companies (ྤʫΆ
) released by the
CSRC on February 17, 2023 and effective on March 31,
2023
“Partnership Program” a partnership program of our Group designed for
attracting seasoned medical professionals, as well as
administrative and marketing talents to join and work
with us, under which we mainly invite seasoned dentists
to become minority shareholders of our dental
institutions, details of which are set out in “Business —
Our Unified Management of Direct Chain — Systematic
Talent Retainment and Incentivization — Partnership
Program”
“PBOC” People’s Bank of China ( ʕ਷ɛ͏ვБ)
DEFINITIONS
–3 2–


--- page 43 ---
“People’s Congress” the legislative apparatus of the PRC, including the
National People’s Congress and all the local people’s
congresses (including provincial, municipal, and other
regional or local people’s congresses) as the context may
require, or any of them
“PRC Company Law” Company Law of the PRC ()
as amended, supplemented or otherwise modified from
time to time
“PRC GAAP” PRC Accounting Standards and Accounting Regulations
for Business Enterprise (), as
amended, supplemented or otherwise modified from time
to time
“PRC Legal Advisors” Tian Y uan Law Firm, our legal advisors as to PRC laws
“PRC Legal Advisors relating to
Data Compliance”
Tahota Law Firm, our legal advisors as to PRC laws
relating to data compliance
“PRC Securities Law” Securities Law of the PRC ()
as amended, supplemented or otherwise modified from
time to time
“Pre-IPO Investments” the pre-IPO investments in our Company undertaken by
the Pre-IPO Investors, details of which are set out in
“History, Development and Corporate Structure”
“Pre-IPO Investor(s)” the investor(s) of the Pre-IPO Investments
“Pre-IPO Restricted Share
Scheme”
the pre-IPO restricted share scheme adopted by our
Company on July 27, 2017 and amended on October 28,
2024, the principal terms of which are summarized in
“Appendix VI — Statutory and General Information —
D. Pre-IPO Restricted Share Scheme”
“Price Determination Agreement” the agreement to be entered into between our Company
and the Sole Overall Coordinator (for itself and on behalf
of the Hong Kong Underwriters) on the Price
Determination Date to record and fix the Offer Price
“Price Determination Date” the date, expected to be on or around Monday, July 7,
2025, on which the Offer Price is to be determined for the
purposes of the Global Offering
DEFINITIONS
–3 3–


--- page 44 ---
“Regulation S” Regulation S under the U.S. Securities Act, as amended
from time to time
“Remuneration Committee” the remuneration committee of the Board
“Restricted Share(s)” the Share(s) granted under the Pre-IPO Restricted Share
Scheme with transfer restrictions, which are all Unlisted
Shares as of the date of the Latest Practicable Date and
will be converted into H Shares upon the completion of
the Global Offering and the Conversion of Unlisted
Shares into H Shares
“RMB” or “Renminbi” the lawful currency of the PRC
“SAFE” State Administration of Foreign Exchange of the PRC ( ʕ
̮ි၍ଣ҅)
“SAMR” State Administration for Market Regulation of the PRC
(̹ఙ္ຖ၍ଣᐼ҅)
“STA” State Taxation Administration of the PRC ( ʕശɛ͏΍ձ
೼ਕᐼ҅)
“Series A Investment” the series A investment in our Group as described in
“History, Development and Corporate Structure”
“Series B Investment” the series B investment in our Group as described in
“History, Development and Corporate Structure”
“SFC” Securities and Futures Commission of Hong Kong
“SFO” Securities and Futures Ordinance (Chapter 571 of the
Laws of Hong Kong), as amended, supplemented or
otherwise modified from time to time
“Share(s)” shares in the share capital of our Company, with a
nominal value of RMB1.00 each, comprising Unlisted
Shares and H Shares
“Shaoyang Beita” Shaoyang Dazhong Furong Beita Dental Out-patient
Service Co., Ltd. (ʮ̡),
a limited liability company established in the PRC on
August 31, 2023 and a subsidiary of our Company
DEFINITIONS
–3 4–


--- page 45 ---
“Shaoyang Hospital” Shaoyang Dazhong Furong Dental Hospital Co., Ltd. (ڑ
ʮ̡), a limited liability
company established in the PRC on December 6, 2019
and a subsidiary of our Company
“Shaoyang Shuangqing” Shaoyang Shuangqing Dazhong Furong Dental
Out-patient Service Co., Ltd. (ژ
ʮ̡), a limited liability company established in
the PRC on September 1, 2023 and a subsidiary of our
Company
“Shareholder(s)” holder(s) of our Shares
“Sole Bookrunner” the sole bookrunner as named in ‘‘Directors, Supervisors,
and Parties Involved in the Global Offering’’
“Sole Global Coordinator” the sole global coordinator as named in ‘‘Directors,
Supervisors, and Parties Involved in the Global
Offering’’
“Sole Overall Coordinator” the sole overall coordinator as named in “Directors,
Supervisors and Parties Involved in the Global Offering”
“Sole Sponsor” Haitong International Capital Limited
“Stabilizing Manager” Haitong International Securities Company Limited
“State Council” State Council of the PRC ( ʕശɛ͏΍ձ਷਷ਕ৫)
“Stock Exchange” or “Hong
Kong Stock Exchange”
The Stock Exchange of Hong Kong Limited
“subsidiary(ies)” has the meaning ascribed to it in section 15 of the
Companies Ordinance
“substantial shareholder(s)” has the meaning ascribed thereto under the Listing Rules
“Supervisor(s)” the supervisor(s) of our Company
“Takeovers Code” The Codes on Takeovers and Mergers and Share
Buybacks, as amended, supplemented or otherwise
modified from time to time
DEFINITIONS
–3 5–


--- page 46 ---
“Track Record Period” the financial years ended December 31, 2022, 2023 and
2024
“Underwriters” the Hong Kong Underwriters and the International
Underwriters
“Underwriting Agreements” the Hong Kong Underwriting Agreement and the
International Underwriting Agreement
“United States” or “U.S.” the United States of America, its territories, its
possessions and all areas subject to its jurisdiction
“Unlisted Shares” Shares of our Company with a nominal value of
RMB1.00 each, which are subscribed for and paid up in
Renminbi, and are not currently listed or traded on any
stock exchange
“U.S. Securities Act” the US Securities Act of 1933, as amended, supplemented
or otherwise modified from time to time, and the rules
and regulations promulgated thereunder
“US$”, “USD” or “US dollars” United States dollars, the lawful currency of the United
States
“Wuhan Dazhong Hospital” Wuhan Dazhong Dental Hospital Co., Ltd. (ဏɽ଺ɹ
ʮ̡), a limited liability company established
in the PRC on May 22, 2014 and a wholly-owned
subsidiary of our Company
“Wuhan Taolin” Wuhan Taolin Management Consulting Partnership
(Limited Partnership) (၍ଣፔ༔ΥྫΆุ(ࠢ
Υྫ)), a limited partnership established in the PRC on
July 7, 2017 and an employee stock ownership platform
of our Company
“Wuhan Xinglin” Wuhan Xinglin Management Consulting Partnership
(Limited Partnership) (၍ଣፔ༔ΥྫΆุ(ࠢ
Υྫ)), a limited partnership established in the PRC on
October 17, 2014 and an employee stock ownership
platform of our Company
DEFINITIONS
–3 6–


--- page 47 ---
“Wuhan Zhulin” Wuhan Zhulin Management Consulting Partnership
(Limited Partnership) (၍ଣፔ༔ΥྫΆุ(ࠢ
Υྫ)), a limited partnership established in the PRC on
July 14, 2017 and an employee stock ownership platform
of our Company
“Xiangyang Dazhong” Xiangyang Dazhong Dental Medical Co., Ltd. ( ᑳජɽ଺
ʮ̡), a limited liability company
established in the PRC on December 24, 2019 and a
subsidiary of our Company
“Xiangyang Dazhong Out-patient
Department”
Xiangyang Dazhong Dental Out-patient Department Co.,
Ltd. (ʮ̡), a limited liability
company established in the PRC on September 15, 2017
and a subsidiary of our Company
“Xiangyang Fancheng” Xiangyang Fancheng District Dazhong Dental
Out-patient Department Co., Ltd. (ਜɽ଺ɹഢ
ʮ̡), a limited liability company established
in the PRC on January 16, 2020 and a subsidiary of our
Company
“Xiangyang Kaidi” Xiangyang Dazhong Kaidi Dental Out-patient Service
Co., Ltd. (ʮ̡), a limited
liability company established in the PRC on July 4, 2024
and a subsidiary of our Company
“Xiangyang Xiangcheng” Xiangyang Xiangcheng District Dazhong Dental
Out-patient Department Co., Ltd. (ਜɽ଺ɹഢ
ʮ̡), a limited liability company established
in the PRC on January 17, 2020 and a subsidiary of our
Company
“Xinshao Dazhong” Xinshao Dazhong Furong Dental Out-patient Service
Co., Ltd. (ʮ̡), a limited
liability company established in the PRC on December 4,
2019 and a subsidiary of our Company
“Zaoyang Hospital” Wuhan Dazhong Zaoyang Dental Hospital Co., Ltd. (؛
ʮ̡), a limited liability
company established in the PRC on March 25, 2019 and
a subsidiary of our Company
DEFINITIONS
–3 7–


--- page 48 ---
“Zhidao Capital” Wuhan Zhidao Technology Innovation V enture Capital
Partnership (Limited Partnership) (௴௴ุҳ
༟ΥྫΆุ(Υྫ)), a limited partnership established
in the PRC on April 24, 2020 and one of our Pre-IPO
Investors
“Zhongshan Medical Investment” Hubei Zhongshan Medical Investment Management
Co., Ltd. (ʮ̡), a limited
liability company established in the PRC on October 10,
2004 and one of our Controlling Shareholders
“Zhongyuan Jiupai” Hubei Zhongyuan Jiupai Industrial Investment Fund
Partnership (Limited Partnership) (ପุҳ
ΥྫΆุ(Υྫ)), a limited partnership
established in the PRC on November 23, 2016 and one of
our Pre-IPO Investors
“%” per cent
For ease of reference, the names of Chinese laws and regulations, governmental
authorities, institutions, natural persons or other entities (including our subsidiaries) have
been included in this prospectus in both the Chinese and English languages and in the event
of any inconsistency, the Chinese names shall prevail.
DEFINITIONS
–3 8–


--- page 49 ---
This glossary of technical terms contains terms used in this prospectus as they relate
to our business. As such, these terms and their meanings may not always correspond to
standard industry meaning or usage of these terms.
“All-on-4” an advanced dental implant technology that treats
customers with a fully or partially edentulous arch,
placing four implants in a single jaw to complete crown
restoration and achieve immediate loading
“average spending per
customer visit”
calculated based on dividing the revenue for the relevant
year by the number of customer visits during the same
year
“cavity” pits and fissures formed on the chewing surfaces of
molars and premolars, where food debris easily
accumulates, making these areas difficult to clean and
prone to cavities
“Central China” for the purpose of this prospectus, Hubei province,
Hunan province, Henan province and Jiangxi province
“cephalometric analysis” analyzing images obtained from X-ray cephalometric
radiography. Specific landmarks of the teeth, jaws and
craniofacial structures are outlined, and various lines and
angles are measured during the analysis. This analysis
provides insights into the structure of the soft and hard
tissues of the teeth, jaws and craniofacial region,
allowing the examination and diagnosis to extend beyond
surface morphology to the internal skeletal structure
“Class II dental hospital” according to the Basic Standards of Medical Institutions
(ᔼᐕዚ࿴ਿ͉ᅺ๟) issued by the NHFPC on June
12, 2017, Class II dental hospital are specialized medical
institutions that primarily provide dental services. Class
II dental hospital shall comply with relevant requirements
such as the number of medical professionals and dental
chairs
“COVID-19” coronavirus disease 2019, a disease caused by a novel
virus designated as severe acute respiratory syndrome
coronavirus-2
GLOSSARY OF TECHNICAL TERMS
–3 9–


--- page 50 ---
“dental bridge” fixed dental prostheses, a type of prostheses used to
permanently replace missing teeth by attaching artificial
teeth to adjacent teeth or dental implants. The natural
teeth or implants at one or both ends of the edentulous
gap serve as abutments (similar to bridge supports), on
which retainers are fabricated to hold the prosthesis. The
retainers and artificial teeth form a single or multi-unit
restoration that is secured to the abutments with dental
cement. This type of prostheses cannot be removed by the
customer
“dental calculus” calcified dental plaque, primarily composed of calcium
and phosphorus mineral salts, forms through the
deposition of calcium phosphate mineral salts within and
between the microbial remnants that once resided on the
tooth surface or denture surface. Dental calculus requires
professional cleaning for removal to avoid gum diseases
“dental crown” an artificial replacement that restores missing tooth
structure by surrounding the remaining coronal tooth
structure, or being placed on a dental implant. It is made
of metal, ceramic or polymer materials or a combination
of such materials. It is retained by luting cement or
mechanical means
“dental institution” a dental service institution with a valid Medical
Institution Practicing License or a valid Clinic Filing
Notice (ኯᗇ) to engage in the provision of
dental services
“dental plaque” a biofilm of microorganisms, such as bacteria and fungi,
which grows on surfaces within the mouth. It is a sticky
colorless deposit in initial and becomes brown or pale
yellow when it forms tartar
“direct chain model” under the direct chain model, chain institutions are
wholly owned or having the majority of equity interests
controlled by the headquarters, operating under the
unified management and direct supervision of the
headquarters
“GFA” gross floor area
GLOSSARY OF TECHNICAL TERMS
–4 0–


--- page 51 ---
“medical incident” a claim addressed to a medical institution or medical
professional, alleging violations of the applicable laws,
regulations, government rules, treatment standards or
protocols during the treatment that resulted in harm to the
patient due to negligence
“Medical Insurance Designated
Medical Institutions”
medical institutions that voluntarily enter into medical
insurance agreements with the administrative authorities
in regions covered by public medical insurance programs
to provide designated services for insured customers
participated in public medical insurance programs
“multi-site practice dentist” licensed dentists registered with the health administrative
authorities and practice at two or more medical
institutions
“public medical insurance
programs”
primarily include the Urban Employee Basic Medical
Insurance Scheme (ܓand the
Basic Medical Insurance Systems for Urban and Rural
Residents (ܓ)
sq.m.” square meters
“V-II-V technique” an advanced dental technology that leverages vertical and
angled implantology approaches, as well as trans-
pterygoid approaches to provide implantology services
for edentulous customers with severe maxillary bone
defects
GLOSSARY OF TECHNICAL TERMS
–4 1–


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This prospectus contains certain forward-looking statements representing our goals,
expectation and views of future events, and actual results or outcomes may differ materially
from those expressed or implied. Such forward-looking statements are subject to certain risks,
uncertainties and assumptions. Forward-looking statements typically can be identified by the
use of words such as “will,” “would,” “estimate,” “expect,” “anticipate,” “plan,” “aim,” “going
forward,” “believe,” “may,” “intend,” “ought to,” “continue,” “project,” “should,” “seek,”
“potential” and the negative of these words and other similar expressions. Although we believe
that our expectations are reasonable, we can give no assurance that these expectations will
prove to have been correct, and actual results may vary materially.
These forward-looking statements include, but are not limited to, statements relating to:
 our business and operating strategies and the various measures we use to implement
such strategies;
 our operations and business prospects, including development plans for our existing
and new businesses;
 the future competitive environment for the industry which we operate in;
 the regulatory environment as well as the general industry outlook for the industry
which we operate in;
 future developments and fluctuation in the industry which we operate in;
 general economic trends in which we operate our business;
 our ability to control costs and expenses;
 our dividend policy;
 capital market developments;
 the actions and developments of our competitors;
 change or volatility in interest rates, equity prices, volumes, operations, margins,
risk management and overall market trends; and
 all other risks and uncertainties described in the section headed “Risk Factors.”
Forward-looking statements may and often do differ materially from actual results. Any
forward-looking statements in this prospectus reflect our management’s current view with
respect to future events and are subject to risks relating to future events and other risks,
uncertainties and assumptions. See “Risk Factors,” “Business” and “Financial Information” for
more details.
FORW ARD-LOOKING STATEMENTS
–4 2–


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Should one or more of these risks or uncertainties materialize, or should the underlying
assumptions prove to be incorrect, our financial condition may be adversely affected and may
vary materially from the goals we have expressed or implied in these forward-looking
statements. Except as required by applicable laws and regulations, including the Listing Rules,
we undertake no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. Accordingly, investors
should not place undue reliance on any forward-looking information. In this prospectus,
statements of or references to our intentions or those of our Directors are made as of the date
of this prospectus. Any such intentions may change in light of future developments.
FORW ARD-LOOKING STATEMENTS
–4 3–


--- page 54 ---
An investment in our H Shares involves various risks. You should carefully consider
all the information in this prospectus and in particular the risks and uncertainties
described below before making an investment in our H Shares.
The occurrence of any of the following events could materially and adversely affect
our business performance, financial condition, results of operations or prospects. If any
of these events occur , the trading price of our H Shares could decline and you may lose
all or part of your investment. You should seek professional advice from your relevant
advisors regarding your prospective investment in the context of your particular
circumstances.
RISKS RELATING TO OUR BUSINESS AND INDUSTRY
We operate in a highly competitive industry and such industry experienced dampened
growth and fluctuation in recent years. If we do not compete successfully against existing
or new competitors, our business, financial condition and results of operations may be
materially and adversely affected.
We operate in the dental services industry in China, which is highly competitive with over
107 thousand dental institutions as of December 31, 2024. We primarily compete with dental
hospitals, out-patient departments and clinics as well as dental departments in general hospitals
located in the same geographic regions as our dental institutions. In particular, as a private
dental services provider, we also compete with public dental services providers, which have
been dominating the industry with more resources and higher recognition. In terms of total
revenue in 2024, we took a market share of only 0.4% in the private dental services industry
in China. With the rapid development of the private dental services industry in China, we
expect new market entrants to such industry will continue to increase and they will compete
against us in the future. Some of our competitors may have greater medical experience, or
better marketing, financial and other resources than we do. There could be significant
consolidation and mergers among certain of our competitors. Our competitors may develop
alliances, and these alliances may acquire significant market share with rich resources.
Dental services providers in Central China faced dampened growth and experienced
fluctuation in revenue in recent years as a result of (i) the restricted offline activities during
the spread of COVID-19 pandemic; (ii) customers’ consumption downgrade caused by
slower-than expected post-pandemic economic recovery; (iii) the normalization of dental
service demands following the temporary post-pandemic surge; and (iv) fierce competition
among both private and public dental services providers under the challenging market
conditions. Despite a general increase at a CAGR of 11.4% from 2020 to 2024, the market size
of the dental services market in Central China in terms of revenue generated by dental services
providers in Central China experienced decreases in 2020 and 2022, due to the COVID-19
pandemic. In addition, as the post-pandemic economic recovery is slower than expected, the
dental services market in China is estimated to experience dampened growth in its market size.
RISK FACTORS
–4 4–


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We primarily compete on the following key factors: quality of dental services, service
experience, medical resources, especially seasoned dentists, brand influence, customers’
accessibility, as well as pricing. For instance, in response to the downward pricing pressure
brought by fierce market competition and centralized procurement policies, we made timely
pricing adjustments on our implantology services, which reduced the fees for implantology
services by approximately 25% to 40% across all of our dental institutions in mid-2023,
leading to a decrease in average spending per implant tooth in 2024 as compared to 2023. In
addition, we made price reduction of approximately 15% to 20% to certain orthodontics
services using clear aligners in response to customers’ consumption downgrade during the
slower-than-expected post-pandemic economic recovery, leading to decline in the average
spending per customer visit for orthodontics services from 2023 to 2024. We cannot assure you
that we will be able to successfully compete against existing or new competitors, and changes
in the competitive landscape and macroeconomic conditions may result in downward pressure
on pricing, reduced customer visits, reduced profitability or loss of market share, any of which
could materially and adversely impact our results of operations and business prospects.
We operate in a strictly regulated industry with strict compliance requirements in health,
safety and environmental laws and regulations, and are subject to on-going compliance
costs.
The dental services industry in China is heavily regulated. Our operations are subject to
various laws and regulations. These laws and regulations mainly cover (i) licensing and
management of dental institutions; (ii) licensing of dentists and other medical professionals;
(iii) procurement and use of dental devices and pharmaceuticals; (iv) quality and pricing of
dental services; (v) collection and storage of customers’ personal information and data privacy
protection; (vi) anti-corruption and anti-bribery; and (vii) discharge and disposal of medical
waste generated from operations and occupational health. See “Regulatory Overview” for
details of laws and regulations that we are subject to. In addition, licenses or permits of our
dental institutions are subject to periodic renewal requirements and inspections by the relevant
government authorities. See “— If we fail to timely renew any existing licenses, permits or
certificates or fail to obtain any licenses, permits or certificates for our newly commenced or
acquired business, we may not be able to maintain or develop our business” for details.
Furthermore, any change in applicable laws and regulations, or any change of interpretation
thereof, could require us to obtain additional licenses, permits, approvals or certificates, or
result in the invalidation of our existing licenses, permits, approvals or certificates, or result
in us being regarded as not in compliance with the relevant laws and regulations thereby
subjecting us to penalties and/or other legal consequences. Meanwhile, keeping compliant with
applicable laws and regulations may force us to make adjustments on our existing operations
and management measures and increase our operating costs, which may in turn reduce our
profit margins.
If we cannot meet relevant requirements under the evolving laws or interpretations of the
laws that regulate us, we could be subject to disciplinary warnings and administrative
penalties, which may in turn materially and adversely affect our business, results of operations,
financial condition and prospects.
RISK FACTORS
–4 5–


--- page 56 ---
Centralized procurement policies may further affect the pricing of our implantology
services, which may in turn affect our financial condition and results of operations.
PRC laws and regulations set pricing controls and price ceilings on certain dental services
and dental consumables, which could in turn affect our profit margins and results of operations.
In recent years, the PRC government has been propelling the centralized procurement of dental
implants and strengthening the pricing supervision of dental institutions’ implantology
services, which has impacts on the pricing of dental implantology consumables and services
across the dental services industry in China.
The PRC government promulgated the Notice on Conducting Special Governance of
Medical Service Charges and Consumable Prices for Dental Implants (ɹഢ၇ಔᔼ
) and the Notice on Effectively Implementing
Centralized Procurement and Price Management of Pharmaceuticals in 2023 (ਂλ2023
) in September 2022 and February 2023,
respectively. Such policy is mandatory for public dental institutions, while serving as the
pricing guidance and encouragement for private dental institutions. Meanwhile, as public
dental institutions adjust their implantology service prices in response to such policy, private
dental institutions may correspondingly adjust their prices to meet policy expectations and
address the downward pricing pressure to maintain market competitiveness. In the first quarter
of 2023, the Hunan Notice and Hubei Notice were promulgated at the provincial level.
Following the implementation of centralized procurement policies and fierce market
competition under the downward pricing pressure brought by such policies, we reduced the
prices of our implantology services by approximately 25% to 40% across all of our dental
institutions in mid-2023. As a result, the average spending per implant tooth decreased from
RMB8,460 for the year ended December 31, 2022 to RMB6,004 for the year ended December
31, 2023, and further to RMB5,767 for the year ended December 31, 2024. The implementation
of centralized procurement policies may exert additional pressure on the pricing structure of
our implantology services. For further details of centralized procurement policies, see
“Regulatory Overview — Regulations on the Reform of Medical Institutions” and “Business
— Pricing.”
We cannot predict changes in the pricing guidelines, price ceilings and/or cost-plus
ceilings in the future or if any additional dental services provided by us may become subject
to centralized procurement policies, which may cause pressure on the pricing of our dental
service network. Moreover, if we fail to respond to changes in the pricing guidelines, price
ceilings and/or cost-plus ceilings in a timely manner by adjusting our pricing policies or
service matrix, our competitiveness in the industry, our business operations and prospects may
be adversely affected.
RISK FACTORS
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--- page 57 ---
Dental services, especially implantology and orthodontics services, may not be regarded
as essential treatments by the general public during the economic downturn. If our dental
institutions are unable to continue to attract and retain customers, foster superior
customer experience and maintain customer trust, our business, financial condition and
results of operations may be materially and adversely affected.
Over years of operations, we have accumulated a broad customer base and a trustworthy
reputation. However, uncertainties in macroeconomic environment could adversely affect
residents’ disposable income and consumption power, presenting challenges to the customer
acquisition of dental services providers like us. Moreover, orthodontics and implantology
services are typically non-essential disease-driven dental treatments, as such services generally
focus more on enhancing personal appearance and life quality. Due to the service nature,
demands for our orthodontics and implantology services are vulnerable to residents’ disposable
income and their willingness to pay for improving personal appearance. V ariations in
macroeconomic conditions could adversely impact customers’ consumption power and
willingness on non-essential dental services, which may reduce market demands for such
services, resulting in material adverse impacts on our business, results of operations and
prospects.
Apart from the macroeconomic conditions, our ability to continue to attract and retain
customers is affected by the quality and service experience of our dental services and the fame
and expertise of medical professionals practicing at our dental service network, which requires
us to constantly understand the latest market trends and preferences, keep pace with both
technological and regulatory development in local regions and attract and retain experienced
medical professionals, maintain stable dental supplies, cultivate intimate service experience to
customers throughout the whole course of their visits in our dental institutions and offer
flexible payment options. We shall also pay attention to the management of customer
relationships through both offline and online channels. Reaching these goals not only requires
rich industry expertise and experience in operating dental hospitals, out-patient clinics and
clinics, but also depends on numerous factors beyond our control. In particular, we generally
have limited control over the operations of third-party suppliers and the practice of medical
professionals practicing at our dental institutions. Their failure to ensure high-quality supplies
or appropriate dental services may adversely affect our customers’ willingness to purchase
dental services from us, which may damage our reputation and cause us to lose trust among
customers. If we cannot continue to provide high-quality dental services and maintain
customers’ trust in us, or fail to meet the customers’ expectations on our service offerings, we
may not be able to retain our existing customers or attract new customers.
Meanwhile, any perceived inadequacy or inconvenience of dental services in our dental
institutions, such as longer waiting time than expected at peak times, uncomfortableness during
the dental treatments or misleading or indifferent responses to customers’ inquiries, customer
experience would be materially and adversely affected, which may lead to customer
unsatisfaction. Any negative feedback on our customer services may harm our brand image and
cause loss of customers, which may in turn materially and adversely affect our business, results
of operations, financial condition and prospects. Under such circumstances, our
competitiveness and market share could also be adversely affected.
RISK FACTORS
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--- page 58 ---
Regulatory pricing controls under the public medical insurance programs may further
affect the pricing of dental services provided by our Medical Insurance Designated
Medical Institutions, which may in turn affect our financial condition and results of
operations.
Our dental institutions which are Medical Insurance Designated Medical Institutions are
required to set the prices for dental services and dental consumables covered by the public
medical insurance programs in accordance with the pricing guidelines adopted under such
programs. For instance, local government authorities mandate Medical Insurance Designated
Medical Institutions in Wuhan to comply with centralized procurement policies under their
medical insurance service agreements with local government authorities.
We cannot predict changes in the pricing guidelines under the public medical insurance
programs in the future or if any dental services provided by our Medical Insurance Designated
Medical Institutions may become subject to more stringent medical insurance reimbursement
limits. Any of these events could lead to pressure on the pricing of our Medical Insurance
Designated Medical Institutions, which may in turn affect our financial condition and results
of operations.
If our dental institutions are unable to retain, attract and motivate sufficient qualified
dentists and other medical professionals, or if we fail to properly manage the employment
and service of the dentists and other medical professionals of our dental institutions, our
business and results of operations could be materially and adversely affected.
Our future success depends on our ability to retain, attract and motivate a sufficient
number of qualified and experienced medical professionals, especially dentists. Medical
professionals are essential in supporting our thriving dental service network, offering
high-quality dental services and cultivating stable relationships with customers. Our ability to
retain, attract and motivate a high-caliber and stable team of dentists and other medical
professionals will continue to have substantial influence on the operational and financial
performance of our dental service network. The competition for medical professionals,
especially qualified seasoned dentists, is intense in the dental services industry in China. The
supply of qualified dentists is limited due to the length of training required, including academic
study and clinical training, which can take up to eight years or even longer for certain dental
specialties. Based on our past experience, seasoned dentists generally consider the following
key factors when selecting dental institutions to practice at, including the brand influence and
reputation, compensation, shareholding structure and level of participation in the management
of the dental institutions, corporate culture, location, the number of customer visits, the
deployment of dental devices and supporting staff, among others. Our dental institutions may
not compete favorably with our competitors in respect of one or more of these factors, and our
dental institutions may not be able to attract or retain a sufficient number of qualified medical
professionals we desire.
RISK FACTORS
–4 8–


--- page 59 ---
Meanwhile, multi-site practice dentists practice at our dental institutions pursuant to the
liberated physician registration regulation. Such dentists are entitled to provide dental services
in our dental service network after completing the multi-site practice registration. If the
relevant government authorities promulgate new regulations to change such practices in the
future, our dental institutions may not be able to retain such multi-site practice dentists. If our
dental institutions are unable to timely recruit or retain seasoned and qualified dentists at
reasonable compensation level, our business, results of operations and financial condition may
be adversely affected.
The success of our business depends on our reputation and brand image. Any negative
publicity about us, any of our dental institutions, dentists or other medical professionals
practicing at our dental service network, the dental services industry or the general
healthcare industry could harm our reputation and brand image, which could materially
and adversely affect our business and prospects.
Our business success depends on our reputation and brand image. In particular, we
believe that the wide awareness and acceptance of our brand name in Central China, especially
Hubei province, have been playing an important role in our positioning and promotion of our
dental services.
We highly value our reputation and brand image in the geographic regions where we
operate. Negative publicity involving us, our dental services, our dental institutions, medical
professionals practicing at our dental service network, or the dental services industry could
adversely harm our reputation and brand image. Such negative publicity could also deteriorate
the level of market acceptance of our dental services, customers’ trust in us as well as our
ability to attract and recruit seasoned medical professionals among different dental specialties,
thereby leading to reduced customer visits and loss of medical professionals and other staff.
Such negative publicity may also result in the diversion of management’s attention, and
government investigations or other forms of scrutiny, which could materially and adversely
impact our business, results of operations, financial condition and prospects.
We may not be able to conduct our branding and promotion activities effectively, properly
or at reasonable costs. Compliance with medical advertising laws, rules and regulations
may be difficult, and any non-compliance could subject us to penalties.
We continuously conduct branding and promotion activities through both offline and
online channels, enhancing our brand exposure to the general public and cultivating a
trustworthy brand image. However, our branding and promotion activities may not always be
well received and may not result in the improvement in our operational and financial
performance that we anticipated. The effectiveness of branding measures in the local
communities is influenced by multiple factors beyond our control, such as the variations in the
local economic and social conditions and the changes in the preferences and spending power
of local residents. Meanwhile, customer acquisition measures have been evolving in the dental
services industry, which may further require us to adjust our existing measures to keep up with
the industry developments. Failure to identify proper customer acquisition measures
accommodating to the local conditions in a timely and cost-efficient manner could adversely
affect our business, results of operations and financial condition.
RISK FACTORS
–4 9–


--- page 60 ---
Additionally, we are obligated to ensure all of our advertising content complies with the
applicable PRC laws and regulations. For advertisements related to certain types of services,
we are required to confirm that the advertisers have completed filings with local authorities and
obtained all requisite government approvals. According to the applicable PRC laws and
regulations, dental institutions need to obtain a Medical Advertisement Examination Certificate
(׼before publishing a medical advertisement. Violation of these regulations
may result in a variety of penalties against the non-compliant medical institution, including
rectification, warnings, and in case of material violation, suspension of operations, revocation
of relevant permits to engage in the provision of specific healthcare services, and the
revocation of the Medical Institution Practicing License of such medical institution. In
addition, if the content of the published advertisement deviates from what is approved and
documented in the Medical Advertisement Examination Certificate, the competent authority
may revoke the Medical Advertisement Examination Certificate and suspend any application
for advertisement examination for one year.
Moreover, government actions and civil claims may be filed against us for misleading or
inaccurate medical advertising. We may have to spend significant resources in defending
against such actions, which may cause diversion of our management’s attention and
interruptions to our business operations.
Our revenue fluctuated during the Track Record Period and our revenue stream generally
depends on a number of factors, many of which are beyond our control.
Our revenue fluctuated during the Track Record Period. Our revenue increased by 7.9%
from RMB409.4 million in 2022 to RMB441.8 million in 2023. However, from 2023 to 2024,
our revenue decreased by 7.9% from RMB441.8 million to RMB407.1 million.
Our revenue stream generally depends on a number of factors, many of which are beyond
our control, including the macroeconomic environment, customers’ consumption intention,
changing regulatory and social conditions, public health events, as well as local competitive
landscapes. Our ability to retain and attract dentists and other medical professionals, expand
our customer base, and implement our business strategies are materially affected by such
factors. There can be no assurance that our revenue will not fluctuate in the future. Moreover,
our future development is also subject to other factors that cannot be fully predicted and may
have a material adverse impact on our business, financial condition, results of operations and
prospects.
In addition, our business expansion is also affected by our ability to manage dental
institutions at different development stages. Dental hospitals, out-patient departments and
clinics at any development stage may underperform and thus adversely impact our overall
results of operations. Failure to strike a balance between our business expansion and
profitability by effectively managing the number of our dental institutions at different stages,
our business, financial condition and results of operation would be materially and adversely
impacted.
RISK FACTORS
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--- page 61 ---
We recorded net current liabilities as of December 31, 2023 and 2024 and we cannot
assure you that we will not record the same in the future.
As of December 31, 2023 and 2024, we recorded net current liabilities of RMB0.3 million
and RMB13.5 million, respectively. See “Financial Information — Discussion of Certain Key
Items from Consolidated Statements of Financial Position” for details of our net current
liabilities during the Track Record Period. The net current liabilities position would expose us
to liquidity risk which could restrict our ability to make necessary capital expenditures or
explore business opportunities, and our business, results of operations and financial condition
could be materially and adversely affected.
There can be no assurance that we will not have net current liabilities in the future. We
cannot assure you that we will always be able to raise necessary funding to finance our current
liabilities and other debt obligations. Our ability to arrange financing and the cost of such
financing are both dependent on the macroeconomic conditions, capital and debt market
conditions, lending policies of banks, among other factors. In the event we are unable to obtain
adequate financing to meet our working capital requirements, we may be forced to delay,
adjust, reduce or even abandon our business strategies. Our business, prospects and financial
condition may be materially and adversely affected if our cash flow and capital resources are
insufficient to finance our debt obligations.
We have recognized a large amount of goodwill. If our goodwill was determined to be
impaired, it may adversely affect our results of operations and financial position.
We measure our goodwill initially at cost, being the excess of the aggregate of the
consideration transferred, the amount recognized for non-controlling interests and any fair
value of our previously held equity interests in the acquiree over the identifiable net assets
acquired and liabilities assumed. The carrying value of our goodwill was RMB63.1 million as
of December 31, 2022, 2023 and 2024, accounting for 13.7%, 12.8% and 16.7% of our total
assets as of the same dates, respectively.
We conduct impairment reviews annually or more frequently if events or changes in
circumstances indicate that the carrying value may be impaired. For the purpose of impairment
testing of goodwill, we allocate goodwill to a group of cash-generating units (“ CGUs ”). Such
group of CGUs represents the lowest level within our Group, for which the goodwill is
monitored for internal management purpose. We determine impairment by assessing the
recoverable amount of the group of CGUs to which the goodwill relates. Where the recoverable
amount of the group of CGUs is less than the carrying amount, we recognize an impairment
loss. During the Track Record Period, we did not record any impairment loss on our goodwill.
For details of our accounting policies for goodwill and goodwill impairment, key assumptions
used on impairment testing of our goodwill, see Note 2.3 and Note 15 to the Accountants’
Report in Appendix I to this prospectus.
RISK FACTORS
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There are inherent uncertainties relating to the factors in relation to the assessment of
goodwill impairment that might adversely affect our business operations, or under
circumstances where we might fail to sustain growth as well as the gross profit margin we have
estimated. If we were required to recognize material impairment charges due to significant
adverse changes in factors in relation to the assessment of goodwill impairment, our net profit
in the corresponding period might be substantially affected. In addition, goodwill impairment
might also adversely affect our financial position and all types of financing activities due to its
negative impact on our financial ratios.
We may not be able to identify expansion opportunities or execute our expansion plans
and our expansion strategies are subject to uncertainties and risks. This may materially
and adversely affect our business, financial condition, results of operations and prospects.
Going forward, we seek to further upscale our dental service network, improve our
service capacity and deepen our market penetration in Central China. In particular, in the next
5 years, we plan to expand our network by establishing approximately 80 to 100 new dental
institutions, each equipped with 6 to 20 dental chairs, and acquire an additional approximately
40 to 65 dental institutions, each equipped with 6 to 20 dental chairs, in Central China. See
“Future Plans and Use of Proceeds” for details. We will also further improve talent cultivation
system to promote the organic growth and talent introduction of experienced dentists. In
addition, we expect to strengthen our influence in the industry by enhancing brand promotion
and optimizing the service experience. With the development of our informatization and
digitalization capabilities, we expect to further modernize the operation and management of
our business in the future. See “Business — Business Strategies.” There remain uncertainties
on whether we could timely and properly realize our expansion as expected. Our management
may spend significant time and resources in initiating and adopting specific plans to implement
our future strategies.
With the expansion of our business, our operations have become increasingly complex in
terms of the scale and location of business we operate. Future expansion may increase the
complexity of our operations and cause strain on our managerial, operational, financial and
human resources. We may have to spend extra efforts to upgrade our existing internal
procedures and measures to support our future operations. In particular, the lack of familiarity
with the local communities in new geographic regions covered by our dental service network
and the corresponding promotion methods could make it difficult for us to anticipate customer
demands and preferences. It may be difficult for us to strengthen our competitiveness and
achieve profitability in the new regions and our profit margin, if any, may be lower than
expected, which would adversely affect our overall profitability and results of operations.
We may not be able to replicate our success in the past to our new businesses. Moreover,
we cannot assure you that we will be able to recoup our investments in introducing new
services. The anticipated benefits to be generated from our expansion efforts are based on
assumptions that may prove to be inaccurate. Furthermore, we may not be able to successfully
complete our business growth initiatives, strategies and plans and realize all of the benefits that
we expect to achieve, or it may be more costly than we anticipated. If, for any reason, the
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benefits we realize are less than our previous assumptions, or the implementation of these
growth initiatives, strategies and plans adversely affect our operations or cost more or take
longer to effectuate than we expected, or if our assumptions are proved to be inaccurate, our
business, financial condition and results of operations may be materially and adversely
affected.
Establishing new dental institutions involves multiple risks and could cause fluctuations
in our short-term financial performance. Dental institutions newly commenced operations
may not achieve normal operation as anticipated, which could materially and adversely
affect our business and results of operations.
Our operating results have been, and in the future may continue to be, affected by the
timing of establishing and opening new dental institutions, the number of new dental
institutions opened and the selection of proper geographic locations.
We generally incur substantial expenses before new dental institutions’ commencement of
operations, mainly in terms of construction or property leasing, renovation, medical
professional recruitment and procurement of dental devices and pharmaceuticals for
operations. New dental institutions generally have lower income and higher operating costs
during their initial stages of operations. It typically takes newly opened dental institutions a
period of time to achieve a utilization rate comparable to the existing ones, due to factors such
as the time needed to integrate the operations of such dental institutions into our existing dental
service network and to cultivate customer awareness in the local communities. The operating
results generated at the newly opened dental institutions may not be comparable to the
operating results generated at any of the existing ones. New dental institutions may even
operate at a loss, which could adversely affect our results of operations. Accordingly, the
number and timing of new dental institutions’ establishment and commencement of operations
have, and may continue to have, a significant impact on our profitability. Our results of
operations may fluctuate significantly from period to period due to the offline business
expansion. Y ear-to-year comparisons of our operating results during the Track Record Period
may not be meaningful and you should not rely on them to predict the future performance of
our operating results.
Moreover, if we are unable to effectively deal with the following uncertainties associated
with establishing new dental institutions, we may not be able to expand our business in a timely
and cost-efficient manner:
 difficulties in selecting desirable locations and determining the proper operational
scale and type of dental institution (i.e. hospital, out-patient department or clinic) to
be established based on the market research;
 recruiting dentists at proper level of compensation in new regions;
 providing suitable dental service offerings accommodating the local customers’
preferences and remaining competitive in local communities;
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 obtaining all requisite approvals, permits, licenses or certificates in a timely manner,
as the establishment of dental hospitals, out-patient departments and clinics in the
PRC require various government approvals, permits, licenses or certificates; and
 integrating the newly established dental institution into our existing dental service
network to realize centralized and standardized management.
Inability or material delay in managing the above uncertainties or any substantial increase
in costs to ramp up operations and utilization of the new dental institutions could cause an
adverse impact on our financial performance and business prospects.
We may not be able to complete future acquisitions or enhance post-acquisition
performance as expected, which could adversely affect our business, financial condition
and prospects.
Apart from establishing new dental institutions, we also expanded our dental service
network through acquisitions during the Track Record Period. In the future, we may continue
to acquire suitable targets when appropriate opportunities arise. Our limited track record and
experience in acquiring dental institutions make it challenging to predict the future
performance of our acquisitions. We are exposed to various risks and uncertainties during and
after implementing our future acquisition plans, in particular:
 failure to identify suitable acquisition targets or have to engage in intense
competition for certain suitable acquisition targets, resulting in acquisitions on
terms less commercially favorable to us;
 failure to obtain sufficient financing on acceptable terms to us or at all, to fund such
acquisitions;
 failure to timely obtain the applicable regulatory approvals to consummate the
planned acquisitions;
 failure to integrate the acquired dental institution into the existing dental service
network;
 failure to establish customer awareness in the local community and timely make the
acquired dental institution achieve a utilization rate comparable to the existing ones;
 failure to adapt to the local customer preferences and regulatory environment in new
geographic regions; and
 failure to operate cost-effectively, generate revenue or improve profitability as
anticipated from the acquired businesses. Under such circumstances, the acquired
dental institutions may incur losses, which could adversely affect our results of
operations.
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Furthermore, the process of pursuing and implementing acquisitions as well as integrating
and managing acquired businesses, whether or not successful, could divert our resources and
management attention from our existing business.
In addition, there can be no assurance that due diligence before acquisitions will uncover
all administrative penalties and the corresponding background information relating to our
acquisition targets for activities before our acquisition. Acquisition targets may have unknown
or contingent liabilities, including liabilities for failure to comply with evolving requirements
or interpretations of the applicable laws, regulations and policies. If any acquired dental
institution was subject to any administrative penalties due to incidents that happened prior to
our acquisition, we may also suffer reputational or even financial harm. Moreover, some
acquisition targets may face inferior services or perceived harm to customers that occurred
prior to our acquisition. The occurrence of such actual or alleged events may also subject us
to reputational and financial harm. We may have to spend extra time and efforts to respond to
claims initially as dissatisfied customers will likely pursue their claims against the acquisition
targets and us.
If we are unable to implement acquisitions or enhance post-acquisition performance, or
if we suffer reputational or financial harm caused by unknown or contingent liabilities of the
acquisition targets, our business and prospects could be adversely affected.
Changes in regulatory regime for the healthcare industry, particularly changes in policies
in relation to the dental services industry, could materially affect our business operations
and future expansion.
China’s regulatory regime for the healthcare industry is constantly developing, which may
affect the way we operate business in the industry. We expect new laws and regulations may
be further released to regulate participants in the healthcare industry. The existing PRC laws
and regulations applicable to the healthcare industry may be amended or replaced with the
development of the regulatory environment. In addition, the laws and regulations may also be
subject to further interpretation and enforcement and are evolving. Further amendments and
changes or further interpretation and enforcement of laws and regulations could require us to
obtain additional licenses, permits or approvals, broaden the scope of liabilities relating to
medical incidents, increase our operating costs and expenses, or even result in the invalidation
of our existing licenses, permits or approvals. With the development of China’s regulatory
regime for the healthcare industry, there may be strengthened supervision over medical
institutions and more stringent requirements on the provision of healthcare services and use of
medical consumables and medical devices. We will closely monitor the legislative progress to
ensure our compliance. Moreover, our business operations and future expansion could be
materially affected by government policies, which may be subject to further amendments and
changes. If we are found to be non-compliant with any of the applicable laws, regulations or
government policies, we may face penalties, including suspension of operations and even
revocation of operating licenses, depending on the nature of the findings, any of which could
materially and adversely affect our business, results of operations and financial condition.
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Additionally, future regulatory developments may change the coverage, reimbursement
rates or the payment processing cycle under the public medical insurance programs. Any of
such events could have an adverse impact on our business, results of operations and financial
condition. See “— Our dental institutions derive a portion of revenue from public medical
insurance programs. Any failure to remain eligible for public medical insurance coverage, or
any non-payment or delayed payment under public medical insurance programs could
adversely affect our results of operations and financial position.”
If we fail to timely renew any existing licenses, permits or certificates or fail to obtain any
licenses, permits or certificates for our newly commenced or acquired business, we may
not be able to maintain or develop our business.
Our dental institutions are required to obtain various licenses, permits and certificates for
their operations, in particular, Medical Institution Practicing License ( ᔼᐕዚ࿴ੂุ஢̙ᗇ)o r
Clinic Filing Notice (ኯᗇ), as applicable. In addition, our dental institutions that
operate the dental devices containing radioactive materials or emit radiation during operation
are required to obtain Radiation Safety Permit (τΌ஢̙ᗇ) and Radiodiagnosis and
Radiotherapy Permit (ൢᐕ஢̙ᗇ). Under the applicable PRC laws and regulations,
licenses, permits or certificates of our dental institutions are subject to periodic renewal
requirements and inspections by the relevant government authorities. See “Business —
Licenses, Permits and Certificates” for more details. If our dental institutions fail to obtain or
timely renew any major license, permit, certificate or approval requisite for operations, or if
dentists or other medical professionals practicing at our dental institutions become unlicensed
at any time during their practices, we may face penalties, suspension of operations or even
revocation of operating licenses, depending on the nature of the incidents, any of which could
materially and adversely affect our business, financial condition and results of operations. In
addition, we are required to obtain a series of licenses, permits, certificates or approvals for our
newly commenced or acquired business, such as those in relation to environmental protection
and radiation safety, failure to comply with which may subject us to the corresponding
administrative penalties, including suspension of operations under the worst-case scenario.
The demands for our dental services are affected by the disposable income of our
customers and their willingness to pay for oral health and personal appearance, which are
vulnerable to variations in the macroeconomic environment.
Our dental services are affected by the disposable income of residents and their
willingness to pay for oral health and personal appearance, which are vulnerable to variations
in the macroeconomic environment. In particular, orthodontics services are generally not
covered by the public medical insurance programs. The demand for such dental services is
typically affected by local residents’ willingness to spend on oral health to improve personal
appearance, which would depend on the disposable income of local residents, thus being more
vulnerable to the variations in macroeconomic environment. For the years ended December 31,
2022, 2023 and 2024, revenue from orthodontics services amounted to RMB80.2 million,
RMB81.8 million and RMB74.1 million, respectively, representing 19.6%, 18.5% and 18.2%,
respectively, of our total revenue for the same years.
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Any decrease in the local residents’ affordability of and willingness to pay for dental
services may lead to reduced customer visits to our dental institutions, which in turn could have
material adverse impacts on our business, results of operations and prospects.
If we are unable to keep up with the latest technological developments or market trends
in the dental services industry, we will not be able to compete effectively, which may
adversely affect our business, financial condition and results of operations.
In order to keep up with the latest technological developments and market trends in the
dental services industry in China and keep up with the diversifying needs and preferences of
the general public on oral health management, we are required to constantly upgrade our
existing services, invest in new dental devices and introduce new technologies.
During the provision of dental services, our experienced dentists and other medical
professionals from time to time identify common unmet needs or challenges in clinical
practices, and develop and optimize dental tools and devices. As of the Latest Practicable Date,
we had 10 registered utility model patents, which were material to our business. If our
competitors create or adopt technologies similar to ours and develop tools and devices to
achieve capabilities that are superior to ours, our business, results of operations and financial
condition may be adversely affected.
If we are unable to anticipate or adapt to the latest technological developments or market
trends in the dental services industry in China, we may not be able to meet our customers’
expectations and the demand for our services may decline. Meanwhile, if our competitors are
more sensitive to changes in market trend and the preferences of local residents, or become
more responsive to the newly introduced technologies in the industry, our dental services may
become less competitive. We may lose our existing customers and be unable to efficiently
attract new customers, which could adversely affect our business. Moreover, there can be no
assurance that we will be able to recover the expenditures associated with the purchase of new
dental devices and introduction of new technologies. Any of these circumstances may
adversely affect our results of operations, financial condition and prospects.
Our business generates and possesses a large amount of personal and medical information
of customers, and any improper collection, storage, use, leakage or disclosure of such
information could materially and adversely affect our brand image, reputation and
business.
Unless otherwise provided in laws and administrative regulations, medical institutions
can only collect personal and medical information of customers with such customers’ prior
consents and to the extent necessary under the applicable PRC laws and regulations. PRC laws
and regulations also generally require medical institutions and medical professionals to protect
the privacy of their customers and prohibit unauthorized disclosure of personal information. On
August 8, 2022, the NHC, the NA TCM, and National Disease Control and Prevention
Administration (शषཫԣછՓ҅) jointly promulgated the Administrative Measures for the
Cybersecurity of Medical and Healthcare Institution ()
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with immediate effect, which require full life-cycle management of cybersecurity and data
security, including but not limited to strengthening system construction, implementing daily
network maintenance and monitoring, conducting annual self-inspection and rectification, and
classifying and grading data assets.
Our data security measures may not prevent the improper leakage of personal and medical
information. Our dental service network will be liable for damage caused by divulging the
customers’ personal or medical records without consent. Additionally, we may fail to address
the vulnerabilities in our information technology infrastructure and systems, which could be
subject to viruses, spamming or phishing attacks by third parties or fraudulent or inappropriate
behaviors by dentists, other medical professionals or other staff practicing at our dental
institutions. A security breach that leads to the leakage of our customers’ personal and medical
information, even though anonymized, could subject us to legal liabilities, regulatory
sanctions, reputational damage and customers’ trust crises. Any data breach, system attack or
internet malfunction of our information technology infrastructure may lead us to be subject to
customer complaints, regulatory actions, investigations or litigations on data privacy and
cybersecurity, which could materially and adversely affect our brand image, reputation and
business.
We are subject to evolving laws, regulations and government policies regarding
cybersecurity, data security and personal information protection. Actual or alleged failure
to comply with such laws, regulations and government policies could adversely affect our
business and reputation.
During the course of our business operations, we may need to store, transmit and process
certain data of our customers. We are exposed to risks inherent in handling data and in ensuring
the data privacy and security. There have been several regulatory changes and developments
in relation to cybersecurity, data security and protection of personal information in recent
years. Relevant laws, regulations and governmental policies are evolving and may be subject
to further interpretations or changes, which may affect the scope of our responsibilities in this
regard.
As of the Latest Practicable Date, all the data collected and produced during our
operations is stored within the PRC. There is no data cross-border transfer during our business
operations. As of the Latest Practicable Date, we were not identified as an operator of “critical
information infrastructure” by any government authority. As a result, the obligations as
required by the applicable laws for cross-border flow of data and for such operators of “critical
information infrastructure” are currently not applicable to us. With the continuous expansion
of our business and growth of our customer base, if we are involved in cross-border flow of
data or are recognized as an operator of “critical information infrastructure” in the future, we
will be required to comply with such obligations under the applicable laws and regulations.
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On September 24, 2024, the State Council promulgated the Regulations on the
Administration of Network Data Security (ၣഖᅰኽτΌ၍ଣૢԷ), which came into effect
on January 1, 2025. Based on the PRC Cybersecurity Law, the PRC Data Security Law, and the
PIPL, the Regulations on the Administration of Network Data Security restate and refine
various requirements for internet data processors to process and generate various electronic
data through the internet. On February 14, 2025, the CAC promulgated the Regulations on
Compliance Audit for Personal Information Protection (),
which came into effect on May 1, 2025. The Regulations on Compliance Audit for Personal
Information Protection provide guidelines for compliance audit of personal information
protection with key review contents. For further details of laws, regulations and governmental
policies regarding data privacy, cybersecurity and data protection, see “Regulatory Overview
— Laws and Regulations Related to Cybersecurity, Data Security, and Protection of Personal
Information.”
Regulatory development relevant to cybersecurity, data security and protection of
personal information could impact the general healthcare industry in China, including the
dental services providers with online systems. We may incur substantial costs to comply with
such laws and regulations, communicate with our customers and address their concerns in
cybersecurity, data security and protection of personal information, and improve our
information technology infrastructure and systems. We may from time to time be required to
rectify or further improve our internal measures regarding cybersecurity, data security and
protection of personal information. Any failure or perceived failure to comply with all
applicable laws and regulations regarding cybersecurity, data security and protection of
personal information, or any failure or perceived failure of dentists, other medical
professionals or other staff practicing at our dental institutions to comply with the relevant laws
and regulations, may result in negative publicity and legal proceedings or regulatory actions
against us, and could result in fines, revocation of licenses, suspension of relevant operations
or other legal or administrative penalties, which may in turn damage our reputation among our
existing and potential customers and subject us to fines and damages, which could have an
adverse impact on our business and results of operations.
We may face customer complaints, claims and disputes in our ordinary course of
operations, which could result in costs and materially and adversely affect our brand
image, reputation, business, financial condition and results of operations.
Medical professionals and medical institutions face complaints, claims and disputes
raised by customers, medical incidents and legal proceedings from time to time. Such negative
feedback from customers typically alleges malpractices, medical adverse events or other causes
of action. Dissatisfied customers may even carry out extreme actions or even violence during
the course of explaining their dissatisfaction to medical professionals in medical institutions.
Any occurrence of such incident in our dental institutions would damage our reputation, impair
our ability to attract, recruit and retain medical professionals and staff, discourage customers
from visiting our dental institutions, and cause severe interruptions to our business operations.
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We are exposed to inherent risks of customer complaints, claims and disputes during our
daily operations. We generally do not have direct control over the clinical decisions and actions
taken by the dentists and other medical professionals as their diagnoses and treatments are
subject to their own professional judgment and in most cases, must be performed on a real-time
basis. Any incorrect clinical decisions or improper actions on the part of the dentists and other
medical professionals, or any failure by us to properly manage clinical activities may cause
undesirable or unexpected outcomes, including complications and even injuries in extreme
cases. We may choose to settle with the dissatisfied customers in order to minimize the
negative impact on our brand image and operations.
We cannot guarantee our dental institutions will not be subject to customer complaints,
claims and disputes or that we can successfully prevent or settle all customer complaints,
claims and disputes in the future. Any customer complaints, claims and disputes, regardless of
merit, could cause significant legal costs, diversion of attention of medical professionals and
management and reputational damage to us, which could materially and adversely affect our
business, financial condition and results of operations.
If we become subject to litigation, legal or contractual disputes, government
investigations or administrative proceedings, our management’s attention may be
diverted and we may incur substantial costs and liabilities.
During our ordinary course of business, we may be involved in claims, disputes and legal
proceedings from time to time. Unresolved or threatened litigation, legal or contractual
disputes, government investigations or administrative proceedings involving us or medical
professionals practicing at our dental service network may divert the attention of our
management, cause interruptions to our business and result in damages, liabilities and
substantial costs.
Furthermore, any litigation, legal or contractual disputes, government investigations or
administrative proceedings which are initially not of material importance may escalate and
become important to us, due to a variety of factors, such as the facts and circumstances of the
cases, the likelihood of loss, the monetary amount at stake and the parties involved. If the
outcomes of these proceedings are less favorable to us, we could be required to pay significant
legal costs and monetary damages, assume legal and other liabilities and even to suspend or
terminate the related business. In addition, negative publicity arising from litigation, legal or
contractual disputes, government investigations or administrative proceedings may damage our
reputation and adversely affect our brand image. As a result, our business, results of operations
and financial condition may be materially and adversely affected.
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Our business is subject to seasonality. We expect to continue to experience seasonal
fluctuations in our revenue, results of operations and financial condition.
We generally witness increase in customer visits in July and August each year and
experience fewer customer visits shortly before and during the Chinese New Y ear holiday.
According to Frost & Sullivan, such seasonality is in line with the industry norm in the dental
services industry in China. As a result, our operating and financial results for an interim period
may not be representative of our overall performance. In addition, our costs and expenses do
not necessarily correspond with the timing of our revenue recognition. We expect to continue
to experience seasonal fluctuations in our revenue, results of operations and financial condition
in the future.
Any future occurrence of force majeure events, natural disasters or outbreaks of
contagious diseases in regions where we operate in, could prevent our dental institutions
from serving their customers and thus materially and adversely affect our results of
operations.
Our business could be materially and adversely affected by natural disasters, such as
earthquakes, fires, floods or snowstorms, the outbreak of an epidemic, such as COVID-19
pandemic, swine flu, avian influenza, SARS, Ebola or Zika, or other events, such as wars, acts
of terrorism, environmental accidents, power shortage or communication interruptions. The
occurrence of a disaster or a prolonged outbreak of a pandemic or other adverse developments
in public health in the jurisdiction where we operate could materially impact the dental services
industry and disrupt our operations. The occurrence of such events could even cause a
temporary suspension or closure of our dental institutions, which could materially and
adversely affect our business, financial condition and results of operations. Furthermore,
natural disasters, the outbreak of epidemic illnesses, or other events could also adversely affect
the macroeconomy, the occurrence of which could negatively impact the spending power of our
customers and disrupt our operations.
In particular, the outbreak of COVID-19 had materially and adversely affected the global
economy since late 2019, which had impacted the industry and the geographic regions where
we operate. Our business operations had been affected by the COVID-19 pandemic during the
Track Record Period. For instance, our dental institutions temporarily suspended offline
operations due to the spread of the COVID-19 pandemic. Our offline branding and promotion
activities and customer retention were also adversely affected under the temporary regional
control measures to contain the pandemic spread.
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Our insurance coverage may be inadequate to cover all significant risk exposures.
We maintain limited insurance policies covering certain potential liabilities. For details of
insurances we maintained as of the Latest Practicable Date, see “Business — Insurance.” We
are not required to, and generally do not, maintain employer liability insurance, business
interruption insurance or key person insurance, which are not mandatory under the PRC laws
and regulations. There can be no assurance that our insurance coverage will be available or
sufficient to cover all of the risk exposures faced by us. The occurrence of natural or man-made
disasters that are outside the scope of our insurance coverage may severely interrupt our
business and cause material loss to us.
Moreover, the existing insurances maintained by us contain exclusions and limitations on
coverage. If our insurance coverage is unavailable or insufficient to cover any risk exposures,
we may incur substantial costs and diversion of our resources, which could materially and
adversely affect our business, financial condition and results of operations.
We may not carry adequate insurance for dentists to address the exposures to medical
liabilities that may arise in our business. Any claims beyond our insurance coverage may
result in our incurring substantial costs and a diversion of resources.
We generally do not maintain medical liability insurance for dentists practicing at our
dental institutions to cover potential compensation arising from medical incidents. We cannot
assure you that in the future we will be able to obtain medical liability insurance to cover
various risks from medical incidents on terms that are acceptable to us in a timely manner, or
at all, to mitigate risks associated with such incidents. In the event of significant medical
malpractice claims or serious medical incidents, substantial uninsured losses could divert our
management attention and resources, and adversely affect our business, financial condition and
results of operations.
Failure to comply with relevant regulatory requirements relating to the social insurance
and housing provident fund contributions for and on behalf of our employees may subject
us to penalties and have an adverse impact on our financial conditions and results of
operations.
PRC laws and regulations require us to participate in various employee benefit plans,
including pension insurance, unemployment insurance, medical insurance, maternity
insurance, work-related injury insurance and the housing provident fund. According to the
applicable PRC laws and regulations, employers must open social insurance registration
accounts and housing provident fund accounts and pay social insurance and housing provident
fund contributions in amounts equal to certain percentages of salaries, including bonuses and
allowances, of employees up to the maximum amounts specified by the local governments.
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During the Track Record Period, we did not make social insurance and housing provident
fund contributions in full amount for our employees as required by relevant PRC laws and
regulations, primarily due to (i) unfamiliarity with the relevant PRC laws and regulations by
our human resource management personnel; and (ii) unwillingness of employees to make
contributions of social insurance and housing provident fund for personal reasons, mainly due
to their financial burden.
As advised by our PRC Legal Advisors, according to the relevant PRC laws and
regulations: (i) with respect to social insurance, the relevant government authorities may order
us to pay the outstanding amounts within the prescribed time period with a late charge at the
daily rate of 0.05% on the outstanding amounts, and if and only if we fail to do so, they may
impose a fine or penalty ranging from one to three times of the outstanding amounts; and (ii)
with respect to housing provident funds, the relevant government authorities may order us to
pay the outstanding amounts within the prescribed time period, and they may apply to a
competent court for enforcement of the outstanding amounts if we fail to do so. During the
Track Record Period and up to the Latest Practicable Date, we had not been imposed any
administrative penalties as a result of our non-compliance with social insurance and housing
provident fund related PRC laws and regulations.
We cannot assure you that the relevant government authorities will not impose new
requirements on us according to laws, regulations or local policies published by the relevant
government authorities in the future, such as ordering us to make supplemental social insurance
and housing provident fund contributions, imposing late fees or fines on us or ordering us to
take other measures, any of which may materially and adversely affect our business, financial
condition and results of operations.
Failure to maintain business relationships with our suppliers, or any decrease, shortage
or delay in the supply, or an increase in the prices of supplies may adversely affect our
business, financial condition and results of operations.
We have established business relationships with suppliers primarily including (i)
suppliers of dental devices and pharmaceuticals; (ii) marketing and promotion services
providers as well as consulting services providers; and (iii) software, hardware and services
providers of informatization. For historical procurement from our major suppliers, see
“Business — Suppliers and Procurement.” If we fail to maintain our business relationships
with suppliers, or if they cease to cooperate with us, or breach their supply agreements with
us, we may face limited remedies and may spend additional efforts to source alternative
supplies under commercially acceptable terms to us, which could have a negative impact on the
stability of our operations, thus adversely affect our business, financial performance and results
of operations. Moreover, we cannot assure you that we will be able to timely renew our supply
agreements with existing suppliers upon expiration or to establish relationships with new
suppliers to keep pace with the continued expansion of our business.
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In addition, we may face supply shortages or fluctuations in the market prices of supplies.
The availability and prices of supplies from third-party suppliers, especially dental
consumables and dental equipment, may be affected by multiple factors beyond our control,
including changes in regulatory policies on centralized procurement, unexpected increases in
demand for such supplies, deteriorating financial conditions or cessation of business of the
suppliers in the relevant local regions. In the event that our suppliers are unable to continue to
supply us with sufficient quantities of qualified supplies at acceptable prices, we may have to
spend additional time and efforts to obtain substitutes with acceptable quality and prices
elsewhere. We cannot assure you that we will be able to pass on any increase in the costs of
supplies from third-party suppliers to our customers. Substantial fluctuations in market prices
of supplies requisite for our daily operations may result in an increase in our costs and
adversely affect our profitability.
We may not have full control over the quality of dental devices and pharmaceuticals used
in our dental institutions, which are procured from third parties. Any failures or defects
of such products or any failure of our staff to properly operate the dental devices could
subject us to liability claims, and adversely affect our brand image, reputation, results of
operations and prospects.
We cannot assure you that the dental devices and pharmaceuticals we procured from our
suppliers during our business operations are safe and free of defects or can always meet the
relevant quality standards. In the event of any quality issues in relation to such dental devices
and pharmaceuticals, we could be subject to complaints and claims raised by customers. We
may not be able to seek sufficient indemnification from our suppliers. Legal proceedings
against our suppliers may be time-consuming and costly regardless of the outcomes. Any
quality issues in relation to dental devices and pharmaceuticals may have material and adverse
impacts on customers’ trust in us, damage our reputation and brand image, and adversely affect
our results of operations and financial performance. In addition, we may also need to find
alternative suppliers and suitable replacement products, which may cause interruptions to our
business operations. If we are unable to find alternative suppliers or suitable replacement
products in a timely manner, our service capacity could be adversely affected.
Moreover, our business exposes us to liability risks that are inherent in the operation of
complex dental equipment, which may contain defects or experience failures. Any dental
equipment defects or failures or any failure of medical professionals or other staff to properly
manipulate the dental equipment could result in inaccurate diagnosis results, unsatisfactory
treatment outcomes or even injury. We may become a party to any such liability claim.
Regardless of its merit or eventual outcome, we may face significant legal costs, diversion of
management’s attention and damage of reputation, which could have material and adverse
impacts on our business, financial condition and results of operations.
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Any downtime for maintenance or repair of dental equipment and any disruption to
supply of utilities could cause interruptions to our business, which could materially and
adversely affect our business, financial condition and results of operations.
We primarily rely on equipment manufacturers, distributors or third-party services
providers for the maintenance and repair of dental equipment in our dental institutions.
Significant downtime associated with the maintenance and repair of dental equipment used in
our dental institutions would result in inability to provide dental services to customers in a
timely manner. The failure of equipment manufacturers, distributors or third-party services
providers to provide timely repairs on the equipment could interrupt our operations. Extended
downtime associated with the maintenance and repair of dental equipment could adversely
affect our service capacity and harm our brand image, which could materially and adversely
affect our business, financial condition and results of operations.
In addition, we need essential utilities such as water and electricity to maintain our dental
operations. We rely upon the government or other third parties for the utility supply for our
operations. In case the supply of utilities to our dental institutions is cut off for an extended
period, our business, financial condition and results of operations could be materially and
adversely affected.
We may be subject to fines as a result of unregistered leases and our use of leased
properties may be challenged.
As of the Latest Practicable Date, we had not registered 54 of our lease agreements with
the relevant government authorities. If we fail to complete or timely complete such lease
registration upon the housing authorities’ request, we may face fines on each unregistered lease
agreement, which may adversely affect our financial position. As advised by our PRC Legal
Advisors, we may be subject to a fine of no less than RMB1,000 and not exceeding
RMB10,000 for each unregistered lease agreement if the relevant government authorities
require us to rectify and we fail to do so within the prescribed time period. For details of the
legal defects of our leased properties, see “Business — Properties.”
We are not aware of any material claims or actions being contemplated or initiated by the
relevant government authorities, or other third parties with respect to our use of such
properties. However, we cannot assure you that our use of such properties will not be
challenged in the future. In the event that our use of properties is challenged, we may spend
efforts to respond to third parties’ challenges and face the diversion of the attention of our
management and other staff. As a result, our business and results of operations may be
adversely affected.
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Failure to renew our current leases on reasonable terms or to locate desirable alternatives
for our dental institutions could materially and adversely affect our business, financial
condition and results of operations.
We may not be able to successfully extend or renew our current leases upon their
expiration on commercially reasonable terms, or at all, and may therefore be forced to relocate
the relevant dental institutions. This could disrupt the operations of such dental institutions and
result in significant relocation expenses, which could materially and adversely affect our
business, financial condition and results of operations. In addition, we compete with other
businesses for premises at certain locations or of desirable sizes. As a result, even though we
could extend or renew our leases, rental payments may significantly increase as a result of the
high demand for the leased properties. Moreover, with the continuous expansion of our
business, we may not be able to locate desirable alternative sites for our dental institutions. In
such case, failure in selecting desirable alternatives and timely relocating our dental
institutions concerned on commercially reasonable terms could adversely affect our operations
and business expansion.
We may not be able to adequately protect our intellectual property rights, which could
weaken our competitive strengths and harm our brand image and business.
We believe our trademarks, utility model patents and other intellectual property rights are
important to our business operations and competitiveness. We are susceptible to third parties’
infringement of intellectual property rights. There can be no assurance that third parties will
not copy or otherwise obtain and use our intellectual property rights without our prior
authorization. Our efforts to enforce or defend our intellectual property rights may not be
adequate or effective. We may have to initiate legal proceedings to defend our intellectual
property rights against any infringement by third parties, which may be both costly and
time-consuming, causing diversion of our management’s attention. Furthermore, we may face
the outcome of legal actions that are less favorable to us. Any failure to effectively protect our
intellectual property rights may adversely affect our business, financial condition, results of
operations and prospects.
Moreover, other parties may register trademarks with features similar to our registered
trademarks under certain circumstances, which may confuse our potential customers, medical
professionals pursuing joining our dental service network and our business partners. Under
such circumstances, the goodwill and value of our trademarks and the public perception of our
brand image may be harmed. Any negative perception of our brand image could adversely
impact our results of operations, financial condition and prospects.
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We may be subject to intellectual property rights infringement or misappropriation
claims by third parties, which may force us to incur legal expenses and, if determined
adversely against us, may materially disrupt our business and reputation.
We may be subject to intellectual property rights infringement or misappropriation claims
by third parties during our daily operations. In defending against third-party infringement or
misappropriation claims, we may incur legal expenses and other resources, which would be
both costly and time-consuming, resulting in the diversion of our management’s attention,
regardless of their merit. An adverse determination in any such litigation or proceedings to
which we may become a party could subject us to liabilities to third parties, require us to seek
consents or licenses from third parties, pay ongoing fees or royalties, or subject us to
injunctions prohibiting the provision of relevant services. To the extent that such consents or
licenses are not available on commercially acceptable terms to us or at all, we may be required
to divert considerable time and resources to source alternative technologies or rebrand our
services, or we may be forced to delay or suspend the relevant services.
We have entered into and may continue to enter into agreements in the future with third
parties to get licenses in connection with various third-party intellectual property rights,
including rights to use software and computer programs. Claims on infringement or
misappropriation may arise from such agreements, such as the scope of the rights granted under
the license agreements, the interpretation or application of the provisions under the agreements
and the extent to which our use of intellectual property may infringe, misappropriate or
otherwise violate intellectual property rights of the licensor. Such claims arising from
intellectual property licensing agreements with third parties may damage our reputation and
may in turn affect our business, financial conditions and results of operations.
Preferential tax treatment and government grant we have enjoyed may change or
discontinue, which may adversely affect our financial condition and results of operations.
Our Company was entitled to a preferential EIT rate of 15% during the Track Record
Period, as our Company is accredited as a “New High-tech Enterprise ( ৷อҦஔΆุ)” in 2020
and such recognition was subsequently renewed in 2023. “New High-tech Enterprise”
recognitions are subject to review by the relevant PRC tax authorities for every three years. We
cannot assure you that our Company will be able to successfully renew it in the future. In
addition, certain of our subsidiaries are qualified as micro- and small-sized enterprises and
entitled to preferential enterprise income tax rates of 2.5% to 10% for the year ended December
31, 2022. For the years ended December 31, 2023 and 2024, the preferential tax rate was 5%.
For details, see Note 10 to Accountants’ Report set out in Appendix I to this prospectus.
The PRC government has also granted us various grant. For the years ended December 31,
2022, 2023 and 2024, we recorded government grants of RMB1.5 million, RMB0.5 million and
RMB1.0 million, respectively. Please see “Financial Information — Consolidated Statements
of Profit or Loss and Other Comprehensive Income — Other Income and Gains.” These
government grant have been given at the discretion of the local government authorities.
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There is no assurance that we would continue to enjoy these preferential tax treatment or
government grants at the historical levels, or at all. Any change, suspension or discontinuation
of these preferential tax treatment and government grants to us could adversely affect our
financial condition, results of operations and cash flows. In particular, discontinuation of
preferential tax treatments we currently enjoy or other changes in the relevant policies could
increase the applicable enterprise income tax rates to as high as 25%, causing adverse impacts
on our financial condition.
Increasing focus with respect to environmental, social and corporate governance (the
“ESG”) matters may impose additional costs on us or expose us to additional risks.
Failure to keep up with the evolvement in social trends and policies relating to ESG
matters may adversely affect our business, financial condition and results of operations.
In recent years, public awareness of ESG has been increasing. Changes in social trends
and policies associated with environmental protection, public health and other ESG issues may
have growing influence on our business model and daily operations.
With growing attention on ESG matters, investor advocacy groups, certain institutional
investors, investment funds, and other influential investors attach great importance on the ESG
practices and the social influence of their investments. Any new ESG concern or change in
social trends and political policies relating to ESG matters may increase our compliance costs,
or require us to adjust our practices in a way that could adversely impact our results of
operations. Failure to adapt to or comply with the evolving expectations and standards of ESG,
regardless of whether there is a legal requirement to do so, could adversely affect our
reputation, business operations and financial condition.
Our business is generally subject to PRC laws and regulations in relation to the
environmental matters and fire safety. We cannot assure you that we will not be subject
to liabilities or penalties in connection with environmental matters and fire safety in the
future.
Our business is generally subject to PRC laws and regulations in relation to the
environment and public health, such as the Environmental Protection Law of the People’ s
Republic of China (), Environmental Impact Assessment Law
of the People’ s Republic of China (), Regulations on the
Management of Medical Waste (၍ଣૢԷ) and Fire Prevention Law of the
People’ s Republic of China (). The amendments and changes to the
applicable PRC laws and regulations in relation to the environment and public health may
cause additional compliance costs, which could cause an adverse impact on our business,
results of operations and prospects.
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Failure to comply with the applicable PRC laws and regulations relating to the
environmental matters could result in administrative actions or penalties on us. See “Business
— Compliance and Legal Proceedings — Non-compliance Incidents — Failure to Obtain the
Urban Sewage Disposal Drainage License.” We cannot assure you that we will not be subject
to the liabilities or penalties relating to the environment and public health in the future. Any
of these actions or penalties may cause negative impact on our business, results of operations
and financial condition.
Our business operations are also exposed to risks relating to occupational health,
containment of infection transmission and fire safety. The dentists, other medical professionals
and other staff practicing at our dental institutions may fail to deal with such risks timely and
properly. As of the Latest Practicable Date, one of our subsidiaries had not completed the
requisite fire safety filing with the housing and urban-rural development department of local
government. See “Business — Compliance and Legal Proceedings — Non-compliance
Incidents — Failure to Complete Fire Safety Filing.” According to the applicable PRC laws and
regulations, for each property with defects in Fire Safety Filing after completion of
construction acceptance, the relevant subsidiary may be ordered by the housing and urban-rural
development departments of local governments to rectify and subject to administrative fines.
We cannot assure you that we will not be subject to liabilities or penalties in connection with
occupational health and safety in the future. Any of actions or penalties relating to our defects
in occupational health and safety may cause negative impact on our business, results of
operations and financial condition.
Our dental institutions derive a portion of revenue from public medical insurance
programs. Any failure to remain eligible for public medical insurance coverage, or any
non-payment or delayed payment under public medical insurance programs could
adversely affect our results of operations and financial position.
Customers who are covered by the public medical insurance programs can choose to rely
on public medical insurance programs to pay for dental services provided by Medical Insurance
Designated Medical Institutions (ᓃᔼᐕዚ࿴) eligible for public medical insurance
programs. Therefore, whether a dental institution is eligible for public medical insurance
coverage could affect its acceptance among potential customers.
As of the Latest Practicable Date, 62 of our dental institutions in operation were Medical
Insurance Designated Medical Institutions. For the years ended December 31, 2022, 2023 and
2024, our settlement amount under the public medical insurance programs amounted to
RMB32.6 million, RMB39.5 million and RMB40.2 million, representing 8.0%, 8.9% and
10.4% of the total settlement amount of our dental services for the same years, respectively.
Our dental institutions may cease to be Medical Insurance Designated Medical Institutions if
(i) their medical insurance service agreements with local government authorities are not
renewed upon expiration after negotiations, taking into account the fulfilment of obligations
under such agreements and performance evaluations, or (ii) the government authorities
unilaterally terminate such agreements due to our violations, such as regulatory non-
compliance, supervisory obstruction or other material breaches of medical insurance service
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agreements. We cannot assure you that our dental institutions will be able to maintain their
status as Medical Insurance Designated Medical Institutions, the loss of which may adversely
affect our customer visits and publicity among customers. Reimbursement policies in medical
insurance coverage plans may be subject to further changes in the future such that certain
dental services may no longer be covered, or that more stringent thresholds on existing
coverage may be implemented. Any reduction in the rates reimbursed by relevant medical
insurance bureaus or the scope of services covered could adversely impact customers’ intention
to visit our dental institutions, which may adversely affect our business operations and
financial condition. Meanwhile, violation of the regulatory requirements relevant to medical
insurance may result in penalties against the non-compliant dental institutions. Any failure to
comply with the relevant regulatory requirements on Medical Insurance Designated Medical
Institutions may expose us to penalties. Moreover, any delayed or delinquent settlement under
the public medical insurance programs could increase our trade receivables or result in
write-offs.
We rely upon the continuing efforts of our senior management team and other key
personnel. Any failure to attract, motivate and retain them could severely hinder our
ability to maintain and grow our business.
The collaborative, devoted and diligent efforts of our senior management team and other
key personnel have contributed to our success over the years. We have been, and expect to
continue to be, heavily dependent on the continued services of our senior management team
and other key personnel, some of whom have been with us since our inception. In particular,
we rely on the outstanding efforts, experience and expertise of our executive Directors. We also
rely on other key members of our senior management team. Accordingly, our ability to attract
and retain key personnel is a critical factor in our competitiveness. Following the general
industry practice, we do not maintain key person insurance. If we lose the services of one or
more of our key personnel, we may not be able to find suitable or qualified replacements timely
or at all and may incur additional expenses to recruit and train new personnel. Consequently,
our business could be severely disrupted, the implementation of our business strategies could
be delayed, and our financial condition and results of operations could be materially and
adversely affected. Moreover, if any member of our key personnel joins a competitor or
establishes a competing business, we may lose know-how, trade secrets, customers, other key
medical professionals and staff.
Competition for competent candidates in the industry is intense and the pool of competent
candidates is relatively limited, which could cause us to offer higher compensation and other
benefits in order to attract and retain them, and in turn, materially and adversely affect our
financial condition and results of operations. If our recruitment and retention efforts are
unsuccessful in the future, our business prospects could be adversely affected.
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There is no assurance that we will be able to successfully enforce the non-competition
undertakings signed by the dentists who are minority shareholders of our dental
institutions.
Restrictive covenants are enforceable only when the contractual terms restricting a
contracting party’s activities during or after the termination of his/her agreement are reasonable
in all circumstances to protect the legitimate business interests of the other contracting party,
pursuant to the applicable PRC laws and regulations. Despite the fact that dentists who are
minority shareholders of our dental institutions signed non-competition undertakings to us,
there can be no assurance that they will not, upon termination of their respective collaboration
with us, engage in business activities that compete with our business in Central China,
especially in Hubei province. If such dentists engage in competing business activities in
regions where we operate, there can be no assurance that we will be able to successfully
enforce such non-competition undertakings in a timely and effective manner, or at all. If such
dentists engage in competing business activities in regions where we operate and we fail to
enforce the relevant non-competition undertakings, we may experience customer loss and our
business, results of operations and financial condition may be materially and adversely
affected.
We and/or the dentists, other medical professionals, administrators and other staff of our
dental institutions could be subject to investigations or administrative or criminal
penalties in relation to anti-corruption, which may harm our brand image and reputation
and materially and adversely affect our business, financial condition and results of
operations.
Market participants in the healthcare services industry are exposed to increasing risks of
violating anti-corruption laws, regulations and rules. The government authorities have been
increasing their anti-bribery efforts to control and diminish improper payments and other
illegal benefits received by medical professionals, administrators and other staff relating to the
purchase of devices and pharmaceuticals and the provision of healthcare services. As a dental
services provider, we have adopted multiple policies and procedures designed to ensure that the
dentists, other medical professionals, administrators and other staff practicing at our dental
institutions comply with the anti-corruption and anti-bribery laws, regulations and rules in
China.
However, there can be no assurance that policies and procedures designed and adopted by
us in relation to anti-corruption and anti-bribery will always effectively and entirely prevent
non-compliance with the relevant laws, regulations and rules. The occurrence of any corruption
activities by any individual dentists, other medical professionals, administrators and other staff
practicing at our dental institutions may subject us to thorough investigations and
administrative or criminal penalties. Our brand image and reputation could be harmed by any
negative publicity stemming from incidents in relation to suspected corruption or bribery,
which may materially and adversely affect our business, financial condition and results of
operations.
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If we fail to maintain adequate internal controls, or fail to identify defects in internal
control performance of acquisition targets, we may not be able to effectively manage our
business and may experience errors or information lapses affecting our business.
We have established our internal control and risk management system to monitor and
mitigate risks arising from our daily business operations and improve our corporate
governance. See “Business — Internal Control and Risk Management” for details on our
internal control measures and performance.
As we will continuously develop our business and expand our dental service network, we
have to constantly optimize our financial and managerial measures, internal reporting
procedures and other internal measures to enhance the effectiveness of internal control and risk
management system and ensure compliance with applicable PRC laws and regulations. The
performance of our internal control and risk management depends on the implementation of our
internal control measures by our management and other staff. There can be no assurance that
such implementation will not involve any misinterpretation of internal control measures or
inconsistencies among different dental institutions in different cities within our dental service
network. Such misinterpretation of internal control measures and inconsistencies of
implementation could materially and adversely affect the results of our internal control and
business operations.
There can be no assurance that we can always keep our internal control system being
effective and efficient in the future. If we fail to timely identify new risks and uncertainties and
adapt our internal control measures and procedures in pace with our business expansion,
relevant measures and procedures may become ineffective, which may cause errors and
information lapses and materially and adversely affect our ability to manage our business
growth. In addition, we may experience difficulties in timely identify defects in internal control
performance of acquisition targets during our evaluation before acquisition. Besides, any
failure to discover and tackle the potential weaknesses in our internal control and risk
management system, especially failure to discover and tackle internal control weaknesses in
our acquired dental institutions, could materially and adversely affect the effectiveness of our
internal control, which may materially and adversely affect our business operations and
financial performance.
Our Controlling Shareholders have substantial control over our Company and their
interests may not be aligned with the interests of the other Shareholders.
Prior to and immediately following the completion of the Global Offering, our
Controlling Shareholders will retain substantial control over our Company. Subject to our
Articles of Association and the PRC Company Law, our Controlling Shareholders will be able
to exercise significant control and impose material influence over our business operations or
otherwise on matters that are significant to us and other Shareholders by voting at the general
meetings of the Shareholders and at Board meetings.
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However, the interests of our Controlling Shareholders may not always in line with the
interests of other Shareholders. Our Controlling Shareholders are free to exercise their votes
based on their own intentions and interests, except for limited matters that they shall abstain
from voting. To the extent that the interests of the Controlling Shareholders conflict with the
interests of other Shareholders, the interests of other Shareholders can be disadvantaged and
harmed.
Share incentive schemes may adversely affect our financial performance and cause
shareholding dilution to our existing Shareholders.
We adopted the Pre-IPO Restricted Share Scheme to attract and retain directors, senior
management and employees who promote the success of our operations. For details, see
“Appendix VI — Statutory and General Information — D. Pre-IPO Restricted Share Scheme”
to this prospectus. Share-based payment expenses are expenses arising from Restricted Shares
granted to our employees and former employees under the Pre-IPO Restricted Share Scheme.
For the years ended December 31, 2022, 2023 and 2024, we incurred share-based payment
expenses of RMB1.6 million, RMB1.1 million and RMB2.4 million, respectively.
To further incentivize our key personnel to contribute to us, we may adopt new share
incentive schemes in the future which may potentially dilute the shareholding percentage of
our existing Shareholders. Expenses incurred with respect to awards granted under such share
incentive schemes may also increase our operating expenses and therefore have a material and
adverse impact on our financial performance.
Fair value changes for redeemable preference shares may affect our financial condition
and results of operations. The valuation of redeemable preference shares is uncertain due
to the use of unobservable inputs, estimates and judgements.
Our redeemable preference shares represent shares issued by us in connection with Series
A Investment and Series B Investment to Independent Third-Party investors. All special rights
granted to such investors have been terminated in September 2024. We had fair value losses on
redeemable preference shares of RMB1.3 million and RMB2.3 million for the years ended
December 31, 2022 and 2023, respectively. For the year ended December 31, 2024, we had fair
value gains on redeemable preference shares of RMB1.7 million.
Given the redeemable preference shares are not traded in an active securities market, we
engaged an independent valuer to assess the fair value of the redeemable preference shares
using a discount cash flow model. Changes in unobservable inputs, estimates and judgements
used in the model, particularly the probabilities assigned to the exit scenarios under the equity
allocation model, namely the liquidation scenario, the redemption scenario and the conversion
scenario, together with other assumptions such as the risk-free rates and volatilities adopted,
could affect the fair value of our redeemable preference shares.
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RISKS RELATING TO DOING BUSINESS IN THE JURISDICTION WHERE WE
OPERATE
Changes in the economic, political, social or regulatory conditions could have a material
effect on our business and prospects.
All of our assets, businesses and operations are located in the PRC and we generate all
of our revenue from the PRC. As a consequence, our business, financial condition and results
of operations are significantly subject to the economic, political, social and regulatory
environment in the PRC. The PRC government regulates the economy and the industries by
regulating the macroeconomy through fiscal and monetary policies and imposing industrial
policies. In the past few decades, the PRC government has spent dedicated efforts to promote
market economy and encourage the establishment of sound corporate governance in business
entities.
The performance of Chinese dental services providers has been and will continue to be
affected by the Chinese economy, which in turn is influenced by the global economy. The
uncertainties relating to the global economy as well as the political environment in various
regions of the world will continue to impact the economic growth in the PRC.
We are unable to predict all the risks that we face as a result of the current global
economic, political, social and regulatory developments and many of these risks are beyond our
control. All such factors could have a material impact on our business and financial
performance and our prospects.
Failure to respond to developments in the legal system may subject our business and
financial performance to risks.
We conduct our business in the PRC, which are governed by the PRC laws and
regulations. Some of the current laws and regulations are relatively new and may be amended
from time to time in the future, which may cause impacts on our judgment on the relevance of
legal requirements and the value of your investment.
Meanwhile, the PRC legal system, which is based on written statutes, continues to evolve
in response to changing economic and other conditions. Some enforcement policies, including
those regulating healthcare services industry, also evolve continuously with the development
of social and economic environment in China. Any enforcement actions against us could have
a material adverse impact on us. Any litigation or enforcement proceedings may result in
substantial cost and diversion of management attention and other resources, negative publicity,
and damage to reputation. We are required to constantly keep ourselves up-to-date on the latest
laws, regulations, rules and policies applicable to us. However, we may not be aware of
violation of the newly promulgated or amended laws, regulations, rules and policies until such
violation has occurred.
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Y ou may experience difficulties in effecting service of the legal process upon us and our
management and seeking recognition and enforcement of judgments against them across
jurisdictions.
The legal systems across different jurisdictions vary significantly and the effecting
service of legal process and the process of recognizing and enforcing any judgments may be
different across jurisdictions. Therefore, you may experience difficulties in effecting service of
the legal process upon us and our management and seeking recognition and enforcement of
judgments against them across jurisdictions.
Effecting service of legal process and the process of recognizing and enforcing any
judgments are subject to treaties or arrangements providing for the recognition and
enforcement of judgments made by courts of other jurisdictions. As a consequence, investors
may experience difficulties to effect service of process and/or recognize and enforce any
judgments for disputes brought in other jurisdictions. As a company incorporated under the
laws of the PRC, all of our assets are located in the PRC. Almost all of our Directors,
Supervisors and senior management reside within the PRC, and the assets of our Directors,
Supervisors and senior management are likely to be located within China. As a result, it may
be difficult for you to effect service of process within Hong Kong, the United States or
elsewhere outside the PRC upon us or our Directors, Supervisors and senior management, or
to bring an action in Hong Kong against us or these individuals. In addition, the PRC has not
entered into treaties with certain other jurisdictions that provide for the reciprocal recognition
and enforcement of judicial rulings and awards.
An original action may only be brought in the PRC against us or our Directors,
Supervisors and senior management if the actions are not required to be arbitrated by the PRC
laws and upon satisfaction of the conditions for commencing a cause of action pursuant to the
civil procedure laws in the PRC. As a result of the conditions set forth in such laws, there
remain uncertainties as to whether investors will be able to bring an original action in the PRC
in this manner.
Government’s regulations on foreign currency conversion may affect our foreign
exchange transactions. Fluctuations in exchange rates could result in foreign currency
exchange losses.
We expect that our revenue will be denominated in Renminbi and a portion of our revenue
may be converted into other currencies in order to meet our foreign currency obligations. For
example, we need to obtain foreign currency to make payments of declared dividends, if any,
on our H Shares.
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Under the existing PRC laws and regulations on foreign exchange, following the
completion of the Global Offering, we will be able to make dividend payments in foreign
currencies by complying with certain procedural requirements and without prior approval from
the SAFE. However, in the future, the PRC government may take measures to regulate access
to foreign currencies for capital account and current account transactions under certain
circumstances. As a result, we may not be able to pay dividends in foreign currencies to the
holders of our H Shares.
In addition, the changes in domestic and international political, economic conditions and
monetary policies as well as other factors beyond our control could cause fluctuations in the
exchange rate of Renminbi against Hong Kong dollar, U.S. dollar and other foreign currencies.
There can be no assurance that our business, financial condition and results of operations
would not be adversely affected by the fluctuation in exchange rates in the future. The proceeds
from the Global Offering will be received in Hong Kong dollars. As a result, any appreciation
of the Renminbi against the U.S. dollar, the Hong Kong dollar or any other foreign currencies
may result in the decrease in the value of our proceeds from the Global Offering. Conversely,
any depreciation of the Renminbi may adversely affect the value of, and any dividends payable
on, our H Shares in foreign currency. There are limited instruments available for us to reduce
our foreign currency risk exposure at reasonable costs.
Any of these factors could materially and adversely affect our business, financial
condition, results of operations and prospects, and could reduce the value of, and dividends
payable on, our H Shares in foreign currency terms.
We rely on dividends paid by our subsidiaries for our cash needs, and regulations of the
PRC laws on the ability of our PRC subsidiaries to distribute dividends to us could
adversely affect our ability to utilize such funds.
Under the applicable PRC laws and regulations, dividends may be paid only out of
distributable profits. Distributable profits are our net profit as determined under the PRC
GAAP or the IFRS, whichever is lower, less any recovery of accumulated losses and
appropriations to statutory and other reserves that we are required to make. Therefore, we may
not have sufficient or any distributable profit to make dividend distributions to our
Shareholders in the future, including years for which our financial statements indicate that our
operations have been profitable. Any distributable profits that are not distributed in a given
year are retained and available for distribution in the subsequent years. Moreover, as the
calculation of distributable profits under the PRC GAAP is different from the calculation under
the IFRS in certain respects, our subsidiaries may not have distributable profits as determined
under the PRC GAAP , even if they have profits for that year as determined under the IFRS, or
vice versa . Accordingly, we may not receive sufficient distributions from our subsidiaries.
Failure by our subsidiaries to pay dividends to us could adversely impact our cash flow and our
ability to make dividend distributions to our Shareholders in the future, including those years
when our financial statements indicate that our operations have been profitable.
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Investors of our H Shares may become subject to PRC taxation on dividends received
from us and gains from the disposition of our H Shares.
Individual holders of H Shares who are not residents of mainland China and whose names
appear on the register of members of H Shares (the “ Non-PRC Resident Individual
Holders ”), are subject to PRC individual income tax on dividends received from us.
Pursuant to the Circular on Questions Concerning the Collection of Individual Income
Tax Following the Repeal of Guo Shui Fa [1993] No. 045 (਷೼೯[1993]045 ໮˖΁ᄻ
) issued by the STA on June 28, 2011, the tax rate
applicable to dividends paid to Non-PRC Resident Individual Holders of H Shares varies from
5% to 20% (usually 10%), depending on whether there is any applicable tax treaty between the
PRC and the jurisdiction in which the Non-PRC Resident Individual Holder of H Shares
resides, as well as the tax arrangement between the PRC and Hong Kong. Non-PRC Resident
Individual Holders who reside in jurisdictions that have not entered into tax treaties with the
PRC are subject to a 20% withholding tax on dividends received from us. Meanwhile, under
the Individual Income Tax Law of the PRC () and its
implementation regulations, Non-PRC Resident Individual Holders of H Shares are subject to
individual income tax at a rate of 20% on gains realized upon the sale or other disposition of
H Shares.
However, pursuant to the Circular Declaring that Individual Income Tax Continues to be
Exempted over Income of Individuals from Transfer of Shares (੻ᘱᚃ
) issued by the MOF and the STA on March 30, 1998, gains of
individuals derived from the transfer of listed shares of enterprises may be exempt from
individual income tax. Any collection of such tax in the future may materially and adversely
affect the value of such individual holders’ investments in H Shares. Under the EIT Law and
its implementation regulations, a non-PRC resident enterprise is generally subject to enterprise
income tax at a rate of 10% with respect to its PRC-sourced income, including dividends
received from a PRC company and gains derived from the disposition of equity interests in a
PRC company. This rate may be reduced under any special arrangement or applicable treaty
between the PRC and the jurisdiction in which the non-PRC resident enterprise resides.
Pursuant to the Circular on Questions Concerning Withholding of Enterprise Income Tax for
Dividends Distributed by Resident Enterprises in the PRC to Non-resident Enterprises Holding
H-shares of the Enterprises (͏ΆุΣྤ̮H˾ϔ˾
) promulgated by the STA on November 6, 2008, we intend to
withhold tax at 10% from dividends payable to non-PRC resident enterprise holders of H
Shares (including HKSCC Nominees). Non-PRC resident enterprises that are entitled to be
taxed at a reduced rate under an applicable income tax treaty or arrangement will be required
to apply to the PRC tax authorities for a refund of any amount withheld in excess of the
applicable treaty rate, and payment of such refund will be subject to the approval from the PRC
tax authorities.
RISK FACTORS
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The application of applicable PRC tax laws and regulations by the PRC tax authorities are
still evolving, including whether and how enterprise income tax on gains derived upon the sale
or other disposition of H Shares will be collected from non-PRC resident enterprise holders of
H Shares. If such tax is collected in the future, the value of such non-PRC resident enterprise
holders’ investments in H Shares may be adversely affected.
RISKS RELATING TO THE GLOBAL OFFERING
There has been no prior public market for our H Shares, and the liquidity and market
price of our H Shares following the Global Offering may be volatile.
No public market currently exists for our H Shares. The initial Offer Price for our H
Shares to the public will be the result of negotiations between our Company and the Sole
Overall Coordinator (on behalf of the Underwriters), and the Offer Price may differ
significantly from the market price of the H Shares following the Global Offering.
We have applied to the Hong Kong Stock Exchange for the listing of, and permission to
deal in, the H Shares. A listing on the Hong Kong Stock Exchange, however, does not guarantee
that an active and liquid trading market for the H Shares will develop, or if it does develop,
that it will be sustained following the Global Offering, or that the market price of the H Shares
will not decline following the Global Offering.
Moreover, the trading price and trading volume of the H Shares may be subject to
significant volatility as a result of various factors beyond our control, including:
 developments in the global healthcare market, especially the healthcare services
industry in China;
 unexpected business interruptions resulting from natural disasters or outbreaks of
pandemic;
 developments in laws and regulations in regions where we operate;
 political, economic, financial and social developments in regions where we operate
and in the global economy;
 investors’ perception of us and of the investment environment in regions where we
operate;
 variations in our operating results;
 changes in financial estimates by securities analysts;
 announcements made by us or our competitors;
RISK FACTORS
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 changes in pricing made by us or our competitors;
 acquisitions by us or our competitors;
 the depth and liquidity of the market for our H Shares;
 additions to or departures of, our executive directors and other members of our
senior management; and
 release or expiry of lock-up or other transfer restrictions on our H Shares.
It is possible that our H Shares may be subject to changes in price not directly related to
our performance and as a result, investors in our H Shares may suffer substantial losses.
Future sales or perceived sales of substantial amounts of our securities in the public
market could have a material and adverse effect on the prevailing market price of our H
Shares and our ability to raise additional capital in the future, or may result in dilution
of your shareholdings.
Future sale of substantial amounts of our H Shares or other securities relating to our H
Shares in the public market, or the issuance of new H Shares or other securities relating to our
H Shares, or the perception that such sales or issuances may occur could all cause a decrease
in the market price of our H Shares.
Future sales, or perceived sales, of substantial amounts of our securities or other
securities relating to our H Shares, including part of any future offerings, could also materially
and adversely affect the prevailing market price of our H Shares and our ability to raise capital
in the future at a time and at a price which we deem appropriate.
Any possible conversion of Unlisted Shares into H Shares could increase the supply of H
Shares in the market, which may negatively impact the market price of H Shares.
Pursuant to the stipulations by the State Council’s securities regulatory authority and the
Articles of Association, our Unlisted Shares may be converted into H Shares and such
converted H Shares may be listed or traded on an overseas stock exchange, provided that prior
to the conversion and trading of such converted shares, the requisite internal approval
processes (but without the necessity of Shareholders’ approval) have been duly completed and
the filing with the CSRC has been duly completed.
Moreover, such conversion, trading and listing must comply with the regulations
prescribed by the State Council’s securities regulatory authorities and the regulations,
requirements and procedures prescribed by the relevant overseas stock exchange. We can apply
for the listing of all or any portion of our Unlisted Shares on the Hong Kong Stock Exchange
as H Shares in advance of any proposed conversion to ensure that the conversion process can
RISK FACTORS
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be completed promptly upon notice to the Hong Kong Stock Exchange and delivery of shares
for entry on the H Share register. This could cause an increase in the supply of H Shares in the
market, and future sales, or perceived sales, of the converted H Shares may adversely affect the
trading price of H Shares.
As the Offer Price of our H Shares is higher than the consolidated net tangible assets per
Share immediately prior to the Global Offering, purchasers of our H Shares in the Global
Offering may experience an immediate dilution.
Our existing Shareholders will receive an increase in the pro forma adjusted consolidated
net tangible asset value per Share of their H Shares. In addition, purchasers of our H Shares
may experience further dilution of their shareholdings if we issue additional H Shares pursuant
to the exercise of the Over-allotment Option.
There can be no assurance that if we were to immediately liquidate after the Global
Offering, any assets will be distributed to Shareholders after the creditors’ claims. To expand
our business, we may consider offering and issuing additional H Shares in the future.
Purchasers of the Offer Shares may experience dilution in the net tangible assets value per
Share of their H Shares if we issue additional H Shares in the future at a price which is lower
than the net tangible assets value per Share at that time.
We may not pay any dividends on our H Shares.
We cannot guarantee when and in what form dividends will be paid on our H Shares
following the Global Offering. The declaration of dividends is proposed by the Board and is
based on, and limited by, various factors, including without limitation, our business and
financial performance, capital and regulatory requirements, general business conditions and
other factors that our Directors consider relevant. We may not have sufficient or any profits to
enable us to make dividend distributions to our Shareholders in the future. See “Financial
Information — Dividends.”
We have significant discretion as to how we will use the net proceeds of the Global
Offering, and you may not necessarily agree with how we use them.
Our management may use the net proceeds from the Global Offering in ways that you may
not agree with or that do not yield favorable returns for our Shareholders. For details of our
intended use of proceeds from the Global Offering, see “Future Plans and Use of Proceeds.”
Our management have the discretion as to the actual utilization of the net proceeds within
the scope of disclosed usage schedule. Y ou are entrusting your funds to our management, upon
whose judgment you must depend for the specific usage we will make of the net proceeds from
the Global Offering.
RISK FACTORS
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Facts, forecasts and statistics contained in this prospectus may come from government
sources and may not be fully reliable.
Some of the facts and statistics in this prospectus are derived from publicly available
sources and other sources. Our Directors believe the sources of these facts and statistics are
reliable and appropriate and our Company has taken reasonable care in extracting and
reproducing such information. They do not believe that such information is false or misleading
in any material aspect or that any material fact has been omitted that would render such
information false or misleading. The information from official government sources has not
been independently verified by our Group, the Sole Sponsor or any other party involved in the
Global Offering and no representation is given as to its accuracy or completeness. Due to the
possibly flawed or ineffective sampling or discrepancies between published information and
market practices or other reasons, such facts and statistics may be inaccurate or may not be
comparable to official statistics. Y ou should not place undue reliance on them. Y ou should
consider how much weight or importance such facts or statistics carry and should not place
undue reliance on them.
Forward-looking statements contained in this prospectus are subject to risks and
uncertainties.
This prospectus contains forward-looking statements with respect to our competitive
positions, business strategies, operating efficiencies and future growth opportunities for
existing operations, plans and objectives of management, certain pro forma information and
other matters. The words “potential,” “continue,” “expect,” “plan,” “seek,” “intend,”
“anticipate,” “believe,” “could,” “may,” “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, among others, those relating to our future
business forecasts and prospects, capital expenditure, cash flows, working capital, liquidity and
capital resources are necessary estimates reflecting the best judgment of our Directors,
Supervisors and management, which involve a number of risks and uncertainties that could
cause actual results to materially differ from those mentioned in the forward-looking
statements. As a result, these forward-looking statements should be considered in light of
various important factors, including those set out in “Risk Factors” in this prospectus.
Therefore, such statements are not a guarantee of future performance, and you should not place
undue reliance on any forward-looking information in this prospectus.
All forward-looking statements in this prospectus are qualified by reference to this
cautionary statement.
RISK FACTORS
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If securities or industry analysts do not publish research or reports about our business,
or if they adversely change their recommendations, the market price and trading volume
may decline.
The trading market for our Shares will be influenced by research or reports that industry
or securities analysts publish about us or our business. If one or more analysts who cover us
downgrade our H Shares or publish negative opinions about us, the market price for our H
Shares would likely decline regardless of the accuracy of the information. If one or more of
these analysts cease coverage of us or fail to regularly publish reports on us, we could lose
visibility in the financial markets, which in turn could cause a decline in the market price or
trading volume of our H Shares.
Y ou should read the entire prospectus carefully and we strongly caution you not to place
any reliance on any information contained in press articles or other media regarding us
or the Global Offering.
We strongly caution you to read the entire prospectus carefully, instead of relying on any
information contained in press articles or other media regarding us or the Global Offering.
Prior to the publication of this prospectus, there may have been press and media coverage
regarding us and the Global Offering. Such press and media coverage may include references
to certain information that does not appear in this prospectus, including certain operational and
financial information, as well as projections, valuations and other information. We have not
authorized the disclosure of any such information in the press or media and do not accept any
responsibility for any such press or media coverage or the accuracy or completeness of any
such information or publication. No representation as to the appropriateness, accuracy,
reliability or completeness of any such information or publication has been made by us. To the
extent that any such information is inconsistent or conflicts with the information contained in
this prospectus, we disclaim responsibility for it, and you should not rely on such information.
RISK FACTORS
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In preparation for the Listing, our Company has applied for the following waivers from
strict compliance with the relevant provisions of the Listing Rules and exemption from strict
compliance with the Companies (Winding Up and Miscellaneous Provisions) Ordinance:
W AIVER IN RELATION TO MANAGEMENT PRESENCE IN HONG KONG
Pursuant to Rule 8.12 of the Listing Rules, we must have a sufficient management
presence in Hong Kong. This normally means that at least two of our executive Directors must
be ordinarily resident in Hong Kong. Rule 19A.15 of the Listing Rules further provides that the
requirement in Rule 8.12 of the Listing Rules may be waived by having regard to, among other
considerations, our arrangements for maintaining regular communication with the Stock
Exchange.
In addition, the Guide for New Listing Applicants provides that the listing applicant
should normally have the following arrangements for maintaining regular communication with
the Stock Exchange for the purpose of its granting waiver from strict compliance with the
requirements under Rule 8.12 of the Listing Rules: (a) the authorized representatives of the
listing applicant will act as the principal channel of communication with the Stock Exchange;
(b) the authorized representatives of the listing applicant should have means for contacting all
its directors promptly at all times as and when the Stock Exchange wishes to contact the
directors on any matters; (c) each director of the listing applicant who is not ordinarily resident
in Hong Kong possesses or can apply for valid travel documents to visit Hong Kong and can
meet with the Stock Exchange within a reasonable period; (d) the compliance advisor(s) of the
listing applicant will act as an additional channel of communication with the Stock Exchange;
and (e) each director of the listing applicant will provide their respective mobile phone
numbers, office phone numbers, email addresses and fax numbers to the Stock Exchange.
Since substantially all of the business operations of our Group are managed and
conducted outside of Hong Kong, and all of our executive Directors ordinarily reside in the
PRC, we do not have, and for the foreseeable future will not have, sufficient management
presence in Hong Kong for the purpose of satisfying the requirement under Rules 8.12 and
19A.15 of the Listing Rules. The Directors consider that either by means of relocation of our
existing executive Directors or appointment of additional executive Directors who will be
ordinarily resident in Hong Kong would not be beneficial to, or appropriate for, our Group and
therefore would not be in the best interests of our Company or the Shareholders as a whole.
Accordingly, we have applied for, and the Stock Exchange has granted, a waiver from strict
compliance with the requirements under Rules 8.12 and 19A.15 of the Listing Rules subject to
the following conditions to maintain regular and effective communication between the Stock
Exchange and us:
(i) we have appointed Ms. Liu Hongchan, one of our executive Directors, and Ms. Pau
So Yi, one of our joint company secretaries who is ordinarily resident in Hong Kong,
as our authorized representatives (“ Authorized Representatives ”) for the purpose
of Rule 3.05 of the Listing Rules to serve as our principal channel of communication
with the Stock Exchange. We have provided the Stock Exchange with their contact
W AIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES
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details, and they will be available to meet with the Stock Exchange to discuss any
matters within a reasonable period of time upon the request of the Stock Exchange
and will be readily contactable by telephone, facsimile and email;
(ii) as and when the Stock Exchange wishes to contact our Directors on any matters,
each of our Authorized Representatives will have means to contact all of our
Directors (including our independent non-executive Directors) promptly at all times.
We will implement measures such that (i) each Director must provide his or her
mobile phone number, office phone number, facsimile number and email address to
our Authorized Representatives and the Stock Exchange; and (ii) in the event that a
Director expects to travel or otherwise be out of office, he or she will provide the
phone number of the place of his or her accommodation to our Authorized
Representatives;
(iii) we have provided the Stock Exchange with the contact details of each Director to
facilitate communication with the Stock Exchange. Furthermore, each Director who
is not an ordinary resident in Hong Kong possesses or can apply for valid travel
documents to visit Hong Kong and can meet with the Stock Exchange within a
reasonable period of time, if required;
(iv) we have appointed Haitong International Capital Limited as our compliance advisor
pursuant to Rule 3A.19 of the Listing Rules, which will act as our additional and
alternative channel of communication with the Stock Exchange during the period
from the Listing Date to the date on which we comply with Rule 13.46 of the Listing
Rules in respect of our financial results for the first full financial year immediately
after the Listing, and its representative(s) will be fully available to answer enquiries
from the Stock Exchange. The compliance advisor will advise our Company on
on-going compliance requirements and other issues arising under the Listing Rules
and other applicable laws and regulations in Hong Kong after the Listing, and will
at all times have access to our Authorized Representatives, our Directors and the
other senior management of our Company to ensure that the compliance advisor is
in a position to provide prompt responses to any queries or requests from the Stock
Exchange in respect of our Company; and
(v) any meeting between the Stock Exchange and our Directors will be arranged through
our Authorized Representatives or compliance advisor or directly with our Directors
within a reasonable time frame. We will inform the Stock Exchange promptly in
respect of any changes in our Authorized Representatives and compliance advisor.
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W AIVER IN RELATION TO JOINT COMPANY SECRETARIES
Pursuant to Rules 3.28 and 8.17 of the Listing Rules, our company secretary must be an
individual who by virtue of his or 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 the following academic or professional qualifications to be acceptable:
(i) a member of The Hong Kong Chartered Governance Institute;
(ii) a solicitor or barrister as defined in the Legal Practitioners Ordinance (Chapter 159
of the Laws of Hong Kong); or
(iii) a certified public accountant as defined in the Professional Accountants Ordinance
(Chapter 50 of the Laws of Hong Kong).
Pursuant to Note 2 to Rule 3.28 of the Listing Rules, in assessing “relevant experience,”
the Stock Exchange will consider the individual’s:
(i) length of employment with the listing applicant and other issuers and the roles
he/she played;
(ii) familiarity with the Listing Rules and other relevant law 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
under Rule 3.29 of the Listing Rules; and
(iv) professional qualifications in other jurisdictions.
In addition, the Guide for New Listing Applicants provides that the waiver from strict
compliance with Rule 3.28 of the Listing Rules, if granted, will be for a fixed period of time
and on the following conditions: (a) 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
(b) the waiver will be revoked if there are material breaches of the Listing Rules by the
Company.
We have appointed Ms. Xu Liman (“ Ms. Xu ”) as one of the joint company secretaries on
November 22, 2024. Ms. Xu joined our Group as the general management officer of our
Company in March 2023, primarily responsible for overall coordination and execution of
corporate governance and company secretarial matters of our Group. Ms. Xu has accumulated
abundant knowledge about the business operations and governance of corporations with a
strong recognition of the corporate culture of our Group. By virtue of her position and
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familiarity with our Group, Ms. Xu has worked closely with our Directors and thus possessed
a thorough understanding of matters concerning the Board and its operations. As such, our
Directors believe that Ms. Xu is a suitable person to act as the company secretary of our
Company.
However, Ms. Xu does not possess the specified qualifications strictly required by Rule
3.28 and Rule 8.17 of the Listing Rules. As a result, we have appointed Ms. Pau So Yi (“ Ms.
Pau”), who meets the requirements under Rule 3.28 and Rule 8.17 of the Listing Rules, to act
as the other joint company secretary. For details of Ms. Xu’s and Ms. Pau’s biographies, see
“Directors, Supervisors and Senior Management.”
Over the initial period of three years from the Listing Date, we will implement the
following measures to assist Ms. Xu to satisfy the requisite qualifications as prescribed in
Rules 3.28 and 8.17 of the Listing Rules:
(i) Ms. Pau will assist Ms. Xu to enable her to discharge her duties and responsibilities
as a joint company secretary of our Company. Given Ms. Pau’s relevant experiences,
she will be able to advise both Ms. Xu and us on the relevant requirements of the
Listing Rules as well as other applicable laws and regulations of Hong Kong;
(ii) Ms. Xu will be assisted by Ms. Pau for an initial period of three years commencing
from the Listing Date, which should be sufficient for her to acquire the requisite
knowledge and experience under Rule 3.28 of the Listing Rules;
(iii) we will ensure that Ms. Xu has access to the relevant trainings and support to enable
her to familiarize herself with the Listing Rules and the duties required of a
company secretary of a Hong Kong listed company, and Ms. Xu has undertaken to
attend such trainings;
(iv) Ms. Pau will communicate with Ms. Xu on a regular basis regarding matters in
relation to corporate governance, the Listing Rules as well as other applicable laws
and regulations of Hong Kong which are relevant to our operations and affairs. Ms.
Pau will work closely with and provide assistance to Ms. Xu for her to discharge her
duties and responsibilities as a company secretary, including but not limited to
organizing the Board meetings and Shareholders’ meetings; and
(v) pursuant to Rule 3.29 of the Listing Rules, Ms. Xu and Ms. Pau will also attend in
each financial year no less than 15 hours of relevant professional training courses to
familiarize themselves with the requirements of the Listing Rules and other legal
and regulatory requirements of Hong Kong. Both Ms. Xu and Ms. Pau will be
advised by our legal advisors as to Hong Kong law and our compliance advisor as
and when appropriate and required.
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Accordingly, we have applied for, and the Stock Exchange has granted, a waiver from
strict compliance with the requirements of Rules 3.28 and 8.17 of the Listing Rules, for an
initial period of three years from the Listing Date, in accordance with the Guide for New
Listing Applicants on the conditions that (i) Ms. Pau is engaged as a joint company secretary
and provides assistance to Ms. Xu during this period; and (ii) the waiver will be revoked if Ms.
Pau, during the three-year waiver period, ceases to provide assistance to Ms. Xu, or if there are
material breaches of the Listing Rules by our Company. Before the end of the three-year
period, the Company must demonstrate and seek the Stock Exchange’s confirmation that Ms.
Xu, having had the benefit of Ms. Pau’s assistance during the three-year period, has attained
the relevant experience under note 2 to Rule 3.28 of the Listing Rules and is capable of
discharging the functions of company secretary so that a further waiver would not be necessary.
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DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS
This prospectus, for which our Directors collectively and individually accept full
responsibility, includes particulars given in compliance with the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, the Securities and Futures (Stock Market Listing) Rules
(Chapter 571V of the Laws of Hong Kong) and 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 in this
prospectus misleading.
UNDERWRITING AND INFORMATION ABOUT 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 set out the terms and conditions of the Hong Kong Public Offering. The Global
Offering comprises the Hong Kong Public Offering of initially 1,086,200 H Shares and the
International Offering of initially 9,775,600 H Shares (subject, in each case, to adjustment on
the basis as described in the section headed “Structure of the Global Offering” and, in case of
the International Offering, additionally to any exercise of the Over-allotment Option).
The Listing is sponsored by the Sole Sponsor and the Global Offering is managed by the
Sole Overall Coordinator. The Hong Kong Public Offering is fully underwritten by the Hong
Kong Underwriters under the terms and conditions of the Hong Kong Underwriting Agreement
and is subject to our Company and the Sole Overall Coordinator (for itself and on behalf of the
Hong Kong Underwriters) agreeing on the Offer Price. The International Offering is expected
to be fully underwritten by the International Underwriters subject to the terms and conditions
of the International Underwriting Agreement, which is expected to be entered into on or around
the Price Determination Date.
The Offer Price is expected to be determined between the Sole Overall Coordinator (for
itself and on behalf of the Underwriters) and our Company on the Price Determination Date.
The Price Determination Date is expected to be on or around Monday, July 7, 2025 and, in any
event not later than 12:00 noon on Monday, July 7, 2025. If, for any reason, the Offer Price
is not agreed among us and the Sole Overall Coordinator (for itself and on behalf of the
Underwriters) on or before 12:00 noon on Monday, July 7, 2025, the Global Offering will not
proceed and will lapse. For full information about the Underwriters and the underwriting
arrangements, see “Underwriting.”
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 in this prospectus. No person is authorized 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
authorized by our Company, the Sole Sponsor, the Sole Overall Coordinator, the Sole Global
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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--- page 99 ---
Coordinator, the Sole Bookrunner, the Joint Lead Managers, the Underwriters, any of their
respective directors, officers, employees, partners, agents, employees or advisors or any other
party involved in the Global Offering.
Neither the delivery of this prospectus nor any subscription or acquisition made under it
shall, 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 of any date
subsequent to the date of this prospectus.
Further information regarding the structure of the Global Offering, including its
conditions, are set out in the section headed “Structure of the Global Offering” and the
procedures for applying for our Hong Kong Offer Shares are set out in the section headed “How
to Apply for Hong Kong Offer Shares.”
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 acquisition of Hong Kong Offer Shares to, confirm that
he is aware of the restrictions on offers and sales of the Hong Kong Offer Shares described in
this prospectus.
No action has been taken to permit a public offering of the Offer Shares or the general
distribution of this prospectus in any jurisdiction other than in Hong Kong. Accordingly, 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 authorized
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 authorization by the relevant
securities regulatory authorities or an exemption therefrom. In particular, the Offer Shares have
not been offered or sold, and will not be offered or sold, directly or indirectly, in the PRC.
APPLICATION FOR LISTING OF THE H SHARES ON THE STOCK EXCHANGE
We have applied to the Stock Exchange for the granting of the listing of, and permission
to deal in, the H Shares to be issued pursuant to the Global Offering and the Conversion of
Unlisted Shares into H Shares (including any Shares which may be issued pursuant to the
exercise of the Over-allotment Option).
Dealings in the H Shares on the Stock Exchange are expected to commence on
Wednesday, July 9, 2025. No part of our Shares or loan capital is listed or dealt in on any other
stock exchange and no such listing or permission to list is being or proposed to be sought on
any other stock exchange as of the date of this prospectus. All the Offer Shares will be
registered on the H Share register of members of the Company in Hong Kong in order to enable
them to be traded on the Stock Exchange.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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Under section 44B(1) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, if the permission for the H Shares to be listed on the Stock Exchange pursuant to
this prospectus has been refused before the expiration of three weeks from the date of the
closing of the Global Offering or such longer period not exceeding six weeks as may, within
the said three weeks, be notified to us by or on behalf of the Stock Exchange, then any
allotment made on an application in pursuance of this prospectus shall, whenever made, be
void.
FILING WITH THE CSRC
In compliance with the Overseas Listing Trial Measures, we shall complete filing
procedures with the CSRC and report relevant information with respect to the Listing after the
submission of our listing application to the Stock Exchange. We have submitted filing
documents with the CSRC for the application for the Listing on December 3, 2024. The CSRC
published the notification on completion of filing procedure on June 11, 2025. No other
approval from CSRC are required to be obtained for the Listing.
H SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
Subject to the granting of the listing of, and permission to deal in, the H Shares on the
Stock Exchange and 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 Listing Date or on any other date as determined by
HKSCC. Settlement of transactions between participants of the 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 Operation 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 stockbroker or other professional advisor for details
of those settlement arrangements and how such arrangements will affect their rights and
interests.
H SHARES REGISTER AND STAMP DUTY
All of the H Shares issued pursuant to applications made in the Global 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. Our principal register of members will be
maintained by us at our headquarters in the PRC.
Dealings in the H Shares will be subject to Hong Kong stamp duty. See “Appendix VI —
Statutory and General Information — E. Other Information — 7. Taxation of Holders of
H Shares.” For further details of Hong Kong stamp duty, please seek professional tax advice.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–9 0–


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PROFESSIONAL TAX ADVICE RECOMMENDED
Potential investors in the Global Offering are recommended to consult their professional
advisors as to the taxation implications of subscribing for, purchasing, holding or disposal of,
and/or dealing in the H Shares or exercising rights attached to them. None of us, the Sole
Sponsor, the Sole Overall Coordinator, the Sole Global Coordinator, the Sole Bookrunner, the
Joint Lead Managers, the Underwriters, any of their respective directors, officers, employees,
partners, agents, advisors or representatives 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, purchasing, holding, disposition of, or dealing in, the H Shares or
exercising any rights attached to them.
EXCHANGE RATE CONVERSION
Unless otherwise specified, amounts denominated in HK$, US$ and RMB have been
translated, for the purpose of illustration only, into each other in this prospectus at the
following exchange rates prevailing on the Latest Practicable Date:
HK$1.00: RMB0.9133;
US$1.00: RMB7.1695; and
US$1.00: HK$7.8498.
No representation is made that any amounts in HK$, US$ or RMB were or could have
been or could be converted into each other at such rates or any other exchange rates on such
date or any other date.
ROUNDING
Certain amounts and percentage figures included in this prospectus have been subject to
rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures preceding them.
LANGUAGE
If there is any inconsistency between this prospectus and its Chinese translation, this
prospectus shall prevail. However, for ease of reference, the names of the Chinese laws and
regulations, government 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. In the event of any inconsistency, the Chinese name shall prevail.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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DIRECTORS
Name Address Nationality
Executive Directors
Mr. Y ao Xue (௛) Room 4, 11/F, Unit 1, Building 2
Zhongkanyuan Community
18 Zhongnan Road
Wuchang District, Wuhan
Hubei Province
PRC
Chinese
Ms. Shen Hongmin (ઽ) Room 3G, 22/F, Block A
Guangyuan Building
No. 76 Donghu Road
Wuchang District, Wuhan
Hubei Province
PRC
Chinese
Mr. Guo Jiaping (̻) Room 302, 3/F, Unit 1, Building 6
No. 273 Ruian Street
Hongshan District, Wuhan
Hubei Province
PRC
Chinese
Ms. Liu Hongchan (ᄬ) Room 7, No. 012 Kangxin Garden
Guanxi Community
Hongshan District, Wuhan
Hubei Province
PRC
Chinese
Independent non-executive Directors
Mr. Shu Yijie ( ଯ່௫) Room 108, Building 32
No. 210 Jixi Road
Shushan District, Hefei
Anhui Province
PRC
Chinese
Ms. Huang Suzhen (ޜNo. T8-1603
Phase I Chunshui’an Donghu
No. 166 Huanle Avenue
Wuchang District, Wuhan
Hubei Province
PRC
Chinese
Ms. Wang Taosha ( ˮௗӍ) House 10, Seascape
42 Sassoon Road, Pok Fu Lam
Hong Kong
Chinese
(Hong Kong)
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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SUPERVISORS
Name Address Nationality
Ms. Huang Meiyun (ڄߕRoom 402, Unit 1, Building 6
No. 1 Zisha Road
Wuchang District, Wuhan
Hubei Province
PRC
Chinese
Ms. Xu Cen (Ҋ) Room 135, F Tianxia Oujing Garden
No. 196 Julong Avenue
Panlongcheng
Huangpi District, Wuhan
Hubei Province
PRC
Chinese
M s .Y a nG e(ࣸNo. 66-5-2 Xinyi Village, Gaojiawan
Wuchang District, Wuhan
Hubei Province
PRC
Chinese
For further information regarding our Directors and Supervisors, see “Directors,
Supervisors and Senior Management.”
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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PARTIES INVOLVED IN THE GLOBAL OFFERING
Sole Sponsor Haitong International Capital Limited
Suites 3001-3006 and 3015-3016
One International Finance Centre
No. 1 Harbour View Street
Central
Hong Kong
Sponsor-Overall Coordinator, Sole Overall
Coordinator, Sole Global Coordinator
and Sole Bookrunner
Haitong International Securities Company
Limited
22/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
Joint Lead Managers Haitong International Securities Company
Limited
22/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
Livermore Holdings Limited
Unit 1214A, 12/F,
Tower II Cheung Sha Wan Plaza
833 Cheung Sha Wan Road
Kowloon
Hong Kong
Capital Market Intermediaries Haitong International Securities Company
Limited
22/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
Livermore Holdings Limited
Unit 1214A, 12/F,
Tower II Cheung Sha Wan Plaza
833 Cheung Sha Wan Road
Kowloon
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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Legal Advisors to our Company As to Hong Kong Laws
Tian Yuan Law Firm LLP
Suites 3304-3309, 33/F
Jardine House
One Connaught Place
Central
Hong Kong
As to PRC Laws
Tian Yuan Law Firm
5/F, Tower A, Corporate Square
35 Financial Street
Xicheng District
Beijing
PRC
As to PRC Laws in Respect of Data Compliance
Tahota Law Firm
Palm Springs International Center
No. 199 Middle of Tianfu Avenue
High-tech Zone, Chengdu
Sichuan Province
PRC
Legal Advisors to the Sole Sponsor and
Underwriters
As to Hong Kong Laws
Sidley Austin
39/F, Two International Finance Centre
8 Finance Street
Central
Hong Kong
As to PRC Laws
Commerce & Finance Law Offices
12-15th Floor, China World Office 2
No. 1 Jianguomenwai Avenue
Beijing
PRC
Auditor and Reporting Accountant Ernst & Y oung
Certified Public Accountants
Registered Public Interest Entity Auditor
27/F, One Taikoo Place
979 King’s Road, Quarry Bay
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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Compliance Adviser Haitong International Capital Limited
Suites 3001-3006 and 3015-3016
One International Finance Centre
No. 1 Harbour View Street
Central
Hong Kong
Industry Consultant Frost & Sullivan (Beijing) Inc., Shanghai
Branch Co.
Suite 2504
Wheelock Square
1717 Nanjing West Road
Shanghai
PRC
Receiving Bank CMB Wing Lung Bank Limited
45 Des V oeux Road Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 107 ---
Registered Office Room 5, 11/F and Rooms 601, 608-612, 6/F
Huayin Building
No. 786 Minzhu Road
Zhongnan Road Sub-District
Wuchang District, Wuhan
Hubei Province
PRC
Headquarters and Principal Place of
Business in the PRC
Room 5, 11/F and Rooms 601, 608-612, 6/F
Huayin Building
No. 786 Minzhu Road
Zhongnan Road Sub-District
Wuchang District, Wuhan
Hubei Province
PRC
Principal Place of Business in Hong Kong Room 1920, 19/F, Lee Garden One
33 Hysan Avenue
Causeway Bay
Hong Kong
Company’s Website www.chinadzyl.com
(the information contained on the website
does not form part of this prospectus)
Joint Company Secretaries Ms. Xu Liman ( ஢஁ਟ)
Room 202, Unit 1, Building 4
Bairuijing Phase II, Wuluo Road
Wuchang District, Wuhan
Hubei Province
PRC
Ms. Pau So Yi (׋)
Chartered Secretary, Chartered
Governance Professional)
Room 1920, 19/F, Lee Garden One
33 Hysan Avenue
Causeway Bay
Hong Kong
CORPORATE INFORMATION
–9 7–


--- page 108 ---
Authorized Representatives Ms. Liu Hongchan (ᄬ)
Room 7, No. 012 Kangxin Garden
Guanxi Community
Hongshan District, Wuhan
Hubei Province
PRC
Ms. Pau So Yi (׋)
Room 1920, 19/F, Lee Garden One
33 Hysan Avenue
Causeway Bay
Hong Kong
Audit Committee Ms. Huang Suzhen (ޜ)Chairperson)
Mr. Shu Yijie ( ଯ່௫)
Ms. Wang Taosha ( ˮௗӍ)
Remuneration Committee Mr. Shu Yijie ( ଯ່௫) (Chairperson)
Ms. Huang Suzhen (ޜ)
Mr. Y ao Xue (௛)
Nomination Committee Mr. Y ao Xue (௛) (Chairperson)
Mr. Shu Yijie ( ଯ່௫)
Ms. Wang Taosha ( ˮௗӍ)
H Share Registrar Tricor Investor Services Limited
17/F, Far East Finance Centre
16 Harcourt Road
Hong Kong
Principal Bank(s) China Merchants Bank Wuhan
Jiyuqiao Branch
No. 108 Heping Avenue
Wuchang District, Wuhan
Hubei Province
PRC
Bank of Communications Wuhan
Shuiguohu Branch
No. 108 Zhongbei Road
Wuchang District, Wuhan
Hubei Province
PRC
CORPORATE INFORMATION
–9 8–


--- page 109 ---
The information and statistics set out in this section and other sections of this
prospectus were extracted from the report commissioned by us and prepared by Frost &
Sullivan, and from various official government publications and other publicly available
publications. The information from official government sources has not been
independently verified by us, the Sole Sponsor , the Sole Overall Coordinator , the Sole
Bookrunner , the Joint Lead Managers, the Underwriters, or any of our or their respective
directors, advisors, officers, employees or agents or any other persons or parties involved
in the Global Offering, and no representation is given as to its accuracy, reliability or
completeness.
SOURCE AND RELIABILITY OF INFORMATION
In connection with the Global Offering, we engaged an independent market research
consultant, Frost & Sullivan, to conduct an analysis of, and to prepare an industry report on the
industries where we operate with a commission fee of RMB550,000. Founded in 1961, Frost
& Sullivan is an independent global consulting firm that conducts industry research and
prepares industry report on a wide range of industries, among other services. The information
from Frost & Sullivan disclosed in this prospectus is extracted from the Frost & Sullivan
Report with its consent.
In compiling and preparing the Frost & Sullivan Report, Frost & Sullivan used the
following key methodologies to collect multiple sources, validate the collected data and
information, and cross-check each respondent’s information and expressions against those of
others: (i) detailed primary research, which involved discussing the status of the industry with
leading industry participants and industry experts; and (ii) secondary research, which involved
reviewing published sources including reports of market participants, independent research
reports and data based on Frost & Sullivan’s own research database.
The market projections in the Frost & Sullivan Report are mainly based on the following
assumptions: (i) China’s economy is expected to maintain steady growth in the next decade; (ii)
China’s social, economic and political environment is expected to remain stable in the forecast
period; and (iii) market drivers, such as the stable development of favorable regulatory
policies, upgraded and activated consumption willingness and rising awareness of dental care,
increased prevalence of dental diseases, increasingly important roles of private dental services
providers in the industry, among others. In particular, the projected total market size was
estimated based on historical data analysis plotted against macroeconomic data as well as
specific related industry drivers.
INDUSTRY OVERVIEW
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DIRECTORS’ CONFIRMATION
After making reasonable inquiries, our Directors confirm that, to the best of their
knowledge, there has been no detrimental change in the market information demonstrated in
the Frost & Sullivan Report since the date of the report that may qualify, contradict or have an
impact on the information in this prospectus.
THE DENTAL SERVICES MARKET IN CHINA
Overview of Dental Services Market in China
Dental services refer to the services provided by dental services providers to maintain oral
health, which primarily includes (i) general dentistry services, (ii) implantology services, and
(iii) orthodontics services.
 General dentistry services. General dentistry services typically cover dental
preventive care, regular dental treatment and dental restorative services. Dental
preventive care typically includes teeth cleaning, soft tissue examination and
screening for dental diseases or potential issues. Regular dental treatment mainly
focuses on the examination, diagnosis, and treatment of disorders of the orofacial
region, including teeth filling, root canal treatment, among others. Dental restorative
services focus on restoring the function, integrity and morphology of missing tooth
structure, primarily including repairing damaged teeth by dental crown or removable
denture.
 Implantology services. Implantology services mainly deal with the permanent
implantation of dental prostheses in the bone tissue when it is determined that a
natural tooth must be extracted. Implantology services have become a more durable
option for customers who need teeth replacement as it would not slip, make noise
or cause bone damage that dentures may cause.
 Orthodontics services. Orthodontics services mainly focus on preventing,
diagnosing and treating malocclusions as well as skeletal abnormalities of
developing or mature orofacial structures by different types of dental braces.
Orthodontics services aim to address misalignment of teeth as well as asymmetric
jaw relationships.
INDUSTRY OVERVIEW
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Participants of Dental Services Market in China
Dental institutions are the main participants of the dental services market in China. By
nature as specified in Medical Institution Practicing Licenses, dental institutions are generally
categorized into dental hospitals, dental out-patient departments and dental clinics. The
following table sets forth major differences among these three types of dental institutions under
the applicable regulatory requirements and standards:
Dental hospitals *
Dental out-patient
departments Dental clinics
Dental chairs /H1118/H1118/H1118/H111820 to 59 dental chairs
15 to 49 beds
/H113504 dental chairs /H113501 dental chair
Departments /H1118/H1118/H1118/H1118Clinical departments:
at least have oral
medicine, oral and
maxillofacial surgery,
prosthodontics,
preventive dentistry,
and an oral emergency
room;
No departmental
divisions. Carrying out
diagnostic and
treatment in oral
medicine, oral surgery,
and prosthodontics
Designate personnel
to manage
pharmaceuticals,
laboratory testing
(if no arrangement
by testing center),
radiology and
sterilization supply
No departmental
divisions
Medical technical
departments: at least
have departments of:
pharmacy, laboratory,
radiology, sterilization
supply room and
medical records room
Medical
professionals /H1118/H1118/H1118
/H113501.03 medical
professionals per
dental chair; /H113502
dentists at the level of
associate-chief dentist
or above; /H113501 dentist
in each department;
ratio of dentists to
nursing staff /H113501:1.5;
ratio of prosthodontists
to technicians shall be
1:1
/H113501.03 medical
professionals per
dental chair; /H113502
dentists with one at
the level of attending
dentist or above; for
dental out-patient
departments with more
than 4 dental chairs,
/H113501 additional dentist
for every 4 additional
dental chairs; ratio of
dentists to nursing
staff /H113501:1
/H113501 dentist with at least
five-year practicing
experience; /H113501
additional dentist for
every 2 additional
dental chairs; for
dental clinics with
more than 4 dental
chairs,
/H113501 dentist at the
level of attending
dentist or above
INDUSTRY OVERVIEW
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Dental hospitals *
Dental out-patient
departments Dental clinics
Scale /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118An area of /H1135030 sq.m.
per dental chair; a net
usable area of /H113506
sq.m. per dental chair
in treatment room
An area of /H1135030 sq.m.
per dental chair; a net
usable area of /H113506
sq.m. per dental chair
in treatment room
For dental clinics with 1
dental chair, /H1135030
sq.m.; for dental
clinics with more than
2 dental chairs, an area
of /H1135025 sq.m. per
dental chair; a net
usable area of /H113509
sq.m. per dental chair
in treatment room
Note:
* Representing the major regulatory requirements and standards for Class II dental hospitals. Class III
dental hospitals are generally subject to higher requirements and standards under the applicable laws
and regulations in China, primarily including greater number of dental chairs and beds ( /H1135060 dental
chairs and /H1135050 beds), larger operational scale (an area of /H1135040 sq.m. per dental chair and an area of
/H1135060 sq.m. per bed) and more comprehensive range of departments with senior level dentist
requirements.
Under the applicable PRC laws and regulations, obtaining the classification is not a compulsory
requirement for dental institutions. In practice, relevant government authorities in certain areas, such as
Hubei and Hunan provinces, also permit unclassified dental hospitals (not yet assigned an official tier)
to commence operations. Chenzhou Hospital obtained the Medical Institution Practicing License in
April 2022 and became qualified as a dental hospital under the applicable local laws and regulations.
According to the Medical Institution Practicing License of Chenzhou Hospital, it had 20 dental chairs
and 6 dental beds, significantly exceeding the standard requirements for dental out-patient departments.
We expect to apply for the classification for such dental hospital in the future based on our actual
business needs.
The following table sets forth a comparison of public dental institutions and our private
dental institutions.
Type of
institutions Public dental institutions * Our private dental institutions
Pricing
standards
Service
scopes
Government-guided pricing without
adjustment flexibility
Market-oriented pricing with differentiated
packages
Comprehensive treatment for dental
diseases, including complex diseases
and in-patient services
Daily dental care and treatment for common
dental diseases, implantology services,
orthodontics services, pediatric dentistry, etc.
Service
experience
Comparative
advantages
Longer waiting time for registration,
treatment and payment
Experienced in handling complex
cases and rich expert resources
Seamless, convenient and customized
service experiences in a comfortable
environment with personalized care
Customer-centric services, advanced
medical equipment and organized allocation
of resources under direct chain model
Note:
* Including both dental departments of public general hospitals and public dental hospitals.
INDUSTRY OVERVIEW
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With the increasing prevalence of dental diseases as well as the rising awareness of dental
care, the number of dental institutions in China is expected to increase at a CAGR of 3.7% from
107.3 thousand as of December 31, 2024 to 128.9 thousand as of December 31, 2029, among
which the number of private dental institutions is expected to increase at a CAGR of 3.8% from
99.3 thousand as of December 31, 2024 to 119.8 thousand as of December 31, 2029, while the
number of public dental institutions is expected to increase at a CAGR of 2.6% from 8.0
thousand as of December 31, 2024 to 9.1 thousand as of December 31, 2029. From 2024 to
2029, private dental institutions are expected to maintain a significant presence in China,
comprising over 92% of the total number of dental institutions nationwide. The following
diagram sets forth the historical and forecasted number of dental institutions in China from
2020 to 2029.
Number of Dental Institutions in China, 2020-2029E
0
30
60
90
120
150
2020 2021 2022 2023 2024 2025E 2026E 2027E 2028E 2029E
89.6 86.7 94.7 102.4 106.7 111.0 115.4 119.8
97.3 94.1
102.4
110.6 115.1 119.6 124.3 128.9
80.5
87.7
7.2
7.7 7.4
7.7
8.2
99.3
107.3
8.0
8.4 8.6 8.9 9.1
Number CAGR (2020-2024) CAGR (2024-2029E)
2.7% 2.6%
5.4% 3.8%
Total 5.2% 3.7%
Public Dental Institutions
Private Dental Institutions
(Thousands)
Source: Frost & Sullivan analysis
Customers generally pay dental institutions through online payments via third-party
platforms, cash or bank cards. Besides, customers can choose to rely on public medical
insurance programs to pay expenses at Medical Insurance Designated Medical Institutions. For
private dental institutions in China, settlements under the public medical insurance programs
generally accounts for less than 15% of their total settlement amount. In Hubei and Hunan
provinces, over 80% of the general dentistry services and substantially all of the implantology
and orthodontics services are not covered by the public medical insurance programs.
In recent years, the PRC government has been expanding public medical insurance
programs to improve the accessibility of medical services and reduce the financial burden on
patients. As of the Latest Practicable Date, in the private dental services market in China, the
number of private and public Medical Insurance Designated Medical Institutions reached
approximately 32.0 thousand and 8.0 thousand, respectively.
INDUSTRY OVERVIEW
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Market Size of Dental Services Market in China
The market size of the dental services market in China in terms of total revenue generated
by dental services providers in China fluctuated from 2020 to 2024 due to the outbreak of
COVID-19 pandemic in 2020 and the following wide spreads of highly transmissible variants
of COVID-19. Despite the decrease in 2020 and 2022 due to the COVID-19 pandemic, the
market size of the dental services market in China increased in general from RMB119.9 billion
in 2020 to RMB147.2 billion in 2024. As the post-pandemic economic recovery is slower than
expected, the dental services market in China is estimated to experience dampened growth in
its market size. However, in the long term, driven by favorable policies to encourage
consumption and elevate the purchasing power of Chinese residents, such as the Opinions on
Promoting High-Quality Development of Service Consumption (ਕऊ൬৷ሯඎ೯
จԈ) and the Measures for Creating New Consumption Scenarios and Cultivating New
Growth Points in Consumption ()
promulgated in 2024, the market size of the dental services market in China is expected to
reach RMB200.4 billion in 2029, growing at a CAGR of 6.4% from 2024 to 2029. In particular,
the total revenue generated by private dental services providers in China is expected to reach
RMB145.0 billion in 2029, representing a CAGR of 7.0% from 2024 to 2029. In contrast, the
total revenue generated by public dental services providers in China is expected to grow at a
more moderate CAGR of 4.9% from 2024 to 2029, reaching RMB55.4 billion in 2029. The
following diagram sets forth the historical and forecasted market size of the dental services
market in China from 2020 to 2029.
Market Size of Dental Services Market in China, 2020-2029E
0
50
100
150
200
250
2020 2021 2022 2023 2024 2025E 2026E 2027E 2028E 2029E
83.1 101.3 85.9 101.5 103.5 111.1 119.5 127.9 136.4
119.9
141.0
123.4
144.6 147.2
157.4
168.0
178.7
189.6
36.8
39.7
37.5
43.1 43.7
46.3
48.5
50.8
53.2
145.0
200.4
55.4
Total Revenue CAGR (2020-2024) CAGR (2024-2029E)
4.4% 4.9%
5.6% 7.0%
Total(RMB in Billions) 5.3% 6.4%
Public Dental Institutions
Private Dental Institutions
Source: Frost & Sullivan analysis
INDUSTRY OVERVIEW
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--- page 115 ---
Market Drivers of Dental Services Market in China
Dental services market in China is primarily driven by the following key factors:
 Favorable government policies. The Chinese government has issued a series of
favorable policies to promote the development of the dental services market in
China. For instance, the NHC released the Dental Health Action Plan (2019-2025)
(ࣩ2019 ϋ-2025 ϋ)) in 2019, which advocates for the high-
quality development of the dental services market and encourages private dental
services providers to participate in the prevention and treatment of dental diseases.
The State Council issued the 14th Five Year Plan for National Health (“ɤ̬ʞ”
೥) in 2022, which propels comprehensive prevention and control of
chronic diseases, with a focus on common dental diseases. The promulgation of
these policies indicates that the Chinese government has attached great importance
to dental health, which promoted the development of the dental services market in
China;
 Increased prevalence of dental diseases. The prevalence rate of dental diseases,
defined as the proportion of dental disease cases relative to the total population at
a given time, has been increasing in China. According to the third and fourth
nationwide epidemiological surveys on dental health (ݟ)
conducted by the NHFPC in 2007 and 2017, respectively, the overall prevalence rate
of dental diseases in China surpassed 90%. The number of dental disease cases in
China increased at a CAGR of 4.4% from 638.2 million in 2020 to 757.7 million in
2024. In recent years, shifts in dietary patterns and excessive daily sugar
consumption have elevated the risk of dental diseases. The aggregate retail sales of
tobacco and alcohol in China increased at a CAGR of 9.4% from RMB412.4 billion
in 2020 to RMB589.9 billion in 2024. Moreover, the sugar consumption in foods and
beverages in China increased at a CAGR of 2.7% from 8.1 million tonnes in 2020
to 9.0 million tonnes in 2024. In addition, the prolonged exposure to high pressure
may weaken the immune system and increase the risks of dental diseases.
Meanwhile, the natural reparative capacity of teeth tends to decline with age,
making the elderly population more susceptible to a range of dental issues due to the
physiological effects of aging. As a result, the prevalence rate of dental diseases in
China further increased, exceeding 95% as of December 31, 2024. The increased
cases and prevalence rate of dental diseases stimulated robust demands for dental
services in China;
 Rising awareness of dental health. With long-term knowledge popularization in
dental health, customers are paying more attention to daily dental care and regular
dental examinations, and are willing to pay more for quality dental services. In
addition, young parents and educational institutions are placing greater emphasis on
children’s dental health, and have been continuously cultivating awareness of dental
health from an early age. Rising awareness of dental health drives the dental services
market in China continuously; and
INDUSTRY OVERVIEW
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--- page 116 ---
 Private dental services providers play an increasingly important role. The Chinese
government has promulgated a series of policies to encourage social capital to
participate in the provision of healthcare services and promote the development of
private medical institutions, aiming to optimize medical resource allocation and
complement the role of public medical institutions. For instance, in 2013, the NHC
issued the Several Opinions on Accelerating the Development of Socially Operated
Medical Institutions (ʍจԈ) to encourage social
capital to establish high-level and large-scale medical institutions. In 2022, the State
Council issued the 14th Five- Year Plan for National Health (“ɤ̬ʞ”਷͏਄ੰ
஝ྌ) to promote the sustained and standardized development of socially operated
medical institutions. Additionally, in 2024, the State Council issued the Key Tasks
for Deepening the Reform of Medical and Health Systems (ଉʷᔼᖹሊ͛᜗Փҷ
ࠧ2024ᓃʈЪ΂ਕ) to promote and regulate the development of private
medical institutions. Benefiting from such policies, the private dental services
providers, especially the community focused dental institutions, have been playing
an increasingly important role and the private dental services market in China has
grown rapidly in recent years. As of December 31, 2024, the number of private
dental institutions accounted for approximately 92.5% of the total number of dental
institutions in China. Additionally, in 2024, the revenue generated by private dental
services providers accounted for approximately 70.3% of the total revenue
generated by dental services providers in China. Compared to the public dental
services providers, private dental services providers generally provide a wide range
of dental services in comfortable environment with advanced technology and
personalized care. Through offering diverse appointment channels and service
choices, private dental services providers treat dental diseases while addressing
customers’ preferences. Leveraging high decision-making flexibility, it is easier for
private dental services providers to introduce advanced dental technology and
equipment to improve service capacity. With highly qualified professionals and
advanced medical equipment, private dental services providers can offer
personalized services and improved customer experience.
Future Opportunities of Dental Services Market in China
Dental services market in China faces the following major opportunities:
 Promulgation of policies that standardize the development. The Chinese
government has promulgated a series of standards and regulations, including quality
standards for healthcare services, safety standards for medical equipment and
materials, and professional qualification requirements for medical professionals, to
promote the standardized development of the dental services market in China. For
instance, the NHC and other three departments jointly issued the Notice on Further
Promoting the Management of Dental Services and Guarantees (ආɓӉપආ
) in 2023, which emphasized the
standardization of diagnosis and treatment for dental diseases. Additionally, the
standardized development of the dental services market facilitates transparent
pricing of dental services, which on one hand enhances the accessibility and
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penetration rate of dental services, and on the other hand accelerates the elimination
of small-sized dental services providers that lack economies of scale and enough
operational capabilities. With the standardization of the dental services market in
China, leading dental services providers have gained competitive advantages by
leveraging their standardized service processes and operation specifications, and
economies of scale, which further promotes industry consolidation;
 Direct chain model. In recent years, customers have paid more attention to service
experience, convenience of services, service quality and brand reputation of dental
services providers. With the establishment of standardized management systems,
direct chain model can achieve coherent diagnosis and treatment processes,
consistent service standards and unified brand image, offering customers reliable
and professional services in all in-network dental institutions. Additionally,
standardized direct chain model facilitates rapid expansion, achieving wide
coverage and deep penetration of dental services, and thus realizing economies of
scale and elevated competitiveness. As of December 31, 2024, only approximately
3% of dental institutions were operated under a chain model, which led to a
fragmented market with numerous participants lack of standardization. Market
participants with direct chain model can easily expand their business scales and
increase market shares, which facilitates market consolidation;
 Growing demand for community dental services. As an important part of China’s
healthcare service system, community healthcare services provide basic medical
attention and convenient healthcare services for residents. Private community
healthcare services represent community healthcare services provided by private
medical institutions located in or adjacent to communities, covering a wide range of
healthcare services to address residents’ common healthcare demands. The total
revenue of private community healthcare services in China reached approximately
RMB403.0 billion in 2024, accounting for 31.2% of the total revenue of private
healthcare services in China, while the revenue of dental services accounted for
approximately 10% of the total revenue of private community healthcare services in
China. Dental services are characterized by high frequency and strong revisit
dynamics, primarily driven by the complexity of dental conditions, extended
treatment timelines, and increasing demand for preventive care. To be specific,
implantology services typically involve multiple stages, including the initial
consultation, preoperative examination, surgical implantation and the final crown
installation, spanning a period of 3 to 12 months. Complex dental conditions require
longer treatment processes with multiple follow-up visits, which further increases
the frequency of customer visits. In addition, with the rising awareness of dental
health, more customers are opting for preventive care, such as regular teeth cleaning
and dental examinations. These basic dental services which are inherently high in
frequency, further enhance customer retention and return rates. The growing demand
for convenient and quality dental services from residents in communities has driven
the penetration of high-quality dental services into the communities. Dental services
providers respond to residents’ daily dental treatment needs by staying in proximity
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to communities. With the continuous growth in demand for community dental
services, dental services providers that focus on community dental services face
increasing development opportunities;
 Penetration into second- and third-tier cities. Nowadays, the competition among
dental services providers in first-tier cities and some developed second-tier cities
has been fierce. As the dental services market in developed cities is nearly saturated,
resources of dental services are gradually penetrating into second- and third-tier
cities. The average annual disposable income in second- and third-tier cities has
experienced rapid growth in recent years, which facilitated the increasing
consumption willingness on dental services. In the future, more dental service
resources are expected to amass to second- and third-tier cities, creating
development potential for dental services providers in these cities; and
 Increasing focus on advanced digitalization. Dental services providers in China are
expected to increasingly focus on enhancing their services and operations through
advanced digitalization technologies, such as digital scanning, 3D modeling and
robotic-assisted implant, among others. Advancement in digitalization promotes
specialization in medical practices, streamlined service delivery and improved
operational efficiency, which enables dental services providers to offer high-quality
services to more customers and cultivate well-regarded brand images among
customers.
Entry Barriers to Dental Services Market in China
New entrants to the dental services market in China primarily encounter the following
entry barriers:
 Medical talent. Professional dentists are the core competitiveness of dental services
providers, as their professional skills and clinical experiences directly affect service
quality and customer satisfaction. Currently, seasoned dentists are scarce in China.
In 2024, the number of dentists per million population in China was only 283, far
below 852 in Japan and 608 in the United States in the same year. To attract and
retain excellent medical professionals, dental services providers need to offer
competitive compensation packages and promising career promotion paths. In
addition, established dental services providers are actively seeking collaboration
with academic institutions to develop their talent teams. For new entrants, it is rather
difficult to recruit and maintain their own talent reserves;
 Business qualification. Establishing a dental institution needs to obtain the Medical
Institution Practicing License and meet requirements on medical equipment,
department standards, staff qualification, operating area, among others, to pass the
examination of relevant government authorities. In addition, dental institutions need
to undergo regular supervision and quality assessments to ensure compliance with
industry standards for sustainable operation;
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 Management and operation capability. Efficient management and operation
capabilities ensure that dental services providers can optimize service processes,
improve service qualities and reduce operating costs. Leading dental services
providers usually possess strong capabilities in medical resource allocation,
equipment and consumables procurement management, and marketing strategies.
Especially, the implementation of centralized procurement for dental implants
caused reduction in the prices of implantology services, which could adversely
affect the profitability of dental services providers. However, well-established
dental services providers with chain operations and strong supply chain management
capabilities can leverage economies of scale and sufficient management experience
to effectively control costs and improve cost-efficiency, thereby enhancing their
competitiveness. New entrants without enough capabilities may face great
challenges in competing with existing dental services providers in cost control and
profitability;
 Local reputation and brand influence. Due to significant differences in
specialization level and service quality of dental services providers, customers
generally rely on local reputation and brand influence when choosing dental services
providers. Moreover, customers tend to repeatedly pay visits to dental services
providers with whom they are familiar and satisfied. Therefore, existing dental
services providers have developed their own customer bases and sound local
reputation, which enables them to achieve scalable chain operations while setting a
barrier for new entrants; and
 Substantial investments in medical equipment and other medical resources. There
are a large number of categories of medical equipment necessary for dental services
providers, such as dental chairs, disinfection equipment, operating tables, and
relevant operating and management systems, among others. The deployment of these
medical resources generally determines the business scale of dental services
providers, which requires substantial investments and has become one of the major
entry barriers in the dental services market in China. Dental services providers with
positive operating cash flow and strong profitability have advantages in selecting
and procuring medical equipment for better operations.
THE PRIV ATE DENTAL SERVICES MARKET IN CHINA
Overview of Private Dental Services Market in China
Compared to public dental services providers, private dental services providers generally
possess more advanced medical equipment and offer customer-centric services. In addition,
private dental services providers with chain operations easily and quickly realize business
expansion, which enables them to achieve synergies among chain institutions, apply
standardized diagnosis and treatment procedures, and focus on the provision of quality dental
services and customer experiences.
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Despite the decrease in 2020 and 2022 due to the COVID-19 pandemic, the number of
private dental institutions in China increased in general from approximately 80.5 thousand as
of December 31, 2020 to 99.3 thousand as of December 31, 2024. Benefiting from the
favorable policies to encourage social capital to participate in healthcare services, the number
of private dental institutions in China is expected to reach 119.8 thousand as of December 31,
2029, growing at a CAGR of 3.8% from 2024 to 2029, according to Frost & Sullivan.
Competitive Advantages of Private Dental Services Market in China
 Rapid chain expansion and penetration into underdeveloped regions. Private dental
services providers with scalable chain operations can achieve rapid business expansion
and extensive geographic coverage due to efficient and centralized management,
standardized service processes, effective cost control and renowned brand reputation.
Furthermore, due to the growing demand for convenient and quality dental services and
uneven distribution of dental resources, customers from remote underdeveloped regions
still face difficulties in obtaining effective dental diagnosis and treatment, which creates
development opportunities for private dental services providers to seize market shares in
these regions through chain expansion;
 Convenience and timeliness attributable to proximity to communities. Private dental
institutions are generally located in proximity to communities, with significant
advantages in service convenience and timeliness. Local customers gain efficient access
to dental services in private dental institutions without long-distance travel. Therefore,
the convenient and timely services due to proximity to communities address daily oral
health needs of residents and strengthen private dental services providers’
competitiveness; and
 Customized services and personalized consumption patterns. Private dental services
providers have high flexibility to formulate service portfolios accommodating to
customers’ needs and their expertise. Leading private dental services providers with
strong service capabilities are able to provide customized services, such as family-
oriented service programs, detailed dental health guidance and other exclusive services,
as well as offer personalized consumption patterns for customers through service-based
charging and package charging, which can effectively improve customer satisfaction and
loyalty. In addition, private dental services providers are dedicated to upgrading their
service offerings by adopting online platforms and membership systems.
Market Size of Private Dental Services Market in China
The market size of the private dental services market in China in terms of total revenue
generated by private dental services providers in China experienced fluctuations from 2020 to
2024, primarily due to the outbreak of COVID-19 pandemic in 2020 and the following wide
spreads of highly transmissible variants of COVID-19. The market size of the private dental
services market in China increased in general from RMB83.1 billion in 2020 to RMB103.5
billion in 2024, despite the decrease in 2020 and 2022 due to the COVID-19 pandemic. Private
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dental services market in China experienced dampened growth in 2024 as the post-pandemic
economic recovery is slower than expected. However, with the promulgation of multiple
government policies encouraging consumption and elevating purchasing power of Chinese
residents in 2024, the market size of the private dental services market in China is expected to
reach RMB145.0 billion in 2029, growing at a CAGR of 7.0% from 2024 to 2029. The
following diagram sets forth the historical and forecasted market size of the private dental
services market in China from 2020 to 2029.
Market Size of Private Dental Services Market in China, 2020-2029E
0
30
60
90
120
150
Growth Rate (%)
2020 2021 2022 2023 2024 2025E 2026E 2027E 2028E 2029E
83.1
101.3
85.9
101.5 103.5
111.1
119.5
127.9
136.4
145.0
Total Revenue CAGR (2020-2024) CAGR (2024-2029E)
5.6% 7.0%Private Dental Institution
Total Revenue in Private Dental Services Market(RMB in Billions)
Growth Rate
-15.2% -20
-10
0
10
20
30
40
50
60
70
21.9%
18.2%
2.0% 7.3% 7.6% 7.0% 6.6% 6.3%
Source: Frost & Sullivan analysis
Competitive Landscape of Private Dental Services Market in China
Private dental services market in China is highly fragmented and competitive. Private
dental institutions in China have experienced significant development and become an
increasingly important component in the dental services market in China in recent years. As of
December 31, 2024, there were approximately 99.3 thousand private dental institutions in
China, and major cities, such as Beijing, Shanghai and Wuhan have become important centers
for dental services due to sufficient medical resources and substantial customers’ demands.
Private dental services providers with chain operations have growing influence in the private
dental services market in China through developing standardized processes of dental services
and improving brand reputation while obtaining larger market shares.
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Ranking
According to Frost & Sullivan, we ranked fifth among all private dental services
providers in China in terms of the number of dental chairs as of December 31, 2024. The table
below sets forth the top five private dental services providers in China in terms of the number
of dental chairs as of December 31, 2024.
Ranking
Company
name
Number of
dental chairs
as of
December 31,
2024 Listing status Background
1 /H1118/H1118/H1118/H1118Company A 3,100 Listed a group established in 1995
engaging in the provision of
dental services.
2 /H1118/H1118/H1118/H1118Company B 1,932 Non-listed a group established in 1999
engaging in the provision of
dental services nationwide.
3 /H1118/H1118/H1118/H1118Company C 1,812 Non-listed a group established in 2015
engaging in the provision of
dental services.
4 /H1118/H1118/H1118/H1118Company D 1,608 Listed a group established in 1999
engaging in the provision of
dental services.
5 /H1118/H1118/H1118/H1118Our Group 702 Non-listed See “Business.”
According to Frost & Sullivan, we ranked fourteenth among all private dental services
providers in China in terms of revenue in 2024, occupying a market share of approximately
0.4%. The table below sets forth the top private dental services providers in China in terms of
revenue in 2024.
Ranking
Company
name
Revenue in
2024
Market
share
Listing
status Background
(RMB in
billions) (%)
1 /H1118/H1118/H1118/H1118/H1118Company A 2.73 2.6 Listed a group established in 1995
engaging in the provision of
dental services.
2 /H1118/H1118/H1118/H1118/H1118Company C 1.80 1.7 Non-listed a group established in 2015
engaging in the provision of
dental services.
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Ranking
Company
name
Revenue in
2024
Market
share
Listing
status Background
(RMB in
billions) (%)
3 /H1118/H1118/H1118/H1118/H1118Company D 1.77 1.7 Listed a group established in 1999
engaging in the provision of
dental services.
4 /H1118/H1118/H1118/H1118/H1118Company B 1.76 1.7 Non-listed a group established in 1999
engaging in the provision of
dental services nationwide.
5 /H1118/H1118/H1118/H1118/H1118Company E 1.58 1.5 Non-listed a group established in 2010
engaging in the provision of
dental services.
6 /H1118/H1118/H1118/H1118/H1118Company F 0.90 0.9 Non-listed a group established in 2008
engaging in the provision of
dental services.
7 /H1118/H1118/H1118/H1118/H1118Company G 0.77 0.7 Listed a group established in 1998
engaging in the provision of
dental services.
8 /H1118/H1118/H1118/H1118/H1118Company H 0.65 0.6 Non-listed a group established in 2014
engaging in the provision of
dental services.
9 /H1118/H1118/H1118/H1118/H1118Company I 0.63 0.6 Non-listed a group established in 2019
engaging in the provision of
dental services, and dental
research and development,
training and academic research.
10 /H1118/H1118/H1118/H1118Company J 0.55 0.5 Non-listed a group established in 2013
engaging in the provision of
dental services.
11 /H1118/H1118/H1118/H1118Company K 0.50 0.5 Non-listed a group established in 2015
engaging in the provision of
dental services.
12 /H1118/H1118/H1118/H1118Company L 0.43 0.4 Listed a group established in 2012
engaging in the provision of
dental services, ophthalmic
services and other specialty
services.
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Ranking
Company
name
Revenue in
2024
Market
share
Listing
status Background
(RMB in
billions) (%)
13 /H1118/H1118/H1118/H1118Company M 0.42 0.4 Non-listed a group established in 2011
engaging in the provision of
dental services.
14 /H1118/H1118/H1118/H1118Our Group 0.41 0.4 Non-listed See “Business.”
According to Frost & Sullivan, we ranked third among all private dental services
providers in China in terms of net profit generated in 2024. The table below sets forth the top
five private dental services providers in China in terms of net profit generated in 2024.
Ranking
Company
name
Net profit
generated in
2024 Listing status Background
(RMB in
millions)
1 /H1118/H1118/H1118/H1118Company A 501 Listed a group established in 1995
engaging in the provision of
dental services.
2 /H1118/H1118/H1118/H1118Company E 108 Non-listed a group established in 2010
engaging in the provision of
dental services.
3 /H1118/H1118/H1118/H1118Our Group 63 Non-listed See “Business.”
4 /H1118/H1118/H1118/H1118Company I 58 Non-listed a group established in 2019
engaging in the provision of
dental services, and dental
research and development,
training and academic
research.
5 /H1118/H1118/H1118/H1118Company J 52 Non-listed a group established in 2013
engaging in the provision of
dental services.
Cost Analysis of Dental Services Market in China
The costs of the dental services market in China primarily include staff cost, cost of raw
materials and consumables, depreciation and amortization and property rental, among which
staff cost accounted for approximately 45% of total costs in 2024, representing the largest cost
component in the dental services market in China. Cost of raw materials and consumables,
being the second largest cost component in the dental services market in China, accounted for
approximately 30% of total costs in 2024.
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DENTAL SERVICES MARKET IN CENTRAL CHINA
Overview of the Dental Services Market in Central China
Central China consists of Hubei province, Hunan province, Henan province and Jiangxi
province. As one of the most important economic development regions in China, Central China
had a nominal GDP of approximately RMB21.1 trillion in 2024, accounting for 15.6% of
China’s nominal GDP , and a total population of approximately 266.6 million in 2024,
accounting for approximately 18.9% of China’s total population.
The number of dental institutions in Central China increased at a CAGR of 10.2% from
12.9 thousand as of December 31, 2020 to 19.0 thousand as of December 31, 2024 and is
expected to reach 25.3 thousand as of December 31, 2029, representing a CAGR of 5.9% from
2024 to 2029, among which the number of private dental institutions is expected to reach 22.7
thousand as of December 31, 2029, growing at a CAGR of 6.0% from 2024 to 2029. The below
diagram sets forth the number of dental institutions in Central China from 2020 to 2029.
Number of Dental Institutions in Central China, 2020-2029E
0
5
10
15
20
25
30
2020 2021 2022 2023 2024 2025E 2026E 2027E 2028E 2029E
11.4 13.4 13.5
15.9 17.0 18.1 19.2 20.3 21.5
12.9
15.1 15.2
17.9 19.0
20.2 21.4
22.6
23.9
1.5
1.7 1.7
2.0 2.0
2.1
2.2
2.3
2.4
22.7
25.3
2.6
Number CAGR (2020-2024) CAGR (2024-2029E)
7.5% 5.4%
10.5% 6.0%
Total
(Thousands)
10.2% 5.9%
Public Dental Institutions
Private Dental Institutions
Source: Frost & Sullivan analysis
In Hubei province, the number of public and private dental institutions as of December
31, 2024 amounted to 0.7 thousand and 3.9 thousand, respectively, which is expected to reach
0.9 thousand and 5.0 thousand as of December 31, 2029, growing at a CAGR of 5.2% and 5.1%
from 2024 to 2029, respectively. In Wuhan, the number of public dental institutions is expected
to remain stable at 0.3 thousand from 2024 to 2029, while the number of private dental
institutions is expected to increase at a CAGR of 2.9% from 1.3 thousand as of December 31,
2024 to 1.5 thousand as of December 31, 2029.
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In Hunan province, the number of public and private dental institutions as of December
31, 2024 amounted to 0.7 thousand and 4.0 thousand, respectively, which is expected to reach
0.8 thousand and 5.1 thousand as of December 31, 2029, growing at a CAGR of 2.7% and 5.0%
from 2024 to 2029, respectively.
The following table sets forth the pricing comparison of major dental services between
our dental institutions and public dental institutions in Hubei and Hunan provinces during the
Track Record Period.
Type of services Our price range
Price range
in public dental institutions
in Hubei and
Hunan provinces
General dentistry services
– Crown services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118RMB980 to
RMB7,500 per tooth
RMB600 to
RMB6,000 per tooth
– Dental filling services /H1118/H1118/H1118/H1118/H1118RMB200 to
RMB600 per tooth
RMB120 to
RMB500 per tooth
– Root canal treatment
services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
RMB300 to
RMB1,500 per tooth
RMB300 to
RMB2,000 per tooth
Implantology services
– Single-implant /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118RMB1,920 to
RMB11,900 per tooth
RMB2,000 to
RMB14,000 per tooth
– Half denture /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118RMB20,000 to
RMB70,000 per denture
RMB20,000 to
RMB80,000 per denture
Orthodontics services /H1118/H1118/H1118/H1118/H1118/H1118/H1118RMB4,500 to
RMB42,000 per case
RMB5,000 to
RMB45,000 per case
Source: Frost & Sullivan analysis
As a customer-centric dental services provider located in densely populated areas and
adjacent to communities, we position general dentistry services as our advantageous services
and offer customers premium service experience. During the Track Record Period, the prices
of our crown and dental filling services were relatively higher than those of public dental
institutions in Hubei and Hunan provinces, primarily due to the relatively low prices of such
dental services provided by public dental institutions at township or village levels. During the
same period, the prices of our implantology and orthodontics services were slightly lower than
those of public dental institutions in the same regions, primarily as our dental institutions
feature community-focused dental care and offer affordable dental services to the general
public, while public dental institutions at township or village levels generally do not provide
implantology and orthodontics services.
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Market Size of Dental Services Market in Central China
The market size of the dental services market in Central China in terms of revenue
generated by dental services providers in Central China increased in general at a CAGR of
11.4% from RMB18.6 billion in 2020 to RMB28.6 billion in 2024, despite the decrease in 2020
and 2022 due to the COVID-19 pandemic. Such market size is expected to reach RMB40.0
billion in 2029, representing a CAGR of 6.9% from 2024 to 2029. The total revenue generated
by private dental services providers in Central China is expected to reach RMB25.3 billion,
growing at a CAGR of 7.8% from 2024 to 2029. The following diagram sets forth the historical
and forecasted market size of the dental services market in Central China from 2020 to 2029.
Market Size of Dental Services Market in Central China, 2020-2029E
2020 2021 2022 2023 2024 2025E 2026E 2027E 2028E 2029E
18.6
24.3
22.1
28.2 28.6
30.7
33.0
35.4
37.7
11.8
6.8
15.2
9.1
8.8
13.3
17.2
11.0
17.4 18.9 20.5 22.2 23.8
11.2
11.8
12.5
13.2
13.9
40.0
25.3
14.7
CAGR (2020-2024) CAGR (2024-2029E)
13.3% 5.6%
10.2% 7.8%
11.4% 6.9%
Total Revenue
Total
Public Dental Institutions
Private Dental Institutions
(RMB in Billions)
0
10
20
30
40
Source: Frost & Sullivan analysis
In Hubei province, the total revenue generated from public and private dental services
providers in 2024 amounted to RMB4.0 billion and RMB5.4 billion, respectively, which is
expected to reach RMB5.0 billion and RMB7.8 billion in 2029, growing at a CAGR of 4.6%
and 7.6% from 2024 to 2029, respectively.
In Hunan province, the total revenue generated from public and private dental services
providers in 2024 amounted to RMB3.8 billion and RMB4.7 billion, respectively, which is
expected to reach RMB5.2 billion and RMB7.2 billion in 2029, growing at a CAGR of 6.5%
and 8.9% from 2024 to 2029, respectively.
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Market Drivers of the Dental Services Market in Central China
The development of the dental services market in Central China is mainly driven by the
following factors:
 Favorable policies in Central China. The government authorities in Central China
have promulgated a series of policies to promote dental health, such as the Notice
on Integrating Dental Implant Projects and Regulating Prices (ਂλɹഢ၇ಔ
), and the 14th Five-Year Plan for
Development of Healthcare Industry in Hubei Province (ሊ͛਄ੰԫุ೯
࢝“ɤ̬ʞ”஝ྌ). These policies aim to allocate more resources to improve dental
health, including establishing dental institutions and providing subsidies, which can
make dental services more accessible to local residents. In addition, dental health
action plans, such as the 2024 Henan Province Elderly Dental Health Action Plan
(2024), have been issued to introduce the
importance of regular dental examinations and oral hygiene to the public, thereby
boosting demands for dental services in Central China;
 Increasing disposable income drives the growth in per capita health expenditure.
In recent years, the income level of residents in Central China has experienced a
continuous improvement. For instance, the per capita annual disposable income in
Hubei province increased at a CAGR of 7.3% from RMB27,881 in 2020 to
RMB36,947 in 2024 and is expected to further grow at a CAGR of 4.7% from 2024
to 2029. The continuous increase in disposable income has driven the growth in
health expenditure, thereby stimulating the growing demands for dental services in
Central China;
 Supply of dental services falls short of demands. In recent years, people’s
awareness of oral health issues has been increasing, driving the demands for dental
services. Along with an aging population and the implementation of two-child and
three-child policies, it is expected that the population of children and elderly people
will grow in Central China, thereby bringing substantial demands for dental services
in this region. However, the dental services market in Central China is currently
facing a shortage of qualified dentists. According to the NHC, the number of dentists
per million population in Central China reached approximately 197 in 2024, which
is lower than that in China of approximately 283. The gap between the demand for
dental services and the supply of dental resources is expected to drive the
development of the dental services market in Central China; and
 High-level dental resources in Wuhan. The dental services market in Wuhan
embraces significant advantages in talent cultivation and scientific research. There
are prestigious academic institutions and dental institutions in Wuhan, which
integrate teaching, research and dental services. Each year, dental talents graduate
from outstanding universities and colleges in Wuhan and enrich dental resources of
the dental services market in local regions. Furthermore, experienced dental
professionals in Wuhan promote technological advancement in dental services, and
facilitate academic communication and cooperation in Central China and across the
country, continuously attracting dental talents from other regions.
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Market Drivers of the Dental Services Market in Hubei and Hunan Provinces
The development of the dental services market in Hubei and Hunan provinces is primarily
driven by the following key factors:
 Supportive government policies. Benefiting from supportive government policies,
the dental services markets in Hubei and Hunan provinces have experienced stable
growth. For instance, in 2021, the Health Commission of Hubei Province issued the
14th Five-Year Plan for Health Development in Hubei Province (ሊ͛਄ੰ
࢝“ɤ̬ʞ”஝ྌ), which emphasized to support private capital to establish
high-quality dental institutions. In addition, in 2021, the People’s Government of
Hunan Province (ִ݁released the 14th Five-Year Plan for the
Construction of Healthy Hunan (ی“ɤ̬ʞ”ண஝ྌ), which proposed
to expand the supply of high-quality healthcare resources and further promote dental
health. Driven by these supportive government policies, Hubei and Hunan provinces
are gradually establishing comprehensive and efficient dental service systems to
address residents’ diverse needs for dental care.
 Growing per capita disposable income. In 2024, the per capita annual disposable
income in Hubei and Hunan provinces reached RMB36,947 and RMB37,679,
respectively, which is lower than that in China, indicating broad growth potentials
for the income levels in these provinces. By 2029, the per capita annual disposable
income in Hubei and Hunan provinces is expected to reach RMB46,523 and
RMB48,154, growing at a CAGR of 4.7% and 5.0% from 2024 to 2029, respectively.
The growing per capita disposable income of residents in Hubei and Hunan
provinces enhanced their awareness on dental care and increased their willingness
to pay for dental services. Therefore, the growing per capita disposable income
promoted the development of dental services market in these provinces.
 Abundant dental resources. Hubei and Hunan provinces have prestigious academic
institutions, which have established a comprehensive and systematic dental
education system and cultivated numerous dental talents. By introducing advanced
treatment methodologies and modern clinical concepts, these dental talents are
promoting technological advancements in dental services market in Hubei and
Hunan provinces. Supported by abundant educational resources and expanding
dental talent reserves, the dental services markets in Hubei and Hunan provinces
have experienced sustained growth.
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Future Opportunities of the Dental Services Market in Central China
Set forth below are major opportunities for dental services providers in the dental services
market in Central China:
 Penetration into county-level cities. In recent years, the number of dental services
providers in developed cities in Central China, such as Wuhan and Changsha, has
been increasing, leading to fierce competition in local markets. For instance, with
the continuous business expansion of leading dental services providers, the number
of dental institutions in Wuhan is expected to reach 1.8 thousand in 2029. As the
dental services market in these developed cities approaches saturation, increasing
dental services providers are gradually penetrating into county-level cities. In
addition, with the growing awareness of dental health in Central China especially
those county-level cities, the demands for dental services is expected to witness
significant growth in the future. Considering the large populations and growing
demands for dental services in county-level cities of Central China, the dental
services providers that expand their business to county-level cities can explore
extensive development potentials and obtain larger market shares;
 Regional chain operation achieves economies of scale. Dental services providers
with regional chain operations in Central China have competitive advantages with
increasing economies of scale. They purchase medical equipment and consumables
in bulk and negotiate favorable prices with their suppliers. Additionally, dental
services providers with regional chain operations can share their managerial,
marketing and training resources among in-network institutions in different regions,
which can reduce their overall operational and management costs. Furthermore,
dental services providers with regional chain operations in Central China attract new
customers based on their renowned reputation and established brand in local
markets, which can also reduce their marketing costs;
 Rooted in the regional market to further propel market integration and entrench
market position through acquisitions and scalable operations. In Central China,
dental services providers that focus on the local market generally have a better
understanding of local demands for dental services and are capable of offering
services tailored to such demands. Taking advantage of renowned brand reputation
and matured operational and managerial models, the newly established institutions
of these dental services providers can easily achieve scalable operation and
efficiently enter the fully-fledged stage. Efficient and effective business expansion
in local market further consolidates their market positions. Along with intensified
market competition and standardized development of the industry, leading dental
services providers with business focus on local market can further consolidate
medical resources and increase their market shares; and
 Regional integration of resources. In Central China, leading dental services
providers have greater capabilities to integrate dental resources within or across
provinces, which promotes the rationalized allocation and utilization of resources.
Meanwhile, the regional collaboration in Central China also enables the allocation
and sharing of quality dental resources among developed and underdeveloped
regions. With solid industrial foundation, scientific and educational resources to
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foster high-quality development of dental services, Hubei province embraces
significant regional advantages. The integration of resources including talents,
equipment and technologies contributes to the improvement of service capacity and
the standardization of management in dental institutions in county-level cities,
benefiting customers in these regions with quality and affordable dental services.
Competitive Landscape of Private Dental Services Market in Central China
The dental services market in Central China is relatively fragmented and highly
competitive. As of December 31, 2024, there were approximately 17.0 thousand private dental
services providers in Central China, among which the top five providers accounted for
approximately 9.6% of the market share in terms of total revenue generated from Central China
in 2024. As such market is rapidly developing, private dental services providers explore
development potentials while facing intensified market competition. There have been
increasing large private dental services providers with chain operations that extend their
business to Central China and compete with small and medium-sized private dental services
providers. Leveraging their abundant dental resources, technological advantages and brand
reputation, large private dental services providers attract customers and increase their market
shares in Central China. Meanwhile, local private dental services providers attract customers
with competitive prices, brand recognition and customers’ trust accumulated over long-term
operations in local communities.
Ranking
According to Frost & Sullivan, we ranked first among all private dental services providers
in Central China in terms of the number of dental chairs as of December 31, 2024. The table
below sets forth the top five private dental services providers in Central China in terms of the
number of dental chairs as of December 31, 2024.
Ranking
Company
name
Number of
dental chairs
in Central
China as of
December 31,
2024 Listing status Background
1/H1118/H1118/H1118/H1118/H1118Our Group 702 Non-listed See “Business.”
2/H1118/H1118/H1118/H1118/H1118Company I 535 Non-listed a group established in 2019
engaging in the provision of
dental services, and dental
research and development,
training and academic
research.
3/H1118/H1118/H1118/H1118/H1118Company N 502 Non-listed a group established in 2021
engaging in the provision of
dental services, and
investment, business
operation and marketing.
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Ranking
Company
name
Number of
dental chairs
in Central
China as of
December 31,
2024 Listing status Background
4/H1118/H1118/H1118/H1118/H1118Company C 454 Non-listed a group established in 2015
engaging in the provision of
dental services.
5/H1118/H1118/H1118/H1118/H1118Company K 300 Non-listed a group established in 2015
engaging in the provision of
dental services.
According to Frost & Sullivan, we ranked first among all private dental services providers
in Central China in terms of revenue generated from Central China in 2024, occupying a
market share of approximately 2.4%. The table below sets forth the top five private dental
services providers in Central China in terms of revenue generated from Central China in 2024.
Ranking
Company
name
Revenue
generated from
Central China
in 2024
Market
share
Listing
status Background
(RMB in
billions) (%)
1 /H1118/H1118/H1118/H1118/H1118Our Group 0.41 2.4 Non-listed See “Business.”
2 /H1118/H1118/H1118/H1118/H1118Company I 0.40 2.3 Non-listed a group established in 2019
engaging in the provision of
dental services, and dental
research and development,
training and academic research.
3 /H1118/H1118/H1118/H1118/H1118Company N 0.33 1.9 Non-listed a group established in 2021
engaging in the provision of
dental services, and investment,
business operation and
marketing.
4 /H1118/H1118/H1118/H1118/H1118Company C 0.28 1.6 Non-listed a group established in 2015
engaging in the provision of
dental services.
5 /H1118/H1118/H1118/H1118/H1118Company K 0.25 1.4 Non-listed a group established in 2015
engaging in the provision of
dental services.
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REGULATIONS ON THE REFORM OF MEDICAL INSTITUTIONS
Opinions on Deepening the Reform of the Medical and Healthcare System
The Opinions on Deepening the Reform of the Medical and Healthcare System (ଉ
จԈ) promulgated by the Central Committee of the Communist Party
of China and the State Council and took effect on March 17, 2009 encourage social capital to
invest in the medical institutions (including investments by the foreign investors), and promote
the development of private medical institutions and the reform of public medical institutions
(including those established by state-owned enterprises) through social capital investment.
Opinions on Further Encouraging and Guiding the Establishment of Medical Institutions
by Social Capital
On November 26, 2010, the General Office of the State Council promulgated the Notice
of the General Office of the State Council on Forwarding the Opinions of the National
Development and Reform Commission, the Ministry of Health and Other Ministries on Further
Encouraging and Guiding the Establishment of Medical Institutions by Social Capital ( ਷ਕ৫
ஷ
ٝwhich stipulates that the PRC government encourages and supports investments by private
investors in medical institutions of various types. Private investors are permitted to apply to
establish for-profit or not-for-profit medical institutions. Private healthcare institutions are
encouraged to engage or authorize domestic or overseas medical institutions with professional
experience to participate in the management of hospitals to improve their efficiencies.
Several Opinions on Promoting the Development of Healthcare Service Industry
The Several Opinions on Promoting the Development of Healthcare Service Industry ( ਷
ʍจԈ), which was promulgated by the State Council on
September 28, 2013, encourage enterprises to invest in healthcare service industry in various
forms, such as new establishment and participation in restructuring, trusteeship, public and
private ownership, etc., and proposes the idea of the further relaxation of the requirements for
Sino-foreign equity joint or cooperative joint medical institutions and gradually expands
eligibility in the pilot program for wholly foreign-invested medical institutions.
Several Policies and Measures Regarding the Promotion of Accelerating the Development
of the Medical Institutions Invested by Social Capital
Several Policies and Measures Regarding the Promotion of Accelerating the Development
of the Medical Institutions Invested by Social Capital (ഄણ
ٝwhich was promulgated by the General Office of the State Council on June 11, 2015
and came into effect on the same day, stipulate (i) the elimination and cancellation of
unreasonable preceding items for examination and approval and the reduction in the time
required for making such examination and approval; (ii) the reasonable control of the number
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and scale of the public medical institutions and the exploration of the space for development
of the medical institutions invested by social capital; and (iii) the support for the listing and
financing of such eligible and qualified for-profit medical institutions invested by social
capital.
Notice on Issuing the Guiding Principles for the Allocation Planning of Medical
Institutions (2021-2025)
The Notice on Issuing the Guiding Principles for the Allocation Planning of Medical
Institutions (2021-2025) (ۆࡡ2021-2025
ϋ)ٝwhich was promulgated by the NHC on January 12, 2022, encourages the
establishment of medical institutions by social capital and stipulates no planning restrictions
on the total number and space for establishment of medical institution with social capital.
Notice on Conducting Special Governance of Medical Service Charges and Consumables
Price for Dental Implants
The National Healthcare Security Administration (ღ҅) (the “ NHSA ”)
promulgated the Notice on Conducting Special Governance of Medical Service Charges and
Consumables Price for Dental Implants (ଣ
ٝthe “ Notice ”) on September 6, 2022 to guarantee the general public access to
high-quality, efficient and affordable repair service for extracted teeth. According to the
Notice, public medical institutions shall mainly adopt a separate pricing method of “service
items plus special consumables” when providing dental implant medical services and policy
guidance on the pricing of dental medical services in public medical institutions shall be
strengthened. The prices of services such as dental implants provided by private medical
institutions could be adjusted by the market and should be reasonable and in line with the rules
of market competition and the expectation of the mass public.
Pursuant to the Notice on Effectively Integrating the Medical Service Items and Price
Regulating for Dental Implants (ٝthe
“Hubei Notice ”) jointly promulgated by the Healthcare Security Administration of Hubei
Province, the Health Commission of Hubei Province, and the Administration for Market
Regulation of Hubei Province on March 21, 2023 and effective on April 1, 2023, 15 pricing
items including the medical services for dental implants have been added in the pricing
guidance list. According to the Hubei Notice, the competent authorities shall strengthen the
price regulation of private medical institutions for dental implant medical services, and guide
private medical institutions to adopt a reasonable price in line with the rules of market
competition and the expectation of the mass public.
On January 17, 2023, Hunan Healthcare Security Administration, the Health Commission
of Hunan Province, and the Administration for Market Regulation of Hunan Province jointly
promulgated the Notice on Regulating the Pricing Items of Medical Services for Dental
Implants and Adjusting the Medical Service Charges (ධͦʿ
ٝthe “ Hunan Notice ”), which took effect from January 31, 2023.
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The Hunan Notice set a price cap for 15 pricing items including the medical services for dental
implants. Pursuant to the Hunan Notice, private medical institutions shall strictly comply with
the pricing catalogue of medical services and the pricing items of medical services for dental
implants, and adopt a reasonable price in line with the rules of market competition and the
expectation of the mass public.
Notice on Effectively Implementing Centralized Procurement and Price Management of
Pharmaceuticals
In February 2023, the NHSA promulgated the Notice on Effectively Implementing
Centralized Procurement and Price Management of Pharmaceuticals in 2023 (ਂλ2023 ϋ
ٝfurther implemented the results of the centralized
procurement for dental implants and guided medical institutions to prioritize the procurement
and use of the selected products.
Notice on Further Promoting the Management of Dental Healthcare Services and Security
The Notice on Further Promoting the Management of Dental Healthcare Services and
Security (ٝwhich was promulgated by
the NHSA on August 25, 2023, stipulate that eligible therapeutic medical service items and
medical consumables will be included in the scope of basic medical insurance payments in
accordance with procedures, within the affordability of the medical insurance fund.
REGULATIONS ON THE ADMINISTRATION AND CATEGORIZATION OF
MEDICAL INSTITUTIONS
Administrative Measures on Medical Institutions and its Implementation Measures
The Administrative Measures on Medical Institutions ( ᔼᐕዚ࿴၍ଣૢԷ), which was
promulgated on February 26, 1994 by the State Council and came into effect on September 1,
1994 and amended on February 6, 2016 and March 29, 2022, respectively, and the
Implementation Measures of the Administrative Measures on Medical Institutions ( ᔼᐕዚ࿴၍
ۆpromulgated by the Ministry of Health of the PRC (the “ MOH”) on August
29, 1994 and came into effect on September 1, 1994 and last amended on February 21, 2017
by NHFPC, stipulate that any entity or individual that intends to establish a medical institution
must comply with the relevant application and approval procedures and register with the
relevant healthcare administrative authorities to obtain a Medical Institution Practicing License
(ᔼᐕዚ࿴ੂุ஢̙ᗇ). Medical institutions are classified into, among others, general
hospitals, specialized hospitals, clinics and other diagnosis and treatment institutions and the
establishment of any medical institution shall be in compliance with the plan of establishment
medical institutions and the basic standards for medical institutions.
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Notice on the Issuance of the Interim Measures for the Administration of Clinic Filing
The Notice on the Issuance of the Interim Measures for the Administration of Clinic
Filing (ٝwas issued by the NHC and the NA TCM, on
December 20, 2022, which stipulates that the establishment of a clinic by an entity or
individual shall be reported to the healthcare administrative department or the competent
department of traditional Chinese medicine of the people’s government at the county level
where the clinic is to be established for the record, and the practice activities can be carried
out after obtaining the clinic filing certificate (ኯᗇ).
Administrative Measures for the Examination of Medical Institutions (for Trial)
The Administrative Measures for the Examination of Medical Institutions (For Trial) ( ᔼ
ج(༊Б)), which was promulgated by the MOH and came into effect on
June 15, 2009, stipulate that Medical Institution Practicing License is subject to periodic
examinations and verifications by the registration authorities. The examination conclusion
includes “Pass” and “Suspension”. For the examination that conclusion of “suspension”, the
suspension period should be determined. Medical Institution Practicing License will be
cancelled if such healthcare institution fails to pass the re-examination or fails to apply for
re-examination within the prescribed time limit after the expiry of the suspension period.
Opinions on Implementing Categorization Administration of Urban Medical Institutions
The Opinions on Implementing Categorization Administration of Urban Medical
Institutions (จԈ), jointly promulgated by the MOH,
NA TCM, MOF and NDRC on July 18, 2000 and came into effect on September 1, 2000,
provides that medical institutions in the PRC are mainly identified as not-for-profit medical
institutions (the “ NMIs ”) and for-profit medical institutions (the “ PMIs ”). Key basis for
identifying either type of the two medical institutions include business objectives, service
purposes and implementation of various financial, taxation, pricing and accounting policies.
Governments shall not operate for-profit medical institutions. NMIs must comply with the
pricing guidance for medical service stipulated by governments from time to time, and the rules
and policies issued by the NHC and the MOF including Hospital Finance System ( ᔼ৫ৌਕՓ
ܓwhich was promulgated on December 28, 2010 and came into effect on July 1, 2011. PMIs
can distribute the profits to their investors as economic returns. Based on its marketing needs,
PMIs have the discretion to set the fees and prices for their medical and healthcare services.
In establishing internal control system, PMIs can apply the finance and accounting system and
other policies suitable for corporate enterprise. The not-for-profit/for- profit status of a medical
institution is decided based on the source of its investment and the nature of its business by the
health administration and other relevant government authorities and such status is recorded in
the registration files of such medical institution.
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Law on the Promotion of Basic Medical Care, Hygiene and Health
Pursuant to the Law on the Promotion of Basic Medical Care, Hygiene and Health ( ਿ͉
جwhich was released by the Standing Committee of the National
People’s Congress (the “ SCNPC ”) on December 28, 2019 and came into effect on June 1,
2020, lawful registration and classified management for NMIs and PMIs shall be implemented.
Government-run medical institution shall not establish non-independent legal person medical
institution with other organizations, or cooperate with social capital to establish for-profit
medical institutions. It also provides that the government will adopt a variety of measures to
encourage and guide social resources to establish medical institution, and such institution will
enjoy similar benefits as government-run institution, in certain areas including basic medical
insurance coverage, research and teaching, access to specific medical technologies, and title
assessment of medical staff, etc.
Provisions on the Administration of Radiological Diagnosis and Treatment
According to the Provisions on the Administration of Radiological Diagnosis and
Treatment (֛which were promulgated by the MOH on January 24, 2006,
came into effect on March 1, 2006 and amended on January 19, 2016, medical institutions
engaged in the radio diagnosis and radiotherapy shall be equipped with the conditions required
for conducting radio diagnosis and radiotherapy, and apply for the Radiodiagnosis and
Radiotherapy Permit (ൢᐕ஢̙ᗇ) issued by the competent health administrative
authorities. After obtaining the Radiodiagnosis and Radiotherapy Permit, medical institution
shall undertake registration of the relevant diagnosis and treatment subject with health
administrative authorities, which issued the Medical Institution Practicing License. Medical
institutions shall not conduct radio diagnosis and radiotherapy if failing in obtaining License
for radiotherapy or not registering the diagnosis and treatment subject. During the course of
radiotherapy, medical institutions shall take protective measures in accordance with the
relevant laws and regulations. Where a medical institution provides any services in relation to
radiological diagnosis and treatment without obtaining a Radiodiagnosis and Radiotherapy
Permit, the relevant health administrative departments at or above the county level may issue
a warning to the medical institution in violation and order the medical institution to take
corrective measures within a prescribed time limit, and may impose a fine not exceeding
RMB3,000 depending on the circumstances. If the violation is serious, the relevant health
administrative authorities have the power to revoke the medical institution’s Medical
Institution Practicing License.
Regulations on the Safety and Protection of Radioisotopes and Radiation Devices and
Measures for Administration of the Safety Licensing of Radioactive Isotopes and
Radioactive Equipment
According to Regulations on the Safety and Protection of Radioisotopes and Radiation
Devices (ᇞༀໄτΌձԣᚐૢԷ), which were promulgated by the State
Council on September 14, 2005 and latest revised on March 2, 2019, and Measures for
Administration of the safety Licensing of Radioactive Isotopes and Radioactive Equipment (׳
جwhich were promulgated by Ministry of
Environmental Protection on January 18, 2006 and latest revised on January 4, 2021, any entity
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engaging in the production, sale or use of radioisotopes or radiation devices of different
categories shall obtain a Radiation Safety License (τΌ஢̙ᗇ). If any entity is engaged
in the production, sale or use of radioisotopes or radiation devices without a Radiation Safety
License, the relevant department of ecology and environment at or above the county level may
order such entity to stop the violation and take corrective measures within a prescribed time
limit. If the entity fails to take any corrective actions within the prescribed time limit, the entity
may be ordered to suspend production or business operation. Further, if any income had been
generated from such violation, such income shall be confiscated, and if such income amounts
to RMB100,000 or above, a fine of one to five times of the amount of such income may be
imposed; if no such income had been generated or such income is less than RMB100,000, a fine
of RMB10,000 to RMB100,000 may be imposed.
Measures for the Supervision and Administration of Pharmaceuticals in Medical
Institutions (for Trial)
The Measures for the Supervision and Administration of Pharmaceuticals in Medical
Institutions (for Trial) (ج(༊Б)), promulgated by China Food and
Drug Administration and came into effect on October 11, 2011, stipulate that medical
institutions must purchase pharmaceuticals from enterprises qualified for the production or
distribution of pharmaceuticals and comply with certain standards in respect of the storage,
dispensation and use of such pharmaceuticals. Pharmaceutical preparation dispensed by a
medical institution must only be used by and for that medical institution. Medical institutions
are prohibited from selling prescription pharmaceuticals to the public by such means as post,
online transaction and open-shelf selection.
Prescription Management
According to the Administrative Measures for Prescriptions (جwhich was
promulgated by the MOH on February 14, 2007 and came into effect on May 1, 2007, a
registered medical practitioner is entitled to issue prescriptions at his registered practice
location. The Measures for the Classification and Administration of Prescription
Pharmaceuticals and Non-prescription Pharmaceuticals (For Trial Implementation) ( ஈ˙ᖹၾ
ج(༊Б)), which was promulgated by CFDA on June 18, 1999 and came
into effect on January 1, 2000, set forth different systems for the control of prescription and
non-prescription drugs. Medical institutions can decide or recommend the use of
nonprescription pharmaceuticals with regard to medical necessary.
REGULATIONS ON MEDICAL DEVICES
Regulations on Supervision and Administration of Medical Devices
In the PRC, medical devices are classified into three different categories, Class I, Class
II and Class III, based on the invasiveness of and risks associated with each medical device.
According to the Regulations on Supervision and Administration of Medical Devices ( ᔼᐕኜ
૛္ຖ၍ଣૢԷ) promulgated by the State Council on January 4, 2000 and lastly amended on
December 6, 2024 and came into effect on January 20, 2025, to engage in the operation of Class
II medical devices, an operating enterprise shall make a record-filing with the municipal level
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drug supervision and administration department, while to engage in the operation of Class III
medical devices, an operating enterprise shall apply for the of Medical Devices Operation
License ( ᔼᐕኜ૛຾ᐄ஢̙ᗇ) to the municipal level drug supervision and administration
department.
Measures for the Supervision and Administration of Medical Devices Operation
Pursuant to the Measures for the Supervision and Administration of Medical Devices
Operation (جpromulgated on July 30, 2014 and latest amended on
March 10, 2022, an enterprise engaging in the operation of medical devices shall have business
premises and storage conditions suitable for the operation scale and scope and shall have
quality control department or personnel suitable for the medical devices it operates. An
enterprise engaged in the operation of Class I medical devices is not required for license or
record filing, the operation of Class II medical devices shall file with the municipal level drug
supervision and administration department and provide proofing materials for satisfying the
relevant conditions of engaging in the operation of medical devices, while an enterprise
engaged in the operation of Class III medical devices shall apply for a Medical Devices
Operation License to the municipal level drug supervision and administration department and
provide proofing materials for satisfying the relevant conditions of engaging in the operation
of such medical devices. Where matters stated on the Medical Devices Operation License of
a Class III medical device operator change, or the business premises, mode of operation,
business scope and warehouse addresses of a Class II medical device operator change, the
operator shall apply to the competent drug supervision and administration department for filing
of the change in a timely manner.
Laws and Regulations on Medical Personnel of Medical Institutions
The Physicians Law of the PRC (جࢪpromulgated by the SCNPC on
August 20, 2021 and came into effect on March 1, 2022, provide that physicians in the PRC
must obtain qualification licenses for their medical profession. Qualified physicians and
qualified assistant physicians must register with the relevant health administrative authorities
at or above the county level. After registration, physicians may work at medical institutions in
their registered location in the types of jobs and within the scope of medical treatment,
disease-prevention or healthcare business as provided in their registration.
On November 5, 2014, the NHFPC, the NDRC, the Ministry of Human Resources and
Social Security, the NA TCM, and the China Insurance Regulatory Commission (currently
known as the National Administration of Financial Regulation), jointly issued Several
Opinions on Promoting and Standardizing Multi-Site Practice of Physicians (ࢪ
ʍจԈ), which puts forward to simplify the registration procedure of the
multiple places practice and proposes the feasibility of exploring the “record management”.
According to Administrative Measures for the Registration of Medical Practitioners (ੂุ
جpromulgated by the NHFPC on February 28, 2017, effective on April 1, 2017,
medical practitioners shall obtain the Practice Certificate for Medical Practitioners (ੂุ
ࣣto practice upon registration. Person who fails to obtain the Practice Certificate for
Medical Practitioners shall not engage in medical treatment, prevention and healthcare
activities. A medical practitioner who practices for multiple institutions at the same place of
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practice shall determine one institution as the main practicing institution where he or she
practices, and apply for registration to the administrative department of health and family
planning approving the practice of such institution; and, for other institutions where the
medical practitioner is to practice, respectively apply for recordation to the administrative
health and family planning authority approving the practice of such institution, indicating the
names of the institutions where he or she is to practice. If a medical practitioner practices in
an additional institution not at the registered place of practice, he or she shall apply for
registering such addition to the administrative health and family planning authority approving
the practice of such institution.
The Regulations on Nurses ( ᚐɻૢԷ), promulgated by the State Council on January 31,
2008 and came into effect on May 12, 2008 and amended on March 27, 2020, provide that a
nurse must obtain a Nurse’s Practicing Certificate (ࣣwhich is valid for five
years. According to Administrative Measures for the Nurse Practice Registration ( ᚐɻੂุൗ
جnurses may undertake nursing work at the registered place of practice after
obtaining the Practice Certificate for Nurses upon practice registration.
The Measures for the Administration of Occupational Health of Workers Exposed to
Radiation (جissued by the MOH on June 3, 2007, stipulate that
the employers are responsible for applying to the competent health authorities at the county
level or above for applying the Radiation Worker Certificate (ᗇ) for the workers
exposed to radiation. According to the Provisions on the Administration of Radiological
Diagnosis and Treatment, if medical institutions engage any employer without the Radiation
Worker Certificate to manipulate the radioactive equipment, the relevant health administrative
departments at or above the county level may order the medical institution to take corrective
measures within a prescribed time limit, and may impose a fine not exceeding RMB5,000. If
the violation is serious, the relevant health administrative authorities have the power to revoke
the Medical Institution Practicing License of the medical institution.
LA WS AND REGULATIONS ON MEDICAL MALPRACTICE
PRC Civil Code
The PRC Civil Code (Պ) promulgated by the National People’s
Congress (the “ NPC”) on May 28, 2020 and effective from January 1, 2021, requires tortfeasor
to assume the responsibilities of infringement if the civil interests of any people has been
infringed. If a medical institution or its medical personnel are at fault for damage inflicted on
a patient during the course of diagnosis and treatment, the medical institution will be liable for
compensation. A medical institution shall be presumed to be at fault under (i) violating laws,
administrative regulations, rules or other relevant provisions on diagnosis and treatment
practices, (ii) concealing or refusing to provide medical records relating to the dispute; or
(iii) losing, forging, tampering with or illegally destroying medical records. If the medical
personnel fail to perform diagnosis and treatment obligations corresponding to the prevailing
medical standards in diagnosis and treatment activities and cause a patient suffer damage, the
medical institution shall bear compensation liability. Medical institutions and their medical
personnel should protect the privacy of their patients and will be liable for the damage caused
by divulging the patients’ private or medical records without consent.
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Regulations on Handling Medical Malpractice
The Regulations on Handling Medical Malpractice (ஈଣૢԷ), which was
promulgated by the State Council on April 4, 2002 and came into effect on September 1, 2002,
provide a legal framework and detailed provisions regarding the prevention, technical
identification, disposition, supervision, compensation and penalties of medical malpractice.
Medical malpractice refers to an accident involving personal injury to patients caused by
medical institutions or medical personnel due to malpractice as a result of violation of the laws,
administrative regulations or departmental rules on medical and health administration, or of
standards or procedures of medical treatment.
REGULATIONS ON MEDICAL ADVERTISING IN THE PRC
Advertisement Law of the PRC
The Advertisement Law of the PRC (جwhich was promulgated by
the SCNPC on October 27, 1994 and came into effect on February 1, 1995 and last amended
on April 29, 2021, provides that advertisements shall not contain false statements and be
deceitful or misleading to consumers. Advertisements legally required to receive censorship,
including those that are relating to medical treatment, pharmaceuticals and medical devices,
shall be reviewed by relevant authorities in accordance with relevant rules before being
published.
Administrative Measures for Internet Advertising
The Administrative Measures for Internet Advertising (جwhich were
promulgated by the SAMR on February 25, 2023 and came into effect on May 1, 2023, provide
that Internet advertisement shall be identifiable so that consumers will identify it is as such.
With regard to commodities or services ranked under competitive bidding, advertisement
publishers shall indicate conspicuously the word “Advertisement” to distinguish them from the
natural search results. No advertisement of any medical treatment, medicines, medical
apparatuses, pesticides, veterinary medicines, dietary supplement, foods for special medical
purpose or other special commodities or services which are subject to review by advertisement
examination authorities as stipulated by laws and regulations shall be released unless it has
passed such examination.
Administrative Measures on Medical Advertisement
The Administrative Measures on Medical Advertisement (جjointly
promulgated by the State Administration of Industry and Commerce and the MOH on
September 27, 1993, took effect on December 1, 1993, amended on November 10, 2006 and
came into effect on January 1, 2007, require that medical advertisements shall be reviewed by
relevant health authorities and obtain a Medical Advertisement Examination Certificate ( ᔼᐕ
׼before they may be released by a medical institution. Medical Advertisement
Examination Certificate has an effective term of one year and may be renewed upon
application.
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REGULATIONS ON ENVIRONMENTAL PROTECTION RELATED TO MEDICAL
INSTITUTIONS
Environmental Impact Assessment
According to the Environmental Impact Assessment Law of PRC ( ʕശɛ͏΍ձ਷ᐑྤᅂ
جwhich was promulgated by the SCNPC and last amended on December 29, 2018,
for any construction projects that have an impact on the environment, an entity is required to
produce either a report, or a statement, or a registration form of such environmental impacts
depending on the seriousness of effect that may be exerted on the environment.
According to the Administration Rules on Environmental Protection of Construction
Projects (ᚐ၍ଣૢԷ), which was promulgated by the State Council and
amended on July 16, 2017, depending on the impact of the construction project on the
environment, a construction entity shall submit an environmental impact report or an
environmental impact statement, or file a registration form. As to a construction project, for
which an environmental impact report or the environmental impact statement is required, the
construction entity shall, before the commencement of construction, submit the environmental
impact report or the environmental impact statement to the relevant authority at the
environmental protection administrative department for approval. For which an environmental
impact registration form is required, a construction entity shall file the registration form to the
environmental protection administrative authority at county level for recordation.
Regulation on the Administration of Pollutant Discharge Licensing
Regulation on the Administration of Pollutant Discharge Licensing ( રϮ஢̙၍ଣૢԷ),
which was promulgated by the State Council on January 24, 2021 and took effect on March 1,
2021, stipulates that the enterprises, public institutions and other production operators included
in the classified management catalog of pollutant discharge permits for stationary sources of
pollution shall apply for and obtain a pollutant discharge permit as per the prescribed time
limit; and those are not included in the catalog are not required to do so for the time of being.
Pursuant to the Administrative Measures of Pollutant Discharge Licensing ( રϮ஢̙၍ଣ
جpromulgated by the Ministry of Ecology and Environment on April 1, 2024 and became
effective from July 1, 2024, and the Classified Management Catalog of Pollutant Discharge
Permits for Stationary Sources of Pollution (2019 Edition) (๕રϮ஢̙ʱᗳ၍ଣΤ፽
(2019وwhich was promulgated by the Ministry of Ecology and Environment on
December 20, 2019 and became effective on the same day, a pollutant discharge entity subject
to registration management is not required to apply for a pollutant discharge permit. It shall fill
in the pollutant discharge registration form on the management information platform of state
pollutant discharge permits, and register with its basic information, pollutant discharge route,
pollutant discharge standards implemented, pollution prevention and control measures adopted,
and other information.
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Regulations on Urban Drainage and Sewage Treatment
The Regulations on Urban Drainage and Sewage Treatment (ᕄર˥ၾϮ˥ஈଣૢԷ),
which were promulgated by the State Council on October 2, 2013 and came into effect on
January 1, 2014, require that urban entities and individuals shall dispose sewage through urban
drainage facilities covering their geographic area in accordance with relevant rules. Companies
or other entities engaging in medical activities shall apply for a Urban Sewage Disposal
Drainage License ( Ϯ˥રɝર˥၍ၣ஢̙ᗇ) before disposing sewage into urban drainage
facilities. Sewage-disposing entities and individuals shall pay sewage treatment fee in
accordance with relevant rules.
The Administrative Measures on Licensing of Urban Drainage (ᕄϮ˥રɝર˥၍ၣ஢
جwhich was promulgated by the Ministry of Housing and Urban-rural
Development on January 22, 2015 and came into effect on March 1, 2015, amended on
December 1, 2022 and became effective on February 1, 2023, provide that enterprises,
institutions and individual industrial and commercial households engaging in industry,
construction, catering industry, medical industry and discharging sewage into the urban
drainage network must apply for and obtain a Urban Sewage Disposal Drainage License. An
entity that had not obtained the requisite Sewage Disposal Drainage License may be ordered
by the local government authorities for urban sewage disposal to cease the illegal actions, take
rectification measures and apply for the Sewage Disposal Drainage License, and may be
subject to a fine of up to RMB500 thousand, provided that it is not included in the Key
Pollutant Discharge Units List.
Regulations on the Management of Medical Waste and its Implementation Measures
The Regulations on the Management of Medical Waste (၍ଣૢԷ), promulgated
by the State Council on June 16, 2003 and came into effect on the same day and further
amended and came into effect on January 8, 2011, and the Implementation Measures for the
Management of Medical Waste of Medical and Health Institutions (၍
جpromulgated by the MOH on October 15, 2003 and came into effect on the same day,
stipulate that medical institutions must categorise the medical waste in accordance with the
Classified Catalogue of Medical Waste (ʱᗳͦ፽) for management purpose and
timely deliver medical waste to a medical waste disposal entity approved by the environmental
protection administrative department at or above the county level for centralized disposal.
Pursuant to the Notice on further Regulate the Management of Medical Waste (ආɓӉ஝
ٝjointly issued by the office of NHFPC and other four ministries,
the relevant health authorities and environment protection authorities shall explore the
management system of centralizing disposal of medical waste from local medical institutions
to larger medical institutions, or deliver to medical waste centralizing disposal institution
which qualified for Hazardous Waste Business Licenses. According to the List of Hazardous
Waste in relation to the exemption management of hazardous waste, the collection process of
medical waste is exempted from hazardous waste management for medical institutions which
have 19 beds or fewer.
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Laws and Regulations Related to Fire Prevention Design and Acceptance
The Fire Prevention Law of the PRC (جthe “ Fire Prevention
Law”), was promulgated on April 29, 1998, then became effective on September 1, 1998 and
last amended on April 29, 2021. According to the Fire Prevention Law, for special construction
projects stipulated by the housing and urban-rural development authority of the State Council,
the developer shall submit the fire safety design documents to the housing and urban-rural
development authority for examination, while for construction projects other than those
stipulated as special development projects, the developer shall, at the time of applying for the
construction permit or approval for work commencement report, provide the fire safety design
drawings and technical materials which satisfy the construction needs.
According to Interim Regulations on Administration of Examination and Acceptance of
Fire Control Design of Construction Projects (֛)
promulgated by the Ministry of Housing and Urban-Rural Development of the PRC on April 1,
2020, then became effective on June 1, 2020 and last amended on August 21, 2023 and became
effective on October 30, 2023, an examination system for fire prevention design and
acceptance only applies to special construction projects, and for other projects, a record-filing
and spot check system should be applied. If a non-special construction project fails to pass the
spot check, it shall cease to be used.
LA WS AND REGULATIONS RELATED TO CYBERSECURITY, DATA SECURITY,
AND PROTECTION OF PERSONAL INFORMATION
Decisions on Maintaining Internet Security
The SCNPC enacted the Decisions on Maintaining Internet Security (ၪᚐʝᑌၣτ
֛on December 28, 2000, which was further amended on August 27, 2009 and may
subject violators to criminal punishment in China for any effort to: (i) gain improper entry into
a computer or system of strategic importance; (ii) disseminate politically disruptive
information; (iii) leak state secrets; (iv) spread false commercial information; or (v) infringe
intellectual property rights. The MPS has promulgated measures that prohibit use of the
Internet in ways which, among other things, result in a leakage of state secrets or a spread of
socially destabilizing content. If an Internet information service provider violates these
measures, the MPS and its local branches may shut down its websites and suggest the relevant
authority to revoke its operating license if necessary.
Several Provisions on Regulating the Market Order of Internet Information Services
Under the Several Provisions on Regulating the Market Order of Internet Information
Services (֛issued by the MIIT on December 29, 2011
and became effective on March 15, 2012, an Internet information service provider shall neither
collect any users’ personal information nor provide any users’ personal information to any third
party before obtaining the consent of users, except as otherwise provided by laws and
regulations.
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Decision on Strengthening the Protection of Online Information and Order for the
Protection of Telecommunication and Internet User Personal Information
Pursuant to the Decision on Strengthening the Protection of Online Information (̋
֛issued by the SCNPC on December 28, 2012 and the Order for the
Protection of Telecommunication and Internet User Personal Information (ձʝᑌၣ͜˒
֛issued by the MIIT on July 16, 2013, any collection and use of a user’s
personal information must be subject to the consent of the user and be within the specified
purposes, methods and scopes. An Internet information service provider must also keep such
information strictly confidential, and is further prohibited from divulging, tampering or
destroying any such information, or selling or providing such information to other parties. An
Internet information service provider is required to take technical and other measures to
prevent the collected personal information from any unauthorized disclosure, damage or loss.
Regulations on the Management of Medical Records in Medical Institutions (2013
Edition)
On November 20, 2013, the National Health and Family Planning Commission (abolished
in March 2018 and its responsibilities and powers were entrusted to the newly established
National Health Commission) and the State Administration of Traditional Chinese Medicine
jointly issued the Regulations on the Management of Medical Records in Medical Institutions
(2013 Edition) (֛2013وwhich came into effect on January 1,
2014. According to the Regulations on Medical Record Management of Medical Institutions
(2013 Edition), medical institutions and their medical staff should strictly protect patients’
privacy and prohibit any disclosure of patients’ medical records for non-medical, non-teaching,
and non-research purposes.
Measures for the Management of Population Health Information (Trial)
On May 5, 2014, the National Health and Family Planning Commission issued the
Measures for the Management of Population Health Information (Trial) (၍ଣ፬
ج(༊Б)), which came into effect on the date of its release. According to the Measures for the
Management of Population Health Information (Trial), the basic population information and
medical and health service information generated by medical and health service institutions in
the process of service and management fall within the population health information. The
collection, utilization, and management of population health information should comply with
the provisions of laws and regulations, follow medical ethics principles, ensure information
security, and protect personal privacy. This regulation emphasizes that population health
information shall not be stored on overseas servers, nor shall it be hosted or leased on overseas
servers.
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Ninth Amendment to the Criminal Law of the PRC
On August 29, 2015, the SCNPC promulgated the Ninth Amendment to the Criminal Law
of the PRC (ࣩ(ɘ)), which came into force on November 1, 2015.
The amendment stipulates that if a network service provider fails to fulfill its information
network security management obligations under applicable laws and refuses to take corrective
measures, and falls under any of the following circumstances, it shall bear criminal
responsibility: (i) Causing the widespread dissemination of illegal information; (ii) Causing the
leakage of user information and resulting in serious consequences; (iii) Causing the loss of
evidence in criminal cases, with serious circumstances; or (iv) Other serious circumstances. At
the same time, it is stipulated that any individual or entity who: (i) illegally sells or provides
personal information to others, or (ii) steals or illegally obtains any personal information by
other means, if the circumstances are serious, will also bear criminal responsibility.
Cybersecurity Law of the PRC
On November 7, 2016, the SCNPC issued the Cybersecurity Law of the PRC ( ʕശɛ͏
جthe “ Cybersecurity Law ”), which took effect as of June 1, 2017. Pursuant
to the Cybersecurity Law, a network operator, which includes, among others, Internet
information services providers, must take technical measures and other necessary measures in
accordance with the provisions of applicable laws and regulations as well as the compulsory
requirements of the national and industrial standards to safeguard the safe and stable operation
of the networks, effectively respond to the network security incidents, prevent illegal and
criminal activities, and maintain the integrity, confidentiality and availability of network data.
The Cybersecurity Law reaffirms the basic principles and requirements stipulated in other
existing laws and regulations on the protection of personal information, such as the
requirements for the collection, use, processing, storage and disclosure of personal
information, and requires network operators to take technical and other necessary measures to
ensure the security of the personal information they collect and prevent the disclosure, damage
or loss of personal information. Any violation of the provisions and requirements under the
Cybersecurity Law may subject the network provider to warnings, fines, confiscation of illegal
gains, revocation of licenses, shutdown of websites or even criminal liabilities.
National Medical and Health Big Data Standards, Security, and Service Management
Measures (Trial)
On July 12, 2018, the National Health Commission issued the National Medical and
Health Big Data Standards, Security, and Service Management Measures (Trial) (਄ੰᔼ
ج(༊Б)), which came into effect on the date of
publication. This regulation stipulates that medical and health institutions should establish and
improve relevant safety management systems, operating procedures, and technical
specifications, implement the “top leader” responsibility system, strengthen the construction of
safety guarantee system, enhance overall management and coordination supervision, and
ensure the security of health and medical big data. The regulation stipulates that health and
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medical big data should be stored on secure and trustworthy servers within the territory of
China. If it is necessary to provide it to overseas due to business needs, security assessments
and audits should be conducted in accordance with relevant laws, regulations, and
requirements.
Regulations on Cyber Protection of Children’s Personal Information
On August 22, 2019, the CAC issued the Regulations on Cyber Protection of Children’s
Personal Information (֛which became effective on October 1,
2019. According to this regulation, network operators are required to establish special policies
and user agreements to protect children’s personal information, and to appoint special
personnel in charge of protecting children’s personal information. Network operators who
collect, use, transfer or disclose personal information of children are required to, in a
prominent and clear way, notify and obtain consent from children’s guardians.
Notice on the Special Crackdown Against Illegal Collection and Use of Personal
Information by Apps
On January 23, 2019, the CAC, the MIIT, the MPS, and the SAMR jointly issued the
Notice on the Special Crackdown Against Illegal Collection and Use of Personal Information
by Apps (࢝Appʮѓ), deciding to organize a
special crackdown against illegal collection and use of personal information by apps
nationwide from January to December 2019.
Measures to Identify Illegal Collection and Usage of Personal Information by Apps
On November 28, 2019, the CAC, MIIT, the MPS and the SAMR jointly issued the
Measures to Identify Illegal Collection and Usage of Personal Information by Apps (Appج
جin which the common illegal collection and use of
personal information are listed, including the behaviors of “not publicly disclosing the
collection and use rules”, the behaviors of “not clearly stating the purpose, method, and scope
of collecting and using personal information”, the behaviors of “collecting and using personal
information without user consent”, the behaviors of “violating necessary principles and
collecting personal information unrelated to the services provided”, the behaviors of
“providing personal information to others without consent”, the behaviors of “not providing the
function of deleting or correcting personal information according to legal provisions”, or the
behaviors of “not disclosing information such as complaints and reports”.
Civil Code of the PRC
On May 28, 2020, the NPC promulgated the Civil Code of the PRC ( ʕശɛ͏΍ձ਷͏
Պ), which took effect on January 1, 2021. According to the Civil Code of the PRC,
individuals have the right of privacy. No organization or individual shall process any
individual’s private information or infringe an individual’s right of privacy, unless otherwise
prescribed by law or with the consent of such individual or such individual’s guardian. In
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addition, personal information is protected by Chinese law. The processing of personal
information shall follow the principles of legality, legitimacy, and necessity. Information
processors shall not disclose or tamper with the personal information they collect and store,
and shall not provide the personal information of the individual to others without their consent.
Rules on the Scope of Necessary Personal Information for Common Types of Mobile
Internet Applications
On March 12, 2021, the CAC, the MIIT, the MPS and the SAMR jointly issued the Rules
on the Scope of Necessary Personal Information for Common Types of Mobile Internet
Applications (֛the “ Necessary
Personal Information Rules ”), which came into effect on May 1, 2021. According to the
Necessary Personal Information Rules, mobile app operators shall not deny users’ access to its
basic functions and services on the basis that such user disagrees with the provision of their
personal information that is not necessary. The Necessary Personal Information Rules further
provides relevant scopes of necessary personal information for different types of mobile apps.
Data Security Law of the PRC
On June 10, 2021, the SCNPC promulgated the Data Security Law of the PRC ( ʕശɛ
جthe “ Data Security Law ”), which took effect on September 1, 2021.
The Data Security Law provides a national data security review system, under which data
processing activities that affect or may affect national security shall be reviewed. In addition,
it clarifies that the data security protection obligations of organizations and individuals
carrying out data activities and implementing data security protection responsibility, data
processors shall establish and improve the whole-process data security management rules,
organize and implement data security trainings as well as take appropriate technical measures
and other necessary measures to protect data security. Any organization or individual engaged
in data processing activities that violate the Data Security Law shall bear corresponding civil,
administrative, or criminal responsibilities according to specific circumstances.
Opinions on Strictly Cracking Down on Securities Illegal Activities in Accordance with
the Law
On July 6, 2021, the General Office of the CPC Central Committee and the General Office
of the State Council jointly promulgated the Opinions on Strictly Cracking Down on Securities
Illegal Activities in Accordance with the Law (จԈ), which
emphasizes on the prevention of illegal securities activities and tightened supervision on
overseas listings by China-based companies. The opinions aim to achieve this by establishing
a regulatory system and revising the existing rules and regulations for overseas listings by
Chinese entities and affiliates, including potential extraterritorial application of China’s
securities laws. As the opinions are new, official guidance and implementation rules have not
been issued and the final interpretation of and potential impact from these opinions remain
unclear at this stage.
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Security Protection Regulations for Critical Information Infrastructure
On July 30, 2021, the State Council promulgated the Security Protection Regulations for
Critical Information Infrastructure (ᚐૢԷ) (the Regulations for
CII), which came into effect on September 1, 2021. According to the Regulations for CII,
critical information infrastructure refers to important network facilities and information
systems in important industries, including (among others) public communication and
information services, energy, transportation, water conservancy, finance, public services,
e-government, national defense technology and industry, as well as other important network
facilities and information systems that may seriously endanger national security, national
economy and people’s livelihood, and public interests if they are damaged, lose their functions,
or have data leakage. The government regulatory and supervisory departments of the
above-mentioned important industries and departments will be responsible for: (i) organizing
the identification of critical information infrastructure in their respective industries according
to certain identification rules, and (ii) promptly notifying the operators concerned the
identification results and report the same to the public security department under the State
Council.
Personal Information Protection Law of the PRC
On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law
of the PRC (جthe “ PIPL ”), which became effective on
November 1, 2021. The PIPL requires, among others, that (i) the processing of personal
information should have a clear legal basis (such as obtaining the individual’s consent,
necessary for fulfilling the contract to which the individual is a party, etc.), (ii) the processing
of personal information should have a clear and reasonable purpose which should be directly
related to the processing purpose, in a method that has the least impact on personal rights and
interests, and (iii) 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. Different types of personal information and personal information processing will
be subject to various rules on consent, transfer, and security. Entities processing personal
information bear responsibilities for their activities of processing personal information, and
shall adopt necessary measures to safeguard the security of the personal information that they
process. Otherwise, the entities processing personal information could be ordered to correct, or
suspend or terminate the provision of services, and face confiscation of illegal income, fines
or other penalties.
Cybersecurity Review Measures
On December 28, 2021, thirteen regulatory authorities jointly released the Cybersecurity
Review Measures (جwhich came into effect on February 15, 2022. The
Cybersecurity Review Measures provides that: (i) network platform operators that are engaged
in data processing activities which have or may have an implication on national security shall
undergo a cybersecurity review; (ii) the CSRC is one of the regulatory authorities for purposes
of jointly establishing the state cybersecurity review mechanism; (iii) network platform
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operators that master personal information of more than one million users and seek to list
abroad ( ਷̮ɪ̹) shall file for a cybersecurity review with the Cybersecurity Review Office;
and (iv) the risks of core data, material data or large amounts of personal information being
stolen, leaked, destroyed, damaged, illegally used or transmitted to overseas parties, and the
risks of critical information infrastructure, core data, material data or large amounts of personal
information being influenced, controlled or used maliciously shall be collectively taken into
consideration during the cybersecurity review process.
Cross-Border Data Transfer Security Assessment Measures
On July 7, 2022, the CAC promulgated the Cross-Border Data Transfer Security
Assessment Measures (جwhich came into effect on September 1, 2022.
The Cross-Border Data Transfer Measures provides four circumstances, under any of which
data processors shall, through the local cyberspace administration at the provincial level, apply
to the national cyberspace administration for security assessment of cross-border data transfer.
These circumstances include: (i) where a data processor transfers important data overseas; (ii)
where a critical information infrastructure operator, or a data processor processing the personal
information of more than one million individuals, who, in either case, transfers personal
information overseas; (iii) where a data processor who has, since January 1 of the previous year
cumulatively transferred overseas the personal information of more than 100,000 individuals,
or the sensitive personal information of more than 10,000 individuals; or (iv) other
circumstances under which security assessment of data cross-border transfer is required as
prescribed by the national cyberspace administration.
Measures on the Standard Contract for Outbound Transfer of Personal Information
On February 22, 2023, the CAC issued the Measures on the Standard Contract for
Outbound Transfer of Personal Information (جwhich came into
effect on June 1, 2023. According to the Measures on the Standard Contract for Outbound
Transfer of Personal Information, if a personal information processor provides personal
information to overseas through the establishment of a standard contract, it shall also meet the
following conditions: (i) non critical information infrastructure operators; (ii) processing
personal information of less than one million people; (iii) provided personal information to less
than 100,000 people overseas since January 1 of the previous year; (iv) those who have
provided sensitive personal information to less than 10,000 people overseas since January 1 of
the previous year.
Regulations on Promoting and Regulating Cross border Data Flow
On March 22, 2024, the CAC issued the Regulations on Promoting and Regulating Cross
border Data Flow, which came into effect on the same day. According to the Regulations on
Promoting and Regulating Cross-border Data Flows (֛data
processors who provide personal information to overseas countries and meet one of the
following conditions are exempt from applying for data cross-border transfer security
assessment, entering into standard contracts for outbound transfer of personal information, and
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obtaining personal information protection certification: (i) for the purpose of entering into and
fulfilling contracts with individuals as one party, such as cross-border shopping, cross-border
delivery, cross-border remittance, cross-border payment, cross-border account opening, flight
and hotel booking, visa processing, examination services, etc., it is necessary to provide
personal information to overseas countries; (ii) implementing cross-border human resources
management in accordance with legally established labor rules and regulations and collective
contracts signed in accordance with the law, if it is necessary to provide employees’ personal
information to overseas parties; (iii) in emergency situations, it is necessary to provide
personal information to foreign countries in order to protect the life, health, and property safety
of natural persons; or (iv) data processors other than key information infrastructure operators
who have provided less than 100,000 personal information (excluding sensitive personal
information) to overseas parties since January 1 of the current year.
Measures for the Management of Network Security in Medical and Health Institutions
On August 8, 2022, the National Health Commission, the State Administration of
Traditional Chinese Medicine, and the State Administration for Disease Control and Prevention
jointly issued the Measures for the Management of Network Security in Medical and Health
Institutions (جwhich came into effect on the date of
promulgation. The Measures for the Management of Network Security in Medical and Health
Institutions require medical and health institutions to establish network security and data
security management organizations, with reference to national network security standards,
establish and improve data security management systems, operating procedures, and technical
specifications, strengthen data security education and training, and carry out full life-cycle
management of network security and data security.
Notice of the Ministry of Industry and Information Technology on Filing Mobile Internet
Applications
On July 21, 2023, the MIIT issued the Notice of the Ministry of Industry and Information
Technology on Carrying out the Filing of Mobile Internet Applications (׵
ٝwhich came into effect on the date of
promulgation. The Notice of the Ministry of Industry and Information Technology on Filing
Mobile Internet Applications requires that APP sponsors engaged in Internet information
services within the territory of the People’s Republic of China shall go through the filing
procedures according to law, and those who fail to go through the filing procedures shall not
engage in APP Internet information services, and APP sponsors shall indicate their filing
number in a prominent position on the APP , and link the filing system website below the filing
number as required for public inquiry and verification.
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Regulations on the Administration of Network Data Security
On September 24, 2024, the State Council promulgated the Regulations on the
Administration of Network Data Security ( ၣഖᅰኽτΌ၍ଣૢԷ), which came into effect on
January 1, 2025. The Regulations on the Administration of Network Data Security, based on
the Cybersecurity Law, the Data Security Law, and the Personal Information Protection Law,
reiterate various requirements for network data processors to process and generate various
electronic data through the network, mainly including: (i) network data processors should
strengthen network data security protection through management systems, technical measures,
contract constraints, and other means; (ii) for the processing of personal information, personal
information rules shall be formulated and made public in accordance with requirements, and
the relevant rights of personal information processing shall be guaranteed; (iii) if processing
personal information based on personal consent, the consent of the personal information
subject or its guardian shall be obtained; (iv) focus on protecting network data listed in the
important data directory; (v) the rules that should be followed when providing personal
information and important data to overseas parties; (vi) the obligation of network platform
service providers to protect network data security; (vii) responsibilities and powers of
regulatory authorities; (viii) administrative penalties for violations of relevant regulations.
On February 14, 2025, the CAC promulgated the Regulations on Compliance Audit for
Personal Information Protection (جwhich came into effect on
May 1, 2025. According to these regulations, compliance audit for personal information
protection refers to the supervisory activity of reviewing and evaluating whether the personal
information processing activities of personal information processors comply with laws and
administrative regulations. Personal information processors handling more than 10 million
persons’ personal information should conduct at least one compliance audit for personal
information protection every two years. The attachment to these regulations, “Guidelines for
Compliance Audit of Personal Information Protection (ˏ),” sets
forth the key review contents for compliance audit of personal information protection.
REGULATIONS RELATED TO INTELLECTUAL PROPERTY
Patent
Patents in the PRC are principally protected under the Patent Law of the PRC ( ʕശɛ͏
جpromulgated by the SCNPC on March 12, 1984 and most recently amended on
October 17, 2020 and effective as at June 1, 2021. The Chinese patent system adopts a
first-to-file principle. To be patentable, an invention or a utility model must meet three criteria:
novelty, inventiveness and practicability. The duration of a patent right is 10 years, 15 years
or 20 years from the date of application, depending on the type of patent right.
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Copyright
Copyright in the PRC, including copyrighted computer software, is principally protected
under the Copyright Law of the PRC (جpromulgated by the SCNPC
on September 7, 1990 and most recently amended on November 11, 2020 and effective as at
June 1, 2021 and related rules and regulations. Under the Copyright Law of the PRC, the term
of protection for copyrighted computer software is 50 years. The Regulation on the Protection
of the Right to Communicate Works to the Public over Information Networks (ၣഖෂᅧ
ᚐૢԷ), as most recently amended by the State Council on January 30, 2013, provides
specific rules on fair use, statutory licence, and a safe harbour for use of copyrights and
copyright management technology and specifies the liabilities of various entities for violations,
including libraries and Internet service providers.
The Computer Software Copyright Registration Measures (ج,)
promulgated by the National Copyright Administration on February 20, 2002 and amended on
June 18, 2004 and effective on July 1, 2004, regulate registrations of software copyrights,
exclusive licencing contracts for software copyrights and assignment agreements. The National
Copyright Administration administers software copyright registration and the Copyright
Protection Centre of China is designated as the software registration authority. The Copyright
Protection Centre of China grants registration certificates to the computer software copyrights
applicants which meet the relevant requirements.
Trademark
Registered trademarks are protected under the Trademark Law of the PRC ( ʕശɛ͏΍
جpromulgated by the SCNPC on August 23, 1982 and most recently revised on
April 23, 2019 and effective as at November 1, 2019 and related rules and regulations.
Trademarks are registered with the National Intellectual Property Administration where
registration is sought for a trademark that is identical or similar to another trademark which has
already been registered or given preliminary examination and approval for use in the same or
similar category of commodities or services, the application for registration of this trademark
may be rejected. Trademark registrations are effective for a renewable ten-year period, unless
otherwise revoked.
Domain Name
Domain names are protected under the Administrative Measures on Internet Domain
Names (جpromulgated by the Ministry of Industry and Information
Technology of the PRC on August 24, 2017 and effective as at November 1, 2017. Domain
name registrations are handled through domain name service agencies established under the
relevant regulations, and applicants become domain name holders upon successful registration.
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LA WS AND REGULATIONS RELATED TO FOREIGN INVESTMENT
Foreign Investment
On March 15, 2019, the NPC, promulgated the PRC Foreign Investment Law ( ʕശɛ͏
جthe “ Foreign Investment Law ”), which came into effect on January 1,
2020 and replaced the previous laws regulating foreign investment in the PRC, namely, the
Sino-foreign Equity Joint V enture Enterprise Law of PRC ( ʕശɛ͏΍ձ਷ʕ̮Υ༟຾ᐄΆุ
جthe Sino-foreign Cooperative Joint V enture Enterprise Law of the PRC ( ʕശɛ͏΍ձ਷
جand the Wholly Foreign-invested Enterprise Law of the PRC ( ʕശɛ͏
جtogether with their implementation rules and the ancillary regulations. The
Foreign Investment Law is formulated to further expand opening-up, vigorously promote
foreign investment and protect the legitimate rights and interests of foreign investors.
According to the Foreign Investment Law, foreign investments are entitled to pre-entry
national treatment and are subject to negative list management system. The pre-entry national
treatment means that the treatment given to foreign investors and their investments at the stage
of investment access is not lower than that of domestic investors and their investments. The
negative list management system means that the state implements special management
measures for the access of foreign investment in specific fields. Foreign investors shall not
invest in any forbidden fields stipulated in the negative list and shall meet the conditions
stipulated in the negative list before investing in any restricted fields.
The 2024 Negative List
Pursuant to the Special Administrative Measures (Negative List) for the Access of
Foreign Investment (2024) (݄(૶ఊ)(2024وthe “ 2024
Negative List ”), jointly promulgated by the NDRC and MOFCOM on September 6, 2024 and
came into effect on November 1, 2024, limitations were stipulated for foreign investments in
different industries in the PRC. The 2024 Negative List is further classified into “Catalogue of
Industries Limited for Foreign Investment” and “Catalogue of Industries Prohibited for Foreign
Investment.” Industries which do not fall within the “Special Management Measures (Negative
List) for the Access of Foreign Investment” are industries permitted for foreign investment.
According to the 2024 Negative List, medical institutions are limited to the form of equity joint
ventures.
REGULATIONS RELATED TO TAXATION AND FOREIGN EXCHANGE
For more details, please refer to the section headed “Appendix III — Taxation and
Foreign Exchange” in this prospectus.
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REGULATIONS RELATED TO EMPLOYMENT, SOCIAL INSURANCE AND
HOUSING FUND
Regulations on Employment
The major PRC laws and regulations that govern employment relationship are the Labour
Law of the PRC (جpromulgated by the SCNPC on July 5, 1994 and
latest amended and effective on December 29, 2018, the Labour Contract Law of the PRC ( ʕ
جpromulgated by the SCNPC on June 29, 2007 and latest amended on
December 28, 2012 and effective on July 1, 2013, and the Implementation Rules of the Labour
Contract Law of the PRC (ૢԷ) promulgated by the State
Council and effective on September 18, 2008. Pursuant to the aforementioned laws and
regulations, labour relationships between employers and employees must be executed in
written form. The laws and regulations above impose stringent requirements on the employers
in relation to entering into fixed-term employment contracts, hiring of temporary employees
and dismissal of employees. As prescribed under the laws and regulations, employers shall
ensure their employees have the right to rest and the right to receive wages no lower than the
local minimum wages. Employers must establish a system for labour safety and sanitation that
strictly abides by state standards and provide relevant education to its employees. Violations
of the Labour Contract Law of the PRC and the Labour Law of the PRC may result in the
imposition of fines and other administrative liabilities and/or incur criminal liabilities in the
case of serious violations.
Regulations on Social Insurance
Pursuant to the Social Insurance Law of the PRC (جwhich
was promulgated by the SCNPC on October 28, 2010 and amended on December 29, 2018,
enterprises and institutions in the PRC shall provide their employees with welfare schemes
covering pension insurance, unemployment insurance, maternity insurance, occupational
injury insurance, medical insurance and other welfare plans. The employer shall apply to the
local social insurance agency for social insurance registration within 30 days from the date of
its establishment. And it shall, within 30 days from the date of employment, apply to the social
insurance agency for social insurance registration for the employee. Any employer who
violates the regulations above shall be ordered to make correction within a prescribed time
limit; if the employer fails to rectify within the time limit, the employer and the person(s)-
in-charge who is/are directly liable and other directly liable personnel will be fined.
Meanwhile, the Interim Regulation on the Collection and Payment of Social Insurance
Premiums (ᎈ൬ᅄᖮᅲБૢԷ) promulgated by the State Council on January 22, 1999
and revised on March 24, 2019 prescribes the details concerning the collection and payment of
social insurance.
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Regulations on Housing Provident Fund
According to the Regulation on the Administration of Housing Provident Fund (ʮ
၍ଣૢԷ), which was implemented on April 3, 1999 and latest revised on March 24, 2019,
any newly established entity shall make deposit registration at the housing accumulation fund
management centre within 30 days as at its establishment. After that, the entity shall open a
housing accumulation fund account for its employees in an entrusted bank. Within 30 days as
at the date an employee is recruited, the entity shall make deposit registration at the housing
accumulation fund management centre and go through the formalities of opening housing
provident fund accounts on behalf of its employees. Any entity that fails to make deposit
registration of the housing accumulation fund or fails to open a housing accumulation fund
account for its employees shall be ordered to complete the relevant procedures within a
prescribed time limit. Any entity failing to complete the relevant procedure within the time
limit will be fined RMB10,000 to RMB50,000. Any entity that fails to make payment of
housing provident fund within the time limit or has a shortfall in payment of housing provident
fund will be ordered to make the payment or make up the shortfall within the prescribed time
limit, otherwise, the housing provident management centre is entitled to apply for compulsory
enforcement with the People’s Court.
REGULATIONS RELATED TO OVERSEAS SECURITIES OFFERING AND LISTING
AND FULL CIRCULATION
Regulations on Overseas Securities Offering
On February 17, 2023, the CSRC promulgated six rules and regulations, including the
Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic
Companies (جthe “ Overseas Listing Trial
Measures ”) and five supporting guidelines, which became effective on March 31, 2023. The
Overseas Listing Trial Measures adopt a filing and regulatory regime to regulate the direct and
indirect overseas listing of securities of PRC enterprises. If a domestic enterprise fails to
comply with the filing procedures as required, or if it is listed outside of PRC despite being
prohibited from doing so, the CSRC may order the domestic enterprise to rectify the situation,
issue a warning and impose a fine of not less than RMB1,000,000 and not more than
RMB10,000,000. A warning may be given to the directly responsible officer and other directly
responsible persons and a fine of not less than RMB500,000 and not more than RMB5,000,000
shall be imposed. If the controlling shareholder or the actual controller of the domestic
enterprise organises or instructs to engage in the above illegal acts, he may be liable to a fine
of not less than RMB1,000,000 and not more than RMB10,000,000. The Overseas Listing Trial
Measures also stipulate that in the event of any material events such as change of control,
investigation or punishment by the overseas securities supervisory authority or relevant
authorities, change of listing status or transfer of listing segment, or termination of listing on
its own initiative or compulsory termination of listing after the issuer’s overseas listing, the
issuer shall report the specific circumstances to the CSRC within three working days from the
date of the announcement of the relevant event.
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On February 24, 2023, the CSRC, the MOF, the National Administration of State Secrets
Protection and the National Archives Administration of China jointly promulgated the
Provisions on Strengthening the Confidentiality and Archives Administration Concerning the
Overseas Securities Offering and Listing by Domestic Enterprises (̋੶ྤʫΆุྤ̮೯
֛the “ Confidentiality and Archives
Administration Provisions ”), which became effective on 31 March 2023. According to the
Confidentiality and Archives Administration Provisions, if a domestic joint stock company
with a direct overseas listing or a domestic operating entity with an indirect overseas listing
provides or publicly discloses, or provides or publicly discloses through its overseas listed
entity, documents or information involving state secrets or secrets of the work of state organs,
or other documents or information the disclosure of which would adversely affect national
security or public interests, the corresponding procedures shall be strictly complied with in
accordance with the relevant state regulations.
Regulations on Full Circulation
“Full Circulation” represents listing and circulating on the Stock Exchange of the
domestic unlisted shares of an H-share listed company, including unlisted domestic shares held
by domestic shareholders prior to overseas listing, unlisted domestic shares additionally issued
after overseas listing, and unlisted shares held by foreign shareholders. On November 14, 2019,
CSRC announced the Guidelines on Application for “Full Circulation” of Domestic Unlisted
Shares of H-share Companies ( H΅͡ሗ“ஷ”ˏ)( “ Full
Circulation Guidelines ”), which were amended on August 10, 2023. As regulated in the Full
Circulation Guidelines, shareholders of domestic unlisted shares have the flexibility to jointly
decide the amount and proportion of shares that will be included in the circulation application.
This decision should be reached through mutual consultation, ensuring compliance with
relevant laws, regulations and policies governing state-owned asset administration, foreign
investment and industry regulation. Meanwhile, the H-share listed company corresponding to
these shares may be authorized to file for “full circulation” with the CSRC. An unlisted
domestic joint stock company may file with the CSRC for “full circulation” at the time of its
initial public offering and listing overseas. After domestic unlisted shares are listed and
circulated on the Stock Exchange, they may not be transferred back to China. Pursuant to the
Overseas Listing Trial Measures, for a domestic company directly offering and listing
overseas, shareholders of its domestic unlisted shares applying to convert such shares into
shares listed and traded on an overseas trading venue shall conform to relevant regulations
promulgated by the CSRC. Additionally, they are required to authorize the domestic company
to submit the conversion application to the CSRC on their behalf. On December 31, 2019,
China Securities Depository and Clearing Corporation Limited and Shenzhen Stock Exchange
jointly announced the Measures for Implementation of H-share “Full Circulation” Business
(the “ Measures for Implementation ”). The businesses of cross-border share transfer
registration, maintenance of deposit and holding details, transaction entrustment and
instruction transmission, settlement, management of settlement participants, services of
nominal holders, etc., in relation to the H-share “Full Circulation” business, are subject to these
Measures for Implementation.
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OVERVIEW
Our history can be traced back to 2007, when our Company was established by
Zhongshan Medical Investment, an investment holding company then held by Mr. Y ao and Ms.
Shen as to 55% and 39% respectively, as a limited liability company in the PRC. Mr. Y ao and
Ms. Shen, both experienced medical professionals at the time, shared the common vision to
deliver superior and patient-centered care directly to the public. Through market research, they
identified a growing demand for accessible and high-quality oral healthcare services, which
would be capable of supporting scalable chain-based operations. In response, drawing on their
expertise and extensive industry experience, they established a chain of dental clinics and
hospitals. Through years of development, under the leadership of Mr. Y ao and Ms. Shen and
leveraging our excelling healthcare services, we stand as a leading private dental services
provider in Central China with a focus on Hubei and Hunan provinces. As of the Latest
Practicable Date, we had 4 dental hospitals, 80 dental out-patient departments and 8 dental
clinics covering 8 cities in 2 provinces in China, providing customers with comprehensive and
customized dental services.
Our Company was converted into a joint stock company with limited liability on
December 24, 2014 and was renamed as Wuhan Dazhong Dental Medical Co., Ltd. (ဏɽ଺
ʮ̡) on May 9, 2017.
OUR MILESTONES
The following sets forth the business milestones of our Group:
Y ear Milestone
2007 /H1118/H1118/H1118 Our Company was established in Wuhan under the name of Wuhan
Dazhong Dental Clinic Co., Ltd. (ʮ̡).
2014 /H1118/H1118/H1118 Our Company was converted into a joint stock company with limited
liability.
 Wuhan Dazhong Hospital, one of our principal operating subsidiaries,
was established.
2017 /H1118/H1118/H1118 Our Company was renamed as Wuhan Dazhong Dental Medical
Co., Ltd. (ʮ̡).
 We received the Series A Investment.
 We initiated our Partnership Program and established the first medical
institution we partnered with a seasoned dentist to operate.
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Y ear Milestone
2018 /H1118/H1118/H1118 We expanded our business beyond Wuhan and grew our geographic
footprint as Xiangyang Dazhong Out-patient Department commenced its
business in Xiangyang, Hubei Province.
2020 /H1118/H1118/H1118 We expanded our business beyond Hubei Province by acquiring
Shaoyang Hospital in Shaoyang, Hunan Province.
2021 /H1118/H1118/H1118 We received the Series B Investment.
2022 /H1118/H1118/H1118 We were awarded Creditable and Contract-honored Enterprise ( ςΥΝ
͜Άุ) by Wuhan Administration for Market Regulation (ဏ̹
̹ఙ္ຖ၍ଣ҅).
2023 /H1118/H1118/H1118 The number of our medical institutions exceeds 80.
 We were one of the first medical institution groups to use robot-assisted
technology on dental surgeries in Hubei Province.
 We were awarded New High-tech Enterprise ( ৷อҦஔΆุ)b y
Department of Science and Technology of Hubei Province (ኪ
Ҧஔᝂ).
2024 /H1118/H1118/H1118 We upgraded our brand name as Aishang Dazhong Dental (ɽ଺ɹ
ഢ).
OUR MAJOR CORPORATE DEVELOPMENT
Early Development
Our Company was established as a limited liability company in the PRC on July 10, 2007
under the name of Wuhan Dazhong Dental Clinic Co., Ltd. (ʮ̡)
with a registered capital of RMB2.42 million. At the time of our establishment, we were wholly
owned by Zhongshan Medical Investment, one of our Controlling Shareholders. Zhongshan
Medical Investment was then held by Mr. Y ao, Ms. Shen and Ms. Huang Meiyun (ڄߕa s
to 55%, 39% and 1%, respectively. Both Mr. Y ao and Ms. Shen are our Controlling
Shareholders and executive Directors. Ms. Huang Meiyun is one of our Supervisors. The rest
5% equity interest in Zhongshan Medical Investment was held by several early individual
investors who are all Independent Third Parties.
On June 3, 2014, Mr. Y ao and Ms. Shen entered into an acting-in-concert agreement to
align their votes at the general meetings of Zhongshan Medical Investment and our Company
such that their ownership in our Company would be consolidated.
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On August 27, 2014, in order to enhance our capital resources to support our overall
business development, our registered capital was increased by RMB17.58 million to RMB20
million, all of which was subscribed for by Ms. Shen and fully paid up as of August 27, 2014.
Upon completion of such capital increase, we were owned by Ms. Shen and Zhongshan
Medical Investment as to 87.9% and 12.1%, respectively.
On October 20, 2014, Ms. Shen entered into an equity transfer agreement with each of
Zhongshan Medical Investment and Wuhan Xinglin, pursuant to which Ms. Shen agreed to
transfer 77.9% and 10% equity interest in our Company to Zhongshan Medical Investment and
Wuhan Xinglin at a consideration of RMB15.58 million and RMB2 million, respectively. Such
consideration was determined with reference to our then registered capital and was fully settled
as of June 15, 2015. Upon completion of such equity transfers, we were owned by Zhongshan
Medical Investment and Wuhan Xinglin as of 90% and 10%, respectively.
Wuhan Xinglin is one of our employee stock ownership platforms established in the PRC
on October 17, 2014. The general partner and limited partner of Wuhan Xinglin were both
employees of our Company at the time of its establishment, and we subsequently utilized the
equity interest in our Company held by Wuhan Xinglin as restricted shares for grants to our
employees as incentives and awards. For details, see “— Pre-IPO Restricted Share Scheme.”
Prior Quotation on NEEQ
Conversion into Joint Stock Company and Quotation on NEEQ
On December 24, 2014, our Company was converted into a joint stock company with
limited liability and renamed as Wuhan Dazhong Dental Clinic Co., Ltd. (ൢ
ʮ̡). Our registered capital became RMB20 million divided into 20 million
Shares with a nominal value of RMB1.00 each. On May 12, 2015, we became quoted on the
NEEQ (Stock code: 832387). Immediately upon quotation, our shareholding structure was as
follows:
Name of Shareholder
Number of
Shares held
Shareholding
percentage
Zhongshan Medical Investment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,000,000 90%
Wuhan Xinglin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,000,000 10%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,000,000 100.00%
Capital Increase and Share Transfer
On January 29, 2016, we entered into a share issue and subscription agreement with
Zhongshan Medical Investment, pursuant to which Zhongshan Medical Investment agreed to
subscribe for 7,000,000 new Shares at a consideration of RMB14 million, which was
determined with reference to our then net assets and was fully paid up as of February 23, 2016.
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On May 25, 2016 and June 30, 2017, we increased our issued share capital by way of
conversion of capital reserve into share capital and issued an additional of 1. 1111112 Shares
and 2.333334 Shares, respectively, for every 10 Shares then held by our Shareholders.
On August 12, 2017, Zhongshan Medical Investment entered into an equity transfer
agreement with each of Wuhan Taolin and Wuhan Zhulin, pursuant to which Zhongshan
Medical Investment agreed to transfer 1,505,000 Shares and 1,505,000 Shares to Wuhan Taolin
and Wuhan Zhulin at a consideration of approximately RMB5.72 million and RMB5.72
million, respectively. Such consideration was determined with reference to our then results of
operation and business prospects, and was fully settled as of August 18, 2017.
Wuhan Taolin and Wuhan Zhulin are both our employee stock ownership platforms
established in the PRC on July 7, 2017 and July 14, 2017, respectively. The general partners
and limited partners of both Wuhan Taolin and Wuhan Zhulin were all employees of our
Company at the time of their establishment, and we subsequently utilized the Shares held by
Wuhan Taolin and Wuhan Zhulin as restricted shares for grants to our employees as incentives
and awards. For details, see “— Pre-IPO Restricted Share Scheme.”
Series A Investment
On July 31, 2017, we entered into a share issue and subscription agreement with two
investors (namely Zhongyuan Jiupai and Mr. Zhu Chao ( ϡ൴)), pursuant to which Zhongyuan
Jiupai and Mr. Zhu Chao agreed to subscribe for 2,400,000 Shares and 600,000 Shares at a
consideration of RMB23.52 million and RMB5.88 million, respectively. For details, see “—
Pre-IPO Investments.”
Ceased to be Quoted on NEEQ
Our Company voluntarily ceased to be quoted on the NEEQ on April 27, 2018,
considering the following factors:
(i) the NEEQ is a market open only to qualified investors and has a relatively lower
trading volume and liquidity level compared to other stock exchanges, making it
difficult to reflect the fair value of the Shares of our Company;
(ii) our Company has limited ability to publicly raise funds to finance its business
operations and development when quoted on the NEEQ; and
(iii) we were exploring for opportunities to list on other stock exchanges including the
Stock Exchange, which would offer us an access to a more mature and international
capital market, enhance our fund-raising capabilities and broaden our shareholder
base, as well as improve our brand awareness and corporate governance.
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Our Directors confirm that during the period when our Company was quoted on the
NEEQ and up to the cessation of quotation thereon, (i) our Company had been in compliance
with all applicable laws and regulations as well as rules and regulations of the NEEQ in all
material respects; (ii) our Company had not been subject to any disciplinary action by the
relevant regulators in this respect; and (iii) there are no other issues that need to be brought to
the attention of our Shareholders. The delisting of our Company was approved by a unanimous
consent of all our then shareholders. Therefore, there were no circumstances requiring our
Company to repurchase its shares, thereby resulting in no specific share transaction price or
any accurate valuation of our Company at that time.
Based on the due diligence work performed by the Sole Sponsor, there are no material
findings that have come to the attention of the Sole Sponsor which would reasonably cause it
to cast doubt on the Directors’ confirmations above.
Immediately upon cessation of quotation, our shareholding structure was as follows:
Name of Shareholder
Number of
Shares held
Shareholding
percentage
Zhongshan Medical Investment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831,249,260 78.12%
Wuhan Xinglin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,740,740 6.85%
Wuhan Taolin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,505,000 3.76%
Wuhan Zhulin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,505,000 3.76%
Zhongyuan Jiupai /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,400,000 6.00%
Mr. Zhu Chao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118600,000 1.50%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111840,000,000 100.00%
Series B Investment
In May and June 2021, we entered into a series of capital increase agreements with our
Controlling Shareholders (namely Zhongshan Medical Investment, Mr. Y ao and Ms. Shen) and
eight investors (namely CITIC Securities Investment, Zhongyuan Jiupai, Zhidao Capital, Mr.
Li Jiansheng (͛), Ms. Li Zhen ( ҽጲ), Mr. Chen Wei ( ௓ᙯ), Mr. Wang Hong ( ˮ҃) and
Mr. Wang Qingsong (ؒڡpursuant to which the Controlling Shareholders agreed to
subscribe for an aggregate of 1,000,642 Shares at a total consideration of RMB14.51 million
and the investors agreed to subscribe for an aggregate of 5,895,906 Shares at a total
consideration of RMB85.49 million. For details, see “— Pre-IPO Investments.” Upon
completion of the Series B Investment, our shareholding structure was as follows:
Name of Shareholder
Number of
Shares held
Shareholding
percentage
Zhongshan Medical Investment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831,324,102 66.79%
Mr. Y ao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118475,800 1.01%
Ms. Shen /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118450,000 0.96%
Wuhan Xinglin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,740,740 5.84%
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Name of Shareholder
Number of
Shares held
Shareholding
percentage
Wuhan Taolin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,505,000 3.21%
Wuhan Zhulin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,505,000 3.21%
CITIC Securities Investment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,448,274 7.35%
Zhongyuan Jiupai /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,296,551 7.03%
Mr. Li Jiansheng /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118620,690 1.32%
Mr. Zhu Chao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118600,000 1.28%
Zhidao Capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118344,827 0.74%
Ms. Li Zhen /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118206,800 0.44%
Mr. Chen Wei /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118206,800 0.44%
Mr. Wang Hong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118103,000 0.22%
Mr. Wang Qingsong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111868,964 0.15%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111846,896,548 100.00%
Share Repurchase and Reduction of Capital
Due to divergent views of certain of our investors on the proposed listing location of our
Company, in September 2024, we entered into a share repurchase agreement or capital
reduction agreement with each of CITIC Securities Investment, Zhongyuan Jiupai, Mr. Li
Jiansheng, Mr. Zhu Chao, Zhidao Capital and Mr. Wang Qingsong, pursuant to which we
agreed to repurchase all the 8,379,306 Shares held by these investors at a total consideration
of RMB121.3 million. Such consideration was equal to their original investment costs plus a
premium and deducting paid dividends as agreed between the parties with reference to their
previous investment agreements, and was fully settled on October 8, 2024. Upon completion
of the share repurchase and capital reduction, our shareholding structure was as follows:
Name of Shareholder
Number of
Shares held
Shareholding
percentage
Zhongshan Medical Investment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831,324,102 81.32%
Mr. Y ao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118475,800 1.24%
Ms. Shen /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118450,000 1.17%
Wuhan Xinglin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,740,740 7.12%
Wuhan Taolin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,505,000 3.91%
Wuhan Zhulin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,505,000 3.91%
Ms. Li Zhen /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118206,800 0.54%
Mr. Chen Wei /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118206,800 0.54%
Mr. Wang Hong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118103,000 0.27%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838,517,242 100.00%
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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PRE-IPO RESTRICTED SHARE SCHEME
On July 27, 2017, our Company adopted the Pre-IPO Restricted Share Scheme, which was
amended on October 28, 2024, in order to motivate and encourage our officers, employees and
consultants. Pursuant to the Pre-IPO Restricted Share Scheme, an aggregate of 5,750,740
Restricted Shares, representing approximately 11.65% of the total issued Shares of our
Company immediately after the Global Offering (assuming no exercise of the Over-allotment
Option) were reserved for share grants to our officers, employees and consultants as awards
and incentives, including (i) 2,740,740 Shares held by Wuhan Xinglin, (ii) 1,505,000 Shares
held by Wuhan Taolin and (iii) 1,505,000 Shares held by Wuhan Zhulin. As of the Latest
Practicable Date, all Restricted Shares under the Pre-IPO Restricted Share Scheme had been
granted to 68 participants, all of whom indirectly held their interests in our Company as limited
partners and/or general partners of our three employee stock ownership platforms.
From accounting perspectives, the Restricted Shares are recognized as treasury shares
prior to the Listing as they cannot be freely transferred and are under the control of the
Company pursuant to the terms of the Pre-IPO Restricted Share Scheme. Upon the Listing, the
Restricted Shares will be transferable and cease to be under the control of the Company, and
hence the Restricted Shares will no longer be recognized as treasury shares from accounting
perspectives. For details, see “D. Pre-IPO Restricted Share Scheme — 4. Restrictions on the
Restricted Shares” in Appendix VI and Note 29 to the Accountants’ Report in Appendix I to
this prospectus.
The Pre-IPO Restricted Share Scheme is not subject to the provisions of Chapter 17 of the
Listing Rules as it does not involve grant of Restricted Shares after the Listing. The principal
terms of the Pre-IPO Restricted Share Scheme are set out in “Appendix VI — Statutory and
General Information — D. Pre-IPO Restricted Share Scheme.”
OUR PRINCIPAL SUBSIDIARIES
The following entities are the principal operating subsidiaries which made a material
contribution to our financial results during the Track Record Period:
Name of company
Shareholding
held by our
Group
Place and date of
establishment Principal business activities
Wuhan Dazhong
Hospital /H1118/H1118/H1118/H1118/H1118/H1118
100% Wuhan, Hubei Province
May 22, 2014
Provision of dental
healthcare services
Hejian Baibuting /H1118 51% Wuhan, Hubei Province
August 12, 2019
Provision of dental
healthcare services
Zaoyang Hospital /H1118 51% Xiangyang, Hubei
Province
March 25, 2019
Provision of dental
healthcare services
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Name of company
Shareholding
held by our
Group
Place and date of
establishment Principal business activities
Jingzhou
Dazhong /H1118/H1118/H1118/H1118/H1118/H1118
70% Jingzhou, Hubei Province
January 2, 2020
Investment holding
Shaoyang
Hospital /H1118/H1118/H1118/H1118/H1118/H1118
51% Shaoyang, Hunan
Province
December 6, 2019
Provision of dental
healthcare services
Chenzhou
Hospital /H1118/H1118/H1118/H1118/H1118/H1118
51% Chenzhou, Hunan
Province
December 13, 2019
Provision of dental
healthcare services
Wuhan Dazhong Hospital
Wuhan Dazhong Hospital was established as a limited liability company in the PRC on
May 22, 2014 with a registered capital of RMB5.0 million, and had been our wholly-owned
subsidiary since then. Wuhan Dazhong Hospital is the largest dental institution within our
dental service network in terms of total revenue generated during the Track Record Period. For
details, see “Business — Our Dental Service Network — Wuhan Dazhong Hospital.”
Hejian Baibuting
Hejian Baibuting was established as a limited liability company in the PRC on August 12,
2019 with a registered capital of RMB1.5 million. At the time of its establishment, Hejian
Baibuting was held by Wang Jian ( ˮ਄), a then Independent Third Party, and our Company as
to 99% and 1%, respectively.
On January 9, 2020, our Company acquired 50% equity interest in Hejian Baibuting from
Wang Jian at a consideration of RMB1,311,000. Such consideration was determined based on
results of operation and business prospects of Hejian Baibuting and had been fully settled as
of the Latest Practicable Date. Mr. Wang Jian has 19 years of experience in dental industry who
was in charge of the operation of the predecessor of Hejian Baibuting, Wuhan Chikangjian
Dental Out-patient Department (ൢ௅) prior to the acquisition.
Upon completion of the acquisition on January 9, 2020, Hejian Baibuting became our
non-wholly-owned subsidiary. Our acquisition of Hejian Baibuting expanded the coverage of
our dental service network in Wuhan, Hubei Province.
Zaoyang Hospital
Zaoyang Hospital was established as a limited liability company in the PRC on March 25,
2019 with a registered capital of RMB2.6 million. At the time of its establishment, Zaoyang
Hospital was held by Su Shengfeng (ࢤa then Independent Third Party, and our
Company as to 99% and 1%, respectively.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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On May 7, 2019, our Company acquired 50% equity interest in Zaoyang Hospital from
Su Shengfeng at a consideration of RMB4,360,000. Such consideration was determined based
on the results of operation and business prospects of Zaoyang Hospital and had been fully
settled as of the Latest Practicable Date. Mr. Su Shengfeng is a seasoned dentist with 17 years
of experience who served as a dentist in the predecessor of Zaoyang Hospital, Zaoyang
Dongsheng Dental Hospital (ସɹഢᔼ৫) prior to the acquisition. Su Shengfeng
currently serves as a dentist of our Group.
Upon completion of the acquisition on May 7, 2019, Zaoyang Hospital became our
non-wholly-owned subsidiary. Our acquisition of Zaoyang Hospital expanded the coverage of
our dental service network in Xiangyang, Hubei Province.
Jingzhou Dazhong
Jingzhou Dazhong was established by Huang Y ong (ۇan Independent Third Party, as
a limited liability company in the PRC on January 2, 2020 with a registered capital of RMB5.1
million.
On November 19, 2020, our Company acquired 70% equity interest in Jingzhou Dazhong
from Huang Y ong at a consideration of RMB26,775,000. Such consideration was determined
with reference to the equity value of Jingzhou Dazhong as of November 30, 2020 according to
a valuation report issued by an independent professional valuer and had been fully settled as
of the Latest Practicable Date. Mr. Huang Y ong has 18 years of experience in dental industry
who was in charge of the operation of the predecessor of Jingzhou Dazhong, 16 dental
institutions controlled by Mr. Huang Y ong and operated under the brand of Jingzhou Chuxing
Dental (ɹഢ) prior to the acquisition.
Upon completion of the acquisition on November 19, 2020, Jingzhou Dazhong became
our non-wholly-owned subsidiary. On April 22, 2022, the registered capital of Jingzhou
Dazhong was increased by RMB7 million to RMB12.1 million, which was subscribed for by
our Company and Huang Y ong in proportion to their then shareholding in Jingzhou Dazhong.
Jingzhou Dazhong is the holding company of our 17 subsidiaries which operate dental
out-patient departments in Jingzhou and Jingmen, Hubei Province, as well as Changde and
Y ueyang, Hunan Province.
Shaoyang Hospital
Shaoyang Hospital was established as a limited liability company in the PRC on
December 6, 2019 with a registered capital of RMB2.0 million. At the time of its establishment,
Shaoyang Hospital was held by Xiong Zhongcai (ʑ), Zeng Qingbiao ( ಀᅅஉ), Liang
Chengliang (ڥוXiong Xueji ( ဤ௛ᛢ), Li Caifeng ( ҽ੹ჾ), Li Zhi’e (ࢎLi
Y uanfeng ( ҽჃቜ), Tang Guoxian (਷ሬ), Wang Juanli (л), He Guiqin (ා) and
Xiao Jingyi ( ӽԯ່), all of whom are then Independent Third Parties, as to 40.75%, 13.44%,
13.11%, 12.00%, 9.18%, 3.00%, 1.95%, 1.64%, 1.64%, 1.64% and 1.64%, respectively.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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On December 24, 2019, our Company acquired an aggregate of 51% equity interest in
Shaoyang Hospital from Xiong Zhongcai, Zeng Qingbiao, Li Caifeng, Xiong Xueji, Li
Y uanfeng, Tang Guoxian, He Guiqin and Xiao Jingyi at a total consideration of
RMB12,597,000. Such consideration was determined based on the business prospects, results
of operation and financial condition of Shaoyang Hospital and had been fully settled as of the
Latest Practicable Date. Upon completion of the acquisition on December 24, 2019, Shaoyang
Hospital became our non-wholly-owned subsidiary. Our acquisition of Shaoyang Hospital
marked our first step in expanding our dental service network in Shaoyang, Hunan Province.
Chenzhou Hospital
Chenzhou Hospital was established as a limited liability company in the PRC on
December 13, 2019 with a registered capital of RMB2.0 million. At the time of its
establishment, Chenzhou Hospital was held by Lu Hongyi (൪), Xiong Zhongcai, Zhang
Chengyuan ( ੵ೻ʩ), Zeng Qingguang ( ಀᅅΈ) and Zheng Jun (ࠏall then Independent
Third Parties, as to 37.83% 36.62%, 13.00%, 6.51% and 6.04%, respectively.
On January 3, 2020, our Company acquired an aggregate of 51% equity interest in
Chenzhou Hospital from Xiong Zhongcai, Lu Hongyi, Zhang Chengyuan, Zeng Qingguang and
Zheng Jun at a total consideration of RMB12,627,588. Such consideration was determined
based on the business prospects, results of operation and financial condition of Chenzhou
Hospital and had been fully settled as of the Latest Practicable Date. Upon completion of the
acquisition on January 3, 2020, Chenzhou Hospital became our non-wholly-owned subsidiary.
Our acquisition of Chenzhou Hospital marked our first step in expanding our dental service
network in Chenzhou, Hunan Province.
PRE-IPO INVESTMENTS
Principal Terms of the Pre-IPO Investments
The following table sets forth the principal terms of the Pre-IPO Investments:
Series A Investment Series B Investment (1)
Date of the Pre-IPO
Investments
July 31, 2017 May 24, 2021, June 11,
2021 and June 17, 2021
Name of the Pre-IPO
Investors
Zhongyuan Jiupai (2)
Mr. Zhu Chao (2)
CITIC Securities
Investment (2)
Zhongyuan Jiupai (2)
Zhidao Capital (2)
Mr. Li Jiansheng (2)
Ms. Li Zhen
Mr. Chen Wei
Mr. Wang Hong
Mr. Wang Qingsong
(2)
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Series A Investment Series B Investment (1)
Date on which the
consideration was fully
settled
August 18, 2017 June 30, 2021
Consideration RMB29,400,000 RMB85,490,637
Total number of Shares
subscribed for by the Pre-
IPO Investors under the
Pre-IPO Investments
3,000,000 Shares 5,895,906 Shares
Cost per Share RMB9.80 RMB14.50
Discount to the Offer
Price
(3)
48.16% 23.30%
Post-money valuation of our
Group
RMB392 million RMB680 million
Basis of consideration The consideration of the Pre-IPO Investments was
determined after arm’s length negotiations with the
Pre-IPO Investors after taking into account, among
others, the financial performance and business
prospects of our Group.
Use of Proceeds from the
Pre-IPO Investments
We utilized the proceeds from the Pre-IPO Investments
primarily for promoting the growth and expansion of
our principal business and for general working capital
purpose. As of the Latest Practicable Date, the
proceeds from the Pre-IPO Investments were fully
utilized.
Lock-up Pursuant to the PRC Company Law, all of our current
Shareholders (including the current Pre-IPO Investors)
are subject to a lock-up period of 12 months following
the Listing Date.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Series A Investment Series B Investment (1)
Strategic benefits of the
investors brought to our
Company
At the time of the Pre-IPO Investments, our Directors
were of the view that our Group could benefit from the
additional capital provided by the Pre-IPO Investors
and their knowledge and experience. Moreover, the
investments by the Pre-IPO Investors demonstrated
their confidence in the business operations of our
Group and served as an endorsement of our
performance and prospects.
Notes:
(1) Zhongshan Medical Investment, Mr. Y ao and Ms. Shen, who are our Controlling Shareholders, invested
RMB14,509,309 in total in our Company for their subscription of 1,000,642 Shares during the Series
B Investment. Such investment made by our Controlling Shareholders was for the purpose of reinforcing
their controlling interest in our Company.
(2) An aggregate of 8,379,306 Shares subscribed for by CITIC Securities Investment, Zhongyuan Jiupai,
Mr. Li Jiansheng, Mr. Zhu Chao, Zhidao Capital and Mr. Wang Qingsong were repurchased by our
Company on October 8, 2024. For details, see “— Our Major Corporate Development — Share
Repurchase and Reduction of Capital.”
(3) Assuming the Offer Price is fixed at HK$20.70, being the mid-point of the indicative Offer Price range.
Special Rights
Under the Pre-IPO Investments, Zhongyuan Jiupai, Mr. Zhu Chao, CITIC Securities
Investment and Zhidao Capital were granted certain special rights including, among others,
veto right, information right, redemption right, pre-emptive right, right of first refusal and right
of co-sale. Pursuant to the share repurchase agreements entered into between our Company and
such Pre-IPO Investors, all the special rights under the Pre-IPO Investments were terminated
when the consideration of such share repurchase was fully settled on September 30, 2024. For
details, see “— Our Major Corporate Development — Share Repurchase and Reduction of
Capital.”
Information about the Pre-IPO Investors
Set out below is the information about our current Pre-IPO Investors:
Ms. Li Zhen
Ms. Li Zhen has over 10 years of experience in the secondary market and currently
worked in Tianjin Keruijie Technology Co., Ltd. (ʮ̡). Ms. Li Zhen
became acquainted with our Company through our Controlling Shareholder. Ms. Li Zhen is an
Independent Third Party.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Mr. Chen Wei
Mr. Chen Wei has 25 years of experience in the pharmaceutical industry and currently
worked in Sichuan Kelun-Biotech Biopharmaceutical Co., Ltd (Stock code: 6990.HK). Mr.
Chen Wei became acquainted with our Company through our Controlling Shareholder. Mr.
Chen Wei is an Independent Third Party.
Mr. Wang Hong
Mr. Wang Hong is one of our senior management. For his biographical details, see
“Directors, Supervisors and Senior Management — Senior Management.”
Set out below is the information about our previous Pre-IPO Investors that had exited
their investments as of the Latest Practicable Date:
Zhongyuan Jiupai
Zhongyuan Jiupai is a limited liability partnership formed in the PRC on November 23,
2016. The general partner of Zhongyuan Jiupai is Wuhan Zhongyuan Jiupai
Industry Investment Management Co., Ltd. (ʮ̡)( “ Wuhan
Zhongyuan ”). Wuhan Zhongyuan is held by Ganzhou Jiupai Gongyun Equity Investment
Partnership (Limited Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ)),
Zhongyuanhui (Wuhan) Industry Investment Co., Ltd. ( ʕʩි(ဏ)ʮ̡), Qian
Bin ( ፺ⅳ), Wuhan Zhongchuang Rongkong Investment Management Co., Ltd. (ဏ଺௴ፄછ
ʮ̡) and He Chi ( ൭ཱུ), all of which are Independent Third Parties, as to 30%,
30%, 15%, 15% and 10%, respectively. Zhongyuan Jiupai primarily invests in sectors including
healthcare, high-end equipment, energy saving and environmental protection, with
approximately RMB250 million funds under management.
Mr. Zhu Chao
Mr. Zhu Chao is an individual investor. He became acquainted with our Company through
Zhongyuan Jiupai during the Series A Investment. Mr. Zhu Chao is an Independent Third Party.
CITIC Securities Investment
CITIC Securities Investment is a limited liability company established in the PRC and
wholly owned by CITIC Securities Co., Ltd. (ʮ̡)( “ CITIC Securities ”),
a joint stock limited liability company listed on the Stock Exchange (Stock code: 6030.HK) and
the Shanghai Stock Exchange (Stock code: 600030.SH). CITIC Securities Investment is
principally engaged in financial products investment, securities investment and equity
investment.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Zhidao Capital
Zhidao Capital is a limited liability partnership formed in the PRC on April 24, 2020. The
general partner of Zhidao Capital is Suzhou Industrial Park Zhidao Private Fund Management
Co., Ltd. (ʮ̡)( “ Zhidao Private Fund ”). Zhidao
Private Fund is held by Suzhou Zhongfang Caituan Holding Co., Ltd. (΅
ʮ̡), Suzhou Zhongxin Zhidao V enture Capital Partnership (Limited Partnership) ( ᘽψ
༸௴ุҳ༟ΥྫΆุ(Υྫ)), Suzhou Industrial Park Asset Management Co., Ltd.
(ʮ̡) and Suzhou Jiadu Sheji Yingzao Co., Ltd. (ᐄ
ʮ̡), all of which are Independent Third Parties, as to 40%, 30%, 25% and 5%,
respectively. Zhidao Capital primarily invests in sectors including healthcare, new information
technology and advanced manufacturing, with approximately RMB3 billion funds under
management.
Mr. Li Jiansheng
Mr. Li Jiansheng is an individual investor with approximately 20 years of experience,
primarily investing in healthcare, machinery manufacturing and consumer industries. Mr. Li
Jiansheng became acquainted with our Company through our Controlling Shareholder. Mr. Li
Jiansheng is an Independent Third Party.
Mr. Wang Qingsong
Mr. Wang Qingsong is an individual investor with 10 years of experience in professional
services and investment, primarily investing in healthcare and technology industries. Mr. Wang
Qingsong became acquainted with our Company through our Controlling Shareholder. Mr.
Wang Qingsong is an Independent Third Party.
Public Float
Immediately upon completion of the Global Offering and the Conversion of Unlisted
Shares into H Shares (assuming no exercise of the Over-allotment Option), our Company will
have 32,352,902 Unlisted Shares and 17,026,140 H Shares, among which:
(i) the 32,352,902 Unlisted Shares (representing approximately 65.52% of our total
issued Shares upon Listing) will not be considered as part of the public float as such
Unlisted Shares will not be converted into H Shares;
(ii) among the 17,026,140 H Shares,
 the 1,505,000 H Shares (representing approximately 3.05% of our total issued
Shares upon Listing) converted from Unlisted Shares held by Wuhan Zhulin,
despite no longer being controlled by our Company and recognized as treasury
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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shares from accounting perspectives upon the Listing, will not be considered
as part of the public float as Wuhan Zhulin is a close associate of Mr. Guo
Jiaping, our executive Director, and therefore is a core connected person of our
Group;
 the 4,659,340 H Shares (representing approximately 9.44% of our total issued
Shares upon Listing) converted from the Unlisted Shares held by Wuhan
Xinglin, Wuhan Taolin, Ms. Li Zhen and Mr. Chen Wei will be counted towards
the public float as none of the aforesaid Shareholders (i) is a core connected
person of our Group; (ii) has been financed directly or indirectly by a core
connected person of our Group for the subscription of Shares; or (iii) is
accustomed to take instructions from a core connected person of our Group in
relation to the acquisition, disposal, voting or other disposition of the Shares
registered in his/her/its name or otherwise held by him/her/it. In particular, the
H Shares converted from the Unlisted Shares held by Wuhan Xinglin and
Wuhan Taolin (i.e. the Restricted Shares held by them under the Pre-IPO
Restricted Share Scheme) will no longer be controlled by our Company or
recognized as treasury shares from accounting perspectives upon the Listing;
and
 the 10,861,800 H Shares (representing approximately 22.00% of our total
issued Shares upon Listing) issued by our Company under the Global Offering
to public Shareholders will be counted towards the public float.
In light of the above, upon completion of the Global Offering and the Conversion of
Unlisted Shares into H Shares, an aggregate of 15,521,140 H Shares or approximately 31.43%
of the total issued share capital of our Company (assuming no exercise of the Over-allotment
Options), which is more than 25% as required under Rule 8.08 of the Listing Rules, will be
counted towards the public float upon the Listing. Therefore, our Company will be able to meet
the minimum public float requirement under Rule 8.08 of the Listing Rules.
Compliance with the Pre-IPO Investment Guidance
The Sole Sponsor confirms that the Pre-IPO Investments are in compliance with the
guidance in Chapter 4.2 (Pre-IPO Investments) of the Guide for New Listing Applicants.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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CORPORATE STRUCTURE
Corporate Structure immediately before the Global Offering
The following chart sets forth the simplified corporate structure of our Group immediately before completion of the Global Offering:
1.17%
44.11%
1.24%
31.38%
7.12% 3.91%81.32%
Our Company
Zhongshan Medical
Investment(1)
3.91% 0.54% 0.54% 0.27%
100% 56% 56% 51% 67% 67%
70% 89.48% 51% 51% 51% 51%100% 51%
Shaoyang
Beita(18)
Shaoyang
Hospital(12)
Shaoyang
Shuangqing(17)
Xiangyang
Xiangcheng(16)
Chenzhou
Hospital(11)
Xinshao
Dazhong(10)
Xiangyang Kaidi(15)
Zaoyang
Hospital(9)
Xiangyang
Dazhong(8)
Xiangyang
Fancheng(14)
Xiangyang
Dazhong Out-patient
Department
Other 17
subsidiaries(13)
Jingzhou
Dazhong(7)
Other 18 subsidiaries
in Wuhan(6)
Hejian
Baibuting(5)
Wuhan Dazhong
Hospital
Mr. Wang HongMr. Chen WeiMs. Li ZhenWuhan Zhulin(4)Wuhan Taolin(3)Wuhan Xinglin(2)
Ms. ShenMr. Yao
Notes:
(1) As of the Latest Practicable Date, Zhongshan Medical Investment was held by (i) Mr. Y ao as to 44.11% and Ms. Shen as to 31.38%, who are our Controlling Shareholders and
executive Directors, (ii) Ms. Liu Hongchan, our executive Director, as to 0.86%, (iii) Ms. Huang Meiyun as to 1.72% and Ms. Xu Cen as to 0.86%, who are our Supervisors,
(iv) Mr. Zhou Xianlue ( մ΋ଫ), a former Director, as to 0.43%, (v) Mr. Wang Hong, one of our senior management, as to 2.58%, (vi) Mr. Liu Baoping (̻), the spouse
of Ms. Liu Hongchan, as to 1.29% and (vii) other 13 individual shareholders who are Independent Third Parties as to 16.77% in total. Pursuant to an actin g-in-concert agreement
entered into between Mr. Y ao and Ms. Shen on June 3, 2014, Mr. Y ao and Ms. Shen agreed to act in concert in respect of their voting rights in Zhongshan Medic al Investment
and our Company. For details, see “— Our Major Corporate Development — Early Development.”
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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(2) As of the Latest Practicable Date, Wuhan Xinglin was held by Y ao Qi (೘), one of our employees and an Independent Third Party, as the general partner as to 0.91%, and
20 limited partners who are our employees as to 99.09% in total.
(3) As of the Latest Practicable Date, Wuhan Taolin was held by Ma Zhenrong (࿲), one of our employees and an Independent Third Party, as the general partner as to 6.64%,
and 21 limited partners who are our employees as to 93.36% in total.
(4) As of the Latest Practicable Date, Wuhan Zhulin was held by (i) Mr. Guo Jiaping, our executive Director, as the general partner as to 30.56%, (ii) Ms. Liu Hongchan, our
executive Director, as a limited partner as to 4.98%, (iii) Ms. Wang Lixia, our senior management, as a limited partner as to 6.64%, (iv) Ms. Y an Ge, our S upervisor, as a limited
partner as to 1.66%, (v) Mr. Fu Wei, our connected person who holds directorships in Jingzhou Dazhong and its subsidiaries, as a limited partner as to 3. 32% and (vi) other
24 limited partners who are our employees as to 52.82% in total.
(5) The remaining 49% equity interest in Hejian Baibuting was held by Wang Jian, who is also a director of Hejian Baibuting. As Hejian Baibuting is a sign ificant subsidiary of
our Company from financial perspective, Wang Jian is a connected person of our Company.
(6) The other 18 subsidiaries in Wuhan include:
(a) Wuhan Dazhong Wanda Dental Out-patient Service Co., Ltd. (ʮ̡), held by our Company as to 51% and by Li Y ahui ( ҽԭึ), a dentist of
our Group, and Li Y ang (ݱan Independent Third Party, as to 25% and 24%, respectively.
(b) Wuhan Dazhong Dental Houhu Out-patient Service Co., Ltd. (ʮ̡), a wholly-owned subsidiary of our Company.
(c) Wuhan Dazhong Dental Xudong Out-patient Department Co., Ltd. (ʮ̡), held by our Company and Y uan Kaisen ( ঺කಌ), a dentist
of our Group, as to 51% and 49%, respectively.
(d) Wuhan Dazhong Dental Out-patient Department Co., Ltd. (ʮ̡), held by our Company as to 51% and by Wang Derong ( ˮᅃ࿲), a dentist of
our Group, and Hu Mingjin (ږ׼ߡan Independent Third Party, as to 25% and 24%, respectively.
(e) Wuhan Dazhong Hefeng Kaide Dental Out-patient Department Co., Ltd. (ʮ̡)( “ Hefeng Kaide ”), held by our Company and Zhao
Fenglin (؍ࢤa dentist of our Group, as to 51% and 49%, respectively.
(f) Wuhan Dazhong Tuanjie Dental Out-patient Service Co., Ltd. (ʮ̡), a wholly-owned subsidiary of Hefeng Kaide.
(g) Wuhan Dazhong Heqiu Panlongcheng Dental Out-patient Department Co., Ltd. (ʮ̡), held by our Company and Zhang Qiu (߇,)
a dentist of our Group, as to 51% and 49%, respectively.
(h) Wuhan Dazhong Jinyinhu Dental Out-patient Service Co., Ltd. (ʮ̡), a wholly-owned subsidiary of our Company.
(i) Wuhan Dazhong Hewang Xunlimen Dental Out-patient Service Co., Ltd. (ʮ̡), held by our Company and Ke Wangju (ૐീ), a
dentist of our Group, as to 51% and 49%, respectively.
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(j) Wuhan Dazhong Hesong Huashiyuan Dental Out-patient Service Co., Ltd. (ʮ̡), held by our Company as to 51% and by Y u Jinsong
(ؒږa dentist of our Group, and Sun Dan (ʗ), an Independent Third Party, as to 35% and 14%, respectively.
(k) Wuhan Dazhong Helei Pingan Chuntian Dental Out-patient Service Co., Ltd. (ʮ̡), held by our Company and Wu Lei ( юᆾ), a
dentist of our Group, as to 51% and 49%, respectively.
(l) Wuhan Dazhong Heyuan Dental Out-patient Service Co., Ltd. (ʮ̡), held by our Company as to 51% and by Tian Y uzhi (ٺand Liu
Jingyuan ( ᄎ᎑ధ), both of whom are dentists of our Group, as to 40% and 9%, respectively.
(m) Wuhan Jiangxia Dazhong Hejun Dental Out-patient Service Co., Ltd. (ʮ̡), held by our Company and Wang Junfeng (ቜ), a dentist
of our Group, as to 51% and 49%, respectively.
(n) Wuhan Dazhong Baishazhou Dental Out-patient Service Co., Ltd. (ʮ̡), held by our Company and Ma Jun (ڲa dentist of our Group,
as to 51% and 49%, respectively.
(o) Wuhan Dazhong Hesen Zhongbeilu Dental Out-patient Department Co., Ltd. (ʮ̡), held by our Company and Y uan Kaisen, a dentist
of our Group, as to 51% and 49%, respectively.
(p) Wuhan Dazhong Dental Jiyuqiao Out-patient Department Co., Ltd. (ʮ̡), held by our Company and Lei Sifeng (ቜ), a dentist of
our Group, as to 51% and 49%, respectively.
(q) Wuhan Dazhong Heyu Gujie Dental Out-patient Service Co., Ltd. (ʮ̡), held by our Company as to 51% and by Dong Y umei ( ໨͗ૠ),
a dentist of our Group, and Wang Huolin (؍an Independent Third Party, as to 39% and 10%, respectively.
(r) Wuhan Dazhong Hexu Guannanyuan Dental Out-patient Service Co., Ltd. (ʮ̡), held by our Company and Wuhan Jintian Management
Consulting Co., Ltd. (ப΂ʮ̡), an Independent Third Party, as to 51% and 49%, respectively.
(7) The remaining 30% equity interest in Jingzhou Dazhong was held by Huang Y ong, an Independent Third Party.
(8) The remaining 10.52% equity interest in Xiangyang Dazhong was held by Du Chongli ( Ӂ̂ͭ), a dentist of our Group.
(9) The remaining 49% equity interest in Zaoyang Hospital was held by Su Shengfeng, a dentist of our Group, and Chen Ying (ߵan Independent Third Party, as to 44% and
5%, respectively.
(10) The remaining 49% equity interest in Xinshao Dazhong was held by Liang Chengliang, Zhang Zhengfang ( ੵ͍˙), Deng Kaiwen ( ቎௱˖), Shi Chunxiang (࠰݆Li Caifeng,
Zeng Qingbiao and Xiong Zhongcai as to 16.5%, 16.5%, 3.5%, 3.5%, 3%, 3% and 3%, respectively. Liang Chengliang, Deng Kaiwen, Shi Chunliang and Li Caife ng are dentists
of our Group, and Zhang Zhengfang, Zeng Qingbiao and Xiong Zhongcai are Independent Third Parties. Deng Kaiwen has entered into an equity transfer agr eement to transfer
3.5% equity interest in Xinshao Dazhong to Liang Chengliang. Xinshao Dazhong is in the process of filing such equity transfer with the company registr ation authority.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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(11) The remaining 49% equity interest in Chenzhou Hospital was held by Xiong Zhongcai, Xie Liwen ( ᑽͭ˖), Zhang Chengyuan, Ma Jianqiong (ᖘ), Zheng Jun and Zeng
Qingguang as to 12.4%, 12%, 10.13%, 5.17%, 4.71% and 4.6%, respectively. Zhang Chengyuan, Ma Jianqiong and Zheng Jun are dentists of our Group, and Xio ng Zhongcai,
Xie Liwen, Ma Jianqiong and Zeng Qingguang are Independent Third Parties.
(12) The remaining equity interest in Shaoyang Hospital was held by Liang Chengliang, Zeng Qingbiao, Li Caifeng, Xiong Xueji, Li Zhi’e, Tang Guoxian, He Guiqin, Wang Juanli,
Xiong Zhongcai, Tan Jing ( ᗈዽ), Y ang Pan (เᖂ), Li Y uanfeng and Xiao Jingyi as to 14.95%, 8.00%, 6.00%, 5.29%, 4.00%, 2.00%, 2.00%, 2.00%, 1.00%, 1.00%, 1.00%, 0.96%
and 0.80%, respectively. Liang Chengliang, Li Caifeng, Li Zhi’e, He Guiqin, Tan Jing and Y ang Pan are dentists of our Group, and Zeng Qingbiao, Xiong Xu eji, Tang Guoxian,
Wang Juanli, Xiong Zhongcai, Li Y uanfeng and Xiao Jingyi are Independent Third Parties.
(13) The other 17 subsidiaries include:
(a) Jingzhou Dazhong Keya Dental Out-patient Service Co., Ltd. (ʮ̡), held by Jingzhou Dazhong and Huang Yi ( රᆇ), a dentist of our
Group, as to 51% and 49%, respectively.
(b) Jingzhou Dazhong Dental Jiangjin Out-patient Department Co., Ltd. (ʮ̡), held by Jingzhou Dazhong and Hu Huanhuan (ᛇᛇ), a dentist
of our Group, as to 51% and 49%, respectively.
(c) Jingzhou Dazhong Shabei Dental Out-patient Service Co., Ltd. (ʮ̡), a wholly-owned subsidiary of Jingzhou Dazhong.
(d) Jingzhou Dazhong Xiangzhang Dental Out-patient Service Co., Ltd. (ʮ̡), held by Jingzhou Dazhong as to 51% and by Y ang Y an ( เᝣ),
Chen Jing ( ௓᎑), both of whom are Independent Third Parties, and Gong Y anhong (ߎa dentist of our Group, as to 29.4%, 9.8% and 9.8%, respectively.
(e) Songzi Dazhong Chuxing Dental Clinic Co., Ltd. (ʮ̡)( “ Songzi Dazhong ”), held by Jingzhou Dazhong and He Haoran ( ൭ख್), a dentist
of our Group, as to 51% and 49%, respectively.
(f) Jingzhou Dazhong Dental Daqiao Out-patient Department Co., Ltd. (ʮ̡), a wholly-owned subsidiary of Songzi Dazhong.
(g) Gongan Dazhong Chuxing Dental Out-patient Department Co., Ltd. (ʮ̡), held by Jingzhou Dazhong and Huang Wen ( රၲ), an
Independent Third Party, as to 51% and 49%, respectively.
(h) Huarong Dazhong Chuxing Dental Out-patient Service Co., Ltd. (ʮ̡), held by Jingzhou Dazhong and Huang Zhilong (Ꮂ), an
Independent Third Party, as to 51% and 49%, respectively.
(i) Anxiang Dazhong Chuxing Dental Out-patient Service Co., Ltd. (ʮ̡), held by Jingzhou Dazhong and Huang Zhilong, an Independent Third
Party, as to 51% and 49%, respectively.
(j) Jingzhou Dazhong Chongwen Dental Out-patient Department Co., Ltd. (ʮ̡), held by Jingzhou Dazhong and Gong Y anhong, a dentist of
our Group, as to 51% and 49%, respectively.
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(k) Jingzhou Dazhong Huafu Dental Out-patient Department Co., Ltd. (ʮ̡), held by Jingzhou Dazhong and Huang Wen, an Independent Third
Party, as to 51% and 49%, respectively.
(l) Jingzhou Dazhong Dental Dongmen Out-patient Department Co., Ltd. (ʮ̡), held by Jingzhou Dazhong as to 51% and by Xiong Jie (؏,)
a dentist of our Group, and Huang Rong ( රႂ), an Independent Third Party, as to 34% and 15%, respectively.
(m) Shishou Dazhong Chuxing Dental Out-patient Department Co., Ltd. (ʮ̡)( “ Shishou Dazhong ”), held by Jingzhou Dazhong, Huang
Zhilong (Ꮂ), an Independent Third Party, and Chen Lu ( ௓༩), a dentist of our Group, as to 51%, 38.7% and 10.3%, respectively.
(n) Zhongxiang Dazhong Chuxing Wanchang Dental Out-patient Department Co., Ltd. (ʮ̡), held by Jingzhou Dazhong and Guo
Shiming (׼an Independent Third Party, as to 51% and 49%, respectively.
(o) Zhongxiang Dazhong Chuxing Dongjie Dental Out-patient Department Co., Ltd. (ʮ̡), held by Jingzhou Dazhong and Guo
Shiming, an Independent Third Party, as to 51% and 49%, respectively.
(p) Zhongxiang Dazhong Chuxing Y ulong Dental Out-patient Department Co., Ltd. (ʮ̡), held by Jingzhou Dazhong as to 51% and by
Zhou Y anhong, a dentist of our Group, and Guo Shiming, an Independent Third Party, as to 45% and 4%, respectively.
(q) Jingzhou Dazhong Zhanqian Dental Out-patient Service Co., Ltd. (ʮ̡), held by Jingzhou Dazhong and Wu Di (ࠔa dentist of our Group,
as to 51% and 49%, respectively.
(14) The remaining 44% equity interest in Xiangyang Fancheng was held by Peng Chong ( ుላ), an Independent Third Party, Wang Sihong (҃) and Jiang Songbo (تؒ,)
both of whom are dentists of our Group, as to 19%, 15% and 10%, respectively.
(15) The remaining 44% equity interest in Xiangyang Kaidi was held by Peng Chong, an Independent Third Party, Wang Sihong and Jiang Songbo, both of whom are dentists of
our Group, as to 19%, 15% and 10%, respectively.
(16) The remaining 49% equity interest in Xiangyang Xiangcheng was held by Wuhan Haobochuan Enterprise Management Co., Ltd. (ʮ̡), an Independent
Third Party.
(17) The remaining 33% equity interest in Shaoyang Shuangqing was held by Tan Jing, a dentist of our Group, and Huang Ziqian (࠺an Independent Third Party, as to 20%
and 13%, respectively.
(18) The remaining 33% equity interest in Shaoyang Beita was held by Y ang Pan, a dentist of our Group, and Liu Yingzi (۶ߵan Independent Third Party, as to 20% and 13%,
respectively.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Corporate Structure immediately following the Global Offering
The following chart sets forth the simplified corporate structure of our Group immediately after the completion of the Global Offering
(assuming the Over-allotment Option is not exercised):
0.21%
Ms. Shen
44.11% 31.38%
63.44%0.96% 0.91% 5.55% 3.05% 3.05% 0.42% 0.42% 22.00%
Zhongshan Medical
Investment(1) Wuhan Xinglin(2) Wuhan Taolin(3) Wuhan Zhulin(4) Ms. Li Zhen Mr. Chen Wei Mr. Wang Hong Public
Shareholders
Our Company
70% 89.48% 51% 51% 51% 51%
100% 56% 56% 51% 67% 67%
100% 51%
Wuhan Dazhong
Hospital
Hejian
Baibuting(5)
Other 18 subsidiaries
in Wuhan(6)
Jingzhou
Dazhong(7)
Xiangyang
Dazhong(8)
Zaoyang
Hospital(9)
Xinshao
Dazhong(10)
Chenzhou
Hospital(11)
Other 17
subsidiaries(13)
Xiangyang
Dazhong Out-patient
Department
Xiangyang
Fancheng(14) Xiangyang Kaidi(15) Xiangyang
Xiangcheng(16)
Shaoyang
Hospital(12)
Shaoyang
Shuangqing(17)
Shaoyang
Beita(18)
Mr. Yao
Notes:
(1)-(18) Please refer to corresponding notes to the chart in “— Corporate Structure immediately before the Global Offering.”
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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OVERVIEW
We are a private dental services provider in Central China with a focus on Hubei and
Hunan provinces, operating an expanding dental service network under the direct chain model
in this thriving market. We provide reliable and accessible dental care to communities,
dedicated to serving the general public. According to Frost & Sullivan, we ranked first among
all private dental services providers in Central China in terms of revenue generated therefrom
in 2024, occupying a market share of approximately 2.4%. Over the years, we have been
focusing our dental services on addressing the mass market demands, maintaining strong
presence in densely populated Central China.
Benefiting from years of efforts to expand our dental service network, the number of our
dental institutions in operation increased from 77 as of January 1, 2022 to 86 as of December
31, 2024, and further to 92 as of the Latest Practicable Date, including 4 for-profit dental
hospitals, 80 for-profit dental out-patient departments and 8 for-profit dental clinics covering
8 cities in Hubei and Hunan provinces. These three types of dental institutions are subject to
different regulatory requirements and standards mainly in terms of dental chairs, departments,
medical professionals and scale. See “Industry Overview — The Dental Services Market in
China — Participants of Dental Services Market in China.” Pursuing a single-brand strategy,
all of our dental institutions are operated under the unified brand name “ɽ଺ɹഢ”
together with a trademark of “
,” ensuring a cohesive and robust identity across our
multi-regional dental service network. Most of our dental institutions are located in or adjacent
to local communities, providing dental services to residents with ease of access.
We operate a Partnership Program primarily targeting seasoned medical professionals, to
underpin the expansion of our dental service network, maintain the cohesion and stability of
our core talent team and facilitate our talent team development, all of which constitute our
competitive advantages and make our dental service network an ideal entrepreneurial platform
for dentists. As of December 31, 2022, 2023 and 2024, 24, 32 and 37 dentists were minority
shareholders of our dental institutions under the Partnership Program, respectively. Upholding
the principle of “direct chain and direct partnerships (ટΥྫ),” the Partnership
Program has enriched our medical professional resources and fueled the expansion and
profitability of our dental service network. In addition, our professional talent team led by
seasoned dental experts and supported by our Technical Committee (ึ) consistently
delivers quality dental services with advanced medical capabilities.
We place significant importance on our dentist resources and maintain a stable and broad
dentist team. There were 280 dentists in total practicing at our dental service network as of
December 31, 2024. For the years ended December 31, 2022, 2023 and 2024, the retention rate
of dentists practicing at our dental service network for over three years reached approximately
87%, 89% and 90%, respectively. For the years ended December 31, 2022, 2023 and 2024, staff
costs for dentists amounted to RMB57.8 million, RMB65.8 million and RMB58.2 million,
accounting for 22.1%, 24.1% and 22.8% of our cost of sales for the same years, respectively.
We did not rely on any particular dentist during the Track Record Period. The revenue
contributed by our top five dentists in each year during the Track Record Period, in terms of
revenue contribution, accounted for approximately 8.0% to 10.0% of our total revenue each
year.
BUSINESS
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Our dental services consist of general dentistry services, implantology services and
orthodontics services, addressing oral health needs of customers of all ages. Leveraging our
community-focused dental care, we have accumulated a loyal customer base during the Track
Record Period. For the years ended December 31, 2022, 2023 and 2024, we served 276,310,
296,859 and 283,640 customers and recorded 708,651, 768,809 and 748,632 customer visits,
respectively, with average spending per customer visit of RMB578, RMB575 and RMB544,
respectively.
Our Market Opportunities
Driven by the rising public awareness of oral health and favorable policies, the dental
services market in China is expected to witness continual growth in market demand and
penetration. According to Frost & Sullivan, the market size of the dental services market in
China was RMB147.2 billion in 2024 and is expected to grow at a CAGR of 6.4% from 2024
to 2029, reaching RMB200.4 billion in 2029. In particular, the market size of the private dental
services market in China was RMB103.5 billion in 2024 and is expected to grow at a CAGR
of 7.0% from 2024 to 2029, reaching RMB145.0 billion in 2029.
The private dental services market in Central China represented 16.8% of the market
share of China’s private dental services market in 2024, constituting an essential component of
the national dental services market, with numerous untapped demands in this densely populated
region. According to Frost & Sullivan, the market size of the private dental services market in
Central China increased from RMB13.3 billion in 2022 to RMB17.4 billion in 2024 at a CAGR
of 14.4% and is expected to grow at a CAGR of 7.8% from 2024 to 2029, reaching RMB25.3
billion in 2029. For the years ended December 31, 2022, 2023 and 2024, our total revenue
amounted to RMB409.4 million, RMB441.8 million and RMB407.1 million, respectively.
Along with the market expansion of the thriving private dental services market in Central
China, our total revenue grew at a slower pace from 2022 to 2023. From 2023 to 2024, we
encountered challenges mainly caused by customers’ consumption downgrade resulting from
the slower-than-expected post-pandemic economic recovery, and fierce competition among
dental services providers under the downward pricing pressure brought by centralized
procurement policies. While the market size of the private dental services market in Central
China slightly increased from RMB17.2 billion in 2023 to RMB17.4 billion in 2024, we did not
fully capture the market growth opportunities and experienced moderate declines in revenue,
gross profit and net profit for the year ended December 31, 2024.
Going forward, as a private dental services provider in Central China with a focus on
Hubei and Hunan provinces, we are well positioned to enhance our competitiveness through
our distinctive branding strategy, experienced medical professionals, centralized cost control
measures, optimized resource allocation across our dental service network, standardized and
refined operational capabilities, as well as pragmatic and balanced expansion approach.
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Our Financial Highlights
Benefiting from our highly standardized and refined direct chain model, our profitability
stands out among private dental services providers in China, according to Frost & Sullivan.
For the years ended December 31, 2022, 2023 and 2024, our gross profit margin was
36.3%, 38.1% and 37.4%, respectively. Our net profit increased by 18.8% from RMB56.5
million for the year ended December 31, 2022 to RMB67.0 million for the year ended
December 31, 2023, primarily due to the increase in revenue from our general dentistry and
implantology services. Our net profit margin increased from 13.8% in 2022 to 15.2% in 2023.
From 2023 to 2024, despite the challenging market conditions, such as the slower-than-
expected post-pandemic economic recovery and fierce competition among dental services
providers, we mitigated the negative impact on our profitability through our centralized cost
control measures, such as utilizing online operating systems to visualize operational
performance and refine resource allocation to maximize cost efficiency and negotiating
favorable pricing with suppliers for high quality dental consumables as secured through our
strengthened bargaining power with them. Our net profit reduced at a slower pace compared
to revenue, maintaining at RMB62.5 million in 2024. Our net profit margin increased from
15.2% in 2023 to 15.4% in 2024. Our net profit attributable to owners of the parent amounted
to RMB43.3 million, RMB50.1 million and RMB41.9 million for the years ended December
31, 2022, 2023 and 2024, respectively.
We believe our superior management capabilities and direct chain model would steadily
contribute to our profitability performance and lay a solid foundation for our future growth.
COMPETITIVE STRENGTHS
We believe that the following competitive strengths contribute to our continuous
development and preeminent position in the dental services industry in Central China.
As a private dental services provider operating under the direct chain model in Central
China, we serve the general public with reliable and accessible dental care, capitalizing
on years of development experience and deep insights into the industry
Our operational scale and financial performance stand out among private dental services
providers
As a testament to our industry leading position, we have achieved the following
outstanding accomplishments according to Frost & Sullivan:
 ranked first among all private dental services providers in Central China in terms of
revenue generated therefrom in 2024;
 ranked fourteenth among all private dental services providers in China in terms of
revenue in 2024; and
 ranked third among all private dental services providers in China in terms of net
profit generated in 2024.
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V ast dental services market with expanding size and broad unmet demands, creating
enormous growth potential
Driven by the rising public awareness of oral health and favorable policies, both market
demand for and market size of dental services in China have been growing. According to Frost
& Sullivan, the market size of the dental services market in China was RMB147.2 billion in
2024 and is expected to grow at a CAGR of 6.4% from 2024 to 2029, reaching RMB200.4
billion in 2029. The market dynamics are influenced by the limited supply of qualified dentists,
especially those with rich academic knowledge and clinical practice experience, which gives
rise to intense competition in acquiring and retaining talents. According to the same source, the
number of dentists per million population in China was only 283 in 2024, which was largely
lower than that of the developed countries, such as the United States, the European Union and
Japan in the same year. Moreover, the distribution of qualified dental professionals remains
geographically unbalanced in China. Many private dental services providers are committed to
building their own talent cultivation program and focusing on regional markets outside
first-tier cities, which play a crucial role in addressing the shortage and unbalanced distribution
of dentist resources. With such efforts from private dental services providers, the accessibility
and popularity of dental services in China are expected to improve rapidly. The dental services
market in Central China has been an essential growth segment of the national dental services
market. According to Frost & Sullivan, the market size of the dental services market in Central
China is expected to grow at a CAGR of 6.9% from 2024 to 2029, reaching RMB40.0 billion
in 2029. In particular, the market size of the private dental services market in Central China
accounted for approximately 16.8% of the total market size of the private dental services
market in China in 2024, and is expected to grow at a CAGR of 7.8% from 2024 to 2029,
reaching RMB25.3 billion in 2029. In terms of revenue generated from Central China in 2024,
we commended a market share of 2.4% in the private dental services market in Central China.
We maintain a dominant position in the dental services market in Wuhan with recognized
brand awareness, and strategic network coverage extending across Hubei province leading to
a prominent network effect, which alongside our highly standardized and adaptable business
model enables highly efficient network expansion. Leveraging our in-depth industry insights
and years of accumulated experience, we solidify our leading market position in Wuhan while
continuously amplifying our brand influence in Central China.
Centralized and refined operational capabilities of our headquarters empower our dental
institutions, ensuring operational efficiency and sustained profitability
Improved digitalization capabilities facilitate data-driven operational analysis and decision-
making
Underpinned by our in-house information technology development capabilities, we have
built digital management systems for our dental institutions, which effectively coordinate the
front, middle and back-end operations. For instance, our back-end Big Data Analysis System,
together with our mid-end operating systems, such as HIS, Supplier System and Fund
Management System, digitalize and visualize our operational performance to facilitate
optimum resources allocation across our front-end dental service network. In recognition of our
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strong information technology capability, we have been accredited as a “New High-tech
Enterprise ( ৷อҦஔΆุ)” since 2020. As of the Latest Practicable Date, we had 25 registered
software copyrights, demonstrating our remarkable achievements in digitalization and
informatization. Our proprietary information technology systems, such as HIS and BI system,
largely enhanced our management of medical records and medical images through digitalizing
our dental services, in particular, prosthodontics services, implantology services and
orthodontics services. With years of investment in information technology infrastructure, we
have established ourselves as a dental services provider with digital operation and management
capabilities in Central China.
Specifically, our information technology systems effectively monitor operational
indicators of our dental institutions in real-time and generate visualized reports for our
management’s review and decision-making. Through analyzing our internal operational
indicators and comparing with external data such as human traffic and customer traffic, our
information technology systems facilitate well-rounded and detailed operational analyses,
enabling us to identify features of our top-performing dental institutions and areas for
improvement, thereby continuously optimizing our operations and strategies for new
establishments and acquisitions.
Our digital management system for dental institutions can achieve unified management of
daily business matters such as customer visits, revenue, rental expenses, consumables costs and
other expenses, providing strong system support for our daily business management, which
help us achieve refined and cost-efficient operations. For instance, our digital systems can
provide detailed cost analyses, help us analyze our cost components, provide supporting data
for bargaining with lessors and suppliers, allowing us effectively control rental and renovation
expenses and procurement costs.
Apart from digitalized dental institution management, we have been digitalizing our
dental treatment, customer services and customer relationship management, striving to
cultivate professional and convenient service experience throughout the pre-consultation stage,
treatment stage and post-consultation stage. Specifically, we utilize advanced systems and
technologies to achieve digitalized dental treatment, such as cephalometric analysis systems,
digitalized intraoral scanners, chairside precision positioning systems and digital surgical
guide technology. The introduction and application of such systems and technologies elevated
diagnosis efficiency and dental practice precision, and improved service efficacy and
experience for customers. Meanwhile, our HIS supports digitalized customer management,
electronic medical records and pricing management, facilitating our medical professionals to
track the treatment history and offer dental treatments precisely and efficiently. We also
deployed a SCRM system for better customer acquisition and long-term customer relationship
management, delivering customized service experiences while elevating repurchase of our
dental services.
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Community-oriented branding and service delivery
Aligning with the national policy of tiered healthcare services and massive unmet
demands from residents for accessible oral health management, community healthcare services
have become an essential component of private healthcare services in China. According to
Frost & Sullivan, the total revenue of private community healthcare services in China reached
approximately RMB403.0 billion in 2024, accounting for 31.2% of the total revenue of private
healthcare services in China. Due to the nature of dental services, residents generally require
frequent visits to offline dental institutions for treatments including implantology services,
orthodontics services or preventative dental care. Public dental services providers typically
face challenges in responding to customers’ demands with accessible and convenient service
experience. As a result, private dental services providers in proximity to residents are well
positioned to address the unmet oral health demands in communities. According to Frost &
Sullivan, the revenue contributed by dental services accounted for approximately 10% of the
total revenue generated from private community healthcare services in China.
Our dental institutions are strategically located in or adjacent to communities, effectively
addressing to the unmet demands for dental services in the local communities. Following our
strategic site selection criteria and utilizing our information technology systems, we conduct
comprehensive online and offline market research to thoroughly assess the demographic
characteristics, traffic pattern and location of other dental institutions in the surrounding area.
As such, most of our dental institutions were established in or adjacent to communities with
massive demands for dental services. We have also established clear quantitative criteria on
rental expenses and GFA for new dental institutions in different areas, which enables rigorous
control over up-front investment and operating expenses during business expansion. Therefore,
our dental institutions typically have a GFA ranging from 300 sq.m. to 500 sq.m..
We have implemented a standardized customer relationship management system, with
designated staff responsible for customer acquisition, service delivery and follow-up services,
aiming to provide a seamless and intimate service experience. We have deployed an advanced
SCRM system integrated with our HIS, enabling synchronized customer information for better
customer acquisition and customer relationship management. We regularly organize a variety
of oral health promotion activities, such as health lectures, science salons, and holiday
greetings, maintaining our medical professionals’ presence within local communities to
optimize customer relationship management and marketing outreach, which facilitates our
customer acquisition and retention on a continual basis.
Holistic supply chain management and centralized procurement improve our profitability
and operational efficiency
We have established a holistic supply chain management system at our headquarters level,
standardizing our procurement, utilization and stocking of our dental equipment and
consumables and our supplier selection. In pursuit of standardized and organized supply chain
management, we coordinate, consolidate and address the procurement demands across our
dental service network through our interconnected Supply Chain System, HIS and other online
operating systems.
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Taking advantage of our long-term stable relationships with suppliers and standardized
supply chain management, we gained greater bargaining power to procure quality dental
consumables in bulk at favorable prices, pursuing better profitability. Our costs of consumables
and customized products as a percentage of our total revenue decreased from 17.5% in 2022
to 17.0% in 2023, and further to 16.2% in 2024.
Strategic Partnership Program and employee stock ownership platforms motivating
high-quality medical professionals and other talents, underpinning our business growth
while building our dental service network into a talent entrepreneurial platform
We respect and cherish the contribution of medical, administrative and marketing talents
to the prosperity of our dental service network. We have strategically adopted a Partnership
Program to amass and maintain a loyal, professional and motivated talent team.
We adopted our Partnership Program in 2017 to attract and retain seasoned medical
professionals as well as administrative and marketing talents, which constitutes an essential
and solid foundation of our dental service network’s operation and expansion. Centering
around dentists and upholding the principle of “direct chain and direct partnerships (ᐄஹ
ટΥྫ),” our Partnership Program efficiently propels both organic growth and strategic
acquisitions, driving network expansion efficiently. Under the Partnership Program, we invite
seasoned dental, administrative and/or marketing talents to become minority shareholders of
dental institutions, fostering experience sharing and resource coordination, and creating
synergistic value propositions between such talents and our organization. As the minority
shareholders of the dental institutions, these talents are actively involved in the daily operation
and management, ensuring strategic alignment with institutional growth objectives. Beyond
salaries and performance-based bonuses, participating dentists receive dividend distributions,
which were distributed to them from the distributable profits of the relevant dental institutions
in the previous year, in strict compliance with applicable regulatory requirements and our
dividend policy. Such dividend distributions are contingent upon the profitability of the
relevant dental institutions, thus largely enhance their sense of belonging and motivation, while
securing the stability of our talent team, especially the seasoned dentists. Our Partnership
Program has become an ideal entrepreneurial platform for dentists. With win-win cooperation
mechanism and confidence to our long-term growth, such talents deeply participate in the daily
operations and spend unwavering efforts in deploying their expertise and strengths in dental
treatment, corporate management or marketing and promotion. For the years ended December
31, 2022, 2023 and 2024, revenue from those dental institutions with dentists as the minority
shareholders amounted to RMB120.5 million, RMB147.6 million, and RMB161.0 million,
representing 29.4%, 33.4% and 39.6% of our total revenue for the same years, respectively.
We also initiated employee stock ownership platforms to incentivize our management and
employees, including those outstanding dentists, and enhance their stickiness to our dental
service network. See “History, Development and Corporate Structure — Our Major Corporate
Development.”
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We believe a stable team of talents leads to smooth cooperation among medical
professionals as well as effective support from administrative and marketing staff during daily
operations, which enables us to offer trustworthy dental services with consistent service
quality. This ultimately contributes to customer satisfaction, accumulated customer trust and
long-term prosperity of our dental service network.
Well-established scalable and replicable business model benefiting from organic growth
and strategic acquisitions
Preeminent profitability among private dental services providers
Our highly standardized and refined operations under the direct chain model contribute
to our leading profitability among private dental services providers in China. Among all private
dental services providers in China, we ranked third in terms of net profit generated in 2024.
Our remarkable profitability is attributable to our centralized and refined management
capabilities. We have implemented differentiated and effective internal management measures
for dental institutions in different operational scales, locations and development stages. To
make the best use of medical resources, we allocate personnel and equipment for different
dental institutions based on their actual metrics including GFA, average monthly income,
number of customers and customer visits to maximize human resource and equipment
efficiency. Such meticulous business management has been proven to be valid and effective
during years of operations, which laid a solid foundation for our future expansion.
Robust organic growth momentum in newly established dental institutions
We have accumulated rich experience in establishing new dental institutions during the
Track Record Period. Our new dental institutions established during the Track Record Period
generally have a GFA of 300 sq.m. to 500 sq.m. and it generally took approximately 3 to 4
months at the soonest from site selection to commencement of operations, which was largely
shorter than the industry average of approximately 9 to 12 months, according to Frost &
Sullivan, primarily due to the close and efficient collaboration among our departments under
our centralized management system. Substantially all of the dental institutions we established
during the Track Record Period achieved significant growth in both revenue and profitability,
with a monthly breakeven period of approximately 5 to 7 months on average. The monthly
breakeven period of our new dental institutions has been shortened in recent year, primarily
due to (i) the reduced procurement costs of dental consumables following the implementation
of centralized procurement policies; and (ii) our more efficient customer acquisition benefiting
from our strengthened brand influence. In particular, 2 of our new dental institutions
established in 2024 even reached their monthly breakeven point in their first month of
operations. According to Frost & Sullivan, it usually takes around 1 to 2 years for a new dental
institution to reach the monthly breakeven point in Central China.
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Proven track record in strategic acquisitions
Apart from establishing new dental institutions, we have also successfully acquired a
number of dental institutions and integrated into our dental service network. Historically, we
proactively pursued acquisition opportunities and successfully completed several acquisitions.
For instance, in 2019, we acquired Zaoyang Hospital, which recorded continuous increase in
gross profit margin thereafter. The gross profit margin of Zaoyang Hospital increased from
40.5% in 2022 to 45.8% in 2023, and further to 46.6% in 2024. Furthermore, in 2020, to
strengthen our presence in Central China, we acquired Jingzhou Dazhong. Taking advantage of
our experience and efforts in integrating brand, customers and dentist resources, the acquired
dental institutions recorded continuous growth in profitability since our acquisition. In
particular, from 2022 to 2024, the gross profit of Jingzhou Dazhong increased at a CAGR of
9.7%.
 Standardized and systematic acquisition target evaluation . We implement
standardized and systematic due diligence and evaluation process to identify
acquisition targets with a proven track record that can adapt to our standardized
management. We strategically concentrate on geographic regions with mass unmet
demands for dental services, and closely monitor the market competition and the
availability of qualified dental service resources in the relevant regions. Following
our well-established criteria, we conduct thorough due diligence on the financial and
operational performance of the acquisition targets and comprehensively assess their
existing medical resources, such as GFA, the number of dental chairs and the
development of dental specialties.
 In-depth post-acquisition integration to promote in-network synergies . After
acquisitions, we devote efforts in standardizing the management and enhancing the
operational efficiency of the newly acquired dental institutions, pursuing in-depth
integration rather than simple financial consolidation. We continuously integrate the
acquired dental institutions in various aspects, such as supply chain consolidation,
staff training, cultural alignment and unified management system, ensuring the
acquired dental institutions can be effectively integrated into our dental service
network and overall development. We then optimize the operations of acquired
dental institutions through digitalizing information technology systems, and
centralizing financial settlement to the headquarters level. Additionally, our
Technical Committee provides technical supports for the daily operations of the
acquired dental institutions in order to supplement their medical resources and
elevate their medical skills. Our centralized management and meticulous cost
control measures at the headquarters level constantly optimize the acquired dental
institutions’ financial and operational performance.
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 High-quality expansion empowered by our direct chain model . There are numerous
private participants in the private dental services industry in China. According to
Frost & Sullivan, the number of private dental institutions in China amounted to
approximately 99.3 thousand in 2024, among which less than 3.0% of dental
institutions achieved direct chain operations. Compared to the few dental services
providers operating under the direct chain model, the remaining private dental
services providers in China are mainly standalone dentist practice with lower
compliance standard and weak competitiveness and profitability. Benefiting from
the rapid growth of the private dental services market in China, we are poised to
further increase our market share and entrench our competitive advantages by
expanding our dental service network under the replicable and standardized direct
chain model.
Preeminent professional talent team led by renowned dental experts, with medical
technologies as our core competitiveness
Well-established Technical Committee underpinning the advancement of our medical
technologies
Since our inception, we have attracted a number of renowned dental experts to join our
dental service network and work with us, including renowned chief experts with abundant
clinical experience and management expertise. Led by chief experts, we also established a
Technical Committee and its subcommittees, which enrich our medical resources and
contribute to our trustworthy service quality. Together with its three subcommittees, the
Technical Committee serves as our highest academic organization, propelling our technology
innovation and advantageous specialty development. Multiple experts with remarkable
academic contributions in the field of dentistry and/or rich experience in clinical practices have
been gathered in such committee to advise on our technology innovation and offer training
sessions. They also from time to time conduct on-site visits to our dental institutions, conduct
joint consultations and give technical guidance, which activates the innovation and application
of advanced technologies in our dental service network, strengthens our capabilities to deal
with miscellaneous oral diseases or complex dental procedures while propelling the
development of our dental specialties. See “— Medical Professionals — Our Technical
Committees” for details of the composition of our Technical Committee and its subcommittees.
The robust technological support from our Technical Committee enables us to offer
reliable and satisfied dental services. We prioritize treatment efficacy and safety during the
whole dental diagnosis and treatment process, requiring all of our dental institutions to strictly
adhere to our quality management system. Under our “three-level and four-tier” quality
management system, our Quality Safety Management Committee (ึ)
collaborates closely with our Medical Center ( ᔼᐕʕː) and dental institutions to improve
service experience for customers and make our dental services more secure and reliable. See
“— Medical Quality Control — Systematic Quality Management System” for details.
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High-quality services and trustworthy quality control capabilities led to high customer
satisfaction and reputable brand image in the industry. The total number of customer
complaints we experienced during the Track Record Period only accounted for approximately
0.01% of the total customer visits to our dental service network, significantly lower than the
industry average of approximately 1.0% during the same year, according to Frost & Sullivan.
See “Business — Compliance and Legal Proceedings — Legal Proceedings — Medical Claims
Solved through Mediation.”
Concentrating on the development of talent team and cultivating general dentists with
strengths in advantageous specialties
Underpinned by the collaboration of subcommittees of our Technical Committee, we have
built a comprehensive dentist cultivation system that offers personalized and targeted training
programs for dentists with different lengths of dental practice and diverse backgrounds
recruited by us through different channels, improving their technical proficiency while
enhancing our service capacity. We encourage chief dentists, associate-chief dentists and
technical administrators practicing at our dental service network to expand their expertise
beyond their primary specialties, guiding them to become excellent dentists with holistic dental
expertise and strengths in selected specialties. This approach enables us to become
comprehensive dental services provider with advantageous specialties. We also continuously
recruit seasoned dental experts to expand our Technical Committee.
Cultivating dentists with multifaceted dental expertise and specialized skills and
developing both the service spectrum and advantageous specialties of our dental institutions
enable us to address diverse oral health demands from residents of different ages and health
conditions, while showcasing the technical prowess and unique expertise of dentists practicing
at our dental service network.
We provide dentists with diverse professional development opportunities and clear career
advancement ladder. We offer regular vocational trainings, case discussions and various
academic communication activities. We also organize medical professionals to participate in
the joint consultation of complex cases, and advise on their career development and clinical
practice. Furthermore, we are committed to technology innovation and its clinical application.
As of the Latest Practicable Date, we had 10 registered utility model patents, which were
material to our business, demonstrating our contributions to continuous advancements and
innovations in the dental services industry in China.
With our long-standing dedication to developing talent team and cultivating dentists, we
have amassed a group of excellent dentists in our dental service network. Among all dentists
practicing at our dental service network as of December 31, 2024, over 13% of dentists had
over ten years of industry experience as of the same date. As of December 31, 2024, dentists
with qualifications at mid-end or above level accounted for over 57% of the total number of
dentists practicing at our dental service network, which surpassed the industry average level,
according to Frost & Sullivan. Our comprehensive development system enables us to retain
high-caliber dentists and serve our growing customer base with superior dental services.
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Unified management led by visionary and experienced management team utilizing
outstanding professional and managerial expertise
We adopt a direct chain model with unified operation philosophy, operational
management, service standards and brand image across our dental service network, where
customers trust us, our medical professionals and services. Under our direct chain model, we
have established a well-rounded centralized management structure from headquarters level to
institutional level, covering multifaceted committees, centers, divisions and departments. See
“— Our Unified Management of Direct Chain — Centralized Management with Tiered
Responsibility.”
From our headquarters level, we coordinate the medical resources and efficiently
optimize resource allocation to pursue high operational efficiency and cost-effectiveness across
our dental institutions. Such tiered and standardized management promotes clear allocation of
responsibilities and precise risk control, enabling us to effectively manage our broad dental
service network and achieve healthy development.
A management team with superior expertise, experience and industry insights
All of our key management personnel have expertise in healthcare or management, as
well as extensive experience in corporate management and a successful track record in starting
multiple new businesses. Meanwhile, our mid-level management personnel have strong
execution capabilities. With accumulated theoretical knowledge and rich practice experience
through systematic management training and daily operations, our mid-level management
personnel also contribute to the effective management.
We believe that our success is in part attributable to our visionary and experienced
management team that has strong operational capabilities and outstanding academic
backgrounds.
In particular, the chairman of the Board, Mr. Y ao, has profound industry knowledge and
insightful observations in the healthcare industry with over 30 years of experience in business
operations and corporate management. Mr. Y ao previously held managerial roles at Xi’ an
Janssen Pharmaceutical Co., Ltd. (ʮ̡), Zhuhai United Laboratories Co.,
Ltd. (ʮ̡) and Nanjing Pharmaceutical Hubei Co., Ltd. (ԯᔼᖹಳ̏
ʮ̡). Mr. Y ao also served in various public and association roles, such as a member of
the Fifth Council of the Chinese Stomatological Association ( ʕശɹഢᔼኪึ) and a deputy to
the Fifteenth People’s Congress of Wuhan City and the Fourteenth People’s Congress of Wuhan
City. Mr. Y ao is currently the vice president of the Sixth Council of Hubei Stomatological
Association (ɹഢᔼኪึ) and the vice chairman of the Pharmaceutical Profession
Association of Hubei Province (ᔼᖹБุ՘ึ). Mr. Y ao was recognized as an
outstanding member of Committee of the Chinese People’s Political Consultative Conference
of Hubei Province (ึ).
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The vice chairman of the Board and our general manager, Ms. Shen, has over 30 years of
experience in the healthcare industry and corporate management. Ms. Shen previously held
managerial roles at Xi’ an Janssen Pharmaceutical Co., Ltd. (ʮ̡), Zhuhai
United Laboratories Co., Ltd. (ʮ̡), Hubei Pukang Pharmaceutical
Co., Ltd. (ʮ̡), Hubei Wanjia Pharmaceutical Co., Ltd. (ࠢ
ʮ̡) and Nanjing Pharmaceutical Hubei Co., Ltd. (ʮ̡). Ms. Shen held
positions at several public offices and associations throughout her career. She was a member
of the Sixth Council of the Chinese Stomatological Association ( ʕശɹഢᔼኪึ) and the vice
director of the Private Dental Medical Branch of the Chinese Stomatological Association ( ʕ
ശɹഢᔼኪึ͏ᐄɹഢᔼᐕʱึ), a standing member of the Sixth Council of Hubei
Stomatological Association (ɹഢᔼኪึ) and a deputy to the Sixteenth People’s
Congress of Wuchang District (ɽึ). Ms. Shen was recognized as an
outstanding member of Committee of the Chinese People’s Political Consultative Conference
of Wuchang District (ึ).
In addition, our executive Director and vice general manager, Mr. Guo Jiaping (̻),
has deep professional knowledge and a reputable track record in the dental services industry
of over 30 years. Mr. Guo mainly focuses on the medical management, clinical work and
professional training in our dental service network. Before joining our Group, Mr. Guo was the
chief physician in the clinical dentistry department of the predecessor of The General Hospital
of Central Theater Command of Chinese People’s Liberation Army (ʕ௅኷ਜ
ᐼᔼ৫). He had held a number of positions in professional associations at both national and
provincial level.
See “Directors, Supervisors and Senior Management — Board of Directors — Executive
Directors” for further details of their biographies.
Moreover, our senior consultant, chief expert of our Technical Committee and the
honorary chief executive administrator of our Wuhan Dazhong Hospital, Mr. Zhou Xianlue ( մ
΋ଫ), is primarily responsible for providing suggestions for our dental operations as well as
guidance for our clinical practice. Mr. Zhou has rich expertise in oral implantology and
maxillofacial surgery. With over 40 years of extensive experience in dental clinical practice
and research, he has published over 50 academic papers and two books in the field of dentistry.
He has gained Hubei Provincial Science and Technology Progress Awards (ኪҦஔආ
Ӊᆤ) several times for his research achievements. Mr. Zhou has been recognized as Expert
with State Council’s Special Allowance (࢕He had held multiple positions
in professional associations at both national and provincial level.
We believe that the diverse experience and expertise of our management team in
healthcare, legal affairs, finance, and business operations will continue to drive our future
growth trajectory and optimize our corporate strategy and management model. Under the
leadership of our visionary and experienced management, we are constantly expanding our
business in Central China.
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BUSINESS STRATEGIES
We intend to implement the following strategies in pursuit of our vision.
Reinforce our dominant position in Central China, consistently increase our market
share, and expand our dental service network through establishments and acquisitions
Establish new dental institutions to enhance our brand influence in Central China
 Entrench our dominant position in Wuhan . We have been preparing for establishing new
dental institutions in Wuhan. Aligning with the market dynamics and overall development
pace, we will continue to open new dental institutions to elevate our market share and
competitiveness in the local market. To achieve this, we will designate a dedicated team
to further optimize medical resource allocation and improve return on investment.
Through establishing new dental institutions in Wuhan, we expect to further enhance our
network coverage therein and foster synergies among dental institutions. We maintain a
prudent approach for establishments and avoid significant up-front capital investment,
while targeting profitability in their first month of operations.
 Explore the dental services market in the third- and fourth-tier cities in Hubei province .
We will continue to observe market opportunities in the third- and fourth-tier cities across
Hubei province, further addressing the unmet demands from local residents. Following
our well-established internal procedures and criteria for new establishment, we prioritize
densely populated regions with a stable customer base and available medical
professionals. We expect to establish a viable business model accommodating to the
dental services market in the third- and fourth-tier cities, utilizing our operational and
managerial expertise to benefit residents while diversifying our revenue sources by of
region.
 Expand into markets outside Hubei province . We will expand our dental service network
into other cities in Central China by establishing new dental institutions in or adjacent to
communities, developing our brand presence across Central China. We plan to expand to
such markets mainly through joint ventures with seasoned dentists under our Partnership
Program to rapidly increase our market share and penetration.
Expand market coverage and prudently evaluate acquisition targets in appropriate
geographic regions
We will continue to identify and evaluate potential acquisition targets in Central China,
pursuing opportunities that meet our acquisition criteria and align with our development
strategies at an appropriate pace and with reasonable considerations.
Based on thorough market research, due diligence and prudent target evaluation, we
carefully select acquisition targets in accordance with our established standards and internal
procedures. During internal assessment, we generally focus on the acquisition targets’
profitability, stability of existing medical resources (especially dentists), growth potential,
cultural alignment, and network synergies.
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See “— Our Future Expansion” for details of our future expansion through both new
establishment and acquisition.
We maintain stringent performance monitoring of newly established or acquired dental
institutions. We seamlessly integrate such dental institutions into our existing dental service
network under the direct chain model and strengthen vertical management supervision at the
headquarters level. Our Partnership Program and “three-level and four-tier” quality
management system help us systematically and effectively monitor their service quality.
Persistently improve our dental service capabilities, cultivate advantageous specialties
and develop our Technical Committee to optimize dental technologies and empower the
professional growth of dentists
Adhering to the spirit of “rooted in medical and driven by technology ( ᔼᐕ͉๕eҦஔ
ᚨਗ),” we seek to solidify the standardization of our quality control system, delivering reliable
and safe dental services to our customers. We will further improve our quality control
management system, timely upgrade our internal measures and protocols to adapt to industry
development, optimize our organizational structure and offer training sessions for our quality
management personnel to ensure operational excellence.
We will also reinforce our talent cultivation and systematic training for medical
professionals. Through comprehensive training programs, we expect to further enhance our
dental technologies. We will develop a tutoring system, where experienced dental experts
provide clinical and research guidance to young talents to continually improve their theoretical
knowledge and clinical capacity, thereby raising the overall quality of our dental services.
Apart from internal cultivation, we plan to expand our medical professional team through
diverse recruitment channel, including campus recruitment at prestigious institutions, targeted
online social recruitment for personnel with work experience and professional referral
programs. We will be gradually elevating our recruitment standards on a larger scale,
particularly focusing on graduates of resident standardization training and postgraduates for
clinical training from top universities. We will also recruit excellent undergraduates from other
universities to expand our talent pool. Additionally, we will continue to enhance the promotion
system for medical professionals, providing them with promising welfare and long-term career
development opportunities.
Moreover, we will upgrade dental equipment and learn the latest technological
development in the dental services industry. By adopting new technologies, advanced
equipment and dental materials, we expect to optimize the efficiency and effectiveness of our
dental diagnosis and treatments, ultimately improving customers’ satisfaction and our
competitiveness.
Furthermore, we highly value our dentist resources, which we consider are the essential
cornerstone for the long-term development of our dental service network. We place great
importance to attracting, recruiting, cultivating and retaining dentists practicing at our dental
service network. We plan to further incentivize medical professionals through developing our
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Partnership Program. We strive to offer clear career trajectories, establish systematic talent
cultivation mechanism and optimize remuneration structures for such medical professionals.
We will develop our Partnership Program, design and implement long-term equity incentive
plans and talent retention programs, with the aim to foster “co-creation, co-win and co-share
(΍௴΍ᙊ΍Ԯ)” culture with key medical professionals. We believe these sustainable
mechanisms not only attract and retain seasoned medical professionals but also provide offer
such medical professionals a promising platform for personal advancement.
Strengthen our brand building and boost our brand influence by enhancing customers’
service experience and satisfaction
Strengthen customer acquisition in communities and accurately reach potential customers in
the local area
We are committed to deepening our penetration into the communities through serving
more residents with trusted and accessible dental services. With a strategic focus on
communities with high population density, we plan to regularly organize brand promotion
activities, such as free dental consultation services and health lectures for the enterprises and
schools located in or adjacent to communities. Such proactive participation allows us to gain
a deeper understanding of customer needs, while elevating our brand awareness and service
penetration in the communities.
Diversify promotion channels
We will diversify our promotion channels to attract customers both online and offline,
strengthening our brand influence and boosting our reputation among potential customers and
medical professionals. We believe diverse brand promotion approaches, coupled with enhanced
customer acquisition capabilities, will drive sustainable expansion of our dental service
network.
Enhance customer service experience
We cherish customers’ trust in us and spare no efforts to create satisfied customer
experience. Looking forward, we expect to further upgrade service experience throughout our
whole service process, covering pre-consultation stage, treatment stage and post-consultation
stage, offering customers intimate and coherent service experience. We seek to enhance
customer satisfaction through various aspects, such as comfortable treatment environment,
advanced diagnosis and treatment facilities and shortened waiting time. We plan to designate
oral health management consultants in our dental institutions to enable personalized interaction
and customized service experience, thereby increasing customer retention and customer
loyalty.
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Strive to accelerate our digitalization and informatization to empower our business
development
Digitalized diagnosis and treatment
We aim to propel the digitalization of the entire service process, mainly covering
electronic medical records, digitalized diagnosis and treatment and online customer
relationship management. Utilizing our integrated information technology systems, we
endeavor to offer one-stop data-based treatment solutions accommodating to individual
customer’s oral health condition and personal preference.
 Digitalized information management . We plan to use various digital tools to enhance
our digitalization. Through advanced digital platforms, we systematically collect
and archive medical information, ensuring standardized record management. Based
on the comprehensive patient history records, we are able to deliver streamlined
service with personalized treatment protocols and real-time patient access to
medical records.
 Digitalized clinical technologies . We will leverage digital analysis technologies to
tailor our dental services and develop the optimal treatment plans for customers.
 In-house big data analysis and application capabilities . In the future, we expect to
deploy an advanced platform to assess and identify potential oral health issues for
customers through in-depth analyses on historical medical records. Such platform
will assist dentists in assessing the severity and specific type of oral diseases and
designing personalized treatment plans.
Digitalized management
In pursuit of digitalized and modern management, we plan to further propel the
integration of our information technology systems with data-based operational risk
management. We have been utilizing a matrix of information technology systems to visualize
our operational and financial performance and facilitate our management’s data-based decision
making. We expect to further digitalize our information collection process and develop our big
data operational risk management. This helps our management understand our dental
institutions’ business performance on a real time basis, thereby improving our service quality,
customer experience and internal control.
We expect to further develop our information integration capabilities and benefit from
modern and digitalized management. Informative reports on operational and financial
performance are crucial for decision-making and modern management. We will further elevate
the information integration and analysis function of our information technology systems,
leveraging data-based analysis to rationalize our business plans and timely adjust our
operational and financial management.
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Digitalized marketing
We plan to upgrade our information technology systems to enhance marketing data
analysis capabilities, explore collaboration with third-party online platforms to reach more
targeted customers and continuously expand our customer base effectively and cost-efficiently.
OUR DENTAL SERVICES
Adhering to the spirit of “rooted in medical and driven by technology ( ᔼᐕ͉๕eҦஔ
ᚨਗ),” we are committed to delivering trustworthy and accessible dental services to address
customers’ diverse needs along their life path through our broad dental service network across
Central China.
Since the establishment of our first dental institution in 2007, we have established
ourselves as a high-quality dental services provider with abundant technologies, expertise and
experience accumulated across all dental specialties. Over the years, we have been strategically
focusing our dental services on addressing the mass market demands, maintaining strong
presence in communities throughout densely populated Central China. We amass and integrate
medical resources through the direct chain model, and efficiently reach and serve customers of
diverse demographics through our broad dental service network, addressing their oral health
needs. With experienced dentists and advanced technology, we endeavor to provide
comprehensive and customized dental services catering to customers’ personal conditions,
creating a convenient and intimate service experience.
We provide customers with a comprehensive range of dental services, including general
dentistry services, implantology services and orthodontics services. The following table sets
forth a breakdown of our revenue by business line for the years indicated:
Y ear ended December 31,
2022 2023 2024
RMB’000
%o f
revenue RMB’000
%o f
revenue RMB’000
%o f
revenue
General dentistry services /H1118/H1118212,526 51.9 237,088 53.7 217,321 53.4
Implantology services /H1118/H1118/H1118/H1118/H1118116,728 28.5 122,984 27.8 115,647 28.4
Orthodontics services /H1118/H1118/H1118/H1118/H111880,190 19.6 81,769 18.5 74,115 18.2
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118409,444 100.0 441,841 100.0 407,083 100.0
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General Dentistry Services
General dentistry services generally refer to oral preventive care, treatment of regular oral
diseases, and restorative services, encompassing full process from prevention, diagnosis to
treatment, with the aim to provide customers with a one-stop oral health solution. As a
customer-centric dental services provider located in densely populated areas and adjacent to
communities, we focus on the daily oral health of our customers. Through regular oral health
management and early intervention of dental diseases, we help customers mitigate the risks of
worsening symptoms and avoid costly treatments of serious diseases. As healthy teeth and
gums improve the comfort, appearance and confidence of customers, we believe regular oral
health management not only tackles customers’ basic and general dental problems but also
enhances their overall quality of life.
Our general dentistry services mainly cover (i) prosthodontics; (ii) oral medicine; (iii)
oral surgery; and (iv) pedodontics.
 Prosthodontics . Prosthodontics is a specialty of dentistry that provides diagnoses
and treatments on tooth defects, tooth loss and maxillofacial defects. Our
prosthodontics services aim to restore customers’ oral function and aesthetics
through various restorative methods, thereby improving their life quality. Particular
treatment methods are typically determined by customers’ specific conditions and
demands, based on dentists’ professional diagnosis. Our prosthodontics services
encompass restoration of dental defects, restoration of tooth defects, restoration of
tooth loss, periodontal disease-related restoration, maxillofacial defect restoration,
cosmetic restoration, implant restoration, digital prosthodontics, occlusal
reconstruction, and restoration supported by multidisciplinary collaboration. Our
prosthodontic treatments are characterized by minimally invasive treatments, high
aesthetics standards, and commitment to providing natural-looking, comfortable and
lasting results. The main dental equipment and consumables used in our
prosthodontic treatments include electronic facebows, intraoral scanners, dental
impression materials, dental crowns, dental bridges and dentures. Typically, our
prosthodontics services take two weeks to two months, depending on the types of
denture, materials used, customization required and technology involved.
 Oral medicine . Oral medicine is a specialty of dentistry that deals with the most
common oral diseases, including teeth hard tissue diseases, pulp diseases, periapical
diseases, periodontal diseases and oral mucosal diseases. Oral medicine aims to
preserve the original organs and maintain their natural functions. Our service
offerings mainly include root canal treatments, root canal retreatments, dental
filling, microscope-assisted root canal treatments, aesthetic filling for anterior teeth
and painless teeth cleaning. The main dental equipment and consumables for our
oral medicine services include dental microscopes, intraoral scanners, ultrasonic
dental cleaners, endodontic files, root canal irrigants, resins and dental scalers. The
duration of our oral medicine services varies from 1 day to approximately 10 days,
depending on the severity of diseases, complexity of treatment procedure and
technological requirements.
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 Oral surgery . Oral surgery is a specialty of dentistry that deals with the diagnosis
and surgical treatment of diseases, injuries and defects of mouth, jaw, and associated
facial structures. Our oral surgery typically covers painless tooth extraction,
minimally invasive tooth extraction, extraction of complex impacted teeth, alveolar
surgery, surgical correction of oral developmental deformities and removal of
maxillofacial cysts. The main dental equipment and consumables for our oral
surgery typically consist of surgical drills, minimally invasive dental elevators,
dental forceps, scalpels, retractors, sutures, along with anesthetics, gauze, etc.
 Pedodontics . Pedodontics is a specialty of dentistry that focuses on the diagnosis
and treatment of oral health issues of children. Our pediatric dental services include
dental examinations, preventative teeth treatments, cavity fillings and other routine
dental services accommodating the unique needs of children. Our pediatric dental
services focus on both prevention and treatment, fostering good oral health habits
through effective communication with children and their parents. During treatment,
medical professionals pay special attention to children’s physical growth stages,
psychological state and behavioral patterns, to ensure the safety and effectiveness of
dental treatment. We typically use dental equipment and consumables tailored to
children’s teeth, such as pedodontics forceps, pediatric brackets and bands, as well
as other general dental equipment and consumables during the provision of
pedodontics services. We also provide treatment rooms and play areas designed for
children, featuring cartoon decorations and child-friendly interactive methods to
help anxious children relax during dental treatment.
For the years ended December 31, 2022, 2023 and 2024, we recorded 520,961, 549,907
and 516,570 customer visits to general dentistry services, respectively, and the average
spending per customer visit for general dentistry services was RMB408, RMB431 and
RMB421, respectively, for the same years.
For the years ended December 31, 2022, 2023 and 2024, revenue from general dentistry
services amounted to RMB212.5 million, RMB237.1 million and RMB217.3 million,
respectively, representing 51.9%, 53.7% and 53.4%, respectively, of our total revenue for the
same years.
Implantology Services
Implantology is a specialty of dentistry that deals with the tooth replacement, which
involves implanting artificial teeth root (implants) into the alveolar bone to support the
restoration of missing teeth. Our implantology treatments utilize different types of dental
equipment and consumables, mainly including cone beam computed tomography machines,
implant machines, ultrasonic bone scalpels, implant membrane tacks, implant fixtures, bone
grafts, abutments, drills and other dental tools for implants. Our implantology services aim to
provide customers with a teeth replacement solution to replace the natural teeth with implants
and achieve improved functionality and aesthetics. Through precise surgery and professional
care, we can achieve successful implantation with long-term stability of the implants.
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We apply multiple advanced implantology technologies, such as robotic-assisted implant,
digital surgical guide technology (Ҧஔ), dynamic navigation technology ( ਗ࿒ኬঘ
Ҧஔ), the All-on-4 implant, and V-II-V technique. These technologies enhance the precision,
efficiency and success rate of implantology procedures, thereby improving service experience
and customer satisfaction. In particular, the All-on-4 implant and V-II-V technique enable
immediate implant placement and restoration, while preserving oral soft tissues and bone
tissues, minimizing surgical trauma and shortening the whole treatment procedure.
 Digital surgical guide technology . Digital surgical guide technology is an auxiliary
tool used in dental implant surgery, designed based on customers’ three-dimensional
oral data (such as CT data, dental arch data, etc.) and manufactured using
three-dimensional printing technology. We utilize digital surgical guide technology
to design and fabricate custom guide for our dental implant surgeries. Such custom
guides help medical professionals precisely place the implants according to
pre-planned locations, improve implant accuracy, achieve optimal alignment, and
minimize surgical risks for our customers.
 All-on-4 implant . All-on-4 implant technology is an advanced dental implant
technology that restores edentulous arch by implanting four implants in the upper or
lower jaw. We adopt the All-on-4 implant technology to provide fixed dentures with
greater comfort and convenience for edentulous customers. Compared with the
traditional treatment methods, All-on-4 implant technology uses only four implants
to support the arch restoration, eliminating the need for bone grafting, largely
shortening the treatment time and achieving immediate and ideal implant results.
 Robotic-assisted implant . Our innovative robotic-assisted implant is guided by
digital surgical guides and infrared optical positioning. We are committed to
improving the implant surgery process, by using robotic systems to assist dentists in
placing implants based on comprehensive oral data analysis and well-designed
implant plans, minimizing incisions and optimizing positioning. As an emerging
high-precision technology that integrates computer-aided design, computer-aided
manufacturing, robotics and three-dimensional imaging to achieve precise implant
placement, robotic-assisted implant technology enhances surgical accuracy, reduces
operation time, improves customers’ comfort during treatment and lowers the risk of
complications.
 Dynamic navigation technology . Leveraging clinical image visualization and
spatial coordinate system positioning, dynamic navigation technology provides
medical professionals with real-time and precise guidance during dental implant
surgeries. Through dynamic navigation, medical professionals can observe real-time
progress of the procedure on the monitor, monitor the movement of surgical
instruments in real-time and make efficient adjustments on implant placement,
which provides flexibility and improves accuracy during implant process, allowing
customers to enjoy reliable and sophisticated implantology services.
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 V-II-V technology . We employ V-II-V technology during implantology services.
Specifically, we leverage vertical and angled implantology approaches, as well as
trans-pterygoid approaches to provide implantology services for edentulous
customers with severe maxillary bone defects. This reduces the challenges
associated with complex bone augmentation, while shortening the time length of
implantology procedures.
Our implantology services generally last for 3 months to 12 months, depending on the
severity of bone loss, bone density and quantity, number of implants, type of techniques, the
complexity of the surgical procedure, customization of the prosthesis, such as crowns or
bridges, and technological involvement.
National Centralized Procurement
In recent years, the PRC government has been propelling the centralized procurement of
dental implants and strengthening the pricing supervision of dental institutions’ implantology
services, with the aim to rationalize and promote the transparency in the pricing of dental
implantology consumables and services across the dental services industry in China. In
September 2022, the National Healthcare Security Administration (ღ҅)
promulgated the Notice of the National Healthcare Security Administration on
Conducting Special Governance of Medical Service Charges and Consumable Prices for
Dental Implants (ஷ
). Since then, the government authorities at both national and provincial level issued a
series of policies on effectively implementing centralized procurement and pricing
management for dental implants. See “Regulatory Overview — Regulations on the Reform of
Medical Institutions — Notice on Conducting Special Governance of Medical Service Charges
and Consumables Price for Dental Implants.”
For further details of centralized procurement policies, see “Regulatory Overview —
Regulations on the Reform of Medical Institutions.”
These policies enhanced the general public awareness and willingness to seek
implantology services at dental institutions. As a result, we have observed an increasing
number of customers gaining access to more affordable dental services. The number of implant
teeth increased from 13,797 in 2022 to 20,485 in 2023. These policies have also reduced our
procurement costs of implants by approximately 15% from 2022 to 2023. In response to the
implementation of centralized procurement policies in Hubei and Hunan provinces as well as
the fierce market competition under the downward pricing pressure brought by such policies,
we made pricing adjustments, reducing the fees for implantology services by approximately
25% to 40% across all of our dental institutions in mid-2023. Following such pricing
adjustment, the average spending per customer visit for our implantology services reduced
from RMB1,953 in 2022 to RMB1,562 in 2023, while the average spending per implant tooth
reduced from RMB8,460 in 2022 to RMB6,004 in 2023. Taking advantage of our
comprehensive dental specialty deployment, improving resource utilization efficiency, as well
as the centralized management and economies of scale of our service network, we expect to
mitigate the negative impact of these policies on our overall profitability.
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For the years ended December 31, 2022, 2023 and 2024, the number of customer visits
to our implantology services amounted to 59,763, 78,759 and 86,810, respectively, and the
average spending per customer visit for implantology services was RMB1,953, RMB1,562 and
RMB1,332, respectively, for the same years. For the years ended December 31, 2022, 2023 and
2024, the number of implant teeth amounted to 13,797, 20,485 and 20,055, respectively, and
the average spending per implant tooth was RMB8,460, RMB6,004 and RMB5,767
respectively, for the same years.
For the years ended December 31, 2022, 2023 and 2024, revenue from implantology
services amounted to RMB116.7 million, RMB123.0 million and RMB115.6 million,
respectively, representing 28.5%, 27.8% and 28.4%, respectively, of our total revenue for the
same years.
Orthodontics Services
Orthodontics is a specialty of dentistry that focuses on the diagnosis, prevention and
treatment of dental and jawbone developmental abnormalities. These abnormalities include
misaligned teeth, abnormal occlusion and irregularities in the size, shape and position of the
jawbone. As an important specialty of dentistry, orthodontics not only focuses on the aesthetic
alignment of teeth but also, more importantly, aims to restore and maintain normal function of
mouth, such as chewing, speaking and facial aesthetics. Our orthodontic treatments use a range
of dental equipment and consumables, mainly including metal brackets, ceramic brackets, clear
aligners and other appliances.
During the orthodontics services, the dentist chooses one or more fixed or removable
dental braces according to the specific situation of each customer to achieve ideal treatment
outcomes. Our orthodontics services demonstrate the following competitive advantages:
 Optimal orthodontics plan customized for customers in diverse oral conditions .W e
tailor our orthodontics services and develop the optimal treatment plan for
customers mainly based on (i) customers’ age and jaw development, which are
crucial in determining the treatment plan; (ii) severity and specific type of the
malocclusion, such as maxillary protrusion, mandibular protrusion, crossbite and
open bite; (iii) customers’ oral health condition. We generally recommend that
customers address tooth decay or gum problems before the orthodontics process;
(iv) customers’ preferences and treatment goals. We pay attention to their specific
goals, such as improving bite function, enhancing smile aesthetics or addressing
other issues, and preferences for treatment options, such as clear aligners or
traditional fixed braces; and (v) the application of advanced dental equipment and
tools.
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 Refined and digitalized orthodontic treatment. We have introduced cephalometric
analysis systems, digitalized intraoral scanners, chairside precision positioning
systems, to perform medical measurements on 3D cephalograms generated by the
CT scanner. Utilizing its connection with our HIS, the cephalometric analysis
system digitalizes the diagnosis of customers’ malocclusions with higher efficiency
and accuracy.
Typically, our orthodontics services include multiple treatment sessions lasting from one
year to three years, depending on the severity of malocclusions, type of orthodontic
consumables, extent and frequency of adjustments, customers’ adherence to the treatment plan
and technical complexity involved.
For the years ended December 31, 2022, 2023 and 2024, we recorded 127,927, 140,143
and 145,252 customer visits to our orthodontics services, respectively, and the average
spending per customer visit for orthodontics services was RMB627, RMB583 and RMB510,
respectively, for the same years. The decrease of such spending from 2022 to 2023 was mainly
caused by increased customers’ follow-up visits after the pandemic to complete the
orthodontics treatment in previous years. The decrease of such spending from 2023 to 2024 was
mainly as a result of (i) our price reduction of approximately 15% to 20% to certain
orthodontics services using clear aligners in response to customers’ consumption downgrade
during the slower-than-expected post-pandemic economic recovery. Such pricing adjustment
was underpinned by our effective cost control and negotiation of favorable terms with key
suppliers for high-quality dental consumables; and (ii) reduced customer visits by new
customers mainly resulting from customers’ consumption downgrade, which led customers to
defer non-essential expenditures such as consumption-oriented orthodontics services as they
are typically considered non-urgent and demand-driven, unlike essential, disease-driven dental
treatments, and our relatively conservative marketing strategy outside Wuhan in reaction to
slower-than-expected post-pandemic economic recovery.
For the years ended December 31, 2022, 2023 and 2024, revenue from orthodontics
services amounted to RMB80.2 million, RMB81.8 million and RMB74.1 million, respectively,
representing 19.6%, 18.5% and 18.2%, respectively, of our total revenue for the same years.
Our Standardized Service Steps
To better control the quality of our clinical practices and monitor the service progress and
outcomes of our entire dental service network, we have streamlined and standardized our
service steps. We prioritize customers’ service experience throughout their whole visits to our
dental institutions. We generally designate oral health management consultants in our dental
institutions, who work closely with our medical professionals to guide service steps in a timely
manner and promote a seamless service experience, addressing oral health needs in a one-stop
manner. See “— Our Customers — Broad Customer Base with Intimate Customer Experience”
for details.
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The following flow chart illustrates key steps of our dental services.
Appointment and Pre-
consultation Preparations
• Appointment
• Reception
• Filling in tables
• Arranging consultants
Consultation and Diagnosis
• Guided to visit the dentist
• Dental consultation
• Dental examination
Follow-up and Post-
consultation Services
• Appointment on the next
treatment session or follow-
up visit
• Follow-up
• Proactive feedback collection
Treatment
• Signing of consent form
• Pre-treatment preparations
• Treatment
• Post-treatment instructions
Pre-Treatment Consultation
• Discussion on treatment plans
with the dentist
• Determination of treatment
plans
Payment
• Settling payment after
treatment completed
OUR DENTAL SERVICE NETWORK
Since our inception in 2007, we have established a cross-regional dental service network
consisting of 92 dental institutions in operation as of the Latest Practicable Date, including 4
dental hospitals, 80 dental out-patient departments and 8 dental clinics, covering 8 cities in 2
provinces in China. Through these dental institutions, we provide a full range of dental services
to customers with diverse dental health needs. As a private dental services provider in Central
China with a focus on Hubei and Hunan provinces, we are well-positioned to promote the oral
health of the public through our expanding dental service network.
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Geographic Coverage of Our Dental Service Network
Set out below is an illustration of the geographic coverage and service capacity of our
dental service network as of the Latest Practicable Date.
South China Sea
NANHAI ZHUDAO
South China Sea
NANHAI ZHUDAO
Jiangxi
Henan
Our Dental Service Network
Chenzhou 1
Yueyang 1Changde 1
Hubei
Jingzhou 12
 65
Wuhan
5
Xiangyang
Jingmen 3
Hunan
Shaoyang 4
Central China
4
Hospitals
80
Out-patient
departments
8
Clinics
The following table sets forth the number of our dental chairs by region as of the dates
indicated:
As of December 31,
As of the
Latest
Practicable
Date2022 2023 2024
Hubei province /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118577 630 627 644
Wuhan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118400 453 468 489
Other cities in Hubei
province /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118177 177 159 155
Hunan province /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111868 71 75 73
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118645 701 702 717
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The following table sets forth a breakdown of our revenue, gross profit and gross profit
margin by region for the years indicated:
Y ear ended December 31,
2022 2023 2024
Revenue
% of total
revenue
Gross
profit
Gross
profit
margin Revenue
% of total
revenue
Gross
profit
Gross
profit
margin Revenue
% of total
revenue
Gross
profit
Gross
profit
margin
(RMB’000) (%) (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) (RMB’000) (%)
Wuhan /H1118/H1118/H1118/H1118/H1118/H1118/H1118290,948 71.1 118,882 40.9 316,892 71.7 133,976 42.3 290,404 71.3 116,681 40.2
Other cities in Hubei
province /H1118/H1118/H1118/H1118/H1118/H111874,308 18.1 18,128 24.4 80,350 18.2 20,498 25.5 73,961 18.2 22,204 30.0
Hunan province /H1118/H1118/H1118/H111841,773 10.2 11,391 27.3 44,600 10.1 13,752 30.8 42,718 10.5 13,455 31.5
Total(1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118409,444 100.0 148,474 36.3 441,841 100.0 168,226 38.1 407,083 100.0 152,340 37.4
Note:
(1) Apart from dental institutions in Hubei and Hunan provinces, historically, we operated two dental institutions
in Anhui province, which were voluntarily disposed in May 2022 following our thorough evaluation of market
conditions and alignment with our future business strategies. In 2022, our revenue generated from dental
institutions in Anhui province amounted to RMB2.4 million, representing 0.6% of our total revenue for the
same year.
Composition of Our Dental Service Network
Dental institutions are generally categorized into dental hospitals, dental out-patient
departments and dental clinics, as specified in their Medical Institution Practicing Licenses.
Each of these three types of dental institutions is subject to distinct regulatory requirements
and standards. See “Industry Overview — The Dental Services Market in China — Participants
of Dental Services Market in China” for details. As of the Latest Practicable Date, we had 4
dental hospitals, 80 dental out-patient departments and 8 dental clinics in operation in our
dental service network. All dental hospitals operated by us during the Track Record Period and
up to the Latest Practicable Date were Class II dental hospitals, except for Chenzhou Hospital,
which had not been classified as of the Latest Practicable Date.
Our dental hospitals, dental out-patient departments and dental clinics all target residents
of all ages in communities, generally providing general dentistry services, implantology
services and orthodontics services with ease of access. In our dental service network, a dental
hospital typically covers an area of 1,300 sq.m. to 2,000 sq.m., a dental out-patient department
typically covers an area of 200 sq.m. to 1,000 sq.m, while a dental clinic typically covers an
area of 200 sq.m. to 500 sq.m.. These three types of dental institutions are cohesively
integrated and operated under a direct chain model, forming a unified dental service network
supported by a centralized management structure.
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The following table sets forth the movement in the number of dental chairs across our
various types of dental institutions during the Track Record Period and up to the Latest
Practicable Date:
Y ear ended December 31,
As of the
Latest
Practicable
Date2022 2023 2024
Number of dental chairs at
the beginning of the year /H1118 676 645 701 702
– Dental hospitals /H1118/H1118/H1118/H1118/H1118/H1118/H1118128 89 89 87
– Dental out-patient
departments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118499 505 560 561
– Dental clinics /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111849 51 52 54
Number of new dental chairs
during the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111847 63 46 52
– Dental hospitals /H1118/H1118/H1118/H1118/H1118/H1118/H11181–––
– Dental out-patient
departments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111844 61 43 47
– Dental clinics /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182235
Number of reduced dental
chairs during the year (1) /H1118/H1118/H1118 (78) (7) (45) (37)
– Dental hospitals /H1118/H1118/H1118/H1118/H1118/H1118/H1118(40) – (2) –
– Dental out-patient
departments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(38) (6) (42) (31)
– Dental clinics /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (1) (1) (6)
Number of dental chairs at
the end of the year /H1118/H1118/H1118/H1118/H1118/H1118645 701 702 717 (2)
Notes:
(1) Representing decommissioned dental chairs due to their service life expiration and reduced dental chairs
following our disposal of dental institutions. The average service life of our dental chairs generally
ranges from 5 to 10 years.
(2) As of the Latest Practicable Date, our dental hospitals, dental out-patient departments and dental clinics
had 87, 577 and 53 dental chairs, respectively.
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We are committed to steadily growing our market share and expanding our dental service
network through both organic growth and strategic acquisitions. Taking into account market
dynamics and the overall development pace, we will continue to establish new dental
institutions in Wuhan while pursuing acquisitions of dental institutions outside Wuhan. We
prioritize new establishment in Wuhan to leverage our well-established brand recognition and
accumulated dentist resources in the city, enhancing local residents’ access to reliable dental
services, while expanding our service network to achieve greater economies of scale. Besides,
when proper collaboration opportunities with seasoned dentists arise, we may also explore
acquisitions in Wuhan and new establishments outside Wuhan. In the next five years, we expect
to prioritize the expansion of dental out-patient departments, with a secondary focus on dental
hospitals to satisfy unmet demands across a broader service radius, foster dental research, and
facilitate experience sharing, reinforcing our dominant position in Central China. Based on our
existing utilization of dental resources and insights into the local customers’ demands, we will
prioritize the expansion of dental out-patient departments as the operational scale and dental
resources available to such type of institutions enable us to effectively address unmet
customers’ demands while achieving cost-efficient expansion and operations. Please see
“Future Plans and Use of Proceeds.”
Development Stage of Our Dental Institutions
Taking advantage of our growing brand influence and rich experience in operating dental
institutions under a direct chain model, we maintain an expanding dental service network. We
categorized our dental institutions based on the historical operational and financial
performance of dental institutions for better in-network resource coordination and allocation.
Our dental institutions with an operating history of less than two years within our dental
service network are at their initial development stage (the “ initial stage ”), dental institutions
with an operating history of two years to six years within our dental service network are
ramping up (the “ ramp-up stage ”) and dental institutions with an operating history of over six
years within our dental service network are relatively matured (the “ matured stage ”). As of the
Latest Practicable Date, we had 20 dental institutions at the initial stage, 39 dental institutions
at the ramp-up stage and 33 dental institutions at the matured stage. Our dental institutions
move from initial stage to ramp-up stage and further to matured stage along with their business
growth, witnessing increasing customer visits, improving medical resource utilization and
strengthening revenue streams, which pave the way for greater economies of scale and
in-network synergies.
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The following table sets forth the movement in the number of our dental institutions in
operation by type and development stage during the Track Record Period and up to the Latest
Practicable Date:
Y ear ended December 31,
As of the
Latest
Practicable
Date2022 2023 2024
Number of dental institutions at
the beginning of the year /H1118/H1118/H1118/H1118/H111877 74 81 86
– Dental hospitals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186444
– Dental out-patient departments 64 63 70 75
– Dental clinics /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187777
Number of newly established
dental institutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185468
– Dental hospitals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
– Dental out-patient departments 5468
– Dental clinics /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
Number of newly acquired dental
institutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–3––
– Dental hospitals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
– Dental out-patient departments –3––
– Dental clinics /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
Number of dental institutions
disposed by us during the
year
(1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(8) – (1) (2)
– Dental hospitals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2) – – –
– Dental out-patient departments (6) – (1) (2)
– Dental clinics /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
Number of dental institutions at
the end of the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111874 81 86 92
(2)
– Initial stage /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816 12 13 20
– Ramp-up stage /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111839 44 42 39
– Matured stage /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819 25 31 33
Notes:
(1) We voluntarily terminated the operations of eight, one and two dental institutions in 2022, 2024 and during
the period subsequent to December 31, 2024 and up to the Latest Practicable Date, respectively, based on our
evaluation on the market condition and future business strategies. Before our disposal of such dental
institutions, we generally notify customers of the locations and dentist information of our other dental
institutions in nearby regions, ensuring the continuity and consistency of our dental services.
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Of the eight institutions terminated operations and disposed by us in 2022, four were disposed due to their
suboptimal financial performance, while the remaining four were disposed after comprehensive consideration
of our regional development priorities, local market demands and resource allocation within our dental service
network. Revenue from these eight dental institutions in 2022 accounted for approximately 1.8% of our total
revenue in the same year. Our gross profit from these dental institutions amounted to approximately RMB0.2
million in 2022. As a result of such disposal, we recognized gains on disposal of subsidiaries of RMB1.6
million in total in 2022.
(2) In April 2025, one of our dental out-patient departments was reclassified as a dental clinic. As of the Latest
Practicable Date, we had 4 dental hospitals, 80 dental out-patient departments and 8 dental clinics in operation
in our dental service network.
The following table sets forth the number of dental chairs in our dental institutions of
different development stages as of the dates indicated:
As of December 31,
As of the
Latest
Practicable
Date2022 2023 2024
Initial stage as of the end of
the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118100 85 81 122
Ramp-up stage as of the end
of the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118345 364 337 297
Matured stage as of the end
of the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118200 252 284 298
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118645 701 702 717
The following table sets forth the revenue, gross profit and gross profit margin of our
dental institutions at different development stages for the years indicated:
Y ear ended December 31,
2022 2023 2024
Revenue
% of total
revenue
Gross
profit
Gross
profit
margin Revenue
% of total
revenue
Gross
profit
Gross
profit
margin Revenue
% of total
revenue
Gross
profit
Gross
profit
margin
(RMB’000) (%) (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) (RMB’000) (%)
Initial stage as of the
end of the year /H1118/H1118/H111834,628 8.5 801 2.3 32,185 7.3 8,742 27.2 26,723 6.6 6,972 26.1
Ramp-up stage as of the
end of the year /H1118/H1118/H1118217,167 53.0 77,316 35.6 203,772 46.1 63,534 31.2 181,292 44.5 56,787 31.3
Matured stage as of the
end of the year /H1118/H1118/H1118157,649 38.5 70,357 44.6 205,884 46.6 95,950 46.6 199,068 48.9 88,581 44.5
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118409,444 100.0 148,474 36.3 441,841 100.0 168,226 38.1 407,083 100.0 152,340 37.4
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The following table sets forth the number of our dental institutions (1) that recorded gross
profit or gross loss for the years indicated:
Y ear ended December 31,
2022 2023 2024
Number of dental institutions recorded
gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111872 74 77
Number of dental institutions recorded
gross loss (2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111897 1 0
Notes:
(1) The aggregate number of profit-making and loss-making dental institutions did not equal to the total
number of our dental institutions as of the end of each year, due to our establishment, acquisition and/or
disposal of dental institutions during the relevant year.
(2) 21 dental institutions in total recorded gross loss during the Track Record Period, among which five
dental institutions recorded gross loss in two years. With respect to these five dental institutions, two
dental institutions recorded gross loss in 2022 and 2023, one dental institution recorded gross loss in
2023 and 2024, while the remaining two recorded gross loss in 2022 and 2024. As of the Latest
Practicable Date, two of them achieved profit turnaround, two were voluntarily disposed by us, while
the remaining one outside Wuhan was still in the loss-making position, primarily due to decrease in
customer visits as a result of its conservative marketing strategy in reaction to slower-than-expected
post-pandemic economic recovery.
During the Track Record Period, a total of 21 of our dental institutions recorded gross
loss. In particular, 18 newly established and 3 newly acquired dental institutions recorded gross
loss due to the upfront investment during their preparation or ramp-up stage. For all dental
institutions that recorded gross loss in 2022, their loss position was also caused by decrease in
customer visits to such dental institutions caused by local travel restrictions during the
COVID-19 pandemic.
For the year ended December 31, 2023, among the nine dental institutions recorded gross
loss in the previous year, (i) four dental institutions achieved profit turnaround, (ii) three dental
institutions were voluntarily disposed by us, while (iii) the remaining two were still in the
loss-making position, among which one had substantial upfront investment at its ramp-up
stage, while the other dental institution became an independent legal entity in 2023, adopting
standalone financial reporting and assuming its own lease costs, resulting in its loss-making
position. For the year ended December 31, 2024, among the seven dental institutions recorded
gross loss in the previous year, (i) six dental institutions achieved profit turnaround, and (ii)
the remaining one was voluntarily disposed by us. As of the Latest Practicable Date, among the
10 dental institutions recorded gross loss for the year ended December 31, 2024, (i) three dental
institutions achieved profit turnaround, (ii) two dental institutions were voluntarily disposed by
us, while (iii) the remaining five were still in the loss-making position, among which three
dental institutions had substantial upfront investment at their ramp-up stage and the remaining
two outside Wuhan implemented conservative marketing strategies in reaction to slower-than-
expected post-pandemic economic recovery.
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Business Highlights of Our Representative Dental Institutions
Set forth below is the summary information of our representative dental institutions.
Wuhan Dazhong Hospital
Overview and Highlights
Wuhan Dazhong Hospital is a Class II for-profit dental hospital we established in Wuhan,
Hubei province in 2014. As a Medical Insurance Designated Medical Institution, Wuhan
Dazhong Hospital offers reliable and accessible dental services.
Wuhan Dazhong Hospital is the largest dental institution within our dental service
network in terms of revenue contribution during the Track Record Period. For the years ended
December 31, 2022, 2023 and 2024, our revenue derived from Wuhan Dazhong Hospital
represented 6.6%, 6.6% and 6.2%, respectively, of our total revenue for the same years. For the
years ended December 31, 2022, 2023 and 2024, Wuhan Dazhong Hospital recorded 35,032,
35,606 and 32,634 customer visits, respectively. The decrease in customer visits in 2024 was
mainly due to the decrease in customer visits of general dentistry services, as Wuhan Dazhong
Hospital had promotional campaigns on general dentistry services in 2023.
The following table sets forth the revenue, gross profit and gross profit margin of Wuhan
Dazhong Hospital for the years indicated:
Y ear ended December 31,
2022 2023 2024
Revenue (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,959 28,994 25,174
Gross profit (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,548 13,564 11,517
Gross profit margin (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111846.5 46.8 45.8
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Dental Service Capacity and Offering
Wuhan Dazhong Hospital deploys comprehensive specialties, serving customers with
diverse oral health demands. Its specialties cover general dentistry services, implantology
services and orthodontics services, which are underpinned by advanced dental equipment, such
as computer-aided design/computer-aided manufacturing all-ceramic restoration system and
operating microscope. Implantology services and orthodontics services have been positioned as
its key specialties. Wuhan Dazhong Hospital is committed to promoting specialty cultivation,
enhancing diagnosis and treatment capacity and stimulating the experience sharing among
dentists. Wuhan Dazhong Hospital has established multiple digitalized dental centers,
including, among others, Oral Digital Aesthetic Prosthodontics Center (ూʕ
ː), Oral Digital Implantology Center ( ɹഢᅰοʷ၇ಔʕː), Pediatric Dental Treatment and
Early Orthodontic Center ( Յഁ˫षൢᐕၾϘᐞʕː) and Oral Digital Orthodontic Center ( ɹ
ഢᅰοʷ͍ຆʕː). Such centers propel the application of advanced technologies during
dental diagnosis and treatment, such as 3D data collection technology, mathematical modeling
technology, computer-aided design technology and computer-aided manufacturing technology.
With a GFA of 1,751 sq.m., Wuhan Dazhong Hospital had 27 dental chairs as of
December 31, 2024. Wuhan Dazhong Hospital has attracted and retained plentiful seasoned
dentists with expertise and experience in dental services. As of December 31, 2024, 11 dentists
were practicing at Wuhan Dazhong Hospital, among whom 3 dentists were chief dentists or
associate-chief dentists. Wuhan Dazhong Hospital has an Expert with State Council’s Special
Allowance (࢕As of the same date, 19 other medical professionals were
practicing at such dental institutions.
Wuhan Dazhong Hospital has made profound contributions to our talent cultivation and
specialty development. Under the well-rounded dental tutoring system, young dentists receive
precious clinical and research guidance from experienced mentors at Wuhan Dazhong Hospital.
In pursuit of higher service quality and capacity, we also arrange periodic training sessions,
where dental experts from Wuhan Dazhong Hospital share their experience and professional
techniques to other dentists practicing at our dental service network.
Our Effective Management and Operation
We have utilized our centralized and standardized direct chain model, tiered management
structure and proficient medical professionals to empower the operations of Wuhan Dazhong
Hospital since its inception. In particular, we have established a tiered management structure
at Wuhan Dazhong Hospital to modernize management at both the institutional level and
specialty level.
As its dedicated efforts to improve the service quality and customer satisfaction, Wuhan
Dazhong Hospital has implemented various measures: (i) a tiered tutoring system, which forms
a one-to-one twinning mentorship among dentists at senior, mid-level and junior levels, thereby
improving the overall clinical service capacity of dentists practicing at Wuhan Dazhong
Hospital; (ii) professional training sessions, which enrich the professional knowledge and
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elevate the clinical skills of dentists through training and examinations; (iii) frequent
assessments and internal reviews, where both the management and dentists identify strengths
and areas for improvement, develop proper solutions to enhance service capacity and solidify
their basic skills; (iv) experience sharing, through which young dentists gain knowledge and
experience from senior experts through complex case analysis, joint consultations, face-to-face
discussions and chairside real-time guidance; and (v) academic study, where dentists collect
and review cases, write essays and communicate with senior dentists, to accumulate clinical
experience and theoretical knowledge.
Nanhu Dadao Out-patient Department
Overview and Highlights
We established Nanhu Dadao Out-patient Department, a for-profit dental out-patient
department in Wuhan, Hubei province in 2017. Nanhu Dadao Out-patient Department is a
Medical Insurance Designated Medical Institution. During the Track Record Period, Nanhu
Dadao Out-patient Department demonstrated vibrant growth with an accumulated reputation
among customers. With years of operations, Nanhu Dadao Out-patient Department has amassed
a significant customer base.
The following table sets forth the revenue, gross profit and gross profit margin of Nanhu
Dadao Out-patient Department for the years indicated:
Y ear ended December 31,
2022 2023 2024
Revenue (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,120 9,135 8,561
Gross profit (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,630 4,970 4,555
Gross profit margin (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111850.8 54.4 53.2
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Dental Service Capacity and Offering
Nanhu Dadao Out-patient Department provides comprehensive dental services, serving
customers with diverse needs in oral health. Implantology services and orthodontics services
have been positioned as its key specialties. With a GFA of 360 sq.m., the out-patient
department had nine dental chairs, four dentists and seven other medical professionals as of
December 31, 2024. Nanhu Dadao Out-patient Department has a group of outstanding dentists
with extensive knowledge and experience in dental services.
Nanhu Dadao Out-patient Department is equipped with modern diagnosis and treatment
equipment, such as dental cone beam computed tomography machines and intraoral impression
scanners. Supported by advanced equipment and advanced dental technologies, customers
receive precise dental examinations and appropriate treatments at Nanhu Dadao Out-patient
Department.
Our Effective Management and Operation
We have strived to modernize our operations and promote the orderly flow and optimal
allocation of medical resources in dental institutions, through which we improve cost-
efficiency while enhancing profitability across our dental service network. Nanhu Dadao
Out-patient Department seeks to enhance its service quality and customer experience through
periodic internal review and discussions among medical professionals and supporting staff,
striving to from time to time optimize business procedures, streamline organizational structure
and update the internal assessment standards. We address the weakness identified from internal
review and customers’ feedback to pursue higher cost-efficiency in such out-patient
department. Benefiting from our well-established operation model and improved service
experience, Nanhu Dadao Out-patient Department had built a stable customer base. The
number of customer visits to Nanhu Dadao Out-patient Department increased throughout the
Track Record Period. For the years ended December 31, 2022, 2023 and 2024, Nanhu Dadao
Out-patient Department recorded 12,886, 14,270 and 14,960 customer visits, respectively.
Zaoyang Hospital
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Overview and Highlights
Zaoyang Hospital is a Class II for-profit dental hospital in Zaoyang, Hubei province. As
a Medical Insurance Designated Medical Institution, Zaoyang Hospital offers comprehensive
dental services and utilizes advanced dental equipment. In 2019, we acquired Zaoyang Hospital
to explore our business opportunities in regions outside Wuhan. Our acquisition of Zaoyang
Hospital and the following integration initiatives expanded the geographic coverage of our
dental service network, enabling more customers to benefit from our preeminent dental
services. Customer visits to Zaoyang Hospital increased from 16,695 in 2022 to 20,233 in 2023
and further to 21,348 in 2024, primarily due to the continuous increase in customer visits of
orthodontics services as a result of improved service quality with the expansion of dental
expert team.
The following table sets forth the revenue, gross profit and gross profit margin of
Zaoyang Hospital for the years indicated:
Y ear ended December 31,
2022 2023 2024
Revenue (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,405 8,747 8,505
Gross profit (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,999 4,001 3,960
Gross profit margin (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111840.5 45.7 46.6
For the years ended December 31, 2022, 2023 and 2024, our revenue derived from
Zaoyang Hospital amounted to RMB7.4 million, RMB8.7 million and RMB8.5 million,
representing 1.8%, 2.0% and 2.1%, respectively, of our total revenue for the same years.
During the same years, the gross profit of Zaoyang Hospital amounted to RMB3.0 million,
RMB4.0 million and RMB4.0 million, respectively.
Service Capacity and Offerings
Zaoyang Hospital provides comprehensive dental services and regards implantology
services and orthodontics services as its key specialties. With a GFA of 1,382 sq.m., such
hospital had 20 dental chairs, 6 dentists and 10 other medical professionals as of December 31,
2024. Zaoyang Hospital has attracted a number of experienced dentists with extensive
theoretical knowledge and clinical skills in dental services. Zaoyang Hospital has been
equipped with a full suite of advanced dental cone beam computed tomography machines and
piezosurgery.
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Our Effective Integration Efforts
Since our acquisition in 2019, we have empowered the operations of Zaoyang Hospital.
In particular, we improved both service capacity and service quality of Zaoyang Hospital by
arranging training sessions for dentists and introducing dental experts to practicing at this
hospital. We also standardized the operations of Zaoyang Hospital, enabling the hospital to
benefit from our centralized management and direct chain operations. We extend our
“three-level and four-tier” quality management system to cover Zaoyang Hospital, optimizing
its service quality through tiered quality management. We also utilize our brand influence and
introduce diverse promotion methods to empower Zaoyang Hospital’s customer acquisition. As
a testament to our effective integration efforts, Zaoyang Hospital recorded prominent growth
since our acquisition. The gross profit margin of Zaoyang Hospital increased from 40.5% in
2022 to 45.7% in 2023 and further to 46.6% in 2024.
Key Operational Performance of Our Dental Service Network
The following table sets forth key operational performance indicators of our dental
service network for the years indicated:
Y ear ended December 31,
2022 2023 2024
Customer visits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118708,651 768,809 748,632
Number of dental chairs as of the end
of the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118645 701 702
– Dental hospitals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111889 89 87
– Dental out-patient departments /H1118/H1118/H1118/H1118505 560 561
– Dental clinics /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851 52 54
Number of customer visits per dental
chair /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,099 1,097 1,066
Average spending per dental chair
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118635 630 580
– Dental hospitals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118720 752 714
– Dental out-patient departments /H1118/H1118/H1118/H1118642 623 573
– Dental clinics /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118412 496 434
Average utilization rate of dental
chair (1) (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111850.9 50.8 49.4
Number of dentists as of the end
of the year (2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118287 294 280
Number of customer visits per
dentist /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,495 2,647 2,608
Average spending per dentist
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,442 1,521 1,418
Average utilization rate of dentists (3)
(%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111881.5 86.5 85.2
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Notes:
(1) Representing the actual number of customer visits per dental chair during the relevant year as a percentage of
the maximum visit capacity per dental chair of our dental institutions in the same year. The maximum visit
capacity per dental chair represents the theoretical maximum number of customer visits of each dental chair
during the relevant year, which is calculated based on (i) estimated 60 minutes per visit; (ii) the maximum
number of servicing hours of dental chairs being approximately 6 hours per clinic day, taking into account the
preparation time for each customer visit; and (iii) the average number of days in operations. Accordingly, each
dental chair can theoretically accommodate up to 6 customer visits on each day in operations.
(2) Including (i) dentists employed by us, representing the dentists entered into labor contracts ( ௶ਗΥΝ) with
us and work full-time in our dental institutions; and (ii) dentists in collaboration with us, representing the
dentists entered into service contracts ( ௶ਕΥΝ) with us, typically including multi-site practice dentists who
work part-time in our dental institutions and rehired dentists after their retirement who work full-time or
part-time in our dental institutions.
(3) Representing the actual number of customer visits per dentist during the relevant year as a percentage of the
maximum service capacity of our dentists in the same year. The maximum service capacity of our dentists
represents the theoretical maximum number of customer visits of each dentist can serve during the relevant
year, which is calculated based on: (i) estimated 45 minutes per visit; (ii) the maximum number of servicing
hours of dentists being approximately 7.5 hours per clinic day; and (iii) 300 working days on average per year.
Accordingly, each dentist can theoretically accommodate up to 10 customer visits on each working day.
According to Frost & Sullivan, such calculation method is generally in line with the industry norm, based on
expert interviews and research on the prospectus and annual reports of major dental services providers to
confirm that the same calculation method for such rate (i.e. formula and the assumption used therein, including
the industry average (a) time spent by dentists for a single customer visit, (b) dentists’ servicing hours per day
and (c) dentists’ working days per year) is adopted by major industry peers. The industry average utilization
rate of dentists in the private dental services industry in China was approximately 60%, 65% and 65% in 2022,
2023 and 2024, respectively, according to the same source.
Our top 20 dental institutions in terms of revenue contributed the majority of our revenue.
For the years ended December 31, 2022, 2023 and 2024, revenue from these dental institutions
represented 52.4%, 50.0% and 47.2%, respectively, of our total revenue for the same years.
OUR UNIFIED MANAGEMENT OF DIRECT CHAIN
Over years of operations, we have upheld the operation philosophy of “rooted in medical and
driven by technology, standardized management and healthy development ( ᔼᐕ͉๕eҦஔᚨਗe
࢝To this end, we coordinate medical resources across our entire dental service
network to implement stringent quality control covering the whole working process of all staff. We
strive to refine our direct chain operations and deliver reliable dental services to customers with
cost-effective corporate management.
Direct Chain Model
We adopt a direct chain model with unified operation philosophy, operational
management, service standards and brand image across our dental service network. This
uniformity helps us maintain consistent service quality, which is crucial for building and
sustaining customer trust and loyalty. The direct chain operations under our centralized
management propel the orderly flow and optimal allocation of medical resources among our
headquarters and dental institutions, which enables us to timely accommodate variations in
market demands while fostering synergies among our dental institutions. We integrate medical
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resources and streamline the resource allocation process to improve operational efficiency and
promote cost-effectiveness. Under the direct chain model, we are able to replicate our
successful standardized operations to newly established or acquired dental institutions. As
such, we have effectively expanded our presence to different regions in Central China and
largely broadened our customer base. We also benefit from the increasing economies of scale
brought by such model during procurement and customer acquisition, which drives our
profitability. Meanwhile, our brand recognition has been intensified as the direct chain model
creates a consistent brand image across all of our dental institutions, where customers trust us,
our medical professionals and services.
We choose to develop our dental service network under the direct chain model based on
our keen observations of the industry. According to Frost & Sullivan, compared with other
business models, such as licensing, franchising and financial investment, the direct chain
model generally has the following advantages: (i) direct control over daily operations to ensure
the adherence to unified standards; (ii) comprehensive management on clinical practices and
customer services to achieve whole-process quality control; (iii) better protection of brand
image and reputation to avoid negative publicity caused by poor performance; (iv) stronger
motivation to upgrade the services and adapt to the latest industry trend as a result of deeper
sense of belonging; and (v) direct benefits from the operations without heavy reliance on the
capability and integrity of the franchisees or licensees.
Centralized Management with Tiered Responsibility
We adopt centralized management in a tiered structure within our dental service network.
Operating Center Marketing Center Medical Center Financial Center Administrative Center
Zhuankou
Division
Xiangyang
Division
Jingzhou
Division
Zhongxiang
Division
Hunan
Division
Optics Valley
Division
Nanhu
Division
Wuchang
Division
Xudong
Division
Hankou
Division
Houhu
Division
Market
Department
Our
management
Our Headquarters
Medical Quality
Management
Committee
Technical
Committee
Publicity
Committee
Information Security
Committee
Pricing
Committee
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At our headquarters level, we have established Medical Quality Management Committee
(ึ), Technical Committee (ึ), Pricing Committee (ึ),
Information Security Committee (ึ) and Publicity Committee (ึ).
Meanwhile, we have established five centers at the headquarters level, namely Operating
Center ( ༶ᐄʕː), Medical Center ( ᔼᐕʕː), Marketing Center ( ᐄቖʕː), Financial Center
(ৌਕʕː) and Administrative Center (ʕː). These centers closely scrutinize and
coordinate their subordinate functional departments by organizing regular meetings and
optimizing the internal management measures, guidelines, procedures and work plans based on
insights into the industry and regulatory environment. The functional departments under such
centers take multiple responsibilities, including, among others, formulating operation
schedules and standardizing workflows, formulating budgets, as well as organizing trainings
and daily internal quality review.
Our headquarters-level departments oversee our dental institutions through a vertically
integrated management structure, working in close coordination under our robust internal
management measures. This structure encompasses key functions including quality control,
operational management, marketing, customer relationship, financial management,
procurement, human resources and compliance. Tiered deployment of centers and departments
helps us effectively monitor the implementation of internal policies and measures, while
minimizing inefficiencies caused by information gaps or unconscionable resource allocation.
Benefiting from the vertical management approach, we clearly set the responsibilities of each
tier and control risks arising from both clinical operations and corporate management, forming
a closed-loop management covering the “Plan, Do, Check and Act” process of operations.
Systematic Talent Retainment and Incentivization
Partnership Program
We place significant importance on our dentist resources, recognizing them as the
essential cornerstone for the long-term success of our dental service network. Upholding the
principle of “direct chain and direct partnerships (ટΥྫ),” we have adopted a
Partnership Program designed for attracting seasoned medical professionals, as well as
administrative and marketing talents to join and grow with us. Through such program, we
mainly attract and invite seasoned dentists to become minority shareholders of our new dental
institutions, fostering shared benefits and mutual trust. We typically invite dentists who meet
the following requirements to participate in our Partnership Program: (i) mid-end level ( ʕॴ
ᔖ၈) (attending dentists) or above, or obtained the physician qualification certificates for over
five years; (ii) highly-skilled in dental services with technical strengths in particular specialties
or experience in marketing and management; and (iii) aged between 35 to 55. Additionally, we
typically invite administrative and marketing talents who are recommended by dentists and
have experience in corporate management and promotional activities. Being the minority
shareholders of the dental institutions, these talents not only explore their operational and
managerial potential but also align their interests with ours, sharing our values and vision. With
loyalty and strong commitment to our growth, these talents actively participate in the daily
operation and management, and recommend the candidate of directors, supervisors and general
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managers of the relevant dental institutions. Our remuneration for dentists that became
minority shareholders of our dental institutions comprise (i) base salaries, (ii) performance-
based bonuses, and (iii) dividend distributions as their equity return for being shareholders of
our dental institutions, which are proportional to their shareholding in the relevant dental
institutions. Compared with other dentists practicing at those dental institutions that receive
base salaries and performance-based bonuses, such shareholder dentists are also stimulated by
the dividend distributions, which were distributed to them from the distributable profits of the
relevant dental institutions in the previous year, in strict compliance with applicable regulatory
requirements and our dividend policy. Since the commencement of Partnership Program in
2017 and up to the Latest Practicable Date, our relevant dental institutions maintained a
relatively stable dividend payout pattern. As of December 31, 2022, 2023 and 2024, 24, 32 and
37 dentists were minority shareholders of our dental institutions under the Partnership
Program, respectively. For the years ended December 31, 2022, 2023 and 2024, the dividend
distributions paid to dentists that were minority shareholders of our dental institutions
amounted to RMB2.6 million, RMB5.2 million and RMB9.5 million, respectively. According
to Frost & Sullivan, during the Track Record Period, the level of our base salaries and
performance-based bonuses for our dentists that were minority shareholders of our dental
institutions, was comparable to that paid by other private dental services providers in Hubei
and Hunan provinces for dentists with similar practicing experience and qualifications.
During the Track Record Period and up to the Latest Practicable Date, save as disclosed
above, we did not have any financial assistance, loan and other salary arrangement with the
dentists that were minority shareholders of our dental institutions. We expect no material
change in our remuneration policy for dentists for the year ending December 31, 2025.
Since its commencement in 2017, our Partnership Program has demonstrated strong
vitality, contributing to the steady growth of our dental institutions and fueling the expansion
and profitability of our dental service network.
Employee Stock Ownership Platforms
To incentivize our management and employees and foster their long-term engagement, we
initiated three employee stock ownership platforms successively, through which key
employees, especially seasoned dentists, became our indirect shareholders and benefited from
our business growth. In particular, we established Wuhan Xinglin in October 2014, and Wuhan
Taolin and Wuhan Zhulin in July 2017, offering our management and employees with
opportunities to acquire a proprietary interest in our Company. See “History, Development and
Corporate Structure — Our Major Corporate Development.”
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Digitalized and Modernized Service Network
We have developed and equipped diverse information technology systems to digitalize
and modernize our dental service network. See “— Information Technology Systems” for
details of our deployment of information technology systems.
Information technology systems not only streamline our daily operations but also
visualize our business performance to support our management’s data-based decisions.
Leveraging HIS, our proprietary online system integrated our supply chain system, marketing
middle platform and SCRM system, we have significantly reduced certain processing time for
our medical professionals by digitalizing medical records, standardizing customer management
and synchronizing information within our dental institutions, allowing them to focus more on
dental practices. We have fully deployed information technology systems, covering multiple
aspects of corporate management, such as operational performance analysis, marketing and
customer acquisition, customer relationship management, supply chain and finance. Through
this initiative, our staff can efficiently access operational and financial information and use
quantitative indicators to gain better insights into business operations, promoting precise
management and optimal resource allocation for dental practices.
We are committed to further digitalizing our management and optimizing medical
resource allocation based on upgraded information technology systems, to improve our service
quality and operational efficiency on a continuing basis. Please see “Future Plans and Use of
Proceeds.”
MEDICAL PROFESSIONALS
Medical professionals practicing at our dental service network generally comprise
dentists and other medical professionals. Our dental service network integrates abundant
high-caliber medical professionals with stable relationships with us, which are vital to our
service capacity and quality.
There were 280 dentists in total practicing at our dental service network as of
December 31, 2024, comprising (i) 245 dentists employed by us, representing the dentists
entered into labor contracts ( ௶ਗΥΝ) with us and work full-time in our dental institutions;
and (ii) 35 dentists in collaboration with us, representing the dentists entered into service
contracts ( ௶ਕΥΝ) with us, typically including multi-site practice dentists who work
part-time in our dental institutions and rehired dentists after their retirement who work
full-time or part-time in our dental institutions. We generally do not set limitations on ages to
dentists practicing at our dental service network, which complies with the applicable PRC laws
and regulations. Multi-site practice dentists are entitled to provide consultation and diagnosis
services in our dental service network after completing their multi-site practice registration. All
multi-site practice dentists are registered qualified dentists and have obtained requisite
approvals and registration for multi-site practice. The service time and frequency of multi-site
practice dentists are generally determined based on the negotiation between such dentists and
the relevant dental institutions they practice in.
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Salient terms of labor contracts we entered into with dentists employed by us are as
follows:
 Duration : Typically three years and renewable upon parties’ mutual consent.
 Dentists’ service arrangement : Dentists are contractually obligated to practice
exclusively at our dental institutions in the designated city, unless they obtain prior
written consent from us for part-time engagements elsewhere.
 Remuneration : The compensation packages of such dentists typically consist of a
fixed base salary and performance-based bonus. We pay compensation and social
insurance and housing provident fund contributions for such dentists on a monthly
basis.
 Termination : Both parties can terminate the contracts in certain circumstances. In
particular, such contracts can be terminated by us under specific circumstances,
including (i) failure by dentists to provide necessary on-boarding information within
30 days; (ii) submission of false personal information during the job application
process; (iii) severe violations of internal policies by dentists; and (iv) mutual
agreement. Additionally, the contract may be terminated by dentists under
circumstances including: (i) provision of a 30-day prior notice, or a three-day prior
notice during the probation period; and (ii) insufficient remuneration payment by us.
Salient terms of service contracts we entered into with dentists in collaboration with us
are as follows:
Multi-site practice dentists Rehired dentists
 Duration:  generally at least one year  typically five years,
renewable annually
 Dentists’ service
arrangement:
 part-time  full-time or part-time
 such dentists provide dental services to our customers in the
designated city on fixed days each week as stated in their
service contracts with us
 Remuneration:  typically a performance-
based remuneration, with a
minimum remuneration for
each day practicing at our
dental service network
 typically a fixed base salary
and performance-based
bonus
 we pay such dentists compensation packages on a monthly
basis. We are not required to make social insurance and
housing provident fund contributions for such dentists
 Termination:  service contracts shall be modified or terminated by mutual
consent if material changes render performance unfeasible
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There were 469 other medical professionals practicing at our dental service network as of
December 31, 2024, typically including 468 full-time nurses, radiographers and dental
assistants, as well as 1 part-time dental assistant. Dental assistants practicing at our dental
service network primarily comprise medical graduates who work at our dental service network
as assistants to the dentists. The assistants need to work for at least one year and successfully
obtain the physician qualification certificates (ࣣor assistant physician
qualification certificates (ࣣbefore taking up the role of qualified dentists or
qualified assistant dentists ( ੂุпଣ˫ᔼ).
Qualification of Medical Professionals
Under the evaluation system of professional ranks of medical professionals ( ሊ͛ਖ਼ุҦ
ᔖ၈൙ᄆ᜗ӻ) in China, professional ranks for dentists include: (i) junior level
qualification (ॴᔖ၈) for (a) those obtained assistant physician qualification certificates, as
feldshers ( ᔼɻ); and (b) those obtained physician qualification certificates, as physicians ( ᔼ
ࢪii) mid-end level qualification ( ʕॴᔖ၈) for attending dentists who passed the national
examination; and (iii) senior level qualification ( ৷ॴᔖ၈) for (a) associate-chief dentists; and
(b) chief dentists. As of December 31, 2024, among all dentists practicing at our dental service
network, there were 11 chief dentists, 19 associate-chief dentists and 132 attending dentists,
together representing over 57% of the total number of dentists.
To dynamically manage and allocate dentists in our dental institutions, we regularly
review the qualifications and profiles of dentists to arrange appropriate practice training and
remind eligible dentists to timely apply for their next professional ranks. As of December 31,
2024, each of the dentists practicing at our dental service network had obtained the physician
qualification certificate. As of the same date, each of the other medical professionals practicing
at our dental service network had obtained requisite qualification certificate for his or her
respective medical practice. We monitor the qualification registration and licensing records of
medical professionals to ensure that all medical professionals practicing at our dental service
network comply with all applicable PRC laws and regulations, in particular, the practice of
each medical professional is within the scope of his or her qualification and license. We
generally do not maintain medical liability insurance for dentists practicing at our dental
institutions, considering (i) there is no statutory requirement for our dental institutions to
maintain such insurance coverage; and (ii) it is not a common industry practice for private
dental services providers in China to maintain such insurance, according to Frost & Sullivan.
See “Risk Factors — Risks Relating to Our Business and Industry — We may not carry
adequate insurance for dentists to address the exposures to medical liabilities that may arise in
our business. Any claims beyond our insurance coverage may result in our incurring substantial
costs and a diversion of resources.”
Prestigious Dentists with Industry Recognition
Our dental service network embraces numerous venerable dentists with honorary titles.
Among dentists practicing at our dental service network as of December 31, 2024, over 32%
of dentists were the members of industry associations at the municipal level or above. In
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addition, as of the same date, seven dentists practicing at our dental service network were
accredited as “Reliable Dentist Trusted by the Public (λ˫ᔼ),” a municipal
level award for outstanding dentists that have well-recognized reputation in the dental services
industry in Wuhan.
Recruitment, Management and Cultivation of Medical Professionals
Modern management, systematic training, on-the-job tutoring, competitive employee
benefits as well as rewarding Partnership Program and employee stock ownership platforms
make us remain attractive to talents, especially medical professionals. We attract medical
professionals to join and work with us through multiple channels. To be specific, we recruit
young talent through campus recruitment each year. We hold spring and autumn campus
recruitment talks at selected universities or colleges in Hubei province to attract outstanding
graduates mainly majoring in stomatology, nursing and accounting. We have been accredited
as a “Practicing and Training Base for University Students in Wuhan (ဏ̹ɽኪ͛ྼ୦ྼ৅
ਿή)” by Wuhan Municipal Bureau of Human Resources and Social Security (ဏ̹ɛɢ༟
ღ҅). To increase our visibility to experienced dentists, we periodically participate
in academic seminars, conferences and symposia in the industry. We also engage medical
professionals through online social recruitment channels and referrals. When evaluating and
recruiting a new medical professional, we typically assess, among others, their academic
background, professional qualifications, clinical experience, communication skills, technical
skills and relevant experience.
To enhance risk control of our dental treatments and realize differentiated management of
medical professionals, we classify (i) our dental treatments into Level I, Level II, Level III and
Level IV mainly based on the complexity of techniques and resources involved; and (ii)
dentists practicing at our dental service network into four grades mainly based on their years
of practice, professional ranks, experience in specialized training and proficiency in dental
technologies of their respective specialties. We clearly define the particular type and level of
dental treatments that each grade of dentists can proceed, with the aim to offer customers
reliable and safe dental services, control service quality and minimize risks arising from
dentists’ non-proficiency or inexperience. This classification system creates clear trajectories
of career development for dentists and incentivizes them to achieve better performance.
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We encourage experience sharing among medical professionals and regularly deliver
organized training sessions to support their professional growth. Our well-designed training
system for medical professionals typically consists of a matrix of pre-job training, basic theory,
knowledge and skill training, advanced training, specialty training, on-the-job training and
academic activities, cultivating a pipeline of medical professionals to elevate our service
quality. As of December 31, 2024, 59 dentists passed the professional rank examinations after
participating in our training sessions. We also from time to time provide external
communication and development opportunities for medical professionals, such as advanced
studies, specialized training and international academic conferences.
Compensation and Rewards for Medical Professionals
Dentists employed by us get compensated pursuant to their respective labor contracts with
us and typically receive base salaries and performance-based bonuses on a monthly basis,
while those dentists in collaboration with us get compensated pursuant to their respective
service contracts with us and typically receive service fees on a monthly basis.
Deploying rewarding Partnership Program and employee stock ownership platforms helps
us enhance the working efficiency and sense of belonging of dentists practicing at our dental
service network. See “— Our Unified Management of Direct Chain — Systematic Talent
Retainment and Incentivization” for details of our Partnership Program and employee stock
ownership platforms.
Our Technical Committees
Well-established technical committees contribute to our trustworthy services and
excellent track record in the dental services industry. We cherish the expertise and experience
of seasoned dentists amassed in our dental service network and have established a Technical
Committee responsible for the overall planning, guidance and monitoring of our technological
advancement and business development. Our Technical Committee comprises three
subcommittees.
 Expert Committee (
ึ). As the consulting and advisory body of our
Technical Committee, our Expert Committee consists of senior experts with
remarkable contributions in the field of dentistry and/or rich experience in clinical
practices. These experts join our Expert Committee after their retirement. They
advise on our technological advancement and conduct training sessions. They also
from time to time visit our dental institutions, conduct joint consultations and offer
technical guidance on the treatment of miscellaneous oral diseases or complex
dental procedures;
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 Technical Administrator Committee (ึ). As the executing arm of our
Technical Committee, our Technical Administrator Committee consists of dentists
practicing at our dental service network with technical strengths and sufficient
experience. These dentists collaborate and innovate leveraging their experience
accumulated from daily diagnosis and treatment and promote the application of new
technologies within our dental service network. They also provide trainings and
participate in joint consultation on various oral diseases or complex dental
procedures; and
 Professional Committee (
ึ). As the specialized body of our Technical
Committee, responsible for the development of different dental specialties. It
consists of six subcommittees: implantology committee, prosthodontics committee,
orthodontics committee, oral medicine committee, oral surgery committee and
dental nursing committee. Our Professional Committee drives the cultivation of
advantageous specialties and the comprehensive development of our
multidisciplinary dental service capacity.
Among medical professionals in our Technical Committee as of the Latest Practicable
Date, approximately 92.0% of them work full-time in our dental institutions, while the
remaining medical professionals work with us on a part-time basis, including both multi-site
practice dentists and rehired dentists after their retirement. Seasoned medical professionals
closely coordinate with each other in these committees during our daily operations, thereby
improving our service quality, activating the experience sharing among dental institutions in
our dental service network, and reinforcing our leading position in the industry.
Composition of Our Experienced and Stable Dentist Team
High-caliber dentist resources lay the solid foundation for the development of our dental
service network and entrench our competitiveness. Among all dentists practicing at our dental
service network as of December 31, 2024, over 13% of dentists had over ten years of industry
experience as of the same date. As of December 31, 2024, dentists with qualifications at
mid-end or above level accounted for over 57% of the total number of dentists practicing at our
dental service network, which surpassed the industry average level, according to Frost &
Sullivan.
We spent dedicated efforts in attracting, retaining and managing dentists. Capitalizing on
our diversified compensation and rewards, we maintain a stable and broad dentist team. For the
years ended December 31, 2022, 2023 and 2024, the retention rate of dentists practicing at our
dental service network for over three years was approximately 87%, 89% and 90%,
respectively. Such retention rate is calculated based on the number of dentists practicing at our
dental service network for over three years since the beginning of the relevant year and up to
the end of the same year, divided by the number of dentists practicing at our dental service
network for over three years at the beginning of the same year. As of December 31, 2022, 2023
and 2024, we had 168, 203 and 183 dentists that had practiced at our dental service network
for three years or above, respectively, representing 59%, 69% and 65% of the total number of
dentists for the same years. Among these dentists, over 87% were full-time dentists employed
by us and over 48% were dentists with mid-end or senior level qualifications.
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The following table sets forth the movement in the number of dentists practicing at our
dental service network during the Track Record Period and up to the Latest Practicable Date:
Y ear ended December 31,
As of the
Latest
Practicable
Date2022 2023 2024
Number of dentists at the beginning
of the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118281 287 294 280
Number of dentists newly joined
our dental service network during
the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111840 64 43 11
Number of dentists terminated practicing
at our dental service network during
the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(34) (57) (57) (42)
Number of dentists at the end of
the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118287 294 280 249
We were not subject to reliance on any particular dentist during the Track Record Period.
Revenue contributed by our top 10 dentists in each year during the Track Record Period in
terms of revenue contribution as a percentage of our total revenue ranged from approximately
13% to approximately 15%, while the revenue contributed by our top one dentist in terms of
revenue contribution as a percentage of our total revenue was approximately 2.0%. All of such
top dentists in terms of revenue contribution have extensive expertise and rich clinical
experience in dental services.
OUR FUTURE EXPANSION
Going forward, we plan to expand our dental service network by (i) upgrading existing
dental institutions; (ii) establishing new dental institutions; and (iii) acquiring for-profit dental
institutions.
Organic Growth
Upgrading the Existing Dental institutions
Our proven track record and highly scalable business model enable us to serve a broad
customer base. In line with our business growth, we plan to upgrade the facilities and dental
equipment at our dental institutions and renovate our dental institutions progressively. Through
upgrading our existing dental institutions, we aim to enhance the service capacity while
improving customers’ satisfaction during their visits to our dental institutions. In the following
three years, we expect to upgrade and renovate our dental institutions in Wuhan, and procure
new dental equipment to replace the dental equipment that have been used for years. We plan
to finance these upgrades primarily by the proceeds from the Global Offering, and, if necessary
or desirable, with our internal financial resources and/or bank borrowings.
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New Establishment
To further broaden our dental service network and elevate our service capacity, we expect
to establish new dental institutions. We have extensive experience in establishing new dental
institutions. We tend to attract and invite seasoned dentists to become minority shareholders of
our new dental institutions to align their interests with us. We will prudently implement the
establishment plan, leveraging our managerial and operational experiences while avoiding
significant up-front capital investment. In particular, we plan to establish approximately 80 to
100 new dental institutions in Central China in the next five years. Each of the new dental
institutions is expected to occupy approximately 300 sq.m. to 500 sq.m. with approximately 6
to 20 dental chairs. Establishing a new dental institution generally involves several steps,
including selecting and determining the major responsible individuals or partners, completing
the internal approval process, entering into agreement, choosing a site, designing and
decorating the premises, recruiting necessary personnel, acquiring equipment and supplies to
the extent necessary, securing regulatory approvals, marketing and promotion to establish
awareness, and commencing operations. According to our past experience, such process
generally takes approximately three to four months at the soonest.
A new dental institution reaches monthly breakeven when it begins to record monthly net
profit. The payback period for a new dental institution represents the time that it takes for the
accumulated operating cash flow attributable to our Company from the relevant dental
institution to cover the initial investment. During the Track Record Period, all dental
institutions established by us were out-patient departments. The following table sets forth the
average and range of breakeven period and investment payback period for out-patient
departments established by us during the Track Record Period and reached monthly breakeven
or covered the initial investment as of the Latest Practicable Date.
Breakeven period
Investment payback
period (1)
Average
period
Range of
period
Average
period
Range of
period
(Months)
Dental out-patient departments /H1118/H1118/H1118/H11185 1 to 8 15 5 to 25
Note:
(1) Representing the time period for the accumulated operating cash flow attributable to our Company from
the newly established dental institutions to cover our investment.
As of the Latest Practicable Date, we had 65 dental institutions established by us, among
which 55 dental institutions had already reached monthly breakeven and the operating cash
flow attributable to our Company from 46 dental institutions covered our initial investment.
Based on our previous operating experience, we estimate that the monthly breakeven period for
our new dental institutions, which typically occupy approximately 300 sq.m. to 500 sq.m. with
approximately 6 to 20 dental chairs, to be 5 to 7 months, benefiting from our rich experience
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and prudent up-front capital investment. We estimate that the investment payback period for
our new dental institutions to be approximately 15 months to 24 months from commencement
of operations. However, the monthly breakeven periods and the investment payback periods
may be further affected by the specific characteristics of a dental institution, such as its service
capacity, initial investment, the coverage of its service offerings, competitive landscape and
variation in the local economy and municipal road planning.
We plan to finance the above intended investment in establishment primarily by the
proceeds from the Global Offering, and, if necessary or desirable, with our internal financial
resources and/or bank borrowings.
See “Risk Factors — Risks Relating to Our Business and Industry — Establishing new
dental institutions involves multiple risks and could cause fluctuations in our short-term
financial performance. Dental institutions newly commenced operations may not achieve
normal operation as anticipated, which could materially and adversely affect our business and
results of operations.”
Strategic Acquisition
During the Track Record Period, we have conducted strategic acquisitions of dental
hospitals, dental out-patient departments and dental clinics, through which we accumulated
experiences. As part of our future expansion plan, we will continue to pursue acquisition
opportunities of offline dental institutions and target profit-making dental institutions or those
with growth potential.
We have standardized our acquisition procedure, which enables us to integrate the newly
acquired dental institutions into our dental service network with streamlined steps and
improved efficiency. Acquiring a dental institution generally involves a number of steps,
including target evaluation and selection, negotiation on the acquisition, due diligence,
acquisition planning and scheduling, internal approval process, entering into acquisition
agreement, change of industrial and commercial registration, setting operational plans and
targets, recruitment of necessary personnel and determining the salaries, preparation for
operations, and commencement of operations. To maintain a unified brand image, we typically
re-brand the acquired dental institutions to align with our existing standards and decoration.
Before making the acquisition decision, we systematically review and screen potential
acquisition targets. We believe our previous operating experience will aid us in identifying
suitable acquisition opportunities and successfully integrating newly acquired dental
institutions into our existing dental service network. We mainly focus on the targets with
reasonable operational scale and a stable team of dentists, which we believe will enable us to
rapidly replicate our success. To stay well informed on potential suitable targets, our
management keeps in close touch with market participants and reviews due diligence report of
the potential targets. We evaluate a potential acquisition target thoroughly, typically based on
the following criteria.
 location, traffic convenience, rental level, population density, local economic
environment and consumption level;
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 geographic distribution of local communities and dental institutions, and brand
awareness among local residents;
 service capacity, such as number of dentists and other medical professionals, number
of dental chairs in operation, GFA, existing medical facilities and equipment, scope
of dental service offerings;
 historical monthly revenue, profit margin and other financial performance metrics;
 required licenses and permits for operations, existing qualifications and historical
regulatory compliance;
 professional reputation, taking into consideration the background and scale of the
professional team;
 estimated initial investment amount required to conduct decoration, brand-building
and infrastructure improvement;
 ongoing operating expenses and capital requirements, as well as potential returns
and estimated future value; and
 compatibility with our corporate culture and dental service network.
We seek and assess the potential acquisition targets with a market-oriented vision and a
strategic geographic focus on Central China when appropriate opportunities arise. The actual
number of acquisition targets will depend on the then market condition, negotiation results and
scale and consideration of the actual acquisition. We plan to acquire approximately 40 to 65
dental institutions in the next five years, through acquiring the majority equity interests of the
acquisition targets.
We plan to finance the above intended acquisitions by the proceeds from the Global
Offering, and, if necessary or desirable, with our internal resources and/or bank borrowings. As
of the Latest Practicable Date, we had not entered into any letter of intent or agreement with
respect to future acquisitions and had not identified any definite acquisition targets that meet
our criteria.
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During the Track Record Period, all dental institutions acquired by us were out-patient
departments. The following table sets forth the breakeven period and average and range of
investment payback period for dental out-patient departments acquired by us during the Track
Record Period and covered the initial investment as of the Latest Practicable Date.
Breakeven period
Investment payback period (1)
Average period Range of period
(Months)
Dental out-patient
departments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118N/A(2) 1 8 9t o2 3
Notes:
(1) Representing the time period for the accumulated operating cash flow attributable to our Company from the
acquired dental institutions to cover our investment. We evaluate the acquisition investment payback based on
the acquisition consideration, which is heavily influenced by acquisition terms derived from commercial
negotiations.
(2) During the Track Record Period, all dental institutions acquired by us were profit-making before being
acquired.
See “Risk Factors — Risks Relating to Our Business and Industry — We may not be able
to complete future acquisitions or enhance post-acquisition performance as expected, which
could adversely affect our business, financial condition and prospects.”
We may face uncertainties and challenges in implementing our expansion plans for
upgrading, establishing or acquiring dental institutions. In particular, we may fail to identify
suitable opportunities to further expand our dental service network, negotiate commercially
acceptable terms for such expansion, or successfully integrate businesses into our existing
dental service network. The execution of expansion plans is inevitably subject to the then
social and economic conditions and we may make reasonable adjustments accordingly for our
best interests. See “Risk Factors — Risks Relating to Our Business and Industry — We may
not be able to identify expansion opportunities or execute our expansion plans and our
expansion strategies are subject to uncertainties and risks. This may materially and adversely
affect our business, financial condition, results of operations and prospects.”
OUR CUSTOMERS
Our customers during the Track Record Period were individuals in the PRC who received
dental services at our dental institutions. Our comprehensive dental services cover a broad
range of customers in all age groups. Reliable treatment quality combined with satisfied
customer experience drives the continuous growth of customer loyalty and the expansion of our
customer base. For the years ended December 31, 2022, 2023 and 2024, we served 276,310,
296,859 and 283,640 customers in 708,651, 768,809 and 748,632 customer visits, respectively.
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Given the dispersed base of our customers, we do not have any customer concentration
risk. Our business and profitability are not materially dependent on any single individual
customer. None of our individual customers accounted for more than 0.1% of our total revenue
for each year during the Track Record Period.
All of our five largest customers in each year of the Track Record Period are Independent
Third Parties. To the best of the knowledge of our Directors, none of our Directors, their
respective associates or any shareholder who owns more than 5% of our issued share capital
had any interest in any of our five largest customers in each year of the Track Record Period.
Payment Methods
Customers are generally required to pay their medical bills before receiving our dental
services. Customers can choose to pay our dental institutions in online payments via third-party
payment platforms, such as WeChat or Alipay, cash, or bank cards (including debit cards and
credit cards). Besides, customers can choose to rely on public medical insurance programs to
pay for dental services provided by Medical Insurance Designated Medical Institutions which
are eligible for public medical insurance programs. We also have customers that purchase our
dental services upfront through popular third-party e-commerce platforms which subsequently
settle with us.
The following table sets forth a breakdown of our settlement amount by payment method
for the years indicated:
Y ear ended December 31,
2022 2023 2024
(RMB’000) (%) (RMB’000) (%) (RMB’000) (%)
Third-party payment
platforms /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118294,346 72.3 322,712 72.4 274,029 70.7
Public medical insurance
programs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832,575 8.0 39,536 8.9 40,161 10.4
Third-party e-commerce
platforms /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,302 6.2 31,191 7.0 38,203 9.9
Cash /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,924 6.1 27,085 6.1 21,893 5.6
Bank cards /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830,130 7.4 24,996 5.6 13,034 3.4
Total(1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118407,277 100.0 445,520 100.0 387,320 100.0
Note:
(1) The difference between total settlement amount and total revenue was primarily because revenue from
rendering of orthodontics and implantology services is recognized over time, using an input method to
measure progress towards complete satisfaction of the services. Considering the nature of dental
services, especially implantology and orthodontics services, revenue is progressively recognized over
the service delivery process. Consequently, service fees settled by customers within a given year may
not be fully recognized as revenue for the same year.
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Public Medical Insurance
In recent years, the government has adopted favorable policies to expand public medical
insurance coverage to promote the accessibility and affordability of dental services for the
general public, raising public awareness and encouraging customers to seek professional dental
care. We encourage our dental institutions to apply for the qualification of Medical Insurance
Designated Medical Institution. As of the Latest Practicable Date, 62 of our dental institutions
in operation were Medical Insurance Designated Medical Institutions and the remaining 30
dental institutions were eligible to apply for the qualification of Medical Insurance Designated
Medical Institutions. As of the Latest Practicable Date, we submitted the applications for the
qualification of Medical Insurance Designated Medical Institutions for 27 of them and
expected to obtain such qualification by the end of 2025. As of the Latest Practicable Date, the
remaining three dental institutions were preparing to submit the applications. Medical
Insurance Designated Medical Institutions are required to pass annual review regarding their
compliance to maintain such qualification under the applicable PRC laws and regulations.
During the Track Record Period and up to the Latest Practicable Date, our dental institutions
passed all the annual reviews for maintaining such qualification.
Some of the dental services provided by our Medical Insurance Designated Medical
Institutions are eligible to be paid by public medical insurance programs. The specific
percentage covered by different public medical insurance programs may vary based on criteria
including type of the insurance program, the age of the patient and the particular type of dental
treatment involved. For medical fees covered by the public medical insurance programs and
payable by the local medical insurance bureaus, our Medical Insurance Designated Medical
Institutions typically receive reimbursement of the portion deemed as eligible by the local
medical insurance bureaus in the following one to two months since the relevant dental services
are rendered. For the years ended December 31, 2022, 2023 and 2024, our settlement amount
under the public medical insurance programs amounted to RMB32.6 million, RMB39.5 million
and RMB40.2 million, representing 8.0%, 8.9% and 10.4% of the total settlement amount of
our dental services for the same years, respectively.
We believe the risks of potential competition among the Medical Insurance Designated
Medical Institutions and other dental institutions within our dental service network are
relatively low, considering that (i) all dental institutions, regardless of Medical Insurance
Designated Medical Institution or not, operate under our direct chain model and centralized
management on resource allocation and marketing activities; (ii) during establishing or
acquiring dental institutions, we evaluate the unmet local demands for dental care and
generally avoid deploying two dental institutions within their respective service radius; and
(iii) our settlement amount under the public medical insurance programs, representing
approximately 10% of our total settlement amount during the Track Record Period, was
relatively insignificant to our financial results as a whole.
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Being qualified as a Medical Insurance Designated Medical Institution generally
enhances customer traffic and reinforces revenue growth. For instance, five of our dental
institutions became Medical Insurance Designated Medical Institutions in 2024, with four of
them experienced notable increases in both customer visits and revenue compared to 2023.
Customer visits to these five dental institutions grew from 15,464 in 2023 to 25,207 in 2024.
Revenue from these five dental institutions as a percentage of our total revenue increased from
2.4% in 2023 to 3.8% in 2024.
Broad Customer Base with Intimate Customer Experience
We stay in proximity to customers. Over years of operation, we have built a broad
customer base and earned a trustworthy reputation. Our dedicated efforts in improving brand
influence, long-term relationships with seasoned medical professionals, well-rounded
treatment plans customized for customers’ individual oral conditions, advanced equipment and
facilities, as well as standardized service procedures all contribute to our highly satisfactory
dental services. To maintain and further expand our customer base, we are committed to
delivering superior customer experience across multiple scenarios.
 One-stop experience with convenient and comprehensive services. We believe that
a full suite of service offerings saves time for customers and streamlines the whole
dental health management process, helping us acquire new customers as well as
retain existing ones. Our standardized customer management system covers the
whole service procedure, ensuring that customers are treated coherently by
designated staff throughout the pre-consultation stage, treatment stage and post-
consultation stage. Additionally, we designate oral health management consultants
in our dental institutions, who keep interactive and responsive communication to
customers, mitigating information gaps between our customers and medical
professionals, and offering customers an intimate service experience. Our oral
health management consultants collaborate closely with our medical professionals in
dental institutions to deliver a full line-up of dental services, addressing oral health
needs in a one-stop manner.
 Stay in proximity to customers with prompt responses and diversified activities.
Convenience and timeliness are essential to deliver an excellent customer
experience. Most of our dental institutions are located in densely populated areas
and close to to local communities, which helps customers receive accessible and
reliable dental services without long-distance travel. We offer customers instant
medical attention, effectively address their oral health concerns and analyze their
personal oral conditions, thus delivering services in a more comfortable and targeted
way. Meanwhile, timely and frequent communication with customers reflects our
respect and reduces customer dissatisfaction arising from long waiting time. We
proactively follow up with our customers through WeChat, phone calls or messages,
confirming their appointment, responding to their inquiries promptly and reminding
customers to pay follow-up visits to our dental institutions for their following
treatment sessions. In addition, to promote trust and loyalty, we from time to time
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hold appreciation activities for customers, inviting them to join our health lectures,
watch movies and experience tea-making for free. These diversified activities
elevate customer satisfaction while encouraging them to visit our dental institutions
for regular dental care.
 Digitalized customer relationship management and effective customer outreach.
Taking advantage of technology and digitalization, we maintain close and
interactive relationships with our customers. We have deployed a SCRM system for
better customer acquisition and customer relationship management. See “—
Information Technology Systems” for details. This system is integrated with our HIS
to synchronize information of customers paid visits to our dental institutions. We
remain highly responsive to customers and strive to deliver customized service
experiences based on the relevant customers’ previous treatment in our dental
service network. Through our SCRM system, our headquarters set marketing targets
and requirements on customer outreach on a daily basis. Holiday greetings and
healthcare knowledge popularization through WeChat help us build a welcoming
and friendly image among customers, enhancing their service experience while
increasing repurchase for our dental services.
 Systematic internal mechanism that prioritizes service experience and feedback.
Providing satisfactory customer services is a top priority across our dental service
network. We have standardized the service procedures and established specifications
for customer services, requiring both medical professionals and oral health
management consultants to maintain politeness throughout the whole
communication and effectively resolve any issue raised by customers. We arrange
periodic internal meetings and training to discuss and review our performance
regarding customer services. We also arrange random satisfaction surveys in our
dental institutions, prompting medical professionals to serve customers with heart
and soul and maintain long-term relationships with customers.
We believe optimizing service experience not only contributes to fostering trust among
existing customers, but also encourages word-of-mouth referrals to their families and
acquaintances. As such, reliable treatment quality combined with satisfied customer experience
drives the continuous growth of customer loyalty and the expansion of our customer base.
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The following table sets forth key operational data of our customer base for the years
indicated:
Y ear ended December 31,
2022 2023 2024
Number of new customers (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118168,479 171,991 150,527
By type of services
– General dentistry services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118165,137 167,784 146,794
– Implantology services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,295 2,171 1,946
– Orthodontics services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,477 2,367 1,933
Number of customers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118276,310 296,859 283,640
Customer visits (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118708,651 768,809 748,632
By type of services
– General dentistry services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118520,961 549,907 516,570
– Implantology services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111859,763 78,759 86,810
– Orthodontics services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118127,927 140,143 145,252
By type of dental institutions
– Dental hospitals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111886,338 86,560 87,256
– Dental out-patient departments /H1118/H1118/H1118/H1118544,032 597,519 586,202
– Dental clinics /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111878,281 84,730 75,174
Customer return rate (2) (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111875.3 76.7 79.6
Customer repurchase rate (3) (%) /H1118/H1118/H1118/H111823.6 22.7 23.1
By type of dental institutions
– Dental hospitals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826.3 26.3 25.9
– Dental out-patient departments /H1118/H1118/H1118/H111822.1 20.8 21.3
– Dental clinics /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819.3 19.7 20.1
Notes:
(1) New customers are customers who received dental services provided by us for the first time. Specifically, the
new customers of a particular type of service (i.e., general dentistry, implantology or orthodontics) represent
customers who visit our dental institutions for the first time for such type of dental service. For customers who
have previously received other dental services provided by us, they are not regarded as the new customer upon
their visit to our dental institutions for another type of dental service.
The decrease of our new customers in 2024 was mainly caused by a decrease of 12.5% in new customers of
our general dentistry services, as a result of (i) decreased customer flow due to the relocation of eight dental
institutions and the renovation of three dental institutions in Wuhan notwithstanding our efforts to contain the
negative influence to the extent possible; (ii) our relatively conservative marketing strategy outside Wuhan in
reaction to slower-than-expected post-pandemic economic recovery; and (iii) normalization of service
demands in 2024 after experiencing a temporary demand surge during post-pandemic recovery period in 2023.
Due to the same reason, we experienced a decrease of 6.1% in customer visits to general dentistry services,
which resulted in the decrease of our total customer visits in 2024. According to Frost & Sullivan, such decline
aligned with broader industry trends among dental services providers in Central China in the challenging
market environment in 2024.
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(2) Representing the number of customer visits by returning customers during the relevant year divided by the
total number of our customer visits during the same year. Returning customers refer to customers who paid
visits to our dental institutions for twice or above since our inception and up to the end of the relevant year
according to the records in our operating systems.
(3) Representing the number of repurchase customers during the relevant year divided by the total number of
customers during the same year. Repurchase customers refer to customers who paid visits to our dental
institutions at any time during the relevant year and no more than 12 months had lapsed since such customers’
previous visits to our dental institutions, excluding customers’ follow-up visits for the same treatment.
From 2023 to 2024, we encountered challenges mainly caused by customers’ consumption
downgrade resulting from the slower-than-expected post-pandemic economic recovery, and
fierce competition among dental services providers. To counter these macroeconomic pressures
and reinforce our industry leadership, we implemented centralized cost control measures, such
as utilizing online operating systems to visualize operational performance and refine resource
allocation to maximize cost efficiency and negotiating favorable pricing with suppliers for high
quality dental consumables as secured through our strengthened bargaining power with them.
We optimized resource allocation and encouraged experience-sharing among seasoned dental
experts across our service network. In particular, we established technical committees to amass
multiple dental experts with rich experience in clinical practices. These experts offer training
sessions and technical guidance, activating the experience-sharing and application of advanced
technologies in our dental service network, strengthening our capabilities to deal with
miscellaneous oral diseases or complex dental procedures while propelling the development of
our dental specialties. See “— Medical Professionals — Our Technical Committees” for
details. These efforts were supported by streamlining our centralized management structure,
ensuring agility and sustained competitiveness.
In 2024, as part of our strategic initiative to maintain proximity to customers and enhance
acquisition and retention, we relocated eight dental institutions in Wuhan, coinciding with the
expiration of certain leases. In addition, to upgrade service capacity and elevate customer
experience, we also renovated three dental institutions in Wuhan, in the same year. As the result
of such relocation and renovation, our customer flow experienced temporary decline.
Concurrently, in response to slower-than-expected post-pandemic economic recovery, we
scaled back marketing efforts outside Wuhan to maintain relatively stable profit margins while
sharpening our focus on service excellence and customer satisfaction. In addition, after
experiencing a temporary demand surge during post-pandemic recovery period in 2023, dental
service demands returned to normalized levels in 2024. As such, from 2023 to 2024, our total
customer visits decreased from 768,809 to 748,632, and our new customers decreased from
171,991 to 150,527. In the long term, we expect to witness growth in customer visits and new
customers, supported by optimized dental resource allocation, increased dentists and expanded
brand awareness.
Meanwhile, in response to the region-specific policy developments, particularly the
implementation of centralized procurement policies in Hubei and Hunan provinces, as well as
the fierce market competition under the downward pricing pressure brought by such policies,
we made pricing adjustments, reducing the fees for implantology services by approximately
25% to 40% across all of our dental institutions in mid-2023. As a result, the average spending
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per customer visit for our implantology services decreased from RMB1,562 in 2023 to
RMB1,332 in 2024. Simultaneously, we leveraged our centralized procurement framework to
optimize supply chain efficiency, negotiating favorable terms with key suppliers for high-
quality dental consumables. By enhancing cost control measures, we maintained the ability to
offer dental services at competitive prices while preserving stable gross margins even amid
revenue pressures. From 2023 to 2024, the average spending per customer visit for our general
dentistry services decreased from RMB431 to RMB421, while the average spending per
customer visit to our orthodontics services decreased from RMB583 to RMB510.
We maintained stability in our revenue stream and only recorded a slight decline in total
revenue, from RMB441.8 million for the year ended December 31, 2023 to RMB407.1 million
for the year ended December 31, 2024. Notably, our customer retention metrics demonstrated
improvement, with the customer repurchase rate rising steadily from the year ended December
31, 2023 to the year ended December 31, 2024. This enhancement in customer loyalty reflected
our brand strength, service quality and timely adjusted pricing structure.
Customer Feedback
Customer Satisfaction
We value customers’ feedback as a crucial indicator in assessing the performance of our
clinical practices and customer services. To constantly gain operational and managerial insights
into the evolving customer demands and optimize service experience, we conduct customer
satisfaction surveys to understand their attitudes and suggestions, based on which we review
our service quality and medical professionals’ integrity. By inviting customers to provide
comments and express their opinions, we foster customers’ sense of participation and make
them feel valued. Learning from customers’ expectations of our services deepens our
understanding in dental institution operation and management. We collect customer feedback
in various ways, including comment collection surveys through online group-buying platforms,
short messages or WeChat, paper surveys and complaint collection boxes in offline dental
institutions, call-back interviews, messages and hotlines. During the Track Record Period, the
number of customer complaints received by us as a percentage of the total customer visits to
our dental service network was approximately 0.01%, significantly lower than the industry
average of approximately 1.0% during the same period, according to Frost & Sullivan.
Customer Complaints
Owing to the nature of services, dental services providers occasionally face complaints
from customers. During the Track Record Period, we sporadically receive customer complaints
(˒ମᙄ), usually in relation to longer waiting time than expected, perceived indifferent
attitude of our staff, dissatisfaction with pricing, service quality below customers’ expectation
or perceived side effects or complications occur in connection with dental services provided by
us.
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Our Management Measures on Customer Complaints
To ensure prompt and proper handling of customer complaints, we have established a
standardized and tiered complaint handling procedure within our dental service network. When
a customer raises the disagreement and initiates the complaint, the manager of the relevant
dental institution shall listen to the customer’s opinion and timely give explanations. For those
complaints failed to reach a consensus, the manager reports the complaints to the chief
operational administrator ( ༶ᐄᐼ္), who then reports to our Medical Department for
thorough investigations and preliminary conclusions. Our Medical Department then organizes
negotiations among the relevant expert, manager and customer based on the findings of
detailed investigations, offering solutions to reach a consensus.
We review all complaints received for rectification and improvement. We periodically
summarize and analyze complaints received, hold internal discussions on major complaints and
set appropriate internal guidelines or adjustments to prevent recurring complaints of a similar
nature.
For all the disagreement and complaints raised by the customers, we listen to the
customer’s opinion and timely provide explanations. Apart from explanations, customers
generally accept complimentary services and/or refunds to settle their complaints. We may also
be required to pay monetary compensation to settle customer complaints. We investigate the
background and basis of customers’ requests for refunds or compensation on a case-by-case
basis, evaluating the reasonableness of the requests, as well as other factors such as resources
that we may otherwise have to spend in settling the customer complaints and impact on our
brand image. During the Track Record Period and up to the Latest Practicable Date, the total
amount of monetary compensation (except for refund) paid by us to settle customer complaints
amounted to approximately RMB0.3 million. During the Track Record Period and up to the
Latest Practicable Date, we did not experience any material customer complaint.
BRANDING AND PROMOTION
Over years of operations in the dental services market, we are committed to building our
brand and strengthening our brand influence among customers. Our Marketing Center takes
charge of the planning and scheduling of our branding and promotion activities to improve the
regulatory compliance and consistency of such activities. By delivering reliable and high-
quality services, we have built a unified brand image which differentiates us from competitors
and helps us attract and retain customers. We integrate both offline and online marketing
resources to enhance our brand exposure to the general public and attract more customers to
visit our dental institutions. As of December 31, 2024, we had 50 employees being responsible
for our offline and online branding and promotion activities in China.
We are obligated to ensure all of our medical advertising content complies with applicable
laws and regulations. We have established an Annual Inspection Record for Medical
Advertisements (ڌto systematically and rigorously track and review the
content of advertisements and renew medical advertising approvals before expiration,
preventing the misleading or inaccurate advertising. We designate staff to supervise the
publication of medical advertisement. We also from time to time arrange internal meetings and
training sessions to discuss and review our performance regarding medical advertising.
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Offline Branding and Promotion
Attaching great importance to the service quality, we address customers’ oral disease
treatment and oral health management demands with refined technologies, advanced equipment
and intimate services, gaining customers’ satisfaction and cultivating a trustworthy brand
image. We obtain new customers through word-of-mouth publicity, as satisfied customers from
time to time recommend our services to their families and acquaintances.
Meanwhile, our dental institutions are strategically located in densely populated areas and
adjacent to local communities, where we easily gain access to potential customers. We adopt
diversified branding measures, such as bus station advertisements, elevator advertisements (in
image or video) in communities and office buildings, bus advertisements, and advertisements
on the barrier gates of communities, elevating brand awareness among local residents. In
addition to attracting walk-in customers, we also actively engage in pro-bono activities in
communities and enterprises, such as free dental consultation services and health lectures. For
instance, in 2024, we implemented elevator advertising campaigns in Wuhan to strengthen
brand awareness and promote our service offerings among residents, incurring an expenditure
of approximately RMB7.9 million. These frequent free dental consultation services help us
introduce our brand and major services to residents while raising residents’ awareness to oral
hygiene and oral health management.
We also organize and participate in various academic conferences in the dental services
industry, such as the annual meetings of Chinese Stomatological Association and the annual
meetings of implantology committee and orthodontics committee of Chinese Stomatological
Association, which enable us to continuously enhance our exposure to medical professionals,
especially seasoned dentists with established reputation, while keeping us informed about the
latest industry information and advancing our technological capabilities.
Online Branding and Promotion
To reinforce our brand awareness and recognition among potential customers, we
leverage social media platforms, e-commerce platforms and multiple search engine platforms
with vast customer traffic to promote our brand, medical professionals, as well as dental
services to the general public. These social media platforms, e-commerce platforms and
multiple search engine platforms are the online marketing channels to enhance our exposure to
potential customers and strengthen our brand influence. For instance, in 2024, we collaborated
with a leading marketing and promotion services provider to enhance our brand’s online
presence. Such promotional campaign incurred an expenditure of over RMB10.0 million. We
set annual and monthly promotion targets and conduct regular reviews on our marketing
performance, optimizing the cost-efficiency of our online promotion activities. We utilize our
brand-building capabilities and invite individuals to conduct on-site visits and experience our
services, thereby increasing our exposure on popular social media platforms and embracing the
trending internet celebrity economy.
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Our WeChat public accounts and WeChat mini programs enable customers to
conveniently understand our brand and corporate culture, and check the introduction of our
dentists and dental institutions without temporal and spatial constraints. We also popularize the
basic knowledge of oral health management through text and images among potential
customers through our WeChat public accounts.
To improve customers’ service experience while enhancing customer loyalty, we spend
efforts in daily customer relationship maintenance through calls, messages or WeChat. For
instance, during the follow-up calls, our medical professionals check the recovery progress,
provide guidance on the following treatment sessions when necessary and promptly address
customer inquiries. In addition, to elevate customer stickiness to our dental services, we invite
customers to join our offline activities, such as health lectures and customer appreciation
activities, through which we improve our customer experience and increase our customer
retention rate.
PRICING
To the extent allowed by the applicable regulatory requirements in China, as a private
dental services provider, we are generally entitled to set the prices of dental services of our
dental institutions at our own discretion. We price dental services based on certain factors,
including the complexity of the treatments, operating costs, local market conditions and the
pricing of both private and public dental institutions in the same region on similar dental
services. During our daily operations, we from time to time review our pricing to avoid
malicious competition caused by their unreasonable pricing or promotion.
The following table sets forth the price ranges of our major types of dental services during
the Track Record Period:
Type of services General price range (1)
General dentistry services (2)
– Crown services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118RMB980 to RMB7,500 per tooth
– Dental filling services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118RMB200 to RMB600 per tooth
– Root canal treatment services /H1118/H1118 RMB300 to RMB1,500 per tooth
Implantology services (3)
– Single-implant /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118RMB1,920 to RMB11,900 per tooth
– Half denture /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118RMB20,000 to RMB70,000 per denture
Orthodontics services (4) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118RMB4,500 to RMB42,000 per case
Notes:
(1) Representing the prices of an integral dental treatment procedure, which generally requires multiple
visits due to the complexity of dental conditions and the necessary treatment duration. For instance,
customers undergoing implantology and orthodontics services typically make approximately 5 and 12
visits, respectively, to complete their treatments. Consequently, the price range for each category of
services exceeds the average spending per customer visit, which is also in line with the industry practice,
as confirmed by Frost & Sullivan.
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(2) Prices of our general dentistry services vary, generally depending on the type of particular specialties
and services provided, and the regions where the relevant dental institutions located.
(3) Prices of our implantology services vary, generally depending on the type of consumables and the
regions where the relevant dental institutions located.
(4) Prices of our orthodontics services vary, generally depending on the type of consumables and the regions
where the relevant dental institutions located.
Our dental institutions that are qualified as Medical Insurance Designated Medical
Institutions are required to charge medical fees in accordance with the pricing guidelines and
price ceilings set by the relevant government authorities for dental services eligible to be paid
through the public medical insurance programs. We regularly inspect the pricing of our
Medical Insurance Designated Medical Institutions to ensure compliance with local medical
insurance policies. The following table sets forth the number of Medical Insurance Designated
Medical Institutions by type of dental institutions as of the dates indicated:
As of December 31, As of the Latest
Practicable Date2022 2023 2024
Dental hospitals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118444 4
Dental out-patient departments /H1118/H1118 53 58 56 52
Dental clinics /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118455 6
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111861 67 65 62
In recent years, the PRC government has been propelling the centralized procurement to
promote the transparency in the pricing of dental implantology consumables and services,
making the implantology service more affordable and accessible for the general public. In
response to such polices as well as the fierce competition under the downward pricing pressure
brought by such policies, we made timely pricing adjustments on our implantology services
and witnessed more customers access affordable dental services. For further details of
centralized procurement policies and pricing supervision, see “Regulatory Overview —
Regulations on the Reform of Medical Institutions.”
SUPPLIERS AND PROCUREMENT
Our dental service network requires various products for its business operations, mainly
covering dental devices and pharmaceuticals. Our suppliers primarily comprise (i) suppliers of
the above products; (ii) marketing and promotion services providers as well as consulting
services providers; and (iii) software, hardware and services providers of informatization. We
mainly purchase from suppliers located in China, including domestic distributors that are
licensed to import dental tools and equipment manufactured by foreign manufacturers.
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Our Centralized Procurement Management Mechanism
To streamline our dental institutions’ procurement of dental devices and pharmaceuticals,
we have adopted a centralized procurement management mechanism and deployed an online
supply chain system. With standardized procurement procedures, we select qualified suppliers
that are able to provide reliable supplies to us at competitive prices and monitor the quality of
supplies within our dental service network. Our internal procurement policies and guidelines
are reviewed and approved during the manager meetings at the headquarters level.
Supplier Selection and Lists of Suppliers and Equipment
We conduct thorough market research and analysis before selecting suppliers and
procuring supplies. We mainly select suppliers through bidding process based on stringent
selection criteria and the applicable PRC laws and regulations to ensure the legality and quality
of our purchases. We enter into framework agreements with successful bidders and place
procurement orders for the following procurement based on the actual procurement needs
arising from daily operations.
When selecting suppliers at the headquarters level, we consider, among other things, the
quality characteristics and strengths of their supplies, the qualification of suppliers, the pricing,
service experience, value-added services and the suppliers’ track record and market share. Our
suppliers are required to possess all licenses and permits necessary to conduct their operations.
We have established a supplier list containing suppliers that have met all our selection
criteria. We classify our suppliers in different levels for better daily inspections and routine
assessments on our suppliers’ performance to check their qualifications and maintain the
legality, quality and stability of supplies. In addition, we value the feedback from medical
professionals on their usage experience. If medical professionals identify sub-standard dental
devices or pharmaceuticals, we timely address the issue by discussing with the relevant
suppliers and holding internal review meetings. We dynamically update the supplier list based
on our review on the suppliers and feedback on their supplies. We also keep a standard
equipment list for our dental institutions to record and track the details of our existing dental
equipment. We make decisions to replace our dental equipment based on the comprehensive
evaluations on equipment depreciation and amortization period, length of usage, equipment
performance and wear and tear condition.
Procurement Process
With respect to major dental devices and pharmaceuticals, most of our dental institutions
report their procurement needs to the online supply chain system at the headquarters level,
specifying the amount, type together with the particular customization requirements, while
other dental institutions procure dental devices and pharmaceuticals directly from suppliers.
The procurement needs reported to our headquarters are then reviewed by our Procurement
Department ( મᒅ௅) under the Administrative Center, which places purchase orders with the
selected suppliers. The procurement needs of dental equipment are reported by dental
institutions and reviewed by our Procurement Department together with the personnel taking
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charge of operational and technical affairs at the headquarters level. Our Procurement
Department then consolidates the procurement needs to prepare procurement budget plans,
which shall be reported to and approved by our Medical Center and Financial Center
successively. After the standardized internal approval process, our Procurement Department
enters into procurement agreement with the supplier and proceeds with the advance payment.
With respect to dental consumables that are regulated by the government centralized
procurement policies, such as implants and crowns for implantology services, we enter into
tripartite procurement agreements with distributors and manufacturers on the government
procurement platform, reporting our annual demands and procuring the relevant consumables
as needed according to the tripartite agreements.
Through unified bidding, dynamic price inquiry and comparison, as well as centralized
price negotiation, we seek high-quality supplies at reasonable prices accommodating the actual
business demands of our dental institutions. We believe unified bidding and centralized
procurement allow us to achieve economies of scale and enhance operational efficiency, while
serving customers with quality supplies used in our dental service network.
Procurement Agreements with Suppliers
We generally enter into procurement agreements with our major suppliers for dental
devices and pharmaceuticals with a term of one to two years on a non-exclusive basis.
Depending on the types of supplies and our relationships with the suppliers, the terms of the
procurement agreements vary from supplier to supplier. We generally do not have long-term
agreements with our suppliers. By virtue of our well-established brand image in Central China
and large operational scale, we generally have strong bargaining power during price
negotiation and are typically given credit terms ranging from two months to three months by
our suppliers for dental consumables, and one month for pharmaceuticals. We typically have
installment payment arrangements with our suppliers for dental equipment. We normally pay
our suppliers via wire transfer. Our suppliers are generally responsible for arranging the
delivery to our designated place of delivery at their own costs. Our suppliers generally grant
us a guarantee period in the procurement agreements. We are typically entitled to return or
exchange certain supplies that do not meet our standards upon inspection after delivery and
during usage after acceptance.
During the Track Record Period and up to the Latest Practicable Date, we had not
experienced any significant return or exchange of supplies that did not meet our standards or
suffered any significant loss or damage caused by quality problems of supplies. To ensure the
stability of supplies while maintaining supply consistency, we typically source each type of
supplies from selected suppliers with several alternative options for backup. During the Track
Record Period and up to the Latest Practicable Date, we had not experienced any significant
shortage of or delay in the delivery of supplies that caused material adverse impacts on our
business operations. Capitalizing on our centralized procurement management mechanism and
strong bargaining power, we had not experienced any significant fluctuation in the prices of our
supplies which had a material adverse impact on our results of operations or gross profit
margins during the Track Record Period and up to the Latest Practicable Date.
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For risks in relation to our relationships with suppliers, see “Risk Factors — Risks
Relating to Our Business and Industry — Failure to maintain business relationships with our
suppliers, or any decrease, shortage or delay in the supply, or an increase in the prices of
supplies may adversely affect our business, financial condition and results of operations.”
Our Five Largest Suppliers
The following tables set forth certain information of our five largest suppliers in each year
of the Track Record Period:
Y ear Ended December 31, 2024
Supplier
Major
products/services
purchased by us Credit terms
Payment
method
Amount
of
purchases
As a
percentage
of our total
purchases
Length of
business
relationship
with us
(RMB’000) (%)
Supplier A /H1118/H1118/H1118Dental devices 0 to 90 days Bank transfer 13,020 14.6 Since 2018
Supplier D /H1118/H1118/H1118Dental devices 0 to 90 days Bank transfer 7,578 8.5 Since 2018
Supplier C /H1118/H1118/H1118Dental devices 0 to 60 days Bank transfer 6,593 7.4 Since 2020
Supplier B /H1118/H1118/H1118Advertising
services
Pay by
installments
Bank transfer 5,825 6.5 Since 2022
Supplier E /H1118/H1118/H1118Dental devices 0 to 30 days Bank transfer 4,861 5.4 Since 2014
37,877 42.4
Y ear Ended December 31, 2023
Supplier
Major
products/services
purchased by us Credit terms
Payment
method
Amount
of
purchases
As a
percentage
of our total
purchases
Length of
business
relationship
with us
(RMB’000) (%)
Supplier A /H1118/H1118/H1118Dental devices 0 to 90 days Bank transfer 15,147 16.2 Since 2018
Supplier F /H1118/H1118/H1118Dental devices 0 to 90 days Bank transfer 7,468 8.0 Since 2011
Supplier C /H1118/H1118/H1118Dental devices 0 to 90 days Bank transfer 7,157 7.7 Since 2020
Supplier E /H1118/H1118/H1118Dental devices 0 to 30 days Bank transfer 6,509 7.0 Since 2014
Supplier D /H1118/H1118/H1118Dental devices 0 to 90 days Bank transfer 5,638 6.0 Since 2018
41,919 44.9
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Y ear Ended December 31, 2022
Supplier
Major
products/services
purchased by us Credit terms
Payment
method
Amount
of
purchases
As a
percentage
of our total
purchases
Length of
business
relationship
with us
(RMB’000) (%)
Supplier A /H1118/H1118/H1118Dental devices 0 to 90 days Bank transfer 18,292 20.8 Since 2018
Supplier F /H1118/H1118/H1118Dental devices 0 to 90 days Bank transfer 7,615 8.7 Since 2011
Supplier E /H1118/H1118/H1118Dental devices 0 to 30 days Bank transfer 7,431 8.4 Since 2014
Supplier D /H1118/H1118/H1118Dental devices 0 to 90 days Bank transfer 5,877 6.7 Since 2018
Supplier B /H1118/H1118/H1118Advertising
services
Pay by
installments
Bank transfer 4,665 5.3 Since 2022
43,880 49.9
All of our five largest suppliers in each year of the Track Record Period are Independent
Third Parties. To the best of the knowledge of our Directors, none of our Directors, their
respective associates or any shareholder who owns more than 5% of our issued share capital
had any interest in any of our five largest suppliers in each year of the Track Record Period.
INVENTORY MANAGEMENT
Our inventories primarily consist of dental consumables and pharmaceuticals which are
stored in the warehouses or storerooms of our dental institutions for temporary storage of such
inventories.
While each of our dental institutions maintains its own inventories, we have implemented
a strict inventory management system at our headquarters level to monitor the procurement,
storage and distribution of inventories. To minimize operational risks arising from inventories
and optimize the utilization of inventories, we set target inventory turnover days and kept an
efficient inventory turnover during the Track Record Period. Our dental institutions generally
maintain one to three months of inventory to meet their business needs. See “Financial
Information — Discussion of Certain Key Items from Consolidated Statements of Financial
Position — Inventories” for details of our inventory turnover days. As of December 31, 2022,
2023 and 2024, our inventory amounted to approximately RMB6.1 million, RMB5.7 million
and RMB3.7 million, respectively. Our inventory turnover days decreased throughout the Track
Record Period primarily attributable to the decrease in our inventory balance and our improved
inventory management.
Upon inspection after delivery, supplies are stored into the designated storage areas in our
dental institutions. We typically conduct monthly reviews on inventories to check and report
the medical consumables on hand against the records in our information technology systems.
We track, determine and record reasons for any identified difference to keep accurate inventory
records. In addition to the inventory management within dental institutions, pursuant to the
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check results on inventory balance and turnover days, our headquarters timely reminds the
relevant dental institutions of the identified problems. Meanwhile, we closely monitor
inventory expiry dates to avoid the usage of expired items. Once the supplies are expired, we
safely dispose of them in accordance with applicable laws and regulations, and write off them
accordingly. During the Track Record Period, we did not experience any significant write-offs
of our inventories.
MEDICAL QUALITY CONTROL
We believe quality control is of vital importance to ensuring the safety and quality of our
services and maintaining our brand image and reputation among existing and potential
customers. We have established a tiered quality control system within our dental service
network, pursuing regular inspection and instant adjustment during our daily operations. We
have adopted a series of internal measures focusing on quality control, such as Medical Quality
and Safety Management Core Measures () and Quality
Management Personnel Work Book (ʈЪ˓̅).
Systematic Quality Management System
We have established a “three-level and four-tier” quality management system to monitor
the quality of dental services provided to customers through our dental institutions. Such
quality management system connects three-level institutions, namely our Quality Safety
Management Committee (ึ), our Medical Center and dental institutions in
our dental service network, and comprises four-tier staff, namely our medical vice president,
chief and deputy administrator of our Medical Center, chief executive administrator/head of the
dental institutions and quality management personnel of medical and nursing services. For our
dental hospitals, the heads of their medical departments and nursing departments also
participate in tiered quality management system. The below table sets forth our “three-level
and four-tier” quality management system.
Three-level and Four-tier
Medical Vice President
Chief and Deputy Administrator of Medical Center
Chief Executive Administrator of Hospitals Head of Out-patient Departments/Clinics
Quality Management
Personnel
Quality Safety Management Committee Level
Medical Center Level
Dental Institutions Level
Medical Department/
Nursing Department
Chief Dentist/
Associate-chief
Dentist/Head Nurse
Quality Management
Personnel
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As of December 31, 2024, our quality management personnel comprised 178 employees,
including experienced dentists at our dental institutions as medical quality management
personnel (ࡰand selected nurses at our dental institutions as caring quality
management personnel (ࡰthe majority of which have stomatology, caring or
related educational background and/or working experience. All of our dental institutions have
designated medical quality management personnel and/or caring quality management
personnel in charge of monitoring the quality of services. Quality management personnel is
responsible for supervising our dental institutions to adopt and maintain efficient and
standardized control methods that focus on the quality of dental services. Our dental
institutions conduct internal reviews on the quality management periodically. The
comprehensive quality control performance of our dental institutions is collected, analyzed and
reported by our quality management personnel by months. Additionally, we arrange random
quality inspections and optimize the implementation plans relating to quality control on dental
services based on the results of both periodic evaluations and random inspections.
Our Quality Control Initiatives
Service quality has direct impacts on the efficacy of our treatments and customers’ trust
in us. We require our dental institutions to enhance awareness of customers’ safety during
treatments. Pursuant to the industry technical standards and our dental experts’ accumulated
experience, we established a series of treatment and operating procedures to standardize and
refine the workflows of our dental clinical practices, such as Oral Disease Diagnosis and
Treatment Guidance and Technical Standards (ၾҦஔ஝ᇍ), Oral
Clinical Nursing Procedure (೻) and Standard Diagnosis and
Treatment Protocols for Oral Diseases (ɹഢशषൢᐕ੬஝). Clear guidance with detailed
instructions on workflows helps our medical professionals coordinate closely and effectively,
minimizing the risks arising from improper treatment or nursing, which ultimately contributes
to the treatment efficacy and customer satisfaction.
Based on the risks and complexity of treatments, we categorize our service procedures
and set different levels of clinical standards for treatments. We also set specific requirements
on the expertise, professional rank and experience of medical professionals carrying on
different levels of treatments for customers. This approach ensures that customers receive
treatment from skilled dentists while reserving highly experienced experts for cases involving
complex oral conditions.
Our stringent talent recruitment procedures and well-rounded cultivation system for
medical professionals also improve the reliability of our service quality. See “— Medical
Professionals — Recruitment, Management and Cultivation of Medical Professionals” for
details.
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RESEARCH AND DEVELOPMENT
Research and Development on Utility Model Patents
During the provision of dental services, our dentists and other medical professionals from
time to time identify common unmet needs or challenges in clinical practices, such as
enhancing treatment efficacy, addressing specific dental conditions with proper tools or easing
customers’ discomfort during certain treatment processes. Leveraging these insights, our
experienced dentists take the lead in developing and optimizing dental tools and devices used
in our dental service network based on daily observations and considerations in terms of
practicality, feasibility, and potential impact on dental care. After the development and
thorough testing process, the relevant tools or devices are optimized for practical use and
ultimately submitted for patent registration. As of the Latest Practicable Date, we had 10
registered utility model patents, which were material to our business, demonstrating our
contributions to continuous advancements and innovations.
Research and Development on Information Technology Systems
Our Information Department is responsible for research and development of our
information technology systems. By identifying the actual needs during our daily operations,
our Information Department developed a matrix of information technology systems tailored to
digitalize our operations and corporate management. To respond to the evolving management
demands arising from our expanding dental service network, our Information Department
constantly refines the functionality and usability of our information technology systems. Such
refined systems visualize operating results and vital performance indicators for our
management and support our management analysis and decision-making.
The development cycle for our major information technology systems varies, depending
on the complexity of the systems and the required upgrades. The typical development process
covers demands analysis, feasibility study, internal approval, development, testing and
adjustment, and system launch. Advanced technologies underpin our development, application
and optimization of diversified information technology systems. To sustain this innovation, we
recruit, retain and cultivate our research and development employees, especially those
employees with deep insights in both information technology and dental institutions.
For the years ended December 31, 2022, 2023 and 2024, we incurred research and
development expenses of RMB6.6 million, RMB6.8 million and RMB6.7 million, representing
1.6%, 1.5% and 1.6% of our total revenue for the same years, respectively. We expect to further
optimize our information technology systems and enhance our technical strength by
continuously investing in system upgrades and informatization. See “Future Plans and Use of
Proceeds.”
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INFORMATION TECHNOLOGY SYSTEMS
Our Information Department has a software development team and a hardware network
team. The software development team primarily takes charge of planning, implementing and
promoting system development and upgrade based on our business demands. We expect to
progressively reach the standardization of software development. The hardware network team
is primarily responsible for the daily maintenance of information technology systems deployed
in our headquarters and dental institutions, the standardized management of hardware network,
implementation of data security policies, cybersecurity, training sessions relating to the
operations of hardware and equipment, and periodical analysis on the information technology
systems. We also pay close attention to technology development to drive our constant
improvement of system operation and maintenance methods.
We are in the process of propelling the informatization of our business operations and
visualizing our performance for better operations. Our in-house development of information
technology systems enables us to timely respond to informatization demands arising from daily
operations and deepens our understanding in performance with tailored data analytical tools.
We have adopted a matrix of information technology systems, which are centralized on
the unified information technology infrastructure underpinned by the public cloud. Set forth
below are our major information technology systems.
 Hospital Information System (the “HIS”) . By applying our robust software
development capabilities, we have developed our HIS to digitalize our diagnosis and
treatment process, which underpins our standardized business operations and
scalable customer base. Specifically, our HIS supports digitalized customer
management, electronic medical records and pricing management, granting our
medical professionals efficient access to treatment records and enabling our precise
management on dental practices.
 Office Automation System (the “OA system”) . We have developed an OA system to
facilitate our human resource management, asset management and internal approval
process. Such system covers multiple functional modules to address our daily office
needs, enabling us to achieve standardized and modernized operations.
 Supply Chain System . We have deployed an advanced supply chain system to
digitalize the whole process of our centralized procurement, covering demand
reporting, placing orders, acceptance, storage and inventory consumption. Utilizing
the connections between such system and our HIS and OA system, we monitor the
quality and usage of supplies through real-time system updates.
 Fund Management System . To realize centralized financial management and
monitor financial risks, we have deployed a tailored fund management system,
which has a connection with our OA system. We believe such system improves our
fund utilization efficiency while elevating fund security.
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 Big Data Analysis System (the “BI system”) . Supported by advanced technologies,
we have developed a BI system to analyze the status and trend of our business
performance for our management. Deployment of such system helps our
management understand our business performance through streamlined and
visualized indicators.
 Marketing Middle Platform . We have developed our marketing middle platform to
monitor our marketing and promotion activities and customer services. Such
platform has been connected with our HIS and OA system to realize real-time
updates on discounts offered and our customers’ feedback.
 Social Customer Relationship Management System (the “SCRM system”) .W e
have deployed a SCRM system for customer acquisition and customer relationship
management. Such system facilitates our approaching and tracking customers with
dental service demands while supporting our maintenance of customer relationships.
Connected with our HIS, our SCRM system enhances our online interactions and
follow-ups with customers, ultimately leading to improved customer satisfaction
and loyalty.
 Supplier System. Based on our observations on procurement activities, we have
developed a supplier system adapted to the dental services market to offer
convenience for our suppliers during the transaction process. As of the Latest
Practicable Date, we were in the process of upgrading our supplier system to
accommodate to the expansion of our business.
Our fees and expenses incurred in respect of the maintenance and upgrade of information
technology systems amounted to RMB1.3 million, RMB1.8 million and RMB1.6 million, for
the years ended December 31, 2022, 2023 and 2024, respectively. We plan to continuously
invest in our information technology systems to support the growth of our business operations
and achieve refined corporate management. For more details, see “Future Plans and Use of
Proceeds.”
Development of the Regulatory Environment of Cybersecurity, Data Security and
Protection of Personal Information
Cybersecurity, data security and protection of personal information have become an
increasing regulatory focus of government authorities. There has been continuous regulatory
development regarding cybersecurity, data security and protection of personal information in
China in recent years. On November 7, 2016, the Standing Committee of the National People’s
Congress (ึ) (the “ SCNPC ”), promulgated the Cybersecurity
Law of the PRC (), which became effective on June 1, 2017.
In July 2018, the NHC promulgated the Administrative Measures Regarding National
Healthcare Big Data Standards, Safety and Service Management (Trial) (਄ੰᔼᐕɽᅰ
ج(༊Б)) to further standardize the management of the
healthcare data produced during disease treatment and health management. On June 10, 2021,
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the PRC Data Security Law () was adopted by the SCNPC and
became effective on September 1, 2021. On August 20, 2021, the PRC Personal Information
Protection Law () (the “ PIPL ”) was adopted by the
SCNPC and became effective on November 1, 2021. On December 28, 2021, the Cyberspace
Administration of China (܃the “ CAC”), together with
certain other PRC government authorities, promulgated the revised Measures for Cybersecurity
Review (), which became effective on February 15, 2022. On August 8,
2022, the NHC, the NA TCM, and National Disease Control and Prevention Administration ( ਷
शषཫԣછՓ҅) jointly promulgated the Administrative Measures for the Cybersecurity of
Medical and Healthcare Institution () with immediate
effect. On February 14, 2025, the CAC promulgated the Regulations on Compliance Audit for
Personal Information Protection (), which came into
effect on May 1, 2025. The Regulations on Compliance Audit for Personal Information
Protection provide guidelines for compliance audit of personal information protection with key
review contents.
For further details of laws and regulations regarding cybersecurity, data security and
protection of personal information, see “Regulatory Overview — Laws and Regulations
Related to Cybersecurity, Data Security, and Protection of Personal Information.” The above
regulatory development could impact the healthcare services industry in China, including
dental services providers with information technology systems.
As confirmed by our PRC Legal Advisors relating to Data Compliance, we were in
compliance with all applicable PRC laws and regulations governing cybersecurity, data
security and protection of personal information in all material aspects during the Track Record
Period and up to the Latest Practicable Date. However, as the laws and regulations regarding
cybersecurity, data security and protection of personal information are still developing, we
cannot assure you that we can always timely adapt to all the new requirements of such laws
and regulations. See “Risk Factors — Risks Relating to Our Business and Industry — We are
subject to evolving laws, regulations and government policies regarding cybersecurity, data
security and personal information protection. Actual or alleged failure to comply with such
laws, regulations and government policies could adversely affect our business and reputation.”
Our Access to Personal and Medical Information during Operations
During provision of dental services, with the prior consent of customers or as approved
by the applicable laws and regulations for personal information processing, we collect and
store personal and medical information of customers to the extent necessary and in accordance
with applicable PRC laws and regulations. These personal and medical information of
customers typically covers name, gender, identification number, contact information, medical
history and other medical records. During the Track Record Period and up to the Latest
Practicable Date, we did not collect or store any personal information of foreign residents,
considering we did not provide dental services to overseas customers. We require that
information and data we receive during our operations in China shall be stored and preserved
within China.
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Our Internal Policies and Measures on Cybersecurity, Data Security and Protection of
Personal Information
As a dental services provider in China, we highly value cybersecurity, data security and
protection of customers’ personal and medical information. We have implemented management
measures on customers’ information to monitor the collection, storage, access, use and
protection of customers’ personal and medical information, thereby ensuring regulatory
compliance.
Specifically, during the information collection process, for personal and medical
information, we only collect the data to the extent necessary and permitted by our customers.
Prior to our collection, we clearly notify the customers on the purpose, scope and usage of the
data. We utilize encryption technologies, such as file encryption, to keep personal and medical
information transmitted in private, so that it cannot be viewed without proper authorization or
exported in bulk. We strictly restrict the access to and copy of medical records, categorizing
medical records and assigning individuals for supervising the management of personal and
medical information. We also perform de-identification on raw data stored from customers,
protecting customers’ privacy while still maintaining data utility. To enhance our employees’
awareness on data security and protection, we arrange training sessions to introduce the
characteristics of high-risk sites and tips on reducing the risks associated with phishing and
account leakage. In addition, we also set up firewalls to prevent information loss or leakage
caused by cyber-attacks. We have obtained the Level III Cybersecurity Protection Filling
Certificate. We require our information technology service suppliers to strictly follow
regulatory requirements on data protection and establish stable cooperation relationships with
those suppliers have certificates regarding cybersecurity or better performance in data
protection.
As a result of our efforts in strengthening the informationization capabilities and
respecting cybersecurity and data security, we had not experienced any material service
interruption caused by system malfunctions, or any material data leakage or data loss during
the Track Record Period and up to the Latest Practicable Date.
Considering that: (i) we were not identified as a critical information infrastructure
operator; (ii) our information systems are for our own use only and does not have multi-party
trading capabilities, indicating we are not a platform operator; (iii) the data we process mainly
includes the basic information and medical records of patients during diagnosis and treatment,
which does not involve national security; (iv) the data collected and generated during our
business development process is stored within the territory of China; (v) we have not received
any investigation or inquiry from the CAC, the CSRC, or any other relevant government
authority regarding cybersecurity, data security, or any cybersecurity review. Our PRC Legal
Advisors relating to Data Compliance are of the view that the likelihood of us being required
to undergo a cybersecurity review is low.
Considering the constant evolution of the regulatory requirements of cybersecurity, data
security and protection of personal information in recent years, we have been paying close
attention to the latest regulatory developments to timely adopt measures or make adjustments.
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COMPETITION
We operate in a highly competitive and fragmented industry, according to Frost &
Sullivan. We generally compete with private and public dental hospitals, out-patient
departments and clinics as well as dental departments in general hospitals located in the same
geographic regions as our dental institutions. We typically compete on the following key
factors: quality of dental services, service experience, medical resources, especially seasoned
dentists, brand influence, customers’ accessibility, as well as pricing.
As the largest private dental services provider in Central China with a focus on Hubei and
Hunan provinces in terms of revenue generated therefrom in 2024, we believe we are well
positioned to serve the general public with reliable and accessible dental care, leveraging our
outstanding dentist resources, direct chain model, established brand awareness and continuous
efforts. See “Industry Overview” for a more detailed discussion regarding the industries and
markets where we operate.
A W ARDS AND RECOGNITIONS
Our strengths and industry influence are evidenced by the honors awarded to us during
our years of operations. The following table sets forth major awards and recognitions received
by us:
Y ear of
award Award/Recognition Awarding authority/institution
2024 /H1118/H1118/H1118Creditable and Contract-
honored Enterprise (ࠠ
͜Άุ)
Hubei Administration for Market
Regulation (̹ఙ္ຖ၍ଣ҅)
2024 /H1118/H1118/H1118/H1118Hubei Provincial Golden Seed
Enterprises for Listing ( ಳ̏
௪“၇ɿ”Ά
ุ)
Office of Hubei Provincial Enterprise
Listing Work Leading Group (޲
܃)
2023 /H1118/H1118/H1118/H1118New High-tech Enterprises ( ৷
อҦஔΆุ)
Department of Science and Technology
of Hubei Province (ኪҦஔ
ᝂ), Department of Finance of Hubei
Province (ᝂ) and Hubei
Provincial Tax Service, State
Taxation Administration (೼ਕᐼ
೼ਕ҅)
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Y ear of
award Award/Recognition Awarding authority/institution
2023 /H1118/H1118/H1118/H1118Executive Member of Wuhan
Non-government Medical
Institutions Association (ဏ
ʮͭᔼᐕዚ࿴՘ึ੬ਕଣ
ԫఊЗ)
Wuhan Non-government Medical
Institutions Association (ʮ
ͭᔼᐕዚ࿴՘ึ)
2022 /H1118/H1118/H1118/H1118Creditable and Contract-
honored Enterprise
Wuhan Administration for Market
Regulation (ဏ̹̹ఙ္ຖ၍ଣ҅)
2021 /H1118/H1118/H1118/H1118Civilized Unit of 2021 to 2022
(2021-2022ఊЗ)
Wuhan Wuchang District Committee of
the Communist Party of China ( ʕ΍
ึ), Wuhan
Wuchang District People’s
Government (ִ݁)
2020 /H1118/H1118/H1118/H1118Creditable and Contract-
honored Enterprise
Wuhan Administration for Market
Regulation (ဏ̹̹ఙ္ຖ၍ଣ҅),
Office of Wuhan Moral and
Ideological Development Guiding
Committee (ኬ
܃and Office of Wuhan
Social Credit System Construction
Leading Group (͜᜗ӻ
܃)
2019 /H1118/H1118/H1118/H1118Star-class Rating (Out-patient
Department): Four-Star (ൢ
ॴ൙ᄆ:ॴ)
Chinese Non-government Medical
Institutions Association (ʮͭ
ᔼᐕዚ࿴՘ึ)
2018 /H1118/H1118/H1118/H1118Technology Small Giant
Enterprise of Wuhan (ဏ̹
Ҧ“ʃ̶ɛ”Άุ)
Bureau of Science and Technology of
Wuhan (ኪҦஔ҅)
2017 /H1118/H1118/H1118/H1118Gazelle Enterprise of 2017
(2017ᐙୣΆุ)
Management Committee of Wuhan East
Lake High-tech Development Zone
(ึ)
2017 /H1118/H1118/H1118/H1118Strategic Cooperation Base of
Wuhan University of
Technology School of
Management (ဏଣʈɽኪ
၍ଣኪ৫኷ଫΥЪਿή)
Wuhan University of Technology (ဏ
ଣʈɽኪ)
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Medical professionals practicing at our dental service network have profound academic
achievements. The following table sets forth selected representative publications of such
medical professionals:
Y ear Name of publication Journal/Press
2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118Comparison of Clinical Effects of
a Modified Socket Shield
Technique and the
Conventional Immediate
Implant Placement (࿴ஔ
؈ࣖ
Ӻ)
Journal of Clinical Stomatology
(ᑗґɹഢᔼኪᕏႦ)
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118Application of Plasmatrix in the
Reconstruction of the Contour
of Hard and Soft Tissue in
Esthetic Zone: A Case Report
(ኪਜ၇ಔ
ɓԷ)
Chinese Journal of Stomatology
(ʕശɹഢᔼኪᕏႦ)
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118Clinical Observation of
Clindamycin Combined with
Metronidazole in the Treatment
of Chronic Periodontitis (؍
˫մ
ᑗґ൙ᄆ)
China Pharmaceuticals (ʕ਷
ᖹุ)
2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118Treatment of Peri-implant
Infection in Aesthetic Area: A
Case Report (ኪਜ၇ಔ᜗մ
ᐕɓԷ)
Chinese Journal of Oral
Implantology (ʕ਷ɹഢ၇ಔኪ
ᕏқ)
INTELLECTUAL PROPERTY
As of the Latest Practicable Date, we had (i) 10 registered patents; (ii) 12 registered
trademarks; (iii) 11 registered copyrights in the PRC; and (iv) 3 registered domain names,
which were material to our business. See “Appendix VI — Statutory and General Information
— B. Further Information about Our Business — 2. Intellectual Property Rights of Our Group”
for more details of our material intellectual property rights.
To protect the intellectual properties owned by us, we rely on a combination of
intellectual property right protection laws in the PRC, confidentiality procedures, contractual
provisions and internal control procedures. During the Track Record Period and up to the
Latest Practicable Date, we had not been sued on the basis of, and had not undergone
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arbitration in respect of, nor had we received any notification from third parties claiming,
infringement of any intellectual property that has had a material adverse effect on our business.
In addition, during the Track Record Period and up to the Latest Practicable Date, we had not
been the subject of any adverse finding in an investigation by any government authorities in
respect of infringement of any intellectual property of third parties that had a material adverse
effect on our business.
EMPLOYEES
As of December 31, 2024, we had 1,164 employees in total, all of whom were based in
China as of the same date. The following table sets forth a breakdown of our employees by
their function as of the same date:
Function
Number of
employees
% of total
employees
Employees in our dental institutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,054 90.5%
– Dentists /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118245 21.0%
– Other medical professionals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118468 40.2%
– Operational and other employees /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118341 29.3%
Employees at our headquarters /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118110 9.5%
– Management /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835 3.0%
– General administrative, marketing and
other staff /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111875 6.5%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,164 100.0%
To attract qualified personnel, especially qualified medical professionals, we adopt
various recruitment methods to satisfy our demands for different types of employees. These
methods typically include campus recruitment, online social recruitment for personnel with
work experience and recruitment through referrals.
Following our strict assessment criteria for candidates, our recruitment procedures
generally contain reporting recruitment demands, publishing recruitment notices, reviewing
and screening resumes, arranging examinations, evaluating and selecting candidates, approving
and making announcement. Our employees typically enter into standard labor contracts with
us. During the Track Record Period and up to the Latest Practicable Date, we had not
experienced any difficulty in recruiting employees for our operations.
We respect the work and contributions of our employees. Our compensation packages for
employees mainly comprise base salary and performance-based bonuses. We periodically
review our employees’ performance, based on which we generally determine and offer annual
bonus awards. We highly value the recruitment, management, training and retainment of our
employees, especially medical professionals. In particular, we arrange diversified training
sessions for our employees, including pre-job training, training on basic medical theory, basic
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medical knowledge, and basic medical skills, advanced training and special training focused on
selected specialties. In addition, our on-the-job tutoring enables young medical professionals
to closely and systematically learn the valuable academic theories and clinical experiences
from experienced medical professionals.
PRC laws and regulations require us to participate in various employee benefit plans,
including pension insurance, unemployment insurance, medical insurance, maternity
insurance, work-related injury insurance and the housing provident fund and pay social
insurance and housing provident fund contributions in amounts equal to certain percentages of
salaries, including bonuses and allowances, of employees up to the maximum amounts
specified by the local government. During the Track Record Period, we did not make social
insurance and housing provident fund contributions in full amount for our employees as
required by relevant PRC laws and regulations. Such incident was primarily caused by (i)
unfamiliarity with the relevant PRC laws and regulations by our human resource management
personnel; and (ii) unwillingness of employees to make contributions of social insurance and
housing provident fund for personal reasons, mainly due to their financial burden.
Legal Consequences
As advised by our PRC Legal Advisors, according to the applicable PRC laws and
regulations: (i) with respect to social insurance, the relevant government authorities may order
us to pay the outstanding amounts within the prescribed time period with a late charge at the
daily rate of 0.05% on the outstanding amounts, and if and only if we fail to do so, they may
impose a fine or penalty ranging from one to three times of the outstanding amounts; and (ii)
with respect to housing provident funds, the relevant government authorities may order us to
pay the outstanding amounts within the prescribed time period, and they may apply to
competent court for enforcement of the outstanding amounts if we fail to do so.
During the Track Record Period and up to the Latest Practicable Date, no administrative
action had been initiated against us by the relevant PRC government authorities with respect
to such non-compliance, nor has any order been received by us to settle the outstanding amount
of social insurance and housing provident fund contributions. During the Track Record Period
and up to the Latest Practicable Date, we were not imposed any administrative penalties as a
result of our non-compliance with social insurance and housing provident fund related PRC
laws and regulations. During the Track Record Period and up to the Latest Practicable Date,
we had not experienced any material claim or complaint filed against us by our employees
demanding us to make up the shortfall of social insurance and housing provident fund
contributions.
For the years ended December 31, 2022, 2023 and 2024, the shortfall of our social
insurance and housing provident fund contributions amounted to RMB1.3 million, RMB1.5
million and RMB1.6 million, respectively. We did not make any provision for such shortfall
during the Track Record Period in our financial statements, considering (i) we had received
confirmations from the competent government authorities (as confirmed by our PRC Legal
Advisors) that we have not been subject to any penalty for violations of laws and regulations
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regarding social security or housing provident fund; (ii) during the Track Record Period and
up to the Latest Practicable Date, no government notice had been received by us and no
administrative penalties had been imposed on us with respect to the shortfall of social
insurance and housing provident fund contributions, nor had we experienced any material
claim raised by employees regarding such shortfall; (iii) based on the confirmations we
received from the competent government authorities, our PRC Legal Advisors are of the view
that the likelihood of us being subject to centralized collection of the outstanding historical
social insurance and housing provident fund contributions and any material penalties due to the
failure to provide such contributions in full amount for our employees is relatively low,
according to the applicable regulatory policies, provided no claims or complaints are filed
against us by our employees; and (iv) if we receive notice from competent government
authorities requiring us to pay the outstanding contributions, we will take immediate measures
as required and such payment would not have a material adverse impact on our business,
financial condition or results of operations.
Measures Adopted and Improved Internal Control
We became aware of such incidents during our compliance reviews. Such incidents were
not a result of any willful misconduct by our Directors or any of our employees. We took
prompt remedial and/or rectification measures as soon as we identified such incident:
(i) we have reviewed our internal control policies and adopted Notice on Effectively
Implementing Social Insurance and Housing Provident Fund Work (ʲྼਂλ
) in November 2024 to formulate systematic
internal measures to make social insurance and housing provident fund contributions
in accordance with the applicable laws and regulations going forward;
(ii) we designated Ms. Liu Hongchan (ᄬ), our executive Director, vice general
manager and secretary of the Board in November 2024, to closely monitor our
on-going compliance with the applicable laws and regulations relating to social
insurance and housing provident fund contributions and oversee the implementation
of any necessary measures;
(iii) our management will from time to time hold meetings to monitor the associated risks
and discuss measures on preventing the reoccurrence of such incidents; and
(iv) we will hold training sessions to keep our staff updated on the latest regulatory
requirements and local practices on social insurance and housing provident fund. We
will also consult our PRC Legal Advisors on a regular basis for advice on relevant
regulatory requirements to keep us abreast of relevant regulatory developments.
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We intend to make social insurance and housing provident fund contributions in
accordance with the applicable laws and regulations progressively going forward. As of the
Latest Practicable Date, we started to make social insurance and housing provident fund
contributions in full in accordance with all applicable PRC laws and regulations for some of
our employees. We were still making efforts to communicate with the remaining employees and
get their cooperations to make social insurance and housing provident fund contributions in
full, as making such contributions in full would also require them to pay their respective
contributions in full at the same time. For all the employees newly employed by us during the
period subsequent to December 31, 2024 and up to the Latest Practicable Date, we had made
social insurance and housing provident fund contributions in full for them. We expect to make
social insurance and housing provident fund contributions in full for all employees in
accordance with all applicable PRC laws and regulations within one year upon Listing.
See “Risk Factors — Risks Relating to Our Business and Industry — Failure to comply
with relevant regulatory requirements relating to the social insurance and housing provident
fund contributions for and on behalf of our employees may subject us to penalties and have an
adverse impact on our financial conditions and results of operations.”
We believe we have maintained good relationships with our employees. During the Track
Record Period and up to the Latest Practicable Date, we did not experience any strike or any
labor dispute with our employees which have had or are likely to have a material impact on our
business.
SEASONALITY
Our business operations are subject to minor seasonal fluctuations. In line with the
industry norm of the dental services market in China, we typically witness increase in customer
visits in July and August each year, as it can be easier for potential customers, especially
children and teenagers, to have time for dental diagnosis and treatment during their summer
vacation. In addition, we typically witness fewer customer visits shortly before and during the
Chinese New Y ear holiday. We expect our business operations and financial performance to
continue to experience minor fluctuations based on seasonal factors.
For more details, see “Risk Factors — Risks Relating to Our Business and Industry —
Our business is subject to seasonality. We expect to continue to experience seasonal
fluctuations in our revenue, results of operations and financial condition.”
LICENSES, PERMITS AND CERTIFICATES
We operate in a strictly regulated industry in the PRC. According to the applicable PRC
laws and regulations, we are required to obtain various licenses, permits and certificates for our
operations, including among others, the Medical Institution Practicing License ( ᔼᐕዚ࿴ੂุ
஢̙ᗇ), Clinic Filing Notice (ኯᗇ), Radiation Safety Permit (τΌ஢̙ᗇ) and
Radio diagnosis and Radiotherapy Permit (ൢᐕ஢̙ᗇ). See “Regulatory Overview —
Regulations on the Administration and Categorization of Medical Institutions” for details of the
relevant requirements.
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We had obtained all material licenses, permits, approvals and certificates required for the
current operations and such licenses, permits, approvals and certificates were valid and remain
in effect as of the Latest Practicable Date. We monitor the validity status of, and make timely
applications for the renewal of, relevant licenses, permits, approvals and certificates prior to
their respective expiration date. During the Track Record Period and up to the Latest
Practicable Date, we had not experienced any material difficulty in obtaining or renewing the
required licenses, permits, approvals and certificates for our business operations. With respect
to 10 licenses, permits, approvals and certificates to expire in 2025 (among which 5 licenses
were Medical Institution Practicing Licenses), we were in the process of preparing for the
renewal for them according to the applicable PRC laws and regulations as of the Latest
Practicable Date. Our PRC Legal Advisors are of the view that, there is no material legal
impediment in renewing these licenses, permits, approvals and certificates as they expire in
future as long as we are in compliance with applicable requirements under the PRC laws,
regulations and rules and provided that we take all necessary steps and submit relevant
applications in accordance with the requirements and schedules under the applicable PRC laws,
regulations and rules. However, we cannot assure you that we will be able to timely renew such
licenses, permits, approvals or certificates in the future. If we are unable to renew such
licenses, permits, approvals and certificates upon their expiration in a timely manner, our
business operations, finance performance and prospects will be materially adversely
affected. See “Risk Factors — Risks Relating to Our Business and Industry — If we fail to
timely renew any existing licenses, permits or certificates or fail to obtain any licenses, permits
or certificates for our newly commenced or acquired business, we may not be able to maintain
or develop our business.”
INSURANCE
As of the Latest Practicable Date, we maintained automobile insurance. We are not
required to, and generally do not, maintain employer liability insurance, business interruption
insurance or key person insurance, which are not mandatory under the PRC laws and
regulations. During the Track Record Period and up to the Latest Practicable Date, we did not
submit any material insurance claims, nor did we experience any material difficulties in
renewing our insurance policies.
Our Directors believe that our insurance coverage is adequate and is in line with industry
practice. However, the risks related to our business and operations may not be fully covered
by insurance. See “Risk Factors — Risks Relating to Our Business and Industry — Our
insurance coverage may be inadequate to cover all significant risk exposures.”
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PROPERTIES
We occupy certain properties in the PRC in connection with our business operations.
These properties are used for non-property activities as defined under Rule 5.01(2) of the
Listing Rules.
Owned Properties
As of the Latest Practicable Date, we owned and occupied nine properties in the PRC with
a total GFA of 1,738.49 sq.m. as our dental institution premises. We have obtained Real Estate
Ownership Certificates for all nine properties. The following table sets forth a summary of our
owned properties as of the Latest Practicable Date:
No. Owner/Occupier Location Usage GFA
(sq.m.)
1. /H1118/H1118Our Company Wuhan, Hubei
province
Commercial and
residential
67.32
2. /H1118/H1118Our Company Wuhan, Hubei
province
Commercial and
residential
458.26
3. /H1118/H1118Our Company Wuhan, Hubei
province
Office premises and
residential
596.88
4. /H1118/H1118Our Company Wuhan, Hubei
province
Commercial 101.23
5. /H1118/H1118Our Company Wuhan, Hubei
province
Commercial 148.55
6. /H1118/H1118Our Company Wuhan, Hubei
province
Commercial 36.50
7. /H1118/H1118Our Company Wuhan, Hubei
province
Commercial 138.74
8. /H1118/H1118Our Company Wuhan, Hubei
province
Commercial 104.77
9. /H1118/H1118Our Company Wuhan, Hubei
province
Commercial 86.24
According to section 6(2) of the Companies (Exemption of Companies and Prospectuses
from Compliance with Provisions) Notice, the prospectus is exempted from compliance with
the requirements of section 342(1)(b) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance in relation to paragraph 34(2) of the Third Schedule to the Companies
(Winding Up and Miscellaneous Provisions) Ordinance which require a valuation report with
respect to all our interests in land or buildings, for the reason that, as of December 31, 2024,
none of our properties has a carrying amount of 15% or more of our consolidated total assets.
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Leased Properties
As of the Latest Practicable Date, we leased 121 properties in the PRC with a total GFA
of 46,280.7 sq.m. mainly for dental institution or office premises. The following table sets forth
the details of our lease portfolio as of the Latest Practicable Date.
Total number of effective lease agreements 121
Tenancy period Number of effective lease agreements
– Expiring by the end of 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810
– Expiring by the end of 2026 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821
– Expiring by the end of 2027 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817
– Expiring after December 31, 2027 /H1118/H1118/H1118/H1118/H1118/H1118/H1118 73
Rental structure Number of effective lease agreements
– Fixed rental /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111858
– Rental subject to periodical rise /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118 63
Under the applicable PRC laws and regulations, we, as the lessee, have the right of first
refusal under the same conditions to renew the leases with lessors under all of our lease
agreements.
As of the Latest Practicable Date, 54 of our lease agreements with an aggregate GFA of
22,002.7 sq.m. had not been registered with the relevant PRC authorities, primarily due to
certain landlords failed to cooperate to complete the lease registration, or unfamiliarity with the
relevant requirements by certain of our staff.
Legal Consequences
As advised by our PRC Legal Advisors, failure to register an executed lease agreement
will not affect its legality, validity or enforceability. However, we may be subject to a fine of
no less than RMB1,000 and not exceeding RMB10,000 for each unregistered lease agreement
if the relevant PRC government authorities require us to rectify and we fail to do so within the
prescribed time period. We estimate that the maximum penalty we may be subject to for these
unregistered lease agreements will be approximately RMB0.54 million, which we believe is
immaterial. Therefore, we believe that the failure to register these lease agreements will not
have any material adverse impact on our financial condition or results of operations. As of the
Latest Practicable Date, we were not aware of any material claims or actions being
contemplated or initiated by the relevant government authorities, or other third parties with
respect to our use of such properties.
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Measures Adopted and Improved Internal Control
We will continue to actively liaise with the respective lessors to complete the registration
of all such lease agreements, if possible. We have designated Ms. Huang Meiyun (ڄߕthe
chairman of the Board of Supervisors and the senior consultant of our Company in November
2024 to track the latest progress on registration of all such lease agreements. In addition, we
adopted a series of measures in November 2024 to enhance our internal control, including
Management Measures on Institution Lease (), Measures on License
Management () and Notice on the Renovation and License Management of
Dental Institutions ().
Based on our internal estimates and taking into account the market rent level and
renovation expenses, in the most extreme case, we would choose to relocate the relevant dental
institutions upon expiration of the relevant unregistered lease agreements. We believe we will
be able to timely find comparable properties to relocate and such relocations, individually or
collectively, will not materially adversely affect our operations and financial performance.
Subsequent to December 31, 2024 and up to the Latest Practicable Date, we entered into
20 lease agreements. Among these lease agreements, we completed registration with the
relevant government authorities for 17 agreements, while the remaining three agreements were
in the process of completing registration as of the Latest Practicable Date, primarily as the
relevant lessors failed to cooperate to complete the registration. We have been spending efforts
to liaise with the respective lessors to complete the registration of all such lease agreements,
if possible.
See “Risk Factors — Risks Relating to Our Business and Industry — We may be subject
to fines as a result of unregistered leases and our use of leased properties may be challenged.”
ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE
We are subject to various PRC laws, regulations and rules with respect to environmental
protection and social responsibility, typically covering disposal of medical waste, discharge of
wastewater, environmental impact assessment, fire safety and occupational health. For more
details, see “Regulatory Overview — Regulations on Environmental Protection Related to
Medical Institutions.”
We emphasize the importance of environmental, social and corporate governance (the
“ESG”) affairs to achieve long-term and sustainable growth. We endeavor to contribute to
environmental protection, shoulder corporate social responsibility and promote corporate
governance.
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Overall ESG Governance
We have established ESG policies to set forth our measures in relation to environmental
protection, social responsibilities and corporate governance. Our Board is committed to
maintaining lawful, ethical and environmentally friendly operations, upholding high standards
in environmental and social practices. With appropriate skills and competencies to assess
ESG-related risks and opportunities, our Directors have the collective and overall
responsibility regarding the identification, evaluation and management of ESG-related risks
and opportunities. Our Directors oversee our internal plans and goals designed to respond to
such risks and opportunities. Our management team is generally responsible for setting ESG
strategies and particular targets, carrying out our ESG measures, and scrutinizing the
implementation of and timely updates to our internal policies pursuant to the development in
regulatory environment and industry trend. Through reviewing our ESG-related performance,
our management identifies, evaluates and determines our ESG-related risks and opportunities
over the short, medium and long term. Our management from time to time discusses with
employees in charge of the committees and centers at our headquarters level as well as
operating staff at dental institutions level to assess the impact of such risks and opportunities
on our Group’s business, strategy and financial planning. Our management then reports to the
Board, based on which we improve and implement our internal control measures and targets
relating to ESG.
We do not operate production facilities, the future impact of potential changes in
ESG-related social trends and policies on our business model, strategies, operations and
financial performance is limited. We are committed to identifying and mitigating any potential
risks in this regard in the mid- to long-term. To be specific, we pay close attention to the
development of ESG-related social trends and policies. We closely assess changes in resource
supply and climate in regions where we operate and their potential impact on our operations.
This enables us to timely formulate and take emergency measures for public emergencies and
extreme climate hazards to minimize the risk of interruption to our operations. During the
Track Record Period and up to the Latest Practicable Date, our business operations had not
been materially adversely affected by any changes in ESG-related social trends and policies.
With the accelerated transformation to a low-carbon economy, any failure to respond to
ESG-related social trends and policies may result in reputational damage and even customer
losses. The promulgation and implementation of ESG-related policies and rapid developing
public awareness of ESG issues may require significant investment to be made to operate our
dental service network in an eco-friendlier method, or even require us to alter our dental
practices in a way that could adversely impact the performance of our dental institutions or the
results of our overall business operations. See “Risk Factors — Risks Relating to Our Business
and Industry — Increasing focus with respect to environmental, social and corporate
governance matters may impose additional costs on us or expose us to additional risks. Failure
to keep up with the evolvement in social trends and policies relating to ESG matters may
adversely affect our business, financial condition and results of operations.” for details.
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We have formulated the following measures and working mechanisms to identify, assess,
manage and mitigate our ESG-related risks and opportunities and optimize our ESG
performance:
 arranging internal training sessions regarding occupational health, environmental
protection, disposal of medical waste and dental institutions’ other ESG-related
responsibilities;
 summarizing and discussing experiences on improving the internal mechanism on
ESG matters among our management;
 arranging internal meetings to discuss the latest development in laws, regulations,
rules and policies on ESG matters, to raise the awareness of ESG among our
management, dentists, other medical professionals and other staff;
 with increasing attention on ESG-related risks, taking ESG matters into
consideration during planning the establishment of new dental institutions or
assessing potential acquisition targets, such as fire safety and environmental impact
assessment; and
 communicating with other dental services providers and industry experts on the
identification and assessment of ESG-related risks and opportunities, sharing ideas
with respect to the latest ESG trend in both local and national markets.
We integrate the above measures and working mechanisms into our daily operations,
fulfilling our corporate responsibility in environmental and social aspects.
Going forward, we will assess and address our ESG-related risks and review our
ESG-related performance on a continuing basis. We also plan to establish a ESG Committee
within one year upon the Listing. The ESG Committee is expected to have three committee
members, including both our management and employees, who are led by Ms. Shen. The
primary duties of such committee are expected to mainly cover (i) discussing and providing
feedback on ESG management objectives, plans, implementation performance and progress;
(ii) setting and reviewing our ESG framework, strategies, policies and procedures; (iii)
collaborating with third-party consulting firms to prepare and review our ESG report; (iv)
supervising and guiding our departments in implementing ESG policies and conducting
assessments; and (v) promoting our ESG initiatives, such as emission reduction, environmental
friendly projects, community activities, etc.. Upon the Listing, we will continue to follow the
applicable regulatory requirements regarding ESG matters.
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Environmental Protection
We believe operating and managing our dental institutions in an environmentally friendly
way not only benefits the natural environment but also creates a clean, safe and comfortable
diagnosis and treatment environment for our customers. Due to the nature of our business, the
environmental, social and climate-related impacts arising from our business operations are
limited. Using electricity is among the main sources of our indirect greenhouse gas emissions.
The consumption of electricity produced from fossil fuels results in the release of greenhouse
gases, primarily carbon dioxide, which contribute to global warming and climate change.
We are subject to the PRC environmental protection laws and regulations. As of the Latest
Practicable Date, we complied with all PRC laws and regulations with respect to environmental
matters in all material respects, and we did not receive any complaint from any party in respect
of any environmental protection concern or issue and we have not experienced any material
environmental incidents arising from our business operations.
Our environmental protection policies and measures mainly cover conservation of
resources including water and electricity, disposal of medical waste and protection from
medical radiation, seeking to integrate the core value of environmental protection into the daily
operations of our dental institutions.
Conservation of Resources
With a view of balancing business growth and environmental protection, we give high
regard for resource consumption efficiency and control the greenhouse gas emission during our
business operations. We primarily adopt the following measures to conserve resources and
realize environmentally friendly operations:
 arranging meetings and training sessions to educate our staff on the concept of
resource consumption efficiency, especially energy efficiency, fostering our staff’s
awareness on energy conservation;
 promoting the recycle of packaging materials used in office during our daily
operations, such as plastic bags and bottles, cartons and cardboard, where efficient
and applicable;
 encouraging the reuse of paper, double-sided printing and usage of electronic copies
to conserve resources, where efficient and applicable;
 deploying online operating systems, such as HIS and SCRM, which helps us
streamline and digitalize hospital information and medical records in electronic
forms, reducing the use of paper during our daily operations and promoting
paperless environment;
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 establishing stable cooperation relationships with suppliers that appreciate ESG
performance and discussing with our suppliers with respect to resource conservation
and the use of degradable packaging materials;
 posting ESG-related publicity signs in our offices and reminding our staff to
conserve resources during daily operations, such as saving water and electricity and
timely turning off the light and air conditioner before leaving the office; and
 monitoring our electricity consumption, as the use of electricity is among the main
sources of our indirect greenhouse gas emissions. Encouraging the use of energy-
saving lighting systems and new energy vehicles among our staff to reduce
greenhouse gas emissions. We have temperature controls for air conditioning and
close doors and windows when using air conditioning. We also remind the last
employee to leave the office to be responsible for turning off the lights and air
conditioning.
Disposal of Medical Waste
During the daily operations, our dental institutions generate solid waste, primarily
including hazardous medical waste and non-hazardous waste. We require our dental institutions
to strictly follow the centralized disposal principle of Regulations on the Administration of
Medical Waste (၍ଣૢԷ) promulgated by the State Council, as well as the
classified management of medical waste according to the Catalogue of Classified Medical
Wastes (ʱᗳͦ፽) issued by the NHC. Our dental institutions also generate
medical wastewater during daily operations and we require our dental institutions to dispose
medical wastewater in accordance with the relevant regulatory requirements.
We have implemented detailed internal measures on disposal of medical waste, such as
Medical Waste Management System () and Medical Waste Record
Management System (), in order to clearly categorize the medical
waste generated during operations and standardize the storage, collection, handover,
transportation and disposal of medical waste with precise time requirement. We engage
qualified third-party entities specialized in centralized disposal of medical waste to promptly
transfer medical waste under the applicable regulatory requirements.
Protection from Medical Radiation
Our dental institutions that operate the medical devices containing radioactive materials
or emit radiation during operations are required to obtain Radiation Safety Permit (τΌ
஢̙ᗇ) and Radio diagnosis and Radiotherapy Permit (ൢᐕ஢̙ᗇ). We pay close
attention to the radiation safety and protection from medical radiation in our dental institutions.
We require medical professionals to strictly follow the radiation monitoring and protection
protocols. We require qualified medical professionals with Radiation Worker Certificate (࢛׳
ᗇ) to manipulate the radioactive equipment during operations. Such professionals are
required to participate in regular radiation protection trainings and examinations under the PRC
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laws, regulations and rules. See “Regulatory Overview — Regulations on the Administration
and Categorization of Medical Institutions” for details of relevant regulatory requirements. We
also from time to time conduct occupational hazards review for the medical radiation sites in
our dental institutions, ensuring that the protective equipment such as shielding walls and
shielding doors have been adequately equipped.
Key Metrics and Targets
Under our ESG policies for environmental protection, we will promote conservation of
resources and reduce greenhouse gas emissions. We set ESG targets and review our ESG
performance through multiple metrics to better monitor our ESG performance and control the
ESG-related risks that may impact our operational and financial performance. We constantly
control our environmental impact through monitoring our resource consumption and pollutant
emission levels.
Our energy consumption is mainly derived from water and electricity consumption during
the operations of our dental institutions, and daily operation and maintenance of our
information technology systems. By keeping records for our electricity consumption and water
consumption, we from time to time review and timely improve the resource consumption
efficiency. The below table sets forth our water and electricity consumption analysis for the
years indicated:
Y ear ended December 31,
2022 2023 2024
Water consumption (ton) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836,920 37,358 35,606
Charges for water consumption
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118137 140 135
Charges for water consumption/revenue
(%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.033 0.032 0.033
Electricity consumption (MWh) /H1118/H1118/H1118/H1118/H1118/H1118/H11183,478 3,525 3,372
Charges for electricity consumption
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,833 2,861 2,843
Charges for electricity
consumption/revenue (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.69 0.65 0.70
The below table sets forth the number of our dental institutions that used energy-saving
lighting systems for the years indicated:
Y ear ended December 31,
2022 2023 2024
Number of dental institutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111874 81 86
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The below table sets forth the weight of disposed medical waste of our dental institutions
for the years indicated:
Y ear ended December 31,
2022 2023 2024
Weight of disposed medical waste (ton) /H1118 83.7 88.5 90.9
Considering our historical ESG-related performance and the measures we expect to
implement in the future, we set the following key ESG targets:
 increasing the coverage of energy-saving lighting systems in our offices to over 95%
in the following five years;
 striving to reduce the electricity consumption per revenue generated by us by over
5% in 2029 compared to 2024;
 striving to reduce the water consumption per revenue generated by us by over 5%
in 2029 compared to 2024; and
 increasing ESG-related posters or slogans to cover over 90% of our dental
institutions in the following five years, promoting the informatization of both our
headquarters and dental institutions in the following five years and reducing the use
of paper during our daily operations in the following five years.
We recognize compliance with all applicable ESG-related laws and regulations as our
principle on ESG issues. We also make efforts to ensure that our ESG goals are communicated
effectively and efficiently and measure and track our ESG metrics during the daily operations.
To be specific, we hold internal meetings to review the ESG metrics, check the feasibility of
ESG goals and make necessary adjustments to ESG measures based on our latest ESG
performance. We regularly monitor electricity and water consumption and encourage resource
conservation among our employees while ensuring operational efficiency and compliance. Our
management convenes to discuss our ESG tracking and measuring mechanisms to identify
potential risks and challenges in multiple aspects, such as resource consumption and
conservation, disposal of medical waste, protection from medical radiation, occupational
safety, employee welfare and diversity, etc. We plan to hold periodic training sessions to
improve employees’ awareness of our ESG goals as well as social and environmental
responsibilities, equipping them with sustainable and environmentally friendly knowledge and
techniques.
Our annual cost of compliance with environmental protection laws and regulations was
immaterial to us as a whole. We expect such compliance cost to remain immaterial considering
the nature of our business.
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Social and Governance
We shoulder our social responsibilities and establish a safe, equitable, diverse and
friendly working atmosphere. We strive to promote occupational safety and ensure our
compliance with applicable laws and regulations. Our ESG policies for social and corporate
governance facilitate us to manage the risks relevant to social, health and occupational matters
while improving our operating efficiency.
We do not operate any production facilities. We require our employees to pay attention
to all health and safety statutory requirements. To ensure compliance with applicable laws and
regulations, we mainly adopt the following measures and policies:
 our Human Resource Department from time to time reviews our existing policies on
human resources to make timely and necessary adjustments, keeping pace with
material changes to relevant laws and regulations;
 we designate staff to organize systematic training sessions and other team building
activities, such as internal training for employees on legal, safety protection and
emergency treatment knowledge, and training for employees on the latest industry
knowledge and working skills, caring for their occupational health and fostering
cohesiveness;
 we provide selected medical professionals with opportunities to participate in
advanced study, academic symposia and international meetings;
 we invite dentists as well as administrative and marketing talents to join our
Partnership Program and employee stock ownership platforms, aiming to elevate
their sense of responsibility and belonging;
 we proactively notify and negotiate with our employees pursuant to our internal
procedures if we need to adjust the employees’ positions or responsibilities due to
strategical adjustments or the relevant employees’ performance; and
 we maintain balanced employee structures. As of December 31, 2022, 2023 and
2024, women employees represented 76.7%, 77.8% and 78.6% of our total
employees as of the same dates, respectively.
To ensure compliance with applicable laws and regulations, our Human Resource
Department would, if necessary and after necessary consultation with our legal advisers, adjust
our internal policies on human resources to accommodate material changes to relevant laws and
regulations.
During the Track Record Period and up to the Latest Practicable Date, we complied with
all PRC laws and regulations with respect to health and occupational safety matters in all
material respects. During the Track Record Period and up to the Latest Practicable Date, we did
not experience any material accidents during our operations, nor were we subject to any
material claims for personal or property damages or compensation paid to employees.
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We also uphold our corporate social responsibility through providing free healthcare
knowledge popularization and dental consultation in local communities, and give donations to
the local Red Cross Society during the COVID-19 pandemic. Moreover, we also from time to
time offer free offline lectures in communities, introducing oral health knowledge and
enhancing daily oral hygiene awareness among the general public.
Board Diversity
We strive to achieve and maintain board diversity to improve our Board’s performance,
bring inclusivity and unique perspectives to the boardroom. In particular, Ms. Shen and Ms.
Liu Hongchan (ᄬ) have been appointed as our executive Directors to promote the gender
diversity of our Board. See “Directors, Supervisors and Senior Management” for more details.
COMPLIANCE AND LEGAL PROCEEDINGS
During the Track Record Period and up to the Latest Practicable Date, we were not
imposed any material administrative penalties. During the Track Record Period and up to the
Latest Practicable Date, we were not involved in any non-compliance incidents that had a
material adverse effect on our business, financial conditions or results of operations.
Non-compliance Incidents
Other than the non-compliance incidents disclosed below, we did not experience any
other systemic non-compliance incidents against us or any of our subsidiaries which could have
a material adverse effect on our financial conditions or results of operations.
Failure to Obtain the Urban Sewage Disposal Drainage License
Background and Reasons
Historically, we failed to obtain the requisite Urban Sewage Disposal Drainage Licenses
(ᕄϮ˥રɝર˥၍ၣ஢̙ᗇ) for certain dental institutions in a timely basis. As of
November 20, 2024, 21 of our dental institutions were in the process of applying for the Urban
Sewage Disposal Drainage License, among which (i) 17 dental institutions were acquired by
us and their former shareholders had not obtained the Urban Sewage Disposal Drainage
Licenses. We were not noticed by the local government authorities to apply for the Urban
Sewage Disposal Drainage Licenses during the acquisition process; and (ii) 4 dental
institutions’ failure to obtain the Urban Sewage Disposal Drainage Licenses was mainly caused
by our staff’s unfamiliarity with and/or misunderstanding of the regulatory requirements on
applying the Urban Sewage Disposal Drainage Licenses as a result of the evolving and varied
requirements and practices adopted by the local government authorities of different cities
where such dental institutions are located.
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Once we became aware of such incidents during our compliance reviews, we took prompt
remedial and/or rectification measures as soon as practicable. We submitted the applications
for the Urban Sewage Disposal Drainage Licenses and designated dedicated personnel to track
the latest progress on our dental institutions’ application for the Urban Sewage Disposal
Drainage Licenses. As of the Latest Practicable Date, among the abovementioned 21 dental
institutions, (i) 17 dental institutions obtained the requisite Urban Sewage Disposal Drainage
Licenses; and (ii) 4 dental institutions received written confirmations from their respective
competent government authorities in February 2025, confirming these dental institutions do not
need to apply for the Urban Sewage Disposal Drainage Licenses and such dental institutions
are permitted to conduct drainage activities under their existing setup without Urban Sewage
Disposal Drainage Licenses. Going forward, once the relevant competent government
authorities started to accept the applications for Urban Sewage Disposal Drainage Licenses, we
will apply for such licenses for these dental institutions as soon as practicable.
Legal Consequences
As advised by our PRC Legal Advisors, according to the applicable PRC laws and
regulations, an entity that had not obtained the requisite Urban Sewage Disposal Drainage
License may be ordered by the local government authorities for urban sewage disposal to cease
the illegal actions, take rectification measures and apply for the Urban Sewage Disposal
Drainage License, and may be subject to a fine of up to RMB500 thousand, which is our
maximum exposure to such non-compliance as advised by our PRC Legal Advisors.
Measures Adopted and Improved Internal Control
We became aware of such incident during our compliance reviews. Such incident was not
a result of any willful misconduct by our Directors or any of our employees. We took prompt
remedial and/or rectification measures as soon as we identified such incident:
(i) We submitted the applications for the Urban Sewage Disposal Drainage Licenses for
the relevant dental institutions as soon as practicable after we became aware of such
incident.
(ii) We have enhanced our internal control measures on urban sewage disposal issues.
In particular,
(a) in November 2024, we adopted a series of measures to enhance our internal
control, covering urban sewage disposal issues, such as Management Measures
on Investment and Acquisition (), Management Measures on
Institution Lease (), Management Measures on
Construction Project Management () and Measures on
License Management (). We also adopted the Notice on the
Renovation and License Management of Dental Institutions (ਂλᔼᐕ
) in the same month;
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(b) our management will from time to time hold meetings to monitor the
associated risks and discuss measures on preventing the reoccurrence of such
incidents. They will also pay attention to the regulatory compliance
performance of our potential acquisition targets in respect of disposal of urban
sewage;
(c) we will hold training sessions to keep our staff updated on the latest regulatory
requirements and local practices on disposal of urban sewage in dental
institutions;
(d) in November 2024, we designated Ms. Huang Meiyun, the chairman of the
Board of Supervisors and the senior consultant of our Company, to track the
latest progress on our dental institutions’ application for the Urban Sewage
Disposal Drainage Licenses; and
(e) we have included a regulatory compliance provision in our acquisition
agreements, pursuant to which the transferors are required to provide
undertaking on the compliance status, including the status of the Urban Sewage
Disposal Drainage Licenses.
After the implementation of enhanced internal control measures, we had not experienced
similar non-compliance incidents within our dental service network as of the Latest Practicable
Date.
Our Directors are of the view that our historical failure to obtain the Urban Sewage
Disposal Drainage License has not had any material adverse impact on our business, financial
condition or results of operations. During the Track Record Period and up to the Latest
Practicable Date, none of our dental institutions with defects in the Urban Sewage Disposal
Drainage Licenses had experienced any accident in respect of sewage disposal or been imposed
any administrative penalties for the failure to obtain the Urban Sewage Disposal Drainage
Licenses.
See “Risk Factors — Risks Relating to Our Business and Industry — Our business is
generally subject to PRC laws and regulations in relation to the environmental matters and fire
safety. We cannot assure you that we will not be subject to liabilities or penalties in connection
with environmental matters and fire safety in the future.”
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Failure to Complete Fire Safety Filing
Background and Reasons
Pursuant to the applicable PRC laws and regulations, when we renovate an owned
property or lease property for the purpose of opening a dental institution, we may be required
to make a fire safety filing with the housing and urban-rural development departments of local
governments (the “ Fire Safety Filing (ࣩ)and be subject to spot check. Historically,
we failed to complete Fire Safety Filing with the housing and urban-rural development
departments of local governments for certain properties in a timely basis. As of November 20,
2024, we had not completed Fire Safety Filings with the housing and urban-rural development
departments of local governments for 11 properties used for provision of dental services. In
particular, (i) our subsidiaries on 6 properties were acquired by us and their former
shareholders had not completed the Fire Safety Filing in respect of such leased properties; and
(ii) our subsidiaries on 5 properties failed to complete the Fire Safety Filing, which was caused
by our staff’s unfamiliarity with and/or misunderstanding of the regulatory requirements on
Fire Safety Filling as a result of the evolving and varied requirements and practices adopted
by the local government authorities of different cities where such dental institutions are
located.
Once we became aware of such incidents during our compliance reviews, we held internal
meetings to discuss the improvements in internal control measures and took prompt remedial
and/or rectification measures. We submitted the applications for the Fire Safety Filings to the
extent practicable and designated dedicated personnel to track the latest progress on our dental
institutions’ application for the Fire Safety Filings. As of the Latest Practicable Date, among
the abovementioned 11 properties, (i) we completed Fire Safety Filings for 9 properties; and
(ii) we closed the dental institution on 1 property and no longer need to apply for Fire Safety
Filing for such property. We voluntarily terminated the operations of such dental institution
based on our evaluation on the market condition and future business strategies. Revenue
generated from such dental institution in each year during the Track Record Period only
accounted for less than 1% of our total revenue, indicating closure of such dental institution
would not have any material influence on our operations and financial performance. In
addition, as of the Latest Practicable Date, we had not completed Fire Safety Filing for the
remaining 1 property used as dental institution premise for provision of dental services. Our
subsidiary on such property failed to complete the Fire Safety Filing, mainly caused by our
staff’s unfamiliarity with and/or misunderstanding of the regulatory requirements on Fire
Safety Filling as a result of the evolving and varied requirements and practices adopted by the
local government authorities.
For the years ended December 31, 2022, 2023 and 2024, our revenue generated from such
dental institution amounted to RMB11.7 million, RMB10.4 million and RMB7.8 million,
accounting for 2.9%, 2.4% and 1.9%, respectively, of our total revenue for the same years.
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With respect to the property that did not complete Fire Safety Filing as of the Latest
Practicable Date, we plan to relocate the relevant dental institution based on our evaluation on
market conditions and operational performance. Given our existing strategic decision to
relocate the relevant dental institution closer to our customer base to improve acquisition and
retention, coupled with the fact that the expected timeline for Fire Safety Filing would have
exceeded our relocation schedule, we did not apply for the Fire Safety Filing for such property.
We were in the process of site selection as of the Latest Practicable Date and expect to finish
the relocation by the end of October 2025. Upon completion of the relocation, we expect to
thoroughly go through all necessary Fire Safety Filing procedures and duly complete Fire
Safety Filing. We expect the relocation will not have material impacts on our business
operations and financial condition, considering (i) the revenue generated from such dental
institution in each year during the Track Record Period remained less than 3% of our annual
revenue; and (ii) we estimate the total costs for such relocation would be immaterial to our
Group as a whole.
Legal Consequences
As advised by our PRC Legal Advisors, according to the applicable PRC laws and
regulations, for the property for which our relevant subsidiary fails to complete the Fire Safety
Filing after completion of construction acceptance, our relevant subsidiary may be ordered by
the housing and urban-rural development departments of local governments to rectify and
subject to a fine of up to RMB5,000, which is our maximum exposure to such non-compliance
as advised by our PRC Legal Advisors.
Our PRC Legal Advisors are of the view that the amount of maximum administrative fines
that may be imposed for the failure to complete the Fire Safety Filing under applicable PRC
laws and regulations is immaterial and such non-compliance incident would not have material
adverse effect on our operations as a whole.
Our Directors are of the view that such non-compliance incident has not had and will not
have any material adverse impact on our business, financial condition or results of operations,
taking into account (i) the maximum potential fines, if imposed, would be RMB5,000 for such
property, which would be immaterial to us, (ii) the confirmations from Fire Safety Consultant
and our PRC Legal Advisors’ view as mentioned above, (iii) such dental institution had not
been imposed any administrative penalties or identified any material risks in respect of fire
safety during the daily inspections by fire and rescue brigades, which are the authorities for
daily supervision of fire safety related matters of such dental institution, and (iv) during the
Track Record Period and up to the Latest Practicable Date, none of our subsidiaries with
defects in Fire Safety Filing had been imposed penalties as a result of their failure to complete
such procedures.
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Measures Adopted and Improved Internal Control
We became aware of such incident during our compliance reviews. Such incident was not
a result of any willful misconduct by our Directors or any of our employees. We took prompt
remedial and/or rectification measures as soon as we identified such incident.
We have engaged an Independent Third Party fire safety consultant (the “ Fire Safety
Consultant ”) to conduct fire safety inspections on the property which had not yet completed
the Fire Safety Filing through on-site inspection, surveys and document review. The Fire Safety
Consultant is the certified fire safety specialist with experience in the maintenance and
inspection of fire safety facilities and fire safety evaluation. As confirmed by the Fire Safety
Consultant, (i) the function of such property’s fire safety facilities was in compliance with
regulatory requirements; (ii) the surrounding fire separation distance and the fire safety lanes
of such property were in compliance with regulatory requirements and the fire prevention
standards, and no potential hazard on fire safety were identified during the on-site inspections;
and (iii) there will be no material legal impediment for us to complete the Fire Safety Filing
for such property.
We have enhanced our internal control measures on fire safety-related issues. In
particular:
(i) in November 2024, we adopted a series of measures to enhance our internal control,
covering fire safety-related issues, such as Management Measures on Investment
and Acquisition, Management Measures on Institution Lease, Management
Measures on Construction Project Management and Measures on License
Management . We also adopted Notice on the Enhancement of Fire Safety
Management () and Management Measures on
Fire Safety () in the same month;
(ii) we will hold internal meetings and training sessions to keep our staff updated on the
latest regulatory requirements on fire safety, conduct fire drill to elevate staff’s
awareness of fire emergency knowledge and inspect the fire safety facilities in our
dental institutions;
(iii) we pay attention to the regulatory compliance performance of our potential
acquisition targets in respect of fire safety. For our newly established and acquired
dental institutions, such dental institutions shall only commence operations after
completing the Fire Safety Filing procedure or obtaining any other fire safety
approvals under the applicable PRC laws and regulations. For our existing dental
institutions, if we intend to conduct renovation, we will perform the relevant fire
safety procedures in accordance with applicable laws and regulations before
resumption of operations;
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(iv) we have included a regulatory compliance provision in our acquisition agreements,
pursuant to which the transferors are required to provide undertaking on the
compliance status, including the fire safety compliance; and
(v) in November 2024, we designated Ms. Huang Meiyun, the chairman of the Board of
Supervisors and the senior consultant of our Company, to track the latest progress
on our dental institutions’ Fire Safety Filing procedure.
After the implementation of enhanced internal control measures, we had not experienced
similar non-compliance incidents within our dental service network as of the Latest Practicable
Date.
See “Risk Factors — Risks Relating to Our Business and Industry — Our business is
generally subject to PRC laws and regulations in relation to the environmental matters and fire
safety. We cannot assure you that we will not be subject to liabilities or penalties in connection
with environmental matters and fire safety in the future.”
Save as disclosed above, we were not aware of any other material or systemic
non-compliance incidents in respect of applicable laws and regulations during the Track
Record Period and up to the Latest Practicable Date. We have engaged an Independent
Third-Party consultant (the “ Internal Control Consultant ”) to conduct a review of our
internal control policies and rectification measures and to provide recommendations and
suggestions for improvement, where applicable. Taking into account (i) the internal control
measures implemented by us in connection with the above non-compliance incidents, and the
Internal Control Consultant did not have any further recommendation in its Follow-up Review,
(ii) our ongoing rectification efforts and substantial rectification progress, and (iii) under the
ongoing supervision by our Board, as confirmed by our Directors, the non-compliance
incidents did not involve fraud or dishonesty, our Directors are of the view that our enhanced
internal control measures are adequate and effective. Based on the due diligence conducted,
nothing has come to the attention of the Sole Sponsor which would reasonably cause the Sole
Sponsor to disagree with the above view of the Directors. Our Directors are also of the view
that the suitability of our Directors is compliant with the Listing Rules 3.08 and 3.09; and our
Company is suitable for the Listing under the Listing Rule 8.04.
Legal Proceedings
During the Track Record Period and up to the Latest Practicable Date, we were not
involved in any litigation, arbitration or administrative proceedings that could have a material
and adverse effect on our business, financial condition or results of operations. As of the Latest
Practicable Date, we were not a party to any ongoing material litigation, arbitration or
administrative proceedings. As of the same date, we were not aware of any claims or
proceedings contemplated by government authorities or third parties which would materially
and adversely affect our business. Our Directors are not involved in any actual or threatened
material claims or litigation.
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Medical Claims Solved through Mediation
We are subject to occasional medical claims that may arise during the ordinary course of
business, which primarily include claims brought by customers and/or their families against
our dental institutions, primarily related to unsatisfactory treatment efficacy or physical
injuries that the customers claim to have suffered during or after receiving our dental services.
We strictly monitor the medical risks and establish multiple internal measures for tackling
medical claims, including Medical Quality and Safety Management System (ᔼᐕሯඎၾτΌ
) and Customer Complaint Management Measures ().
During the Track Record Period and up to the date of this prospectus, we had one medical
claim that resolved through mediation by medical dispute mediation committees and other
competent authorities and we had one medical claim that was undergoing the litigation
procedure. The claim amount of such undergoing litigation was approximately RMB92,000,
which was insignificant to us.
During the Track Record Period and up to the Latest Practicable Date, the total
compensation amounts paid by us to the relevant customers or their families in the medical
claims that resolved through mediation amounted to approximately RMB12,000. During the
Track Record Period and up to the Latest Practicable Date, we had not experienced any medical
claims that could cause a material adverse effect on our business, financial condition or results
of operations.
None of medical claims raised by our customers and/or their families involve any
determination of medical incident (݂During the Track Record Period and up to the
Latest Practicable Date, none of the dentists and other medical professionals practicing at our
dental service network had been involved in any disciplinary proceedings or otherwise
determined to be liable for any medical incident.
INTERNAL CONTROL AND RISK MANAGEMENT
To ensure compliance with the applicable laws and regulations, control the risks in
relation to our business operations, we have adopted various internal control and risk
management measures. In particular, we implemented internal policies, guidelines and
procedures to monitor and minimize the impact of risks which are relevant to our business and
improve our corporate governance.
Our Board is responsible for establishing our internal control and risk management
measures and reviewing the implementation and effectiveness of such measures. We have
established an Audit Committee which comprises three independent non-executive Directors,
namely Mr. Shu Yijie ( ଯ່௫), Ms. Huang Suzhen (ޜand Ms. Wang Taosha ( ˮௗӍ)
chaired by Ms. Huang Suzhen (ޜ.)
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The Audit Committee has also adopted its terms of reference which set out clearly its
duties and obligations for ensuring compliance with the relevant regulatory requirements and
providing an independent view on the effectiveness of our internal control policies, risk
management systems and financial management processes. In particular, the Audit Committee
is empowered under its terms of reference to review any arrangement which may raise concerns
about possible improprieties in financial reporting, internal control or other matters.
Internal Control Review
In preparation for the Listing, we have engaged the Internal Control Consultant in July
2024 to perform a review over selected areas of our internal controls (the “ Internal Control
Review ”). To review the status of the management actions taken by us to address the findings
of the Internal Control Review, the Internal Control Consultant performed the follow-up review
in November 2024 (the “ Follow-up Review ”). We had improved our internal control system,
and the Internal Control Consultant did not have any further recommendation in its Follow-up
Review.
We have adopted and implemented a series of internal control policies, measures and
procedures designed to provide further assurance on effective and efficient operations, duly
financial reporting and sound compliance with applicable laws and regulations. We will
conduct regular reviews and constant updates on our internal control policies, measures and
procedures to accommodate the development of the regulatory environment and our business
expansion.
Enhanced Internal Control Measures
In accordance with the applicable laws and regulations in the PRC and Hong Kong, we
have implemented measures to establish and maintain our internal control system, including
monitoring of operational processes, the establishment of risk management policies and
compliance with applicable laws and regulations.
 our Directors have attended trainings conducted by our Hong Kong legal advisor on
their ongoing obligations, duties and responsibilities of publicly listed companies
under the Companies Ordinance, the SFO and the Listing Rules. Our Directors are
fully aware of their duties and responsibilities as directors of a listed company in
Hong Kong;
 we have set internal procedures for lines of communication and provided a process
by which our employees can identify and timely report potential non-compliance
exposures; and
 we have appointed a compliance adviser pursuant to Rule 3A.19 of the Listing Rules
to ensure that, among other things, we are properly guided and advised as to
compliance with the Listing Rules and all other applicable laws, rules, codes and
guidelines.
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OUTBREAK AND SPREAD OF COVID-19
During the Track Record Period, the COVID-19 pandemic caused imposition of various
containment measures to reduce offline activities in regions with high infection risks.
Customers with dental diseases or oral health needs reduced their visits to offline dental
institutions during the outbreak and spread of the pandemic. During the Track Record Period,
dental institutions in our dental service network experienced temporary operation suspension
at various times as precautionary measures to mitigate infection risks. During the Track Record
Period, 29 of our dental institutions in 7 cities temporarily suspended operations for 3 to 26
days, the majority of which suspended operations for less than 10 days. By the end of October
2022, all of such dental institutions resumed operations.
We highly value the health of our customers and employees and promptly took
precautionary measures including temperature screening at entry of offline dental institutions
and offices, strengthening the disinfection of common areas, as well as providing protective
masks and alcohol-based hand wash to our onsite employees. The expenses we incurred in
respect of the precautionary measures to prevent the transmission of COVID-19 within our
Group during the Track Record Period were insignificant to our Group as a whole. Taking
advantage of our timely measures and orderly management, we did not encounter severe
shortages or delays in the supply of, or material fluctuation in the price of, our supplies during
the outbreak and spread of COVID-19.
Our Directors consider that the negative impacts caused by the COVID-19 pandemic were
immaterial to the operational and financial performance of our Group during the Track Record
Period. We will continue to pay attention to any similar pandemic and take proper measures to
minimize any potential negative impact on our operations going forward.
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BOARD OF DIRECTORS
Our Board is responsible for, and has general powers over, the management and operation
of our business. Our Board consists of seven Directors, comprising four executive Directors
and three independent non-executive Directors. All Directors are elected by the general
meeting of Shareholders for a term of three years which is renewable upon re-election and
re-appointment.
The following table sets forth certain information regarding our Directors:
Name Age Position(s)
Time of joining
our Group
Date of
appointment as
a Director
Roles and
responsibilities
Mr. Y ao Xue
(௛) /H1118/H1118/H1118/H1118/H1118/H1118
60 – Chairman of
the Board
– Executive Director
July 2007 July 10, 2007 Responsible for the
overall strategy
planning, business
operation and
management of
our Group
Ms. Shen
Hongmin
(ઽ) /H1118/H1118/H1118/H1118
61 – Executive Director
– Vice chairman of
the Board
– General manager
December 2014 December 24,
2014
Responsible for the
daily operation
and management
of our Group
Mr. Guo Jiaping
(̻) /H1118/H1118/H1118/H1118
59 – Executive Director
– Vice general
manager
February 2021 October 28,
2024
Responsible for the
medical
management,
clinical work and
professional
training of our
Group
Ms. Liu
Hongchan
(ᄬ) /H1118/H1118/H1118/H1118
51 – Executive Director
– Vice general
manager
– Secretary of
the Board
November 2014 October 28,
2024
Responsible for the
investment and
procurement
management,
corporate
governance and
securities matters
of our Group
Mr. Shu Yijie
(ଯ່௫) /H1118/H1118/H1118/H1118
61 – Independent
non-executive
Director
November 2024 November 22,
2024
Providing
independent
opinion to our
Board
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Name Age Position(s)
Time of joining
our Group
Date of
appointment as
a Director
Roles and
responsibilities
Ms. Huang
Suzhen
(ޜ)H1118/H1118/H1118/H1118
58 – Independent
non-executive
Director
November 2024 November 22,
2024
Providing
independent
opinion to our
Board
Ms. Wang Taosha
(ˮௗӍ) /H1118/H1118/H1118/H1118
36 – Independent
non-executive
Director
November 2024 November 22,
2024
Providing
independent
opinion to our
Board
Executive Directors
Mr. Y ao Xue (௛), aged 60, founded our Group in July 2007 and has been the chairman
of the Board and a Director since then. Mr. Y ao is primarily responsible for the overall strategy
planning, business operation and management of our Group.
Mr. Y ao has over 30 years of experience in medical and healthcare industry and corporate
management. He set foot in the industry as a regional manager in Xi’an Janssen Pharmaceutical
Co., Ltd. (ʮ̡) from July 1993 to April 1994, primarily responsible for
sales of pharmaceuticals in certain areas of Hubei Province. Then, he served as the general
manager of the Chinese sales department in Zhuhai United Laboratories Co., Ltd. ( मऎᑌԞ
ʮ̡), a subsidiary of The United Laboratories International Holdings Limited
(Stock code: 3933.HK), from November 1994 to September 1996, primarily responsible for the
overall management of its sales business in China. Mr. Y ao then worked in Hubei Pukang
Pharmaceutical Co., Ltd. (ʮ̡) from May 1999 to February 2005. Mr. Y ao
served as the chairman of the board of Hubei Wanjia Pharmaceutical Co., Ltd. ( ಳ̏ຬԳᔼᖹ
ʮ̡) and was responsible for its overall management from March 2005 to November
2009. From December 2009 to December 2022, Mr. Y ao served as the general manager of
Nanjing Pharmaceutical Hubei Co., Ltd. (ʮ̡) primarily responsible for its
operation management, and since December 2020, he has been the chairman of the board of
Nanjing Pharmaceutical Hubei Co., Ltd.
Mr. Y ao is a well-regarded figure and holds positions at a number of public offices and
associations throughout his career. Mr. Y ao has been a deputy to the Fifteenth People’s
Congress of Wuhan City (ɽึ) since January 2022 and he was also
a deputy to the Fourteenth People’s Congress of Wuhan City (ɽึ)
from February 2017 to February 2022. He also served as a member of the Eleventh Committee
of the Chinese People’s Political Consultative Conference of Hubei Province (՘
ึ) from March 2013 to March 2018. He was a member of the Fifth
Council of the Chinese Stomatological Association ( ʕശɹഢᔼኪึ) from September 2016 to
September 2021. He was also a vice chairman of the Fourth Private Dental Medical Branch of
the Chinese Stomatological Association ( ʕശɹഢᔼኪึ͏ᐄɹഢᔼᐕʱึ) from May 2018
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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to May 2021 and a vice chairman of the Fifth Council of Hubei Stomatological Association ( ಳ
ɹഢᔼኪึ) from November 2017 to November 2022. Mr. Y ao is currently the vice
president of the Sixth Council of Hubei Stomatological Association and the vice chairman of
Pharmaceutical Profession Association of Hubei Province (ᔼᖹБุ՘ึ). In December
2017, Mr. Y ao was recognized as an outstanding member of Committee of the Chinese People’s
Political Consultative Conference of Hubei Province (ึ).
In April 2018, Mr. Y ao was recognized as the seventeenth model worker by Wuhan People’s
Government (ִ݁Mr. Y ao was also rewarded as an outstanding entrepreneur for
the years from 2015 to 2019 by Wuhan Enterprise Federation (ဏΆุᑌΥึ) and Wuhan
Entrepreneurs Association (՘ึ).
Mr. Y ao obtained his bachelor’s degree in medical science from Hubei Medical College
(ɽኪ) (the predecessor of Wuhan University School of Medicine (ဏɽኪᔼኪ௅))
in July 1987 and his bachelor’s degree in laws from Central China Normal University (ࢪ
ᇍɽኪ) in June 1991. Mr. Y ao obtained an executive master of business administration degree
from National University of Singapore in June 2005. From October 2017 to October 2020, Mr.
Y ao served as a part-time professor at the School of Management, Wuhan University of
Technology (ဏଣʈɽኪ). In December 2020, he was appointed as a social mentor for
candidates for master of business administration at the School of Management, Huazhong
University of Science and Technology (Ҧɽኪ). He was recognized as a senior
economist by Hubei Province Economic Profession (Wuhan) Senior Appraisal Committee ( ಳ
຾᏶ਖ਼ุ(ဏ)৷൙ึ) in April 2020.
Ms. Shen Hongmin (ઽ) (formerly known as Shen Hongmin ( ӏ҃ઽ)), aged 61,
joined our Group in December 2014 as a Director and the vice chairman of the Board and was
appointed as the general manager of our Company in April 2017. Ms. Shen is primarily
responsible for the daily operation and management of our Group. She also serves as director
of Shaoyang Hospital, Chenzhou Hospital and Jingzhou Dazhong.
Ms. Shen has over 30 years of experience in medical and healthcare industry and
corporate management. Ms. Shen commenced her career in medical and healthcare industry as
a provincial manager in Xi’an Janssen Pharmaceutical Co., Ltd. (ʮ̡) from
June 1993 to November 1994, primarily responsible for sales and distribution in Heilongjiang
Province. Ms. Shen subsequently served as the deputy general manager of the Chinese sales
department of Zhuhai United Laboratories Co., Ltd. (ʮ̡), a subsidiary
of The United Laboratories International Holdings Limited (Stock code: 3933.HK), from
December 1994 to August 1996, overseeing the sales and distribution across East, North,
Northeast, and Northwest regions of China. She worked in Hubei Pukang Pharmaceutical Co.,
Ltd. (ʮ̡) primarily responsible for its daily operation and management
from May 1999 to February 2005 and the general manager in Hubei Wanjia Pharmaceutical
Co., Ltd. (ʮ̡) primarily responsible for its daily operation and
management from March 2005 to November 2009. She served as the director and the vice
general manager in Nanjing Pharmaceutical Hubei Co., Ltd. (ʮ̡) from
December 2009 to December 2016, primarily responsible for the management of functional
departments at headquarters.
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Ms. Shen holds positions at a number of public offices and associations throughout her
career. She is a member of the Sixth Council of the Chinese Stomatological Association ( ʕശ
ɹഢᔼኪึ), the vice director of the Private Dental Medical Branch of the Chinese
Stomatological Association ( ʕശɹഢᔼኪึ͏ᐄɹഢᔼᐕʱึ), a standing member of the
Sixth Council of Hubei Stomatological Association (ɹഢᔼኪึ) and a deputy to the
Sixteenth People’s Congress of Wuchang District (ɽึ). Ms. Shen
was recognized as an outstanding member of Committee of the Chinese People’s Political
Consultative Conference of Wuchang District (ึ) for the
years of 2011, 2013 and 2014.
Ms. Shen obtained her bachelor’s and master’s degrees in medical science from Harbin
Medical University (ɽኪ) in July 1986 and August 1993, respectively. She
obtained an executive master of business administration degree from National University of
Singapore in June 2003. From October 2017 to October 2020, Ms. Shen served as a part-time
professor at the School of Management, Wuhan University of Technology (ဏଣʈɽኪ).
Mr. Guo Jiaping (̻), aged 59, joined our Group in February 2021 and was
appointed as a vice general manager of our Company in August 2022 and a Director in October
2024. He is primarily responsible for the medical management, clinical work and professional
training of our Group.
Mr. Guo has over 30 years of experience in dental medical industry. Prior to joining our
Group, Mr. Guo served as a chief physician in the clinical dentistry department of Wuhan
General Hospital of the Guangzhou Military Region (ဏᐼᔼ৫) (the predecessor of
The General Hospital of Central Theater Command of Chinese People’s Liberation Army ( ʕ
ʕ௅኷ਜᐼᔼ৫)) from July 1991 to April 2009. Mr. Guo then served as a chief
physician and the director of clinical dentistry department of Wuhan General Hospital of the
Guangzhou Military Region from April 2009 to November 2020.
Mr. Guo is a well-regarded physician and has been actively involved in a number of
professional associations. He was a member of the standing committee of the General
Stomatological Committee to the Chinese Stomatological Association ( ʕശɹഢᔼኪึ) from
2015 to 2021 and the Sixth Council of the Oral and Maxillofacial Surgery Professional
Committee to Chinese Stomatological Association (ࡰ
ึ). Mr. Guo was a vice president of both the Fourth and Fifth Councils of Hubei
Stomatological Association (ɹഢᔼኪึ) from November 2012 to November 2022, a
deputy director of the Third Council of the Oral and Maxillofacial Surgery Professional
Committee to Hubei Stomatological Association (ึ)
from November 2017 to November 2019, a director member of the Fourth Council of General
Dentistry Professional Committee of Hubei Stomatological Association (ɹഢᔼኪึΌ
ึ) from November 2019 to November 2021 and a deputy director of the
Third Council of Dental Physician Branch of Hubei Physician Association (՘ึɹ
ʱึ) from November 2019 to November 2023. He has been a vice president of Wuhan
Stomatological Association (ဏ̹ɹഢᔼኪึ) from August 2017 to August 2022. Mr. Guo
was awarded as the advanced individual in military and medical ethics by the Guangzhou
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Military Region of the Chinese People’s Liberation Army (ਜ) in 2010
and 2012 and the third prize of the Military Science and Technology Progress Award by the
Central Military Commission’s Science and Technology Committee (ࡰ
ึ) in February 2020.
Mr. Guo obtained his bachelor’s and master’s degrees in dentistry from Hubei Medical
College (ɽኪ) (the predecessor of Wuhan University School of Medicine (ဏɽኪ
ᔼኪ௅)) in July 1987 and July 1990, respectively.
Ms. Liu Hongchan (ᄬ), aged 51, joined our Group in November 2014 and was
appointed as a vice general manager of our Company and the secretary to the Board in
December 2014. Ms. Liu was appointed as a Director in October 2024 and is primarily
responsible for the investment and procurement management, corporate governance and
securities matters of our Group.
Ms. Liu has over 30 years of experience in finance management and corporate
governance. Prior to joining our Group, she held various financial management positions in
medical and healthcare industry. From July 1992 to July 1994, she served as the financial staff
in Hubei Shashi Famen General Factory (ᐼᅀ). She then worked in Hubei
Pharmaceutical Co., Ltd. (ʮ̡) from August 1994 to March 2005. Ms. Liu
served as the financial manager in Hubei Wanjia Pharmaceutical Co., Ltd. (ࠢ
ʮ̡) from April 2005 to November 2009. Subsequently, Ms. Liu served as the financial
manager in Nanjing Pharmaceutical Hubei Co., Ltd. (ʮ̡) from December
2009 to October 2014.
Ms. Liu obtained her associate diploma in finance management from Wuhan University
(ဏɽኪ) in July 1992 and her qualification certificate as an intermediate accountant ( ʕॴ
ࢪࠇfrom Ministry of Finance of the PRC (௅) in May 2002.
Independent Non-executive Directors
Mr. Shu Yijie ( ଯ່௫), aged 61, was appointed as an independent non-executive
Director on November 22, 2024 with effect from the Listing Date, primarily responsible for
providing independent opinion to our Board.
Mr. Shu has over 40 years of experience in pharmaceutical industry and corporate
management. He began his career as a pharmacist at the First Affiliated Hospital of Anhui
Medical University (᙮ᔼ৫), where he provided pharmaceutical services.
Mr. Shu then served as a department manager and vice general manager in Hefei
Pharmaceutical Company (̹ᔼᖹʮ̡) from December 1992 to December 2002, where he
was primarily responsible for its marketing and management. From December 2002 to
December 2015, Mr. Shu successively served as the vice general manager and general manager
in Nanjing Pharmaceutical Hefei Tianxing Co., Ltd. (ʮ̡) (now known
as Anhui Tianxing Pharmaceutical Group Co., Ltd. (ʮ̡)), a subsidiary
of Nanjing Pharmaceutical Co., Ltd. (ʮ̡) (Stock code: 600713.SH), where
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he was responsible for its corporate management. He then successively served as the vice
president and president in Nanjing Pharmaceutical Co., Ltd. from January 2016 to April 2022,
responsible for its overall operation and management. Mr. Shu served as the chairman of the
board of Anhui Tianxing Pharmaceutical Group Co., Ltd. from May 2022 to May 2024, where
he was responsible for board matters of the company.
Mr. Shu also served as a standing member of the second committee of the Pharmaceutical
Management Professional Committee of the Hospital Association of Anhui Province (޲
ึ) from July 2017 to July 2021, the deputy director of the seventh
committee of the Pharmaceutical Preparation Professional Committee of the Pharmaceutical
Society of Anhui Province (ึ) from July 2017 to July 2022, the
honorary president of the Eighth Pharmaceutical Profession Association of Anhui Province ( τ
ᔼᖹਠุ՘ึ) since 2019, the president of the Seventh Pharmaceutical Profession
Association of Anhui Province from 2015 to 2019 and a member of Committee of the Chinese
People’s Political Consultative Conference of Hefei (ึ)
from January 2013 to January 2018. He was also appointed as the deputy director of the ninth
board of Pharmaceutical Association of Anhui Province (ᖹኪึ) in November 2017.
Mr. Shu obtained his secondary vocational diploma in pharmacy from Anqing Health
School (ࣧin August 1982. He obtained an associate diploma in pharmacy from
Anhui University of Chinese Medicine ( τᏏʕᔼኪ৫) in June 1989 through part-time study.
Mr. Shu continued his education through part-time study and graduated from the
correspondence school of the Party School of the Central Committee of the Communist Party
of China (ࣧwith a major in economic management in December 1995. Mr. Shu
also obtained a master of business administration degree from Anhui Business Administration
College ( τᏏʈਠ၍ଣኪ৫) in December 2001 and an executive master of business
administration degree from Jinan University (ɽኪ) in June 2015. Mr. Shu has been
serving as an industry mentor for master of business administration degree candidates at Hefei
University of Technology (ʈุɽኪ) since 2023. Mr. Shu was recognized as a certified
practicing pharmacist by the Department of Personnel of Anhui Province (ɛԫᝂ)i n
September 1995 and a deputy director pharmacist by the Senior Professional Technical Position
Appraisal Committee for Pharmaceutical Professionals of Anhui Province (ᖹኪਖ਼ุ৷
ึ) in December 2002.
Ms. Huang Suzhen (ޜ)aged 58, was appointed as an independent non-executive
Director on November 22, 2024 with effect from the Listing Date, primarily responsible for
providing independent opinion to our Board.
Ms. Huang has approximately 30 years of experience in accounting. From December 1996
to October 2021, Ms. Huang successively served as an accountant, the deputy section chief and
section chief in the financial supervision section, accounting section and economic
construction section of the Bureau of Finance of Jiang’an District, Wuhan (҅),
primarily responsible for supervising the implementation of financial policies, the compliance
with financial discipline and accounting standardization inspection of administrative and
public institutions in Jiang’an District, Wuhan.
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Ms. Huang obtained her associate diploma in financial accounting from Wuhan River
Transport College (ࣧthe predecessor of Wuhan University of Technology
(ဏଣʈɽኪ)) in July 1988. She was accredited as a certified public accountant by the
Certified Public Accountants Examination Committee of Ministry of Finance (ࠇ
ึ) in April 1997 and a certificate public valuer by China Appraisal Society ( ʕ਷
༟ପ൙П՘ึ) in June 2001.
Ms. Wang Taosha ( ˮௗӍ), aged 36, was appointed as an independent non-executive
Director on November 22, 2024 with effect from the Listing Date, primarily responsible for
providing independent opinion to our Board.
Ms. Wang has over 10 years of experience in financing and asset management. Ms. Wang
started to serve as an analyst in the investment banking division of Credit Suisse from January
2011. Successively, Ms. Wang worked in PIMCO Asia Limited from August 2012 to February
2021 with her last position as a senior vice president responsible for portfolio management.
Since May 2021, Ms. Wang has been serving as a portfolio manager in FIL Asia Holdings Pte
Ltd HK Branch.
Ms. Wang obtained her bachelor’s degree in economics from Brown University in May
2010 and an executive master of business administration degree through part-time studies in a
joint program of Kellogg School of Management, Northwestern University and Guanghua
School of Management, Peking University in June 2024. Since December 2023, Ms. Wang has
been serving as a member of board of directors of Brown University Alumni Association of
Hong Kong.
BOARD OF SUPERVISORS
The Board of Supervisors consists of three Supervisors, comprising one employee
representative and two shareholders’ representatives. Among the three Supervisors, the
employee representative is elected by our employees while the shareholders’ representatives
are elected by our Shareholders, all for a term of three years and renewable upon re-election
and re-appointment.
Pursuant to the Articles of Association, the functions and powers of the Board of
Supervisors include, among others, reviewing the financial management of our Company,
supervising the performance of our Directors and senior management members, monitoring as
to whether they comply with the law, administrative stipulations and Articles of Association
when performing their duties, and requesting Directors and senior management members to
rectify actions detrimental to our Company’s interests. In addition, our Board of Supervisors
is responsible for exercising other powers, functions and duties in accordance with the Articles
of Association and applicable laws and regulations.
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The following table sets forth certain information regarding our Supervisors:
Name Age Position
Time of joining
our Group
Date of
appointment as
a Supervisor
Roles and
responsibilities
Ms. Huang
Meiyun
(ڄߕ)H1118/H1118/H1118/H1118
60 – Chairman of
the Board of
Supervisors
– Senior consultant
July 2007 October 28,
2024
Responsible for
supervising our
Board and senior
management and
advising on the
administrative and
financial work of
our Group
Ms. Xu Cen
(Ҋ) /H1118/H1118/H1118/H1118/H1118/H1118
61 – Supervisor
– Senior consultant
July 2018 October 28,
2024
Responsible for
supervising our
Board and senior
management and
advising on the
operation
management of
our Group
Ms. Y an Ge
(ࣸ)H1118/H1118/H1118/H1118/H1118/H1118
56 – Supervisor
(employee
representative)
– Accountant
October 2014 December 29,
2014
Responsible for
supervising our
Board and senior
management and
financial
accounting of our
Group
Ms. Huang Meiyun (ڄߕ)aged 60, joined our Group in July 2007 and was appointed
as a Supervisor and the chairman of the Board of Supervisors on October 28, 2024. She is
primarily responsible for supervising our Board and senior management and advising on the
administrative and financial work of our Group.
Ms. Huang has over 25 years of experience in medical and healthcare industry. Prior to
joining our Group, she served as a financial manager in Hubei Pukang Pharmaceutical Co., Ltd.
(ʮ̡) from April 1999 to February 2005, primarily responsible for its
financial management. Then she served as a department manager in Hubei Wanjia
Pharmaceutical Co., Ltd. (ʮ̡) from March 2005 to June 2007, primarily
responsible for its procurement management.
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Ms. Huang obtained her associate diploma in machinery through continuing education
from Wuhan First Light Bureau Technical School (ࣧnow known as Wuhan
First Light Industry School (ࣧin September 1983. She was accredited
as an assistant accountant (ࢪࠇby Wuhan Municipal Bureau of Personnel (ဏ̹ɛ
ԫ҅) in February 1993.
Ms. Xu Cen (Ҋ), aged 61, joined our Group in July 2018 and was appointed as a
Supervisor on October 28, 2024. She is primarily responsible for supervising our Board and
senior management and advising on the operation management of our Group.
Ms. Xu has over 35 years of experience in medical and healthcare industry. Prior to
joining our Group, she served as a head nurse in the neonatal department at Wuhan Children’s
Hospital (ဏ̹Յഁᔼ৫) from December 1984 to November 1997. She then served as a
staffer nurse in the Special Care Baby Unit at Basier Hospital of Amman Jordan from February
1988 to February 1990 and at Dubai Hospital of the United Arab Emirates from February 1992
to February 1995. She served as a regional manager responsible for business development in
Bayer Healthcare Company Ltd. (ʮ̡), a subsidiary of Bayer AG (Stock
code: BAYN.F), from November 1997 to June 2000. Ms. Xu then served as a market sales
manager in Novo Nordisk (China) Pharmaceutical Co., Ltd. ( ፕձፕᅃ(ʕ਷)ʮ̡)
from February 2001 to February 2007, primarily responsible for the market development in the
Western China area. She then worked in Baxalta (China) Investment Co., Ltd. ( ϵत(ʕ਷)ҳ
ʮ̡) from March 2007 to July 2018 with her last position as an associate director of
regional sales, where she was primarily responsible for the business development in the
Southern China area.
Ms. Xu graduated from the medical school of Jianghan University ( Ϫဏɽኪ) (formerly
known as Wuhan Health School (ࣧwith a major in nursing in November 1984.
She also majored in business administration through part-time study at the president seminar
of Huazhong University of Science and Technology (Ҧɽኪ) in October 2007 and
obtained a master’s degree in business administration through part-time study at Colorado City
University in June 2024.
M s .Y a nG e(ࣸ)aged 56, joined our Group in October 2014 as an accountant and was
appointed as a Supervisor (employee representative) on December 29, 2014. She is primarily
responsible for supervising our Board and senior management and financial accounting of our
Group.
Ms. Y an has over 25 years of experience in financial accounting. Prior to joining our
Group, she served as an accountant in Hubei Pukang Pharmaceutical Co., Ltd. ( ಳ̏౷ੰᔼᖹ
ʮ̡) from February 1998 to February 2005. Then she served as an accountant in Hubei
Wanjia Pharmaceutical Co., Ltd. (ʮ̡) from March 2005 to November
2009. Ms. Y an served as an accountant in Nanjing Pharmaceutical Hubei Co., Ltd. (ԯᔼᖹ
ʮ̡) from December 2009 to September 2014.
Ms. Y an obtained her associate diploma in accounting from Hubei University of
Economics and Management ( ಳ̏຾᏶၍ଣɽኪ) in December 1988. She was accredited as an
assistant accountant (ࢪࠇby Wuhan Municipal Bureau of Personnel (ဏ̹ɛԫ҅)i n
March 1993.
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SENIOR MANAGEMENT
Our senior management is responsible for the day-to-day management and operation of
our business.
The following table sets forth certain information regarding our senior management:
Name Age Position(s)
Time of joining
our Group
Date of
appointment
as senior
management
Roles and
responsibilities
Ms. Shen
Hongmin
(ઽ) /H1118/H1118/H1118/H1118
61 – Executive Director
– Vice chairman of
the Board
– General manager
December 2014 April 10, 2017 Responsible for the
daily operation
and management
of our Group
Mr. Guo Jiaping
(̻) /H1118/H1118/H1118/H1118
59 – Executive Director
– Vice general
manager
February 2021 August 18, 2022 Responsible for the
medical
management,
clinical work and
professional
training of our
Group
Ms. Liu
Hongchan
(ᄬ) /H1118/H1118/H1118/H1118
51 – Executive Director
– Vice general
manager
– Secretary of
the Board
November 2014 December 24,
2014
Responsible for the
investment and
procurement
management,
corporate
governance and
securities matters
of our Group
Mr. Wang Hong
(ˮ҃) /H1118/H1118/H1118/H1118/H1118/H1118
61 – Vice general
manager
January 2021 January 1, 2021 Responsible for the
daily operation of
our medical
institutions in
Jingzhou and
Jingmen, Hubei
Province as well
as Hunan
Province
Ms. Wang Lixia
(ˮᘆᒳ) /H1118/H1118/H1118/H1118
42 – Vice general
manager
July 2007 February 20,
2023
Responsible for the
marketing and
human resources
of our Group
Ms. Wang Lanlan
(ˮᚆᚆ) /H1118/H1118/H1118/H1118
41 – Financial director June 2024 June 24, 2024 Responsible for
the financial
management of
our Group
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For biographical details of Ms. Shen Hongmin (ઽ), Mr. Guo Jiaping (̻) and
Ms. Liu Hongchan (ᄬ), see “— Board of Directors — Executive Directors.”
Mr. Wang Hong ( ˮ҃), aged 61, joined our Group in January 2021 as a vice general
manager of our Company. He is primarily responsible for the daily operation of our medical
institutions in Jingzhou and Jingmen, Hubei Province as well as Hunan Province. Mr. Wang
also served as directors of our subsidiaries in Jingzhou and Jingmen, Hubei Province as well
as Hunan Province.
Mr. Wang has over 30 years of experience in medical and healthcare industry. Prior to
joining our Group, he served as the sales effective manager and head of global dermatology
division in Xi’an Janssen Pharmaceutical Co., Ltd. (ʮ̡) from May 1994 to
December 2002, primarily responsible for its marketing and business development. He then
successively served as the nationwide marketing director, deputy general manager of marketing
and the vice president in Chia Tai Tianqing Pharmaceutical Group Co., Ltd. ( ͍ɽ˂౹ᖹุණ
ʮ̡), a subsidiary of Sino Biopharmaceutical Limited (Stock code: 1177.HK),
from December 2002 to December 2020, where he was responsible for its nationwide
marketing and sales.
Mr. Wang obtained his associate diploma in animal husbandry from Henan University of
Animal Husbandry and Economy (ุ຾᏶ኪ৫) in July 1984 and his master’s degree in
pathology from Shanghai Medical University (ɽኪ) in July 1991. He also obtained
an executive master of business administration degree from the National University of
Singapore in August 2002.
Ms. Wang Lixia ( ˮᘆᒳ), aged 42, joined our Group in July 2007 and was appointed as
a vice general manager of our Company in March 2023. She is primarily responsible for the
marketing and human resources of our Group.
Ms. Wang has been with our Group for more than 17 years since we started our business
in 2007. She has accumulated rich experience in marketing and human resources of our Group
through various positions within our Group. Since She started to work as a manager in respect
of marketing and human resources in July 2007, Ms. Wang successively served as a director,
a senior director and a vice general manager of our Group.
Ms. Wang obtained her bachelor’s degree in chemical engineering and technology and
master’s degree in enterprise management from Wuhan University of Technology (ဏଣʈɽ
ኪ) in June 2004 and December 2006, respectively.
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Ms. Wang Lanlan ( ˮᚆᚆ), aged 41, joined our Group as the financial director of our
Company in June 2024. She is primarily responsible for the financial management of our
Group.
Ms. Wang has more than 15 years of experience in financial management. Prior to joining
our Group, Ms. Wang served as a financial manager in Hubei Handan Electromechanical
Factory ( ಳ̏ဏʗዚཥᅀ) from June 2009 to May 2015. From May 2015 to June 2024, she
served as a deputy financial director in Nanjing Pharmaceutical Hubei Co., Ltd. (ԯᔼᖹಳ
ʮ̡).
Ms. Wang obtained her bachelor’s degree in business administration and master’s degree
in accounting from Wuhan University of Technology (ဏଣʈɽኪ) in June 2006 and
December 2008, respectively. She was accredited as an intermediate accountant (ࢪࠇ)
by Hubei Province Professional Title Reform Leading Group Office (ჯኬʃଡ଼
܃in March 2012. Ms. Wang has been a non-practicing certified public accountant (ੂ
ࢪࠇcertified by Hubei Institute of Certified Public Accountants since April 2019.
GENERAL CONFIRMATIONS
Save as disclosed above, each of the Directors, Supervisors and members of the senior
management of our Company (i) had no other relationship with any of the Directors,
Supervisors and senior management of our Company as of the Latest Practicable Date; and (ii)
did not hold any other directorship in listed companies in the three years prior to the Latest
Practicable Date. For the Directors’ and Supervisors’ interests in the Shares within the meaning
of Part XV of the SFO, see “Appendix VI — Statutory and General Information — C. Further
Information about Our Directors, Supervisors and Substantial Shareholders.”
Save as disclosed herein, to the best knowledge, information and belief of our Directors
and Supervisors having made all reasonable enquiries, there was no other matter with respect
to the appointment of our Directors and Supervisors that needs to be brought to the attention
of the Shareholders and there was no information relating to our Directors and Supervisors that
is required to be disclosed pursuant to Rule 13.51(2) of the Listing Rules as of the Latest
Practicable Date.
Each of our Directors confirms that as of the Latest Practicable Date, he or she did not
have any interest in a business which competes or is likely to compete, either directly or
indirectly, with our Company’s business which would require disclosure under Rule 8.10 of the
Listing Rules.
Each of our Directors confirms that he or she (i) has obtained the legal advice referred
to under Rule 3.09D of the Listing Rules on November 26, 2024, and (ii) understands his or
her obligations as a director of a listed issuer under the Listing Rules.
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Each of our independent non-executive Directors has confirmed (i) his or her
independence as regards each of the factors referred to in Rules 3.13(1) to (8) of the Listing
Rules, (ii) he or she has no past or present financial or other interest in the business of the
Company or its subsidiaries or any connection with any core connected person of the Company
under the Listing Rules as of the Latest Practicable Date, and (iii) that there are no other factors
that may affect his or her independence at the time of his or her appointments.
JOINT COMPANY SECRETARIES
Ms. Xu Liman ( ஢஁ਟ), aged 28, joined our Group as the general management officer
of our Company in March 2023 and was appointed as the joint company secretary of our
Company on November 22, 2024. She is primarily responsible for overall coordination and
execution of corporate governance and company secretarial matters of our Group.
Prior to joining our Group, Ms. Xu served as the general management officer in Nanjing
Pharmaceutical Hubei Co., Ltd. (ʮ̡) from April 2018 to March 2023,
primarily responsible for its general corporate governance matters.
Ms. Xu obtained her bachelor’s degree in financing management from Hubei University
of Economics ( ಳ̏຾᏶ኪ৫) in June 2018 and a dual bachelor’s degree in laws from
Zhongnan University of Economics and Law (ɽኪ). Ms. Xu obtained her
master’s degree in accounting from Zhongnan University of Economics and Law in June 2020.
She obtained intermediate accounting professional qualification from Ministry of Human
Resources and Social Security of the PRC (ღ҅) and
Ministry of Finance of the PRC (௅) in September 2020 and was
accredited as a certified public accountant by the Certified Public Accountants Examination
Committee of Ministry of Finance (ึ) in February 2023.
Ms. Pau So Yi (׋)was appointed as the joint company secretary of our Company
on November 22, 2024.
Ms. Pau is a manager of company secretarial services of Tricor Services Limited, a global
professional services provider specializing in integrated business, corporate and investor
services. Ms. Pau has over 9 years of experience in corporate secretarial work. She has been
providing professional corporate governance and compliance services to Hong Kong listed
companies and private companies.
Ms. Pau obtained her bachelor’s degree in accounting with honor from Hong Kong Shue
Y an University in July 2015. Ms. Pau is a Chartered Secretary, a Chartered Governance
Professional, an Associate of both The Hong Kong Chartered Governance Institute and The
Chartered Governance Institute in the United Kingdom, respectively.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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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 three Board committees, namely the Audit
Committee, the Remuneration Committee and the Nomination Committee.
Audit Committee
We have established an Audit Committee with written terms of reference in compliance
with Rule 3.21 of the Listing Rules and the Corporate Governance Code set out in Appendix
C1 to the Listing Rules. The Audit Committee consists of three Directors, namely Ms. Huang
Suzhen, Mr. Shu Yijie and Ms. Wang Taosha. The chairperson of the Audit Committee is
Ms. Huang Suzhen, who is the independent non-executive Director with the appropriate
accounting and related financial management expertise. The primary duties of the Audit
Committee include, among others:
 making recommendations to our Board on the appointment, reappointment and
removal of external auditor, and monitoring the external auditor’s independence and
evaluating the effectiveness of the audit process and their performance;
 monitoring integrity of our financial statements and annual report and accounts,
half-year report and, if prepared for publication, quarterly reports, and reviewing
significant financial reporting judgements contained therein;
 assessing the effectiveness of internal control;
 guiding internal audit work;
 coordinating the communication among management, internal audit department,
related departments and external audit agency; and
 other responsibilities as authorized by our Board or required by the relevant laws
and regulations.
Remuneration Committee
We have established a Remuneration Committee with written terms of reference in
compliance with the Corporate Governance Code set out in Appendix C1 to the Listing Rules.
The Remuneration Committee consists of three Directors, namely Mr. Shu Yijie, Ms. Huang
Suzhen and Mr. Y ao Xue. The chairperson of the Remuneration Committee is Mr. Shu Yijie.
The primary duties of the Remuneration Committee include, among others:
 making recommendations to our Board on the policy and structure for the
remuneration of Directors, Supervisors and senior management and on the
establishment of a formal and transparent procedure for developing remuneration
policy;
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 making recommendations to our Board on the remuneration packages of individual
executive Directors, Supervisors and senior management and the remuneration of
non-executive Directors;
 reviewing and approving compensation payable to executive Directors, Supervisors
and senior management of our Company for any loss or termination of office or
appointment to ensure that it is consistent with contractual terms and is otherwise
fair and not excessive;
 reviewing and approving compensation arrangements relating to dismissal or
removal of Directors for misconduct to ensure that they are consistent with
contractual terms and are otherwise reasonable and appropriate; and
 other responsibilities as authorized by our Board or required by the relevant laws
and regulations.
Nomination Committee
We have established a Nomination Committee with written terms of reference in
compliance with the Corporate Governance Code set out in Appendix C1 to the Listing Rules.
The Nomination Committee consists of three members, namely Mr. Y ao Xue, Mr. Shu Yijie and
Ms. Wang Taosha. The chairperson of the Nomination Committee is Mr. Y ao Xue. The primary
duties of the Nomination Committee include, among others:
 reviewing the structure, size and composition (including the skills, knowledge and
experience) of our Board at least annually, and making recommendations on any
proposed changes to our Board to complement our Company’s corporate strategy;
 identifying individuals who are suitably qualified to become Board members and
selecting or making recommendations to our Board on the selection of individuals
nominated for directorships;
 assessing the independence of independent non-executive Directors;
 researching and developing standards and procedures for the election of our Board
members, general managers and members of the senior management, and making
recommendations to our Board; and
 other responsibilities as authorized by our Board or required by the relevant laws
and regulations.
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CORPORATE GOVERNANCE
Our Company is committed to achieve high standards of corporate governance which are
crucial to our development and safeguard the interests of our Shareholders. To accomplish this,
we expect to comply with the corporate governance requirements under the Corporate
Governance Code set out in Appendix C1 to the Listing Rules after the Listing.
BOARD DIVERSITY
We are committed to promoting the culture of diversity in the Company. We have strived
to promote diversity to the extent practicable by taking into consideration a number of factors
in our corporate governance structure.
We have adopted a board diversity policy which sets out the approach to achieve and
maintain an appropriate balance of diversity perspectives of our Board that are relevant to our
business growth. Selection of candidates will be based on a range of diversity perspectives,
including but not limited to gender, age, cultural and educational background, ethnicity,
professional experience, skills, knowledge and length of service. The ultimate decision will be
based on merits and contribution that the selected candidates will bring to the Board.
Our Directors have a balanced mix of knowledge and skills, including corporate
management, medical quality management, accounting, financing and asset management. They
obtained degrees in various majors, including medical science, dentistry, business
administration and finance management. Our three independent non-executive Directors with
different industry backgrounds, representing more than one-third of the Board. Furthermore,
our Board has a diverse age and gender representation, ranging from 36 years old to 61 years
old and comprising three male and four female Directors. Taking into account our existing
business mode and specific needs as well as the different background of our Directors, the
composition of our Board satisfies our board diversity policy. We will continue to apply the
principles of appointments based on merits with reference to our board diversity policy as a
whole.
Our Nomination Committee is responsible for reviewing the structure and ensuring the
diversity of our Board. After the Listing, our Nomination Committee will monitor and evaluate
the implementation of the board diversity policy from time to time to ensure its continued
effectiveness and we will disclose in our corporate governance report about the implementation
of the board diversity policy on annual basis.
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COMPENSATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Our Directors, Supervisors and senior management members receive compensation from
our Company in the form of salaries, bonuses, allowances, benefits in kind, pension scheme
contributions and other employee benefits.
The aggregate amounts of remuneration (including salaries, bonuses, allowances, benefits
in kind, pension scheme contributions and other employee benefits) paid to our Directors and
Supervisors for the years ended December 31, 2022, 2023 and 2024 were approximately
RMB3.4 million, RMB3.9 million and RMB2.7 million, respectively.
The five highest paid individuals for the years ended December 31, 2022, 2023 and 2024
included three, two and nil Directors, respectively, whose remunerations are included in the
aggregate amount of remuneration set out above. For the years ended December 31, 2022, 2023
and 2024, the aggregate amount of remuneration (including salaries, bonuses, allowances,
benefits in kind, pension scheme contributions and other employee benefits) for the remaining
two, three and five highest paid individuals who are not Directors or Supervisors of our Group
were approximately RMB1.8 million, RMB2.9 million and RMB3.7 million.
It is estimated that remuneration equivalent to approximately RMB4.8 million in
aggregate will be paid to the Directors and Supervisors (inclusive of benefits in kind but
exclusive of any discretionary bonuses) by our Company for the year ending December 31,
2025 based on the arrangements currently in force.
No remuneration was paid by our Company to the Directors, Supervisors or the five
highest paid individuals as inducement to join or upon joining our Company or as a
compensation for loss of office during the Track Record Period. Furthermore, none of the
Directors or Supervisors had waived or agreed to waive any remuneration during the Track
Record Period.
COMPLIANCE ADVISOR
We have appointed Haitong International Capital Limited as the compliance advisor
pursuant to Rule 3A.19 of the Listing Rules, and the compliance advisor will advise our
Company in the following circumstances:
 before the publication of any regulatory announcement, circular or financial report;
 where a transaction, which might be a notifiable or connected transaction under the
Listing Rules, is contemplated, including share issues and share repurchases;
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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 where our Company proposes to use the proceeds of the Global Offering in a manner
that is different from that detailed in this prospectus or where our business activities,
developments or results deviate from any forecasts, estimates or other information
in this prospectus; and
 where the Stock Exchange makes an inquiry of our Company regarding unusual
movements in the price or trading volume of the Shares or any other matters under
Rule 13.10 of the Listing Rules.
The term of the appointment of the compliance advisor will commence on the Listing
Date and is expected to end on the date when our Company distributes the annual report of its
financial results for the first full financial year commencing after the Listing Date.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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OUR CONTROLLING SHAREHOLDERS
As of the Latest Practicable Date, our Company was directly held as to approximately
1.24% by Mr. Y ao, 1.17% by Ms. Shen and 81.32% by Zhongshan Medical Investment, which
was in turn held by Mr. Y ao and Ms. Shen as to approximately 44.11% and 31.38%,
respectively. Pursuant to an acting-in-concert agreement entered into between Mr. Y ao and Ms.
Shen on June 3, 2014, Mr. Y ao and Ms. Shen agreed to align their votes at Zhongshan Medical
Investment and its subsidiaries (including our Company) in terms of all their direct
shareholding interest in such companies. Therefore, Mr. Y ao and Ms. Shen had been acting in
concert in exercising their voting rights attaching to all their direct interest in Zhongshan
Medial Investment, as well as their voting rights attaching to all their direct interest in our
Company. See “History, Development and Corporate Structure — Our Major Corporate
Development — Early Development” for details.
Immediately upon completion of the Global Offering (assuming no exercise of the
Over-allotment Option), Mr. Y ao and Ms. Shen, directly and indirectly through Zhongshan
Medical Investment, will together be entitled to exercise the voting rights attaching to
approximately 65.31% of our enlarged total issued share capital. Therefore, Mr. Y ao, Ms. Shen
and Zhongshan Medical Investment will be considered as a group of Controlling Shareholders
after the Listing for the purpose of the Listing Rules.
DELINEATION OF BUSINESS
Our Controlling Shareholders confirm that as of the Latest Practicable Date, neither of
them or their respective close associates was interested in any business, other than our Group,
which competes or is likely to compete, either directly or indirectly, with our Group’s business
and which requires disclosure pursuant to Rule 8.10 of the Listing Rules.
INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS
Having considered the following factors, our Directors are satisfied that we are capable
of carrying out our business independently of our Controlling Shareholders and their respective
close associates after the Listing.
Operational Independence
We engage in our operations and make and implement our operational decisions
independently. We do not share operation team, facilities or equipment with our Controlling
Shareholders or their respective close associates. We possess relevant licenses, approvals and
permits from the relevant regulatory authorities that are necessary to carry out and operate our
business. Our Group have established our own organizational structure with independent
departments, and each department is assigned to specific areas of responsibilities. Our
operating functions, such as cash and accounting management, invoices and bills, operate
independently from our Controlling Shareholders and their respective close associates. We
have independent access to a large and diversified base of suppliers and customers and have
not relied on our Controlling Shareholders and their respective close associates with respect to
supplies for our business operations. We also maintain a set of comprehensive internal control
procedures to facilitate the effective operation of our business.
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
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Due to the features and characteristics of our businesses, during the Track Record Period,
we conducted certain transactions with our Controlling Shareholders’ close associates on a
recurring basis which are expected to continue after the Listing and will constitute continuing
connected transactions of our Group under the Listing Rules, details of which are set out in
“Connected Transactions.” Our Directors believe that the aforesaid transactions do not have
any material adverse impact on our operational independence from our Controlling
Shareholders on the basis that (i) all such transactions are conducted after arm’s length
negotiation and on normal commercial terms or better, and (ii) the cost and expense incurred
from such transactions account for insignificant proportion of our cost and expense during the
Track Record Period, which do not indicate any undue reliance by our Group on our
Controlling Shareholders or their close associates and are beneficial to our Group and our
Shareholders as a whole.
Based on the above, our Directors are of the view that we are able to operate
independently from our Controlling Shareholders and their respective close associates.
Management Independence
Our business is managed and conducted by our Board and senior management. Our Board
comprises four executive Directors and three independent non-executive Directors, among
whom Mr. Y ao, the chairman of our Board and an executive Director, and Ms. Shen, an
executive Director, the vice chairman of our Board and the general manager of our Company,
are members of our Controlling Shareholders. For further details, see “Directors, Supervisors
and Senior Management.”
Save as disclosed below, none of our Directors or members of our senior management
serves as a director or member of senior management in our Controlling Shareholders or their
close associates (other than members of our Group):
Major positions held in our Controlling
Shareholders and their close associates
(other than members of our Group)
Name
Positions in our
Company Name of company Position
Mr. Y ao /H1118/H1118/H1118/H1118/H1118Chairman of the Board
and executive Director
Zhongshan Medical
Investment
Chairman of the board
Nanjing Pharmaceutical
Hubei Co., Ltd. (ԯ
ʮ̡)
(“Nanjing
Pharmaceutical
Hubei ”)
(1)
Chairman of the board
Ms. Shen /H1118/H1118/H1118/H1118Executive Director, vice
chairman of the Board
and general manager
Zhongshan Medical
Investment
Vice chairman of the
board
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
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Note:
(1) Nanjing Pharmaceutical Hubei, a subsidiary of Nanjing Pharmaceutical Company Limited (ٰ
ʮ̡) (Stock code: 600713.SH), is held by Nanjing Pharmaceutical Company Limited and
Zhongshan Medical Investment as to 51% and 49% respectively. Nanjing Pharmaceutical Hubei
primarily engages in wholesale business of pharmaceutical products, with a revenue of approximately
RMB5.4 billion for the year ended December 31, 2023.
Our Directors are of the view that our Board and senior management team are able to
manage our business independently from our Controlling Shareholders and their close
associates for the following reasons:
(i) as confirmed by Mr. Y ao and Ms. Shen, Zhongshan Medical Investment is an
investment holding company and had no actual business operation or commercial
activities as of the Latest Practicable Date. As confirmed by Mr. Y ao, the
directorship held by him in Nanjing Pharmaceutical Hubei is non-executive in
nature and he is not involved in its day-to-day management. Therefore, Mr. Y ao and
Ms. Shen will have sufficient time and resources to serve on our Board or as senior
management members, and their positions in the aforementioned companies will not
affect their discharge of duties and responsibilities to our Group;
(ii) save for Mr. Y ao and Ms. Shen, all members of our senior management are our
full-time employees and are independent from our Controlling Shareholders and
their close associates;
(iii) pursuant to the Articles of Association of our Company, in the event that any
Shareholder or Director or his/her close associates has the material interest in a
contract or arrangement to be entered into with our Group, the interested
Shareholder(s) or Director(s) shall abstain from voting on any Shareholder or Board
resolutions approving any contract, arrangement or any other proposal and shall not
be counted in the quorum present at the relevant meeting;
(iv) we have appointed three independent non-executive Directors (accounting for more
than one-third of our Board) to balance the number of potentially interested
Directors with a view to promote the interests of our Company and the Shareholders
as a whole. The independent non-executive Directors will be entitled to engage
professional advisors at our cost for advice on matters relating to any potential
conflict of interest arising out of any transaction to be entered into between our
Company and another company or entity to which a Director or senior management
member holds position. We believe our independent non-executive Directors have
the depth and breadth of experience which will enable them to bring sound,
independent and impartial judgment to the decision-making process of our Board;
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
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(v) each of our Directors is aware of his/her fiduciary duties as a Director, which require
him/her to act for the benefit and in the interests of our Company and the
Shareholders as a whole and do not allow any conflict between his/her duties as a
Director and his/her personal interests; and
(vi) we have adopted corporate governance measures to manage conflicts of interest, if
any, between our Group and our Controlling Shareholders and their close associates
which would support our independent management. See “— Corporate Governance
Measures” below for further information.
Based on the above, our Directors are satisfied that the Board as a whole, together with
our senior management team, is able to perform the managerial role in our Group
independently.
Financial Independence
We have established a finance department with a team of independent financial staff,
which operates entirely independently of the Controlling Shareholders. In addition, our
Company has established a sound and independent financial system and makes financial
decisions according to our Company’s business needs, which are independent of our
Controlling Shareholders.
During the Track Record Period, our Group had no non-trade related amounts due to or
due from our Controlling Shareholders or their close associates. As of the Latest Practicable
Date, there were no outstanding loans, advances or non-trade balances due to or from our
Controlling Shareholders or their respective close associates, nor were there any outstanding
pledges or guarantees provided for our benefit by our Controlling Shareholders or their
respective close associates and vice versa.
Based on the above, our Directors are satisfied that we are able to maintain financial
independence from our Controlling Shareholders and their close associates.
CORPORATE GOVERNANCE MEASURES
Our Directors recognize the importance of good corporate governance to protect the
interest of our Shareholders. We will adopt the following corporate governance measures to
manage potential conflict of interests between our Group and the Controlling Shareholders:
(i) where a Shareholders’ meeting is held for considering proposed transaction in which
any of the Controlling Shareholder has a material interest, the Controlling
Shareholder(s) shall abstain from voting on the resolutions and shall not be counted
in the quorum for the voting;
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
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(ii) where a Board meeting is held for the matters in which a Director has a material
interest, such Director shall abstain from voting on the resolutions and shall not be
counted in the quorum for the voting;
(iii) any transaction between (or proposed to be made between) our Group and the
connected persons will be subject to the requirements under Chapter 14A of the
Listing Rules, including, where applicable, the announcement, reporting, annual
review, circular (including independent financial advice) and independent
Shareholders’ approval requirements and with those conditions imposed by the
Stock Exchange for the granting of waiver from strict compliance with relevant
requirements under the Listing Rules;
(iv) in the event that our independent non-executive Directors are requested to review
any conflict of interests between our Group and the Controlling Shareholders, the
Controlling Shareholders shall provide the independent non-executive Directors
with all necessary information and our Company shall disclose the decisions of the
independent non-executive Directors either in its annual report or by way of
announcements to the public; and
(v) our Company has appointed Haitong International Capital Limited as our
compliance advisor, which will provide advice and guidance to our Group in respect
of compliance with the applicable laws and Listing Rules including various
requirements relating to Directors’ duties and corporate governance.
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
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We have entered into certain agreements with our connected persons, the details of which
are set out below. Upon Listing, the transactions contemplated under such agreements will
constitute our continuing connected transactions under Chapter 14A of the Listing Rules.
OUR CONNECTED PERSONS
The table below sets forth certain parties who will become our connected persons upon
Listing and the nature of their relationship with our Group:
Connected person Connected relationship
Zhongshan Medical Investment /H1118/H1118/H1118one of our Controlling Shareholders
Nanjing Pharmaceutical Hubei
Co., Ltd. (ʮ
̡)( “ Nanjing Pharmaceutical
Hubei ”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
a company owned by Zhongshan Medical
Investment as to 49%, and hence an associate of
Zhongshan Medical Investment
SUMMARY OF OUR CONTINUING CONNECTED TRANSACTIONS
Continuing connected
transactions
Applicable
Listing Rules Waiver sought
Proposed annual cap
for the years ending
December 31,
2025 2026 2027
(RMB in thousands)
Fully-exempt Continuing Connected Transaction
Pharmaceuticals and
Consumables Procurement
Framework Agreement /H1118/H1118/H111814A.76(1)(c) N/A 1,600 1,900 2,200
FULLY-EXEMPT CONTINUING CONNECTED TRANSACTION
Pharmaceuticals and Consumables Procurement Framework Agreement
Principal Terms
On June 22, 2025, our Company and Nanjing Pharmaceutical Hubei (for themselves and
on behalf of their respective subsidiaries) entered into a pharmaceuticals and consumables
procurement framework agreement (the “ Pharmaceuticals and Consumables Procurement
Framework Agreement ”), pursuant to which our Group agreed to purchase certain
pharmaceuticals and consumables from Nanjing Pharmaceutical Hubei and its subsidiaries for
medical use.
CONNECTED TRANSACTIONS
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Separate underlying agreements will be entered between the parties to set out the detailed
terms, including the category of pharmaceuticals and consumables, pricing terms, method of
payment and credit terms, based on the principles and within the parameters provided in the
Pharmaceuticals and Consumables Procurement Framework Agreement. The definitive terms
of each of such underlying agreements will be determined on a case-by-case and a fair and
reasonable basis after arm’s length negotiation between the parties.
The initial term of the Pharmaceuticals and Consumables Procurement Framework
Agreement will commence on the Listing Date and expire on December 31, 2027. Such term
is renewable for a term of three years upon mutual consents and subject to the requirements
under the Listing Rules and other applicable laws and regulations.
Reasons for and Benefits of the Transaction
As a dental services provider, we purchase pharmaceuticals and consumables for medical
use in the ordinary and usual course of our business. The quality of the products we purchased
is important to our business operation and expansion. Nanjing Pharmaceutical Hubei, a
subsidiary of Nanjing Pharmaceutical Company Limited (ʮ̡) (Stock code:
600713.SH), primarily engages in wholesale business of pharmaceutical products. Since
Nanjing Pharmaceutical Hubei is a well-known pharmaceuticals supplier in Hubei Province,
securing a stable procurement relationship with Nanjing Pharmaceutical Hubei would enable
us to procure quality pharmaceuticals and consumables for our customers. In addition, the
terms Nanjing Pharmaceutical Hubei offered to us are no less favorable than those offered by
our other suppliers who are Independent Third Parties. Therefore, our procurement of
pharmaceuticals and consumables from Nanjing Pharmaceutical Hubei is in the interests of our
Group and the Shareholders as a whole.
Pricing Policy
The purchase price of the pharmaceuticals and consumables shall be determined with
reference to a number of factors including: (i) the price of the similar products sold by Nanjing
Pharmaceutical Hubei to other independent customers under similar conditions; and (ii) the
prevailing market price of similar products. The aforesaid pricing policies are no less favorable
to us than those offered by Independent Third Parties.
Historical Amounts
For the years ended December 31, 2022, 2023 and 2024, the historical amounts of our
procurement of pharmaceuticals and consumables from Nanjing Pharmaceutical Hubei were
approximately RMB1.2 million, RMB1.3 million and RMB1.5 million, respectively.
CONNECTED TRANSACTIONS
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Annual Caps
The proposed annual caps for the transactions under the Pharmaceuticals and
Consumables Procurement Framework Agreement for the years ending December 31, 2025,
2026 and 2027 are set out below:
Proposed annual caps for the years ending December 31,
2025 2026 2027
(RMB in thousands)
1,600 1,900 2,200
The above annual caps are determined with reference to:
(i) the historical transaction amounts of our procurement of pharmaceuticals and
consumables from Nanjing Pharmaceutical Hubei during the Track Record Period;
and
(ii) the expected increasing procurement amounts, taking into account the potential
increase in the demand by our medical institutions for pharmaceuticals and
consumables, which is in line with the expected business growth of our medical
institutions.
Implication under the Listing Rules
The Pharmaceuticals and Consumables Procurement Framework Agreement and the
transactions contemplated thereunder have been and will continue to be entered into in the
ordinary and usual course of our business on normal commercial terms or better. As each of the
applicable percentage ratios (other than the profits ratio) under the Listing Rules in respect of
this transaction is expected to be, on an annual basis, less than 5% and the highest proposed
annual cap of this transaction is expected to be less than HK$3 million, such transaction will
be fully exempt from the reporting, annual review, announcement, circular and independent
shareholders’ approval requirements under Chapter 14A of the Listing Rules.
CONNECTED TRANSACTIONS
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ONE-OFF TRANSACTION ENTERED INTO BEFORE THE LISTING
We have entered into a property lease agreement with Zhongshan Medical Investment (the
“Lease Agreement ”), pursuant to which we leased a property from Zhongshan Medical
Investment as our offices (the “ Property ”). The transaction was entered into before the Listing
and accounted as right-of-use assets under IFRS 16, therefore such transaction was one-off
connected transaction of the Company for the purpose of the Listing Rules. Details of such
transaction are set out below.
Tenant Landlord
Location of the
Property
Total
GFA
Term of Lease
Agreement
Total rental
per year
(sq.m.) (RMB’000)
1. /H1118/H1118The Company Zhongshan Medical
Investment
Room 5, 11/F, Huayin
Building, No. 786
Minzhu Road,
Wuchang District,
Wuhan, Hubei
Province
389.1 July 1, 2024 to
December 31,
2025
258
The rent of the Property under the Lease Agreement was determined after arm’s length
negotiations based on the prevailing market price no less favorable than those offered by
Independent Third Parties for similar properties with comparable size and quality in the
vicinity. As such, our Directors are of the view that the terms of the Lease Agreement are on
normal commercial terms and are fair and reasonable and in the interests of our Company and
our Shareholders as a whole.
We have adopted IFRS 16 in the preparation of the financial information of our Group
during the Track Record Period, pursuant to which, at the commencement date of a lease, our
Group as lessee shall recognize a liability to make lease payments and an asset representing the
right to use the underlying asset during the lease term. Accordingly, the lease transaction under
the Lease Agreement would be regarded as acquisition of assets by the lessee and one-off
connected transactions of the Company for the purpose of the Listing Rules.
CONNECTED TRANSACTIONS
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OUR SHARE CAPITAL
Immediately before the Global Offering
As of the Latest Practicable Date, the registered capital of our Company was
RMB38,517,242, comprising 38,517,242 Unlisted Shares with a nominal value of RMB1.00
each.
Upon the Completion of the Global Offering
Immediately following completion of the Global Offering and the Conversion of Unlisted
Shares into H Shares, assuming the Over-allotment Option is not exercised, the share capital
of our Company will be as follows:
Description of Shares Number of Shares
Approximate %
of the enlarged
issued share
capital after the
Global Offering
Unlisted Shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832,352,902 65.52%
H Shares to be converted from Unlisted Shares (1) /H1118 6,164,340 12.48%
H Shares to be issued pursuant to the Global
Offering /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,861,800 22.00%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111849,379,042 100%
Note:
(1) See “History, Development and Corporate Structure — Pre-IPO Investments — Public Float” for details
of the identities of the Shareholders whose Shares will be converted into H Shares upon Listing.
Immediately following completion of the Global Offering and the Conversion of Unlisted
Shares into H Shares, assuming the Over-allotment Option is fully exercised, the share capital
of our Company will be as follows:
Description of Shares Number of Shares
Approximate %
of the enlarged
issued share
capital after the
Global Offering
Unlisted Shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832,352,902 63.43%
H Shares to be converted from Unlisted Shares (1) /H1118 6,164,340 12.08%
H Shares to be issued pursuant to the Global
Offering /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,491,000 24.49%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851,008,242 100%
Note:
(1) See “History, Development and Corporate Structure — Pre-IPO Investments — Public float” for details
of the identities of the Shareholders whose Shares will be converted into H Shares upon Listing.
SHARE CAPITAL
– 299 –


--- page 310 ---
RANKING
Upon completion of the Global Offering and the Conversion of Unlisted Shares into H
Shares, the Shares will consist of Unlisted Shares and H Shares. Unlisted Shares and H Shares
are all ordinary Shares in the share capital of our Company.
Apart from certain qualified domestic institutional investors in the PRC, qualified PRC
investors under the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock
Connect and other persons entitled to hold our H Shares pursuant to the relevant PRC laws and
regulations or upon approval by any competent authorities, H Shares generally may not be
subscribed for by, or traded between, legal or natural persons of the PRC.
Unlisted Shares and H Shares are regarded as one class of Shares under our Articles of
Association and will rank pari passu with each other in all other respects and, in particular, will
rank equally for all dividends or distributions declared, paid or made after the date of this
prospectus. Dividends in respect of our Shares may be paid by us in Hong Kong dollars or
Renminbi. In addition to cash, dividends may be distributed in the form of Shares.
CIRCUMSTANCES UNDER WHICH GENERAL MEETINGS ARE REQUIRED
Our Company will have only one class of Shares upon completion of the Global Offering,
namely ordinary shares, and each carry the same rights in all respects with the other Shares.
For details of circumstances under which our Shareholders’ meetings are required, see
“Appendix IV — Summary of Principal Laws and Regulations” and “Appendix V — Summary
of Articles of Association.”
CONVERSION OF UNLISTED SHARES INTO H SHARES
Upon completion of the Global Offering, all our Unlisted Shares (other than those
converting to H Shares) are not listed or traded on any stock exchange. The holders of our
Unlisted Shares may convert their Shares into H Shares provided that such conversion shall
have gone through the requisite internal approval process and complied with the regulations
prescribed by the securities regulatory authorities of the State Council and the regulations,
requirements and procedures prescribed by the overseas stock exchange(s) and complete the
filing process procedure with CSRC. The listing of such converted Shares on the Stock
Exchange will also require the approval of the Stock Exchange.
In accordance with the Guidelines on Application for “Full Circulation” of Domestic
Unlisted Shares of H-share Companies ( H΅͡ሗ“ஷ”ˏ)
and the Overseas Listing Trial Measures, domestic unlisted shares of H-share companies
(including domestic unlisted shares held by domestic shareholders prior to the overseas listing,
domestic unlisted shares further issued in the PRC after the overseas listing and unlisted shares
held by foreign shareholders) could be listed and traded on the Stock Exchange after
application to file with the CSRC.
SHARE CAPITAL
– 300 –


--- page 311 ---
Upon completion of the Global Offering, 6,164,340 Unlisted Shares held by Wuhan
Xinglin, Wuhan Taolin, Wuhan Zhulin, Ms. Li Zhen ( ҽጲ) and Mr. Chen Wei ( ௓ᙯ) will be
converted into H Shares on a one-for-one basis. The conversion of these Unlisted Shares into
H Shares has been filed with the CSRC and the CSRC issued notice of filing on June 11, 2025
and an application has been made to the Listing Committee for such H Shares to be listed on
the Stock Exchange.
Based on the procedures for the conversion of our Unlisted Shares into H Shares as
disclosed in this section, we can apply for the listing of our Unlisted Shares on the Stock
Exchange as H Shares in advance of any proposed conversion to ensure 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 initial listing on
the Stock Exchange is ordinarily considered by the Stock Exchange to be a purely
administrative matter, it will not require such prior application for listing at the time of our
initial listing in Hong Kong.
No class Shareholder voting is required for the listing and trading of the converted Shares
on the Stock Exchange. Any application for listing of the converted Shares on the Stock
Exchange after our initial listing is subject to prior notification by way of announcement to
inform Shareholders and the public of such proposed conversion.
After all the requisite approvals have been obtained, the following procedures will need
to be completed: the relevant Unlisted Shares will be withdrawn from the Share register and
we will re-register such Shares on our H Share register maintained in Hong Kong and instruct
the H Share Registrar to issue H Share certificates. Registration on our H Share register will
be on the condition that (a) our H Share Registrar lodges with the Stock Exchange a letter
confirming the proper entry of the relevant H Shares on the H Share register of members and
the due dispatch of H Share certificates and (b) the admission of the H Shares to trade on the
Stock Exchange will comply with the Listing Rules and the General Rules of HKSCC and
HKSCC Operational Procedures in force from time to time. Until the converted Shares are
re-registered on our H Share register, such Shares would not be listed as H Shares.
For further details, see “Risk Factors — Risks Relating to the Global Offering — Future
sales or perceived sales of substantial amounts of our securities in the public market could have
a material and adverse effect on the prevailing market price of our H Shares and our ability to
raise additional capital in the future, or may result in dilution of your shareholdings.”
SHARE CAPITAL
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TRANSFER OF SHARES ISSUED PRIOR TO THE GLOBAL OFFERING
Pursuant to the PRC Company Law, our Shares issued prior to the Listing shall not be
transferred within 12 months from the Listing Date.
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 held by the aforementioned persons cannot be
transferred within half a year after they leave their positions as Directors, Supervisors and
members of the senior management of 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.
GENERAL MANDATE TO ISSUE SHARES AND REPURCHASE SHARES
Subject to the Global Offering becoming unconditional, our Directors have been granted
general mandates to issue and repurchase our Shares. For further details, see “Appendix VI —
Statutory and General Information — A. Further Information about Our Group — 4.
Resolutions Passed by Our Shareholders’ Meeting in Relation to the Global Offering.”
RESTRICTIONS ON SHARES NOT LISTED ON THE OVERSEAS STOCK
EXCHANGE
According to the Notice on Adjustment of Business Acceptance of Registration and
Depository of Non-Overseas Listed Shares of Overseas Listed Companies (ྤ̮ɪ̹ʮ
) and Business Guidelines for the
Registration and Depository of Non-Overseas Listed Shares of Overseas Listed Companies
(), our Company is required to register
and deposit our Shares that are not listed on the overseas stock exchange with the China
Securities Depository and Clearing Corporation Limited after the Global Offering.
SHARE CAPITAL
– 302 –


--- page 313 ---
So far as our Directors are aware, immediately following the completion of the Global
Offering (assuming no exercise of the Over-allotment Option), the following persons will have
or be deemed or taken to have an interest and/or short positions in the Shares or the underlying
Shares of our Company which shall 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 the general meetings our Company:
Name of
Shareholder Nature of interest
Shares held as of the Latest Practicable Date
Shares held immediately following the completion of
the Global Offering (assuming no exercise
of the Over-allotment Option) (1)
Number
Description
of Shares
Approximate
percentage of
shareholding in
the total issued
share capital Number
Description
of Shares
Approximate
percentage of
shareholding in
the total issued
share capital
Mr. Y ao(2) /H1118/H1118Interest in
controlled
corporation
31,324,102 Unlisted
Shares
81.32% 31,324,102 Unlisted
Shares
63.44%
Beneficial interest 475,800 Unlisted
Shares
1.24% 475,800 Unlisted
Shares
0.96%
Interest of concert
party
31,774,102 Unlisted
Shares
82.49% 31,774,102 Unlisted
Shares
64.35%
Ms. Shen
(2) /H1118Interest in
controlled
corporation
31,324,102 Unlisted
Shares
81.32% 31,324,102 Unlisted
Shares
63.44%
Beneficial interest 450,000 Unlisted
Shares
1.17% 450,000 Unlisted
Shares
0.91%
Interest of concert
party
31,799,902 Unlisted
Shares
82.56% 31,799,902 Unlisted
Shares
64.40%
Zhongshan
Medical
Investment /H1118
Beneficial interest 31,324,102 Unlisted
Shares
81.32% 31,324,102 Unlisted
Shares
63.44%
Wuhan
Xinglin /H1118/H1118
Beneficial interest 2,740,740 Unlisted
Shares
7.12% 2,740,740 H Shares 5.55%
Ya o Q i
(೘)
(3) /H1118/H1118
Interest in
controlled
corporation
2,740,740 Unlisted
Shares
7.12% 2,740,740 H Shares 5.55%
SUBSTANTIAL SHAREHOLDERS
– 303 –


--- page 314 ---
Notes:
(1) The calculation is based on the total number of 32,352,902 Unlisted Shares in issue and 17,026,140 H Shares
in issue immediately after completion of the Global Offering and the Conversion of Unlisted Shares into H
Shares (assuming no exercise of the Over-allotment Option). Unlisted Shares and H Shares are both ordinary
Shares in the share capital of our Company and are considered as one class of Shares.
(2) As of the Latest Practicable Date, Zhongshan Medical Investment was held by Mr. Y ao and Ms. Shen as to
44.11% and 31.38%, respectively. Pursuant to an acting-in-concert agreement entered into between Mr. Y ao
and Ms. Shen on June 3, 2014, Mr. Y ao and Ms. Shen agreed to act in concert in respect of their voting rights
in Zhongshan Medical Investment and our Company. See “History, Development and Corporate Structure –
Our Major Corporate Development — Early Development” for details. Therefore, Mr. Y ao and Ms. Shen are
deemed to be interested in the Shares directly held by Zhongshan Medical Investment and each other by virtue
of the SFO.
(3) Y ao Qi is the general partner of Wuhan Xinglin. Therefore, Y ao Qi is deemed to be interested in the Shares
directly held by Wuhan Xinglin by virtue of the SFO.
Save as disclosed above and in “Appendix VI — Statutory and General Information —
C. Further Information about Our Directors, Supervisors and Substantial Shareholders,” our
Directors are not aware of any person who will, immediately following the completion of the
Global Offering (assuming no exercise of the Over-allotment Option), have an interest or short
position in the Shares or underlying Shares which will be required to be disclosed to our
Company and the Stock Exchange under the provisions of Division 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 the general meetings of our
Company.
SUBSTANTIAL SHAREHOLDERS
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--- page 315 ---
You should read the following discussion and analysis in conjunction with our
audited consolidated financial information as of and for the years ended December 31,
2022, 2023 and 2024 included in the Accountants’ Report set out in Appendix I to this
prospectus, together with the accompanying notes. Our consolidated financial
information has been prepared in accordance with IFRS.
The following discussion and analysis contain forward-looking statements that
reflect our current views with respect to future events and financial performance that
involve risks and uncertainties. These statements are based on assumptions and analysis
made by us in light of our experience and perception of historical events, current
conditions and expected future developments, as well as other factors we believe are
appropriate under the circumstances. In evaluating our business, you should carefully
consider the information provided in the section headed “Risk Factors” in this
prospectus.
OVERVIEW
We are a private dental services provider in Central China with a focus on Hubei and
Hunan provinces, operating an expanding dental service network under the direct chain model
in this thriving market. We provide reliable and accessible dental care to communities,
dedicated to serving the general public. According to Frost & Sullivan, we ranked first among
all private dental services providers in Central China in terms of revenue generated therefrom
in 2024, occupying a market share of approximately 2.4%. Over the years, we have been
focusing our dental services on addressing the mass market demands, maintaining strong
presence in densely populated Central China. As of the Latest Practicable Date, our dental
service network consisted of 92 dental institutions in operation in total. Our dental services
consist of general dentistry services, implantology services and orthodontics services,
addressing oral health needs of customers of all ages.
During the Track Record Period, we generated revenue from provision of a
comprehensive range of dental services, including (i) general dentistry services, (ii)
implantology services, and (iii) orthodontics services. Our revenue increased from RMB409.4
million for the year ended December 31, 2022 to RMB441.8 million for the year ended
December 31, 2023. From 2023 to 2024, we encountered challenges mainly caused by
customers’ consumption downgrade resulting from the slower-than-expected post-pandemic
economic recovery, and fierce competition among dental services providers. To counter these
macroeconomic pressures and reinforce our industry leadership, we implemented centralized
cost control measures, such as utilizing online operating systems to visualize operational
performance and refine resource allocation to maximize cost efficiency and negotiating
favorable pricing with suppliers for high quality dental consumables as secured through our
strengthened bargaining power with them. We maintained stability in our revenue stream and
only recorded a slight decline in total revenue, from RMB441.8 million for the year ended
December 31, 2023 to RMB407.1 million for the year ended December 31, 2024.
FINANCIAL INFORMATION
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Benefiting from our unified management under direct chain model and increasing
economies of scale of our dental service network, we recorded net profit throughout the Track
Record Period. Our net profit amounted to RMB56.5 million, RMB67.0 million and RMB62.5
million, respectively, for the years ended December 31, 2022, 2023 and 2024. Our adjusted net
profit (non-IFRS measure), as net profit for the year adjusted by adding fair value losses or
gains on redeemable preference shares, share-based payment expenses and listing expenses,
amounted to RMB59.3 million, RMB70.4 million and RMB68.3 million, respectively, for the
years ended December 31, 2022, 2023 and 2024.
BASIS OF PRESENTATION
Our Company was established in the PRC as a limited liability company on July 10, 2007
and was converted into a joint stock company with limited liability on December 24, 2014. See
“History, Development and Corporate Structure.” Our historical financial information has been
prepared in accordance with IFRS, which comprise all standards and interpretations approved
by the IASB. All IFRS effective for the accounting period commencing from January 1, 2024,
together with the relevant transitional provisions, have been early adopted by our Group in the
preparation for the historical financial information consistently throughout the Track Record
Period.
The historical financial information has been prepared under the historical cost
convention, except for certain financial assets at fair value through profit or loss (the
“FVTPL ”), contingent consideration and financial liabilities at FVTPL which have been
measured at fair value. Financial assets at FVTPL are carried in the statement of financial
position at fair value with net changes in fair value recognized in profit or loss. This category
includes derivative instruments and equity investments which we had not irrevocably elected
to classify at fair value through other comprehensive income. Profit or loss and each
component of other comprehensive income are attributed to the owners of the parent of our
Group and to the non-controlling interests, even if this results in the non-controlling interests
having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and
cash flows relating to transactions between members of our Group are eliminated in full on
consolidation. See Note 2.1 to the Accountants’ Report in Appendix I to this prospectus for
details.
FINANCIAL INFORMATION
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--- page 317 ---
KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS
We believe our results of operations and financial condition are mainly affected by the
following factors:
Growth of Dental Services Market in Central China
The growth of the dental services market in China has profound influence on our business
growth and financial performance. The dental services market in China flourishes along with
the development of Chinese economy, the increasing per capita annual disposable income, the
rising total health expenditure and per capita health expenditure in China as well as the
promulgation of government policies favorable to the healthcare services industry in China,
especially the dental services industry. According to Frost & Sullivan, the market size of the
China’s dental services market in terms of revenue generated by dental services providers in
China fluctuated from 2020 to 2024 due to the outbreak of COVID-19 pandemic in 2020 and
the following spreads of transmissible variants of COVID-19.
We have been strategically focusing on providing dental services to serve the general
public in densely populated Central China. Accordingly, our results of operations and financial
condition are especially affected by the growth of dental services market in Central China,
which is typically driven by (i) favorable policies to promote dental services industry in
Central China; (ii) the growth in per capita health expenditure driven by increasing disposable
income; (iii) supply of dental services falls short of demands; and (iv) high-level dental
resources available in Central China, especially Wuhan. The market size of dental services
market in Central China in terms of revenue generated by dental services providers therein
increased in general at a CAGR of 11.4% from 2020 to 2024, despite the decrease in 2020 and
2022 due to the COVID-19 pandemic.
Our future business operations and financial performance are expected to continue to be
affected by the growth of the dental services market in Central China. According to Frost &
Sullivan, such market size is expected to reach RMB40.0 billion in 2029, representing a CAGR
of 6.9% from 2024 to 2029. In particular, the total revenue generated by private dental services
providers in Central China is expected to reach RMB25.3 billion in 2029, growing at a CAGR
of 7.8% from 2024 to 2029, demonstrating extensive market potential for private dental
services providers therein. See “Industry Overview — Dental Services Market in Central
China” for details of the market where we operate.
FINANCIAL INFORMATION
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--- page 318 ---
Our Ability to Grow our Customer Base and Offer Satisfied Dental Services
The revenue generated from dental services provided by our dental institutions mainly
depends on (i) the number of customer visits to our dental institutions; and (ii) customer’s
spending during his or her visits to our dental institutions. See “— Consolidated Statements of
Profit or Loss and Other Comprehensive Income — Revenue” for details.
We believe that our success depends to a significant extent on our ability to grow our
customer base and offer satisfied dental services to customers. Our extensive dental service
network with sufficient seasoned dentists and quality supply of dental devices contributes to
the quality of our dental services, thereby enhancing customer satisfaction and retention. In
addition, the geographic location of our dental institutions, being proximity to local
communities, assures the accessibility and long-term customer relationship management.
Meanwhile, our consistent brand image across all of our dental institutions and growing brand
recognition in Central China are also crucial for attracting and retaining customers. The above
factors, among others, have direct impact on the number of our customer visits and in turn
affect our financial performance and results of operations.
Customer’s spending during his or her visit to our dental institutions is mainly determined
by the type and severity of dental diseases, oral health condition, treatment plans and
preference in treatment methods and consumables. The prices of certain of our dental services
are subject to the applicable PRC laws and regulations, including those applicable to Medical
Insurance Designated Medical Institutions. With the implementation of the centralized
procurement policies, we made timely pricing adjustments on our implantology services and
witnessed more customers access affordable dental services. See “Business — Our Dental
Services” and “Business — Pricing” for more details of our pricing.
Our Ability to Control Our Cost and Expenses
Our ability to manage costs and operating expenses is critical to our results of operations.
Our cost of sales primarily comprises (i) staff costs; (ii) costs of consumables and customized
products; (iii) depreciation and amortization; (iv) office and property management expenses;
and (v) share-based payment expenses. Our operating expenses primarily comprise selling and
distribution expenses, administrative expenses and research and development expenses. We
anticipate an absolute increase in operating expenses and cost of sales along with our business
growth and the expansion of our dental service network. We also expect that our operating
expenses as a percentage of our total revenue will remain relatively stable or potentially
decrease due to ongoing efforts to improve operating efficiency and cost-effectiveness. Our
ability to effectively control such costs and expenses is primarily driven by our operational
efficiency and economies of scale, which in turn may materially affect our profitability.
FINANCIAL INFORMATION
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--- page 319 ---
During the Track Record Period, employee benefit expenses, including those recorded
under cost of sales, selling and marketing expenses, administrative expenses and research and
development expenses, were the largest component of our total costs and expenses. For the
years ended December 31, 2022, 2023 and 2024, our employee benefit expenses amounted to
RMB155.5 million, RMB167.3 million and RMB160.7 million, accounting for 38.0%, 37.9%
and 39.5%, respectively, of our revenue for the same years. Any change in employee benefit
expenses, including the number of employees, salaries and bonuses, social insurance, welfare
and other benefits, and other forms of incentives, could affect our results of operations. The
following table sets forth a sensitivity analysis illustrating the impact of hypothetical
fluctuations in employee benefit expenses on our net profit, excluding any tax effect, for the
years indicated:
Y ear ended December 31,
2022 2023 2024
Change in
net profit
% change
in net
profit
Change in
net profit
% change
in net
profit
Change in
net profit
% change
in net
profit
(RMB’000, except percentages)
+10% /H1118/H1118/H1118/H1118/H1118/H1118(15,549) (28) (16,727) (25) (16,074) (26)
+5% /H1118/H1118/H1118/H1118/H1118/H1118(7,775) (14) (8,364) (12) (8,037) (13)
-5% /H1118/H1118/H1118/H1118/H1118/H1118/H11187,775 14 8,364 12 8,037 13
-10% /H1118/H1118/H1118/H1118/H1118/H111815,549 28 16,727 25 16,074 26
In addition, during the Track Record Period, costs of consumables and customized
products constituted the second largest component of our cost of sales. Our costs of
consumables and customized products amounted to RMB71.6 million, RMB75.2 million and
RMB65.9 million for the years ended December 31, 2022, 2023 and 2024, accounting for
27.4%, 27.5% and 25.9%, respectively, of our cost of sales for the same years. The following
table sets forth a sensitivity analysis illustrating the impact of hypothetical fluctuations in costs
of consumables and customized products in our cost of sales on our net profit, excluding any
tax effect, for the years indicated:
Y ear ended December 31,
2022 2023 2024
Change in
net profit
% change
in net
profit
Change in
net profit
% change
in net
profit
Change in
net profit
% change
in net
profit
(RMB’000, except percentages)
+10% /H1118/H1118/H1118/H1118/H1118/H1118(7,156) (13) (7,524) (11) (6,586) (11)
+5% /H1118/H1118/H1118/H1118/H1118/H1118(3,578) (6) (3,762) (6) (3,293) (5)
-5% /H1118/H1118/H1118/H1118/H1118/H1118/H11183,578 6 3,762 6 3,293 5
-10% /H1118/H1118/H1118/H1118/H1118/H11187,156 13 7,524 11 6,586 11
FINANCIAL INFORMATION
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--- page 320 ---
Our Ability to Expand Our Dental Service Network
The scale of our dental service network plays a critical role in our results of operations
and financial performance. Our revenue and overall profitability depend on the number,
development stage and profitability of each dental institution in our dental service network, and
our future revenue growth is affected by our ability to expand our dental service network and
ramp up the operations of our newly established and acquired dental institutions. Over years
of operations, we have successfully established a strong presence in Central China and remain
committed to increasing our dental institution density in existing cities while penetrating into
new cities and local communities to reach a broader customer base through both establishment
and strategic acquisitions. As of the Latest Practicable Date, we established a dental service
network consisting of 92 dental institutions in operation in total, covering 8 cities in 2
provinces in China. According to Frost & Sullivan, we ranked first among all private dental
services providers in Central China in terms of revenue generated therefrom in 2024. Our
successful track record and highly scalable business model enable us to serve a broad customer
base.
In line with our business growth, we intend to continuously upgrade our existing dental
institutions, elevating their service capacity and optimizing customer experience. In addition,
we plan to seek and assess potential acquisition targets with a market-oriented approach and
a strategic geographic focus on Central China. The cost efficiency of establishing or acquiring
dental institutions is critical to our ability to recoup investments in a timely manner, which may
materially impact our revenue and profitability. The monthly breakeven periods and the
investment payback periods for our new dental institutions depend on specific characteristics
of such dental institution, such as its service capacity, initial investment, the coverage of its
service offerings, competitive landscape and variation in the local economy and urban road
planning. In addition, the monthly breakeven periods and the investment payback periods of
our acquired dental institutions are also affected by the profitability of relevant dental
institutions prior to our acquisition. Newly established dental institutions may experience
lower operational efficiency during their ramp-up stage, potentially affecting our short-term
liquidity and profitability. We may open new dental institutions and/or acquire dental
institutions from period to period at an uneven rate. As such, our profitability may fluctuate
from period to period. Overall, expansion of our dental service network have been
strengthening our revenue stream and promoting in-network synergies and economies of scale.
See “Business — Our Future Expansion” and “Future Plans and Use of Proceeds.”
FINANCIAL INFORMATION
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--- page 321 ---
Seasonality
We experience insignificant seasonal fluctuations in our revenue and profitability. In line
with the industry norm, we typically witness increase in customer visits in July and August
each year, as it can be easier for potential customers, especially children and teenagers, to have
time for dental diagnosis and treatment during their summer vacation. In addition, we typically
witness fewer customer visits shortly before and during the Chinese New Y ear holiday, mainly
because most Chinese residents tend to postpone their dental treatment plans during such
period. See “Business — Seasonality.” Therefore, our revenue is generally slightly higher in
the third quarter of each financial year and slightly lower in the first quarter of each financial
year.
We expect our business operations and financial performance to continue to experience
minor fluctuations based on seasonal factors. Our financial performance for any period of less
than a year may not reflect our annual financial results.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We have identified certain accounting policies that we believe are most significant to the
preparation of our consolidated financial statements. The preparation of financial statements
also requires the use of accounting estimates and associated assumptions, which are based on
our historical experience and various other relevant factors that we believe are reasonable
under the circumstances. Our management also exercises judgement in applying the accounting
policies. Our material accounting policy information, judgements and estimates, which are
important for understanding our results of operations and financial condition, are set out in
Note 2.3 and Note 3 to the Accountants’ Report set out in Appendix I to this prospectus.
When reviewing our financial results, you should consider: (i) our selection of critical
accounting policies; (ii) the judgment and other uncertainties affecting the application of such
policies; and (iii) the sensitivity of reported results to changes in conditions and assumptions.
The basis for determination of these items may change in the future, and as a result, actual
results could differ from those estimates.
We set forth below the accounting policies that we believe are the most significant to our
financial information.
Revenue Recognition
We recognize revenue from contracts with customers when control of goods or services
is transferred to the customers at an amount that reflects the consideration to which we expect
to be entitled in exchange for those goods or services.
FINANCIAL INFORMATION
–3 1 1–


--- page 322 ---
The following is a description of the accounting policy for our principal revenue streams:
Provision of General Dentistry Services
Revenue from provision of general dentistry services is recognized when the services
have been rendered, given that such dental services are generally completed within a very short
period of time.
Revenue from sale of goods is recognized when control of the goods has transferred,
being when the goods are delivered to the customers.
Provision of Implantology and Orthodontics Services
Revenue from provision of implantology and orthodontics services are recognized over
time, using an input method to measure progress towards complete satisfaction of the services.
The input method recognizes revenue on the basis of the staff costs and cost of inventories,
consumables and customized products expended relative to the total expected costs to complete
the service.
Contract Liabilities
A contract liability is our obligation to transfer goods or services to a customer for which
we have received consideration (or an amount of consideration is due) from our customer.
Property, Plant and Equipment Depreciation
We state property, plant and equipment, other than construction in progress, at cost less
accumulated depreciation and any impairment losses. The cost of an item of property, plant and
equipment comprises its purchase price and any directly attributable costs of bringing the asset
to its working condition and location for its intended use. Expenditure incurred after items of
property, plant and equipment have been put into operation, such as repairs and maintenance,
is normally charged to profit or loss in the year in which it is incurred. In situations where the
recognition criteria are satisfied, the expenditure for a major inspection is capitalized in the
carrying amount of the asset as a replacement. Where significant parts of property, plant and
equipment are required to be replaced at intervals, we recognize such parts as individual assets
with specific useful lives and depreciate them accordingly. Depreciation is calculated on the
straight-line basis to write off the cost of each item of property, plant and equipment to its
residual value over its estimated useful life.
FINANCIAL INFORMATION
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--- page 323 ---
The below table sets forth the principal annual rates of property, plant and equipment.
Categories Principal annual rates
Buildings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.17%
Medical equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819%
Furniture and fixtures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819%-31.67%
Motor vehicles /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819%
Leasehold improvements /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Shorter of the
useful life and the
lease term
Where certain parts of property, plant and equipment have different useful lives, we
allocate the cost of such parts on a reasonable basis among the property, plant and equipment
and each part of property, plant and equipment is depreciated separately. We review and make
adjustments, when appropriate, on the residual values, useful lives and the depreciation method
at least at the end of each reporting period during the Track Record Period. We derecognize an
item of property, plant and equipment including any significant part initially recognized upon
disposal or when no future economic benefits are expected to derive from its use or disposal.
Any gain or loss on disposal or retirement recognized in profit or loss in the year the asset is
derecognized is the difference between the net sales proceeds and the carrying amount of the
relevant asset.
Construction in progress, which is stated at cost less any impairment losses, and is not
depreciated. Construction in progress is reclassified to the appropriate category of property,
plant and equipment when completed and ready for use.
Right-of-use assets
We recognize right-of-use assets at the commencement date of the lease (i.e. the date
when the underlying asset is available for use). We measure right-of-use assets at cost, less any
accumulated depreciation and any impairment losses, and adjusted for any remeasurement of
lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities
recognized, initial direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Right-of-use assets are depreciated on
a straight-line basis over the shorter of the lease terms and the estimated useful lives of the
assets as follows:
Categories Estimated useful lives
Clinic and office premises /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182 to 16.5 years
If ownership of the leased asset transfers to our Group by the end of the lease term or the
cost reflects the exercise of a purchase option, depreciation is calculated using the estimated
useful life of the asset.
FINANCIAL INFORMATION
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Business Combinations
Our business combinations are accounted for using the acquisition method. We measure
the consideration transferred at the fair value as of the acquisition date, which equals to the
sum of the fair values of assets transferred by us as of the acquisition date, liabilities assumed
by us to the former owners of the acquiree and the equity interests issued by us in exchange
for control of the acquiree.
For each business combination, we elect whether to measure the non-controlling interests
in the acquiree that are present ownership interests and entitle their holders to a proportionate
share of net assets in the event of liquidation at fair value or at the proportionate share of the
acquiree’s identifiable net assets. All other components of non-controlling interests are
measured at fair value. Acquisition-related costs are expensed as incurred.
We determine that our Group has acquired a business when the acquired set of activities
and assets include an input and a substantive process that together significantly contribute to
the ability to create outputs. When we acquire a business, we assess the financial assets and
liabilities assumed for appropriate classification and designation in accordance with the
contractual terms, economic circumstances and pertinent conditions as of the acquisition date.
This includes the separation of embedded derivatives in host contracts of the acquiree. For
business combination achieved in stages, we remeasure the equity interest previously held at
its fair value as of acquisition date and recognize any gain or loss in profit or loss resulted from
the acquisition. We recognize any contingent consideration to be transferred by the acquirer at
fair value as of the acquisition date. We measure contingent consideration classified as an asset
or liability at fair value with changes in fair value recognized in profit or loss. Contingent
consideration that is classified as equity is not remeasured and subsequent settlement is
accounted for within equity.
Goodwill
We measure goodwill initially at cost, being the excess of the sum of the consideration
transferred, the amount recognized for non-controlling interests and any fair value of our
equity interest in the acquiree previously held over the identifiable net assets acquired and
liabilities assumed. If the sum of this consideration and other items is lower than the fair value
of the net assets acquired, we recognize the difference in profit or loss as a gain on bargain
purchase after reassessment.
After initial recognition, we measure goodwill at cost less any accumulated impairment
losses. We test goodwill for impairment annually or more frequently if events or changes in
circumstances indicate that the carrying value of the goodwill may be impaired. We perform
our annual impairment test of goodwill as of December 31 of each year. For the purpose of
impairment testing, goodwill acquired in a business combination is, from the acquisition date,
allocated to each of our cash-generating units, or each group of cash-generating units, that is
expected to benefit from the synergies of the combination, irrespective of whether our other
assets or liabilities are assigned to those units or groups of units. We determine the impairment
FINANCIAL INFORMATION
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by assessing the recoverable amount of the cash-generating unit, or group of cash-generating
units, to which the goodwill relates. Where the recoverable amount of the cash-generating
units, or groups of cash-generating units, is less than the carrying amount, an impairment loss
is recognized. We do not reverse an impairment loss recognized for goodwill in a subsequent
period.
Where goodwill has been allocated to a cash-generating unit, or a group of cash-
generating units, and part of the operation within that unit is disposed of, the goodwill
associated with the operation disposed of is included in the carrying amount of the operation
when determining the gain or loss on the disposal. Goodwill disposed of in these circumstances
is measured based on the relative value of the operation disposed of and the portion of the
cash-generating unit retained.
Impairment of Financial Assets
We recognize an allowance for expected credit losses (the “ ECLs ”) for all debt
instruments not held at FVTPL. ECLs are based on the difference between the contractual cash
flows due in accordance with the contract and all the cash flows that we expect to receive,
discounted at an approximation of the original effective interest rate. The expected cash flows
will include cash flows from the sale of collateral held or other credit enhancements that are
integral to the contractual terms. We write off a financial asset when there is no reasonable
expectation of recovering the contractual cash flows.
For trade receivables that do not contain a significant financing component or when we
apply the practical expedient of not adjusting the effect of a significant financing component,
we apply the simplified approach in calculating ECLs. Under the simplified approach, we do
not track changes in credit risk, but instead recognize a loss allowance based on lifetime ECLs
at the end of each of the financial year. We have established a provision matrix that is based
on our historical credit loss experience, adjusted for forward-looking factors specific to the
debtors and the economic environment.
Impairment of Non-financial Assets
Where an indication of impairment exists, or when annual impairment testing for an asset
is required (other than inventories, deferred tax assets and financial assets), we estimate the
asset’s recoverable amount, which is the higher of the asset’s or cash-generating unit’s value
in use and its fair value less costs of disposal, and determine for an individual asset, unless the
asset does not generate cash inflows that are largely independent of those from other assets or
groups of assets, in which case we determine the recoverable amount for the cash-generating
unit to which the asset belongs. In testing a cash-generating unit for impairment, a portion of
the carrying amount of a corporate asset (e.g., a headquarters building) is allocated to an
individual cash-generating unit if it can be allocated on a reasonable and consistent basis or,
otherwise, to the smallest group of cash-generating units.
FINANCIAL INFORMATION
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We recognize an impairment loss only if the carrying amount of an asset exceeds its
recoverable amount. 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. An impairment loss is charged to
the profit or loss in the year in which it arises in those expense categories consistent with the
function of the impaired asset.
We make assessment at the end of each of the financial year as to whether there is an
indication that impairment losses previously recognized may no longer exist or may have
decreased. If such an indication exists, we estimate the recoverable amount. We reverse the
impairment loss of an asset previously recognized other than goodwill only if there has been
a change in the estimates used to determine the recoverable amount of that asset, but not to an
amount higher than the carrying amount that would have been determined (net of any
depreciation/amortization) had no impairment loss been recognized for the asset in prior years.
A reversal of such an impairment loss is credited to profit or loss in the year in which it arises.
Inventories
We state inventories at the lower of cost and net realizable value. We determine cost
comprising all cost of purchase and other costs incurred in bringing the inventories to their
present location and condition on the specific identification basis. Net realizable value is based
on estimated selling prices less any estimated costs to be incurred to completion and disposal.
Cash and Cash Equivalents
For the purpose of the consolidated statement of financial position, cash and cash
equivalents comprise cash on hand and at banks, and short-term highly liquid deposits with a
maturity of generally within three months that are readily convertible into known amounts of
cash, subject to an insignificant risk of changes in value and held for the purpose of meeting
short-term cash commitments.
For the purpose of the consolidated statement of cash flow, cash and cash equivalents
comprise cash on hand and at banks, and short-term deposits, less bank overdrafts which are
repayable on demand and form an integral part of our cash management.
Investments and Other Financial Assets
Initial Recognition and Measurement
Financial assets are classified, at initial recognition, as subsequently measured at
amortized cost and FVTPL. The classification of financial assets at initial recognition depends
on the financial asset’s contractual cash flow characteristics and our business model for
managing them. With the exception of trade receivables that do not contain a significant
financing component or for which we have applied the practical expedient of not adjusting the
effect of a significant financing component, we initially measure a financial asset at its fair
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value plus in the case of a financial asset not at FVTPL, transaction costs. Trade receivables
that do not contain a significant financing component or for which we have applied the
practical expedient are measured at the transaction price determined under IFRS 15 in
accordance with the revenue recognition policies as mentioned above.
In order for a financial asset to be classified and measured at amortized cost or fair value
through other comprehensive income, it needs to give rise to cash flows that are solely
payments of principal and interest (the “ SPPI ”) on the principal amount outstanding. We
classify and measure financial assets with cash flows that are not SPPI at FVTPL, irrespective
of the business model.
Our business model for managing financial assets refers to how we manage the financial
assets in order to generate cash flows. The business model determines whether cash flows will
result from collecting contractual cash flows, selling the financial assets, or both. Financial
assets classified and measured at amortized cost are held within a business model with the
objective to hold financial assets in order to collect contractual cash flows, while financial
assets classified and measured at fair value through other comprehensive income are held
within a business model with the objective of both holding to collect contractual cash flows and
selling. Financial assets which are not held within the aforementioned business models are
classified and measured at FVTPL. Purchases or sales of financial assets that require delivery
of assets within the period generally established by regulation or convention in the marketplace
are recognized on the trade date, which is the date that we commit to purchase or sell the asset.
Subsequent Measurement
The subsequent measurement of financial assets depends on their classification as
follows.
Financial Assets at Amortized Cost (Debt Instruments)
Financial assets at amortized cost are subsequently measured using the effective interest
method and are subject to impairment. Gains and losses are recognized in profit or loss when
the asset is derecognized, modified or impaired.
Financial Assets at FVTPL
Financial assets at FVTPL are carried in the statement of financial position at fair value
with net changes in fair value recognized in profit or loss. This category includes derivative
instruments and equity investments which we had not irrevocably elected to classify at fair
value through other comprehensive income. Dividends on the equity investments are also
recognized as other income in profit or loss when the right of payment has been established.
A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is
separated from the host and accounted for as a separate derivative if the economic
characteristics and risks are not closely related to the host; a separate instrument with the same
terms as the embedded derivative would meet the definition of a derivative; and the hybrid
FINANCIAL INFORMATION
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contract is not measured at FVTPL. Embedded derivatives are measured at fair value with
changes in fair value recognized in profit or loss. Reassessment only occurs if there is either
a change in the terms of the contract that significantly modifies the cash flows that would
otherwise be required or a reclassification of a financial asset out of the FVTPL category. A
derivative embedded within a hybrid contract containing a financial asset host is not accounted
for separately. The financial asset host together with the embedded derivative is required to be
classified in its entirety as a financial asset at FVTPL.
We set forth below the accounting estimates that we believe are the most significant to
our financial information.
Impairment of Goodwill
Our Group determines whether goodwill is impaired at least on an annual basis. This
requires an estimation of the value in use of the cash-generating units to which the goodwill
is allocated. We make an estimate of the expected future cash flows from the cash-generating
units and also choose a suitable discount rate in order to calculate the present value of those
cash flows to estimate the value in use.
Fair Value of Redeemable Preference Shares
The redeemable preference shares issued by us are not traded in an active market and the
respective fair values are determined by using the equity allocation method. Key inputs used
in valuing the underlying equity value are set forth in detail in Note 26 to the Accountants’
Report in Appendix I to this prospectus. The carrying amounts of redeemable preference shares
were RMB110,450,000, RMB112,781,000, and nil as of December 31, 2022, 2023 and 2024,
respectively.
Restricted Share Scheme
We have set up a Pre-IPO Restricted Share Scheme and granted restricted shares to our
directors and employees. The fair value of the Restricted Shares are determined by the
discounted cash flow and equity allocation method at the grant dates, respectively. Significant
estimates on assumptions, including the underlying equity value, discount rate, expected
volatility and dividend yield are made by our management. See Note 30 to the Accountants’
Report in Appendix I to this prospectus for further details.
FINANCIAL INFORMATION
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CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
The following table sets forth selected consolidated statements of profit or loss and other
comprehensive income for the years indicated:
Y ear ended December 31,
2022 2023 2024
(RMB’000)
Revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118409,444 441,841 407,083
Cost of sales /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(260,970) (273,615) (254,743)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118148,474 168,226 152,340
Selling and distribution expenses /H1118/H1118/H1118/H1118/H1118/H1118(41,709) (44,687) (40,473)
Administrative expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(33,992) (32,549) (34,875)
Research and development expenses /H1118/H1118/H1118(6,618) (6,823) (6,669)
Other expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,175) (1,885) (1,307)
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6,679) (5,507) (5,329)
Fair value (losses)/gains on redeemable
preference shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,336) (2,331) 1,716
Other income and gains /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,541 4,464 5,414
Profit before tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111863,506 78,908 70,817
Income tax expense /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(7,056) (11,870) (8,317)
Profit for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111856,450 67,038 62,500
Total comprehensive income for
the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111856,450 67,038 62,500
Attributable to:
Owners of the parent /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111843,342 50,069 41,916
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,108 16,969 20,584
Earnings per share attributable
to ordinary equity holders of
the parent
Basic and diluted (RMB) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.92 1.07 0.94
FINANCIAL INFORMATION
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Non-IFRS Measures
To supplement our consolidated statements of profit or loss and other comprehensive
income presented in accordance with IFRS, we also use adjusted net profit (non-IFRS
measure), as an additional financial measure, which is not required by, or presented in
accordance with IFRS. We believe that the presentation of this non-IFRS measure facilitates
comparison of the operating performance from year to year. We believe that this measure
provides useful information to investors in understanding and evaluating our consolidated
results of operations in the same manner as they help our management. However, the use of
non-IFRS measure has limitations as an analytical tool, and you should not consider it in
isolation from, or as a substitute for analysis of, our results of operations or financial
conditions as reported under IFRS. In addition, the non-IFRS financial measure may be defined
differently from similar terms used by other companies.
We define adjusted net profit (non-IFRS measure), as net profit for the year adjusted by
adding (i) fair value losses or gains on redeemable preference shares; (ii) share-based payment
expenses; and (iii) listing expenses. Our redeemable preference shares represent shares issued
by us in connection with Series A Investment and Series B Investment to Independent
Third-Party investors. All special rights granted to such investors have been terminated in
September 2024. We ceased to recognize any further loss on fair value changes of redeemable
preference shares thereafter, because there were no more redeemable preference shares upon
the termination of all special rights. See Note 26 and Note 30 to the Accountants’ Report set
out in Appendix I to this prospectus for details.
The following table reconciles our adjusted net profit (non-IFRS measure) for the years
indicated:
Y ear ended December 31,
2022 2023 2024
(RMB’000)
Net profit for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111856,450 67,038 62,500
Add:
Fair value losses/(gains) on redeemable
preference shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,336 2,331 (1,716)
Share-based payment expenses (1) /H1118/H1118/H1118/H1118/H1118/H11181,598 1,053 2,355
Listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 5,207
Adjusted net profit
(non-IFRS measure) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111859,384 70,422 68,346
Note:
(1) Representing expenses arising from Restricted Shares granted to our employees and former employees
under the Pre-IPO Restricted Share Scheme.
FINANCIAL INFORMATION
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Revenue
During the Track Record Period, we generated revenue from providing (i) general
dentistry services; (ii) implantology services; and (iii) orthodontics services to customers
through our dental service network.
Revenue by Business Line
The following table sets forth our revenue by business line for the years indicated:
Y ear ended December 31,
2022 2023 2024
RMB’000
%o f
revenue RMB’000
%o f
revenue RMB’000
%o f
revenue
General dentistry services /H1118/H1118/H1118212,526 51.9 237,088 53.7 217,321 53.4
Implantology services /H1118/H1118/H1118/H1118/H1118116,728 28.5 122,984 27.8 115,647 28.4
Orthodontics services /H1118/H1118/H1118/H1118/H111880,190 19.6 81,769 18.5 74,115 18.2
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118409,444 100.0 441,841 100.0 407,083 100.0
Revenue from our dental services mainly depends on (i) the number of customer visits to
our dental institutions; and (ii) customer’s spending during his or her visits to our dental
institutions.
The following table sets forth the number of customer visits and average spending per
customer visit by type of our dental services for the years indicated:
Y ear ended December 31,
2022 2023 2024
General dentistry services (1)
– Number of customer visits /H1118/H1118/H1118/H1118/H1118/H1118/H1118520,961 549,907 516,570
– Average spending per customer
visit (RMB) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118408 431 421
Implantology services (1)
– Number of customer visits /H1118/H1118/H1118/H1118/H1118/H1118/H111859,763 78,759 86,810
 Number of initial visits (2) /H1118/H1118/H1118/H1118/H11185,466 8,146 8,843
 Number of follow-up visits /H1118/H1118/H1118/H111854,297 70,613 77,967
– Number of implant teeth /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,797 20,485 20,055
– Average spending per customer
visit (RMB) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,953 1,562 1,332
– Average spending per implant
tooth (RMB) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,460 6,004 5,767
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Y ear ended December 31,
2022 2023 2024
Orthodontics services (1)
– Number of customer visits /H1118/H1118/H1118/H1118/H1118/H1118/H1118127,927 140,143 145,252
 Number of initial visits (3) /H1118/H1118/H1118/H1118/H11185,864 5,576 5,502
 Number of follow-up visits /H1118/H1118/H1118/H1118122,063 134,567 139,750
– Average spending per customer
visit (RMB) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118627 583 510
Notes:
(1) Due to the nature of dental services, an integral implantology or orthodontics treatment generally
requires multiple visits due to the complexity of dental conditions and the necessary treatment duration,
while general dentistry typically focuses on primary care and completes the treatment without
multi-stage procedures.
(2) When calculating initial implantology visits, a customer’s initial visit for an implantology treatment
procedure is counted as an initial visit, regardless of whether the customer had previously received other
dental services provided by us (i.e., general dentistry services or orthodontics services). To be specific,
a customer visit for a new implantology treatment procedure (typically involving previously untreated
teeth) qualifies an initial implantology visit. Customer visits that only involve an existing implantology
treatment plan are regarded as follow-up implantology visits.
(3) When calculating initial orthodontics visits, a customer’s initial visit for our orthodontics treatment is
counted as an initial visit, regardless of whether the customer had previously received other dental
services provided by us (i.e., general dentistry or implantology services).
Revenue from General Dentistry Services
General dentistry services contributed to the majority of our revenue during the Track
Record Period. For the years ended December 31, 2022, 2023 and 2024, revenue from general
dentistry services represented 51.9%, 53.7% and 53.4%, respectively, of our total revenue for
the same years. We expect our provision of general dentistry services to contribute an
increasing portion of our total revenue in the near future, attributable to our increasing focus
on oral health management for residents in local communities as it is our principal method for
customer acquisition and market penetration.
Revenue from Implantology Services
For the years ended December 31, 2022, 2023 and 2024, revenue from implantology
services represented 28.5%, 27.8% and 28.4%, respectively, of our total revenue for the same
years.
FINANCIAL INFORMATION
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Revenue from Orthodontics Services
For the years ended December 31, 2022, 2023 and 2024, revenue from orthodontics
services represented 19.6%, 18.5% and 18.2%, respectively, of our total revenue for the same
years.
See “— Y ear to Y ear Comparison of Results of Operations” for details of the fluctuation
of our revenue generated by different business line during the Track Record Period.
Cost of Sales
Cost of Sales by Nature
Our cost of sales primarily consists of (i) staff costs, mainly including salaries, bonuses
and benefit expenses for dentists and other medical professionals and operating staff working
at our dental service network; (ii) costs of consumables and customized products, mainly
representing costs to procure dental consumables and customize products used in our dental
services, mainly including implant fixtures, porcelain crowns and dental braces; (iii)
depreciation and amortization, mainly representing depreciation of right of use assets and
medical equipment; (iv) office and property management expenses; and (v) share-based
payments to medical professionals employed by us under the Pre-IPO Restricted Share
Scheme. The following table sets forth a breakdown of our cost of sales by nature for the years
indicated:
Y ear ended December 31,
2022 2023 2024
RMB’000
%o f
total RMB’000
%o f
total RMB’000
%o f
total
Staff costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118120,967 46.4 131,189 47.9 125,069 49.1
Costs of consumables and
customized products /H1118/H1118/H1118/H1118/H111871,559 27.4 75,238 27.5 65,855 25.9
Depreciation and
amortization /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111855,971 21.4 55,684 20.4 52,802 20.7
Office and property
management expenses /H1118/H1118/H11189,857 3.8 8,903 3.3 8,151 3.2
Share-based payments /H1118/H1118/H1118/H1118/H1118304 0.1 241 0.1 326 0.1
Others (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,312 0.9 2,360 0.9 2,540 1.0
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118260,970 100.0 273,615 100.0 254,743 100.0
Note:
(1) Mainly representing utility charges, and charges for disposing medical waste of our dental institutions.
FINANCIAL INFORMATION
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Our cost structure remained relatively consistent throughout the Track Record Period.
Staff costs constituted the largest component of our cost of sales during the Track Record
Period. For the years ended December 31, 2022, 2023 and 2024, our staff costs charged in cost
of sales amounted to RMB121.0 million, RMB131.2 million and RMB125.1 million,
accounting for 46.4%, 47.9% and 49.1%, respectively, of our cost of sales for the same years.
See “— Y ear to Y ear Comparison of Results of Operations” for details of the underlying
reasons for the fluctuations on our cost of sales during the Track Record Period.
Gross Profit and Gross Profit Margin
For the years ended December 31, 2022, 2023 and 2024, our gross profit amounted to
RMB148.5 million, RMB168.2 million and RMB152.3 million, respectively. The increase of
our gross profit in 2023 was generally in line with the growth of our revenue. The decrease of
our gross profit in 2024 was mainly caused by the decrease of our revenue in the same year.
See “— Y ear to Y ear Comparison of Results of Operations” for details.
For the years ended December 31, 2022, 2023 and 2024, our gross profit margin was
36.3%, 38.1% and 37.4%, respectively.
Apart from gross profit and gross profit margin, to provide more information in relation
to our profitability by each business line, we present operational profit on below calculation
and hypothetical assumption that (i) revenue of each business line less its corresponding costs
of consumables and customized products; and (ii) depreciation and amortization, and office and
property management expenses, which are allocated to each category of dental services on a
pro rata basis, based on the respective revenue contribution of each category of dental services.
Staff costs constituted the largest component of our cost of sales during the Track Record
Period. Our medical professionals are dynamically managed based on customer needs rather
than rigid specialty delineation. Meanwhile, the time spent by each dentist in different
specialties varies significantly due to the nature of dental specialties. Therefore, it is not
feasible to accurately allocate the staff costs to different dental services nor meaningful to
simply conduct a hypothetical assumption to make allocation according to each business line’s
respective revenue contribution, because allocating staff costs, the largest component of our
cost of sales, on a pro rata basis according to the respective revenue contribution of each
category of dental services would substantially distort the presentation and comparison of
profitability of different dental services. According to Frost & Sullivan, evaluating the
profitability of different business lines through operational profit margin is generally in line
with the industry norm.
FINANCIAL INFORMATION
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The below table sets forth a breakdown of operational profit and operational profit margin
by business line, along with a reconciliation of operational profit to gross profit, for the years
indicated:
Y ear ended December 31,
2022 2023 2024
Operational
profit
Operational
profit
margin
Operational
profit
Operational
profit
margin
Operational
profit
Operational
profit
margin
(RMB’000) (%) (RMB’000) (%) (RMB’000) (%)
General dentistry
services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118156,264 73.5 179,599 75.8 166,733 76.7
Implantology services /H1118 69,164 59.3 72,228 58.7 65,641 56.8
Orthodontics services /H1118/H1118 46,627 58.1 50,192 61.4 47,894 64.6
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118272,055 66.4 302,019 68.4 280,268 68.8
Unallocated common
costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(123,581) N/A (133,793) N/A (127,928) N/A
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118148,474 36.3 168,226 38.1 152,340 37.4
For the years ended December 31, 2022, 2023 and 2024, our operational profit amounted
to RMB272.1 million, RMB302.0 million and RMB280.2 million, respectively, generally in
line with the fluctuation of our gross profit during the same years. The operational profit
margin of general dentistry services was relatively higher than that of implantology and
orthodontics services, which was generally in line with the industry. In dental services market
in China, due to the nature of dental specialties, the costs of dental consumables used in general
dentistry services are generally lower than those of implantology and orthodontics services,
which contributes to the relatively high gross profit margin of general dentistry services.
Our operational profit margin increased from 66.4% for the year ended December 31,
2022 to 68.4% for the year ended December 31, 2023, primarily attributable to our centralized
cost control measures, such as utilizing online operating systems to visualize operational
performance and refine resource allocation to maximize cost efficiency, negotiating with
lessors to reduce the rental payments and negotiating favorable pricing with suppliers for high
quality dental consumables as secured through our strengthened bargaining power with them,
along with the growth in revenue from our dental services. See “— Y ear to Y ear Comparison
of Results of Operations” for details. Our operational profit margin remained relatively stable
at 68.8% for the year ended December 31, 2024 compared to 68.4% for the year ended
December 31, 2023.
FINANCIAL INFORMATION
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Selling and Distribution Expenses
Our selling and distribution expenses primarily consist of (i) advertising and promotion
expenses; and (ii) staff costs, mainly representing salaries, bonuses and benefit expenses for
our branding and marketing staff. The following table sets forth the breakdown of our selling
and distribution expenses by nature for the years indicated:
Y ear ended December 31,
2022 2023 2024
RMB’000
%o f
total RMB’000
%o f
total RMB’000
%o f
total
Advertising and promotion
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,445 82.6 37,150 83.1 32,399 80.1
Staff costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,069 16.9 7,190 16.1 7,781 19.2
Others (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118195 0.5 347 0.8 293 0.7
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111841,709 100.0 44,687 100.0 40,473 100.0
Note:
(1) Mainly representing traveling expenses, and depreciation and amortization expenses.
We carry out marketing and branding activities based on the market conditions and our
expansion strategies. For the years ended December 31, 2022, 2023 and 2024, our selling and
distribution expenses amounted to RMB41.7 million, RMB44.7 million and RMB40.5 million,
respectively. See “— Y ear to Y ear Comparison of Results of Operations” for details of the
underlying reasons for the fluctuations on our selling and distribution expenses during the
Track Record Period.
FINANCIAL INFORMATION
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Administrative Expenses
Our administrative expenses primarily consist of (i) staff costs, mainly representing
salaries, bonuses and benefit expenses for our management and administrative personnel; (ii)
depreciation and amortization; (iii) consultation and professional service expenses mainly in
connection with the business strategy consultation services provided by third-party
professional consulting firms. We engaged such consulting firms for market positioning and
business strategies; (iv) office expenses; (v) listing expenses; (vi) share-based payment
expenses for Restricted Shares granted to our directors and employees under the Pre-IPO
Restricted Share Scheme; and (vii) entertainment expenses. The following table sets forth the
breakdown of our administrative expenses by nature for the years indicated:
Y ear ended December 31,
2022 2023 2024
RMB’000
%o f
total RMB’000
%o f
total RMB’000
%o f
total
Staff costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822,584 66.4 22,219 68.3 20,329 58.3
Depreciation and
amortization /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,192 9.4 2,874 8.8 2,811 8.1
Consultation and professional
service expenses /H1118/H1118/H1118/H1118/H1118/H1118/H11182,371 7.0 2,146 6.6 2,108 6.0
Office expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,490 4.4 1,194 3.7 1,139 3.3
Listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – – 5,207 14.9
Share-based payment
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,221 3.6 812 2.5 676 1.9
Entertainment expenses /H1118/H1118/H1118/H11181,745 5.1 1,372 4.2 979 2.8
Others (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,389 4.1 1,932 5.9 1,626 4.7
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833,992 100.0 32,549 100.0 34,875 100.0
Note:
(1) Mainly representing traveling expenses.
For the years ended December 31, 2022, 2023 and 2024, our administrative expenses
amounted to RMB34.0 million, RMB32.5 million and RMB34.9 million, accounting for 8.3%,
7.4% and 8.6%, respectively, of our total revenue for the same years. See “— Y ear to Y ear
Comparison of Results of Operations” for details of the underlying reasons for the fluctuations
on our administrative expenses during the Track Record Period.
FINANCIAL INFORMATION
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Research and development expenses
During the provision of dental services, our dentists also take the lead in developing
dental technologies and devices used in our dental service network. We develop and upgrade
our information technology systems to digitalize our operations and corporate management.
Our research and development expenses primarily consist of staff costs, representing salaries,
bonuses and benefit expenses to our research and development staff. The following table sets
forth the breakdown of our research and development expenses by nature for the years
indicated:
Y ear ended December 31,
2022 2023 2024
RMB’000 % of total RMB’000 % of total RMB’000 % of total
Staff costs /H1118/H1118/H1118/H1118/H1118/H11186,471 97.8 6,656 97.6 6,558 98.3
Others (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118147 2.2 167 2.4 111 1.7
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,618 100.0 6,823 100.0 6,669 100.0
Note:
(1) Mainly representing depreciation and amortization and expenses for consumables used for our research
and development projects.
For the years ended December 31, 2022, 2023 and 2024, our research and development
expenses amounted to RMB6.6 million, RMB6.8 million and RMB6.7 million, accounting for
1.6%, 1.5% and 1.6%, respectively, of our total revenue for the same years. See “— Y ear to
Y ear Comparison of Results of Operations” for details of the underlying reasons for the
fluctuations on our research and development expenses during the Track Record Period.
Other Expenses
Our other expenses primarily comprise (i) bank charges; and (ii) losses on disposal of
property, plant and equipment. For the years ended December 31, 2022, 2023 and 2024, our
other expenses amounted to RMB2.2 million, RMB1.9 million and RMB1.3 million,
respectively. See “— Y ear to Y ear Comparison of Results of Operations” for details of the
underlying reasons for the fluctuations on our other expenses during the Track Record Period.
FINANCIAL INFORMATION
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Finance Costs
Our finance costs mainly consist of (i) interest on lease liabilities, representing interest
recognized in association with our lease liabilities; and (ii) interest on bank loans. The
following table sets forth a breakdown of finance costs for the years indicated:
Y ear ended December 31,
2022 2023 2024
RMB’000 % of total RMB’000 % of total RMB’000 % of total
Interest on lease
liabilities /H1118/H1118/H1118/H1118/H11186,554 98.1 5,507 100.0 5,329 100.0
Interest on bank
loans /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181 2 5 1 . 9––––
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,679 100.0 5,507 100.0 5,329 100.0
For the years ended December 31, 2022, 2023 and 2024, our finance costs amounted to
RMB6.7 million, RMB5.5 million and RMB5.3 million, accounting for 1.6%, 1.2% and 1.3%,
respectively, of our total revenue for the same years. See “— Y ear to Y ear Comparison of
Results of Operations” for details of the underlying reasons for the fluctuations on our finance
costs during the Track Record Period.
Fair Value Losses or Gains on Redeemable Preference Shares
Our fair value losses or gains on redeemable preference shares arise primarily from the
changes in the fair value of shares issued by us in connection with Series A Investment and
Series B Investment. See “History, Development and Corporate Structure — Pre-IPO
Investments — Special Rights.” Such redeemable preference shares are not traded in an active
market and the respective fair values are determined by using the equity allocation method. We
used risk-free interest rate, discount for lack of marketability and volatility as key valuation
assumptions to determine the fair value of the redeemable preference shares. We had fair value
losses on redeemable preference shares of RMB1.3 million and RMB2.3 million for the year
ended December 31, 2022 and 2023, respectively. For the year ended December 31, 2024, we
had fair value gains on redeemable preference shares of RMB1.7 million. See “— Y ear to Y ear
Comparison of Results of Operations” for details of the underlying reasons for the fluctuations.
All special rights granted to such investors have been terminated in September 2024 and we
ceased to recognize any further loss on fair value changes of redeemable preference shares
thereafter. See Note 26 to the Accountants’ Report set out in Appendix I to this prospectus for
details.
FINANCIAL INFORMATION
– 329 –


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Other Income and Gains
Our other income and gains primarily consists of (i) investment income from wealth
management products we purchased; (ii) government grants mainly representing certain
government grants by the relevant government authorities; (iii) gain arising from lease
modification, representing gains arising from adjustment on the lease terms; (iv) bank interest
income; (v) rental income, representing income generated from lease of certain properties
owned by us or sublease of our right of use assets; (vi) gain on disposal of subsidiaries,
representing gain generated from our disposal of certain dental institutions in 2022; (vii) fair
value changes on contingent consideration and equity investment at FVTPL, including (a) fair
value loss on an equity investment at FVTPL, representing fair value change on our investment
in Hefei Dazhong Dental Co., Ltd. (ʮ̡); and (b) fair value adjustment
on contingent consideration, representing fair value changes on our contingent consideration to
acquire several dental institutions which may be adjusted based on their operational results and
the operational targets set in the acquisition agreements. We evaluate the amount of such
contingent consideration at the end of each financial year. As of December 31, 2024, such
consideration had been duly settled; and (viii) impairment of trade receivables and other
receivables. The following table sets forth the breakdown of our other income and gains by
nature for the years indicated:
Y ear ended December 31,
2022 2023 2024
RMB’000 % of total RMB’000 % of total RMB’000 % of total
Investment income from
wealth management
products /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,425 32.2 2,693 60.3 1,527 28.2
Government grants /H1118/H1118/H1118/H1118/H1118/H11181,503 19.9 490 11.0 968 17.9
Gain arising from lease
modification /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118714 9.5 386 8.6 1,120 20.7
Bank interest income /H1118/H1118/H1118/H1118649 8.6 868 19.4 924 17.1
Rental income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118504 6.7 270 6.0 384 7.1
Gain on disposal of
subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,612 21.4 – – – –
Fair value changes on
contingent consideration
and equity investment at
FVTPL /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111847 0.6 (93) (2.1) – –
Impairment of trade
receivables and other
receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(54) (0.7) (178) (4.0) (124) (2.3)
Others
(1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118141 1.9 28 0.6 615 11.4
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,541 100.0 4,464 100.0 5,414 100.0
Note:
(1) Mainly representing other income arising from transactions not related to our ordinary operations.
FINANCIAL INFORMATION
– 330 –


--- page 341 ---
See “— Y ear to Y ear Comparison of Results of Operations” for details.
Income Tax Expense
We are subject to income tax on an entity basis on profits arising in or derived from the
jurisdictions in which our subsidiaries are domiciled and/or operate. Pursuant to the EIT Law,
we and our subsidiaries which operate in China are subject to the statutory enterprise income
tax at a rate of 25% on the taxable income, unless subject to tax exemption or preferential tax
treatment. We were accredited as a “New High-tech Enterprise ( ৷อҦஔΆุ)” in 2020 and
such recognition was subsequently renewed in 2023. “New High-tech Enterprise” recognitions
are subject to review by the relevant PRC tax authorities for every three years. Therefore, we
were entitled to a preferential EIT rate of 15% during the Track Record Period. In addition,
pursuant to the applicable PRC laws and regulations, such as Announcement on Implementing
Preferential Income Tax Policies for Small and Micro Enterprises and Individual Businesses
(ʮѓ), Announcement on Further
Implementing Preferential Income Tax Policies for Small and Micro Enterprises (ආɓ
ʮѓ) and Announcement on Income Tax Incentives for
Small and Micro Enterprises and Individual Businesses (੻೼
ʮѓ), certain of our subsidiaries meet the statutory criteria for micro- and
small-sized enterprises and automatically enjoy preferential enterprise income tax rates during
the effective period of such announcements. In particular, these subsidiaries are entitled to
preferential enterprise income tax rates of 2.5% to 10% for the year ended December 31, 2022.
For the years ended December 31, 2023 and 2024, the preferential tax rate was 5%. For details,
see “Risk Factors — Risks Relating to Our Business and Industry — Preferential tax treatment
and government grant we have enjoyed may change or discontinue, which may adversely affect
our financial condition and results of operations” and Note 10 to Accountants’ Report set out
in Appendix I to this prospectus.
Our income tax expense consists of current income tax and deferred income tax. The
following table sets forth a breakdown of our income tax expense for the years indicated:
Y ear ended December 31,
2022 2023 2024
(RMB’000)
Current income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Charge for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,612 11,769 9,710
Overprovision in prior years /H1118/H1118/H1118/H1118/H1118/H1118/H1118(57) (25) –
Deferred income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118501 126 (1,393)
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,056 11,870 8,317
The overprovision of our current income tax during the Track Record Period were caused
by income tax differences identified during the reconciliation and settlement for taxes of prior
years.
FINANCIAL INFORMATION
– 331 –


--- page 342 ---
For the years ended December 31, 2022, 2023 and 2024, our effective income tax rate,
representing income tax expense divided by profit before income tax, expressed as a
percentage, was 11.1%, 15.0% and 11.7%, respectively. Our effective income tax rate was
lower than our statutory enterprise income tax rate in 2022, 2023 and 2024, primarily due to
the preferential tax treatment we enjoyed.
As of the Latest Practicable Date, we paid all relevant taxes that were due and applicable
to us and had no material disputes or unresolved tax issues with relevant tax authorities.
YEAR TO YEAR COMPARISON OF RESULTS OF OPERATIONS
Y ear Ended December 31, 2024 Compared to Y ear Ended December 31, 2023
Revenue
Our revenue decreased by 7.9% from RMB441.8 million for the year ended December 31,
2023 to RMB407.1 million for the year ended December 31, 2024.
General Dentistry Services
Revenue from general dentistry services decreased by 8.3% from RMB237.1 million for
the year ended December 31, 2023 to RMB217.3 million for the year ended December 31,
2024, primarily due to (i) an approximately 6.1% decrease in customer visits to general
dentistry services as a result of (a) decreased customer flow due to the relocation of eight
dental institutions and the renovation of three dental institutions in Wuhan though our efforts
to reduce the negative influence of such relocation and renovation to the extent possible; (b)
our relatively conservative marketing strategy outside Wuhan in reaction to slower-than-
expected post-pandemic economic recovery; and (c) normalization of service demands in 2024
after experiencing a temporary demand surge during post-pandemic recovery period in 2023;
and (ii) an approximately 2.4% reduction in average spending per customer visit for such
services mainly as a result of our voluntary price adjustments for prosthodontics services,
allowing us to pass on the benefits of more favorable pricing for high-quality dental
consumables as secured through our strengthened bargaining power with suppliers. As a result,
more customers were able to access prosthodontics services at reduced prices.
Implantology Services
Our revenue from implantology services decreased by 6.0% from RMB123.0 million for
the year ended December 31, 2023 to RMB115.6 million for the year ended December 31,
2024, primarily due to (i) an approximately 3.9% decrease in average spending per implant
tooth following our pricing adjustment, which reduced the fees for implantology services by
approximately 25% to 40% across all of our dental institutions in mid-2023 in response to the
implementation of centralized procurement policies and fierce market competition under the
downward pricing pressure brought by such policies, being fully reflected in 2024 as compared
to 2023, and (ii) an approximately 2.1% decrease in implant teeth in 2024, mainly resulting
from our relatively conservative marketing strategy outside Wuhan in reaction to slower-than-
expected post-pandemic economic recovery.
FINANCIAL INFORMATION
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Orthodontics Services
Revenue from orthodontics services decreased by 9.4% from RMB81.8 million for the
year ended December 31, 2023 to RMB74.1 million for the year ended December 31, 2024,
primarily due to an approximately 12.5% decline in the average spending per customer visit for
orthodontics services from 2023 to 2024, mainly as a result of (i) our price reduction of
approximately 15% to 20% to certain orthodontics services using clear aligners in response to
customers’ consumption downgrade during the slower-than-expected post-pandemic economic
recovery. Such pricing adjustment was underpinned by our effective cost control and
negotiation of favorable terms with key suppliers for high-quality dental consumables; and (ii)
reduced customer visits by new customers mainly resulting from customers’ consumption
downgrade, which led customers to defer non-essential expenditures such as consumption-
oriented orthodontics services as they are typically considered non-urgent and demand-driven,
unlike essential, disease-driven dental treatments, and our relatively conservative marketing
strategy outside Wuhan in reaction to slower-than-expected post-pandemic economic recovery.
Cost of Sales
Our cost of sales decreased by 6.9% from RMB273.6 million for the year ended
December 31, 2023 to RMB 254.7 million for the year ended December 31, 2024, primarily
attributable to (i) a decrease of RMB9.4 million in consumables and customized products
mainly due to decreased customer visits and our dedicated efforts in centralizing procurement
process to conduct prudent procurement based on the actual business needs across dental
institutions; (ii) a decrease of RMB6.1 million in staff costs mainly due to decreased bonuses
to dentists and other medical professionals as a result of suboptimal operational and financial
performance in 2024; and (iii) a decrease of RMB2.9 million in depreciation and amortization
resulting from rent concession as agreed with the lessors and depreciation of some fixed assets
decreased over time.
Gross Profit and Gross Profit Margin
As a result of the foregoing, our gross profit decreased by 9.4% from RMB168.2 million
for the year ended December 31, 2023 to RMB152.3 million for the year ended December 31,
2024. Our gross profit margin decreased from 38.1% for the year ended December 31, 2023 to
37.4% for the year ended December 31, 2024, primarily as our revenue decreased in 2024 while
our cost of sales reduced at a slower pace than that of revenue, as we have certain fixed costs,
including base salaries for dentists, other medical professionals and operating staff working at
our dental service network, depreciation and amortization, office and property management
expenses for business operations, although we recorded a decrease of RMB9.4 million in costs
of consumables and customized products and a decrease of RMB6.1 million in staff costs.
FINANCIAL INFORMATION
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--- page 344 ---
Selling and Distribution Expenses
Our selling and distribution expenses decreased by 9.4% from RMB44.7 million for the
year ended December 31, 2023 to RMB40.5 million for the year ended December 31, 2024,
primarily attributable to the decrease in advertising and promotion expenses as a result of our
strategic reduction in marketing activities during the second half of 2024.
Administrative Expenses
Our administrative expenses increased by 7.1% from RMB32.5 million for the year ended
December 31, 2023 to RMB34.9 million for the year ended December 31, 2024, primarily due
to an increase of RMB5.2 million in listing expenses incurred in relation to the Listing, which
was partially offset by a decrease of RMB1.9 million in staff costs, mainly due to decreased
bonuses to our management and administrative personnel as a result of suboptimal operational
and financial performance in 2024.
Research and Development Expenses
Our research and development expenses remained relatively stable at RMB6.7 million for
the year ended December 31, 2024, compared to RMB6.8 million for the year ended December
31, 2023.
Other Expenses
Our other expenses decreased by 30.7% from RMB1.9 million for the year ended
December 31, 2023 to RMB1.3 million for the year ended December 31, 2024, primarily due
to the decrease in losses on disposal of property, plant and equipment and bank charges.
Finance Costs
Our finance costs remained relatively stable at RMB5.3 million for the year ended
December 31, 2024, compared to RMB5.5 million for the year ended December 31, 2023.
Fair V alue Losses or Gains on Redeemable Preference Shares
We recorded fair value losses on redeemable preference shares of RMB2.3 million for the
year ended December 31, 2023, while we recorded fair value gains on redeemable preference
shares of RMB1.7 million for the year ended December 31, 2024, primarily due to the decrease
in the valuation of fair values of redeemable preference shares, which was assessed based on
the actual consideration paid to the pre-IPO investors whose special rights had been terminated
in September 2024.
FINANCIAL INFORMATION
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--- page 345 ---
Other Income and Gains
Our other income and gains increased by 21.3% from RMB4.5 million for the year ended
December 31, 2023 to RMB5.4 million for the year ended December 31, 2024, primarily
attributable to (i) the increase in gain arising from lease modification of RMB0.7 million in
2024, as a result of the shortened lease terms and decreased GFA of properties we leased; and
(ii) the increase in government grants of RMB0.5 million for the year ended December 31,
2024, mainly in relation to certain local government grants received to encourage enterprises
to retain employees and support vulnerable populations.
Income Tax Expense
Our income tax expense decreased by 29.9% from RMB11.9 million for the year ended
December 31, 2023 to RMB8.3 million for the year ended December 31, 2024, primarily in line
with the decrease in our effective income tax rate from 2023 to 2024.
Profit for the Y ear
As a result of the foregoing, our profit for the year decreased from RMB67.0 million for
the year ended December 31, 2023 to RMB62.5 million for the year ended December 31, 2024.
Our net profit margin, which represents profit for the year as a percentage of revenue, increased
slightly from 15.2% for the year ended December 31, 2023 to 15.4% for the year ended
December 31, 2024, as our profit for the year reduced at a slower pace than that of our revenue
from 2023 to 2024, attributable to our cost control under the centralized management. In
particular, we utilized online operating systems to visualize operational performance and refine
resource allocation to maximize cost efficiency and negotiated favorable pricing with suppliers
for high quality dental consumables as secured through our strengthened bargaining power with
them. Such increase was also attributable to our reduced staff costs, including less bonuses to
dentists and other medical professionals in 2024.
Y ear Ended December 31, 2023 Compared to Y ear Ended December 31, 2022
Revenue
Our revenue increased by 7.9% from RMB409.4 million for the year ended December 31,
2022 to RMB441.8 million for the year ended December 31, 2023, primarily attributable to the
increase in revenue from our general dentistry services and implantology services.
FINANCIAL INFORMATION
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General Dentistry Services
Revenue from our general dentistry services increased by 11.6% from RMB212.5 million
for the year ended December 31, 2022 to RMB237.1 million for the year ended December 31,
2023, which was primarily attributable to (i) an increase in porcelain crown cases in 2023, the
price of which was relatively higher than general dentistry services using other consumables;
and (ii) higher customer visits for oral surgery, oral medicine and prosthodontics services,
mainly as a result of the organic growth of our existing dental institutions following the
resumption of offline activities post the COVID-19 pandemic.
Implantology Services
Revenue from our provision of implantology services increased from RMB116.7 million
for the year ended December 31, 2022 to RMB123.0 million for the year ended December 31,
2023, which was primarily fueled by a significant rise in customer visits of our implantology
services driven by stimulated demands for implantology services following the pricing
reduction after the implementation of centralized procurement policies. However, such
increase in revenue brought by rising customer visits was partially offset by our pricing
adjustment on implantology services in mid-2023, implemented in response to the same
policies and fierce market competition under the downward pricing pressure brought by such
policies.
Orthodontics Services
Our revenue from orthodontics services increased by 2.0% from RMB80.2 million for the
year ended December 31, 2022 to RMB81.8 million for the year ended December 31, 2023,
primarily attributable to increase in the number of customer visits of our orthodontics services
as a result of the resumed offline activities after the COVID-19 pandemic. Such increase was
partially offset by the decrease in average spending per customer visit of orthodontics services
for the year ended December 31, 2023, mainly as a result of customers’ increased follow-up
visits which normally had a lower average spending per customer visit as compared to the
customers’ first visits, to our dental institutions to complete their orthodontics treatment.
Cost of Sales
Our cost of sales increased by 4.8% from RMB261.0 million for the year ended December
31, 2022 to RMB273.6 million for the year ended December 31, 2023, primarily due to (i) an
increase of RMB10.2 million in staff costs, in line with the expansion of our dental service
network in 2023; and (ii) an increase of RMB3.7 million in consumables and customized
products as a result of increase of our customer visits.
FINANCIAL INFORMATION
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Gross Profit and Gross Profit Margin
As a result of the foregoing, our gross profit increased by 13.3% from RMB148.5 million
for the year ended December 31, 2022 to RMB168.2 million for the year ended December 31,
2023. Our gross profit margin increased from 36.3% for the year ended December 31, 2022 to
38.1% for the year ended December 31, 2023, primarily due to the increase of our revenue
outpaced the increase of our cost of sales in 2023 as we benefit from the improvement of our
operational efficiency.
Selling and Distribution Expenses
Our selling and distribution expenses increased by 7.1% from RMB41.7 million for the
year ended December 31, 2022 to RMB44.7 million for the year ended December 31, 2023,
primarily due to an increase of RMB2.7 million in advertising and promotion expenses as a
result of our proactive branding and marketing efforts to enhance our competitiveness in the
industry.
Administrative Expenses
Our administrative expenses remained relatively stable at RMB32.5 million for the year
ended December 31, 2023 compared to RMB34.0 million for the year ended December 31,
2022.
Research and Development Expenses
Our research and development expenses increased by 3.1% from RMB6.6 million for the
year ended December 31, 2022 to RMB6.8 million for the year ended December 31, 2023,
primarily due to an increase of RMB0.2 million in staff costs as a result of the increase of our
research and development projects.
Other Expenses
Our other expenses decreased from RMB2.2 million for the year ended December 31,
2022 to RMB1.9 million for the year ended December 31, 2023, primarily attributable to the
decrease in losses on disposal of property, plant and equipment.
Finance Costs
Our finance costs decreased by 17.5% from RMB6.7 million for the year ended December
31, 2022 to RMB5.5 million for the year ended December 31, 2023, primarily due to a decrease
of RMB1.0 million in interest on lease liabilities as a result of our negotiation with the lessors
to reduce the rental payments.
FINANCIAL INFORMATION
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Fair V alue Losses on Redeemable Preference Shares
Our fair value losses on redeemable preference shares increased from RMB1.3 million for
the year ended December 31, 2022 to RMB2.3 million for the year ended December 31, 2023,
which was primarily caused by changes in fair value of our redeemable preference shares as
a result of an increase in our Company’s equity value.
Other Income and Gains
Our other income and gains decreased by 40.8% from RMB7.5 million for the year ended
December 31, 2022 to RMB4.5 million for the year ended December 31, 2023, primarily as (i)
we did not record gain on disposal of subsidiaries for the year ended December 31, 2023; and
(ii) government grants decreased by RMB1.0 million for the year ended December 31, 2023,
primarily as certain government grants in relation to COVID-19 pandemic discontinued in
2023.
Income Tax Expense
Our income tax expense significantly increased from RMB7.1 million for the year ended
December 31, 2022 to RMB11.9 million for the year ended December 31, 2023, primarily in
line with the increase in our effective income tax rate from 2022 to 2023.
Profit for the Y ear
As a result of the foregoing, our net profit increased from RMB56.5 million for the year
ended December 31, 2022 to RMB67.0 million for the year ended December 31, 2023. Our net
profit margin increased from 13.8% for the year ended December 31, 2022 to 15.2% for the
year ended December 31, 2023.
FINANCIAL INFORMATION
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DISCUSSION OF CERTAIN KEY ITEMS FROM CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
The following table sets forth our financial position as of the dates indicated:
As of December 31,
2022 2023 2024
(RMB’000)
Non-current assets:
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118110,024 99,216 108,438
Property, plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111876,580 74,256 76,512
Goodwill /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111863,090 63,090 63,090
Prepayment, other receivables and other
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,878 3,909 4,674
Other intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,328 2,020 1,749
Deferred tax assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118786 594 1,885
Total non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118257,686 243,085 256,348
Current assets:
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118177,970 227,083 95,046
Prepayments, other receivables and
other assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,867 8,586 17,107
Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,751 6,548 5,836
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,127 5,709 3,655
Contingent consideration /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189 7 6––
Financial assets at fair value through
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181 1 7––
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118201,808 247,926 121,644
Current liabilities:
Redeemable preference shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 112,781 –
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111849,510 52,897 33,612
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,434 32,488 31,211
Other payables and accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,489 29,086 50,756
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,014 17,298 14,678
Tax payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,198 3,658 4,839
Total current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118127,645 248,208 135,096
Net current assets/(liabilities) /H1118/H1118/H1118/H1118/H1118/H1118/H111874,163 (282) (13,452)
Total assets less current liabilities /H1118/H1118/H1118/H1118331,849 242,803 242,896
Non-current liabilities:
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111877,401 69,197 81,902
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,728 2,099 1,732
Deferred tax liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118421 355 253
Redeemable preference shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118110,450 – –
Total non-current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118190,000 71,651 83,887
Total liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118317,645 319,859 218,983
Net assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118141,849 171,152 159,009
FINANCIAL INFORMATION
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Trade Receivables
Trade receivables mainly represent (i) amounts due from the public medical insurance
programs for certain dental services provided by our dental institutions that are Medical
Insurance Designated Medical Institutions; and (ii) trade receivables from third party
e-commerce platforms which are normally settled within two weeks. Our trade receivables are
non-interest-bearing.
Customers are able to choose to pay to our dental institutions in cash, online payments
via third-party platforms, such as WeChat Pay or Alipay, debit cards or credit cards. Besides,
customers can choose to rely on public medical insurance programs to pay for dental services
provided by Medical Insurance Designated Medical Institutions eligible for public medical
insurance programs. Our customers generally prepay fees for our dental services, except for
some transactions paid through public medical insurance programs, which are trade credit.
Depending on the relevant practice with respect to public medical insurance programs, local
medical insurance bureaus are generally responsible for the reimbursement of medical fees
covered by the public medical insurance programs in the following one to two months since the
relevant dental services are rendered. See “Business — Our Customers — Payment Methods
— Public Medical Insurance” for details of reimbursement mechanism and revenue recognition
of medical fees under the public medical insurance programs.
The following table sets forth our trade receivables as of the dates indicated:
As of December 31,
2022 2023 2024
(RMB’000)
Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,948 6,896 6,143
Less: provision for impairment of
trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(197) (348) (307)
Net carrying amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,751 6,548 5,836
Our trade receivables increased from RMB3.8 million as of December 31, 2022 to
RMB6.5 million as of December 31, 2023, primarily due to the increase in our settlement
through public medical insurance programs in 2023. Our trade receivables decreased by 10.9%
from RMB6.5 million as of December 31, 2023 to RMB5.8 million as of December 31, 2024,
which corresponds with reduced revenue in 2024.
We perform an impairment analysis at the end of each reporting period using a provision
matrix to measure ECLs for trade receivables. The provision rates are based on the aging of
trade receivables. The calculation reflects the probability-weighted outcome, the time value of
money and reasonable and supportable information that is available at the end of each reporting
period about past events, current conditions and forecasts of future economic conditions. We
recorded provision for impairment of trade receivables of RMB0.2 million, RMB0.3 million
and RMB0.3 million as of December 31, 2022, 2023 and 2024, respectively. The increase of
our impairment of trade receivables in 2023 was mainly caused by the increase in our trade
receivables balances.
FINANCIAL INFORMATION
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The following table sets forth aging analysis of trade receivables, based on transaction
date and net of loss allowance, as of the dates indicated:
As of December 31,
2022 2023 2024
(RMB’000)
Within three months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,615 6,124 5,399
Three months to six months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118133 311 246
Six months to one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183 49 191
One year to two years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–6 4 –
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,751 6,548 5,836
Our trade receivables aging within three months increased from RMB3.6 million as of
December 31, 2022 to RMB6.1 million as of December 31, 2023, primarily due to the increase
of dental services covered by local medical insurance bureaus, following the expansion of
dental service coverage under the public medical insurance programs in 2023.
We calculate the trade receivables turnover days using the average of the opening and
ending trade receivables balances for the year, divided by revenue for the relevant year,
multiplied by 365 days. The following table sets forth the number of our trade receivables
turnover days for the years indicated:
Y ear ended December 31,
2022 2023 2024
Trade receivables turnover days /H1118/H1118/H1118/H1118/H1118/H1118/H1118446
As our customers generally prepay fees for our dental services except for transactions
paid through public medical insurance programs or third-party e-commerce platforms, our
trade receivables turnover days were relatively short during the Track Record Period. Our trade
receivables turnover days remained relatively stable throughout the Track Record Period.
As of April 30, 2025, RMB5.8 million, or approximately 94.3% of our trade receivables
as of December 31, 2024 were subsequently settled.
Prepayments, Other Receivables and Other Assets
The current portion of our prepayments, other receivables and other assets primarily
comprise (i) deferred listing expenses, which are expected to be deducted from equity upon the
Global Offering (ii) other receivables, mainly representing (a) amounts due from certain
minority shareholders of our dental institutions and Hefei Dazhong Dental Co., Ltd. to meet
their capital demands during daily operations, which were interest free and had been fully
settled in 2024, and (b) petty cash advance to our employees for business purpose, as well as
FINANCIAL INFORMATION
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--- page 352 ---
consideration receivable from our disposal of equity interests and subsidiaries; (iii) our
prepayments to suppliers of marketing services, consulting services and dental materials, as
well as property management service suppliers for the property management fees of our
short-term leases; (iv) rental deposits, representing deposits we paid to lessors for our leases
with a term of within one year; and (v) receivables for contingent consideration arrangements,
representing receivables from transferors of dental institutions as certain acquired dental
institutions failed to meet the operational targets subsequent to the acquisitions; and (vi)
receivable from disposal of a subsidiary. The non-current portion of our prepayments, other
receivables and other assets primarily comprise (i) rental deposits, representing deposits we
paid for our leases with a term of over one year; and (ii) prepayment of property, plant and
equipment, representing our prepayments to dental equipment suppliers. We maintain strict
control over our outstanding receivables to minimize credit risk. Overdue balances are
reviewed regularly by our senior management. We do not hold any collateral or other credit
enhancements over our deposits and other receivable balances.
The following table sets forth our prepayments, other receivables and other assets as of
the dates indicated:
As of December 31,
2022 2023 2024
(RMB’000)
Current
Deferred listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 9,043
Other receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,859 2,930 2,568
Prepayments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,521 3,578 4,473
Rental deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118936 1,137 1,066
Receivables for contingent
consideration arrangements /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,000 –
Receivable from disposal of a
subsidiary /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186 0 0––
Sub-total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,916 8,645 17,150
Non-current
Rental deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,599 3,897 3,995
Prepayment of property, plant and
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118279 12 679
Sub-total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,878 3,909 4,674
Impairment allowance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(49) (59) (43)
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,745 12,495 21,781
FINANCIAL INFORMATION
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--- page 353 ---
Our prepayments, other receivables and other assets decreased from RMB17.7 million as
of December 31, 2022 to RMB12.5 million as of December 31, 2023, primarily due to a
decrease of RMB5.5 million in other receivables as we received the consideration from the
transferee for our disposal of equity interests in certain dental institutions.
Our prepayments, other receivables and other assets increased from RMB12.5 million as
of December 31, 2023 to RMB21.8 million as of December 31, 2024, primarily due to an
increase of RMB9.0 million in deferred listing expenses in relation to the Listing, partially
offset by the decrease of RMB1.0 million in receivables for contingent consideration
arrangements.
As of April 30, 2025, RMB5.9 million, or approximately 34.8% of our prepayments, other
receivables and other assets as of December 31, 2024 were subsequently settled.
Inventories
Our inventories primarily comprise medical consumables for our dental services. The
following table sets forth our inventories as of the dates indicated:
As of December 31,
2022 2023 2024
(RMB’000)
Medical consumables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,127 5,709 3,655
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,127 5,709 3,655
Our inventories decreased from RMB6.1 million as of December 31, 2022 to RMB5.7
million as of December 31, 2023. Our inventories further decreased from RMB5.7 million as
of December 31, 2023 to RMB3.7 million as of December 31, 2024. Such continuous decrease
was mainly because (a) we adhere to a first-in-first-out inventory management strategy while
maintaining close communication with suppliers to dynamically adjust procurement amount
based on our actual business needs; and (b) we conduct centralized inventory allocation across
our dental institutions under the direct chain model, significantly enhancing the overall
inventory consumption efficiency. Besides, the decrease of inventories from December 31,
2023 to December 31, 2024 was also caused by reduced purchases resulting from the declined
customers in 2024.
We have implemented a strict inventory management system at our headquarters level to
monitor the procurement, storage and distribution of inventories. We typically conduct monthly
reviews on inventories to check the medical consumables on hand against the records in our
information technology systems. We track, determine and record reasons for any identified
discrepancy to keep accurate inventory records. Our headquarters timely review our inventory
balance and turnover status, and remind the relevant dental institutions of any identified issues.
See “Business — Inventory Management” for details of our inventory management policies.
FINANCIAL INFORMATION
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We periodically assess the impairment on our inventories. In particular, we review our
inventories at the end of each accounting period and timely utilize the relevant inventories
before the expiration date. As of December 31, 2022, 2023 and 2024, we did not recognize any
impairment loss on our inventories.
We calculate the inventory turnover days using the average of the opening and ending
inventory balances for the year, divided by cost of sales for the relevant year, multiplied by 365
days. The following table sets forth the number of our inventory turnover days for the years
indicated:
Y ear ended December 31,
2022 2023 2024
Inventory turnover days /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181 087
Our inventory turnover days decreased from 10 days in 2022 to 8 days in 2023 and further
to 7 days in 2024. Such decrease throughout the Track Record Period was primarily attributable
to (i) the decrease in our inventory balance as we adhere to a first-in-first-out inventory
management strategy while maintaining close communication with suppliers to dynamically
adjust procurement amount based on our actual business needs; and (ii) our improved inventory
management through centralized inventory allocation across our dental institutions under the
direct chain model, significantly enhancing the overall inventory consumption efficiency.
As of April 30, 2025, RMB1.9 million, or approximately 52.8% of our inventories as of
December 31, 2024 had been utilized or sold.
Contingent Consideration
Our contingent consideration represents receivables from certain Independent Third Party
transferors under our dental institution acquisition agreements signed in 2019. Pursuant to such
acquisition agreements, we are entitled to the compensation by transferors based on the
valuation adjustment mechanism when the acquired dental institutions failed to meet the
operational targets in three years subsequent to the acquisitions. Our management reassessed
the fair value of the contingent consideration as of December 31, 2022, concluded that the fair
value change was recognized in profit or loss. By the end of May 2023, all these compensation
arrangements with the transferors had been terminated. For details, please see Note 19 to the
Accountants’ Report included in Appendix I to this prospectus. Our receivables for contingent
consideration arrangement was RMB1.0 million, nil and nil, as of December 31, 2022, 2023
and 2024, respectively. The fair value of such contingent consideration amounted to RMB2.2
million as of the acquisition date and has been included in contingent consideration on the
consolidated statements of financial position. Our management has reassessed the fair value of
the contingent consideration as of December 31, 2022, concluded that the fair value change
was recognized in profit or loss.
FINANCIAL INFORMATION
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Financial Assets at Fair Value through Profit or Loss
Our financial assets at fair value through profit or loss included (i) wealth management
products at fair value we purchased; and (ii) the unlisted equity investments at fair value, in
relation to our equity investments in Hefei Dazhong Dental Co., Ltd. from May 2022 to April
2023, during which we held 10% equity interest in such company. Such unlisted equity
investments were classified as financial assets at fair value through profit or loss as our Group
have not elected to recognize the fair value gain or loss through other comprehensive income.
Our Internal Measures on Investment on Wealth Management Products
As part of our treasury management, during the Track Record Period, we purchased and
held several wealth management products issued by several commercial banks and other
authorized financial institutions in China, with expected return rates ranging from 1.65% to
4.40% per annum. Such wealth management products are generally redeemable on demand and
non-principal-guaranteed. We managed and evaluated the performance of our investments on
wealth management products in accordance with our internal risk management and investment
strategies.
We have established criteria and internal policies in assessing, purchasing and managing
the wealth management products. Under our investment policies, we are prohibited from
investing in high-risk products and the proposed investment must not interfere with our
business operations or capital expenditure. As of the Latest Practicable Date, our investment
decisions did not deviate from our investment policies. We believe that our internal policies
and the related risk management mechanism are adequate. We may invest in wealth
management products and time deposits in consistent with our investment policy, after
consultation with and approval by our Board where we believe it is prudent to do so after the
Listing.
We recorded financial assets at fair value through profit or loss of RMB0.1 million as of
December 31, 2022 in relation to unlisted equity investments at fair value, representing our
investments in the minority equity interests in Hefei Dazhong Dental Co., Ltd..
Cash and Cash Equivalents
Our cash and cash equivalents consist of cash and bank balances we maintained. All of
our cash and cash equivalents during the Track Record Period were denominated in Renminbi.
During the Track Record Period, we did not have any restricted cash deposits.
Our cash and cash equivalents increased from RMB178.0 million as of December 31,
2022 to RMB227.1 million as of December 31, 2023, mainly due to the operating cash inflow.
Our cash and cash equivalents decreased from RMB227.1 million as of December 31, 2023 to
RMB95.0 million as of December 31, 2024, mainly due to our payments made for share
repurchase and profit distribution to shareholders in the second half of 2024.
FINANCIAL INFORMATION
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Right-of-use Assets
Our right-of-use assets consist of dental institution and office premises. We recognize
right-of-use assets at the commencement date of the lease, which is the date when the
underlying asset is available for use. We measure right-of-use assets at cost, less any
accumulated depreciation and any impairment losses, and adjusted for any remeasurement of
lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities
recognized, initial direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Right-of-use assets are depreciated on
a straight-line basis over the shorter of the lease terms and the estimated useful lives of the
assets. For details of the accounting policy of right-of-use assets, see Note 2.3 to the
Accountants’ Report included in Appendix I to this prospectus.
Our right-of-use assets decreased by 9.8% from RMB110.0 million as of December 31,
2022 to RMB99.2 million as of December 31, 2023, primarily due to the depreciation charge
of RMB37.5 million. Our right-of-use assets increased from RMB99.2 million as of December
31, 2023 to RMB108.4 million as of December 31, 2024, primarily due to the additions of
RMB55.6 million mainly as we had renewal of existing lease agreements and entered into new
lease agreements in 2024.
Property, Plant and Equipment
Our property, plant and equipment consist of (i) leasehold improvements; (ii) buildings;
(iii) medical equipment; (iv) furniture and fixtures; (v) construction in progress, mainly in
relation to our construction and renovation of dental institutions; and (vi) motor vehicles. The
following table sets forth a breakdown of the net carrying amount of our property, plant and
equipment as of the dates indicated:
As of December 31,
2022 2023 2024
(RMB’000)
Leasehold improvements /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,266 21,062 23,257
Buildings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819,299 21,720 20,769
Medical equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,243 22,797 19,979
Furniture and fixtures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,838 5,827 5,433
Construction in progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118358 2,430 6,589
Motor vehicles /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118576 420 485
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111876,580 74,256 76,512
Our property, plant and equipment remained relatively stable as of December 31, 2022,
2023 and 2024, amounting to RMB76.6 million, RMB74.3 million and RMB76.5 million,
respectively.
FINANCIAL INFORMATION
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Goodwill
Goodwill is initially measured at cost, being the excess of the aggregate of the
consideration transferred, the amount recognized for non-controlling interests and any fair
value of our previously held equity interests in the acquiree over the identifiable net assets
acquired and liabilities assumed. For details of the accounting policy of goodwill, see Note 2.3
to the Accountants’ Report included in Appendix I to this prospectus.
The carrying value of our goodwill remained stable at RMB63.1 million as of December
31, 2022, 2023 and 2024, respectively.
Impairment Testing of Goodwill
During the Track Record Period, we did not record any impairment loss on our goodwill.
For the purpose of impairment testing of goodwill, goodwill is allocated to a group of
cash-generating units (the “ CGUs ”). Such group of CGUs represents the lowest level within
our Group for which the goodwill is monitored for internal management purpose.
Our management considered that we only have one group of CGUs which represents the
entire business of our Group according to our business operations during the Track Record
Period. The recoverable amount of the industrial products cash-generating unit has been
determined based on a value in use (the “ VIU”) calculation using cash flow projections based
on financial budgets covering a five-year period approved by our senior management. Cash
flows beyond the projected period are extrapolated using the estimated terminal growth rates.
Our management leveraged their experience in the industry and provided forecast based on past
performance and their expectation of future business plans and external sources of information.
The valuation is considered to be level 3 in the fair value hierarchy due to unobservable inputs
used in the valuation. The following table sets forth key assumptions used in the calculation:
As of December 31,
2022 2023 2024
Revenue compound growth rate /H1118/H1118/H1118/H1118/H1118/H1118/H11183.7% 2.8% 3.5%
Budgeted gross margin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
36.3% to
38.1%
36.3% to
36.9%
35.2% to
35.9%
Terminal growth rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182.3% 2.3% 1.9%
Pre-tax discount rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815.3% 15.4% 12.9%
VIU of the group of CGUs ( RMB’000) /H1118 664,000 675,000 690,000
Carrying amount of the group of CGUs
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118252,022 238,582 249,788
Headroom of the group of CGUs
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118411,978 436,418 440,212
FINANCIAL INFORMATION
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Assumptions were used in the value in use calculation of the CGU as of the end of each
year during the Track Record Period. The following describes each key assumption on which
our management has based its cash flow projections to undertake impairment testing of
goodwill:
 Revenue . The basis used to determine the budgeted revenue is based on our
management’s expectations of future expansion. The compound growth rate of
revenue was estimated based on information available at the time of assessment,
disregarding information that became available after the assessment. Such
information includes current industry overview and estimated market development
and customer preferences.
 Terminal growth rate . The forecasted terminal growth rate is based on our
management’s expectations and does not exceed the long-term average growth rate
for the industry relevant to the CGU.
 Budgeted gross margins . The basis used to determine the value assigned to the
budgeted gross margins is the average gross margins achieved in the year
immediately before the budget year, increased for expected efficiency
improvements, and expected market development.
 Discount rates . The discount rates used are before tax and reflect specific risks
relating to the relevant units.
Based on the impairment assessment conducted by our Group utilizing the above key
assumptions, the recoverable amount of the CGU estimated from the cash flow forecast
exceeded the carrying amount of the group of CGUs and therefore no impairment was
considered necessary as of the end of each year during the Track Record Period.
Our Group performs a sensitivity analysis based on the reasonably possible changes in
key assumptions. If the estimated key assumptions changed as below, the headroom would be
decreased to:
As of December 31,
2022 2023 2024
(RMB’000)
Budgeted gross margin decreases of 5% /H1118 227,978 253,417 243,212
Terminal growth rate decreases of 1% /H1118/H1118/H1118381,978 406,417 414,212
Pre-tax discount rate increases of 1% /H1118/H1118/H1118369,978 394,417 400,212
FINANCIAL INFORMATION
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The values assigned to the key assumptions and discount rates are consistent with external
information sources.
Considering there was still sufficient headroom based on the assessment, our management
believes that a reasonably possible change in the above key parameters would not cause the
carrying amount of the CGU to exceed its recoverable amount and would not result in an
impairment provision of goodwill.
Other Intangible Assets
Our other intangible assets comprise software. The following table sets forth our
intangible assets as of the dates indicated:
As of December 31,
2022 2023 2024
(RMB’000)
Software /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,328 2,020 1,749
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,328 2,020 1,749
Our other intangible assets decreased from RMB2.3 million as of December 31, 2022 to
RMB2.0 million as of December 31, 2023 and further to RMB1.7 million as of December 31,
2024, primarily due to the amortization of software.
Trade Payables
Our trade payables primarily represent outstanding amounts due to our suppliers of
medical consumables, medical devices, pharmaceuticals and marketing services. Our trade
payables are non-interest-bearing and are normally settled in approximately 30 to 90 days.
Our trade payables remained relatively stable as of December 31, 2022 and 2023,
amounting to RMB18.0 million and RMB17.3 million as of the same dates, respectively. Our
trade payables decreased from RMB17.3 million as of December 31, 2023 to RMB14.7 million
as of December 31, 2024, primarily due to discounts offered by suppliers due to our enhanced
bargaining power and reduced purchases as a result of the reduced customers in 2024.
FINANCIAL INFORMATION
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The following table sets forth an aging analysis of our trade payables, based on
transaction dates, as of the dates indicated:
As of December 31,
2022 2023 2024
(RMB’000)
Within three months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,001 13,545 11,687
Three months to six months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,744 2,265 2,091
Six months to one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118769 885 591
Over one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118500 603 309
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,014 17,298 14,678
We calculate the trade payables turnover days using the average of the opening and
ending trade payables balances for the year, divided by cost of sales for the relevant year,
multiplied by 365 days. The following table sets forth the number of our trade payables
turnover days for the years indicated:
Y ear ended December 31,
2022 2023 2024
Trade payables turnover days /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827 24 23
Our trade payables turnover days decreased from 27 days for the year ended December
31, 2022 to 24 days for the year ended December 31, 2023. Such decrease was primarily due
to our streamlined payment procedure following our improved supplier management. Our trade
payables turnover days remained relatively stable at 24 days for the year ended December 31,
2023 and 23 days for the year ended December 31, 2024.
As of April 30, 2025, RMB11.5 million, or approximately 78.3% of our trade payables as
of December 31, 2024 were subsequently settled.
Our Directors confirm that we had no material defaults in our trade payables during the
Track Record Period and up to the Latest Practicable Date.
Other Payables and Accruals
Other payables and accruals primarily comprise (i) dividends payable, representing
non-trade dividends payable by us under our 2023 annual profit distribution plan, which had
been fully settled as of the Latest Practicable Date. See Note 11 to the Accountants’ Report
included in Appendix I to this prospectus for details; (ii) payroll payable, mainly representing
the salaries, bonuses and other benefit expenses payable by us; (iii) payable for advertising and
promotion, mainly in relation to amounts payable by us to our advertising and promotion
services providers; (iv) payable for purchasing of property, plant and equipment, mainly
FINANCIAL INFORMATION
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representing the amount payable by us to the suppliers of dental equipment and renovation
materials; (v) payable for listing expenses, representing the amount of expenses payable by us
for the Listing; (vi) other tax payables, mainly representing withholding individual income tax,
value-added tax and other taxes payable by us; (vii) dividends payable to non-controlling
shareholders, representing dividends payable by us under our subsidiaries’ profit distribution
plans; (viii) accruals, mainly representing accrued fees and other daily operation expenses,
such as water and electricity expenses; and (ix) payable for acquisition of subsidiaries, mainly
representing the consideration payable by us for our acquisition of dental institutions.
The following table sets forth our other payables and accruals as of the dates indicated:
As of December 31,
2022 2023 2024
(RMB’000)
Dividends payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 19,397
Payroll payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,317 16,155 13,127
Payable for advertising and promotion /H1118 3,469 3,712 5,315
Payable for purchasing of items of
property, plant and equipment /H1118/H1118/H1118/H1118/H1118/H11183,956 2,688 5,435
Payable for listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 3,827
Other tax payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,079 2,825 1,123
Dividends payable to non-controlling
shareholders /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 577
Accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118686 983 128
Payable for acquisition of subsidiaries /H1118/H1118 551 837 15
Others (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,431 1,886 1,812
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,489 29,086 50,756
Note:
(1) Mainly representing rental and deposit payable to lessors, benefit expenses payable to our staff and other
miscellaneous expenses payable by us.
Our other payables and accruals increased by 18.8% from RMB24.5 million as of
December 31, 2022 to RMB29.1 million as of December 31, 2023, primarily due to an increase
of RMB3.8 million in payroll payable, mainly due to the increase of our employees in 2023,
in line with the expansion of our dental service network in 2023. Our other payables and
accruals increased by 74.5% from RMB29.1 million as of December 31, 2023 to RMB50.8
million as of December 31, 2024, primarily due to (i) an increase of RMB19.4 million in
non-trade dividends payable under our 2023 annual profit distribution plan; and (ii) an increase
of RMB3.8 million in payable for listing expenses in relation to the Listing.
As of April 30, 2025, RMB45.0 million, or approximately 88.6% of our other payables
and accruals as of December 31, 2024 were subsequently settled.
FINANCIAL INFORMATION
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Our Directors confirm that we had no material defaults in our other payables and accruals
during the Track Record Period and up to the Latest Practicable Date.
Contract Liabilities
Contract liabilities represent the obligation of our Group to transfer services to our
customer for which our Group has received consideration (or an amount of consideration is
due) from the customer. Our contract liabilities during the Track Record Period consisted of
advances received for orthodontics services and implantology services. The following table
sets forth the details of our contract liabilities as of the dates indicated:
As of December 31,
2022 2023 2024
(RMB’000)
Orthodontics services
Current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815,549 16,438 14,854
Non-current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,728 2,099 1,732
Implantology services
Current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833,961 36,459 18,758
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851,238 54,996 35,344
Our contract liabilities increased from RMB51.2 million as of December 31, 2022 to
RMB55.0 million as of December 31, 2023, primarily due to an increase of RMB2.5 million
in the contract liabilities for implantology services as of December 31, 2023, resulting from
more advances received from more new customers for our implantology services in 2023
following the resumption of offline activities in 2023. Our contract liabilities decreased from
RMB55.0 million as of December 31, 2023 to RMB35.3 million as of December 31, 2024,
mainly due to a decrease of RMB17.7 million in contract liabilities for implantology services
as of December 31, 2024, resulting from less advances received from our customers in 2024,
as we had less new customers of our implantology services affected by customers’
consumption downgrade and reduced demands on consumption-oriented implantology services
during the slower-than-expected post-pandemic economic recovery and our conservative
marketing strategy outside Wuhan. Such decrease in contract liabilities was partially offset by
less revenue recognized from contract liabilities in 2024, primarily as the average spending per
customer visit decreased following our price reduction to implantology services. See “— Y ear
to Y ear Comparison of Results of Operations” for details.
FINANCIAL INFORMATION
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The following table sets forth the movement of contract liabilities for the years indicated:
Y ear ended December 31,
2022 2023 2024
(RMB’000)
Balance at the beginning of the year /H1118 53,983 51,238 54,996
Advances received from our customers
during the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118406,629 445,515 387,329
Revenue recognized from contract
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(409,374) (441,757) (406,981)
Balance at the end of the year /H1118/H1118/H1118/H1118/H1118/H111851,238 54,996 35,344
Advances received from our customers increased from RMB406.6 million in 2022 to
RMB445.5 million in 2023, primarily due to the increase in new customers of our implantology
services in 2023 attributable to (i) customers’ enhanced willingness to seek implantology
services after the pricing reduction following the promulgation of centralized procurement
policies and fierce market competition under the downward pricing pressure brought by such
policies; and (ii) the surge in dental service demands following the resumption of offline
activities immediately after the COVID-19 pandemic. Advances received from our customers
decreased from RMB445.5 million in 2023 to RMB387.3 million in 2024, primarily due to the
decrease in new customers of our implantology services in 2024 affected by customers’
consumption downgrade and reduced demands on consumption-oriented implantology services
during the slower-than-expected post-pandemic economic recovery and our conservative
marketing strategy outside Wuhan.
Revenue recognized from contract liabilities increased from RMB409.4 million in 2022
to RMB441.8 million in 2023, primarily attributable to increase in the number of customer
visits to complete the implantology and orthodontics treatment following (i) the resumption of
offline activities immediately after the COVID-19 pandemic; and (ii) our enhanced follow-ups
reminding customers of timely follow-up visits according to their treatment plans since late
2023. Revenue recognized from contract liabilities decreased from RMB441.8 million in 2023
to RMB407.0 million in 2024, primarily due to (i) decreased average spending per customer
visit for our implantology services in 2024 mainly caused by customers’ consumption
downgrade and our pricing reduction on implantology services by approximately 25% to 40%
across all of our dental institutions in mid-2023 in response to the implementation of
centralized procurement policies and fierce market competition under the downward pricing
pressure brought by such policies, being fully reflected in 2024 as compared to 2023; and (ii)
decreased new customers of our implantology and orthodontics services mainly resulting from
customers’ consumption downgrade, which led customers to defer non-essential expenditures
such as consumption-oriented implantology and orthodontics services as they are typically
considered non-urgent and demand-driven, unlike essential, disease-driven dental treatments
during the slower-than-expected post-pandemic economic recovery and our conservative
marketing strategy outside Wuhan.
FINANCIAL INFORMATION
– 353 –


--- page 364 ---
As of April 30, 2025, RMB15.7 million, or approximately 44.6% of our contract liabilities
as of December 31, 2024 had been recognized as revenue.
Lease Liabilities
Our lease liabilities mainly represent the amount to be paid by us as the lessee for the
leases of premises of our dental institutions. The following table sets forth the carrying amount
of our lease liabilities as of the dates indicated:
As of December 31,
2022 2023 2024
(RMB’000)
Non-current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111877,401 69,197 81,902
Current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,434 32,488 31,211
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118111,835 101,685 113,113
Our lease liabilities decreased from RMB111.8 million as of December 31, 2022 to
RMB101.7 million as of December 31, 2023, primarily due to our payments of rent, which is
offset by new leases for our newly established and acquired dental institutions in 2023. Our
lease liabilities increased from RMB101.7 million as of December 31, 2023 to RMB113.1
million as of December 31, 2024, primarily as we entered into new long-term lease agreements
for new establishment and relocation of dental institutions in 2024.
For a maturity analysis of our lease liabilities, see Note 40 to the Accountants’ Report
included in Appendix I to this prospectus.
Tax Payables
Our tax payables mainly represent enterprise income tax payable by us on a quarterly
basis. Our tax payables increased from RMB1.2 million as of December 31, 2022 to RMB3.7
million as of December 31, 2023, primarily in line with the increase of our enterprise income
tax. Our tax payables further increased from RMB3.7 million as of December 31, 2023 to
RMB4.8 million as of December 31, 2024, primarily due to the increase in EIT in the fourth
quarter of 2024, in line with the revenue growth during the same period.
FINANCIAL INFORMATION
– 354 –


--- page 365 ---
Redeemable Preference Shares
Our redeemable preference shares represented shares we issued in connection with our
Series A Investment and Series B Investment. See “— Consolidated Statements of Profit or
Loss and Other Comprehensive Income — Fair V alue Losses or gains on Redeemable
Preference Shares” for details. We have recognized the redeemable preference shares as a
whole as financial liabilities carried at fair value through profit or loss. See “History,
Development and Corporate Structure — Pre-IPO Investments — Special Rights” and Note 26
to the Accountants’ Report included in Appendix I to this prospectus for details.
As of December 31, 2023, the redeemable preference shares were presented by our
management in current liabilities considering our Company’s obligation to redeem the share
held by certain pre-IPO investors, which were then terminated in September 2024. See
“History, Development and Corporate Structure — Pre-IPO Investments — Special Rights.”
The following table sets forth the redeemable preference shares recorded as current
liabilities and non-current liabilities as of the dates indicated:
As of December 31,
2022 2023 2024
(RMB’000)
Current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 112,781 –
Non-current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118110,450 – –
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118110,450 112,781 –
All special rights granted to the investors of redeemable preference shares have been
terminated in September 2024 and we did not have any redeemable preference shares as of
December 31, 2024. For further information regarding the preference shares, see Note 26 to the
Accountants’ Report in Appendix I to this prospectus.
FINANCIAL INFORMATION
– 355 –


--- page 366 ---
NET CURRENT ASSETS/(LIABILITIES)
The table below sets forth our current assets, current liabilities and net current assets as
of the dates indicated:
As of December 31,
As of
April 30,
2022 2023 2024 2025
(RMB’000)
(Unaudited)
Current assets:
Cash and cash equivalents /H1118/H1118177,970 227,083 95,046 72,393
Prepayments, other
receivables and other
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,867 8,586 17,107 19,562
Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,751 6,548 5,836 7,203
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,127 5,709 3,655 3,825
Contingent consideration /H1118/H1118/H1118 9 7 6–– –
Financial assets at fair value
through profit or loss /H1118/H1118/H1118/H11181 1 7–– –
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118201,808 247,926 121,644 102,983
Current liabilities:
Redeemable preference
shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 112,781 – –
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111849,510 52,897 33,612 24,668
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,434 32,488 31,211 29,502
Other payables and
accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,489 29,086 50,756 22,697
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,014 17,298 14,678 16,378
Tax payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,198 3,658 4,839 4,029
Total current liabilities /H1118/H1118/H1118127,645 248,208 135,096 97,274
Net current
assets/(liabilities) /H1118/H1118/H1118/H1118/H1118/H111874,163 (282) (13,452) 5,709
FINANCIAL INFORMATION
– 356 –


--- page 367 ---
We had net current assets of RMB5.7 million as of April 30, 2025, consisting of current
assets of RMB103.0 million and current liabilities of RMB97.3 million, while we recorded net
current liabilities of RMB13.5 million as of December 31, 2024. This was primarily
attributable to (i) a decrease of RMB28.1 million in other payables and accruals mainly as a
result of our distribution of profit to shareholders in February 2025; and (ii) a decrease of
RMB8.9 million in contract liabilities primarily due to the decreased advances received from
our customers in the four months ended April 30, 2025, resulting from the decreased new
customers of our implantology and orthodontics services, which was partially offset by a
decrease of RMB22.7 million in cash and cash equivalents as a result of our distribution of
profit to shareholders in February 2025.
We had net current liabilities of RMB13.5 million as of December 31, 2024, consisting
of current assets of RMB121.6 million and current liabilities of RMB135.1 million, which
represented an increase of RMB13.2 million from our net current liabilities of RMB0.3 million
as of December 31, 2023. This was primarily due to (i) a decrease of RMB132.0 million in cash
and cash equivalents as a result of our payments made for share repurchase and profit
distribution to shareholders in the second half of 2024; (ii) an increase of RMB21.7 million in
other payables and accruals, mainly as a result of dividends payable under our 2023 annual
profit distribution plan and increase in payable for listing expenses in relation to the Listing;
and (iii) a decrease of RMB2.1 million in inventories mainly because (a) we adhere to a
first-in-first-out inventory management strategy while maintaining close communication with
suppliers to dynamically adjust procurement amount based on our actual business needs; and
(b) we conduct centralized inventory allocation across our dental institutions under the direct
chain model, significantly enhancing the overall inventory consumption efficiency. Such
decrease was also caused by reduced purchases resulting from the declined customers in 2024.
We had net current liabilities of RMB0.3 million as of December 31, 2023, consisting of
current assets of RMB247.9 million and current liabilities of RMB248.2 million, while we
recorded net current assets of RMB74.2 million as of December 31, 2022. This was primarily
due to (i) an increase of RMB112.8 million in redeemable preference shares considering our
Company’s obligation to redeem the share held by certain pre-IPO investors, whose special
rights were subsequently terminated in September 2024; (ii) an increase of RMB4.6 million in
other payables and accruals due to the increase in payroll payable following the increase of
employees during our service network expansion in 2023; and (iii) a decrease of RMB4.3
million in prepayments, other receivables and other assets, mainly as a result of the decrease
in other receivables as we received consideration from the transferee for our disposal of equity
interests in certain dental institutions. This was partially offset by an increase of RMB49.1
million in cash and cash equivalents as a result of the continuous operating cash inflow.
FINANCIAL INFORMATION
– 357 –


--- page 368 ---
As of December 31, 2022, we had net current assets of RMB74.2 million, consisting of
current assets of RMB201.8 million and current liabilities of RMB127.6 million. Our current
assets as of December 31, 2022 primarily comprise (i) cash and cash equivalents of RMB178.0
million; (ii) prepayments, other receivables and other assets of RMB12.9 million; and (iii)
inventories of RMB6.1 million. Our current liabilities as of December 31, 2022 primarily
comprise (i) contract liabilities of RMB49.5 million; (ii) lease liabilities of RMB34.4 million;
(iii) other payables and accruals of RMB24.5 million; (iv) trade payables of RMB18.0 million;
and (v) tax payables of RMB1.2 million.
We have taken and will continue to take the following measures to improve our net
current liabilities position.
(i) Monitoring our cash flow situation on a regular basis . We implement annual budget
planning to ensure the cash flow of our Group remains healthy. The annual budget
planning and expansion plans are approved by our management after thorough
reviews of the financial position of our Group. Our Financial Center also holds
internal meetings to discuss necessary steps to improve our Group’s cashflow and
liquidity position. We will continue to closely monitor our liquidity position to
ensure sufficient working capital is maintained.
(ii) Maintaining strict procurement and inventory management . We implement a strict
inventory management system at headquarters level to monitor the procurement,
storage and distribution of inventories. We will continue to prudently evaluate
demands for medical consumables, medical devices, pharmaceuticals and marketing
services arising from daily operations, in order to form reasonable procurement
plans.
(iii) Maintaining stable relationships with banks. We will maintain stable relationships
with banks so as to timely obtain bank borrowings on acceptable terms once
necessary.
LIQUIDITY AND CAPITAL RESOURCES
Our business operations and expansion plans require a significant amount of capital,
including cash and cash equivalents as well as other working capital requirements. Historically,
we financed our capital expenditure and working capital requirements mainly through cash
generated from operations, bank borrowings and Pre-IPO investments. As of December 31,
2022, 2023 and 2024, we had cash and cash equivalents of RMB178.0 million, RMB227.1
million and RMB95.0 million, respectively.
FINANCIAL INFORMATION
– 358 –


--- page 369 ---
Cash Flows
The following table sets forth a summary of our cash flows during the Track Record
Period:
Y ear ended December 31,
2022 2023 2024
(RMB’000)
Net cash flows from operating
activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118119,926 148,999 100,636
Net cash flows from/(used in)
investing activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,539 (16,789) (20,068)
Net cash flows used in financing
activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(98,406) (83,097) (212,605)
Net increase/(decrease) in cash and cash
equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111843,059 49,113 (132,037)
Cash and cash equivalents at the
beginning of the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118134,911 177,970 227,083
Cash and cash equivalents at the
end of the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118177,970 227,083 95,046
Operating Activities
Cash flows from operating activities consist of profit before income tax adjusted for
certain non-cash or non-operating activities related items, primarily including depreciation of
property, plant and equipment, depreciation of right-of-use assets, finance costs, share-based
payments, loss on disposal of items of property, plant and equipment, investment income from
wealth management products and COVID-19-related rent concessions from lessors, among
others. We derive our cash inflow mainly from operating activities through (i) provision of
general dentistry services; (ii) provision of implantology services; and (iii) provision of
orthodontics services. Cash outflow from operating activities primarily comprises payments for
procuring dental devices, pharmaceuticals and marketing services, employee benefit expenses,
and other operating expenses incurred during our daily operations. We recorded net operating
cash inflow throughout the Track Record Period.
Our net cash from operating activities was RMB100.6 million for the year ended
December 31, 2024. This net cash inflow was primarily attributable to profit before tax of
RMB70.8 million, as adjusted to reflect non-cash or non-operating items, which primarily
comprise depreciation of right-of-use assets of RMB35.3 million, depreciation of property,
plant and equipment of RMB21.1 million and finance costs of RMB5.3 million. These were
partially offset by (i) a decrease in contract liabilities of RMB19.7 million, mainly due to the
decreased advances received from our customers from 2023 to 2024, resulting from the
FINANCIAL INFORMATION
– 359 –


--- page 370 ---
decreased new customers of our implantology and orthodontics services, mainly caused by
customers’ consumption downgrade and reduced demands on consumption-oriented
implantology and orthodontics services during the slower-than-expected post-pandemic
economic recovery and our conservative marketing strategy outside Wuhan. Such decrease was
partially offset by the slight decrease in revenue recognized from contract liabilities from 2023
to 2024, primarily due to the decreased average spending per customer visit following our price
reduction to implantology and orthodontics services; (ii) income tax paid of RMB8.5 million;
and (iii) a decrease in other payables and accruals of RMB3.1 million.
Our net cash from operating activities was RMB149.0 million for the year ended
December 31, 2023. This net cash inflow was attributable to (i) profit before tax of RMB78.9
million, as adjusted to reflect non-cash or non-operating items, which primarily comprise
depreciation of right-of-use assets of RMB37.5 million, depreciation of property, plant and
equipment of RMB23.1 million and finance costs of RMB5.5 million; (ii) an increase in other
payables and accruals of RMB5.6 million, mainly due to the increase in payroll payable
following the increase of our employees during our service network expansion in 2023; (iii) a
decrease in prepayments, other receivables and other assets of RMB5.4 million, mainly as a
result of the decrease in other receivables as we received consideration from the transferee for
our disposal of equity interests in certain dental institutions; and (iv) an increase in contract
liabilities of RMB3.8 million, primarily due to more advances received from increased number
of new customers for our implantology services in 2023 following the resumption of offline
activities in the same year. These were partially offset by (i) income tax paid of RMB9.3
million; and (ii) an increase in trade receivables of RMB3.0 million, primarily due to the
increase in our settlement through public medical insurance programs in 2023.
Our net cash from operating activities was RMB119.9 million for the year ended
December 31, 2022. This net cash inflow was primarily attributable to (i) profit before tax of
RMB63.5 million, as adjusted to reflect non-cash or non-operating items, which principally
included depreciation of right-of-use assets of RMB39.0 million, depreciation of property,
plant and equipment of RMB24.0 million and finance costs of RMB6.7 million; and (ii) an
increase in other payables and accruals of RMB4.5 million. These were partially offset by (i)
income tax paid of RMB7.3 million; and (ii) an increase in prepayments, other receivables and
other assets of RMB5.8 million.
Investing Activities
Our cash used in investing activities mainly comprises our cash used in purchases of
items of property, plant and equipment, cash used in purchases of wealth management
products, cash used in settlement of consideration for the acquisition of subsidiaries and cash
used in purchase of other intangible assets. Our cash generated from investing activities mainly
comprises proceeds from disposal of property, plant and equipment, proceeds from disposal of
wealth management products, investment income from wealth management products, disposal
of subsidiaries and partial disposal of interests in the subsidiaries without loss of control.
FINANCIAL INFORMATION
– 360 –


--- page 371 ---
Our net cash used in investing activities was RMB20.1 million for the year ended
December 31, 2024. This net cash outflow was primarily due to (i) purchases of wealth
management products of RMB135.0 million; (ii) purchases of property, plant and equipment of
RMB23.4 million; and (iii) acquisition of subsidiaries of RMB0.8 million. This net cash
outflow was partially offset by (i) proceeds from disposal of wealth management products of
RMB136.5 million; (ii) proceeds from disposal of property, plant and equipment of RMB1.7
million; and (iii) contingent consideration received of RMB1.0 million.
Our net cash used in investing activities was RMB16.8 million for the year ended
December 31, 2023. This net cash outflow was primarily due to (i) purchases of wealth
management products of RMB375.0 million; (ii) purchases of property, plant and equipment of
RMB18.5 million; and (iii) acquisition of subsidiaries of RMB2.1 million. This net cash
outflow was partially offset by proceeds from disposal of wealth management products of
RMB377.7 million.
Our net cash from investing activities was RMB21.5 million for the year ended December
31, 2022. This net cash inflow was primarily attributable to (i) proceeds from disposal of
wealth management products of RMB299.2 million; and (ii) disposal of subsidiaries of
RMB2.9 million. This net cash inflow was partially offset by (i) purchases of wealth
management products of RMB264.0 million; and (ii) purchases of items of property, plant and
equipment of RMB14.0 million.
Financing Activities
Our cash used in financing activities mainly comprises our cash used in dividends paid,
repayment of bank borrowings, dividends paid to non-controlling shareholders, principal
portion of lease payments and interest paid. Cash generated from financing activities mainly
comprises proceeds from issuance of ordinary shares and redeemable preference shares,
proceeds from bank borrowings and capital injection from non-controlling shareholders.
Our net cash used in financing activities was RMB212.6 million for the year ended
December 31, 2024. This net cash outflow was primarily due to (i) repurchase of redeemable
preferred shares of RMB111.1 million; (ii) principal portion of lease payments of RMB31.9
million; (iii) dividends paid of RMB30.6 million; (iv) dividends paid to non-controlling
shareholders of RMB17.7 million; and (v) capital deduction of RMB10.8 million. This net cash
outflow was offset by (i) partial disposal of interests in the subsidiaries without loss of control
of RMB2.1 million; and (ii) capital injection from non-controlling shareholders of RMB1.7
million.
Our net cash used in financing activities was RMB83.1 million for the year ended
December 31, 2023. This net cash outflow was primarily due to (i) dividends paid of RMB36.6
million; (ii) principal portion of lease payments of RMB36.5 million; (iii) dividends paid to
non-controlling shareholders of RMB9.6 million; and (iv) interests paid of RMB5.5 million.
This net cash outflow was partially offset by (i) capital injection from non-controlling
shareholders of RMB3.6 million; and (ii) partial disposal of interests in the subsidiaries
without loss of control of RMB1.6 million.
FINANCIAL INFORMATION
– 361 –


--- page 372 ---
Our net cash used in financing activities was RMB98.4 million for the year ended
December 31, 2022. This net cash outflow was primarily due to (i) dividends paid of RMB39.0
million; (ii) principal portion of lease payments of RMB34.2 million; (iii) repayment of bank
borrowings of RMB10.0 million; (iv) dividends paid to non-controlling shareholders of
RMB7.0 million; and (v) interest paid of RMB6.7 million. This net cash outflow was partially
offset by capital injection from non-controlling shareholders of RMB2.1 million.
WORKING CAPITAL SUFFICIENCY
During the Track Record Period, we met our working capital requirements mainly from
cash generated from operations, bank borrowings and Pre-IPO investments.
Taking into account the financial resources available to us, including cash flow from
operating activities and the estimated net proceeds from the Global Offering, our Directors are
of the view that we have sufficient working capital to meet our present requirements and for
the next 12 months from the date of this prospectus.
INDEBTEDNESS AND CONTINGENT LIABILITIES
Indebtedness
During the Track Record Period, our indebtedness mainly consisted of (i) lease liabilities;
and (ii) redeemable preference shares. The following table sets forth a breakdown of our
indebtedness as of the dates indicated:
As of December 31,
As of
April 30,
2022 2023 2024 2025
(RMB’000)
(Unaudited)
Included in current
liabilities
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,434 32,488 31,211 29,502
Redeemable preference
shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 112,781 – –
Sub-total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,434 145,269 31,211 29,502
Included in non-current
liabilities
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111877,401 69,197 81,902 72,777
Redeemable preference
shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118110,450 – – –
Sub-total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118187,851 69,197 81,902 72,777
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118222,285 214,466 113,113 102,279
FINANCIAL INFORMATION
– 362 –


--- page 373 ---
Our Directors confirm that there has been no material change in our indebtedness position
from April 30, 2025 to the Latest Practicable Date. As of the Latest Practicable Date, there was
no material restrictive covenant in our indebtedness which could significantly limit our ability
to undertake additional debt or equity financing, nor was there any breach of covenant during
the Track Record Period and up to the Latest Practicable Date.
As of April 30, 2025, we had unutilized bank facilities of RMB50.0 million. We do not
anticipate any changes to the availability of bank financing to finance our operations in the
future, although we cannot assure you that we will be able to access bank financing on
favorable terms or at all.
Contingent Liabilities
As of April 30, 2025, we did not have any material outstanding debt securities, mortgage,
charges, debentures or other loan capital (issued or agreed to be issued), bank overdrafts, loans,
liabilities under acceptance or acceptance credits, or other similar indebtedness, leasing and
financial leasing commitments, hire purchase commitments, guarantees or other material
contingent liabilities.
CAPITAL EXPENDITURES AND CONTRACTUAL COMMITMENTS
Capital Expenditures
Our capital expenditures during the Track Record Period primarily consisted of
expenditures on (i) property, plant and equipment; (ii) acquisition of subsidiaries; and (iii)
other intangible assets. The following table sets forth our capital expenditures for the years
indicated:
Y ear ended December 31,
2022 2023 2024
(RMB’000)
Property, plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,957 18,521 23,420
Acquisition of subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,629 2,137 821
Other intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118887 – 27
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,473 20,658 24,268
We expect to incur capital expenditure of approximately RMB40.9 million in the year
ending December 31, 2025, primarily related to establishing new dental institutions, upgrading
our existing dental institutions, purchasing dental equipment and improving our information
technology systems. We intend to fund our planned capital expenditures through a combination
of the net proceeds from the Global Offering as well as cash generated from operating
activities.
FINANCIAL INFORMATION
– 363 –


--- page 374 ---
Our actual capital expenditures may differ from the amounts set forth above due to
various factors, including our future cash flows, results of operations and financial condition,
economic conditions in China, the availability of financing on terms acceptable to us and
development in the regulatory environment in China. In addition, we may incur additional
capital expenditures from time to time as we pursue new opportunities to expand our business
in the future.
Contractual Commitments
The following table sets forth our contractual commitments as of the dates indicated:
As of December 31,
2022 2023 2024
(RMB’000)
Contracted, but not provided for:
Property, plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,109 2,982 373
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,109 2,982 373
OFF-BALANCE SHEET ARRANGEMENTS
As of the Latest Practicable Date, we had not entered into any off-balance sheet
transactions.
MATERIAL RELATED PARTY TRANSACTIONS
We enter into transactions with our related parties from time to time during our ordinary
course of business and on terms comparable to the terms of transactions with other entities that
are not our related parties and the market price during the relevant year. Upon the completion
of this Global Offering, we will comply with the relevant Listing Rules and adopt a more
prudent approach when reviewing and engaging related party transactions.
Transactions with Related Parties
During the Track Record Period, our transactions with related parties mainly comprised
(i) purchase of goods from related parties; (ii) rental payments to related parties; and (iii) rental
income from related parties. See Note 37 to the Accountants’ Report in Appendix I to this
prospectus for details of transactions carried out with our related parties during the Track
Record Period.
FINANCIAL INFORMATION
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--- page 375 ---
Purchases of Goods
During the Track Record Period, we purchased dental consumables and pharmaceuticals
from Nanjing Pharmaceutical Hubei Co., Ltd. (ʮ̡). For the years ended
December 31, 2022, 2023 and 2024, our purchases of goods from Nanjing Pharmaceutical
Hubei Co., Ltd. amounted to RMB1.2 million, RMB1.3 million and RMB1.5 million,
respectively. All of such purchases were made according to the published prices and conditions
offered by Nanjing Pharmaceutical Hubei Co., Ltd. to its other independent customers.
Rental Payments
During the Track Record Period, we leased certain properties as our office premises from
Zhongshan Medical Investment, one of our Controlling Shareholders. For the years ended
December 31, 2022, 2023 and 2024, our rental payments for leases from Zhongshan Medical
Investment amounted to RMB0.3 million, RMB0.3 million and RMB0.5 million, respectively.
Rental Income
During the Track Record Period, we, as the lessor, leased certain properties as premises
of retail pharmacy to Nanjing Pharmaceutical Hubei Co., Ltd.. For the years ended December
31, 2022, 2023 and 2024, our rental income received from Nanjing Pharmaceutical Hubei Co.,
Ltd. amounted to RMB0.1 million, nil and nil, respectively.
It is the view of our Directors that each of the related party transactions set out in Note
37 of the Accountants’ Report in Appendix I to this prospectus (i) were conducted on normal
commercial terms and/or on terms not less favorable than terms available from Independent
Third Parties, which are considered fair, reasonable and in the interest of our Shareholders as
a whole; and (ii) do not distort our Track Record Period results or make our historical results
not reflective of future performance.
Balances with Related Parties
As of December 31, 2022, 2023 and 2024, we had trade payables due to Nanjing
Pharmaceutical Hubei Co., Ltd. of RMB4 thousand, RMB3 thousand and nil, respectively,
which was in connection with the abovementioned purchases of dental consumables and
pharmaceuticals. As of December 31, 2022, 2023 and 2024, we had non-trade dividends
payable due to Zhongshan Medical Investment of nil, nil and RMB19.4 million, respectively,
representing the dividends payable by us under our 2023 annual profit distribution plan. In
February 2025, we had already settled such payment.
FINANCIAL INFORMATION
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--- page 376 ---
KEY FINANCIAL RATIOS
The following table sets forth certain of our key financial ratios as of the dates or for the
years indicated:
Y ear ended December 31,
2022 2023 2024
Profitability ratios
Gross profit margin (%) (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836.3 38.1 37.4
Net profit margin (%) (2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813.8 15.2 15.4
Adjusted net profit margin
(non-IFRS measure) (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814.5 15.9 16.8
Return on equity (%) (3) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111841.2 42.8 37.9
Return on assets (%) (4) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811.5 14.1 14.4
As of December 31,
2022 2023 2024
Liquidity ratios
Current ratio (5) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.6x 1.0x 0.9x
Quick ratio (6) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.5x 1.0x 0.9x
Notes:
(1) Gross profit margin is calculated based on gross profit divided by revenue and multiplied by 100%.
(2) Net profit margin is calculated based on profit for the year divided by revenue and multiplied by 100%.
(3) Return on equity is calculated based on profit for the year divided by the arithmetic mean of the opening
and closing balances of total equity and multiplied by 100%.
(4) Return on assets is calculated based on profit for the year divided by the arithmetic mean of the opening
and closing balances of total assets and multiplied by 100%.
(5) Current ratio is calculated based on total current assets divided by total current liabilities.
(6) Quick ratio is calculated based on total current assets less inventories divided by total current liabilities.
Gross Profit Margin and Net Profit Margin
See “— Y ear to Y ear Comparison of Results of Operations” for a discussion of the factors
affecting our gross profit margin and net profit or loss margin during the respective years.
FINANCIAL INFORMATION
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--- page 377 ---
Return on Equity
Our return on equity increased from 41.2% in 2022 to 42.8% in 2023, primarily due to
the increase in our net profit in 2023. Our return on equity decreased from 42.8% in 2023 to
37.9% in 2024, primarily due to the decrease in our net profit in 2024.
Return on Assets
Our return on assets increased from 11.5% in 2022 to 14.1% in 2023, primarily due to the
increase in our net profit in 2023. Our return on assets remained relatively stable at 14.1% in
2023 and 14.4% in 2024.
Current Ratio
Our current ratio decreased from 1.6 as of December 31, 2022 to 1.0 as of December 31,
2023, primarily due to the increase in redeemable preference shares. Our current ratio remained
relatively stable at 0.9 as of December 31, 2024, compared to 1.0 as of December 31, 2023.
Quick Ratio
Our quick ratio decreased from 1.5 as of December 31, 2022 to 1.0 as of December 31,
2023, primarily due to the increase in our total current liabilities as a result of the increase in
redeemable preference shares as of December 31, 2023. Our quick ratio remained relatively
stable at 0.9 as of December 31, 2024, compared to 1.0 as of December 31, 2023.
FINANCIAL RISKS
We are exposed to a variety of financial risks, including credit risk and liquidity risk, as
set out below. We manage and monitor these exposures to ensure appropriate measures are
implemented on a timely and effective manner. As of the Latest Practicable Date, we did not
hedge or consider necessary to hedge any of these risks. For further details, see Note 40 in the
Accountants’ Report set out in Appendix I to this prospectus.
Credit Risk
Credit risk mainly arises from cash and cash equivalents, trade receivables, other
receivables and other financial assets, which represent our maximum exposure equal to credit
risk in relation to the financial assets. For details of the maximum exposure to credit risk based
on our credit policy, see Note 40 to the Accountants’ Report set out in Appendix I to this
prospectus.
FINANCIAL INFORMATION
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--- page 378 ---
It is our policy that all customers who wish to trade on credit terms are subject to credit
verification procedures. In order to minimize the credit risk, we review the recoverable amount
of each individual trade receivable periodically and our management also has monitoring
procedures to ensure the follow-up action is taken to recover overdue receivables. We expect
that there is no significant credit risk associated with other receivables and other financial
assets since counterparties to these financial assets have no history of default.
Liquidity Risk
We monitor the risks to a shortage of funds using a recurring liquidity planning tool,
which considers both the maturity of our financial instruments and financial assets and
projected cash flows from operations. For our financial liabilities by relevant maturity
grouping based on contractual undiscounted payments, see Note 40 to the Accountants’ Report
set out in Appendix I to this prospectus.
DIVIDENDS
We are incorporated under the laws of the PRC. We do not currently have a formal
dividend policy or a predetermined dividend payout ratio. Any dividends we pay will be at the
discretion of our Directors and will depend on our future operations and earnings, capital
requirements and surplus, general financial condition, contractual restriction and other factors
which our Directors consider relevant. Our shareholders in a general meeting may approve any
declaration of dividends, which must not exceed the amount recommended by our Board.
For the years ended December 31, 2022, 2023 and 2024, our dividends paid amounted to
RMB39.0 million, RMB36.6 million and RMB30.6 million, respectively. We had non-trade
dividends payable of RMB19.4 million under our 2023 annual profit distribution plan as of
December 31, 2024, which had been fully settled in February 2025.
Under the applicable PRC laws and regulations, a PRC incorporated company is required
to set aside at least 10% of its after-tax profits each year, after making up previous years’
accumulated losses, if any, to contribute to certain statutory reserve funds until the aggregate
amount contributed to such funds reaches 50% of its registered capital. The company may pay
dividends out of after-tax profits after making up for accumulated losses and contributing to
statutory reserve funds as mentioned above. As advised by our PRC Legal Advisors, our
Company cannot pay dividends if we are in an accumulated loss position. Our PRC companies
will consider to conduct the dividend payments as such companies are in an accumulated profit
position. No dividend shall be declared or payable except out of our profits lawfully available
for distribution. Our Directors have the absolute discretion to recommend any dividend subject
to our constitutional documents and the relevant laws. We cannot assure you that our Company
will be able to declare dividends of any amount each year or in any year.
FINANCIAL INFORMATION
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--- page 379 ---
DISTRIBUTABLE RESERVES
As of December 31, 2024, our Company had retained profits of RMB23.4 million. Our
retained profits could be distributed subject to current articles of association of the Company
and the PRC Company Law.
LISTING EXPENSES
Our listing expenses mainly include underwriting commissions, professional fees paid to
legal advisors, the Reporting Accountants and other professional parties for their services
rendered in relation to the Listing and the Global Offering.
The estimated total listing expenses (based on the mid-point of our indicative price range
for the Global Offering and assuming that the Over-allotment Option is not exercised) for the
Global Offering are approximately RMB36.0 million (HK$39.4 million), including (i)
underwriting commissions, SFC transaction levy, Stock Exchange trading fees and AFRC
transaction levy for all Offer Shares of approximately HK$9.0 million; and (ii) non-
underwriting related expenses of approximately HK$30.4 million, which consist of (a) fees and
expenses of legal advisors and reporting accountant of approximately HK$21.1 million; and (b)
sponsor fee and other fees and expenses of approximately HK$9.3 million, representing
approximately 4.1% of the gross proceeds of the Global Offering based on the same
assumptions. During the Track Record Period, we incurred listing expenses of RMB14.2
million (HK$15.6 million), of which (i) RMB5.2 million was recognized as administrative
expenses; and (ii) RMB9.0 million was directly recognized as deduction in equity. We expect
to incur additional listing expenses of approximately RMB5.0 million (HK$5.4 million) as
administrative expenses and approximately RMB16.8 million (HK$18.4 million) as a
deduction in equity directly upon the Listing.
Our Directors do not expect that such expenses will have a material adverse effect on our
results of operations for the year ending December 31, 2025.
UNAUDITED PRO FORMA ADJUSTED NET TANGIBLE ASSETS
The following unaudited pro forma adjusted consolidated net tangible assets of our Group
has been prepared in accordance with paragraph 4.29 of the Listing Rules and with reference
to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for inclusion in
Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants for
illustration purpose only, and is set out below to illustrate the effect of the Global Offering on
our consolidated net tangible assets as of December 31, 2024 as if Global Offering had taken
place on that date.
The unaudited pro forma adjusted consolidated net tangible assets attributed to the owners
of the parent has been prepared for illustrative purposes only and because of its hypothetical
nature, it may not give a true picture of the financial position of our Group had the Global
Offering been completed as of December 31, 2024 or any future date. It is prepared based on
FINANCIAL INFORMATION
– 369 –


--- page 380 ---
the consolidated net tangible assets as of December 31, 2024 as set out in the Accountants’
Report in Appendix I to this prospectus, and adjusted as described below. The unaudited pro
forma adjusted consolidated net tangible assets does not form part of the Accountants’ Report
on the historical financial information as set out in Appendix I to this prospectus.
Consolidated net
tangible assets
attributable to the
equity shareholders
of our Company as
of December 31,
2024
Estimated net
proceeds from
the Global
Offering
Unaudited pro
forma adjusted
consolidated net
tangible assets
attributable to
owners of the
parent as of
December 31,
2024
Unaudited pro forma
adjusted consolidated
net tangible assets
attributable to owners of
the parent per Share as of
December 31, 2024
RMB’000 RMB’000 RMB’000 RMB HK$
(Note 1) (Note 2) (Note 3) (Note 4)
Based on an Offer
Price of HK$20.00
per Share /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111850,792 167,934 218,726 4.43 4.85
Based on an Offer
Price of HK$21.40
per Share /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111850,792 181,265 232,057 4.70 5.15
Notes:
(1) The unaudited consolidated net tangible assets attributable to owners of the parent as of December 31,
2024 is extracted from the historical financial information set out in Appendix I to this prospectus,
which is arrived after deducting intangible assets attributable to owners of the parent and goodwill of
RMB1,749,000 and RMB63,090,000, respectively, from the unaudited consolidated net assets
attributable to owners of the parent of RMB115,631,000 as of December 31, 2024.
(2) The estimated net proceeds from the Global Offering are calculated based on the Offer Price of
HK$20.00 and HK$21.40 per Share, being the low-end price and high-end price of the stated Offer Price
range, respectively, after deduction of the underwriting fees and other related expenses payable by our
Company (excluding the listing expense that have been charged to profit or loss during the Track Record
Period) and do not take into account any shares which may be issued upon exercise of the
Over-allotment Option.
(3) The unaudited pro forma adjusted consolidated net tangible assets attributable to owners of our
Company and the amounts per Share are arrived at after the adjustments referred to in the preceding
paragraphs and on the basis that 49,379,042 shares were in issue assuming the Global Offering had been
completed on December 31, 2024 and the respective Offer Price of HK$20.00 and HK$21.40 per Share.
(4) In connection with the preparation of the unaudited pro forma financial information, the unaudited pro
forma adjusted consolidated net tangible assets attributable to owners of the parent per Share are
converted into Hong Kong dollars at a rate of HK$1=RMB0.9133. No representation is made that the
RMB amounts have been, could have been or may be converted into Hong Kong dollar, or vice versa
at that rate.
(5) Except as disclosed above, no adjustment has been made to reflect any trading result or other
transactions of our Group entered into subsequent to December 31, 2024.
FINANCIAL INFORMATION
– 370 –


--- page 381 ---
RECENT DEVELOPMENT
Recent Business and Financial Performance
Subsequent to December 31, 2024 and up to the Latest Practicable Date, we expanded our
dental service network to serve more customers with reliable and accessible dental services.
During such period, we established 8 dental out-patient departments in Wuhan, Hubei province,
all of which are located in or adjacent to local communities. During the same period, we
voluntarily terminated the operations of 2 dental institutions based on our evaluation on the
market condition and future business strategies. As of the Latest Practicable Date, we had 92
dental institutions in operation in total.
In the first quarter of 2025, our operational and financial performance remained relatively
stable. Our service capacity enhanced along with our dedicated efforts in expanding dental
service network. Meanwhile, we refined our internal operational management through
improving informatization, which further contributed to our business growth. Despite the
impact brought by seasonality, particularly fewer customer visits shortly before and during the
Chinese New Y ear holiday in late January 2025, the total number of our customer visits only
recorded a slight decrease from 189,346 in the fourth quarter of 2024 to 175,141 in the first
quarter of 2025, attributable to our continuous efforts to expand service network while
enhancing service quality and experience. Meanwhile, the number of our new customers grew
by approximately 3% from 36,564 in the fourth quarter of 2024 to 37,553 in the first quarter
of 2025.
No Material Adverse Change
After performing sufficient due diligence work which our Directors consider appropriate
and after due and careful consideration, our Directors confirm that, up to the date of this
prospectus, (i) there had been no material adverse change in our business, the industry where
we operate, or market or regulatory environment to which we are subject; (ii) there has been
no material adverse change in our financial or trading position or prospects since December 31,
2024, being the date of the latest audited consolidated financial position of our Group as set
out in the Accountants’ Report in Appendix I to this prospectus; or (iii) there has been no event
since December 31, 2024 that would materially affect the information shown in the
Accountants’ Report set forth in Appendix I to this prospectus.
DISCLOSURE REQUIRED UNDER THE LISTING RULES
We confirm that, as of the Latest Practicable Date, there were no circumstances that
would give rise to a disclosure requirement under Rules 13.13 to 13.19 in Chapter 13 of the
Listing Rules upon the Listing of the Shares on the Stock Exchange.
FINANCIAL INFORMATION
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--- page 382 ---
FUTURE PLANS
Please see the section headed “Business — Business Strategies” for a detailed description
of our future plans.
USE OF PROCEEDS
We estimate the net proceeds of the Global Offering which we will receive, assuming an
Offer Price of HK$20.7 per Offer Share (being the mid-end of the Offer Price range stated in
this prospectus), will be approximately HK$185.5 million, after deduction of underwriting fees
and commissions and estimated expenses payable by us in connection with the Global Offering
and assuming the Over-allotment Option is not exercised.
We intend to use the net proceeds of the Global Offering for the following purposes,
subject to changes in light of our evolving business needs and changing market conditions:
 approximately 35.0% (or HK$64.9 million) will be used for establishing new dental
institutions in Wuhan and other cities in Central China, with the aim to cater to the
growing demands for dental services in Central China and enhance our market
presence and market share. We expect to use an aggregate of approximately
HK$141.4 million for such expansion plan in the next five years, among which
HK$64.9 million is expected to be financed by the proceeds from the Global
Offering, while the remaining HK$76.5 million is expected to be financed by our
operating cash flow and bank borrowings. In order to offer convenient, accessible
and affordable dental services to residents in local communities, we plan to establish
approximately 80 to 100 new dental institutions in Central China in the next five
years, including approximately 80 in Hubei province and approximately 15 in Hunan
province. Each of the new dental institutions is expected to occupy approximately
300 sq.m. to 500 sq.m. with approximately 6 to 20 dental chairs. The following table
sets forth the details of our future establishment.
Estimated number of institutions Estimated
total number
of institutions
Estimated
number of
dental chairs2025 2026 2027 2028 2029
Dental hospitals /H1118/H1118/H1118/H1118/H111800055 10 20 per each
Dental out-patient
departments /H1118/H1118/H1118/H1118/H1118/H111815 15 15 20 20 85 6 per each
Dental clinics /H1118/H1118/H1118/H1118/H1118/H111800000 0 0
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815 15 15 25 25 95 710
FUTURE PLANS AND USE OF PROCEEDS
– 372 –


--- page 383 ---
We typically take into account the following key factors when establishing new
dental institutions: (a) the city where the new dental institution to be established
shall align with our business expansion strategy; (b) the site of the new dental
institution shall be in densely populated areas and adjacent to local communities; (c)
medical resources, especially medical professionals, available in the relevant
regions; (d) the expected number of customers, dental service demands and monthly
breakeven periods shall be commercially reasonable and practicable; and (e) the
estimated initial investment amount for leases and recruitment, among others.
The actual implementation of such establishment plans will depend on numerous
factors, some of which are beyond our control. We may make necessary adjustments
to our expansion plan based on market conditions, operational performance of our
existing dental institutions, coverage of our dental service network and other
relevant factors, to strike a balance between our business expansion and
profitability.
For details of establishing new dental institutions, please see “Business — Business
Strategies” and “Business — Our Future Expansion — Organic Growth — New
Establishment;”
 approximately 25.0% (or HK$46.4 million) will be used for acquisition of dental
institutions. We expect to seek and assess the potential acquisition targets with a
strategic geographic focus on Central China, particularly in Hubei and Hunan
provinces. As of the Latest Practicable Date, we had not entered into any letter of
intent or agreement with respect to future acquisitions and had not identified any
definite acquisition targets that meet our criteria. We plan to acquire approximately
40 to 65 dental institutions in the next five years, including approximately 20 in
Hubei province, approximately 20 in Hunan province and approximately 15 in
Henan province, through acquiring the majority equity interests of the acquisition
targets. We expect to use an aggregate of approximately HK$141.4 million for such
expansion plan in the next five years, among which HK$46.4 million is expected to
be financed by the proceeds from the Global Offering, while the remaining HK$95.0
million is expected to be financed by our operating cash flow and bank borrowings.
We plan to acquire dental institutions, which demonstrate high growth potential and
strong compatibility with our corporate culture, at reasonable valuation and
acquisition consideration. The following table sets forth the details of our future
acquisition.
FUTURE PLANS AND USE OF PROCEEDS
– 373 –


--- page 384 ---
Estimated number of institutions Estimated
total number
of institutions
Estimated
number of
dental chairs2025 2026 2027 2028 2029
Dental hospitals /H1118/H1118/H1118/H1118/H111800500 5 20 per each
Dental out-patient
departments /H1118/H1118/H1118/H1118/H1118/H11185 10 5 15 15 50 6 per each
Dental clinics /H1118/H1118/H1118/H1118/H1118/H111800000 0 0
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851 01 01 51 5 5 5 4 0 0
When acquiring dental institutions, we generally consider the following key factors:
(i) the target’s compatibility with our corporate culture and dental service network;
(ii) the target’s annual revenue; (iii) the profitability of the target; (iv) the target’s
service capacity, such as management team and medical professional team; and (v)
estimated initial investment amount, ongoing operating expenses and capital
requirements of the targets, among others. According to Frost & Sullivan, based on
expert interviews and market research, there were sufficient dental institutions in
Central China that meet our selection criteria for our strategic acquisition as of the
Latest Practicable Date.
The actual implementation of such acquisition plans will depend on numerous
factors, such as then market condition, our then business strategies, negotiation
results and scale and consideration of the actual acquisition.
For details of acquisition of dental institutions, please see “Business — Business
Strategies” and “Business — Our Future Expansion — Strategic Acquisition.”
During the site selection and acquisition target selection process, we conduct
detailed local market research to evaluate potential customer demands based on
multiple factors, such as population density and composition, local economy,
residents’ consumption power and preferences. We generally avoid establishing or
acquiring a dental institution within the service radius of our existing dental
institutions. We believe the risk of cannibalization among our existing dental
institutions and dental institutions to be established or acquired by us is relatively
low, considering (i) the above measures taken by us to mitigate potential
competition; (ii) the broad unmet demands for dental care among the general public
in Central China.
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Robust Market Demands with Sustained Growth Potential
According to Frost & Sullivan, based on expert interviews and market research,
there are sufficient market demands for dental care in Central China for us to expand
our dental service network by establishment or acquisitions in the next five years.
As the largest private dental services provider in Central China with a focus on
Hubei and Hunan provinces in terms of revenue in 2024, we are well positioned to
address the broad unmet market demands.
 Demand Surge Fuels Market Expansion . Demands for dental services in
Central China is driven by multiple factors, such as increasing disposable
income and per capita health expenditure, growing awareness of dental health,
aging population and the implementation of two-child and three-child policies.
The market size of the dental services market in Central China in terms of
revenue generated by dental services providers is expected to increase at a
CAGR of 6.9% from RMB28.6 billion in 2024 to RMB40.0 billion in 2029,
among which the market share of private dental services providers is projected
to reach 63.3% in 2029.
 Direct Chain Model Unlocks Growth Potential . As of December 31, 2024, only
3% of dental services providers operated under chain models. Chain
standardization enables reliable clinical practice, uniform service quality and
cohesive branding. Intensifying market competition accelerates consolidation
and further increases the market share of dental services providers with chain
operations. We adopt a direct chain model with unified operation philosophy,
operational management, service standards and brand image across our dental
service network. By expanding our dental service network under our direct
chain model, we are poised to increase our market share and entrench our
competitiveness.
Strategic Pricing Adjustments Accommodating Market Conditions
In line with the industry practice among private dental services providers, we make
strategic pricing adjustments after thorough risk assessments, market research and
customer demand analysis to broaden our customer base and increase market
penetration. In 2024, we made appropriate price reduction for implantology services
involving consumables affected by centralized procurement policies and
orthodontics services involving certain high-value consumables, such as clear
aligners to actively capture unmet market demands. As for the general dentistry
services in which we have strong technical competitive advantages, no significant
price adjustments were made for oral medicine, oral surgery and pediatric dentistry.
While these pricing adjustments were in place, we have been enhancing operational
efficiency and optimizing cost structures to maintain overall profitability. We
believe the pricing strategy, combining with our strong brand and consistent service
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quality, allows us to continuously deliver customer benefits, and effectively compete
and gain market share. Since the first quarter of 2025, the dental services market
witnessed price stabilization with a subsequent moderate rebound emerging.
Differentiated Business Model and Operational Capabilities
 Differentiated Business Model . Unified operation philosophy, operational
management, service standards and brand image have fully leveraged the
synergies and economies of scale of our direct chain operations. This
structured approach ensures consistent management standards and improves
operational efficiency. Meanwhile, upholding the principle of “direct chain and
direct partnerships,” the Partnership Program has enriched our medical
professional resources and fueled the expansion of our dental service network.
 Differentiated Operational Capabilities. Adhering to the spirit of “rooted in
medical and driven by technology ( ᔼᐕ͉๕eҦஔᚨਗ),” we improve talent
cultivation and specialty development, entrenching our advantages in
technologies. We have adopted advanced technologies, such as digital
scanning, 3D modeling and robotic-assisted implant, among others, to
facilitate diagnosis and treatment. Cultivating general dentists with strengths in
advantageous specialties and developing both the service spectrum and
advantageous specialties of our dental institutions also differentiated us from
our competitors. We offer one-stop service experience, digitalized service
procedures and intimate follow-ups. We also stay in proximity to customers
and offer prompt responses and diversified activities, constantly building our
trustworthy reputation among residents. As such, reliable treatment quality
combined with satisfied customer experience encourages word-of-mouth
referral, driving the growth of customer base and loyalty. We also organize and
participate in various academic conferences in the industry, continuously
enhancing our exposure to seasoned dentists and amassing dental resources to
our service network.
We do not rely on price reductions to remain competitive. Instead, our long-term
leadership is supported by advanced technologies, superior service experience,
digitalized operations and trustworthy brand image. We are dedicated to combining
“affordable prices” with customer-perceived “high value,” while building
competitive advantages, such as dentist-customer relationships, community
engagement and brand loyalty. This approach ultimately enables the transition from
“price competition” to “value competition.”
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Our Major Evaluations during Expansion through Establishments and
Acquisitions
We will prudently evaluate our future acquisitions and new establishments based on
multiple factors, including among others, our development stage, actual business
needs, then market conditions and specific commercial negotiations. To further
expand our market share in Central China, we have adopted a regionally
differentiated expansion strategy. Specifically,
 Wuhan. We will upscale our network coverage in Wuhan mainly through new
establishment, fostering synergies among dental institutions.
 Outside Wuhan in Hubei province . We will establish new dental institutions in
the third- and fourth-tier cities across Hubei province, addressing significant
unmet demands for reliable dental care among local residents.
 Outside Hubei province . We expect to strengthen our presence mainly through
establishing joint ventures with seasoned dentists under the Partnership
Program to rapidly increase market share while amassing dentist resources in
our dental service network.
Moreover, when proper opportunities arise, we will also pursue acquisition
opportunities in the above regions if we identify potential targets that meet our
acquisition criteria and align with our then development strategies.
Establishments
 Policy Support and Regional Resource Allocation. Taking advantage of
favorable policies to private medical institutions, we strategically target both
regions with sufficient unmet dental care demands and functional communities,
such as aging neighborhoods, school districts, business districts, to stay in
proximity to potential customers.
 Market Demand and Competitive Analysis . We conduct market research to
evaluate the density, service capacities and pricing of local dental institutions.
We assess our brand awareness in the target region and conduct pre-launch
marketing.
 Site Selection . We generally prioritize residential, commercial or school-
adjacent locations for customer accessibility, targeting 10,000 to 50,000
residents within a radius of 2 to 5 kilometers.
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 Service Capacity . We evaluate the sufficiency of qualified management and
seasoned dentists. We assign seasoned dentists for technical mentoring during
the first two years of the newly established dental institutions.
 Capital Planning . We rigorously evaluate funding adequacy, utilization
efficiency and investment payback period, while mitigating capital
mismatches.
Acquisitions
 Resources . We prioritize acquisition targets with established local brand
awareness, customer base and dentist resources, ensuring standard
management and technical standards for seamless integration into our direct
chain dental service network.
 Culture . We believe cultural alignment is critical. The acquisition targets,
especially core management and dentists practicing at such institutions, should
adhere to our centralized management and respect our corporate value.
 Compliance . We pay attention to the historical compliance performance and
review due diligence reports to mitigate risks arising from acquisitions.
 Financial assessments . Our financial assessments focus on business model and
cost control performance, with valuations benchmarked to price-to-earnings
ratio and/or price-to-sales ratio, and growth potential.
 Capital planning . Our capital allocation prioritizes efficiency, evaluating the
investment amount based on anticipated returns.
Our cautious approach in network expansion during the Track Record Period,
particularly in 2023 and 2024, allowed us to navigate market uncertainties and
optimize existing operations. However, these underlying structural opportunities
remain robust. The net proceeds of the Global Offering provide the necessary capital
to strategically pursue this long-term market potential. As a result, we believe such
expansion plan aligns with our long-term growth strategy to reinforce our dominant
position in Central China and consistently increase our market share. In particular:
Capitalizing on Long-Term Growth Drivers Amid Market Fluctuations. Despite the
immediate demand surge during the post-pandemic period in 2023, there was a
broader economic slowdown impacting consumer spending in 2024. Our expansion
plan is predicated on compelling long-term structural growth drivers of the private
dental services market in Central China, such as supportive government policies and
growing demands for dental services along with residents’ rising disposal income
and oral health awareness, rather than short-term cyclical fluctuations. For details of
the market growth drivers, please see “Industry Overview — Dental Services Market
in Central China — Market Drivers of the Dental Services Market in Central China.”
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Proven Scalability and Replicable Model. Our nearly 20 years of operational
experience serves as the foundation of a highly standardized and replicable system
for establishing and managing dental institutions. Since 2007, we have accumulated
dental resources, established brand awareness and formed a standardized and mature
internal system for establishing and acquiring dental institutions. Despite the growth
of our dental service network decelerated during and immediately after the
pandemic, the number of our dental institutions grown at a considerable rate
historically accompanied by high-quality operation, doubling every two to three
years and reaching 13, 31 and 67 as of December 31, 2015, 2018, and 2020,
respectively, representing a CAGR of 38.8% from 2015 to 2020, demonstrating our
proven capability to execute expansion efficiently when market conditions are
appropriate and adequate capital is available. The pace of our future expansion,
increasing by 20 to 40 dental institutions per year and 150 dental institutions in total
in the next five years, is generally in line with our historical growth rate.
Strategic Market Entry and Proximity to Customers. We prioritize institution density
in new markets to efficiently drive brand exposure and cultivate scale effects.
Combining online and offline marketing with multi-institution deployment
accelerates local customer acquisition. Meanwhile, deploying dental institutions in
proximity to customers in communities facilitates their frequent offline visits during
the treatment procedure and deepens our market penetration. Therefore, the planned
network expansion is crucial to rapidly achieve these economies of scale and
network effects.
Long-term Profitability Goals. We are committed to improving our financial
performance. Leveraging proven direct chain model in the thriving dental services
industry in Central China, we expect to enhance economies of scale and profitability
with the expansion of dental service network.
 approximately 10.0% (or HK$18.6 million) will be used for upgrading and
renovating some of our existing dental institutions. In particular, we plan to upgrade
the dental facilities and equipment at our dental institutions and renovate our dental
institutions progressively, with the aim to enhance the service capacity while
improving customers’ satisfaction during their visits to our dental institutions. For
details of acquisition of dental institutions, please see “Business — Business
Strategies” and “Business — Our Future Expansion — Strategic Acquisition;”
 approximately 10.0% (or HK$18.6 million) will be used to optimize our information
technology infrastructure and information technology systems. We expect to
integrate our information technology systems to achieve real-time business,
financial and operational management. Additionally, we will increase our
investment in the infrastructure of cybersecurity and data protection to ensure the
safety of our digitalized operations and the reliability of our information technology
systems.
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In the future, we plan to improve our internal management procedures, elevate both
operational and management efficiency, and develop a standardized, scalable and
replicable business model to strengthen our competitive advantages in the market
and provide high-quality and customer-centric dental services to our customers.
For details of propelling digitalization of our dental service network, please see
“Business — Business Strategies” and “Business — Information Technology
Systems;”
 approximately 10.0% (or HK$18.6 million) will be used for developing our medical
professional team to further support the sustainable growth of our dental service
network. In particular, we plan to develop our internal training system to cultivate
dentists with multifaceted dental expertise and strengths in selected specialties. We
aim to expand their expertise beyond their primary specialties, guiding them to
become excellent dentists with holistic dental expertise and strengths in selected
specialties. To achieve this, we will also encourage in-house research and
development activities by incentivizing innovation and clinical advancements.
Moreover, we plan to recruit talents to accommodate the growing demands for
high-quality dental services and empower our long-term growth. We will focus on
recruiting well-educated, senior-level dental talents and experienced management
talents. The actual frequency and scale of our recruitment are subject to the
operational performance of our dental service network.
For details of talent cultivation and recruitment, please see “Business — Business
Strategies” and “Business — Medical Professionals — Recruitment, Management
and Cultivation of Medical Professionals;”
 approximately 10.0% (or HK$18.6 million) for working capital and other general
corporate purposes.
If the Offer Price is fixed at HK$21.4 per Offer Share (being the high-end of the Offer
Price range stated in this prospectus) and assuming the Over-allotment Option is not exercised,
we will receive additional net proceeds of approximately HK$7.3 million. If the Offer Price is
fixed at HK$20.0 per Offer Share (being the low-end of the Offer Price range stated in this
prospectus) and assuming the Over-allotment Option is not exercised, the net proceeds we
receive will be reduced by approximately HK$7.3 million. The above allocation of the
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-end of the estimated Offer Price range. We intend to apply
the additional net proceeds to the above purposes on a pro rata basis in the event that the
Over-allotment Option is exercised.
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To the extent that the net proceeds are not immediately applied to the above purposes, we
will only deposit the net proceeds into short-term interest bearing accounts at licensed
commercial banks and/or other authorized financial institutions as defined under the Securities
and Futures Ordinance or the applicable laws and regulations in other jurisdictions.
In the event of any material change in our use of net proceeds of the Global Offering from
the purposes described above or in our allocation of the net proceeds among the purposes
described above, a formal announcement will be made.
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HONG KONG UNDERWRITERS
Haitong International Securities Company Limited
Livermore Holdings Limited
UNDERWRITING ARRANGEMENTS AND EXPENSES
Hong Kong Public Offering
Hong Kong Underwriting Agreement
Pursuant to the Hong Kong Underwriting Agreement, our Company has agreed to offer
the Hong Kong Offer Shares for subscription by the public in Hong Kong on and subject to the
terms and conditions of the Hong Kong Underwriting Agreement and this prospectus.
Subject to (a) the Stock Exchange granting approval for the listing of, and permission to
deal in, our H Shares in issue and to be issued pursuant to the Global Offering on the Main
Board as mentioned in this prospectus (including any additional H Shares which may be
allotted and issued pursuant to the exercise of the Over-allotment Option) and such approval
not having been withdrawn; and (b) certain other conditions set out in the Hong Kong
Underwriting Agreement (including, among others, the Sole Overall Coordinator (for itself and
on behalf of the Underwriters) and the Company, agreeing upon the Offer Price), 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.
The Hong Kong Underwriting Agreement is conditional on and subject to, among other
things, the International Underwriting Agreement having been executed and becoming
unconditional and not having been terminated in accordance with its terms.
Grounds for Termination
The obligations of the Hong Kong Underwriters to subscribe or procure subscribers for
the Hong Kong Offer Shares under the Hong Kong Underwriting Agreement are subject to
termination by written notice from the Sole Sponsor and the Sole Overall Coordinator (for
itself and on behalf of the Hong Kong Underwriters), at any time prior to 8:00 a.m. on the
Listing Date if:
(1) there shall develop, occur, exist or come into effect:
(a) any or a series of national, regional or international event(s) or circumstance(s)
in the nature of force majeure (including, without limitation, any acts of
government, declaration of a regional, national or international emergency or
UNDERWRITING
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war, calamity, crisis, epidemic, pandemic (including Severe Acute Respiratory
Syndrome (SARS), swine or avian flu, Coronavirus Disease 2019
(COVID-19), H1N1, H5N1, H7N9, Ebola virus, Middle East respiratory
syndrome and such related or mutated forms and variants), or interruption or
delay in transportation, outbreak, escalation, mutation or aggravation of
disease, economic sanctions, withdrawal of trading status or privileges, strikes,
labour disputes, lock-outs, fire, explosion, flooding, earthquake, tsunami,
volcanic eruption, civil commotion, riots, rebellion, public disorder, acts of
war, outbreak or escalation of hostilities (whether or not war is declared), acts
of God or acts of terrorism (whether or not responsibility has been claimed),
paralysis in government operations, in or directly or indirectly affecting the
Hong Kong, the PRC, the United States, the United Kingdom, the European
Union (or any member thereof) or any other jurisdiction relevant to our Group
or the Global Offering (collectively, the “ Relevant Jurisdictions ”); or
(b) any change, or any development involving a prospective change, or any event
or circumstance or series of events which may result in any change or
development involving a prospective change, in any local, national, regional or
international financial, economic, political, military, industrial, legal, fiscal,
regulatory, currency, credit or market matters or conditions, securities or
exchange control or any monetary or trading settlement system or other
financial markets (including without limitation, conditions in the stock and
bond markets, money and foreign exchange markets, the interbank markets and
credit markets) in or affecting any Relevant Jurisdictions; or
(c) any moratorium, suspension or restriction (including, without limitation, any
imposition of or requirement for any minimum or maximum price limit or price
range) in or on trading in securities generally on the Stock Exchange, the
Shanghai Stock Exchange, the Shenzhen Stock Exchange, the New Y ork Stock
Exchange, the NASDAQ Global Market or the London Stock Exchange; or
(d) any moratorium on commercial banking activities in the Hong Kong (imposed
by the Financial Secretary or the Hong Kong Monetary Authority or other
competent Authority), the PRC, New Y ork (imposed at Federal or New Y ork
State level or other competent Authority), London, European Union (as a
whole) or any other Relevant Jurisdiction, or any disruption in commercial
banking or foreign exchange trading or securities settlement or clearance
services, procedures or matters in or affecting any Relevant Jurisdiction; or
UNDERWRITING
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(e) any new law, or any change or any development involving a prospective
change or any event or circumstance or series of events which may result in a
change or a development involving a prospective change in (or in the
interpretation or application by any court or other competent authority of)
existing laws, in each case, in or affecting any of the Relevant Jurisdictions; or
(f) the imposition of sanctions or the withdrawal of trading privileges, in whatever
form, directly or indirectly, under any sanction laws, or regulations in any
Relevant Jurisdiction; or
(g) a change or development involving a prospective change in or affecting
taxation or exchange control, currency exchange rates or foreign investment
regulations (including, without limitation, a material devaluation of the United
States dollar, Hong Kong dollar, Euro or the Renminbi against any foreign
currencies, a change in the system under which the value of the Hong Kong
dollar is linked to that of the currency of the United States dollar or RMB is
linked to any foreign currency or currencies), or the implementation of any
exchange control, in any of the Relevant Jurisdictions or affecting investments
in the Offer Shares; or
(h) any litigation, dispute, legal action or claim, regulatory or administrative
investigation being contemplated, threatened or instigated or announced
against any member of our Group or any Controlling Shareholder, Director,
Supervisor or member of our Company’s senior management as named in this
prospectus; or
(i) any contravention by any member of our Group or any Controlling
Shareholder, Director or Supervisor of the Listing Rules or applicable laws; or
(j) the issue or requirement to issue by our Company of any supplement or
amendment to this prospectus (or to any other documents issued or used in
connection with the contemplated offer and sale of the Offer Shares) pursuant
to the Companies Ordinance or the Companies (Winding Up and Miscellaneous
Provisions) Ordinance or the Listing Rules or any requirement or request of the
Stock Exchange and/or the SFC; or
(k) any change or development involving a prospective change in, or a
materialization of any of the risks set out in the section headed “Risk Factors”
of this prospectus; or
(l) any demand by any creditor for repayment or payment of any indebtedness of
any member of our Group or in respect of which any member of our Group is
liable prior to its stated maturity; or
UNDERWRITING
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(m) any order or petition is presented for the winding up or liquidation of any
member of our Group or any composition or arrangement made by any member
of our Group with its creditors or a scheme of arrangement entered into by any
member of our Group or any resolution is passed for the winding-up of any
member of our Group or the appointment of a provisional liquidator, receiver
or manager over all or part of the assets or undertaking of any member of our
Group or anything analogous thereto occurring in respect of any member of our
Group,
which, individually or in the aggregate, in the sole and absolute opinion of the Sole
Sponsor and the Sole Overall Coordinator (for itself and on behalf of the other Hong
Kong Underwriters):
(A) has or will have or may have a material adverse change, or any development
involving a prospective material adverse change, whether directly or indirectly,
on or affecting the assets, liabilities, business, general affairs, management,
prospects, shareholders’ equity, profits, losses, trading positions, results of
operations, position or condition, financial or otherwise, or performance of our
Group, taken as a whole; or
(B) has or will have or may have an adverse effect on the success of the Global
Offering or the level of applications under the Hong Kong Public Offering or
the level of indications of interest under the International Offering; or
(C) makes or will make or may make it inadvisable or inexpedient or impracticable
or incapable for any part of the Hong Kong Underwriting Agreement, the Hong
Kong Public Offering and the Global Offering to proceed or to be performed
or implemented as envisaged or to market the Global Offering or the delivery
of the Offer Shares on the terms and in the manner contemplated by the Offer
Related Documents (as defined below); or
(D) has or will have 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 or delaying the processing of
applications and/or payments pursuant to the Global Offering or pursuant to
the underwriting thereof; or
(2) there has come to the notice of the Sole Sponsor and/or the Sole Overall
Coordinator:
(a) that any statement contained in any of this prospectus, the formal notice, the
offering circulars, the application proofs, the post hearing information pack
and/or in any public notices, announcements, circulars, advertisements,
communications or other documents issued or used by or on behalf of our
Company in connection with the Hong Kong Public Offering (collectively, the
UNDERWRITING
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“Offer Related Documents ”) (including any supplement or amendment
thereto, but excluding information in relation to the Underwriters, consisting
only of the name, logo, address and qualification of each of the Sole Sponsor,
the Sole Overall Coordinator, the Sole Global Coordinator, the Sole
Bookrunner, the Joint Lead Managers, the Hong Kong Underwriters and the
Capital Market Intermediaries) was, when it was issued, or has become, untrue,
incorrect, incomplete in any material respect or misleading, or that any
forecast, estimate, expression of opinion, intention or expectation contained in
any of the Offer Related Documents (including any supplement or amendment
thereto) made by our Company and its Directors is not fair and honest and
based on reasonable grounds or reasonable assumptions; or
(b) that any matter has arisen or has been discovered which would, had it arisen
or been discovered immediately before the date of the Hong Kong Prospectus,
constitute a material omission from, or misstatement in, any of the Offer
Related Documents (including any supplement or amendment thereto); or
(c) non-compliance of this prospectus (or any other documents used in connection
with the contemplated subscription and sale of the Offer Shares) or the CSRC
Filings (as defined in the Hong Kong Underwriting Agreement) or any aspect
of the Global Offering with the Listing Rules, the Companies Ordinance, the
Companies (Winding Up and Miscellaneous Provisions) Ordinance, the CSRC
Rules (as defined under the Hong Kong Underwriting Agreement), or any other
applicable laws; or
(d) any breach of the obligations or undertakings imposed upon any party to the
Hong Kong Underwriting Agreement or the International Underwriting
Agreement (other than upon any of the Sole Sponsor, the Hong Kong
Underwriters or the International Underwriters); or
(e) any event, act or omission which gives or is likely to give rise to any liability
of any of the Indemnifying Parties (as defined in the Hong Kong Underwriting
Agreement) pursuant to the indemnities given by any of them under the Hong
Kong Underwriting Agreement; or
(f) any material adverse change, or any development involving a prospective
material adverse change, whether directly or indirectly, on or affecting the
assets, liabilities, business, general affairs, management, prospects,
shareholders’ equity, revenue, profits, losses, trading position, results of
operations, position or condition, financial or otherwise, or performance of our
Group, taken as a whole; or
(g) any breach of, or any event or circumstance rendering untrue or incorrect,
incomplete in any respect or misleading, any of the representations, warranties,
agreements and undertakings given by our Company and the Controlling
Shareholders under the Hong Kong Underwriting or the International
Underwriting Agreement; or
UNDERWRITING
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(h) that the approval by the Stock Exchange of the listing of, and permission to
deal in, the H Shares to be issued (including any additional H Shares that may
be issued pursuant to the exercise of the Over-allotment Option) under the
Global Offering is refused or not granted, other than subject to customary
conditions, on or before the Listing Date, or if granted, the approval is
subsequently withdrawn, cancelled, qualified (other than by customary
conditions), revoked or withheld; or
(i) a prohibition on our Company for whatever reason from offering, allotting,
issuing or selling any of the H Shares pursuant to the terms of the Global
Offering; or
(j) that our Company withdraws any of this prospectus, the formal notice or the
Global Offering; or
(k) the chairman, the general manager, any Director, Supervisor or member of the
senior management of our Company as named in this prospectus vacating his
or her office; or
(l) a Director or a member of our Company’s senior management as named in this
prospectus being charged with an indictable offense or prohibited by operation
of law or otherwise disqualified from taking part in the management or taking
directorship of a company or being subject to any disciplinary proceedings in
any Relevant Jurisdiction (including, in particular, the CSRC and its local
branches and representative offices); or
(m) any order or petition for the winding up or liquidation of any member of our
Group or any composition or arrangement made by any member of our Group
with its creditors or a scheme of arrangement entered into by any member of
our Group or any resolution for the winding-up of any member 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 member of our Group or
anything analogous thereto occurring in respect of any member of our Group;
or
(n) that any of the experts described under “Statutory and General Information —
E. Other Information — 8. Qualification of Experts” in Appendix VI of this
prospectus has withdrawn its respective consent to the issue of this prospectus
with the inclusion of its reports, letters, and/or legal opinions (as the case may
be) and references to its name included in the form and context in which it
respectively appears; or
(o) that any person has withdrawn or is subject to withdrawing its consent to being
named in the Hong Kong Prospectus or to the issue of any of this prospectus,
the formal notice; or
UNDERWRITING
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(p) that a material portion of the orders placed or confirmed in the bookbuilding
process at the time of the International Underwriting Agreement is entered
into, have been withdrawn, terminated or cancelled.
Undertakings to the Stock Exchange Pursuant to the Listing Rules
(A) Undertakings by our Company
Pursuant to Rule 10.08 of the Listing Rules, our Company has undertaken to the Stock
Exchange, that no further Shares or securities convertible into equity securities of our
Company (including warrants or other convertible securities) (whether or not of a class already
listed) may be issued or sold or transferred out of treasury or form the subject of any agreement
to such an issue, or sale or transfer out of treasury by our Company within six months from
the Listing Date (whether or not such issue of Shares or securities of our Company, or sale or
transfer of shares out of treasury will be completed within six months from the Listing Date),
except for (a) any capitalization issue, capital reduction or consolidation or sub-division of the
Shares; (b) pursuant to the Global Offering and the exercise of the Over-allotment Option; or
(c) under any of the circumstances provided under Rule 10.08 of the Listing Rules.
(B) Undertakings by our Controlling Shareholders
By virtue of Rule 10.07 of the Listing Rules, our Controlling Shareholders have
undertaken to the Stock Exchange and to our Company that, except pursuant to the Global
Offering and the Over-allotment Option, they will not and will procure that the relevant
registered holder(s) (if any) of our H Shares in which any of them has a beneficial interest will
not, without the prior written consent of the Stock Exchange or unless otherwise in compliance
with the requirements of the Listing Rules:
(i) at any time in the period commencing from the date by reference to which disclosure
of their shareholdings in our Company is made in this prospectus and ending on the
date which is six months from the Listing Date (the “ First Six-Month Period ”),
dispose of, nor enter into any agreement to dispose of or otherwise create any
options, rights, interests or encumbrances in respect of, any of the Shares in respect
of which they are shown to be the beneficial owner in this prospectus (the “ Relevant
Shares ”); and
(ii) at any time in the period of six months commencing from the expiry of the First
Six-Month Period, dispose of, nor enter into any agreement to dispose of or
otherwise create any options, rights, interests or encumbrances in respect of, any of
the Relevant Shares to such extent that, immediately following such disposal, or
upon the exercise or enforcement of such options, rights, interests or encumbrances,
they will cease to be a controlling shareholder (as defined in the Listing Rules) of
our Company.
UNDERWRITING
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--- page 399 ---
Pursuant to Note 3 to Rule 10.07(2) of the Listing Rules, each of our Controlling
Shareholders has undertaken to the Stock Exchange and to our Company that within the period
commencing from the date by reference to which disclosure of their shareholdings in our
Company is made in this prospectus and ending on the date which is 12 months from the
Listing Date, it will:
(i) when he/she/it pledges or charges any securities or interests in any securities of our
Company beneficially owned by any of them, whether directly or indirectly, in favor
of an authorized institution (as defined in the Banking Ordinance (Chapter 155 of
the Laws of Hong Kong)) for a bona fide commercial loan, immediately inform our
Company of such pledge or charge together with the number of Shares so pledged
or charged; and
(ii) when he/she/it receives indications, either verbal or written, from the pledgee or
chargee of any Shares that any of the pledge or charged Shares will be disposed of,
immediately inform our Company in writing of such indications.
Our Company will inform the Stock Exchange in writing as soon as we have been
informed of matters referred in above by any of our Controlling Shareholders and disclose such
matters by way of announcement pursuant to the requirements under the Listing Rules as soon
as possible.
Undertakings pursuant to the Hong Kong Underwriting Agreement
(A) Undertakings by our Company
Except for the offer, issue and sale of the Offer Shares pursuant to the Global Offering
(including pursuant to the exercise of the Over-allotment Option) and otherwise pursuant to the
Listing Rules, 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 ”), our Company hereby undertakes to each of the Sole Sponsor, the
Sole Overall Coordinator, the Sole Global Coordinator, the Sole Bookrunner, the Joint Lead
Managers, the Hong Kong Underwriters and the Capital Market Intermediaries not to, and to
procure each other member of our Group not to, without the prior written consent of the Sole
Sponsor and the Sole Overall Coordinator (for itself and on behalf of the other Hong Kong
Underwriters) and unless in compliance with the requirements of the Listing Rules:
(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,
or repurchase any legal or beneficial interest in any Shares or other securities of our
Company, or any interest in any of the foregoing (including, but not limited to, any
UNDERWRITING
– 389 –


--- page 400 ---
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 securities
of our Company, as applicable, or any interest in any of the foregoing), or deposit
any Shares or other securities of our Company 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 (legal or beneficial) of any
Shares or other securities of our Company, 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 securities of our Company, as applicable, or any
interest in any of the foregoing); or
(iii) enter into any transaction with the same economic effect as any transaction specified
in (i) or (ii) above; or
(iv) offer to or contract to or agree to or announce or publicly disclose any intention to
effect any transaction specified in (i), (ii) or (iii) above,
in each case, whether any of the transactions specified in (i), (ii) or (iii) above is to be settled
by delivery of Shares or other securities of our Company in cash or otherwise (whether or not
the issue of such Shares or other shares or securities will be completed within the First
Six-Month Period).
In the event that, during the period of six months commencing on the date on which the
First Six-Month Period expires (the “ Second Six-Month Period ”), our Company enters into
any of the transactions specified in (i), (ii) or (iii) above or offers to or contracts to or agrees
to or announces or publicly discloses any intention to effect any such transaction, our Company
undertakes to take all reasonable steps to ensure that such transaction, agreement,
announcement or disclosure (as the case maybe) will not create a disorderly or false market in
the securities of our Company. The Controlling Shareholders undertakes to each of the Sole
Sponsor, the Sole Overall Coordinator, the Sole Global Coordinator, the Sole Bookrunner, the
Joint Lead Managers, the Hong Kong Underwriters and the Capital Market Intermediaries to
procure our Company to comply with the undertakings above.
UNDERWRITING
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--- page 401 ---
(B) Undertakings by our Controlling Shareholders
Each of the Controlling Shareholders hereby jointly and severally undertakes to each of
our Company, the Sole Sponsor, the Sole Overall Coordinator, the Sole Global Coordinator, the
Sole Bookrunner, the Joint Lead Managers, the Hong Kong Underwriters and the Capital
Market Intermediaries that, without the prior written consent of the Sole Sponsor and the Sole
Overall Coordinator (for itself and on behalf of the other Hong Kong Underwriters) and unless
in compliance with the requirements of the Listing Rules:
(i) he, she or it will not, and will procure that the relevant registered holder(s), any
nominee or trustee holding on trust for him, her or it and the companies controlled
by him, her or it and/or entities which entrusted him, her or it to exercise their voting
rights will not, at any time during the First Six-Month Period, (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 other
securities of our Company, or any interest in any of the foregoing (including, but not
limited to, 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 securities of our Company, as applicable or any interest in any of the
foregoing) (the “ Locked-up Securities ”), or deposit any Shares or other securities
of our Company 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 (legal or
beneficial) of, any Locked-up Securities, or (c) enter into any transaction with the
same economic effect as any transaction specified in paragraph (i)(a) or (b) above,
or (iv) offer to or contract to or agree to or announce or publicly disclose any
intention to effect any transaction specified in paragraph (i)(a), (b) or (c) above, in
each case, whether any of the transactions specified in paragraph (i)(a), (b) or (c)
above is to be settled by delivery of the Shares or other securities of our Company
or in cash or otherwise (whether or not the issue of such Shares or other securities
will be completed within the First Six-Month Period);
(ii) during the Second Six Month Period, he, she or it will not, and will procure that the
relevant registered holder(s), any nominee or trustee holding on trust for him, her or
it and the companies controlled by him, her or it will not, at any time, enter into any
transaction described in paragraph (i) (a), (b) or (c) above in respect of any
Locked-up Securities or offer to or contract to or agree to or announce or publicly
disclose any intention to enter into any such transaction if, immediately following
such transaction or upon the exercise or enforcement of any option, right, interest or
Encumbrance pursuant to such transaction, any of the Controlling Shareholder
UNDERWRITING
– 391 –


--- page 402 ---
(individually or in aggregate) will cease to be a “controlling shareholder” (as the
term is defined in the Listing Rules) of our Company and/or a group of controlling
shareholders (as defined in the Listing Rules) of our Company, as the case may be;
(iii) until the expiry of the Second Six-Month period, in the event that he or she or it
enters into any of the transactions specified in paragraph (i) (a), (b) or (c) above or
offers to or agrees to or announces any intention to effect any such transaction, he,
she or it will take all reasonable steps to ensure that he, she or it will not create a
disorderly or false market in the securities of our Company provided that, subject to
strict compliance with any requirements of applicable Laws (including, without
limitation and for the avoidance of doubt, the requirements of the Stock Exchange
or of the SFC or of any other relevant authority).
The restrictions aforesaid do not apply to any pledge or charge of any Shares or other
securities of our Company, as applicable, or any interest in any of the foregoing (including, but
not limited to, 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
securities of our Company, as applicable, or any interest in any of the foregoing) after the
Global Offering in favour of an authorized institution as defined in the Banking Ordinance
(Chapter 155 of the Laws of Hong Kong) for a bona fide commercial loan, provided that at any
time during the First Six-Month Period and the Second Six-Month Period, he, she or it will and
will procure that the relevant registered holder(s) and the companies controlled by him, her or
it will (i) if and when he, she or it pledges or charges any Shares or other securities of our
Company beneficially owned by him, her or it, immediately inform our Company, the Sole
Sponsor and the Sole Overall Coordinator in writing of such pledge or charge together with the
number of Shares or other securities (or interest therein) of our Company so pledged or
charged; and (ii) if and when he, she or it or the relevant registered holder(s) or the companies
controlled by him, her or it receives indications, either verbal or written, from any pledgee or
chargee that any of the pledged or charged Shares or other securities (or interest therein) of our
Company will be disposed of, immediately inform our Company, the Sole Sponsor and the Sole
Overall Coordinator in writing of such indications. The Company shall, as soon as practicable
upon receiving such information in writing from the member of the Controlling Shareholders
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.
UNDERWRITING
– 392 –


--- page 403 ---
Indemnity
We and our Controlling Shareholders have agreed to indemnify, among others, the Sole
Sponsor, the Sole Overall Coordinator, the Sole Global Coordinator, the Sole Bookrunner, the
Joint Lead Managers, the Hong Kong Underwriters and the Capital Market Intermediaries for
certain losses which they may suffer, including, among others, losses arising from the
performance of their obligations under the Hong Kong Underwriting Agreement and any
breach by our Company and our Controlling Shareholders of the Hong Kong Underwriting
Agreement.
The International Offering
International Underwriting Agreement
In connection with the International Offering, it is expected that our Company and our
Controlling Shareholders will enter into the International Underwriting Agreement with the
Sole Sponsor, the Sole Overall Coordinator and the International Underwriters. Under the
International Underwriting Agreement, subject to the conditions set forth therein, the
International Underwriters would severally and not jointly agree to purchase, or procure
purchasers to purchase, the Offer Shares being offered pursuant to the International Offering
(subject to, among others, any reallocation between the International Offering and the Hong
Kong Public Offering). It is expected that the International Underwriting Agreement may be
terminated on similar grounds as the Hong Kong Underwriting Agreement. Potential investors
are reminded that in the event that the International Underwriting Agreement is not entered
into, or is terminated, the Global Offering will not proceed.
It is expected that each of our Controlling Shareholders will undertake to the International
Underwriters not to dispose of, or enter into any agreement to dispose of, or otherwise create
any options, rights, interest or encumbrances in respect of any of the H Shares held by it in our
Company for a period similar to such undertakings given by them pursuant to the Hong Kong
Underwriting Agreement, which is described in “— Underwriting Arrangements and Expenses
— Undertakings pursuant to the Hong Kong Underwriting Agreement — (B) Undertakings by
our Controlling Shareholders” above.
Over-allotment Option and Stabilization
We expect to grant to the International Underwriters, exercisable in whole or in part by
the Sole Overall Coordinator at absolute discretion (for itself and on behalf of the International
Underwriters), the Over-allotment Option, which will be exercisable from the Listing Date
until up to (and including) the date which is 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 1,629,200 H Shares, representing no more than 15.0% of the number of
Offer Shares initially available under the Global Offering, at the Offer Price under the
International Offering to cover over-allocations in the International Offering, if any.
For more details of the arrangements relating to the Over-allotment Option and
stabilization, see “Structure of the Global Offering” in this prospectus.
UNDERWRITING
– 393 –


--- page 404 ---
Commission and Expenses
Our Company will pay an underwriting commission of 3% of the aggregate Offer Price
of all the Offer Shares (including H Shares to be issued if the Over-allotment Option is
exercised) (the “ Fixed Fees ”). Our Company may also in our sole and absolute discretion pay
any one or all of the Underwriters an additional incentive fee in aggregate of up to 1% of the
aggregate Offer Price for all of the Offer Shares (including H Shares to be issued if the
Over-allotment Option is exercised) (the “ Discretionary Fees ”). For the purpose of disclosure
of the ratio of fixed and discretionary fees payable (the “ Fee Split Ratio ”) as required under
paragraph 3B of Appendix D1A to the Listing Rules, the Fees Split Ratio will be approximately
52.5:47.5, assuming the Discretionary Fees will be paid in full, whether or not the
Over-allotment Option is exercised. For any unsubscribed Hong Kong Offer Shares reallocated
to the International Offering, we will pay an underwriting commission at the rate applicable to
the International Offering and such commission will be paid to the relevant International
Underwriters and not the Hong Kong Underwriters.
Assuming the Over-allotment Option is not exercised, the aggregate commissions and
fees, together with Stock Exchange listing fees, SFC transaction levy of 0.0027%, Stock
Exchange trading fee of 0.00565%, AFRC transaction levy of 0.00015%, legal and other
professional fees and printing and all other expenses payable by us relating to the Global
Offering are currently estimated to amount in aggregate to approximately HK$39.4 million
(assuming an Offer Price of HK$20.7 per Offer Share, being the mid-point of the indicative
Offering Price range stated in this prospectus).
TRANSFER OF SHARES ISSUED PRIOR TO THE GLOBAL OFFERING
Pursuant to the PRC Company Law, our Shares issued prior to the Listing shall not be
transferred within 12 months from the Listing Date.
INDEPENDENCE OF THE SOLE SPONSOR
The Sole Sponsor satisfies the independence criteria applicable to sponsor set out in Rule
3A.07 of the Listing Rules.
UNDERWRITERS’ INTERESTS IN OUR COMPANY
Save as disclosed in this prospectus and save for the obligations under the Hong Kong
Underwriting Agreement and the International Underwriting Agreement, as at the Latest
Practicable Date, none of the Underwriters has any shareholding or beneficial interests in any
member of our Group nor 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
member of our Group nor any interest in the Global Offering.
Following the completion of the Global Offering, the Sole Overall Coordinator and the
Hong Kong Underwriters and their affiliated companies may hold a certain portion of the H
Shares as a result of fulfilling their obligations under the Hong Kong Underwriting Agreement.
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 or
stabilizing process.
UNDERWRITING
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--- page 405 ---
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 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 H 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 H Shares in most cases.
Such activities may affect the market price or value of our H Shares, the liquidity or
trading volume in our H Shares and the volatility of the price of our H Shares, and the extent
to which this occurs from day to day cannot be estimated.
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 stabilizing or 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
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--- page 406 ---
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:
(a) the Hong Kong Public Offering of initially 1,086,200 H Shares (subject to
reallocation) in Hong Kong, as described in “— The Hong Kong Public Offering”
below; and
(b) the International Offering of initially 9,775,600 H Shares (subject to reallocation
and the Over-allotment Option) outside the United States in offshore transactions in
reliance on Regulation S, as described in “— The International Offering” below.
The 10,861,800 H Shares initially being offered in the Global Offering will represent
approximately 22% of the total number of issued Shares immediately after completion of the
Global Offering, without taking into account any Shares which may be allotted and issued
pursuant to the exercise of the Over-allotment Option. The underwriting arrangements, and the
respective Underwriting Agreements, are summarized in the section headed “Underwriting” in
this prospectus.
Investors may apply for Hong Kong Offer Shares under the Hong Kong Public Offering,
or, if qualified to do so, apply for or indicate an interest in International Offer Shares under the
International Offering, but may not do both.
References in this prospectus to applications, application monies or the procedure for
application relate solely to the Hong Kong Public Offering.
THE HONG KONG PUBLIC OFFERING
Number of Shares Initially Offered
We are initially offering 1,086,200 Hong Kong Offer Shares, representing approximately
10% of the total number of Offer Shares initially available under the Global Offering, at the
Offer Price for subscription by the public in Hong Kong. Subject to the reallocation of H
Shares between (i) the International Offering, and (ii) the Hong Kong Public Offering, the
Hong Kong Offer Shares will represent approximately 2.2% of our Company’s enlarged share
capital immediately after completion of the Global Offering (assuming the Over-allotment
Option is not exercised).
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 and 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.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 407 ---
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters on
a several basis under the terms of the Hong Kong Underwriting Agreement and is subject to
our Company and the Sole Overall Coordinator (for itself and on behalf of the Underwriters)
agreeing on the Offer Price. Completion of the Hong Kong Public Offering is subject to the
conditions as set out in “— Conditions of the Global Offering” below.
Allocation
Allocation of the Offer Shares to investors under the Hong Kong Public Offering will be
based solely on the level of valid applications received under the Hong Kong Public Offering.
The basis of allocation may vary, depending on the number of Hong Kong Offer Shares validly
applied for by applicants. Such allocation could, where appropriate, consist of balloting, which
would mean that some 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.
For allocation purposes only, the total number of the Offer Shares initially available under
the Hong Kong Public Offering (after taking account of any reallocation in the number of Offer
Shares allocated between the Hong Kong Public Offering and the International Offering
referred to below) will be divided equally into two pools (with any odd lots being allocated to
pool A): pool A and pool B. Pool A will comprise 543,100 Hong Kong Offer Shares and pool
B will comprise 543,100 Hong Kong Offer Shares initially. Both of which are available on an
equitable basis to successful applicants. All valid applications that have applied for Hong Kong
Offer Shares with a total subscription price (excluding brokerage of 1.0%, SFC transaction levy
of 0.0027%, Stock Exchange trading fee of 0.00565% and AFRC transaction levy of 0.00015%
payable) of HK$5 million or below will fall into pool A. All valid applications that have
applied for Hong Kong Offer Shares with a total subscription price (excluding brokerage of
1.0%, SFC transaction levy of 0.0027%, Stock Exchange trading fee of 0.00565% and AFRC
transaction levy of 0.00015% payable) of over HK$5 million and up to the total value of pool
B will fall into pool B.
For the purpose of this sub-section only, the “price” for Offer Shares means the price
payable on application therefor (without regard to the Offer Price as finally determined).
Applicants 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 two
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.
Applicants can only receive an allocation of Hong Kong Offer Shares from either Pool A
or Pool B, but not from both pools. Multiple or suspected multiple applications and any
application for more than 543,100 Hong Kong Offer Shares (being 50% of the 1,086,200 Offer
Shares initially available under the Hong Kong Public Offering) will be rejected.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 408 ---
Reallocation
Assuming that the Over-allotment Option is not exercised, the allocation of the Offer
Shares between the Hong Kong Public Offering and the International Offering is 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 Overall
Coordinator (for itself and on behalf of the Underwriters) 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 Overall Coordinator deems appropriate to satisfy
demand under the International Offering;
(ii) if the number of Offer Shares validly applied for under 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
1,086,200 Offer Shares may be reallocated to the Hong Kong Public Offering
from the International Offering in accordance with Chapter 4.14 of the Guide
for New Listing Applicants issued by the Stock Exchange, so that the number
of the Offer Shares available under the Hong Kong Public Offering will be
increased to 2,172,400 Offer Shares, representing twice of the number of the
Offer Shares initially available under the Hong Kong Public Offering (before
any exercise of the Over-allotment Option);
(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 2,172,400 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 3,258,600 Offer Shares, representing approximately 30% of the number of
the Offer Shares initially available under the Global Offering (before any
exercise of the Over-allotment Option);
(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 3,258,600 Offer Shares will be reallocated to the Hong Kong
Public Offering from the International Offering, so that the number of the Offer
Shares available under the Hong Kong Public Offering will be increased to
4,344,800 Offer Shares, representing approximately 40% of the number of the
Offer Shares initially available under the Global Offering (before any exercise
of the Over-allotment Option); and
STRUCTURE OF THE GLOBAL OFFERING
– 398 –


--- page 409 ---
(v) if the number of Offer Shares validly applied for under the Hong Kong Public
Offering represents 100 times or more the number of the Offer Shares initially
available for subscription under the Hong Kong Public Offering, then
4,344,700 Offer Shares will be reallocated to the Hong Kong Public Offering
from the International Offering, so that the number of the Offer Shares
available under the Hong Kong Public Offering will be increased to 5,430,900
Offer Shares, representing 50% of the number of the Offer Shares initially
available under the Global Offering (before any exercise of the Over-allotment
Option).
(b) where the International Offer Shares are undersubscribed and:
(i) if the Hong Kong Offer Shares are undersubscribed, the Global Offering will
not proceed unless fully underwritten by the Underwriters; 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 1,086,200 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 2,172,400 Offer Shares, representing twice
of the number of the Offer Shares initially available under the Hong Kong
Public Offering (before any exercise of the Over-allotment Option).
The Offer Shares to be offered in the Hong Kong Public Offering and the International
Offering may, in certain circumstances, be reallocated as between these offerings at the sole
and absolute discretion of the Sole Overall Coordinator. If either the Hong Kong Public
Offering or the International Offering is not fully subscribed for, the Sole Overall Coordinator
has the authority (but not the obligation) in its sole and absolute discretion to reallocate all or
any unsubscribed Offer Shares from such offering to the other, in such proportion as the Sole
Overall Coordinator deems appropriate.
In addition to any mandatory reallocation required as described above, the Sole Overall
Coordinator (for itself and on behalf of the Underwriters) may reallocate the Offer Shares from
the International Offering to the Hong Kong Public Offering. In accordance with Chapter 4.14
of the Guide for New Listing Applicants issued by the Stock Exchange, if such reallocation is
done other than pursuant to Practice Note 18 of the Listing Rules, (i) the maximum total
number of Offer Shares that may be reallocated 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. 2,172,400 Offer Shares), and (ii) the final Offer Price shall be fixed at HK$20.0
per Offer Share, the low-end of the Offer Price range stated in this prospectus.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 410 ---
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.
Applications
The Sole Overall Coordinator (for itself and on behalf of the Underwriters) may require
any investor who has been offered H Shares under the International Offering, and who has
made an application under the Hong Kong Public Offering, to provide sufficient information
to the Sole Overall Coordinator so as to allow it to identify the relevant applications under the
Hong Kong Public Offering and to ensure that it is excluded from any application for H Shares
under the Hong Kong Public Offering.
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/it that he/she/it and any
person(s) for whose benefit he/she/it is making the application has not applied for or taken up,
or indicated an interest in, and will not apply for or take up, or indicate an interest in, any
International 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 it has been or will be placed or allocated International Offer Shares under
the International Offering.
Applicants under the Hong Kong Public Offering may be required to pay, on application
(subject to application channels), the maximum price of HK$21.4 per Offer Share in addition
to the brokerage, SFC transaction levy, Stock Exchange trading fee and AFRC transaction levy
payable on each Offer Share. If the Offer Price, as finally determined in the manner described
in “— Pricing and Allocation” below, is less than the maximum price of HK$21.4 per Offer
Share, appropriate refund payments (including the brokerage, SFC transaction levy, Stock
Exchange trading fee and AFRC transaction levy 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.
THE INTERNATIONAL OFFERING
Number of Offer Shares Offered
Subject to the reallocation as described above, the number of Offer Shares to be initially
offered under the International Offering will be 9,775,600, representing approximately 90% of
the total number of Offer Shares initially available under the Global Offering. The International
Offering is expected to be fully underwritten by the International Underwriters subject to the
terms and conditions of the International Underwriting Agreement, and is subject to the Hong
Kong Public Offering becoming unconditional.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 411 ---
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 in Hong Kong and other jurisdictions outside the United States
in offshore transactions in reliance on Regulation S. 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. The International Offering is subject to the Hong Kong Public Offering
being unconditional.
Allocation of Offer Shares pursuant to the International Offering will be effected in
accordance with the “book-building” process described in “— Pricing and Allocation” below
and based on a number of factors, including the level and timing of demand, 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 hold or sell, H Shares, after the Listing. Such
allocation is intended to result in a distribution of the H Shares on a basis which would lead
to the establishment of a solid shareholder base to the benefit of our Company and our
Shareholders as a whole.
The Sole 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 Overall Coordinator (for itself and on behalf of the Underwriters) so as to allow
them to identify the relevant applications under the Hong Kong Public Offering and to ensure
that they are excluded from any application of Offer Shares under the Hong Kong Public
Offering.
Reallocation
The total number of Offer Shares to be issued pursuant to the International Offering may
change as a result of the reallocation arrangement described in “— The Hong Kong Public
Offering — Reallocation” above, the exercise of the Over-allotment Option in whole or in part
described in “— Over-allotment Option” below and any reallocation of unsubscribed Offer
Shares originally included in the Hong Kong Public Offering.
OVER-ALLOTMENT OPTION
In connection with the Global Offering, the Company is expected to grant the
Over-allotment Option to the International Underwriters, which will be exercisable by the Sole
Overall Coordinator (for itself and on behalf of the International Underwriters).
Pursuant to the Over-allotment Option, the International Underwriters have the right,
exercisable by the Sole Overall Coordinator (for itself and on behalf of the International
Underwriters) at any time from the Listing Date to the 30th day after the last day for lodging
applications under the Hong Kong Public Offering, to require the Company to issue up to
STRUCTURE OF THE GLOBAL OFFERING
– 401 –


--- page 412 ---
1,629,200 new H Shares, representing approximately 15% of the total number of Offer Shares
initially available under the Global Offering, at the Offer Price under the International
Offering, to cover over-allocations in the International Offering, if any.
If the Over-allotment Option is exercised in full, the additional Offer Shares will
represent approximately 3.2% of the total number of Shares in issue 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.
STABILIZATION
Stabilization is a practice used by underwriters in some markets to facilitate the
distribution of securities. To stabilize, the underwriters may bid for, or purchase, the securities
in the secondary market, during a specified period of time, inter alia , to curb and, if possible,
prevent any decline in the market price of the securities below the offer price. It may be
effected in jurisdictions where it is permissible to do so and subject to all applicable laws and
regulatory requirements. In Hong Kong, the price at which stabilization is effected is not
permitted to exceed the Offer Price.
In connection with the Global Offering, the Stabilizing Manager or any person acting for
it, on behalf of the Underwriters, may over-allocate or effect short sales or any other stabilizing
transactions with a view to stabilizing or maintaining the market price of the Offer Shares at
a level higher than that which might otherwise prevail in the open market. Short sales involve
the sale by the Stabilizing 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. The Stabilizing Manager may close out the covered
short position by either exercising the Over-allotment Option to purchase additional Offer
Shares or purchasing H Shares in the open market. In determining the source of the Offer
Shares to close out the covered short position, the Stabilizing Manager will consider, among
other things, the price of Offer Shares in the open market as compared to the price at which
they may purchase additional Offer Shares pursuant to the Over-allotment Option. Stabilizing
transactions consist of certain bids or purchases made for the purpose of preventing or curbing
a decline in the market price of the Offer 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 Stabilizing Manager or any person acting for it to conduct any such
stabilizing action. Such stabilizing activity, if commenced, will be done at the absolute
discretion of the Stabilizing Manager and may be discontinued at any time.
Any such stabilizing activity is required to be brought to an end within 30 days of the last
day for the lodging of applications under the Hong Kong Public Offering. The number of the
Offer Shares that may be over-allocated will not exceed the number of the H Shares that may
be issued under the Over-allotment Option, namely, 1,629,200 Offer Shares, which is
approximately 15% of the number of Offer Shares initially available under the Global Offering,
STRUCTURE OF THE GLOBAL OFFERING
– 402 –


--- page 413 ---
and cover such over-allocations by exercising the Over-allotment Option or by making
purchases in the secondary market at prices that do not exceed the Offer Price or through stock
borrowing arrangements or a combination of these means.
In Hong Kong, stabilizing activities must be carried out in accordance with the Securities
and Futures (Price Stabilizing) Rules (Chapter 571W of the Laws of Hong Kong). Stabilizing
actions permitted pursuant to the Securities and Futures (Price Stabilizing) Rules include:
(a) over-allocating for the purpose of preventing or minimizing any reduction in the
market price of our H Shares;
(b) selling or agreeing to sell the H Shares so as to establish a short position in them for
the purpose of preventing or minimizing any reduction in the market price of the
Shares;
(c) purchasing or subscribing for, or agreeing to purchase or subscribe for, our 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 of the H Shares for the sole purpose of
preventing or minimizing any reduction in the market price;
(e) selling or agreeing to sell any of the H Shares in order to liquidate any position
established as a result of those purchases; and
(f) offering or attempting to do anything as described in (b), (c), (d) or (e) above.
Stabilizing actions by the Stabilizing 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 stabilization.
Prospective applications for investors in the Offer Shares should note that:
(a) as a result of effecting transactions to stabilize or maintain the market price of the
H Shares, the Stabilizing Manager, or any person acting for it, may maintain a long
position in the H Shares;
(b) the size of the long position, and the period for which the Stabilizing Manager, or
any person acting for it, will maintain the long position is at the discretion of the
Stabilizing Manager and is uncertain;
(c) liquidation of any such long position by the Stabilizing Manager and selling in the
open market may lead to a decline in the market price of the H Shares;
STRUCTURE OF THE GLOBAL OFFERING
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--- page 414 ---
(d) no stabilizing action can be taken to support the price of the H Shares for longer than
the stabilizing period, which begins on the Listing Date, and is expected to expire
on Sunday, August 3, 2025, being the 30th day after the last day for the lodging of
applications under the Hong Kong Public Offering. After this date, when no further
stabilizing action may be taken, demand for the H Shares, and their market price,
could fall after the end of the stabilizing period. These activities by the Stabilizing
Manager may stabilize, maintain or otherwise affect the market price of the H
Shares. As a result, the price of the H Shares may be higher than the price that
otherwise may exist in the open market;
(e) any stabilizing action taken by the Stabilizing Manager, or any person acting for it,
may not necessarily result in the market price of the H Shares staying at or above
the Offer Price either during or after the stabilizing period; and
(f) stabilizing bids or transactions effected in the course of the stabilizing action may
be made at a price at or below the Offer Price and therefore at or below the price
paid by applicants for, or investors in, the Offer Shares.
In order to effect stabilization actions, the Stabilizing Manager will arrange cover of up
to an aggregate of 1,629,200 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 paid on the Listing Date.
Both the size of such cover and the extent to which the Over-allotment Option can be exercised
will depend on whether arrangements can be made with investors such that a sufficient number
of H Shares can be delivered on a delayed basis. If no investor in the International Offering
agrees to the delayed delivery arrangements, no stabilizing actions will be undertaken by the
Stabilizing Manager and the Over-allotment Option will not be exercised.
Our Company will ensure or procure that an announcement in compliance with the
Securities and Futures (Price Stabilizing) Rules (Chapter 571W of the Laws of Hong Kong)
will be made within seven days of the expiration of the stabilizing period.
PRICING AND ALLOCATION
Determining the Offer Price
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.
STRUCTURE OF THE GLOBAL OFFERING
– 404 –


--- page 415 ---
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 or about
Monday, July 7, 2025, by agreement between the Sole Overall Coordinator (for itself and on
behalf of the Underwriters) and our Company and the number of Offer Shares to be allocated
under the various offerings will be determined shortly thereafter.
Offer Price Range
The Offer Price per Offer Share under the Hong Kong Public Offering will be identical
to the Offer Price per Offer Share under the International Offering based on the Hong Kong
dollar price per Offer Share, as determined by the Sole Overall Coordinator (for and on behalf
of the Underwriters) and our Company.
The Offer Price will not be more than HK$21.4 per Offer Share and is expected to be not
less than HK$20.0 per Offer Share, unless otherwise announced by our Company no later than
the morning of the last day for lodging applications under the Hong Kong Public Offering,
which is Friday, July 4, 2025, as further explained below. 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.
If, for any reason, our Company and the Sole Overall Coordinator (for itself and on behalf
of the Underwriters) are unable to reach agreement on the Offer Price on or before 12:00 noon
on Monday, July 7, 2025, the Global Offering will not proceed and will lapse.
Reduction in Indicative Offer Price Range and/or Number of Offer Shares
The Sole Overall Coordinator (for itself and on behalf of the other Underwriters) may,
where considered appropriate, based on the level of interest expressed by prospective
professional and institutional investors during the book-building process, and with the consent
of our Company, reduce the number of Offer Shares and/or the indicative Offer Price range as
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 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,
cause to be announced on the website of our Company at www.chinadzyl.com and the website
of the Stock Exchange at www.hkexnews.hk , notices of the reduction, and the cancellation of
the Global Offering and relaunch of the offer at the revised number of Offer Shares and/or the
revised Offer Price.
As soon as practicable after such reduction of the number of Offer Shares and/or the Offer
Price, we will also issue a supplemental prospectus or a new prospectus updating investors of
the change in the number of Offer Shares being offered under the Global Offering and/or the
Offer Price, and giving investors at least three business days to consider the new information.
The supplemental or new prospectus should include at least the following: updated (i) Offer
STRUCTURE OF THE GLOBAL OFFERING
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--- page 416 ---
Price and market capitalization; (ii) listing timetable and underwriting obligations; (iii)
price/earning multiple, unaudited pro forma and adjusted net tangible assets; and (iv) use of
proceeds and working capital adequacy confirmation based on the revised proceeds.
Before submitting applications for the Hong Kong Offer Shares, applicants should have
regard to the possibility that any announcement of a reduction in the number of Offer Shares
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, which is Friday, July 4, 2025. In
the absence of any such supplemental or new prospectus so published, the number of Offer
Shares will not be reduced and/or the Offer Price, if agreed upon by the Sole Overall
Coordinator (for itself and on behalf of the Underwriters) and our Company, will under no
circumstances be set outside the Offer Price range as stated in this prospectus.
If there is any change to the offer size due to change in the number of Offer Shares offered
in the Global Offering (other than pursuant to the reallocation mechanism as disclosed in this
prospectus), or change to the Offer Price which leads to the resulting price falling outside the
indicative Offer Price range as stated in this prospectus, or if the Company becomes aware that
there has been a significant change affecting any matter contained in this prospectus or a
significant new matter has arisen, the inclusion of information in respect of which would have
been required to be in this prospectus if it had arisen before this prospectus was issued, after
the issue of this prospectus and before the commencement of dealings in our Offer Shares as
prescribed under Rule 11.13 of the Listing Rules, our Company is required to cancel the Global
Offering and issue a supplemental prospectus or a new prospectus and subsequently relaunched
on FINI pursuant to the supplemental prospectus.
In the event of a reduction in the number of Offer Shares, the Sole Overall Coordinator
(for itself and on behalf of the Underwriters) may, at its discretion, reallocate the number of
Offer Shares to be offered in 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 available under the Global Offering.
The Offer Shares to be offered in the Hong Kong Public Offering and the Offer Shares to be
offered in the International Offering may, in certain circumstances, be reallocated between
these offerings at the discretion of the Sole Overall Coordinator (for itself and on behalf of the
Underwriters).
Announcement of Offer Price and Basis of Allocations
The final Offer Price, the results of indications of interest in the International Offering,
the results of applications in the Hong Kong Public Offering, the basis of allocations of the
Hong Kong Offer Shares and the results of allocations are expected to be announced on
Tuesday, July 8, 2025 on the website of our Company at www.chinadzyl.com and the website
of the Stock Exchange at www.hkexnews.hk .
STRUCTURE OF THE GLOBAL OFFERING
– 406 –


--- page 417 ---
UNDERWRITING
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters
under the terms of the Hong Kong Underwriting Agreement and is subject to our Company and
the Sole Overall Coordinator (for itself and on behalf of the Underwriters) agreeing on the
Offer Price.
We expect to enter into the International Underwriting Agreement relating to the
International Offering on or around the Price Determination Date.
These underwriting arrangements under the Hong Kong Underwriting Agreement and the
International Underwriting Agreement are summarized in “Underwriting” in this prospectus.
CONDITIONS OF THE GLOBAL OFFERING
Acceptances of all applications for Offer Shares pursuant to the Global Offering will be
conditional on, among others:
(a) the Stock Exchange granting approval for the listing of, and permission to deal in,
the H Shares in issue and the H Shares to be issued pursuant to the (i) Global
Offering, and (ii) the exercise of the Over-allotment Option, and such approval not
subsequently having been revoked prior to the commencement of dealings in the
Shares on the Stock Exchange;
(b) the Offer Price having been duly agreed between our Company and the Sole Overall
Coordinator (for itself and on behalf of the Underwriters) 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 the respective Underwriting Agreements
becoming and remaining unconditional and not having been terminated in
accordance with the terms of the respective agreements,
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 date which is 30 days after the date of
this prospectus.
If, for any reason, the Offer Price is not agreed between our Company and the Sole
Overall Coordinator (for itself and on behalf of the Underwriters) by 12:00 noon on Monday,
July 7, 2025, the Global Offering will not proceed and will lapse immediately.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 418 ---
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 their respective terms.
If the above conditions are not fulfilled 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 website
of the Stock Exchange at www.hkexnews.hk and the website of our Company at
www.chinadzyl.com on the next Business Day following such lapse. In such eventuality, all
application monies will be returned, without interest, on the terms set out in “How to Apply
for Hong Kong Offer Shares — D. Dispatch/Collection of Share Certificates and Refund of
Application Monies.” In the meantime, all application monies will be held in separate bank
account(s) with the receiving bankers or other bank(s) in Hong Kong licensed under the
Banking Ordinance (Chapter 155 of the Laws of Hong Kong) (as amended).
Share certificates will only become valid evidence of title at 8:00 a.m. on the Listing Date
provided that (i) the Global Offering has become unconditional in all respects, and (ii) the right
of termination as described in “Underwriting — Underwriting Arrangements and Expenses —
Hong Kong Public Offering — Grounds for Termination” has not been exercised.
APPLICATION FOR LISTING ON THE STOCK EXCHANGE
We have applied to the Stock Exchange for the listing of, and permission to deal in, the
H Shares in issue and to be issued by us pursuant to the Global Offering (including the H
Shares which may be allotted and issued pursuant to the exercise of the Over-allotment
Option).
No part of our Company’s share or loan capital is listed on or dealt in on any other stock
exchange and no such listing or permission to deal is being or proposed to be sought in the near
future.
SHARES WILL BE ELIGIBLE FOR CCASS
Subject to the granting of the listing of, and permission to deal in, the H Shares on the
Stock Exchange and 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 HKSCC chooses. Settlement of transactions between participants
of the Stock Exchange (as defined in the Listing Rules) 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.
Investors should seek the advice of their stockbroker or other professional advisors for details
of the settlement arrangements as such arrangements may affect their rights and interests.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 419 ---
All necessary arrangements have been made enabling our H Shares to be admitted into
CCASS.
DEALING ARRANGEMENTS
Assuming that the Hong Kong Public Offering becomes unconditional at or before 8:00
a.m. in Hong Kong on Wednesday, July 9, 2025, it is expected that dealings in the H Shares
on the Stock Exchange will commence at 9:00 a.m. on Wednesday, July 9, 2025. The H Shares
will be traded in board lots of 100 H Shares. The stock code of the H Shares will be 2651.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 420 ---
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 Offering 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 www.chinadzyl.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
Y ou 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).
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 its close associates; or
 are a Director or any of his/her close associates.
2. Application Channels
The Hong Kong Public Offering period will begin at 9:00 a.m. on Monday, June 30,
2025 and end at 12:00 noon on Friday, July 4, 2025 (Hong Kong time).
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 421 ---
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 service /H1118/H1118/H1118/H1118
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
Monday, June 30, 2025 to
11:30 a.m. on
Friday, July 4, 2025,
Hong Kong time.
The latest time for
completing full payment
of application monies will
be 12:00 noon on Friday,
July 4, 2025, Hong Kong
time.
HKSCC EIPO
channel /H1118/H1118/H1118/H1118/H1118/H1118/H1118
Y our 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.
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 authorized to give those instructions as an agent.
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 1 1–


--- page 422 ---
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
authorized 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 authorized 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 Offering.
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.
3. Information Required to Apply
Y ou must provide the following information with your application:
For Individual Applicants For Corporate Applicants
 Full name(s) 2 as shown on your
identity document
 Full name(s) 2 as shown on your
identity document
 Identity document’s issuing country
or jurisdiction
 Identity document’s issuing country
or jurisdiction
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 423 ---
For Individual Applicants For Corporate Applicants
 Identity document type, with order
of priority:
i. HKID card; or
ii. National identification document;
or
iii. Passport; and
 Identity document type, with order
of priority:
i. LEI registration document; or
ii. Certificate of incorporation; or
iii. Business registration certificate;
or
iv. Other equivalent document; and
 Identity document number  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. Y ou 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.
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 four
(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.
(1) Subject to change, if the 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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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 the company;
 control more than half of the voting power of the company; or
 hold more than half of the issued share capital of the 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 Sole Overall Coordinator, 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.
4. Permitted Number of Hong Kong Offer Shares for Application
Board lot size /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118: 100 H Shares
Permitted number of Hong Kong Offer
Shares for application and amount
payable on application/successful
allotment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
: 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$21.4 per
H Share.
If you are applying through the HKSCC
EIPO channel, you are required to pre-fund
your application based on the amount
specified by your broker or custodian, as
determined based on the applicable laws
and regulations in Hong Kong.
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By instructing your broker or custodian to
apply for the Hong Kong Offer Shares on
your behalf through the HKSCC EIPO
Channel, you (and, if you are joint
applicants, each of you jointly and
severally) are deemed to have instructed
and authorized HKSCC to cause HKSCC
Nominees (acting as nominee for the
relevant HKSCC Participants) to arrange
payment of the final Offer Price, brokerage,
SFC transaction levy, the Stock Exchange
trading fee and the AFRC transaction levy
by debiting the relevant nominee bank
account at the designated bank for your
broker or custodian.
If you are applying through the HK eIPO
White Form service, you may refer to the
table below for the amount payable for the
number of Shares you have selected. Y ou
must pay the respective maximum amount
payable on application in full upon
application for Hong Kong Offer Shares.
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
100 2,161.58 2,000 43,231.64 10,000 216,158.19 200,000 4,323,163.80
200 4,323.17 2,500 54,039.54 20,000 432,316.38 250,000 5,403,954.76
300 6,484.74 3,000 64,847.46 30,000 648,474.56 300,000 6,484,745.70
400 8,646.32 3,500 75,655.36 40,000 864,632.75 350,000 7,565,536.66
500 10,807.91 4,000 86,463.28 50,000 1,080,790.96 400,000 8,646,327.60
600 12,969.50 4,500 97,271.18 60,000 1,296,949.15 450,000 9,727,118.56
700 15,131.07 5,000 108,079.10 70,000 1,513,107.34 500,000 10,807,909.50
800 17,292.66 6,000 129,694.91 80,000 1,729,265.52 543,100
(1) 11,739,551.29
900 19,454.24 7,000 151,310.72 90,000 1,945,423.71
1,000 21,615.82 8,000 172,926.55 100,000 2,161,581.90
1,500 32,423.73 9,000 194,542.37 150,000 3,242,372.86
HOW TO APPLY FOR HONG KONG OFFER SHARES
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Notes:
(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
Y ou 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. Application 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
further for any Offer Shares.
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 authorize us and/or the
Sole Overall Coordinator, as our agent, 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;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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(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;
(vi) agree that our Company, the Sole Sponsor, the Sole Overall Coordinator, the Sole
Global Coordinator, the Sole Bookrunner, the Joint Lead Managers, the
Underwriters, the Capital Market Intermediaries, and any of their or our Company’s
respective directors, officers, employees, partners, agents, advisors, and
representatives, and any other parties involved in the Global Offering (collectively,
the “ Relevant Persons ”), 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;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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(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 ”i n
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;
(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 our 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 our subsidiaries or any of their respective
close associates in relation to the acquisition, disposal, voting or other disposition
of the H 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 Sole Overall Coordinator 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
HOW TO APPLY FOR HONG KONG OFFER SHARES
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(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.
B. PUBLICATION OF RESULTS
Results of Allocation
Y ou 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 /H1118/H1118/H1118From the “Allotment Results” page at
www.hkeipo.hk/IPOResult (or
www.tricor.com.hk/ipo/result ) with a “search by ID
Number” function.
24 hours, from 11:00 p.m. on
Tuesday, July 8, 2025 to
12:00 midnight on Monday,
July 14, 2025 (Hong Kong
time).
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 .
The Stock Exchange’s website at
www.hkexnews.hk and our website at
www.chinadzyl.com which will provide links to the
above mentioned websites of the H Share Registrar.
No later than 11:00 p.m. on
Tuesday, July 8, 2025 (Hong
Kong time).
Telephone /H1118+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,
July 9, 2025 to Monday, July
14, 2025 (Hong Kong time)
on a business day.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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For those applying through HKSCC EIPO channel, you may also check with your broker
or custodian from 6:00 p.m. on Monday, July 7, 2025 (Hong Kong time), HKSCC Participants
can log into FINI and review the allotment result from 6:00 p.m. on Monday, July 7, 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 International Offering, the level of applications in the Hong Kong Public
Offering and the basis of allocations of Hong Kong Offer Shares on the Stock Exchange’s
website at www.hkexnews.hk and our website at www.chinadzyl.com by no later than 11:00
p.m. on Tuesday, July 8, 2025 (Hong Kong time).
C. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED HONG KONG
OFFER SHARES
Y ou 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:
Y our 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 Sole Overall Coordinator, 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 H 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. Y ou may refer to
the paragraph headed “ — A. Application 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 Sole Overall Coordinator 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 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 International Offering. 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.
D. DISPATCH/COLLECTION OF H SHARE CERTIFICATES AND REFUND OF
APPLICATION MONIES
Y ou will receive one H Share certificate for all Hong Kong Offer Shares allotted to you
under the Hong Kong Public Offering (except pursuant to applications made through the
HKSCC EIPO channel where the H Share certificates will be deposited into CCASS as
described below).
HOW TO APPLY FOR HONG KONG OFFER SHARES
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No temporary document of title will be issued in respect of the H Shares. No receipt will
be issued for sums paid on application.
H Share certificates will only become valid at 8:00 a.m. on the Listing Date, provided that
the Global Offering has become unconditional and the right of termination described in the
section headed “Underwriting — Underwriting Arrangements and Expenses — Hong Kong
Public Offering — Grounds for Termination” has not been exercised. Investors who trade the
H Shares on the basis of publicly available allocation details prior to the receipt of H Share
certificates or prior to the H Share certificates becoming valid evidence of title 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.
The following sets out the relevant procedures and time:
HK eIPO White Form service HKSCC EIPO channel
Dispatch/collection of H Share certificate 1
For application of 500,000 Hong
Kong Offer Shares or more /H1118/H1118
Collection in person at the 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,
July 9, 2025
(Hong Kong time).
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.
If you are an individual, you must
not authorize any other person
to collect for you. If you are a
corporate applicant, your
authorized representative must
bear a letter of authorization
from your corporation stamped
with your corporation’s chop.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 433 ---
HK eIPO White Form service HKSCC EIPO channel
Both individuals and authorized
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.
For application of less than
500,000 Hong Kong Offer
Shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Y our H Share certificate(s) will
be sent to the address specified
in your application instructions
by ordinary post at your own
risk.
Date: Tuesday, July 8, 2025.
Refund mechanism for surplus application monies paid by you
Date /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Wednesday, July 9, 2025 Subject to the arrangement
between you and your broker or
custodian.
Responsible party /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118H Share Registrar. Y our broker or custodian.
Application monies paid
through single bank account /H1118
HK eIPO White Form e-Auto
Refund payment instructions to
your designated bank account.
Y our 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 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Refund cheque(s) will be
dispatched to the address as
specified in your application
instructions by ordinary post at
your own risk.
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E. BAD WEATHER ARRANGEMENTS
The Opening and Closing of the Application Lists
The application lists will not open or close on Friday, July 4, 2025 if, there is/are:
 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, July 4,
2025.
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 www.chinadzyl.com of the revised timetable.
If a Bad Weather Signal is hoisted on Tuesday, July 8, 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, July 9,
2025.
If a Bad Weather Signal is hoisted on Tuesday, July 8, 2025, for application of less than
500,000 Offer Shares, the despatch of physical H Share certificates 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, July 8, 2025 or on Wednesday, July 9, 2025).
If a Bad Weather Signal is hoisted on Wednesday, July 9, 2025, for application of 500,000
Offer Shares or more, physical H Share certificates will be made 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, July 9, 2025 or on Thursday, July 10, 2025).
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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.
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.
Y ou 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.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 425 –


--- page 436 ---
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 dispatch of H 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.
3. Purposes
Y our 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 our 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
– 426 –


--- page 437 ---
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 advisors, 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 fulfill 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).
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 joint company secretaries,
or the H Share Registrar for the attention of the privacy compliance officer.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 427 –


--- page 438 ---
Tel 曢婘: +852 2846 9888
Fax ₚ䜆: +852 2868 4432
ey.com
Ernst & Young
27/F , One Taikoo Place
979 King’s Road
Quarry Bay, Hon
g Kong
⭰㰟㛪姯⸒Ṳ⋀㈧
榀㸖毩歁㵳勘䙮怺 979噆
⤑⏋✱ᷧ⺎ 27㧺
ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF WUHAN DAZHONG DENTAL MEDICAL CO., LTD. AND HAITONG
INTERNATIONAL CAPITAL LIMITED
Introduction
We report on the historical financial information of Wuhan Dazhong Dental Medical Co.,
Ltd. (the “Company”) and its subsidiaries (together, the “Group”) set out on pages I-3 to I-70,
which comprises the consolidated statements of profit or loss and other comprehensive income,
statements of changes in equity and statements of cash flows of the Group for each of the years
ended 31 December 2022, 2023 and 2024 (the “Relevant Periods”), and the consolidated
statements of financial position of the Group and the statements of financial position of the
Company as at 31 December 2022, 2023 and 2024 and material accounting policy information
and other explanatory information (together, the “Historical Financial Information”). The
Historical Financial Information set out on pages I-3 to I-70 forms an integral part of this
report, which has been prepared for inclusion in the prospectus of the Company dated 30 June
2025 (the “Prospectus”) in connection with the initial listing of the 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 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 2.1 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 (“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
– I-1 –


--- page 439 ---
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 the Historical Financial Information that gives a true and fair view in accordance
with the basis of preparation set out in note 2.1 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 financial position of the Group and the Company
as at 31 December 2022, 2023 and 2024 and of the financial performance and cash flows of
the Group for each of the Relevant Periods in accordance with the basis of preparation set out
in note 2.1 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 II 11 to the Historical Financial Information which contains information
about the dividends paid by the Company in respect of the Relevant Periods.
Ernst & Y oung
Certified Public Accountants
Hong Kong
30 June 2025
APPENDIX I ACCOUNTANTS’ REPORT
– I-2 –


--- page 440 ---
I HISTORICAL FINANCIAL INFORMATION
Preparation of Historical Financial Information
Set out below is the Historical Financial Information which forms an integral part of this
accountants’ report.
The financial statements of the Group for the Relevant Periods, on which the Historical
Financial Information is based, were audited by Ernst & Y oung in accordance with Hong Kong
Standards on Auditing issued by the HKICPA (the “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
– I-3 –


--- page 441 ---
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 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 409,444 441,841 407,083
Cost of sales /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(260,970) (273,615) (254,743)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118148,474 168,226 152,340
Other income and gains /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 7,541 4,464 5,414
Selling and distribution expenses /H1118/H1118/H1118/H1118/H1118 (41,709) (44,687) (40,473)
Administrative expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(33,992) (32,549) (34,875)
Research and development expenses /H1118/H1118 (6,618) (6,823) (6,669)
Other expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,175) (1,885) (1,307)
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187 (6,679) (5,507) (5,329)
Fair value (losses)/gains on
redeemable preference shares /H1118/H1118/H1118/H1118/H1118/H111826 (1,336) (2,331) 1,716
PROFIT BEFORE TAX /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111863,506 78,908 70,817
Income tax expense /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810 (7,056) (11,870) (8,317)
PROFIT FOR THE YEAR /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111856,450 67,038 62,500
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR /H1118/H1118/H1118/H1118/H1118/H111856,450 67,038 62,500
Attributable to:
Owners of the parent /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111843,342 50,069 41,916
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,108 16,969 20,584
EARNINGS PER SHARE
ATTRIBUTABLE TO ORDINARY
EQUITY HOLDERS OF THE
PARENT
Basic and diluted (RMB) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812 0.92 1.07 0.94
APPENDIX I ACCOUNTANTS’ REPORT
– I-4 –


--- page 442 ---
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at 31 December
Notes 2022 2023 2024
RMB’000 RMB’000 RMB’000
NON-CURRENT ASSETS
Property, plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H111813 76,580 74,256 76,512
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814 110,024 99,216 108,438
Goodwill /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815 63,090 63,090 63,090
Other intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816 2,328 2,020 1,749
Prepayments, other receivables and
other assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817 4,878 3,909 4,674
Deferred tax assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818 786 594 1,885
Total non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118257,686 243,085 256,348
CURRENT ASSETS
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820 6,127 5,709 3,655
Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821 3,751 6,548 5,836
Prepayments, other receivables and
other assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817 12,867 8,586 17,107
Contingent consideration /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819 9 7 6––
Financial assets at FVTPL /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822 1 1 7––
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823 177,970 227,083 95,046
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118201,808 247,926 121,644
CURRENT LIABILITIES
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 18,014 17,298 14,678
Other payables and accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825 24,489 29,086 50,756
Redeemable preference shares /H1118/H1118/H1118/H1118/H1118/H1118/H111826 – 112,781 –
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827 49,510 52,897 33,612
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814 34,434 32,488 31,211
Tax payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,198 3,658 4,839
Total current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118127,645 248,208 135,096
NET CURRENT
ASSETS/(LIABILITIES) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111874,163 (282) (13,452)
TOTAL ASSETS LESS CURRENT
LIABILITIES /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118331,849 242,803 242,896
APPENDIX I ACCOUNTANTS’ REPORT
– I-5 –


--- page 443 ---
As at 31 December
Notes 2022 2023 2024
RMB’000 RMB’000 RMB’000
NON-CURRENT LIABILITIES
Redeemable preference shares /H1118/H1118/H1118/H1118/H1118/H1118/H111826 110,450 – –
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827 1,728 2,099 1,732
Deferred tax liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818 421 355 253
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814 77,401 69,197 81,902
Total non-current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118190,000 71,651 83,887
Total liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118317,645 319,859 218,983
Net assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118141,849 171,152 159,009
EQUITY
Equity attributable to owners of the
parent
Share capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828 46,897 46,897 38,517
Treasury shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829 (15,438) (15,438) (15,438)
Reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829 84,653 99,900 92,552
116,112 131,359 115,631
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,737 39,793 43,378
Total equity /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118141,849 171,152 159,009
APPENDIX I ACCOUNTANTS’ REPORT
– I-6 –


--- page 444 ---
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Y ear ended 31 December 2022
Attributable to owners of the parent
Non-
controlling
interests Total
Share
capital
Treasury
shares
Capital
reserve*
Surplus
reserve*
Share-
based
payment
reserve*
Other
reserve*
Retained
profits* Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(note II 28) (note II 29) (note II 29)
As at 1 January 2022 /H1118/H1118/H111846,897 (15,438) 135,270 9,798 6,674 (96,434) 23,089 109,856 22,002 131,858
Total comprehensive income
for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––– 43,342 43,342 13,108 56,450
Transfer to surplus reserve /H1118 – – – 2,314 – – (2,314) – – –
Acquisition of
non-controlling interests^ /H1118 –– 3 1 6–––– 3 1 6 (3,923) (3,607)
Dividends paid to
non-controlling
shareholders /H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––––– (7,028) (7,028)
Final 2021 dividend declared
(note II 11) /H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––– (39,000) (39,000) – (39,000)
Capital injection from
non-controlling
shareholders /H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––––– 2,103 2,103
Share-based payments /H1118/H1118/H1118 – – 73 – 1,525 – – 1,598 – 1,598
Disposal of subsidiaries
(note II 32) /H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––––– (525) (525)
As at 31 December 2022 /H1118/H1118 46,897 (15,438) 135,659 12,112 8,199 (96,434) 25,117 116,112 25,737 141,849
APPENDIX I ACCOUNTANTS’ REPORT
– I-7 –


--- page 445 ---
Y ear ended 31 December 2023
Attributable to owners of the parent
Non-
controlling
interests Total
Share
capital
Treasury
shares
Capital
reserve*
Surplus
reserve*
Share-
based
payment
reserve*
Other
reserve*
Retained
profits* Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(note II 28) (note II 29) (note II 29)
As at 1 January 2023 /H1118/H1118/H111846,897 (15,438) 135,659 12,112 8,199 (96,434) 25,117 116,112 25,737 141,849
Total comprehensive income
for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––– 50,069 50,069 16,969 67,038
Transfer to surplus reserve /H1118 – – – 3,650 – – (3,650) – – –
Acquisition of subsidiaries
(note II 31) /H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––––– 2,327 2,327
Dividends paid to
non-controlling
shareholders /H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––––– (9,638) (9,638)
Final 2022 dividend declared
(note II 11) /H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––– (36,600) (36,600) – (36,600)
Share-based payments /H1118/H1118/H1118 –––– 1,053 – – 1,053 – 1,053
Capital injection from
non-controlling
shareholders /H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––––– 3,559 3,559
Partial disposal of interests
in subsidiaries without
loss of control
# /H1118/H1118/H1118/H1118/H1118–– 7 2 5–––– 7 2 5 8 3 9 1,564
As at 31 December 2023 /H1118/H1118 46,897 (15,438) 136,384 15,762 9,252 (96,434) 34,936 131,359 39,793 171,152
APPENDIX I ACCOUNTANTS’ REPORT
– I-8 –


--- page 446 ---
Y ear ended 31 December 2024
Attributable to owners of the parent
Non-
controlling
interests Total
Share
capital
Treasury
shares
Capital
reserve*
Surplus
reserve*
Share-
based
payment
reserve*
Other
reserve*
Retained
profits* Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(note II 28) (note II 29) (note II 29)
As at 1 January 2024 /H1118/H1118/H111846,897 (15,438) 136,384 15,762 9,252 (96,434) 34,936 131,359 39,793 171,152
Total comprehensive income
for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––– 41,916 41,916 20,584 62,500
Transfer from retained
profits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 3,497 – – (3,497) – – –
Acquisition of
non-controlling interests^ /H1118 – – (239) –––– (239) (1,083) (1,322)
Dividends paid to
non-controlling
shareholders /H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––––– (18,315) (18,315)
Final 2023 dividend declared
(note II 11) /H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––– (50,000) (50,000) – (50,000)
Share-based payments /H1118/H1118/H1118 – – 1,353 – 1,002 – – 2,355 – 2,355
Capital injection from
non-controlling
shareholders /H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––––– 1,716 1,716
Partial disposal of interests
in subsidiaries without
loss of control
# /H1118/H1118/H1118/H1118/H1118– – 1,010 –––– 1,010 683 1,693
Repurchase of redeemable
preferred shares
(note II 26) /H1118/H1118/H1118/H1118/H1118/H1118/H1118(7,690) – (89,710) – – 97,400 – – – –
Capital deduction
(note II 28) /H1118/H1118/H1118/H1118/H1118/H1118/H1118(690) – (10,080) –––– (10,770) – (10,770)
As at 31 December 2024 /H1118/H1118 38,517 (15,438) 38,718 19,259 10,254 966 23,355 115,631 43,378 159,009
^ In 2022, the Group acquire 38.5% interest in Xiangyang Dazhong Dental Medical Co., Ltd. and 49% interest
in Jingzhou Dazhong Dental Daqiao Out-patient Department Co., Ltd. from certain third parties. In 2024, the
Group acquire 49% interests in Wuhan Dazhong Hesheng Jinyinhu Dental Out-patient Department Co., Ltd.
from a third party.
# In 2023, the Group partially disposed of 49% of its interests in Xiangyang Xiangcheng District Public Oral
Clinic Co., Ltd., 33% of its interests in Shaoyang Shuangqing Dazhong Furong Dental Clinic Co., Ltd., and
33% of its interests in Shaoyang Dazhong Furong Beita Dental Clinic Co., Ltd. to certain third parties. In 2024,
the Group partially disposed of 49% of its interests in Wuhan Dazhong Baishazhou Dental Clinic Co., Ltd.,
44% of its interests in Xiangyang Fancheng District Dazhong Dental Out-patient Department Co., Ltd., and
44% of its interests in Xiangyang Dazhong Kaidi Dental Out-patient Service Co., Ltd. to certain third parties.
* These reserve accounts comprised the consolidated reserves of RMB84,653,000, RMB99,900,000, and
RMB92,552,000 in the consolidated statements of financial position as at 31 December 2022, 2023 and 2024,
respectively.
APPENDIX I ACCOUNTANTS’ REPORT
– I-9 –


--- page 447 ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
Y ear ended 31 December
Notes 2022 2023 2024
RMB’000 RMB’000 RMB’000
CASH FLOWS FROM OPERATING
ACTIVITIES
Profit before tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111863,506 78,908 70,817
Adjustments for:
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187 6,679 5,507 5,329
Loss on disposal of items of
property, plant and equipment /H1118/H1118/H1118/H11186 217 522 512
Gain arising from lease
modification /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 (714) (386) (1,120)
Gain on disposal of subsidiaries /H1118/H1118/H1118/H11185 (1,612) – –
Depreciation of property, plant and
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186 24,048 23,098 21,059
Amortisation of other intangible
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186 267 308 298
Depreciation of right-of-use assets /H1118/H11186 38,971 37,519 35,262
Provision for impairment of trade
receivables and other receivables 54 178 124
Covid-19-related rent concessions
from lessors /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814(b) (3,404) – –
Fair value losses/(gains) on
redeemable preference shares /H1118/H1118/H1118/H1118 1,336 2,331 (1,716)
Investment income from wealth
management products /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 (2,425) (2,693) (1,527)
Share-based payments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186 1,598 1,053 2,355
Fair value loss on equity investment
at FVTPL /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 –1 1 7 –
Fair value adjustment in contingent
consideration /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 (47) (24) –
128,474 146,438 131,393
APPENDIX I ACCOUNTANTS’ REPORT
– I-10 –


--- page 448 ---
Y ear ended 31 December
Notes 2022 2023 2024
RMB’000 RMB’000 RMB’000
Decrease in inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,428 816 2,054
Decrease/(increase) in trade
receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,633 (2,965) 753
(Increase)/decrease in prepayments,
other receivables and other assets /H1118/H1118 (5,756) 5,373 338
Decrease in trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(672) (716) (2,620)
(Decrease)/increase in contract
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,403) 3,758 (19,652)
Increase/(decrease) in other payables
and accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,509 5,579 (3,101)
Cash generated from operations /H1118/H1118/H1118/H1118/H1118/H1118127,213 158,283 109,165
Income tax paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(7,287) (9,284) (8,529)
Net cash flows from operating
activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118119,926 148,999 100,636
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchases of items of property, plant
and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(13,957) (18,521) (23,420)
Proceeds from disposal of property,
plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,986 576 1,673
Purchases of wealth management
products /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(264,000) (375,000) (135,000)
Proceeds from disposal of wealth
management products /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118299,152 377,693 136,527
Addition to other intangible assets /H1118/H1118/H1118/H1118 (887) – (27)
Disposal of subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,874 600 –
Acquisition of subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,629) (2,137) (821)
Contingent consideration received /H1118/H1118/H1118/H1118 – – 1,000
Net cash flows from/(used in)
investing activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,539 (16,789) (20,068)
APPENDIX I ACCOUNTANTS’ REPORT
– I-11 –


--- page 449 ---
Y ear ended 31 December
Notes 2022 2023 2024
RMB’000 RMB’000 RMB’000
CASH FLOWS FROM FINANCING
ACTIVITIES
Dividends paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(39,000) (36,600) (30,603)
Repayment of bank borrowings /H1118/H1118/H1118/H1118/H1118/H1118(10,015) – –
Dividends paid to non-controlling
shareholders /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(7,028) (9,638) (17,738)
Capital injection from non-controlling
shareholders /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,103 3,559 1,716
Acquisition of non-controlling
interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,607) – (1,322)
Principal portion of lease payments /H1118/H1118/H1118 (34,180) (36,475) (31,936)
Interest paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6,679) (5,507) (5,329)
Partial disposal of interests in the
subsidiaries without loss of control /H1118 – 1,564 2,122
Payment of listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (7,680)
Repurchase of redeemable preferred
shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (111,065)
Capital deduction /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (10,770)
Net cash flows used in financing
activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(98,406) (83,097) (212,605)
NET INCREASE/(DECREASE) IN
CASH AND CASH
EQUIV ALENTS /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111843,059 49,113 (132,037)
Cash and cash equivalents at
beginning of year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118134,911 177,970 227,083
CASH AND CASH EQUIV ALENTS
AT END OF YEAR /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118177,970 227,083 95,046
ANALYSIS OF BALANCES OF
CASH AND CASH
EQUIV ALENTS
Cash and bank balances /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823 177,970 227,083 95,046
Cash and cash equivalents as stated in
the statements of cash flows /H1118/H1118/H1118/H1118/H1118/H1118177,970 227,083 95,046
APPENDIX I ACCOUNTANTS’ REPORT
– I-12 –


--- page 450 ---
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 /H1118/H1118/H1118/H1118/H1118/H1118/H111813 37,663 32,673 42,009
Investment properties /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 3,233 3,129
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814 55,109 38,686 56,368
Goodwill /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,982 2,982 2,982
Other intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,317 2,016 1,738
Investments in subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181 93,400 98,883 101,716
Prepayments, other receivables and
other assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817 2,278 1,990 2,453
Total non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118193,749 180,463 210,395
CURRENT ASSETS
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,376 1,895 1,118
Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,164 2,699 2,679
Prepayments, other receivables and
other assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817 10,045 5,689 18,376
Contingent consideration /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819 9 7 6––
Financial assets at FVTPL /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822 1 1 7––
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823 124,110 160,468 12,645
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118139,788 170,751 34,818
CURRENT LIABILITIES
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 9,579 7,548 5,903
Other payables and accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825 40,184 74,595 75,799
Redeemable preference shares /H1118/H1118/H1118/H1118/H1118/H1118/H111826 – 112,781 –
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827 19,829 18,113 9,308
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814 20,865 16,299 16,322
Tax payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,379 1,360
Total current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111890,457 230,715 108,692
NET CURRENT
ASSETS/(LIABILITIES) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111849,331 (59,964) (73,874)
TOTAL ASSETS LESS CURRENT
LIABILITIES /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118243,080 120,499 136,521
APPENDIX I ACCOUNTANTS’ REPORT
– I-13 –


--- page 451 ---
As at 31 December
Notes 2022 2023 2024
RMB’000 RMB’000 RMB’000
NON-CURRENT LIABILITIES
Redeemable preference shares /H1118/H1118/H1118/H1118/H1118/H1118/H111826 110,450 – –
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827 875 836 667
Deferred tax liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118382 305 76
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814 31,786 20,386 39,530
Total non-current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118143,493 21,527 40,273
Net assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111899,587 98,972 96,248
EQUITY
Share capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828 46,897 46,897 38,517
Reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829 52,690 52,075 57,731
Total equity /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111899,587 98,972 96,248
APPENDIX I ACCOUNTANTS’ REPORT
– I-14 –


--- page 452 ---
II NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1. CORPORATE AND GROUP INFORMATION
Wuhan Dazhong Dental Medical Co., Ltd. (the “Company”) is a limited liability company established in the
People’s Republic of China (“PRC”) on 10 July 2007. The registered office address of the Company is located at
Room 5, 11/F and Rooms 601, 608-612, 6/F, Huayin Building, No. 786 Minzhu Road, Zhongnan Road Sub-District,
Wuchang District, Wuhan, Hubei Province, the PRC. On 24 December 2014, the Company was converted to a joint
stock company with limited liability, and a total of 20,000,000 ordinary shares with a par value of RMB1.00 each
were issued and allotted to the respective shareholders of the Company according to the paid-in capital registered
under the names of these shareholders on 31 December 2014.
During the Relevant Periods, the Company and its subsidiaries (together, the “Group”) were principally
engaged in the dental clinic services.
As at the date of this report, the Company had direct and indirect interests in its subsidiaries, all of which are
limited liability companies. The particulars of the Company’s principal subsidiaries are set out below:
Name* Note
Place and date of
incorporation/
registration and place
of operations
Registered share
capital
Percentage of
equity attributable
to the Company
Principal activitiesDirect Indirect
Wuhan Dazhong
Dental Hospital
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118
(a) PRC/Wuhan,
Hubei Province
22 May 2014
RMB5,000,000 100% – Provision of
dental
healthcare
services
Wuhan Dazhong
Hejian Baibuting
Dental Clinic
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118
(a) PRC/Wuhan,
Hubei Province
12 August
2019
RMB1,500,000 51% – Provision of
dental
healthcare
services
Wuhan Dazhong
Zaoyang Dental
Hospital
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118
(a) PRC/Xiangyang,
Hubei Province
25 March 2019
RMB2,600,000 51% – Provision of
dental
healthcare
services
Jingzhou Dazhong
Dental Medical
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118
(a) PRC/Jingzhou,
Hubei Province
2 January 2020
RMB12,100,000 70% – Investment
holding
Chenzhou Dazhong
Furong Dental
Hospital
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118
(a) PRC/Chenzhou,
Hunan
Province
13 December
2019
RMB2,000,000 51% – Provision of
dental
healthcare
services
Shaoyang Dazhong
Furong Dental
Hospital
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118
(a) PRC/Shaoyang,
Hunan
Province
6 December
2019
RMB2,000,000 51% – Provision of
dental
healthcare
services
* The English names of the companies registered in the PRC represent the best efforts made by
management of the Company to translate the Chinese names of the companies as they do not have
official English names.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 453 ---
Note:
(a) The statutory financial statements of these entities for the year ended 31 December 2022 prepared under
PRC Generally Accepted Accounting Principles (“PRC GAAP”) were audited by Wuhan Hengfa Joint
Certified Public Accountants Firm (General Partnership) (ה(౷ஷΥྫ)),
certified public accountants registered in the PRC. No audited financial statements have been prepared
for these entities for the years ended 31 December 2023 and 2024.
The above table lists the subsidiaries of the Company which, in the opinion of the directors, principally
affected the results for the year or formed a substantial portion of the net assets of the Group. To give details of other
subsidiaries would, in the opinion of the directors, result in particulars of excessive length.
Company
The carrying amounts of the Company’s investments in subsidiaries:
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Investments, at cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111893,400 98,883 101,716
2.1 BASIS OF PREPARATION
The Historical Financial Information has been prepared in accordance with International Financial Reporting
Standards (“IFRS”), which comprise all standards and interpretations approved by the International Accounting
Standards Board (“IASB”). All IFRS effective for the accounting period commencing from 1 January 2024, together
with the relevant transitional provisions, have been early adopted by the Group in the preparation of the Historical
Financial Information consistently throughout the Relevant Periods.
The Historical Financial Information has been prepared under the historical cost convention, except for certain
financial assets at FVTPL, contingent consideration and financial liabilities at FVTPL which have been measured at
fair value. Financial assets at FVTPL are carried in the statement of financial position at fair value with net changes
in fair value recognized in profit or loss. This category includes derivative instruments and equity investments which
we had not irrevocably elected to classify at fair value through other comprehensive income. Dividends on the equity
investments are also recognized as other income in profit or loss when the right of payment has been established. A
derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host
and accounted for as a separate derivative if the economic characteristics and risks are not closely related to the host;
a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and
the hybrid contract is not measured at FVTPL. Embedded derivatives are measured at fair value with changes in fair
value recognized in profit or loss. Reassessment only occurs if there is either a change in the terms of the contract
that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset
out of the FVTPL category. A derivative embedded within a hybrid contract containing a financial asset host is not
accounted for separately. The financial asset host together with the embedded derivative is required to be classified
in its entirety as a financial asset at FVTPL.
As at December 31, 2024, the Group had net current liabilities of RMB13,452,000. Having considered the
unutilised banking facilities of RMB50,000,000 and cash flow projections for the twelve months ending 31 December
2025, the board of directors are satisfied that the Historical Financial Information has been prepared on the
assumption that the Group will continue as a going concern. The board of directors of the Company has given careful
consideration to the future liquidity and performance of the Group and its available sources of finance in assessing
whether the Group will have sufficient financial resources to continue as a going concern.
Basis of consolidation
The Historical Financial Information includes the financial information of the Group for the Relevant Periods.
A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. Control
is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Group the
current ability to direct the relevant activities of the investee).
APPENDIX I ACCOUNTANTS’ REPORT
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Generally, there is a presumption that a majority of voting rights results in control. When the Company has
less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee, including:
(a) the contractual arrangement with the other vote holders of the investee;
(b) rights arising from other contractual arrangements; and
(c) the Group’s voting rights and potential voting rights.
The financial statements of the subsidiaries are prepared for the same Relevant Periods as the Company, using
consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group obtains
control, and continue to be consolidated until the date that such control ceases.
Profit or loss and each component of other comprehensive income are attributed to the owners of the parent
of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit
balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.
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 described above. A change in the ownership interest of a
subsidiary, without a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities,
and any non-controlling interest; and recognises the fair value of any investment retained and any resulting surplus
or deficit in profit or loss. The Group’s share of components previously recognised in other comprehensive income
is reclassified to profit or loss or retained profits, as appropriate, on the same basis as would be required if the Group
had directly disposed of the related assets or liabilities.
2.2 ISSUED BUT NOT YET EFFECTIVE IFRS
The Group has not applied the following revised IFRS, that have been issued but are not yet effective, in this
Historical Financial Information. The Group intends to apply these revised IFRS, if applicable, when they become
effective.
Amendments to IFRS 9 and IFRS 7 Amendments to the Classification and Measurement of
Financial Instruments
2
IFRS 18 Presentation and Disclosure in Financial Statements 3
IFRS 19 Subsidiaries without Public Accountability: Disclosures 3
Amendments to IAS 21 Lack of Exchangeability 1
Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and
its Associate or Joint V enture 4
Annual Improvements to IFRS Accounting
Standards — V olume 11
Amendments to IFRS 1, IFRS 7, IFRS 9, IFRS 10
and IAS 7 2
1 Effective for annual periods beginning on or after 1 January 2025
2 Effective for annual periods beginning on or after 1 January 2026
3 Effective for annual/reporting period beginning on or after 1 January 2027
4 No mandatory effective date yet determined but available for adoption
The Group is in the process of making an assessment of the impact of these new and revised IFRS upon initial
application and has concluded that the adoption of them will not have a material impact on the Group’s financial
position and financial performance.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 455 ---
2.3 MATERIAL ACCOUNTING POLICIES
Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The consideration transferred is
measured at the acquisition date fair value which is the sum of the acquisition date fair values of assets transferred
by the Group, liabilities assumed by the Group to the former owners of the acquiree and the equity interests issued
by the Group in exchange for control of the acquiree. For each business combination, the Group elects whether to
measure the non-controlling interests in the acquiree that are present ownership interests and entitle their holders to
a proportionate share of net assets in the event of liquidation at fair value or at the proportionate share of the
acquiree’s identifiable net assets. All other components of non-controlling interests are measured at fair value.
Acquisition-related costs are expensed as incurred.
The Group determines that it has acquired a business when the acquired set of activities and assets includes
an input and a substantive process that together significantly contribute to the ability to create outputs.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts of the
acquiree.
If the business combination is achieved in stages, the previously held equity interest is remeasured at its
acquisition date fair value and any resulting gain or loss is recognised in profit or loss.
Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition
date. Contingent consideration classified as an asset or liability is measured at fair value with changes in fair value
recognised in profit or loss. Contingent consideration that is classified as equity is not remeasured and subsequent
settlement is accounted for within equity.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the
amount recognised for non-controlling interests and any fair value of the Group’s previously held equity interests in
the acquiree over the identifiable net assets acquired and liabilities assumed. If the sum of this consideration and
other items is lower than the fair value of the net assets acquired, the difference is, after reassessment, recognised
in profit or loss as a gain on bargain purchase.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is
tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying
value may be impaired. The Group performs its annual impairment test of goodwill as at 31 December. For the
purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated
to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from
the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those
units or groups of units.
Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of
cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit
(group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. An impairment
loss recognised for goodwill is not reversed in a subsequent period.
Where goodwill has been allocated to a cash-generating unit (or group of cash-generating units) and part of
the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in
the carrying amount of the operation when determining the gain or loss on the disposal. Goodwill disposed of in these
circumstances is measured based on the relative value of the operation disposed of and the portion of the
cash-generating unit retained.
Fair value measurement
The Group measures its wealth management products, contingent consideration, other equity instrument
investment, contingent consideration and redeemable preference shares at fair value at the end of each reporting
period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value measurement is based on the
presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for
APPENDIX I ACCOUNTANTS’ REPORT
– I-18 –


--- page 456 ---
the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a
liability is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant
to the fair value measurement as a whole:
Level 1 — based on quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 — based on valuation techniques for which the lowest level input that is significant to the fair
value measurement is observable, either directly or indirectly
Level 3 — based on valuation techniques for which the lowest level input that is significant to the fair
value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group
determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on
the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
Impairment of non-financial assets
Where an indication of impairment exists, or when annual impairment testing for an asset is required (other
than inventories, deferred tax assets and financial assets), the asset’s recoverable amount is estimated. An asset’s
recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs of
disposal, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets, in which case the recoverable amount is determined for
the cash-generating unit to which the asset belongs. In testing a cash-generating unit for impairment, a portion of the
carrying amount of a corporate asset (e.g., a headquarters building) is allocated to an individual cash-generating unit
if it can be allocated on a reasonable and consistent basis or, otherwise, to the smallest group of cash-generating units.
An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. 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. An
impairment loss is charged to the profit or loss in the period in which it arises in those expense categories consistent
with the function of the impaired asset.
An assessment is made at the end of each reporting period as to whether there is an indication that previously
recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable
amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there
has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher
than the carrying amount that would have been determined (net of any depreciation/amortisation) had no impairment
loss been recognised for the asset in prior years. A reversal of such an impairment loss is credited to profit or loss
in the period in which it arises.
Related parties
A party is considered to be related to the Group if:
(a) the party is a person or a close member of that person’s family and that person
(i) has control or joint control over the Group;
APPENDIX I ACCOUNTANTS’ REPORT
– I-19 –


--- page 457 ---
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or of a parent of the Group;
or
(b) the party is an entity where any of the following conditions applies:
(i) the entity and the Group are members of the same group;
(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow
subsidiary of the other entity);
(iii) the entity and the Group are joint ventures of the same third party;
(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;
(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or
an entity related to the Group;
(vi) the entity is controlled or jointly controlled by a person identified in (a);
(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity); and
(viii) the entity, or any member of a group of which it is a part, provides key management personnel
services to the Group or to the parent of the Group.
Property, plant and equipment and depreciation
Property, plant and equipment, other than construction in progress, are stated at cost less accumulated
depreciation and any impairment losses. The cost of an item of property, plant and equipment comprises its purchase
price and any directly attributable costs of bringing the asset to its working condition and location for its intended
use.
Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs
and maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where the
recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the
asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at
intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them
accordingly.
Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and
equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as
follows:
Categories Principal annual rates
Buildings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.17%
Medical equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819%
Furniture and fixtures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819% to 31.67%
Motor vehicles /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819%
Leasehold improvements /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118The shorter of the useful life
and the lease term
Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is
allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives
and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end.
An item of property, plant and equipment including any significant part initially recognised is derecognised
upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal
or retirement recognised in profit or loss in the year the asset is derecognised is the difference between the net sales
proceeds and the carrying amount of the relevant asset.
APPENDIX I ACCOUNTANTS’ REPORT
– I-20 –


--- page 458 ---
Construction in progress is stated at cost less any impairment losses, and is not depreciated. It is reclassified
to the appropriate category of property, plant and equipment when completed and ready for use.
Investment properties
Investment properties are interests in land and buildings (including right-of-use assets) held to earn rental
income and/or for capital appreciation. Such properties are measured initially at cost, including transaction costs.
Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and any
impairment losses.
The investment properties are depreciated on a straight-line basis at the rate of 3.17% per annum with the
estimated residual value of 5% of the cost.
Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in
the year of the retirement or disposal.
Intangible assets (other than goodwill)
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets
acquired in a business combination is the fair value at the date of acquisition. The useful lives of intangible assets
are assessed to be either finite or indefinite. Intangible assets with finite lives are subsequently amortised over the
useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be
impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are
reviewed at least at each financial year end.
Intangible assets are stated at cost less any impairment losses and are amortised on the straight-line basis over
their estimated useful lives. The principal estimated useful lives of intangible assets are as follows:
Category Estimated useful lives
Software /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 to 10 years
The estimated useful life of the Group’s software is based on the purchase contract or the useful life of similar
software in the market.
Research and development costs
All research costs are charged to profit or loss as incurred.
Expenditure incurred on projects to develop new products is capitalised and deferred only when the Group can
demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its
intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the
availability of resources to complete the project and the ability to measure reliably the expenditure during the
development. Product development expenditure which does not meet these criteria is expensed when incurred.
Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. 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.
Group as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term leases
and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.
APPENDIX I ACCOUNTANTS’ REPORT
– I-21 –


--- page 459 ---
(a) Right-of-use assets
Right-of-use assets are recognised at the commencement date of the lease (that is the date the underlying asset
is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and any impairment
losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount
of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement
date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter
of the lease terms and the estimated useful lives of the assets as follows:
Categories Estimated useful lives
Clinic and office premises /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182 to 16.5 years
If ownership of the leased asset transfers to the Group by the end of the lease term or the cost reflects the
exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
(b) Lease liabilities
Lease liabilities are recognised at the commencement date of the lease at the present value of lease payments
to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments)
less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected
to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option
reasonably certain to be exercised by the Group and payments of penalties for termination of a lease, if the lease term
reflects the Group exercising the option to terminate the lease. The variable lease payments that do not depend on
an index or a rate are recognised as an expense in the period in which the event or condition that triggers the payment
occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease
commencement date because the interest rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for
the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification,
a change in the lease term, a change in lease payments (e.g., a change to future lease payments resulting from a
change in an index or rate) or a change in assessment of an option to purchase the underlying asset.
(c) Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of equipment (that is
those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase
option). It also applies the recognition exemption for leases of low-value assets to leases of office equipment that is
considered to be of low value.
Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a
straight-line basis over the lease term.
Group as a lessor
When the Group acts as a lessor, it classifies at lease inception (or when there is a lease modification) each
of its leases as either an operating lease or a finance lease.
Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of
an asset are classified as operating leases. When a contract contains lease and non-lease components, the Group
allocates the consideration in the contract to each component on a relative stand-alone selling price basis. Rental
income is accounted for on a straight-line basis over the lease terms and is included in revenue in profit or loss due
to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the
carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.
APPENDIX I ACCOUNTANTS’ REPORT
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Investments and other financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost and FVTPL.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash
flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that
do not contain a significant financing component or for which the Group has applied the practical expedient of not
adjusting the effect of a significant financing component, the Group initially measures a financial asset at its fair
value plus in the case of a financial asset not at FVTPL, transaction costs. Trade receivables that do not contain a
significant financing component or for which the Group has applied the practical expedient are measured at the
transaction price determined under IFRS 15 in accordance with the policies set out for “Revenue recognition” below.
In order for a financial asset to be classified and measured at amortised cost or fair value through other
comprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest (“SPPI”)
on the principal amount outstanding. Financial assets with cash flows that are not SPPI are classified and measured
at FVTPL, irrespective of the business model.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order
to generate cash flows. The business model determines whether cash flows will result from collecting contractual
cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held
within a business model with the objective to hold financial assets in order to collect contractual cash flows, while
financial assets classified and measured at fair value through other comprehensive income are held within a business
model with the objective of both holding to collect contractual cash flows and selling. Financial assets which are not
held within the aforementioned business models are classified and measured at FVTPL.
Purchases or sales of financial assets that require delivery of assets within the period generally established by
regulation or convention in the marketplace are recognised on the trade date, that is, the date that the Group commits
to purchase or sell the asset.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:
Financial assets at amortised cost (debt instruments)
Financial assets at amortised cost are subsequently measured using the effective interest method and are
subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or
impaired.
Financial assets at FVTPL
Financial assets at FVTPL are carried in the statement of financial position at fair value with net changes in
fair value recognised in profit or loss.
This category includes derivative instruments and equity investments which the Group had not irrevocably
elected to classify at fair value through other comprehensive income. Dividends on the equity investments are also
recognised as other income in profit or loss when the right of payment has been established.
A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from
the host and accounted for as a separate derivative if the economic characteristics and risks are not closely related
to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a
derivative; and the hybrid contract is not measured at FVTPL. Embedded derivatives are measured at fair value with
changes in fair value recognised in profit or loss. Reassessment only occurs if there is either a change in the terms
of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a
financial asset out of the FVTPL category.
A derivative embedded within a hybrid contract containing a financial asset host is not accounted for
separately. The financial asset host together with the embedded derivative is required to be classified in its entirety
as a financial asset at FVTPL.
APPENDIX I ACCOUNTANTS’ REPORT
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Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets)
is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial position) when:
 the rights to receive cash flows from the asset have expired; or
 the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation
to pay the received cash flows in full without material delay to a third party under a “pass-through”
arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset,
or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset,
but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When
it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of
the asset, the Group continues to recognise the transferred asset to the extent of the Group’s continuing involvement.
In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are
measured on a basis that reflects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower
of the original carrying amount of the asset and the maximum amount of consideration that the Group could be
required to repay.
Impairment of financial assets
The Group recognises an allowance for expected credit losses (“ECLs”) for all debt instruments not held at
FVTPL. ECLs are based on the difference between the contractual cash flows due in accordance with the contract
and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective
interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual terms.
General approach
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase
in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are
possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a
significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over
the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
At each reporting date, the Group assesses whether the credit risk on a financial instrument has increased
significantly since initial recognition. When making the assessment, 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 and considers reasonable and supportable information that is available
without undue cost or effort, including historical and forward-looking information. The Group considers that there
has been a significant increase in credit risk when contractual payments are more than 30 days past due.
The Group considers a financial asset in default when contractual payments are 30 to 60 days past due.
However, in certain cases, the Group may also consider a financial asset to be in default when internal or external
information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking
into account any credit enhancements held by the Group.
A financial asset is written off when there is no reasonable expectation of recovering the contractual cash
flows.
APPENDIX I ACCOUNTANTS’ REPORT
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Financial assets at amortised cost are subject to impairment under the general approach and they are classified
within the following stages for measurement of ECLs except for trade receivables which apply the simplified
approach as detailed below:
Stage 1 — Financial instruments for which credit risk has not increased significantly since initial
recognition and for which the loss allowance is measured at an amount equal to 12-month
ECLs
Stage 2 — Financial instruments for which credit risk has increased significantly since initial recognition
but that are not credit-impaired financial assets and for which the loss allowance is measured
at an amount equal to lifetime ECLs
Stage 3 — Financial assets that are credit-impaired at the reporting date (but that are not purchased or
originated credit-impaired) and for which the loss allowance is measured at an amount equal
to lifetime ECLs
Simplified approach
For trade receivables that do not contain a significant financing component or when the Group applies the
practical expedient of not adjusting the effect of a significant financing component, the Group applies the simplified
approach in calculating ECLs. Under the simplified approach, the Group does not track changes in credit risk, but
instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a
provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific
to the debtors and the economic environment.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as redeemable preference shares, loans and
borrowings, payables as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
The Group’s financial liabilities include trade payables, interest-bearing bank borrowings, redeemable
preference shares and financial liabilities included in other payables and accruals.
Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification as follows:
Financial liabilities at FVTPL (“Redeemable preference shares”)
Financial liabilities designated upon initial recognition as at FVTPL are designated at the initial date of
recognition, and only if the criteria in IFRS 9 are satisfied. Gains or losses on liabilities designated at FVTPL are
recognised in profit or loss, except for the gains or losses arising from the Group’s own credit risk which are
presented in other comprehensive income with no subsequent reclassification to profit or loss. The net fair value gain
or loss recognised in profit or loss does not include any interest charged on these financial liabilities.
Financial liabilities at amortised cost (trade and other payables, and borrowings)
After initial recognition, trade and other payables, and interest-bearing borrowings are subsequently measured
at amortised cost, using the effective interest rate method unless the effect of discounting would be immaterial, in
which case they are stated at cost. Gains and losses are recognised in the profit or loss when the liabilities are
derecognised as well as through the effective interest rate amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs
that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance
costs in profit or loss.
APPENDIX I ACCOUNTANTS’ REPORT
– I-25 –


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Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or
expires.
When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as
a derecognition of the original liability and a recognition of a new liability, and the difference between the respective
carrying amounts is recognised in profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial
position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to
settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined on the specific
identification basis and comprises all cost of purchase and other costs incurred in bringing the inventories to their
present location and condition. Net realisable value is based on estimated selling prices less any estimated costs to
be incurred to completion and disposal.
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash on hand and at banks, and
short-term highly liquid deposits with a maturity of generally within three months that are readily convertible into
known amounts of cash, subject to an insignificant risk of changes in value and held for the purpose of meeting
short-term cash commitments.
For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand
and at banks, and short-term deposits as defined above, less bank overdrafts which are repayable on demand and form
an integral part of the Group’s cash management.
Provisions
A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event
and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable
estimate can be made of the amount of the obligation.
When the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract,
the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The
expense relating to a provision is presented in the profit or loss net of any reimbursement.
When the effect of discounting is material, the amount recognised for a provision is the present value at the
end of the Relevant Periods of the future expenditures expected to be required to settle the obligation. The increase
in the discounted present value amount arising from the passage of time is included in finance costs in profit or loss.
Income tax
Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss
is recognised outside profit or loss, either in other comprehensive income or directly in equity.
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the
taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of
the Relevant Periods, taking into consideration interpretations and practices prevailing in the countries in which the
Group operates.
Deferred tax is provided, using the liability method, on all temporary differences at the end of the Relevant
Periods between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 464 ---
Deferred tax liabilities are recognised for all taxable temporary differences, except:
 when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in
a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss and does not give rise to equal taxable and deductible
temporary differences; and;
 in respect of taxable temporary differences associated with investments in subsidiaries when the timing
of the reversal of the temporary differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, and the carryforward of unused tax
credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit
will be available against which the deductible temporary differences, and the carryforward of unused tax credits and
unused tax losses can be utilised, except:
 when the deferred tax asset relating to the deductible temporary differences arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit or loss and does not give rise
to equal taxable and deductible temporary differences; and;
 in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax
assets are only recognised to the extent that it is probable that the temporary differences will reverse in
the foreseeable future and taxable profit will be available against which the temporary differences can
be utilised.
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 profit will be available to allow all or part of the deferred
tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are
recognised to the extent that it has become probable that sufficient taxable profit will be available to allow all or part
of the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted by the end of the Relevant Periods.
Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable right
to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which
intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities
simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected
to be settled or recovered.
Treasury shares
Own equity instruments which are reacquired and held by the Group (treasury shares) are recognised directly
in equity at cost. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the
Group’s own equity instruments.
Government grants
Government grants are recognised at their fair value where there is reasonable assurance that the grant will be
received and all attaching conditions will be complied with. When the grant relates to an expense item, it is
recognised as income on a systematic basis over the periods that the costs, for which it is intended to compensate,
are expensed.
APPENDIX I ACCOUNTANTS’ REPORT
– I-27 –


--- page 465 ---
Revenue recognition
Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of goods or services is transferred to the
customers at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those
goods or services.
When the contract contains a financing component which provides the customer with a significant benefit of
financing the transfer of goods or services to the customer for more than one year, revenue is measured at the present
value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing
transaction between the Group and the customer at contract inception. When the contract contains a financing
component which provides the Group with a significant financial benefit for more than one year, revenue recognised
under the contract includes the interest expense accreted on the contract liability under the effective interest method.
For a contract where the period between the payment by the customer and the transfer of the promised goods or
services is one year or less, the transaction price is not adjusted for the effects of a significant financing component,
using the practical expedient in IFRS 15. For contracts where the period between the payment by the customer and
the transfer of the promised service exceeds one year, the transaction price is adjusted for the effects of a financing
component, if significant.
Revenue from the rendering of dental services is recognised over time because the customers simultaneously
receive and consume the benefits provided by the Group.
(a) Revenue from the rendering of orthodontics and implantology services is recognised over time, using
an input method to measure progress towards complete satisfaction of the services. The input method
recognises revenue on the basis of the staff costs and cost of inventories, consumables and customised
products expended relative to the total expected costs to complete the service.
(b) Revenue from the rendering of general dentistry services is recognised when the services have been
rendered, given that such dental services are generally completed within a very short period of time.
Revenue from sales of goods is recognised when control of the goods has transferred, being when the goods
are delivered to the customers.
Other income
Interest income is recognised on an accrual basis using the effective interest method by applying the rate that
exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter
period, when appropriate, to the net carrying amount of the financial asset.
Rental income is recognised on a time proportion basis over the lease terms. V ariable lease payments that do
not depend on an index or a rate are recognised as income in the accounting period in which they are incurred.
Contract liabilities
A contract liability is the Group’s obligation to transfer goods or services to a customer for which the Group
has received consideration (or an amount of consideration is due) from the customer.
Other employee benefits
Pension scheme
The employees of the Group’s subsidiaries which operate in Chinese Mainland are required to participate in
a central pension scheme operated by the local municipal government. These subsidiaries are required to contribute
a certain percentage of their payroll costs to the central pension scheme. The contributions are charged to statements
of profit or loss as they become payable in accordance with the rules of the central pension scheme.
Housing fund — Chinese Mainland
The Group contributes on a monthly basis to a defined contribution housing fund plan operated by the local
municipal government. Contributions to this plan by the Group are expensed as incurred.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 466 ---
Share-based payments
The Company operates a restricted share scheme. Employees of the Group receive remuneration in the form
of share-based payments, whereby employees render services in exchange for equity instruments (“equity-settled
transactions”). The cost of equity-settled transactions with employees is measured by reference to the fair value at
the date at which they are granted. The fair value is determined by an external valuer using the discounted cash flow
and equity allocation method, further details of which are given in note II 30 to the financial statements.
The cost of equity-settled transactions is recognised in employee benefit expense, together with a
corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled.
The cumulative expense recognised for equity-settled transactions at the end of each reporting period until the vesting
date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity
instruments that will ultimately vest. The charge or credit to profit or loss for a period represents the movement in
the cumulative expense recognised as at the beginning and end of that period.
Service and non-market performance conditions are not taken into account when determining the grant date
fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate
of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the
grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are
considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead
to an immediate expensing of an award unless there are also service and/or performance conditions. For awards that
do not ultimately vest because non-market performance and/or service conditions have not been met, no expense is
recognised. Where awards include a market or non-vesting condition, the transactions are treated as vesting
irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or
service conditions are satisfied. Where the terms of an equity-settled award are modified, as a minimum an expense
is recognised as if the terms had not been modified, if the original terms of the award are met. In addition, an expense
is recognised for any modification that increases the total fair value of the share-based payments, or is otherwise
beneficial to the employee as measured at the date of modification. Where an equity-settled award is cancelled, it is
treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised
immediately.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e.,
assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as
part of the cost of those assets. The capitalisation of such borrowing costs ceases when the assets are substantially
ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings
pending their expenditure on qualifying assets is deducted from the borrowing costs capitalised. All other borrowing
costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that
an entity incurs in connection with the borrowing of funds.
Dividends
Dividends are recognised as a liability when they are approved by the shareholders in a general meeting.
Proposed dividends are disclosed in the notes to the Historical Financial Information.
Interim dividends are simultaneously proposed and declared, because the Company’s memorandum and
articles of association grant the directors the authority to declare interim dividends. Consequently, interim dividends
are recognised immediately as a liability when they are proposed and declared.
3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Group’s Historical Financial Information requires management to make judgements,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and their
accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and
estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or
liabilities affected in the future.
APPENDIX I ACCOUNTANTS’ REPORT
– I-29 –


--- page 467 ---
Judgements
In the process of applying the Group’s accounting policies, management has made the following judgements,
apart from those involving estimations, which have the most significant effect on the amounts recognised in the
financial statements:
Allocation of goodwill to groups of cash-generating units
The Group accounted for these business combinations by applying the acquisition method and recognised
goodwill. The Group has determined that for the purpose of impairment testing of goodwill, goodwill is allocated to
one group of cash-generating units which represents the entire business of the Group that are expected to benefit from
the synergies of the combination with the consideration that it is the lowest level within the Group at which the
goodwill is monitored for internal management purpose.
Revenue from contracts with customers
The Group applied the following judgements that significantly affect the determination of the amount and
timing of revenue from contracts with customers:
The Group concluded that revenue from the rendering of dental services is to be recognised over time because
customers simultaneously receive and consume the benefits provided by the Group.
The Group determined that the input method is the best method in measuring the progress of orthodontics
services and implantology services because there is a direct relationship between the Group’s effort (i.e., staff costs
and cost of inventories, consumables and customised products incurred) and the transfer of services to the customers.
The Group recognises revenue on the basis of incurred cost, including the staff costs and cost of inventories,
consumables and customised products expended relative to the total expected costs to complete the service.
Estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each
reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described below.
Recognition of income taxes and deferred tax assets
Determining income tax provision involves judgment on the future tax treatment of certain transactions and
when certain matters relating to the income taxes have not been confirmed by the local tax bureau. Management
evaluates tax implications of transactions and tax provisions are set up accordingly. The tax treatments of such
transactions are reconsidered periodically to take into account all changes in tax legislation. Deferred tax assets are
recognised in respect of deductible temporary differences and unused tax losses. As those deferred tax assets can only
be recognised to the extent that it is probable that future taxable profits will be available against which the deductible
temporary differences and the losses can be utilised, management’s judgement is required to assess the probability
of future taxable profits. Management’s assessment is revised as necessary and additional deferred tax assets are
recognised if it becomes probable that future taxable profits will allow the deferred tax asset to be recovered. Further
details are included in note II 18 to the Historical Financial Information.
Leases — Estimating the incremental borrowing rate
The Group cannot readily determine the interest rate implicit in a lease, and therefore, it uses an incremental
borrowing rate (“IBR”) to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay
to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value
to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group “would have
to pay”, which requires estimation when no observable rates are available (such as for subsidiaries that do not enter
into financing transactions) or when it needs to be adjusted to reflect the terms and conditions of the lease (for
example, when leases are not in the subsidiary’s functional currency). The Group estimates the IBR using observable
inputs (such as market interest rates) when available and is required to make certain entity-specific estimates (such
as the subsidiary’s stand-alone credit rating).
APPENDIX I ACCOUNTANTS’ REPORT
– I-30 –


--- page 468 ---
Impairment of non-financial assets (other than goodwill)
The Group assesses whether there are any indicators of impairment for all non-financial assets (including the
right-of-use assets) at the end of each reporting period. Other non-financial assets are tested for impairment when
there are indicators that the carrying amounts may not be recoverable. An impairment exists when the carrying value
of an asset or a cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less costs
of disposal and its value in use. The calculation of the fair value less costs of disposal is based on available data from
binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental
costs for disposing of the asset. When value in use calculations are undertaken, management must estimate the
expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to
calculate the present value of those cash flows.
Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation
of the value in use of the cash-generating units to which the goodwill is allocated. Estimating the value in use requires
the Group to make an estimate of the expected future cash flows from the cash-generating units and also to choose
a suitable discount rate in order to calculate the present value of those cash flows. Further details are given in note
II 15 to the Historical Financial Information.
Fair value of redeemable preference shares
The redeemable preference shares issued by the Group are not traded in an active market and the respective
fair values are determined by using the equity allocation method. Key inputs used in valuing the underlying equity
value are set forth in detail in note II 26 to the Historical Financial Information. The carrying amounts of redeemable
preference shares as at 31 December 2022 and 2023 were RMB110,450,000 and RMB112,781,000, respectively.
Fair value measurement of share-based payments
The Group has set up a restricted share scheme to the Group’s employees. Also, restricted shares were granted
to the Company’s directors, the Group’s employees. The fair value of the restricted shares are determined by the
discounted cash flow and equity allocation method at the grant dates, respectively. Significant estimates on
assumptions, including the underlying equity value, discount rate, expected volatility, and dividend yield, are made
by management. Further details are included in note II 30 to the Historical Financial Information.
4. OPERATING SEGMENT INFORMATION
For management purposes, the Group is not organised into business units based on their services and only has
one reportable operating segment. Management monitors the operating results of the Group’s operating segment as
a whole for the purpose of making decisions about resource allocation and performance assessment.
Geographical information
During the Relevant Periods, all of the Group’s revenue was derived from customers located in Chinese
Mainland and all of the Group’s non-current assets were located in Chinese Mainland, and therefore geographical
information is presented in accordance with IFRS 8 Operation Segments .
Information about major customers
No revenue from the Group’s sales to a single customer amounted to 10% or more of the Group’s revenue
during the Relevant Periods.
APPENDIX I ACCOUNTANTS’ REPORT
– I-31 –


--- page 469 ---
5. REVENUE, OTHER INCOME AND GAINS/(LOSSES), NET
An analysis of revenue is as follows:
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Revenue from contracts with customers /H1118/H1118/H1118/H1118/H1118/H1118/H1118409,444 441,841 407,083
Revenue from contracts with customers
(a) Disaggregated revenue information
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Types of goods or services
Orthodontics services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111880,190 81,769 74,115
Implantology services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118116,728 122,984 115,647
General dentistry services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118212,526 237,088 217,321
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118409,444 441,841 407,083
Geographical market
Chinese Mainland /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118409,444 441,841 407,083
Timing of revenue recognition
Services transferred over time /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118409,374 441,757 406,981
Goods transferred at a point in time /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111870 84 102
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118409,444 441,841 407,083
The following table shows the amounts of revenue recognised in the Relevant Periods that were included in
the contract liabilities at the beginning of each of the Relevant Periods:
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Revenue recognised that was included in contract
liabilities at the beginning of the year:
Rendering orthodontics services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815,127 15,549 16,438
Rendering implantology services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830,669 24,867 30,531
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111845,796 40,416 46,969
(b) Performance obligations
Information about the Group’s performance obligations is summarised below:
Orthodontics and implantology services
The performance obligation of orthodontics and implantology services is satisfied over time when the services
are rendered, and advances are normally required before rendering the services. Since the patient simultaneously
receives and consumes the benefits of the Group’s performance in the medical treatment, the relevant revenue of the
orthodontics and implantology services is recognised over the period of the contracts by reference to the progress
towards complete satisfaction of that performance obligation.
APPENDIX I ACCOUNTANTS’ REPORT
– I-32 –


--- page 470 ---
General dentistry services
The performance obligation of general dentistry services is satisfied over time when services are rendered.
Sale of goods
The performance obligation is satisfied upon delivery of the goods and payment.
The amounts of transaction prices allocated to the remaining performance obligations (unsatisfied or partially
unsatisfied) are as follows:
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Amounts expected to be recognised as revenue:
Within one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111849,510 52,897 33,612
After one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,728 2,099 1,732
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851,238 54,996 35,344
The amounts of transaction prices allocated to the remaining performance obligations which are expected to
be recognised as revenue after one year relate to dentistry services, of which the performance obligations are to be
satisfied within two years. All the other amounts of transaction prices allocated to the remaining performance
obligations are expected to be recognised as revenue within one year. The amounts disclosed above do not include
variable consideration which is constrained.
An analysis of other income and gains/(losses), net, is as follows:
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Other income
Bank interest income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118649 868 924
Government grants* /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,503 490 968
Rental income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118504 270 384
Total other income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,656 1,628 2,276
Other gains/(losses)
Investment income from wealth management
products /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,425 2,693 1,527
Fair value loss on an equity investment at
FVTPL /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (117) –
Fair value adjustment on contingent
consideration /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111847 24 –
Impairment of trade receivables and other
receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(54) (178) (124)
Gain arising from lease modification /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118714 386 1,120
Gain on disposal of subsidiaries (note II 32) /H1118/H1118/H1118 1,612 – –
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118141 28 615
Total gains /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,885 2,836 3,138
Total other income and gains /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,541 4,464 5,414
APPENDIX I ACCOUNTANTS’ REPORT
– I-33 –


--- page 471 ---
* Government grants have been received from the PRC local government authorities for the purpose of
encouraging business development of local enterprises. There are no unfulfilled conditions related to
these government grants.
6. PROFIT BEFORE TAX
The Group’s profit before tax is arrived at after charging/(crediting):
Y ear ended 31 December
Notes 2022 2023 2024
RMB’000 RMB’000 RMB’000
Cost of inventories, consumables and
customised products sold /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111871,559 75,238 65,864
Depreciation of property, plant and
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813 24,048 23,098 21,059
Depreciation of
right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814(a) 38,971 37,519 35,262
Amortisation of other intangible assets /H1118/H111816 267 308 298
Lease payments not included in the
measurement of lease liabilities /H1118/H1118/H1118/H1118/H111814(c) 2,026 932 1,508
Auditor’s remuneration /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118200 200 –
Listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 5,207
Employee benefit expense:
– Wages, salaries and allowances /H1118/H1118/H1118/H1118 138,054 150,009 141,418
– Share-based payment expenses * /H1118/H1118/H1118/H111830 1,598 1,053 2,355
– Pension scheme contributions /H1118/H1118/H1118/H1118/H1118 7,408 7,843 8,359
– Other employee benefits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118 8,433 8,368 8,607
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118155,493 167,273 160,739
Fair value losses/(gains) on redeemable
preference shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826 1,336 2,331 (1,716)
Loss on disposal of property, plant and
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118217 522 512
* The Group recognised share-based payment expenses of RMB1,525,000, RMB1,053,000 and
RMB1,002,000 for the year ended 31 December 2022, 2023 and 2024, respectively, and other employee
expenses of RMB73,000, nil and RMB1,353,000 for the year ended 31 December 2022, 2023 and 2024,
respectively.
7. FINANCE COSTS
An analysis of finance costs is as follows:
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Interest on bank loans /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181 2 5––
Interest on lease liabilities (note II 14(c)) /H1118/H1118/H1118/H1118/H11186,554 5,507 5,329
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,679 5,507 5,329
APPENDIX I ACCOUNTANTS’ REPORT
– I-34 –


--- page 472 ---
8. DIRECTORS’, SUPERVISORS’ AND CHIEF EXECUTIVE’S REMUNERATION
The aggregate amounts of remuneration of the directors, supervisors and chief executives for the Relevant
Periods are set out below:
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Wages, salaries and allowances /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,950 3,383 2,429
Share-based payment expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118319 319 141
Pension scheme contributions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834 31 14
Other employee benefits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118108 125 93
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,411 3,858 2,677
(a) Independent non-executive directors
There were no emoluments payable to the independent non-executive directors during the Relevant Periods.
(b) Executive directors, supervisors and the chief executive
Salaries,
bonuses,
allowances and
benefits in kind
Share-based
payment
expenses
Pension scheme
contributions
Other employee
benefits
Total
remuneration
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
2022
Executive directors:
Ms. Shen Hongmin /H1118/H1118/H1118/H1118/H1118822 – – 33 855
Mr. Wang Hong /H1118/H1118/H1118/H1118/H1118/H1118/H1118819 – 11 36 866
Mr. Zhou Xianlue /H1118/H1118/H1118/H1118/H1118/H1118732 186 – – 918
Ms. Y an Junxin /H1118/H1118/H1118/H1118/H1118/H1118/H1118444 36 11 25 516
Chief executive:
Mr. Y ao Xue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––
Supervisors:
Mr. He Xiangdong /H1118/H1118/H1118/H1118/H111818 93 1 2 114
Ms. Y an Ge /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118115 4 11 12 142
Ms. Wang Li /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,950 319 34 108 3,411
Salaries,
bonuses,
allowances and
benefits in kind
Share-based
payment
expenses
Pension scheme
contributions
Other employee
benefits
Total
remuneration
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
2023
Executive directors:
Ms. Shen Hongmin /H1118/H1118/H1118/H1118/H1118841 – – 36 877
Mr. Wang Hong /H1118/H1118/H1118/H1118/H1118/H1118/H1118868 – 5 38 911
Mr. Zhou Xianlue /H1118/H1118/H1118/H1118/H1118/H1118767 186 – – 953
Ms. Y an Junxin /H1118/H1118/H1118/H1118/H1118/H1118/H1118442 36 12 26 516
Chief executive:
Mr. Y ao Xue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––
APPENDIX I ACCOUNTANTS’ REPORT
– I-35 –


--- page 473 ---
Salaries,
bonuses,
allowances and
benefits in kind
Share-based
payment
expenses
Pension scheme
contributions
Other employee
benefits
Total
remuneration
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Supervisors:
Mr. He Xiangdong /H1118/H1118/H1118/H1118/H1118347 93 11 16 467
Ms. Y an Ge /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181 1 8439 1 3 4
Ms. Wang Li /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,383 319 31 125 3,858
Salaries,
bonuses,
allowances and
benefits in kind
Share-based
payment
expenses
Pension scheme
contributions
Other employee
benefits
Total
remuneration
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
2024
Executive directors:
Ms. Shen Hongmin /H1118/H1118/H1118/H1118/H1118575 – – 36 611
Mr. Guo Jiaping /H1118/H1118/H1118/H1118/H1118/H1118/H1118557 77 – – 634
Ms. Liu Hongchan /H1118/H1118/H1118/H1118/H1118335 60 14 28 437
Chief executive:
Mr. Y ao Xue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189 5––– 9 5
Independent Non-
Executive Director: /H1118/H1118/H1118/H1118
Mr. Shu Yijie /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––
Ms. Huang Suzhen /H1118/H1118/H1118/H1118/H1118–––––
Ms. Wang Taosha /H1118/H1118/H1118/H1118/H1118/H1118–––––
Supervisors:
Ms. Huang Meiyun /H1118/H1118/H1118/H1118/H1118333 – – 21 354
Ms. Xu Cen /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184 1 5––– 4 1 5
Ms. Y an Ge /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181 1 94–8 1 3 1
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,429 141 14 93 2,677
9. FIVE HIGHEST PAID EMPLOYEES
The five highest paid employees during the Relevant Periods included three directors, two directors and no
director, details of whose remuneration are set out in note II 8 to the Historical Financial Information. Details of the
remuneration of the remaining highest paid employees who are neither a director nor chief executive of the Company
are as follows:
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Wages, salaries and allowances /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,681 2,649 3,117
Share-based payment expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118102 145 76
Pension scheme contributions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812 24 315
Other employee benefits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830 45 214
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,825 2,863 3,722
APPENDIX I ACCOUNTANTS’ REPORT
– I-36 –


--- page 474 ---
The numbers of non-director and non-chief executive highest paid employees whose remuneration fell within
the following bands are as follows:
Y ear ended 31 December
2022 2023 2024
HK$1 to HK$500,001 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––
HK$500,001 to HK$1,000,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118235
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118235
10. INCOME TAX
The Group is subject to income tax on an entity basis on profits arising in or derived from the jurisdictions
in which members of the Group are domiciled and operate.
Chinese Mainland
Under the Law of PRC on Enterprise Income Tax (the “EIT Law”) and Implementation Regulation of the EIT
Law, the EIT rate of PRC subsidiaries is 25% unless subject to tax exemption set out below.
The Company was accredited as a “High and New Technology Enterprise” in 2020 and the qualification was
subsequently renewed in 2023, and therefore the Company was entitled to a preferential EIT rate of 15% for the
Relevant Periods. “High and New Technology Enterprise” qualifications are subject to review by the relevant tax
authority in the PRC every three years.
Certain of the Group’s PRC subsidiaries are qualified as small and micro enterprises and were entitled to
preferential corporate income tax rates of 2.5% to 10% during the years ended 31 December 2022. In the years ending
31 December 2023 and 2024, the preferential tax rate was 5%, respectively.
The income tax charge of the Group for the Relevant Periods is analysed as follows:
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Current — Chinese Mainland
Charge for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,612 11,769 9,710
Overprovision in prior years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(57) (25) –
Deferred (note II 18) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118501 126 (1,393)
Total tax charge /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,056 11,870 8,317
A reconciliation of the tax charge applicable to profit before tax at the statutory rate for the jurisdiction in
which the Company and the majority of the Group’s subsidiaries are domiciled and/or operate to the tax expense at
the effective tax rate, is as follows:
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Profit before tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111863,506 78,908 70,817
Tax at the statutory tax rate
of 25% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815,877 19,727 17,704
Preferential tax rates enacted by local authority /H1118/H1118/H1118 (6,267) (7,766) (8,118)
Income not subjected to tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,132) – –
Expenses not deductible
for tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,038 1,011 232
Adjustments in respect of current tax of previous
periods /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(57) (25) –
APPENDIX I ACCOUNTANTS’ REPORT
– I-37 –


--- page 475 ---
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Additional deductible allowance for research and
development expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,329) (1,686) (1,648)
Tax losses not recognised /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118926 609 147
Tax charge at the Group’s effective tax rate /H1118/H1118/H1118/H1118/H11187,056 11,870 8,317
11. DIVIDENDS
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Dividends approved by
the Company’s shareholders /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111839,000 36,600 50,000
In June 2022, the Company’s shareholders approved the “2021 Annual Profit Distribution Plan” at the annual
general meeting, pursuant to which non-trade dividend of an aggregate amount of RMB39,000,000 was paid in July
2022 to shareholders of the Company.
In June 2023, the Company’s shareholders approved the “2022 Annual Profit Distribution Plan” at the annual
general meeting, pursuant to which non-trade dividend of an aggregate amount of RMB36,600,000 was paid in July
2023 to shareholders of the Company.
In August 2024, the Company’s shareholders approved the “2023 Annual Profit Distribution Plan” at the
annual general meeting, pursuant to which non-trade dividend of an aggregate amount of RMB50,000,000 was
distributed. As of December 2024, the Company has an unpaid balance of RMB19,397,000.
12. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT
The calculation of the basic earnings per share amount is based on the profit for the year attributable to
ordinary equity holders of the parent, and the weighted average numbers of the shares outstanding during the
Relevant Periods. As the Group had no potentially dilutive ordinary shares outstanding during the Relevant Periods,
no adjustment has been made on the basic earnings per share amounts presented for the Relevant Periods.
The weighted average numbers of shares for the purpose of basic/diluted earnings per share for the Relevant
Periods are based on the weighted average numbers of shares have been issued.
The calculation of basic earnings per share is based on:
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Earnings
Profit attributable to ordinary equity holders of the
parent: /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111843,342 50,069 41,916
Less: profit attributable to treasury shares /H1118/H1118/H1118/H1118/H1118/H1118(5,315) (6,140) (5,382)
Profit attributable to ordinary equity holders of the
parent, used in the basic earnings per share
calculation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838,027 43,929 36,534
Shares
Weighted average number of ordinary shares
outstanding during the year used in the basic
earnings per share calculation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111841,146
# 41,146 # 39,051 #
# The weighted average number of shares was after taking into account the effect of treasury shares held.
APPENDIX I ACCOUNTANTS’ REPORT
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13. PROPERTY, PLANT AND EQUIPMENT
Group Buildings
Medical
equipment
Furniture
and fixtures
Motor
vehicles
Construction
in progress
Leasehold
improvements Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December 2022
At 1 January 2022:
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,193 67,716 15,579 922 3,797 66,150 180,357
Accumulated depreciation /H1118/H1118/H1118(6,064) (34,681) (6,931) (106) – (33,207) (80,989)
Net carrying amount /H1118/H1118/H1118/H1118/H1118/H111820,129 33,035 8,648 816 3,797 32,943 99,368
At 1 January 2022, net of
accumulated depreciation /H1118/H1118 20,129 33,035 8,648 816 3,797 32,943 99,368
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 4,991 2,071 – 6,087 14 13,163
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (1,082) (268) (9) – (844) (2,203)
Disposal of subsidiaries
(note II 32) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (3,186) (626) (62) – (5,826) (9,700)
Depreciation provided during
the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(830) (9,515) (2,987) (169) – (10,547) (24,048)
Transfers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– (9,526) 9,526 –
At 31 December 2022, net of
accumulated depreciation /H1118/H1118 19,299 24,243 6,838 576 358 25,266 76,580
At 31 December 2022:
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,193 63,391 15,569 815 358 63,827 170,153
Accumulated depreciation /H1118/H1118/H1118(6,894) (39,148) (8,731) (239) – (38,561) (93,573)
Net carrying amount /H1118/H1118/H1118/H1118/H1118/H111819,299 24,243 6,838 576 358 25,266 76,580
Group Buildings
Medical
equipment
Furniture
and fixtures
Motor
vehicles
Construction
in progress
Leasehold
improvements Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December 2023
At 1 January 2023:
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,193 63,391 15,569 815 358 63,827 170,153
Accumulated depreciation /H1118/H1118/H1118(6,894) (39,148) (8,731) (239) – (38,561) (93,573)
Net carrying amount /H1118/H1118/H1118/H1118/H1118/H111819,299 24,243 6,838 576 358 25,266 76,580
At 1 January 2023, net of
accumulated depreciation /H1118/H1118 19,299 24,243 6,838 576 358 25,266 76,580
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,285 6,575 2,007 – 5,069 584 17,520
Acquisition of subsidiaries
(note II 32) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,967 289 – – 2,096 4,352
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (752) (345) (1) – – (1,098)
Depreciation provided during
the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(864) (9,236) (2,962) (155) – (9,881) (23,098)
Transfers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– (2,997) 2,997 –
At 31 December 2023, net of
accumulated depreciation /H1118/H1118 21,720 22,797 5,827 420 2,430 21,062 74,256
At 31 December 2023:
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,478 65,782 16,515 812 2,430 68,650 183,667
Accumulated depreciation /H1118/H1118/H1118(7,758) (42,985) (10,688) (392) – (47,588) (109,411)
Net carrying amount /H1118/H1118/H1118/H1118/H1118/H111821,720 22,797 5,827 420 2,430 21,062 74,256
APPENDIX I ACCOUNTANTS’ REPORT
– I-39 –


--- page 477 ---
Group Buildings
Medical
equipment
Furniture
and fixtures
Motor
vehicles
Construction
in progress
Leasehold
improvements Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December 2024
At 1 January 2024:
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,478 65,782 16,515 812 2,430 68,650 183,667
Accumulated depreciation /H1118/H1118/H1118(7,758) (42,985) (10,688) (392) – (47,588) (109,411)
Net carrying amount /H1118/H1118/H1118/H1118/H1118/H111821,720 22,797 5,827 420 2,430 21,062 74,256
At 1 January 2024, net of
accumulated depreciation /H1118/H1118 21,720 22,797 5,827 420 2,430 21,062 74,256
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 5,814 866 241 18,533 46 25,500
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (1,033) (429) (16) – (707) (2,185)
Depreciation provided during
the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(951) (7,599) (2,306) (160) – (10,043) (21,059)
Transfers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,475 – (14,374) 12,899 –
At 31 December 2024, net of
accumulated depreciation /H1118/H1118 20,769 19,979 5,433 485 6,589 23,257 76,512
At 31 December 2024:
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,478 64,712 16,386 1,003 6,589 79,966 198,134
Accumulated depreciation /H1118/H1118/H1118(8,709) (44,733) (10,953) (518) – (56,709) (121,622)
Net carrying amount /H1118/H1118/H1118/H1118/H1118/H111820,769 19,979 5,433 485 6,589 23,257 76,512
Company Buildings
Medical
equipment
Furniture
and fixtures
Motor
vehicles
Construction
in progress
Leasehold
improvements Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December 2022
At 1 January 2022:
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,193 39,291 8,425 773 1,545 26,856 103,083
Accumulated depreciation /H1118/H1118/H1118(6,064) (26,167) (4,961) (65) – (20,069) (57,326)
Net carrying amount /H1118/H1118/H1118/H1118/H1118/H111820,129 13,124 3,464 708 1,545 6,787 45,757
At 1 January 2022, net of
accumulated depreciation /H1118/H1118 20,129 13,124 3,464 708 1,545 6,787 45,757
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,128 505 – 2,001 – 3,634
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (1,093) (120) (9) – (586) (1,808)
Depreciation provided during
the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(830) (4,403) (1,213) (152) – (3,322) (9,920)
Transfers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– (3,546) 3,546 –
At 31 December 2022, net of
accumulated depreciation /H1118/H1118 19,299 8,756 2,636 547 – 6,425 37,663
At 31 December 2022:
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,193 34,927 7,789 731 – 27,549 97,189
Accumulated depreciation /H1118/H1118/H1118(6,894) (26,171) (5,153) (184) – (21,124) (59,526)
Net carrying amount /H1118/H1118/H1118/H1118/H1118/H111819,299 8,756 2,636 547 – 6,425 37,663
APPENDIX I ACCOUNTANTS’ REPORT
– I-40 –


--- page 478 ---
Company Buildings
Medical
equipment
Furniture
and fixtures
Motor
vehicles
Construction
in progress
Leasehold
improvements Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December 2023
At 1 January 2023:
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,193 34,927 7,789 731 – 27,549 97,189
Accumulated depreciation /H1118/H1118/H1118(6,894) (26,171) (5,153) (184) – (21,124) (59,526)
Net carrying amount /H1118/H1118/H1118/H1118/H1118/H111819,299 8,756 2,636 547 – 6,425 37,663
At 1 January 2023, net of
accumulated depreciation /H1118/H1118 19,299 8,756 2,636 547 – 6,425 37,663
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,285 1,252 495 – 798 – 5,830
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (292) (36) – – – (328)
Depreciation provided during
the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(829) (3,005) (1,081) (139) – (2,153) (7,207)
Transfers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– (259) 259 –
Transfer to investment
properties /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,285) – – – – – (3,285)
At 31 December 2023, net of
accumulated depreciation /H1118/H1118 18,470 6,711 2,014 408 539 4,531 32,673
At 31 December 2023:
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,193 32,395 7,706 731 539 27,808 95,372
Accumulated depreciation /H1118/H1118/H1118(7,723) (25,684) (5,692) (323) – (23,277) (62,699)
Net carrying amount /H1118/H1118/H1118/H1118/H1118/H111818,470 6,711 2,014 408 539 4,531 32,673
Company Buildings
Medical
equipment
Furniture
and fixtures
Motor
vehicles
Construction
in progress
Leasehold
improvements Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December 2024
At 1 January 2024:
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,193 32,395 7,706 731 539 27,808 95,372
Accumulated depreciation /H1118/H1118/H1118(7,723) (25,684) (5,692) (323) – (23,277) (62,699)
Net carrying amount /H1118/H1118/H1118/H1118/H1118/H111818,470 6,711 2,014 408 539 4,531 32,673
At 1 January 2024, net of
accumulated depreciation /H1118/H1118 18,470 6,711 2,014 408 539 4,531 32,673
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 3,930 334 – 12,541 – 16,805
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (397) (306) (16) – (521) (1,240)
Depreciation provided during
the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(830) (2,251) (783) (130) – (2,235) (6,229)
Transfers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 759 – (6,979) 6,220 –
At 31 December 2024, net of
accumulated depreciation /H1118/H1118 17,640 7,993 2,018 262 6,101 7,995 42,009
At 31 December 2024:
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,193 33,567 7,847 681 6,101 32,696 107,085
Accumulated depreciation /H1118/H1118/H1118(8,553) (25,574) (5,829) (419) – (24,701) (65,076)
Net carrying amount /H1118/H1118/H1118/H1118/H1118/H111817,640 7,993 2,018 262 6,101 7,995 42,009
APPENDIX I ACCOUNTANTS’ REPORT
– I-41 –


--- page 479 ---
14. LEASES
The Group as a leasee
The Group has lease contracts for clinic and office premises used in its operations. Leases of clinic and office
premises generally have lease terms between 2 and 16.5 years.
(a) Right-of-use assets
The carrying amounts of right-of-use assets and the movements during the Relevant Periods are as
follows:
Group
Clinic and office premises
RMB’000
As at 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118163,181
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,314
Disposal of subsidiaries (note II 32) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(19,605)
Lease modification /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(11,895)
Depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(38,971)
As at 31 December 2022 and 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118110,024
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831,578
Lease modification /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,867)
Depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(37,519)
As at 31 December 2023 and 1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111899,216
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111855,603
Lease modification /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(11,119)
Depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(35,262)
As at 31 December 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118108,438
Company
Clinic and office premises
RMB’000
As at 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111879,281
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,506
Lease modification /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(14,753)
Depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(21,925)
As at 31 December 2022 and 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111855,109
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,182
Lease modification /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,951)
Depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(21,654)
As at 31 December 2023 and 1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838,686
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111849,125
Lease modification /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(10,077)
Depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(21,366)
As at 31 December 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111856,368
APPENDIX I ACCOUNTANTS’ REPORT
– I-42 –


--- page 480 ---
(b) Lease liabilities
The carrying amounts of lease liabilities and the movements during the Relevant Periods are as follows:
Group
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Carrying amount at 1 January /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118166,626 111,835 101,685
New leases /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,314 31,578 55,603
Disposal of subsidiaries
(note II 32) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(21,912) – –
Lease modification /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(12,609) (5,253) (12,239)
Accretion of interest recognised during
the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,554 5,507 5,329
Covid-19-related rent concessions from
lessors /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,404) – –
Payments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(40,734) (41,982) (37,265)
Carrying amount at the end of year /H1118/H1118/H1118/H1118/H1118111,835 101,685 113,113
Analysed into:
Current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,434 32,488 31,211
Non-current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111877,401 69,197 81,902
Company
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Carrying amount at 1 January /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111878,113 52,651 36,685
New leases /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,506 10,182 49,125
Lease modification /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(14,139) (5,572) (10,909)
Accretion of interest recognised during
the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,808 2,428 2,390
Covid-19-related rent concessions from
lessors /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,902) – –
Payments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(24,735) (23,004) (21,439)
Carrying amount at the end of year /H1118/H1118/H1118/H1118/H111852,651 36,685 55,852
Analysed into:
Current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,865 16,299 16,322
Non-current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831,786 20,386 39,530
The maturity analysis of lease liabilities is disclosed in note II 40 to the Historical Financial
Information.
The Group applied the practical expedient to all eligible covid-19-related rent concessions granted by
the lessors for leases of certain properties during the year ended 31 December 2022.
APPENDIX I ACCOUNTANTS’ REPORT
– I-43 –


--- page 481 ---
(c) The amounts recognised in profit or loss in relation to leases are as follows:
Group
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Interest on lease liabilities (note II 7) /H1118/H1118/H1118/H1118 6,554 5,507 5,329
Depreciation charge of right-of-use assets /H1118 38,971 37,519 35,262
Modification of lease terms /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(714) (386) (1,120)
Expense relating to short-term leases or
leases of low-value asset (note II 6) /H1118/H1118/H1118 2,026 932 1,508
Covid-19-related rent concessions from
lessors /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,404) – –
Total amount recognised in profit or loss /H1118/H1118 43,433 43,572 40,979
(d) The cash outflows for leases:
The total cash outflows for leases are disclosed in note II 33(c), to the Historical Financial Information.
The Group as a lessor
The Group leases its property, plant and equipment (note II 13) consisting of one commercial property, and
subleases its leases (note II 14) consisting of the clinics in the PRC under operating lease arrangements. The terms
of the leases generally require the tenants to pay security deposits. Rental income recognised by the Group during
the Relevant Periods is included in note II 5 to the Historical Financial Information.
At the end of each of the Relevant Periods, the undiscounted lease payments receivable by the Group in future
periods under non-cancellable operating leases with its tenants are as follows:
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Within one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118243 375 297
After one year but within two years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111879 297 117
After two years but within three years /H1118/H1118/H1118/H1118/H1118/H1118/H1118–1 1 7 –
After three years but within four years /H1118/H1118/H1118/H1118/H1118/H1118/H1118–––
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118322 789 414
15. GOODWILL
Group RMB’000
As at 1 January 2022:
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111863,090
Accumulated impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–
Net carrying amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111863,090
Cost at 1 January 2022, net of accumulated impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111863,090
Impairment during the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–
Cost and net carrying amount at 31 December 2022, 2023 and 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111863,090
APPENDIX I ACCOUNTANTS’ REPORT
– I-44 –


--- page 482 ---
Impairment testing of goodwill
For the purpose of impairment testing of goodwill, goodwill is allocated to a group of cash-generating units
(“CGUs”). Such group of CGUs represents the lowest level within the Group for which the goodwill is monitored
for internal management purpose.
Management considered that the Group only has one group of CGUs which represents the entire business of
the Group according to its business operation during the Relevant Periods. The recoverable amount of the industrial
products cash-generating unit has been determined based on a value in use (“VIU”) calculation using cash flow
projections based on financial budgets covering a five-year period approved by senior management. Cash flows
beyond the projected period are extrapolated using the estimated terminal growth rates. The management leveraged
their experience in the industry and provided forecast based on past performance and their expectation of future
business plans and external sources of information. The valuation is considered to be level 3 in the fair value
hierarchy due to unobservable inputs used in the valuation.
Key assumptions used in the calculation are as follows:
As at 31 December
2022 2023 2024
Revenue (compound growth rate) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.7% 2.8% 3.5%
Budgeted gross margin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
36.3%-
38.1%
36.3%-
36.9%
35.2%-
35.9%
Terminal growth rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182.3% 2.3% 1.9%
Pre-tax discount rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815.3% 15.4% 12.9%
VIU of the group of CGUs
(in RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118664,000 675,000 690,000
Carrying amount of the group of CGUs (in
RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118252,022 238,582 249,788
Headroom of the group of CGUs (in RMB’000) /H1118 411,978 436,418 440,212
Assumptions were used in the value in use calculation of the cash-generating unit as at the end of each of the
Relevant Periods. The following describes each key assumption on which management has based its cash flow
projections to undertake impairment testing of goodwill:
Revenue — The basis used to determine the budgeted revenue is based on the management’s expectation
of the future expansion. The compound growth rate of revenue was estimated based on
information available at the time of assessment, disregarding information that became
available after the assessment. Such information includes current industry overview and
estimated market development and customer preferences.
Terminal
growth
rate
— The forecasted terminal growth rate is based on management expectations and does not
exceed the long-term average growth rate for the industry relevant to the cash-generating
unit.
Budgeted
gross
margins
— The basis used to determine the value assigned to the budgeted gross margins is the average
gross margins achieved in the year immediately before the budget year, increased for
expected efficiency improvements, and expected market development.
Discount
rates
— The discount rates used are before tax and reflect specific risks relating to the relevant units.
Based on the impairment assessment conducted by the Group utilising the above key assumptions, the
recoverable amount of the cash-generating unit estimated from the cash flow forecast exceeded the carrying amount
of the group of CGUs and therefore no impairment was considered necessary as at the end of each of the Relevant
Periods.
APPENDIX I ACCOUNTANTS’ REPORT
– I-45 –


--- page 483 ---
The Group performs a sensitivity analysis based on the reasonably possible changes in key assumptions. If the
estimated key assumptions changed as below, the headroom would be decreased to:
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Budgeted gross margin decreases of 5% /H1118/H1118/H1118/H1118/H1118/H1118227,978 253,417 243,212
Terminal growth rate decreases of 1% /H1118/H1118/H1118/H1118/H1118/H1118/H1118381,978 406,417 414,212
Pre-tax discount rate increases of 1% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118369,978 394,417 400,212
The values assigned to the key assumptions and discount rates are consistent with external information sources.
Considering there was still sufficient headroom based on the assessment, the management of the Company
believes that a reasonably possible change in the above key parameters would not cause the carrying amount of the
CGU to exceed its recoverable amount, and would not result in an impairment provision of goodwill.
16. OTHER INTANGIBLE ASSETS
Group
Software As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Carrying amount at 1 January /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,708 2,328 2,020
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118887 – 27
Amortisation provided during the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118(267) (308) (298)
At the end of year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,328 2,020 1,749
17. PREPAYMENTS, OTHER RECEIV ABLES AND OTHER ASSETS
Group
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Non-current:
Prepayment of property, plant and equipment /H1118/H1118/H1118 279 12 679
Rental deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,599 3,897 3,995
Total non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,878 3,909 4,674
Current:
Prepayments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,521 3,578 4,473
Deferred listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 9,043
Rental deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118936 1,137 1,066
Receivables for contingent consideration
arrangements /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,000 –
Receivable from disposal of a subsidiary /H1118/H1118/H1118/H1118/H1118/H11186 0 0––
Other receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,859 2,930 2,568
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,916 8,645 17,150
Impairment allowance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(49) (59) (43)
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,745 12,495 21,781
APPENDIX I ACCOUNTANTS’ REPORT
– I-46 –


--- page 484 ---
Company
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Non-current:
Prepayment of property, plant and equipment /H1118/H1118/H1118 – – 409
Rental deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,278 1,990 2,044
Total non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,278 1,990 2,453
Current:
Prepayments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,567 2,373 3,552
Deferred listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 9,043
Rental deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118503 450 547
Due from subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,582 1,502 4,119
Receivables for contingent consideration
arrangements /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,000 –
Other receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,418 393 1,133
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,070 5,718 18,394
Impairment allowance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(25) (29) (18)
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,323 7,679 20,829
Financial assets included in prepayments, other receivables and other assets had no historical default. The
financial assets included in the above balances related to receivables that were categorised in stage 1 at the end of
each of the Relevant Periods. In calculating the expected credit loss rate, the Group and the Company consider the
historical loss rate and adjust for forward-looking macroeconomic data. During the Relevant Periods, the Group and
the Company estimated that the expected credit loss rate for other receivables and deposits was minimal.
The Group and the Company seek to maintain strict control over its outstanding receivables to minimise credit
risk. Overdue balances are reviewed regularly by senior management. The Group and the Company do not hold any
collateral or other credit enhancements over its deposits and other receivable balances.
18. DEFERRED TAX
Group
The movements in deferred tax liabilities and assets and during the Relevant Periods are as follows:
Deferred tax liabilities
Right-of-use assets
Depreciation
allowance in excess
of related
depreciation Total
RMB’000 RMB’000 RMB’000
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,914 – 17,914
Deferred tax (credited)/charged to the year /H1118/H1118/H1118/H1118 (6,065) 30 (6,035)
Gross deferred tax liabilities at 31 December
2022 and 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,849 30 11,879
Deferred tax charged/(credited) to the year /H1118/H1118/H1118/H1118 173 (4) 169
Gross deferred tax liabilities at 31 December
2023 and 1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,022 26 12,048
Deferred tax charged/(credited) to the year /H1118/H1118/H1118/H1118 2,085 (4) 2,081
Gross deferred tax liabilities at 31 December
2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,107 22 14,129
APPENDIX I ACCOUNTANTS’ REPORT
– I-47 –


--- page 485 ---
Deferred tax assets
Lease liabilities
Losses
available for
offsetting
against future
taxable profits
Assets
impairment
provision
Advertising
fees Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H111818,336 400 54 29 18,819
Deferred tax charged to
the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6,426) (71) (22) (17) (6,536)
Disposal of subsidiaries
(note II 32) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (37) (2) – (39)
Gross deferred tax assets
at 31 December 2022
and 1 January 2023 /H1118/H1118/H111811,910 292 30 12 12,244
Deferred tax (charged)/
credited to the year /H1118/H1118/H1118/H1118(44) 42 22 23 43
Gross deferred tax assets
at 31 December 2023
and 1 January 2024 /H1118/H1118/H111811,866 334 52 35 12,287
Deferred tax (credited)/
charged to the year /H1118/H1118/H1118/H11182,728 67 (4) 683 3,474
Gross deferred tax assets
at 31 December 2024 /H1118/H1118 14,594 401 48 718 15,761
For presentation purposes, certain deferred tax assets and liabilities have been offset in the statements of
financial position. The following is an analysis of the deferred tax balances of the Group for financial reporting
purposes:
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Net deferred tax assets recognised in the
consolidated statements of financial position /H1118/H1118 786 594 1,885
Net deferred tax liabilities recognised in the
consolidated statements of financial position /H1118/H1118 421 355 253
The Group had unused tax losses arising in Chinese Mainland of RMB7,321,000, RMB9,749,000, and
RMB10,345,000 as at the end of each of the Relevant Periods, respectively, that would expire in one to five years
for future taxable profits of the companies in which the losses arose. Deferred tax assets have not been recognised
in respect of these losses as they have arisen in subsidiaries that have been loss-making for some time and it is not
considered probable that taxable profits will be available against which the tax losses can be utilised.
There are no income tax consequences attaching to the payments of dividends by the Company to its
shareholders.
APPENDIX I ACCOUNTANTS’ REPORT
– I-48 –


--- page 486 ---
19. CONTINGENT CONSIDERATION
Group and Company
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Carrying amount at 1 January /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,390 976 –
Unrealised fair value changes recognised in
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111847 24 –
Transfers to other receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (1,000) –
Settlements /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,461) – –
Carrying amount at 31 December /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189 7 6––
The Company entered into a series of acquisition agreements with certain independent third parties in 2019.
Pursuit to the acquisition agreements, contingent considerations are receivables, which are dependent on the amount
of profit after tax or profit before tax during the 3-year period subsequent to such acquisitions.
The fair value of such contingent consideration amounted to RMB2,230,000 as at the acquisition date and has
been included in contingent consideration in the Historical Financial Information. The management have reassessed
the fair value of the contingent consideration as at 2022, and concluded that the fair value change was recognised
in profit or loss.
20. INVENTORIES
Group
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Medical consumables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,127 5,709 3,655
21. TRADE RECEIV ABLES
Group
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,948 6,896 6,143
Impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(197) (348) (307)
Net carrying amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,751 6,548 5,836
The Group’s trading terms with its customers are mainly on payment in advance, except for some transactions
such as those covered by medical insurance bureaus, which are traded on credit. The settlement period is generally
one month, extending up to three months for some customers. Trade receivables are non-interest-bearing.
APPENDIX I ACCOUNTANTS’ REPORT
– I-49 –


--- page 487 ---
An ageing analysis of the trade receivables as at the end of each of the Relevant Periods, based on transaction
dates and net of loss allowance, is as follows:
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Within 3 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,615 6,124 5,399
3 months to 6 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118133 311 246
6 months to 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183 49 191
1 to 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–6 4 –
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,751 6,548 5,836
The Group has applied the simplified approach method to provide for ECLs prescribed by IFRS 9, which
permits the use of the lifetime expected loss provision for trade receivables without significant financing components.
The management calculates the expected credit losses based on the customers’ historical credit loss information and
further incorporates forward-looking adjustments. The Company assessed that the expected loss rate of trade
receivables of the Group was very low. The Company also assessed that there was no significant change in the ECL
rates during the Relevant Periods, mainly because there was no change of historical default rates of trade receivables
and there were no significant changes in the economic conditions and performance and behaviour of the customers,
based on which the ECL rates were determined. The directors of the Company are of the opinion that the ECLs in
respect of the balances of trade receivables are minimal.
The movements in the loss allowance for impairment of trade receivables are as follows:
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
At beginning of year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118292 197 348
Impairment losses, net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(49) 168 (41)
Amount written off as uncollectible /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(5) (17) –
Disposal of subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(41) – –
At end of year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118197 348 307
An impairment analysis is performed at the end of each reporting period using a provision matrix to measure
expected credit losses. The provision rates are based on the ageing of receivables of the customer. The calculation
reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that
is available at the end of each reporting period about past events, current conditions and forecasts of future economic
conditions.
Set out below is the information about the credit risk exposure on the Group’s trade receivables as at the end
of each of the Relevant Periods using a provision matrix:
As at 31 December 2022
Within 1 year 1 to 2 years Total
Expected credit loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184.99% 10.00% 4.99%
Gross carrying amount (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,948 – 3,948
Expected credit losses (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118197 – 197
APPENDIX I ACCOUNTANTS’ REPORT
– I-50 –


--- page 488 ---
As at 31 December 2023
Within 1 year 1 to 2 years Total
Expected credit loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185.00% 9.86% 5.05%
Gross carrying amount (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,825 71 6,896
Expected credit losses (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118341 7 348
As at 31 December 2024
Within 1 year 1 to 2 years Total
Expected credit loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185.00% 10% 5.00%
Gross carrying amount (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,143 – 6,143
Expected credit losses (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118307 – 307
22. FINANCIAL ASSETS AT FVTPL
Group
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Wealth management products, at fair value /H1118/H1118/H1118/H1118 –––
Unlisted equity investments, at fair value /H1118/H1118/H1118/H1118/H11181 1 7––
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181 1 7––
Company
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Wealth management products,
at fair value /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––
Unlisted equity investments,
at fair value /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181 1 7––
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181 1 7––
The above unlisted equity investments were classified as financial assets at FVTPL as the Group has not
elected to recognise the fair value gain or loss through other comprehensive income.
The above financial products were wealth management products issued by banks and trusts in Chinese
Mainland. They were mandatorily classified as financial assets at FVTPL as their contractual cash flows are not
solely payments of principal and interest.
APPENDIX I ACCOUNTANTS’ REPORT
– I-51 –


--- page 489 ---
23. CASH AND CASH EQUIV ALENTS
Group
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Cash and bank balances /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118177,970 227,083 95,046
The RMB is not freely convertible into other currencies, however, under Chinese Mainland’s Foreign
Exchange Control Regulations and Administration of Settlement, and Sale and Payment of Foreign Exchange
Regulations, the Group is permitted to exchange RMB for other currencies through banks authorised to conduct
foreign exchange business.
Cash at banks earns interest at demand bank deposit rates. The bank balances are deposited with creditworthy
banks with no recent history of default.
Company
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Cash and bank balances /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118124,110 160,468 12,645
24. TRADE PAYABLES
An ageing analysis of the trade payables as at the end of each of the Relevant Periods, based on the transaction
dates, is as follows:
Group
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Within 3 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,001 13,545 11,687
3 months to 6 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,744 2,265 2,091
6 months to 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118769 885 591
More than 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118500 603 309
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,014 17,298 14,678
Company
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Within 3 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,704 6,324 5,331
3 months to 6 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,850 831 572
6 months to 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189 364 –
More than 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816 29 –
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,579 7,548 5,903
The trade payables are non-interest-bearing and are normally settled on the terms of 30 to 90 days.
APPENDIX I ACCOUNTANTS’ REPORT
– I-52 –


--- page 490 ---
25. OTHER PAYABLES AND ACCRUALS
Group
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Payroll payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,317 16,155 13,127
Payable for acquisition of subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118551 837 15
Payable for purchasing of items of property,
plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,956 2,688 5,435
Payable for advertising and promotion /H1118/H1118/H1118/H1118/H1118/H1118/H11183,469 3,712 5,315
Payable for listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 3,827
Other tax payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,079 2,825 1,123
Accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118686 983 128
Dividends payable (note II 11) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 19,397
Dividends payable to non-controlling
shareholders /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 577
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,431 1,886 1,812
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,489 29,086 50,756
Company
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Payroll payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,563 9,250 5,806
Payable for acquisition of subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118551 837 15
Payable for purchasing of items of property,
plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,838 446 3,725
Payable for advertising and promotion /H1118/H1118/H1118/H1118/H1118/H1118/H11182,692 2,986 4,921
Payable for listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 3,827
Other tax payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118906 1,411 370
Accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118421 576 17
Dividends payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 19,397
Due to subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,492 58,240 36,219
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118721 849 1,502
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111840,184 74,595 75,799
26. REDEEMABLE PREFERENCE SHARES
Since the date of incorporation, the Company has completed several rounds of financing arrangements by
issuing redeemable preference shares, details of which are as follows:
In August 2017, the Company issued 3,000,000 A round equity shares with a par value of RMB1.00 per share
(“Series A Shares”) to two independent investors for an aggregate cash consideration of RMB29,400,000.
In June 2021, the Company issued 4,689,652 B round equity shares with a par value of RMB1.00 per share
(“Series B Shares”) to three independent investors for an aggregate cash consideration of RMB68,000,000.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 491 ---
The key terms of Series A Shares and Series B Shares (collectively, “Redeemable Preference Shares”) are
summarised as follows:
(a) Redemption rights
Each Redeemable Preference Shares held by investors shall be redeemable at the option of the investors, in
accordance with the following terms. The Company, or Hubei Zhongshan Medical Investment Management Co., Ltd.
and Mr. Y ao Xue and Ms. Shen Hongmin (collectively, “Controlling Shareholders”) shall pay the investors the total
redemption price. Upon the occurrence of any of the specified contingent events, including but not limited to (each,
a “Redemption Event”):
Series A Shares: (i) the failure by the Company to submit an application for a qualified initial public offering
on or before 31 December 2024 (“Qualified IPO”); (ii) any administrative penalties or other major violations of laws
and regulations made by the Controlling Shareholders, related parties and key management of the Company; (iii)
horizontal competition business by the beneficial Controlling Shareholders, main management of the Company and
other related parties of the Company.
Series B Shares: (i) the failure by the Company to submit an Qualified IPO; (ii) any indicators, such as the
Company abandon affecting the Company’s qualified IPO or material substantial obstacles occurrence; (iii)
substantive changes of the Company in its operating model and business scope without consent of investors; (iv) any
occurrence base on valuation adjustment mechanism with other investors; (v) any administrative penalties or other
major violations of laws and regulations made by the Controlling Shareholders, related parties and key management
of the Company; (vi) any Integrity matters from the management team of the Company; (vii) accumulated losses
during twelve months reaching 50% of the net assets as of December 31, 2020.
The redemption price per share for Series A Shares shall be equal to the aggregate of the original issue price
plus interest at 10% per annum (before June 2021) or 8% per annum (after June 2021), calculated on a simple basis
for the period from the payment date of the consideration to the redemption date, less dividends already paid with
respect thereto per Series A Shares then held by such holder.
The redemption price per share for Series B Shares shall be equal to either which higher:
(i) The audited net asset of the Group corresponding to the Series B held by investor; or
(ii) The aggregate of the original issue price plus interest at 8% per annum calculated on a simple basis for
the period from the payment date of the consideration to the redemption date, less dividends already
paid with respect thereto per Series B Shares then held by such holder.
(b) Liquidation preference
In the event of any liquidation or dissolution (the “Liquidation Event”) of the Company, Series B Shares shall
be entitled to receive the amount equal to investment costs that have accrued on the paid-in capital, plus interest at
8% per annum calculated on a simple basis for the period from the payment date of the consideration (the “Priority
Liquidation Amount”). After the Priority Liquidation Amount is paid off, if the Company still has net assets legally
available for distribution, Series B Shares shall be entitled to the residual assets according to their actual investment
ratio. If Series B Shares fail to obtain the Priority Liquidation Amount, the founders shall be obliged to compensate
Series B Shares for the difference to the extent of the distribution property obtained from all of their equity.
In the event of deemed liquidation of the Company, including changing the actual controller of the Group,
disposal of core assets of the Group, the investors of the Series B Shares shall be entitled to receive an amount equal
to the higher of the following two options: (i) the gain from the disposal of such core assets multiplied by the
percentage owned by the investors of the Shares; (ii) the amount based on the Liquidation Event calculation.
(c) Anti-dilution right
If the Company allows new investments at a price lower than the price paid by the Series A Shares investors
on a per share basis, the investors of Series A Shares have a right to require the Company to issue additional shares
to them at the same consideration, so that the percentage of their Shares is not less than immediately before new
issuance by the Company.
APPENDIX I ACCOUNTANTS’ REPORT
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If the Company allows new investments at a price lower than the price paid by the Series B Shares investors
on a per share basis, the investors of Series B Shares have a right to request the Company, or Hubei Zhongshan
Medical Investment Management Co., Ltd. and Mr. Y ao Xue and Ms. Shen Hongmin to provide certain compensation.
(d) Presentation and classification
The Group and the Company have recognized the shares as redeemable preference shares as a whole as
financial liabilities carried at FVTPL. Subsequent to initial recognition, the fair value change of the redeemable
preference shares is charged to profit or loss except for the portion attributable to credit risk change which shall be
recognised in other comprehensive income, if any. The Company does not have the right to defer settlement of the
Redeemable Preference Shares in the next 12 months since 31 December 2023. As such, the redeemable preference
shares were presented by management in current liabilities as at 31 December 2023.
The movements of the redeemable preference shares are set out as follows:
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
At the beginning of year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118109,114 110,450 112,781
Redemption /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (111,065)
Change in fair value /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,336 2,331 (1,716)
At the end of year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118110,450 112,781 –
Analysed into:
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 112,781 –
Non-current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118110,450 – –
At the end of the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118110,450 112,781 –
Note: In September 2024, the Company entered into share repurchase agreements with each of CITIC
Securities Investment Co., Ltd., Wuhan Zhongyuan Jiupai Industry Investment Management Co., Ltd.,
Mr. Zhu Chao, and Wuhan Zhidao Technology Innovation V enture Capital Partnership (Limited
Partnership), pursuant to which the Company agreed to repurchase all the 7,689,652 Shares held by
these investors at a total consideration of RMB111.1 million. The consideration was fully settled on 8
October, 2024.
The fair value is determined by an external valuer using the equity allocation method, key valuation
assumptions used to determine the fair value of the redeemable preference shares as at the end of each of the Relevant
Periods are as follows:
As at 31 December As at 31 December
Sensitivity of fair
value to the input2022 2023
Risk-free interest rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182.35% 2.08% (a)
Discount for lack of marketability (“DLOM”) /H1118/H1118/H1118 16.60% 11.10% (b)
V olatility /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111853.90% 33.20% (c)
(a) 1% increase/decrease of risk-free interest rate while with all other variables constant would result in a
decrease/increase in fair value by RMB1,004,000/RMB465,000 and RMB1,021,000/RMB472,000 as at
31 December 2022 and 2023, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 493 ---
(b) 1% increase/decrease in DLOM while with all other variables constant would result in a
decrease/increase in fair value by RMB743,000/RMB806,000 and RMB742,000/RMB674,000 as at 31
December 2022 and 2023, respectively.
(c) 1% increase/decrease in volatility with all other variables constant would result in a decrease/increase
in fair value by RMB85,000 and RMB79,000 as at 31 December 2022, and result in a increase/decrease
in fair value by RMB48,000 and RMB47,000 as at 31 December 2023.
Management estimated the risk-free interest rate based on the Chinese government bond yield with maturity
close to the expected exit timing as of the valuation date. The DLOM was estimated based on the option-pricing
method. Under the option-pricing method, the cost of a put option, which can hedge the price change before the
privately held shares can be sold, was considered as a basis to determine the discount for lack of marketability.
V olatility was estimated based on annualised standard deviation of daily stock price return of comparable companies
for a period from the valuation date and with a similar time span to expiration date.
27. CONTRACT LIABILITIES
Details of contract liabilities are as follows:
Group
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Orthodontics services
Current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815,549 16,438 14,854
Non-current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,728 2,099 1,732
Implantology services
Current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833,961 36,459 18,758
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851,238 54,996 35,344
Company
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Orthodontics services
Current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,988 6,949 5,522
Non-current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118875 836 667
Implantology services
Current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,841 11,164 3,786
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,704 18,949 9,975
Contract liabilities include advances received to render dental related services.
APPENDIX I ACCOUNTANTS’ REPORT
– I-56 –


--- page 494 ---
28. SHARE CAPITAL
Group and Company
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Issued and fully paid:
38,517,242 (2023 and 2022: 46,896,548)
ordinary shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111846,897 46,897 38,517
A summary of movements in the Company’s share capital is as follows:
Number of shares
in issue Share capital
RMB’000
At 1 January 2022, 2023 and 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111846,896,548 46,897
Repurchase of redeemable preferred shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(7,689,652) (7,690)
Capital deduction /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(689,654) (690)
At 31 December 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838,517,242 38,517
Notes:
(i) In September 2024, the Company repurchased and cancelled Series A Shares and Series B Shares, which
further details are set out in note II 26.
(ii) In September 2024, the Company entered into capital reduction agreements with Mr. Wang Qingsong
and Mr. Li Jiansheng, pursuant to which the Company agreed to repurchase all the 689,654 Shares held
by these investors at a total consideration of RMB10.7 million, the consideration was fully settled on
8 October 2024.
29. TREASURY SHARES AND RESERVES
Group
The amounts of the Group’s reserves and the movements therein for the Relevant Periods are presented in the
consolidated statements of changes in equity.
Treasury shares
The treasury shares of the Group represents the 2,741,000, 1,505,000 and 1,505,000 ordinary shares held by
Wuhan Xinglin Management Consulting Partnership (Limited Partnership) (“Wuhan Xinglin”), Wuhan Zhulin
Management Consulting Partnership (Limited Partnership) (“Wuhan Zhulin”) and Wuhan Taolin Management
Consulting Partnership (Limited Partnership) (“Wuhan Taolin”), respectively, for the benefit of eligible participants
under the Employee Incentive Scheme, which further details are set out in note II 30.
Capital reserve
The Capital reserve of the Group represents the share premium contributed by the shareholders of the
Company.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 495 ---
Surplus reserve
In accordance with the Company Law of the People’s Republic of China, each company in the PRC is required
to allocate 10% of the statutory after-tax profits to the statutory reserve until the cumulative total of the reserve
reaches 50% of the company registered capital. Subject to approval from the relevant PRC authorities, the statutory
reserve may be used to offset any accumulated losses or increase the registered capital of the company. The statutory
reserve is not available for dividend distribution to shareholders of PRC subsidiaries.
Other reserve
Other reserve of the Group mainly represent the carrying amount of the equity shares with redemption features
as stipulated in note II 26 to the Historical Financial Information.
Company
Capital
reserve
Surplus
reserve
Share-
based
payment
reserve
Other
reserve
Retained
profits Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118119,832 9,798 6,674 (96,434) 24,829 64,699
Total comprehensive income
for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 25,393 25,393
Transfer to surplus reserve /H1118/H1118/H1118/H1118– 2,314 – – (2,314) –
Share-based payments /H1118/H1118/H1118/H1118/H1118/H1118/H111873 – 1,525 – – 1,598
Final 2021 dividend declared
(Note II 11) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– (39,000) (39,000)
As at 31 December 2022 /H1118/H1118/H1118/H1118/H1118119,905 12,112 8,199 (96,434) 8,908 52,690
As at 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118119,905 12,112 8,199 (96,434) 8,908 52,690
Total comprehensive income
for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 34,932 34,932
Transfer to surplus reserve /H1118/H1118/H1118/H1118– 3,650 – – (3,650) –
Share-based payments /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,053 – – 1,053
Final 2022 dividend declared
(Note II 11) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– (36,600) (36,600)
As at 31 December 2023 /H1118/H1118/H1118/H1118/H1118119,905 15,762 9,252 (96,434) 3,590 52,075
As at 1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118119,905 15,762 9,252 (96,434) 3,590 52,075
Total comprehensive income
for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 55,691 55,691
Transfer to surplus reserve /H1118/H1118/H1118/H1118– 3,497 – – (3,497) –
Share-based payments /H1118/H1118/H1118/H1118/H1118/H1118/H11181,353 – 1,002 – – 2,355
Final 2023 dividend declared
(Note II 11) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– (50,000) (50,000)
Repurchase of redeemable
preferred shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(89,710) – – 97,400 – 7,690
Capital deduction /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(10,080) – – – – (10,080)
As at 31 December 2024 /H1118/H1118/H1118/H1118/H111821,468 19,259 10,254 966 5,784 57,731
30. SHARE-BASED PAYMENTS
The Group adopted a restricted share scheme (“Employee Incentive Scheme”), which became effective in
2017, for the purpose of attracting and retaining directors, senior management and employees who promote the
success of the Group’s operations. Two of the Controlling Shareholders, Ms. Shen Hongmin and Zhongshan Medical
Investment, have transferred 5,751,000 shares of the Company to Wuhan Xinglin, Wuhan Zhulin and Wuhan Taolin
for cash consideration. Wuhan Xinglin, Wuhan Zhulin and Wuhan Taolin are used as restricted share platforms to
facilitate the administration of the Employee Incentive Scheme. Pursuant to the Employee Incentive Scheme, the
subscription prices ranging from RMB2.00 per share to RMB7.72 per share for restricted shares were paid by the
employees to the general partner or limited partners of the platforms at the respective grant dates of such scheme.
APPENDIX I ACCOUNTANTS’ REPORT
– I-58 –


--- page 496 ---
The restricted shares granted to grantees shall vest on the later of the two dates: the end of a 36-month service
condition and the completion of public offering. The general partners of Wuhan Xinglin, Wuhan Zhulin and Wuhan
Taolin, as well as any officers and employees designated by the general partners, have obligation to repurchase those
forfeited restricted shares.
The following restricted shares were outstanding under the Employee Incentive Scheme during the Relevant
Periods:
As at 31 December
2022 2023 2024
At beginning of year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,750,740 5,750,740 5,750,740
Granted during the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118940,000 75,000 –
Forfeited during the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(940,000) (75,000) (400,000)
At end of year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,750,740 5,750,740 5,350,740
Under the Employee Incentive Scheme, the Group recognised share-based payment expenses of
RMB1,525,000, RMB1,053,000 and RMB1,002,000 for the year ended 31 December 2022, 2023 and 2024,
respectively.
The fair value of the restricted shares as at the grant date were determined with reference to the fair value of
ordinary shares on the grant date, using discounted cash flow and equity allocation method. Major inputs used for
the determination of the fair value of ordinary shares are listed as follows:
At grant date
Risk-free interest rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.44%-3.63%
Discount for lack of marketability /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187.70%-19.40%
Expected volatility /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830.30%-53.90%
31. BUSINESS COMBINATION
(a) Acquisition of a 51% interest in Wuhan Dazhong Heyu Gujie Dental Out-patient Service Co., Ltd.
(“Wuhan Heyu Gujie”)
Wuhan Heyu Gujie is a company that provides dental services to individual customers. To expand its market
share in Wuhan, the Company entered into an agreement with an independent third party in March 2023 to acquire
a 51% interest in Wuhan Heyugujie at a cash consideration of RMB637,000, of which cash consideration of
RMB637,000 was paid in 2023. The acquisition was completed in April 2023.
The fair values of the identifiable assets and liabilities of Wuhan Heyu Gujie as at the date of acquisition were
as follows:
Fair value recognized
on acquisition
RMB’000
Property, plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,200
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111850
Total identifiable net assets at fair value /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,250
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(613)
Satisfied by cash /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118637
Goodwill arising from acquisition /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–
An analysis of the cash flows in respect of the acquisition of a subsidiary is as follows:
Cash consideration /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118637
Total net cash outflow in 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118637
APPENDIX I ACCOUNTANTS’ REPORT
– I-59 –


--- page 497 ---
Since the acquisition, Wuhan Heyugujie contributed RMB2,167,000 to the Group’s revenue and a profit of
RMB10,000 to the consolidated profit for the year ended 31 December 2023.
Had the combination taken place at the beginning of the year ended 31 December 2023, the revenue of the
Group and the profit of the Group for the year ended 31 December 2023 would have been RMB442,268,000 and
RMB66,990,000, respectively.
(b) Acquisition of a 51% interest in Wuhan Dazhong Hexu Guannanyuan Dental Out-patient Service Co.,
Ltd. (“Wuhan Hexuguannanyuan”)
Wuhan Hexuguannanyuan is a company that provides dental services to individual customers. To expand its
market share in Wuhan, the Company entered into an agreement with an independent third party in July 2023 to
acquire a 51% interest in Wuhan Hexuguannanyuan at a cash consideration of RMB867,000, of which cash
considerations of RMB780,300 and RMB86,700 were paid in 2023 and 2024. The acquisition was completed in
August 2023.
The fair values of the identifiable assets and liabilities of Wuhan Hexuguannanyuan as at the date of
acquisition were as follows:
Fair value recognized
on acquisition
RMB’000
Property, plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,614
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111885
Total identifiable net assets at fair value /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,699
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(832)
Satisfied by cash /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118867
Goodwill arising from acquisition /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–
An analysis of the cash flows in respect of the acquisition of a subsidiary is as follows:
Cash consideration /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118867
Less: consideration paid in 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111887
Total net cash outflow in 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118780
Since the acquisition, Wuhan Hexuguannanyuan contributed RMB1,781,000 to the Group’s revenue and a
profit of RMB189,000 to the consolidated profit for the year ended 31 December 2023.
Had the combination taken place at the beginning of the year ended 31 December 2023, the revenue of the
Group and the profit of the Group for the year ended 31 December 2023 would have been RMB442,130,000 and
RMB67,164,000, respectively.
(c) Acquisition of a 51% interest in Wuhan Dazhong Heyuan Dental Out-patient Service Co., Ltd. (“Wuhan
Heyuan”)
Wuhan Heyuan is a company that provides dental services to individual customers. To expand its market share
in Wuhan, the Company entered into an agreement with the independent third parties in September 2023 to acquire
a 51% interest in Wuhan Heyuan at a cash consideration of RMB918,000, of which cash considerations of
RMB184,000 and RMB734,000 were paid in 2023 and 2024. The acquisition was completed in September 2023.
APPENDIX I ACCOUNTANTS’ REPORT
– I-60 –


--- page 498 ---
The fair values of the identifiable assets and liabilities of Wuhan Heyuan as at the date of acquisition were as
follows:
Fair value recognized
on acquisition
RMB’000
Property, plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,538
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118262
Total identifiable net assets at fair value /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,800
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(882)
Satisfied by cash /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118918
Goodwill arising from acquisition /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–
An analysis of the cash flows in respect of the acquisition of a subsidiary is as follows:
Cash consideration /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118918
Less: consideration paid in 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118734
Total net cash outflow in 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118184
Since the acquisition, Wuhan Heyuan contributed RMB1,160,000 to the Group’s revenue and a profit of
RMB37,000 to the consolidated profit for the year ended 31 December 2023.
Had the combination taken place at the beginning of the year ended 31 December 2023, the revenue of the
Group and the profit of the Group for the year ended 31 December 2023 would have been RMB443,737,000 and
RMB67,041,000, respectively.
32. DISPOSAL OF SUBSIDIARIES
Notes 2022
RMB’000
Net assets disposed of:
Property, plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813 9,700
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814(a) 19,605
Deferred tax assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818 39
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118563
Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118166
Prepayments, other receivables and other assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118411
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,818
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,237)
Other payables and accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,476)
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(343)
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814(b) (21,912)
Tax payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(12)
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(525)
Subtotal /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,797
Gain on disposal of subsidiaries (note II 5) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,612
Total consideration /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,409
Satisfied by:
Cash consideration /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,292
Unlisted equity investments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118117
An analysis of the net inflow of cash and cash equivalents in respect of the disposal of subsidiaries is as
follows:
Cash consideration /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,292
Consideration received in 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(600)
Cash and cash equivalents disposed of /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,818)
Net inflow of cash and cash equivalents in respect of the disposal of
subsidiaries in 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,874
APPENDIX I ACCOUNTANTS’ REPORT
– I-61 –


--- page 499 ---
33. NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS
(a) Major non-cash transactions
During the Relevant Periods, the Group had non-cash additions to right-of-use assets and lease liabilities of
RMB17,314,000, RMB31,578,000 and RMB55,603,000 in respect of clinic and office premises, respectively.
(b) Changes in liabilities arising from financing activities
Interest-bearing
bank borrowings Lease liabilities
Redeemable
preference shares
RMB’000 RMB’000 RMB’000
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,015 166,626 109,114
Changes from financing activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(10,140) (40,734) –
New leases /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 17,314 –
Decreases as a result of disposal of a subsidiary /H1118 – (21,912) –
Interest expenses on bank borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181 2 5––
Interest expenses on lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 6,554 –
Reassessment arising from lease modification /H1118/H1118/H1118 – (12,609) –
Covid-19-related rent concessions from lessors /H1118/H1118 – (3,404) –
Fair value losses on redeemable preference
shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,336
At 31 December 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 111,835 110,450
At 31 December 2022 and 1 January 2023 /H1118/H1118/H1118 – 111,835 110,450
Changes from financing activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (41,982) –
New leases /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 31,578 –
Interest expenses on lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 5,507 –
Reassessment arising from lease modification /H1118/H1118/H1118 – (5,253) –
Fair value losses on redeemable preference
shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 2,331
At 31 December 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 101,685 112,781
At 31 December 2023 and 1 January 2024 /H1118/H1118/H1118 – 101,685 112,781
Changes from financing activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (37,265) –
New leases /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 55,603 –
Interest expenses on lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 5,329 –
Reassessment arising from lease modification /H1118/H1118/H1118 – (12,239) –
Repurchase of redeemable preferred shares /H1118/H1118/H1118/H1118 – – (111,065)
Fair value gains on redeemable preference
shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (1,716)
At 31 December 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 113,113 –
(c) Total cash outflows for leases
The total cash outflows for leases included in the statements of cash flows are as follows:
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Within operating activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,026 932 1,508
Within financing activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111840,734 41,982 37,265
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111842,760 42,914 38,773
APPENDIX I ACCOUNTANTS’ REPORT
– I-62 –


--- page 500 ---
34. CONTINGENT LIABILITIES
As at 31 December 2022, 2023 and 2024, the Group did not have any material contingent liabilities.
35. PLEDGE OF ASSETS
The Group did not have any pledge of assets not disclosed in the Historical Financial Information at the end
of each of the Relevant Periods.
36. COMMITMENTS
The Group had the following contractual commitments at the end of each of the Relevant Periods:
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Contracted, but not provided for:
Property, plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,109 2,982 373
37. RELATED PARTY TRANSACTIONS
(a) Name and relationship
The directors of the Group are of the view that the following companies are related parties that had transactions
or balances with the Group during the Relevant Periods:
Name of related parties Relationship with the Group
Nanjing Pharmaceutical Hubei Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118An entity controlled by one of the Company’s
shareholders
Hubei Zhongshan Medical Investment Management
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
An entity controlled by one of the Company’s
shareholders
(b) Transactions with related parties
The Group had the following transactions with related parties during the Relevant Periods:
As at 31 December
2022 2023 2024
Note RMB’000 RMB’000 RMB’000
Purchases of goods /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(i) 1,211 1,309 1,467
Rental payments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118330 300 488
Rental income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181 2 0––
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,661 1,609 1,955
Note:
(i) The transactions with the related parties were made in accordance with the terms and conditions
mutually agreed by the parties involved. The balances with the related parties are trade in nature,
unsecured, interest-free and payable on demand.
APPENDIX I ACCOUNTANTS’ REPORT
– I-63 –


--- page 501 ---
(c) Outstanding balances with related parties
As at 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Trade for payables:
Nanjing Pharmaceutical Hubei
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111843–
Dividends payable (non-trade):
Hubei Zhongshan Medical Investment
Management Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 19,397
(d) Compensation of key management personnel of the Group:
Y ear ended 31 December
2022 2023 2024
RMB’000 RMB’000 RMB’000
Wages, salaries and allowances /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,018 4,749 3,897
Share-based payment expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118285 406 281
Pension scheme contributions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836 44 42
Other employee benefits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118121 168 209
Total compensation paid to key management
personnel /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,460 5,367 4,429
Further details of directors’ and the chief executive’s emoluments are included in note II 8 to the Historical
Financial Information.
38. FINANCIAL INSTRUMENTS BY CATEGORY
The carrying amounts of each of the categories of financial instruments as at the end of each of the Relevant
Periods are as follows:
As at 31 December 2022
Financial assets
Financial assets
at FVTPL
Financial assets at
amortised cost Total
RMB’000 RMB’000 RMB’000
Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 3,751 3,751
Financial assets included in prepayments,
other receivables and other assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 11,461 11,461
Financial assets at FVTPL /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118117 – 117
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 177,970 177,970
Contingent consideration /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118976 – 976
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,093 193,182 194,275
APPENDIX I ACCOUNTANTS’ REPORT
– I-64 –


--- page 502 ---
Financial liabilities
Financial liabilities
at FVTPL
Financial liabilities
at amortised cost Total
RMB’000 RMB’000 RMB’000
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 18,014 18,014
Financial liabilities included in other payables
and accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 9,407 9,407
Redeemable preference shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118110,450 – 110,450
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118110,450 27,421 137,871
As at 31 December 2023
Financial assets
Financial assets at
amortised cost
RMB’000
Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,548
Financial assets included in prepayments, other receivables and other assets /H1118/H1118/H1118/H1118/H1118/H11186,922
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118227,083
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118240,553
Financial liabilities
Financial liabilities
at FVTPL
Financial liabilities
at amortised cost Total
RMB’000 RMB’000 RMB’000
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 17,298 17,298
Financial liabilities included in other payables
and accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 9,123 9,123
Redeemable preference shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118112,781 – 112,781
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118112,781 26,421 139,202
As at 31 December 2024
Financial assets
Financial assets at
amortised cost
RMB’000
Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,836
Financial assets included in prepayments, other receivables and other assets /H1118/H1118/H1118/H1118/H1118/H11187,274
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111895,046
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118108,156
APPENDIX I ACCOUNTANTS’ REPORT
– I-65 –


--- page 503 ---
Financial liabilities
Financial liabilities
at FVTPL
Financial liabilities
at amortised cost Total
RMB’000 RMB’000 RMB’000
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 14,678 14,678
Financial liabilities included in other payables
and accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 12,577 12,577
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 27,255 27,255
39. FAIR V ALUE AND FAIR V ALUE HIERARCHY OF FINANCIAL INSTRUMENTS
Fair value
Management has assessed that the fair values of cash and cash equivalents, trade receivables, trade payables,
the current portion of financial assets included in prepayments, other receivables, the current portion of financial
liabilities included in other payables and accruals, approximate to their carrying amounts largely due to the short term
maturities of these instruments.
The Group’s finance department headed by the finance manager is responsible for determining the policies and
procedures for the fair value measurement of financial instruments. The finance manager reports directly to the
financial director. At the end of each reporting period, the finance department analyses the movements in the values
of financial instruments and determines the major inputs applied in the valuation. The valuation is reviewed and
approved by the financial director.
The fair values of the financial assets and liabilities are included at the amount at which the instrument could
be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following
methods and assumptions were used to estimate the fair values.
The fair values of the non-current portion of financial assets included in prepayments, other receivables and
other assets have been calculated by discounting the expected future cash flows using rates currently available for
instruments with similar terms, credit risk and remaining maturities. The changes in fair value as a result of the
Group’s own non-performance risk for financial assets included in non-current prepayments, other receivables and
other assets as at 31 December 2022, 2023 and 2024 were assessed to be insignificant.
Below is a summary of significant unobservable inputs used in valuing equity investments designated at
FVTPL and contingent consideration whose fair value measurements are categorised as Level 3 as at the end of each
of the Relevant Periods together with a quantitative sensitivity analysis as at the end of each of the Relevant Periods:
Valuation technique
Significant
unobservable
input
Weighted
average
Sensitivity of fair value
to the input
Unlisted equity investments
as at 31 December 2022 /H1118/H1118/H1118
Recent transaction
method
Price RMB480,000 5% increase/decrease
in price of recent
transaction would
result in an
increase/decrease in
fair value by
RMB58,500/
RMB58,500
Contingent consideration as
at 31 December 2022 /H1118/H1118/H1118/H1118
Scenario analysis Discount rate 3.06% 10% increase/decrease
discount rate would
result in an
decrease/increase in
fair value by
RMB10,000/
RMB10,000
APPENDIX I ACCOUNTANTS’ REPORT
– I-66 –


--- page 504 ---
Fair value hierarchy
The following tables illustrate the fair value measurement hierarchy of the Group’s financial instruments:
Assets measured at fair value:
As at 31 December 2022
Fair value measurement using
Quoted prices
in active
markets
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets at FVTPL /H1118/H1118/H1118/H1118/H1118/H1118/H1118–– 1 1 7 1 1 7
Contingent consideration /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 976 976
Liabilities measured at fair value:
As at 31 December 2022
Fair value measurement using
Quoted prices
in active
markets
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000
Redeemable preference shares /H1118/H1118/H1118/H1118 – – 110,450 110,450
As at 31 December 2023
Fair value measurement using
Quoted prices
in active
markets
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000
Redeemable preference shares /H1118/H1118/H1118/H1118 – – 112,781 112,781
During the Relevant Periods, there were no transfers of fair value measurements between Level 1 and Level 2
and no transfers into or out of Level 3 for both financial assets and financial liabilities.
40. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise cash and cash equivalents, financial assets at FVTPL,
redeemable preference shares and interest-bearing bank borrowings. The main purpose of these financial instruments
is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities such as trade
receivables and trade payables, which arise directly from its operations.
The main risks arising from the Group’s financial instruments are credit risk and liquidity risk. The board of
directors meet periodically to analyse and formulate measures to manage the Group’s exposure to these risks.
Credit risk
The carrying amounts of cash and cash equivalents, trade receivables, other receivables and other financial
assets represent the Group’s maximum exposure equal to credit risk in relation to the financial assets.
APPENDIX I ACCOUNTANTS’ REPORT
– I-67 –


--- page 505 ---
The Group expects that there is no significant credit risk associated with cash and cash equivalents since they
are substantially held in reputable state-owned banks and other medium or large-sized listed banks. Management does
not expect that there will be any significant losses from on-performance by these counterparties.
The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all
customers who wish to trade on credit terms are subject to credit verification procedures. In order to minimise the
credit risk, the Group reviews the recoverable amount of each individual trade receivable periodically and the
management also has monitoring procedures to ensure the follow-up action is taken to recover overdue receivables.
In this regard, the directors of the Company consider that the Group’s credit risk is significantly reduced.
The Group also expects that there is no significant credit risk associated with other receivables and other
financial assets since counterparties to these financial assets have no history of default.
Maximum exposure and year-end staging
The tables below show the credit quality and the maximum exposure to credit risk based on the Group’s credit
policy, which is mainly based on past due information unless other information is available without undue cost or
effort, and year-end staging classification as at 31 December. The amounts presented are gross carrying amounts for
financial assets.
As at 31 December 2022
12-month ECLs Lifetime ECLs
Stage 1 Stage 2 Stage 3
Simplified
approach Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables* /H1118/H1118/H1118/H1118/H1118– – – 3,948 3,948
Financial assets included
in prepayments, other
receivables and other
assets — Normal** /H1118/H1118/H1118/H111811,51 0––– 1 1,510
Cash and cash equivalents
— Not yet past due /H1118/H1118/H1118177,97 0––– 177,970
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118189,480 – – 3,948 193,428
As at 31 December 2023
12-month ECLs Lifetime ECLs
Stage 1 Stage 2 Stage 3
Simplified
approach Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables* /H1118/H1118/H1118/H1118/H1118– – – 6,896 6,896
Financial assets included
in prepayments, other
receivables and other
assets — Normal** /H1118/H1118/H1118/H11186,98 1––– 6,981
Cash and cash equivalents
— Not yet past due /H1118/H1118/H1118227,08 3––– 227,083
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118234,064 – – 6,896 240,960
APPENDIX I ACCOUNTANTS’ REPORT
– I-68 –


--- page 506 ---
As at 31 December 2024
12-month ECLs Lifetime ECLs
Stage 1 Stage 2 Stage 3
Simplified
approach Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables* /H1118/H1118/H1118/H1118/H1118– – – 6,143 6,143
Financial assets included
in prepayments, other
receivables and other
assets — Normal** /H1118/H1118/H1118/H11187,31 7––– 7,317
Cash and cash equivalents
— Not yet past due /H1118/H1118/H111895,04 6––– 95,046
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118102,363 – – 6,143 108,506
* For trade receivables to which the Group applies the simplified approach method for impairment,
information is disclosed in note II 21 to the Historical Financial Information.
** The credit quality of the financial assets included in prepayments, other receivables and other assets is
considered to be “normal” when they are not past due and there is no information indicating that the
financial assets had a significant increase in credit risk since initial recognition. Otherwise, the credit
quality of the financial assets is considered to be “doubtful”.
Liquidity risk
The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers
the maturity of both its financial instruments and financial assets (e.g., trade receivables) and projected cash flows
from operations.
The maturity profile of the Group’s financial liabilities as at the end of each of the Relevant Periods, based
on the contractual undiscounted payments, is as follows:
As at 31 December 2022
On demand Within 1 year 1 to 3 years Over 3 years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,01 4––– 18,014
Financial liabilities included in
other payables and accruals /H1118/H1118 5,93 8––– 5,938
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 38,115 54,492 41,232 133,839
Redeemable preference shares /H1118/H1118 – – 125,972 – 125,972
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823,952 38,115 180,464 41,232 283,763
As at 31 December 2023
On demand Within 1 year 1 to 3 years Over 3 years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,29 8––– 17,298
Financial liabilities included in
other payables and accruals /H1118/H1118 5,411––– 5,411
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 37,922 48,843 31,513 118,278
Redeemable preference shares /H1118/H1118 – 126,400 – – 126,400
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822,709 164,322 48,843 31,513 267,387
APPENDIX I ACCOUNTANTS’ REPORT
– I-69 –


--- page 507 ---
As at 31 December 2024
On demand Within 1 year 1 to 3 years Over 3 years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,67 8––– 14,678
Financial liabilities included in
other payables and accruals /H1118/H1118 12,57 7––– 12,577
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 35,643 55,270 31,095 122,008
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827,255 35,643 55,270 31,095 149,263
Capital management
The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue as
a going concern and to maintain healthy capital ratios in order to support its business and maximise shareholders’
value.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions
and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Group may adjust
the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group is not subject
to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for
managing capital during the Relevant Periods.
41. EVENTS AFTER THE RELEV ANT PERIODS
In February 2025, the unpaid non-trade dividend of RMB19,397,000 was settled by the Company, pursuant to
“2023 Annual Profit Distribution Plan” at the annual general meeting approved the Company’s shareholders.
42. SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Company, the Group or any of its subsidiaries in
respect of any period subsequent to 31 December 2024.
APPENDIX I ACCOUNTANTS’ REPORT
– I-70 –


--- page 508 ---
A. UNAUDITED PRO FORMA ADJUSTED CONSOLIDATED NET TANGIBLE
ASSETS
The following unaudited pro forma adjusted consolidated net tangible assets of the Group
has been prepared in accordance with paragraph 4.29 of the Rules Governing the Listing of
Securities on the Stock Exchange of Hong Kong Limited and with reference to Accounting
Guideline 7 “ Preparation of Pro Forma Financial Information for inclusion in Investment
Circulars ” issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) for
illustration purpose only, and is set out below to illustrate the effect of the Global Offering on
the consolidated net tangible assets as at 31 December 2024 as if Global Offering had taken
place on that date.
The unaudited pro forma adjusted consolidated net tangible assets attributed to the owners
of the parent has been prepared for illustrative purposes only and because of its hypothetical
nature, it may not give a true picture of the financial position of the Group had the Global
Offering been completed as at 31 December 2024 or any future date. It is prepared based on
the consolidated net tangible assets as at 31 December 2024 as set out in the Accountants’
Report in Appendix I to this prospectus, and adjusted as described below. The unaudited pro
forma adjusted consolidated net tangible assets does not form part of the Accountants’ Report
on the Historical Financial Information as set out in Appendix I to this prospectus.
Consolidated net
tangible assets
attributable to the
equity shareholders of
the Company as of
31 December 2024
Estimated net
proceeds from
the Global
Offering
Unaudited pro
forma adjusted
consolidated net
tangible assets
attributable to
owners of the
parent as at
31 December 2024
Unaudited pro forma
adjusted consolidated net
tangible assets
attributable to owners of
the parent per Share as at
31 December 2024
RMB’000 RMB’000 RMB’000 RMB HK$
(Note 1) (Note 2) (Note 3) (Note 4)
Based on an Offer
Price of HK$20.00
per Share /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111850,792 167,934 218,726 4.43 4.85
Based on an Offer
Price of HK$21.40
per Share /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111850,792 181,265 232,057 4.70 5.15
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-1 –


--- page 509 ---
Notes:
(1) The unaudited consolidated net tangible assets attributable to owners of the parent as at 31 December
2024 is extracted from the Historical Financial Information set out in Appendix I to this prospectus,
which is arrived after deducting intangible assets attributable to owners of the parent and goodwill of
RMB1,749,000 and RMB63,090,000, respectively, from the unaudited consolidated net assets
attributable to owners of the parent of RMB115,631,000 as at 31 December 2024.
(2) The estimated net proceeds from the Global Offering are calculated based on the Offer Price of
HK$20.00 and HK$21.40 per Share, being the low-end price and high-end price of the stated Offer Price
range, respectively, after deduction of the underwriting fees and other related expenses payable by the
Company (excluding the listing expense that have been charged to profit or loss during the Track Record
Period) and do not take into account any shares which may be issued upon exercise of the
Over-allotment Option.
(3) The unaudited pro forma adjusted consolidated net tangible assets attributable to owners of the
Company and the amounts per Share are arrived at after the adjustments referred to in the preceding
paragraphs and on the basis that 49,379,042 shares were in issue assuming the Global Offering had been
completed on 31 December 2024 and the respective Offer Price of HK$20.00 and HK$21.40 per Share.
(4) In connection with the preparation of the unaudited pro forma financial information, the unaudited pro
forma adjusted consolidated net tangible assets attributable to owners of the parent per Share are
converted into Hong Kong dollars at a rate of HK$1=RMB0.9133. No representation is made that the
RMB amounts have been, could have been or may be converted into Hong Kong dollar, or vice versa
at that rate.
(5) Except as disclosed above, no adjustment has been made to reflect any trading result or other
transactions of our Group entered into subsequent to 31 December 2024.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-2 –


--- page 510 ---
Tel 曢婘: +852 2846 9888
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B. INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE
COMPILATION OF PRO FORMA FINANCIAL INFORMATION
To the Directors of Wuhan Dazhong Dental Medical Co., Ltd.
We have completed our assurance engagement to report on the compilation of pro forma
financial information of Wuhan Dazhong Dental Medical Co., Ltd. (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 pro forma financial information
consists of the pro forma consolidated net tangible assets as at 31 December 2024, and related
notes as set out on pages II-1 to II-2 in part A of Appendix II of the prospectus dated 30 June
2025 issued by the Company (the “Pro Forma Financial Information”). The applicable criteria
on the basis of which the Directors have compiled the Pro Forma Financial Information are
described in note pages II-1 to II-2 in part A of Appendix II to the Prospectus.
The Pro Forma Financial Information has been compiled by the Directors to illustrate the
impact of the global offering of shares of the Company on the Group’s financial position as at
31 December 2024 as if the transaction 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 financial statements for the period ended 31 December 2024, on which an
accountants’ report has been published.
Directors’ responsibility for the Pro Forma Financial Information
The Directors are responsible for compiling the 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 (“AG”) 7 Preparation of Pro Forma Financial Information for Inclusion in
Investment Circulars issued by the Hong Kong Institute of Certified Public Accountants (the
“HKICPA”).
Our independence and quality control
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 behavior.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-3 –


--- page 511 ---
Our firm applies Hong Kong Standard on Quality Management 1 Quality Management for
Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related
Services Engagements which requires the firm to design, implement and operate a system of
quality management including policies or 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 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 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 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 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 Pro Forma Financial Information.
The purpose of the Pro Forma Financial Information included in the Prospectus is solely
to illustrate the impact of the global offering of shares of the Company on unadjusted financial
information of the Group as if 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 transaction would have been as presented.
A reasonable assurance engagement to report on whether the 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 Pro Forma Financial Information provide a reasonable basis for presenting
the significant effects directly attributable to the transaction, and to obtain sufficient
appropriate evidence about whether:
 the related pro forma adjustments give appropriate effect to those criteria; and
 the Pro Forma Financial Information reflects the proper application of those
adjustments to the unadjusted financial information.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-4 –


--- page 512 ---
The procedures selected depend on the reporting accountants’ judgment, having regard to
the reporting accountants’ understanding of the nature of the Group, the transaction in respect
of which the Pro Forma Financial Information has been compiled, and other relevant
engagement circumstances.
The engagement also involves evaluating the overall presentation of the 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 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 purpose of the Pro Forma Financial
Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.
Ernst & Y oung
Certified Public Accountants
Hong Kong
30 June 2025
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-5 –


--- page 513 ---
PRC TAXATION
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 effective PRC laws and practises and no predictions are made about changes or
adjustments to relevant laws or policies, and no comments or suggestions will be made
accordingly. 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 regulations. Accordingly, you
should consult your own tax adviser regarding the tax consequences of an investment in H
shares. The discussion is based upon PRC laws and relevant interpretations in effect as at the
date of this prospectus, all of which are subject to change and may have retrospective effect.
Prospective investors are urged to consult their financial adviser regarding the PRC and other
tax consequences of owning and disposing of H shares.
Taxation on dividends
Individual investors
Pursuant to the Individual Income Tax Law of the PRC (ج,)
which was last amended on August 31, 2018 by the SCNPC and came into effect on January 1,
2019, and the Regulations on Implementation of the Individual Income Tax Law of the PRC
(ૢԷ), which were last amended on December 18, 2018 by
the State Council and came into effect on January 1, 2019, dividends paid 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 a PRC 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 an applicable tax treaty.
Pursuant to the Notice of the STA on Issues Concerning the Levy and Administration of
Individual Income Tax After the Repeal of Guo Shui Fa [1993] No. 045) (Guo Shui Han [2011]
No. 348) (਷೼೯[1993]045ٝ
(਷೼Ռ[2011]348 ໮)) issued by the STA on 28 June 2011, which came into effect on the same
day, domestic non-foreign-invested enterprises issuing shares in Hong Kong may, when
distributing dividends, withhold individual income tax at the rate of 10%. For the individual
holders of H shares receiving dividends who are citizens of countries that have entered into a
tax treaty with the PRC with tax rate of lower than 10%, non-foreign-invested enterprises listed
in Hong Kong may apply on behalf of such holders for enjoying the lower preferential tax
treatments, and, upon approval by the tax authorities, the excessive withholding amount will
be refunded. For the individual holders of H shares receiving dividends who are citizens of
countries that have entered into a tax treaty with the PRC with tax rate of higher than 10% but
lower than 20%, the non-foreign-invested enterprise is required to withhold the tax at the
agreed rate under the treaties, and no application procedures will be necessary. For the
individual holders of H shares receiving dividends who are citizens of countries without
taxation treaties with the PRC or are under other situations, the non-foreign-invested enterprise
is required to withhold the tax at a rate of 20%.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-1 –


--- page 514 ---
Enterprise investors
According to the EIT Law, which was latest amended by the SCNPC and implemented on
December 29, 2018, and the Implementation Rules for the Enterprise Income Tax Law of the
PRC (ૢԷ) enacted on December 6, 2007 by the State
Council and became effective on January 1, 2008, and latest amended on December 6, 2024 and
came into force on January 20, 2025, 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 is 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 Notice on the Issues Concerning Withholding the Enterprise Income Tax on the
Dividends Paid by Chinese Resident Enterprises to H-Share Holders Which Are Overseas
Non-resident Enterprises (Guo Shui Han [2008] No. 897) (͏ΆุΣྤ̮H֢ڢٰ
ٝ(਷೼Ռ[2008]897 ໮)), which was
issued and implemented by the STA on November 6, 2008, further clarifies 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 (Guo Shui Han [2009]
No. 394) (͏Άุ՟੻Bҭᔧ(ৌ೼Ռ[2009]394
໮)), which was issued by the STA and came into effect on July 24, 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 region,
where applicable.
Pursuant to the Arrangement between the Mainland and the Hong Kong Special
Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income (ᅄ೼ձ
τર) (the “ Arrangement ”), which was signed between the STA and the Hong
Kong Government on August 21, 2006, the PRC government may levy taxes on the dividends
paid by a PRC company to Hong Kong residents (including resident individual and resident
entities) in an amount not exceeding 10% of the total dividends payable by the PRC company
unless a Hong Kong resident directly holds 25% or more of the equity interest in the PRC
company, then such tax shall not exceed 5% of the total dividends payable by the PRC
company. The Fifth Protocol to the Arrangement between the Mainland and the Hong Kong
Special Administrative Region for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income (<ࠠ
τર>ࣣ֛which came into effect on December 6, 2019, added a
criteria for the qualification of entitlement to enjoy treaty benefits. Although there may be
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-2 –


--- page 515 ---
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 STA on
the Issues Concerning the Application of the Dividend Clauses of Tax Agreements (Guo Shui
Han [2009] No. 81) (ٝ(਷೼Ռ[2009]81
໮)).
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 PRC enterprise income tax imposed on the dividends received from PRC enterprises. The
PRC currently has entered into avoidance of double taxation treaties or arrangements with a
number of countries and regions including Hong Kong, Macau, 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 PRC 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 PRC tax authorities.
Taxation on share transfer
V alue-Added Tax (“ VAT”) and Local Surcharges
Pursuant to the Notice on the Full Implementation of Pilot Programme for Transition from
Business Tax to V A T (Cai Shui [2016] No. 36) (ٝ(ৌ
೼[2016]36 ໮)), effective from May 1, 2016, entities and individuals engaged in sales of
services within the PRC shall be subject to V A T and sales of services within the PRC refers to
the situation where either the seller or the buyer of a taxable service is located within the PRC.
The notice also provides that transfer of financial products, including transfer of the ownership
of marketable securities, shall be subject to V A T at 6% on the taxable income (which is the
balance of sales price upon deduction of purchase price), for a general or a foreign V A T
taxpayer. However, individuals are exempt from V A T upon transfer of financial products.
V A T taxpayers are also subject to urban maintenance and construction tax, education
surcharge and local education surcharge (collectively, “ local surcharges ”), which is usually at
12% of the V A T payable, if any. However, pursuant to the Urban Maintenance and Construction
Tax Law of the PRC (جwhich became effective on
September 1, 2021, no urban maintenance and construction tax shall be levied on value-added
tax or consumption tax paid for the sale of labour services, other services and intangible assets
in China by overseas entities or individuals. Meanwhile, pursuant to Announcement on the
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-3 –


--- page 516 ---
Measures for Determining the Tax Basis of Urban Maintenance and Construction Tax and
Other Matters (ʮѓ), the basis for calculating
and levying education surcharges and local education surcharges is consistent with the basis for
calculating the urban maintenance and construction tax since September 1, 2021. In
conclusion, no urban maintenance and construction tax, education surcharges, and local
education surcharges will be levied on value-added tax paid for the sale of intangible assets in
China by overseas entities or individuals since September 1, 2021.
However, it is still uncertain whether the non-PRC resident enterprises are required to pay
the PRC V A T for the disposal of H shares in practise. If relevant tariffs are imposed in the
future, the investment value of such holders in H shares may be materially and adversely
affected.
Income Tax
Individual investor
According to the Individual Income Tax Law of the PRC and its implementation rules, the
proceeds from the sale of equity interests in PRC-resident enterprise are subject to income tax
at a tax rate of 20%.
According to the Notice Concerning Continuing Temporary Exemption from Individual
Income Tax on the Income From Stocks Transfer (Cai Shui Zi [1998] No. 61) (ɛᔷᜫ
ٝ(ৌ೼ο[1998]61 ໮)) promulgated by the STA and
became effective on March 30, 1998, since January 1, 1997, the individual income tax levied
on the individual income from transfer of stocks of listed companies will continue to be
temporarily exempted. In the newly revised Individual Income Tax Law of the PRC, the STA
did not clearly stipulate whether to continue to exempt individuals from tax on the income from
transfer of stocks of listed companies.
Furthermore, the Notice of the State Administration of Taxation on Issues Concerning the
Levy of Individual Income Tax on Incomes from the Transfer of Restricted Shares of Listed
Companies (Cai Shui [2009] No. 167) (੻೼Ϟᗫ
ٝ(ৌ೼[2009]167໮)) jointly issued by the MOF, the STA and the CSRC and
implemented on 31 December 2009 stipulates that individuals’ income from the transfer of listed
shares obtained from the public offering of listed companies and transfer market on the Shanghai
Stock Exchange and the Shenzhen Stock Exchange shall continue to be exempted from the
individual income tax, provided that it excludes the relevant restricted shares as defined in the
Supplementary Notice Concerning the Levy of Individual Income Tax on Incomes from the
Transfer of Restricted Shares of Listed Companies (Cai Shui [2010] No. 70) (ɛᔷᜫɪ̹
ٝ(ৌ೼[2010]70໮)) jointly issued by these
departments and implemented on 10 November 2010. As at the Latest Practicable Date, the
aforementioned provisions did not specify whether to impose the individual income tax on the
income from the transfer of shares of PRC-resident enterprise listed on overseas stock exchanges
by non-PRC resident individuals.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-4 –


--- page 517 ---
Enterprise investors
In accordance with the EIT Law and its implementation rules, a non-resident enterprise
that has not established an establishment or premises in the PRC or it has established an
establishment and premises but the income received has no actual connection with the
establishment and premises, it shall pay an enterprise income tax at a rate of 10% for the
income arising within the PRC (including the income from sale of equity interests of
PRC-resident enterprise). 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 on each payment or when it is payable on
due date. The withholding tax may be reduced pursuant to applicable treaties or agreements on
avoidance of double taxation.
Stamp Duty
In accordance with the Stamp Tax Law of the People’s Republic of China ( ʕശɛ͏΍ձ
جpromulgated by the Standing Committee of the NPC on 10 June 2021 and came
into effect on 1 July 2022, entities and individuals that issue taxable certificates and conduct
securities transactions within the territory of PRC, or entities and individuals who issue taxable
certificates and conduct securities transactions outside the territory of PRC to be used within
the territory of the PRC shall subject to stamp duty.
Estate Duty
As at the Latest Practicable Date, no estate duty is levied within the PRC.
PRINCIPAL TAXATION OF OUR COMPANY IN THE PRC
Enterprise Income Tax
The Enterprise Income Tax Law of the PRC (ج,)
promulgated by the National People’s Congress on 16 March 2007, came into effect on
1 January 2008 and last amended on 29 December 2018, as well as the Implementation Rules
of the Enterprise Income Tax Law (ૢԷ), promulgated by
the State Council on 6 December 2007, came into force on 1 January 2008 and latest amended
on 6 December, 2024 and came into force on 20 January, 2025, are the principal law and
regulation governing enterprise income tax in the PRC. According to the EIT Law and its
implementation rules, enterprises are classified into resident enterprises and non-resident
enterprises. Resident enterprises refer to enterprises that are legally established in the PRC, or
are established under foreign laws but whose actual management bodies are located in the PRC.
Non-resident enterprises refer to enterprises that are legally established under foreign laws and
have set up institutions or sites in the PRC but with no actual management body in the PRC,
or enterprises that have not set up institutions or sites in the PRC but have derived incomes
from the PRC. A uniform income tax rate of 25% applies to all resident enterprises and
non-resident enterprises that have set up institutions or sites in the PRC to the extent that such
incomes are derived from their set-up institutions or sites in the PRC, or such income are
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-5 –


--- page 518 ---
obtained outside the PRC but have an actual connection with the set-up institutions or sites.
And non-resident enterprises that have not set up institutions or sites in the PRC or have set
up institutions or sites but the incomes obtained by the said enterprises have no actual
connection with the set-up institutions or sites, shall pay enterprise income tax at the rate of
10% in relation to their income sources from the PRC.
Pursuant to the Administrative Measures on Accreditation of High-tech Enterprises ( ৷อ
جpromulgated on 14 April 2008 and amended on 29 January 2016,
qualifications of an accredited high-tech enterprise shall be valid for three years from the date
of issuance of the certificate. Upon obtaining the qualification as a high-tech enterprise, the
enterprise shall complete tax reduction and exemption formalities with the tax authorities in
charge pursuant to the provisions of Article 4 of these Measures.
Value-Added Tax
The major PRC Law governing value-added tax are the Interim Regulations on
V alue-added Tax of the PRC (೼ᅲБૢԷ) issued on 13 December 1993
by the State Council, came into effect on 1 January 1994, and last revised on 19 November
2017, as well as the Implementation Rules for the Interim Regulations on V alue-Added Tax of
the PRC (ۆissued on 25 December 1993 by the MOF,
came into effect on the same day and last revised on 28 October 2011, any entities and
individuals engaged in the sale of goods, supply of processing, repair and replacement services,
and import of goods within the territory of the PRC are taxpayers of V A T and shall pay the V A T
in accordance with the law and regulation. The rate of V A T for sale of goods is 17% unless
otherwise specified, such as the rate of V A T for sale of transportation is 11%. With the V A T
reforms in the PRC, the rate of V A T has been changed several times. The MOF and the STA
issued the Notice of on Adjusting V A T Rates (Cai Shui [2018] No. 32) (೼೼ଟ
ٝ(ৌ೼[2018]32 ໮)) on 4 April 2018 to adjust the tax rates of 17% and 11% applicable
to any taxpayer’s V A T taxable sale or import of goods to 16% and 10%, respectively, and this
adjustment became effect on 1 May 2018. Subsequently, the MOF, the STA and the General
Administration of Customs jointly issued the Announcement on Relevant Policies for
Deepening the V A T Reform (ʮѓ) on 20 March 2019 to make
a further adjustment, which came into effect on 1 April 2019. The tax rate of 16% applicable
to the V A T taxable sale or import of goods shall be adjusted to 13%, and the tax rate of 10%
applicable thereto shall be adjusted to 9%.
PRC FOREIGN EXCHANGE
The lawful currency of the PRC is Renminbi, which is currently subject to foreign
exchange regulation according to relevant laws and regulations. SAFE, with the authorisation
of the PBOC, is empowered with the functions of administering all matters relating to foreign
exchange, including the enforcement of foreign exchange regulatory regulations.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-6 –


--- page 519 ---
On 29 January 1996, the State Council promulgated the Regulations of the PRC for
Foreign Exchange Control ( ʕശɛ͏΍ձ਷̮ි၍ଣૢԷ) (the “ Foreign Exchange Control
Regulations ”) which became effective on 1 April 1996. The Foreign Exchange Control
Regulations classify all international payments and transfers into current items and capital
items. Most of the current items are no longer subject to SAFE’s approval, while capital items
remain unchanged. The Foreign Exchange Control Regulations were subsequently amended on
14 January 1997 and 5 August 2008. The latest amendment to the Foreign Exchange Control
Regulations clearly states that no restriction will be imposed on international current payments
and transfers.
On 20 June 1996, the PBOC promulgated the Regulations for the Administration of
Settlement, Sale and Payment of Foreign Exchange (Yin Fa [1996] No. 210) ( ഐිeਯිʿ ˹
֛(ვ೯[1996]210 ໮)), which abolished the remaining restrictions on convertibility
of foreign exchange under current items, while retaining the existing restrictions on foreign
exchange transactions under capital items accounts.
According to the Announcement on Improving the Reform of the Renminbi (the PBOC
Announcement [2005] No. 16) (ʮѓ(ʕ਷ɛ͏ვБʮѓ
[2005] ୋ16໮)), issued by the PBOC on 21 July 2005 and effective on the same date, the PRC
began 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. The Renminbi exchange rate was no longer pegged to the U.S. dollar. The 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.
Starting from 4 January 2006, the PBOC introduced over-the-counter transactions into the
interbank spot foreign exchange market for the purpose of improving the formation mechanism
of the central parity of Renminbi exchange rates, and the practise of matching was kept at the
same time. In addition to the above, the PBOC introduced the market-maker rule to provide
liquidity to the foreign exchange market. On 1 July 2014, the PBOC further improved the
formation mechanism of the RMB exchange rate by authorising the China Foreign Exchange
Trade System to make inquiries with the market makers before the interbank foreign exchange
market opens every day for their offered quotations which are used as samples to calculate the
central parity of the RMB against the USD on that day using the weighted average of the
remaining market makers’ offered quotations after excluding the highest and lowest quotations,
and announce the central parity of the RMB against currencies such as the USD at 9:15 a.m.
on each working day. On 11 August 2015, the PBOC announced to improve the central parity
quotations of RMB against the USD by authorising market makers to provide central parity
quotations to the China Foreign Exchange Trading System before the interbank foreign
exchange market opens every day with reference to the interbank foreign exchange market
closing rate of the previous day, the supply and demand for foreign exchange as well as
changes in major international currency exchange rates.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-7 –


--- page 520 ---
On 5 August 2008, the State Council promulgated the revised Foreign Exchange Control
Regulations of the PRC, which have made substantial changes to the foreign exchange
supervision system of the PRC. First, the regulations have adopted an approach of balancing
the inflow and outflow of foreign exchange. Foreign exchange income received overseas can
be repatriated or deposited overseas, and foreign exchange and 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; second, the regulations have
improved the RMB exchange rate floating system based on market supply and demand under
management; third, in the event that international balance of payment suffer or may suffer a
material misbalance, or the national economy encounters or may encounter a severe crisis, the
State may adopt necessary safeguard or control measures against international balance of
payment; fourth, the regulations have enhanced the supervision and administration of foreign
exchange transactions and grant extensive authorities to SAFE to enhance its supervisory and
administrative powers.
According to the relevant laws and regulations in the PRC, PRC 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 designated banks that carry foreign exchange business, on the strength of valid 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 may, after paying taxes in
according to the law, on the strength of resolutions of the board of directors on the distribution
of profits, effect payment from foreign exchange accounts opened at designated banks that
carry foreign exchange business, or effect exchange and payment at designated banks.
The Decisions on Matters including Cancelling and Adjusting a Batch of Administrative
Approval Items (Guo Fa [2014] No. 50) (֛(਷
೯[2014]50 ໮)) promulgated by the State Council and came into effect on 23 October 2014
provide to cancel the approval requirement of 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.
Pursuant to the Notice on Issues Concerning the Foreign Exchange Administration of
Overseas Listing (Hui Fa [2014] No. 54) (ٝ(ි೯[2014]54
໮)) issued by SAFE and became effective on 26 December 2014, a domestic company shall,
within 15 business days of the date of the end of its overseas listing issuance, register the
overseas listing with the branch office of SAFE located at its registered address; the proceeds
from an overseas listing of a domestic company may be repatriated to China or deposited
overseas, provided that the intended use of the proceeds shall be consistent with the content of
the document or other public disclosure documents. A domestic company (except for bank
financial institutions) shall present its certificate of overseas listing to open a dedicated foreign
exchange account at a domestic 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.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-8 –


--- page 521 ---
According to the Notice on Further Simplifying and Improving Policies for the Foreign
Exchange Administration of Direct Investment (Hui Fa [2015] No. 13) (ආɓӉᔊʷձҷ
ٝ(ි೯[2015]13 ໮)) promulgated by SAFE on 13 February
2015 and became effective on 1 June 2015, and partially repealed 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 Notice on Policies for Reforming and Regulating the Control over
Foreign Exchange Settlement of Capital Accounts (Hui Fa [2016] No. 16) (ձ஝ᇍ༟
ٝ(ි೯[2016]16 ໮)) which was promulgated by SAFE and became
effective 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 adjust of SAFE in due time in accordance with international
revenue and expenditure situations.
According to the Notice on Optimising Administration of Foreign Exchange to Support
the Development of Foreign-related Business (Hui Fa [2020] No. 8) (Ꮄ
ٝ(ි೯[2020]8 ໮)) issued by SAFE and became effective
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, without
providing materials to the bank in advance for authenticity verification on an item-by-item
basis, provided that their utilised capital shall be authentic and in line with provisions, and
conform to the prevailing administrative regulations related to the use of income under capital
accounts. The concerned bank shall manage and control the relevant business risks under the
principle of prudent business development and conduct spot checks afterwards in accordance
with the relevant requirements. Local foreign exchange authorities shall strengthen monitoring
and analysis and interim and ex-post supervision.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-9 –


--- page 522 ---
PRC LA WS AND REGULATIONS
This Appendix sets out summaries of certain aspects of PRC laws and regulations, which
are relevant to the Company’s operations and business. Laws and regulations relating to
taxation in the PRC are discussed separately in “Appendix III — Taxation and Foreign
Exchange” to this prospectus. The principal objective of this summary is to provide potential
investors with an overview of the principal PRC legal and regulatory provisions applicable to
the Company. This summary is not intended to include all the information which may be
important to potential investors. For more details on laws and regulations which are relevant
to our business, please refer to the section headed “Regulatory Overview” in this prospectus.
The PRC Legal System
The PRC legal system is based on the PRC Constitution (جand 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 judgements do not
constitute legally binding precedents, although they may be used for the purposes of judicial
reference and guidance.
Pursuant to the PRC Constitution and the Legislation Law of the PRC ( ʕശɛ͏΍ձ਷
ججthe NPC and its standing committee are empowered to exercise the legislative power
of the State. The NPC has the power to formulate and amend basic laws governing State organs,
civil, criminal and other matters. The SCNPC is empowered to formulate and amend 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 PRC 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
regulations do not contravene any provision of the PRC Constitution, laws or administrative
regulations. The people’s congresses of cities with districts and their respective standing
committees may formulate local regulations with respect to urban and rural construction and
administration, environmental protection, historical and cultural protection and other aspects
according to the specific circumstances and actual needs of such cities, which 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, provided that such local
regulations do not contravene any provision of the PRC Constitution, laws, administrative
regulations and local regulations of their respective provinces or autonomous regions.
APPENDIX IV SUMMARY OF PRINCIPAL LA WS AND REGULATIONS
– IV-1 –


--- page 523 ---
The ministries and commissions of the State Council, PBOC, the National Audit Office
of the PRC and the subordinate institutions with administrative functions directly under the
State Council may formulate rules and regulations within the authorisation of their respective
departments in accordance with the laws and administrative regulations, and the decisions and
orders of the State Council. The people’s governments of the provinces, autonomous regions,
municipalities directly under the central government and cities with districts may formulate
rules and regulations in accordance with the laws, administrative regulations and local
regulations of such provinces, autonomous regions and municipalities directly under the
central government.
The PRC Constitution has supreme legal authority and no laws, administrative
regulations, local regulations, autonomous regulations or separate regulations may contravene
the PRC Constitution. The PRC laws rank higher than administrative regulations, local
regulations and rules. The administrative regulations rank higher than local regulations and
rules. The rules enacted by the people’s governments of the provinces or autonomous regions
rank higher than the rules enacted by the people’s governments of the cities with districts and
autonomous prefectures within the administrative areas of such provinces and the autonomous
regions.
The NPC has the power to alter or annul any inappropriate laws enacted by its standing
committee, and to annul any autonomous regulations or separate regulations which have been
approved by its standing committee, but which contravene the PRC Constitution or the PRC
Legislation Law. The SCNPC has the power to annul any administrative regulations that
contravene the PRC Constitution and laws, to annul any local regulations that contravene the
PRC Constitution, laws or administrative regulations, and to annul any autonomous regulations
or local regulations which have been approved by the standing committees of the people’s
congresses of the relevant provinces, autonomous regions or municipalities, but which
contravene the PRC Constitution and the PRC Legislation Law. The State Council has the
power to alter or annul any inappropriate ministerial rules and rules of local governments. The
people’s congresses of provinces, autonomous regions or municipalities have the power to alter
or annul any inappropriate local regulations enacted or approved by their respective standing
committees. The standing committees of local people’s congresses have the power to annul
inappropriate rules enacted by the people’s governments at the corresponding level. The
people’s governments of provinces and autonomous regions have the power to alter or annul
any inappropriate rules enacted by the people’s governments at a lower level.
According to the PRC Constitution, the power to interpret laws is vested in the SCNPC.
Pursuant to the Resolution of the SCNPC Providing an Improved Interpretation of the Law ( Ό
Ӕᙄ) passed on June 10, 1981, issues
related to the further clarification or supplement of laws should be interpreted or provided by
the SCNPC, issues related to the specific application of laws and decrees in a court trial should
be interpreted by the Supreme People’s Court, issues related to the specific application of laws
and decrees in a prosecution process should be interpreted by the Supreme People’s
Procuratorate, and the legal issues other than the above-mentioned should be interpreted by the
State Council and the competent authorities. If there are differences in principle in the
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interpretation of the Supreme People’s court and the Supreme People’s Procuratorate, they
shall be submitted to the SCNPC for interpretation or decision. 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.
The PRC Judicial System
Pursuant to the PRC Constitution and the Law of Organisation of the People’s Courts of
the PRC (جmost recently revised on October 26, 2018 and
taking effect on January 1, 2019, the people’s courts are classified into the Supreme People’s
Court, the local people’s courts at various local levels, and other special people’s courts. The
local people’s courts at various local levels are divided into three levels, namely, the primary
people’s courts, the intermediate people’s courts and the higher people’s courts. The primary
people’s courts are further divided into civil, criminal and economic tribunals. The
intermediate people’s courts have structure similar to those of the primary people’s courts and
other special tribunals, such as the intellectual property courts, military courts and maritime
courts. These two levels of people’s courts are subject to supervision by people’s courts at
higher levels. The Supreme People’s Procuratorate is authorised to supervise the judgement 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 judgement and ruling of a people’s
court at a lower level which have been legally effective. 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.
The people’s courts employ a two-tier appellate system. The judgements or rulings of the
second instance at a people’s court are final. A party may appeal against the judgement 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 judgements or rulings of the people’s
court are final. Judgements or rulings of the second instance of the intermediate people’s
courts, the higher people’s courts and the Supreme People’s Court are final. Judgements or
rulings of the first instance of the Supreme People’s Court are also final. However, if the
Supreme People’s Court or a people’s court at the next higher level discovers an error in a final
and binding judgement or ruling which has taken effect in any people’s court at a lower level,
or the presiding judge of a people’s court finds an error in a final and binding judgement or
ruling which has taken effect in the court over which he presides, a retrial of the case may be
initiated according to the judicial supervision procedures.
The Civil Procedure Law of the PRC (جadopted on April 9,
1991 and most recently amended on September 1, 2023, prescribes the conditions for
instituting a civil action, the jurisdiction of the people’s courts, the procedures to be followed
for conducting a civil action, and the procedures for enforcement of a civil judgement or ruling.
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All parties to a civil action conducted within the PRC must abide by the PRC Civil Procedure
Law. A civil case is generally 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 directly 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. However, such choice shall not in any circumstances contravene
the provisions on grade jurisdiction and exclusive jurisdiction.
A foreign individual, a person without nationality, a foreign enterprise or a foreign
organisation that institute or respond to proceedings in a people’s court is given the same
litigation rights and obligations as a citizen or legal person of the PRC. Should a foreign court
limit the litigation rights of PRC citizens and enterprises, the PRC court shall 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/she 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 PRC is a signatory or a 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, collect evidence and conduct other actions on its behalf. A PRC court shall not
accommodate any request made by a foreign court which will result in the violation of
sovereignty, security or public interests of the PRC.
All parties to a civil action shall perform legally effective judgements and rulings. If any
party to a civil action refuses to abide by a judgement 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 judgement
which the court has granted an enforcement approval, the court may, upon the application of
the other party, mandatorily enforce the judgement.
A party seeking to enforce a judgement or ruling of a people’s court against another party
who is not or whose property is not within the PRC may apply to a foreign court with
jurisdiction over the case for recognition and enforcement of such judgement or ruling.
Alternatively, the people’s court may, pursuant to an international treaty concluded or acceded
to by the PRC or in accordance with the principle of reciprocity, request the foreign court to
recognise and execute the judgement or ruling. Likewise, if the PRC has entered into either a
treaty relating to judicial enforcement with the relevant foreign country or according to the
principle of reciprocity, a foreign judgement or ruling may also be recognised and enforced in
accordance with the PRC enforcement procedures by a PRC court unless the people’s court
considers that the recognition or enforcement of such judgement or ruling would violate the
basic legal principles of the PRC, its sovereignty or national security, or would not be in the
public interest.
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The PRC Company Law, Overseas Listing Trial Measures and Guidance for Articles of
Association
A joint stock limited company incorporated in the PRC and seeking a listing on the Stock
Exchange is mainly subject to the following laws and regulations in the PRC:
 The PRC Company Law (جwhich was promulgated on
December 29, 2023 and took effect on July 1, 2024;
 The Overseas Listing Trial Measures and five relevant guidelines which were
promulgated by the CSRC on February 17, 2023 pursuant to the PRC Securities Law
and are applicable to the direct and indirect overseas share offering or listing of
domestic companies; and
 The Guidelines for Articles of Association of Listed Companies (ˏ)
(the “ Guidance for Articles of Association ”) which was most recently amended on
March 28, 2025 by the CSRC. The Articles of Association is formulated based on the
Guidance for Articles of Association on a reference basis, the summary of which is
set out in the section entitled “Appendix V — Summary of the Articles of
Association” to this prospectus.
Set out below is a summary of the major provisions of the currently effective PRC
Company Law, the Overseas Listing Trial Measures and the Guidance for Articles of
Association which are applicable to the Company.
General
A joint stock limited company refers to a corporate legal person established in China
under the PRC Company Law with its registered capital divided into shares. All shares of the
company shall be either par value shares or no par value shares in accordance with the
company’s articles of association. Where par value shares are adopted, each share shall have
equal value. The liability of the company is limited to the total amount of all assets it owns and
the liability of its shareholders is limited to the extent of the shares they subscribe for.
The company shall conduct its business in accordance with laws and administrative
regulations. It may invest in other limited liability companies and joint stock limited companies
and its liabilities with respect to such invested companies are limited to the amount invested.
Unless otherwise provided by law, the company may not be a contributor that undertakes joint
liabilities for the debts of the invested companies.
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Incorporation
A company may be incorporated by promotion or floatation. A company shall be
incorporated by a minimum of one but no more than 200 promoters, and at least half of the
promoters must be residents within the PRC. Companies incorporated by promotion are
companies of which the entire registered capital is subscribed for by the promoters. Shares in
the company incorporated by promotion shall not be offered to others unless the registered
capital has been fully paid up. If laws, administrative regulations and decisions of the State
Council have separate provisions 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. Procedures relating to the transfer of titles to
non-monetary assets shall be duly completed if such assets are to be contributed as capital.
Promoters who fail to pay up their capital contributions in accordance with the foregoing
provisions shall assume default liabilities in accordance with the covenants set out in the
promoters’ agreements. After the promoters have confirmed the capital contribution under the
articles of association, a board of directors and a board of supervisors shall be elected and the
board of directors shall apply for registration of incorporation by filing the articles of
association with the company registration authority, and other documents as required by laws
or administrative regulations.
Where companies are incorporated by floatation, not less than 35% of their total number
of shares must be subscribed for by the promoters, unless otherwise provided for by laws or
administrative regulations. The promoters shall preside over and convene an inauguration
meeting within thirty days from the date of the full payment of subscription capital. The
inauguration meeting shall be formed by the promoters and subscribers. Where the shares
issued are not fully subscribed for within the offer period stipulated in the share offering
prospectus, or where the promoter fails to convene an inauguration meeting within thirty days
of the subscription capital for the shares issued being fully paid up, the subscribers may
demand that the promoters refund the subscription capital so paid together with the interest
calculated at bank rates of a deposit for the same period. Within thirty days of the conclusion
of the inauguration meeting, the board of directors shall apply to the registration authority for
registration of the establishment of the company. A company is formally established and has
the status of a legal person after the registration with the relevant administration for market
regulation has been completed and a business licence has been issued.
Share Capital
The promoters may make a capital contribution in currencies, or non-monetary assets
such as in kind, 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 laws or administrative regulations. If a capital contribution is made
in non-monetary assets, a valuation of the assets contributed must be carried out pursuant to
the provisions of laws or administrative regulations on valuation without any over-valuation or
under-valuation.
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There is no limit under the PRC Company Law as to the percentage of shares held by an
individual shareholder in a company. The shares of a company are represented by stocks. A
stock is a certificate issued by the company to certify the share held by a shareholder. The stock
issued by the company shall be in the form of registered stock.
The issuance of shares shall be conducted in a fair and equitable manner. Each share of
the same class must carry equal rights. Shares issued at the same time and within the same class
must be issued on the same conditions and at the same price. The same price per share shall
be paid by any share subscriber (whether an entity or an individual). The share offering price
may be equal to or greater than the par value of the share, but may not be less than the par
value.
Under the Overseas Listing Trial Measures, if a domestic company offers shares overseas,
it may raise funds and dividend distributions in foreign currency or Renminbi.
Under the PRC Company Law, a company issuing registered share certificates shall
maintain a shareholder registry which sets forth the following matters:
(i) the name and domicile of each shareholder;
(ii) the number of shares held by each shareholder;
(iii) the serial numbers of shares held by each shareholder; and
(iv) the date on which each shareholder acquired the shares.
Increase in Share Capital
In light of its operational and development needs and in accordance with laws and
regulations, a company may increase its share capital under any of the following methods,
subject to the resolutions be passed at a shareholders’ general meeting: (i) a public offering of
shares; (ii) a private placement of shares; (iii) offering of bonus shares to existing shareholders;
(iv) the conversion of reserve funds into shares; and (v) any other methods provided in law and
administrative regulations and approved by the CSRC.
Pursuant to the PRC Company Law, a company may, according to its articles of
association, issue the following classified shares, which have different rights from those of the
common shares: (i) shares with priority or inferior rights to profits or remaining property in
distribution; (ii) shares with more or less voting rights per share than those of the common
shares; (iii) shares whose transfer is subject to the consent of the company and other
restrictions; (iv) other classified shares provided by the State Council. A company making a
public offering of shares shall not issue any of the classified shares as prescribed on items
(ii) and (iii), except those issued prior to the public offering. Where a company is issuing new
shares, resolutions shall be passed at general meeting in accordance with the articles of
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association in respect of the class and amount of the new shares, the issue price of the new
shares, the commencement and end dates for the issue of the new shares and when the new
shares are proposed to be issued to existing shareholders, the class and amount of such new
shares.
To offer shares overseas, the domestic company shall report the application documents for
offering and listing to the CSRC for record-filing within three business days after submission
of the application documents for offering and listing overseas.
Reduction of Share Capital
A company may reduce its registered capital in accordance with the following procedures
prescribed by the PRC Company Law:
(i) the company shall prepare a balance sheet and a list of properties;
(ii) the reduction of registered capital must be approved by shareholders at the general
meeting;
(iii) the company shall notify its creditors of the reduction in registered capital within ten
days and publish an announcement of the reduction in newspapers or the National
Enterprise Credit Information Publication System within thirty days of the
resolution approving the reduction being passed;
(iv) the creditors of the company may within the statutory time limit require the
company to repay its debts or provide guarantees for covering the debts; and
(v) the company must apply to the relevant company registration authority for
registration of the change and reduction in registered capital.
Repurchase of Shares
Pursuant to the PRC Company Law, a company shall not purchase its own shares other
than in any of the following circumstances:
(i) reducing its registered capital;
(ii) merging with another company which holds its shares;
(iii) utilising the shares for employee stock ownership plan or stock ownership incentive
scheme;
(iv) acquiring its own shares at the request of its shareholders who vote in a
shareholders’ general meeting against a resolution regarding a merger or separation;
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(v) utilising the shares for conversion of corporate bonds which are convertible into
shares issued by a listed company; and
(vi) where it is necessary for a listed company to maintain its corporate value and
stockholders’ equity.
Any company’s purchase of its own shares for any reason specified in item (i) and item
(ii) of the preceding paragraph shall be subject to a resolution of the general meeting; any
company’s purchase of its own shares for any reason specified in item (iii), item (v) and item
(vi) of the preceding paragraph may be subject to a resolution of the board meeting with two
thirds or more of directors present, according to the provisions of the articles of associations
or upon authorisation by the general meeting.
The shares acquired under the circumstance stipulated in item (i) hereof shall be
deregistered within ten days from the date of acquisition of shares; the shares shall be assigned
or deregistered within six months if the repurchase of shares is made under the circumstances
stipulated in either item (ii) or item (iv); and the shares held in total by a company after the
repurchase under any of the circumstances stipulated in item (iii), item (v) or item (vi) shall
not exceed 10% of the company’s total outstanding shares, and shall be assigned or
deregistered within three years.
Transfer of Shares
Shares held by shareholders may be transferred in accordance with the relevant laws.
Pursuant to the PRC Company Law, a shareholder should effect a transfer of his shares on a
stock exchange established in accordance with laws or by any other means as required by the
State Council. Registered shares may be transferred after the shareholders endorse the back of
the share certificates or in any other manner specified by laws or administrative regulations.
Following the transfer, the company shall enter the names and addresses of the transferees into
its share register. No changes of registration in the share register described above shall be
effected during a period of twenty days prior to convening a shareholders’ general meeting or
five days prior to the record date for the purpose of determining entitlements to dividend
distributions, subject to any legal provisions on the registration of changes in the share register
of listed companies.
Pursuant to the PRC Company Law, shares of the company issued prior to the public
offering of shares may not be transferred within one year of the date of the company’s listing
on a stock exchange. Directors, supervisors and the senior management of a company shall
declare to the company their shareholdings in the company and any changes thereof. During
their terms of office, they may transfer no more than 25% of the total number of shares they
hold in the company per annum. They shall not transfer the shares they hold within one year
of the date of the company’s listing on a stock exchange, nor within half a year after they leave
their positions in the company. The articles of association may set out other restrictive
provisions in respect of the transfer of shares in the company held by its directors, supervisors
and the senior management.
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Shareholders
Under the PRC Company Law, the rights of shareholders include the rights:
(i) to receive a return on assets, participate in significant decision-making and select
management personnel;
(ii) to petition the people’s court to revoke any resolution passed on a shareholders’
general meeting or a meeting of the board of directors that has not been convened
in compliance with the laws and regulations or the articles of association or whose
voting has violated the laws, administrative regulations or the articles of association
of the company, or any resolution the contents of which is in violation of the articles
of association, provided that such petition shall be submitted within sixty days of the
passing of such resolution;
(iii) to transfer the shares according to the applicable laws and regulations and the
articles of association;
(iv) to attend or appoint a proxy to attend shareholders’ general meetings and exercise
the voting rights;
(v) to inspect the articles of association, share register, counterfoil of company
debentures, minutes of shareholders’ general meetings, board resolutions,
resolutions of the board of supervisors and financial and accounting reports, and to
make suggestions or inquiries in respect of the company’s operations;
(vi) to receive dividends in respect of the number of shares held;
(vii) to participate in distribution of residual properties of the company in proportion to
their shareholdings upon the liquidation of the company; and
(viii) any other shareholders’ rights provided for in laws, administrative regulations, other
normative documents and the articles of association.
The obligations of shareholders include the obligation to abide by the company’s articles
of association, to pay the subscription capital in respect of the shares subscribed for, to be
liable for the company’s debts and liabilities to the extent of the amount of subscription capital
agreed to be paid in respect of the shares taken up by them and any other shareholder obligation
specified in the articles of association.
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Shareholders’ General Meetings
The general meeting is the organ of authority of the company, which exercises its powers
in accordance with the PRC Company Law. The general meeting may exercise its powers:
(i) to elect and remove the directors and supervisors and to decide on the matters
relating to the remuneration of directors and supervisors;
(ii) to review and approve the reports of the board of directors;
(iii) to review and approve the reports of the board of supervisors or supervisors;
(iv) to review and approve the company’s profit distribution proposals and loss recovery
proposals;
(v) to decide on any increase or reduction of the company’s registered capital;
(vi) to decide on the issue of corporate bonds;
(vii) to decide on merger, division, dissolution and liquidation of the company or change
of its corporate form;
(viii) to amend the company’s articles of association; and
(ix) to exercise any other authority stipulated in the articles of association.
The general meeting may authorise the board of directors to make resolutions on the
issuance of corporate bonds.
Pursuant to the PRC Company Law, a shareholders’ general meeting is required to be held
once every year. An extraordinary general meeting is required to be held within two months of
the occurrence of any of the following circumstances:
(i) the number of directors is less than the number stipulated by the law or less than two
thirds of the number specified in the articles of association;
(ii) the outstanding losses of the company amounted to one-third of the company’s total
share capital;
(iii) shareholders individually or in aggregate holding 10% or more of the company’s
shares request that an extraordinary general meeting is convened;
(iv) the board of directors deems necessary;
(v) the board of supervisors so proposes; or
(vi) any other circumstances as provided for in the articles of association.
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A shareholders’ general meeting shall be convened by the board of directors and presided
over by the chairman of the board of directors. In the event that the chairman is incapable of
performing or is not performing his duties, the meeting shall be presided over by the vice
chairman. In the event that the vice chairman is incapable of performing or is not performing
his duties, a director nominated by more than half of the directors shall preside over the
meeting. Where the board of directors is incapable of performing or is not performing its duties
to convene the general meeting, the board of supervisors shall convene and preside over such
meeting in a timely manner. If the board of supervisors fails to convene and preside over such
meeting, shareholders individually or in aggregate holding 10% or more of the company’s
shares for ninety days or more consecutively may unilaterally convene and preside over such
meeting. Where shareholders individually or in aggregately holding 10% or more of the
company’s shares request to convene an extraordinary general meeting, the board of directors
and the board of supervisors shall, within ten days after receipt of such request, decide whether
to convene the extraordinary general meeting and reply to the shareholders in writing.
In accordance with the PRC Company Law, a notice of the general meeting stating the
date and venue of the meeting and the matters to be considered at the meeting shall be given
to all shareholders twenty days before the meeting. A notice of extraordinary general meeting
shall be given to all shareholders fifteen days prior to the meeting.
There is no specific provision in the PRC Company Law regarding the number of
shareholders constituting a quorum in a shareholders’ general meeting.
Pursuant to the PRC Company Law, shareholders (excluding classified shareholders)
present at a shareholders’ general meeting have one vote for each share they hold, save that
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 general meeting pursuant to the provisions of the articles of association or
a resolution of the general 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 general meeting, and shareholders may consolidate their votes for one or more
directors or supervisors when casting a vote.
Pursuant to the PRC Company Law, resolutions of the general meeting must be passed by
more than half of the voting rights held by shareholders present at the meeting, with the
exception of resolutions 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 two-thirds or more of the voting rights
held by the shareholders present at the meeting. Where the PRC Company Law and the articles
of association provide that the transfer or acquisition of significant assets or the provision of
external guarantees by the company must be approved by way of resolution of the general
meeting, the board of directors shall convene a shareholders’ general meeting promptly to vote
on such matters.
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A shareholder may entrust a proxy to attend the general meeting on his/her behalf and the
matters, power and time limit of the proxy shall be clarified by such shareholder. The proxy
shall present the shareholders’ power of attorney to the company and exercise voting rights
within the scope of authorisation.
Minutes shall be prepared in respect of matters considered at the general meeting and the
chairman and directors attending the meeting shall endorse such minutes by signature. The
chairman of the meeting and directors attending the meeting shall sign to endorse such minutes.
The minutes shall be kept together with the shareholders’ attendance register and the proxy
forms.
Board of Directors
A joint stock limited company shall have a board of directors which shall have at least
three members, except for certain joint stock limited company with smaller scaler or few
shareholders which may appoint one director without establishing a board of directors. For a
company that has three hundred or more employees, the board of directors shall include the
staff representative unless the board of supervisors has been established and already included
the staff representative supervisor. The term of a director shall be stipulated in the articles of
association, provided that no term of office shall last for more than three years. A director may
serve consecutive terms if re-elected. A director shall continue to perform his/her duties as a
director in accordance with the laws, administrative regulations and the articles of association
until a duly re-elected director 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 directors results in the number
of directors being less than the quorum.
Under the PRC Company Law, the board of directors may exercise its powers:
(i) to convene shareholders’ general meetings and report on its work to the
shareholders’ general meetings;
(ii) to implement the resolutions passed by the shareholders at the shareholders’
meetings;
(iii) to decide on the company’s operational plans and investment proposals;
(iv) to formulate the company’s profit distribution proposals and loss recovery
proposals;
(v) to formulate proposals for the increase or reduction of the company’s registered
capital and the issue of corporate bonds;
(vi) to formulate proposals for the merger, division or dissolution of the company or
change of corporate form;
(vii) to decide on the setup of the company’s internal management organs;
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(viii) to appoint or dismiss the company’s manager and decide on his/her remuneration
and, based on the manager’s recommendation, to appoint or dismiss any deputy
manager and financial officer of the company and to decide on their remunerations;
(ix) to formulate the company’s basic management system; and
(x) to exercise any other authority stipulated in the articles of association.
Any restrictions on the powers of the board of directors set out in the articles of
association may not be claimed against any bona fide third party.
Meetings of the board of directors shall be convened at least twice each year. Notices of
meeting shall be given to all directors and supervisors ten days before the meeting. Interim
board meetings may be proposed to be convened by shareholders representing 10% or more of
the voting rights, one-third or more of the directors or the board of supervisors. The chairman
shall convene the meeting within ten days of receiving such proposal, and preside over the
meeting. The board of directors may otherwise determine the means and the period of notice
for convening an interim board meeting. Meetings of the board of directors shall be held only
if more than half of the directors are present. Resolutions of the board of directors 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 of directors. Directors shall attend the meetings of the board of
directors 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 board of directors shall make minutes of the meeting’s decisions
on the matters discussed at the meeting, and the directors attending the meeting shall sign the
minutes.
If a resolution of the board of directors violates any laws, administrative regulations or
the articles of association or resolutions of the general meeting, and as a result of which the
company sustains serious losses, the directors participating in the resolution are liable to
compensate the company. However, if it can be proved that a director expressly objected to the
resolution when the resolution was voted on, and that such objection was recorded in the
minutes of the meeting, such director shall be relieved from that liability.
Under the PRC Company Law, the following person may not serve as a director in a
company:
(i) a person without capacity or restricted capacity to undertake any civil liabilities;
(ii) a person who has been sentenced to any criminal penalty for corruption, bribery,
embezzlement, misappropriation of property or destruction of the socialist economic
order, or who has been deprived of his political rights due to his crimes and such
sentence has expired for no more than five years, or who is granted probation, if no
more than two years have passed since the expiration of the probation period;
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--- page 536 ---
(iii) a person who has been a former director, factory manager or manager of a company
or an enterprise that has entered into insolvent liquidation and who was personally
liable for the insolvency of such company or enterprise, where no more than three
years have elapsed since the date of the completion of the bankruptcy and
liquidation of the company or enterprise;
(iv) a person who has been a legal representative of a company or an enterprise that has
had its business licence revoked due to violations of the law or has been ordered to
close down by law and the person was personally responsible, where less than three
years have elapsed since the date of such revocation or the order to close down; or
(v) a person who is listed as a dishonest person subject to enforcement by the people’s
court due to failure to pay off a large amount of unliquidated mature 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.
Pursuant to the PRC Company Law, the board of directors 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
board meetings and review the implementation of board resolutions. The vice chairman shall
assist the chairman to perform his/her duties. Where the chairman is incapable of performing
or is not performing his/her duties, the duties shall be performed by the vice chairman. Where
the vice chairman is incapable of performing or is not performing his/her duties, a director
elected by more than half of the directors shall perform his/her duties.
Board of Supervisors
The board of supervisors shall consist of representatives of the shareholders and an
appropriate proportion of representatives of the company’s staff, among 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 board of supervisors shall be democratically elected by the company’s staff at the
staff representative assembly, general staff meeting or otherwise. The board of supervisors
shall appoint a chairman and may appoint a vice chairman. The chairman and the vice chairman
of the board of supervisors shall be elected by more than half of the supervisors. Directors and
senior management shall not act concurrently as supervisors.
The chairman of the board of supervisors shall convene and preside over board of
supervisors meetings. Where the chairman of the board of supervisors is incapable of
performing or is not performing his/her duties, the vice chairman of the board of supervisors
shall convene and preside over supervisory board meetings. Where the vice chairman of the
board of supervisors is incapable of performing or is not performing his/her duties, a supervisor
nominated by more than half of the supervisors shall convene and preside over meetings of the
board of supervisors.
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--- page 537 ---
Each term of office of a supervisor is three years and he/she may serve consecutive terms
if re-elected. 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.
The board of supervisors may exercise its powers:
(i) to review the company’s financial position;
(ii) to supervise the directors and senior management in their performance of their
duties and to propose the removal of directors and senior management who have
violated laws, regulations, the articles of association or shareholders’ resolutions;
(iii) when the acts of directors or senior management are detrimental to the company’s
interests, to require the director and senior management to correct these acts;
(iv) to propose the convening of extraordinary shareholders’ general meetings and to
convene and preside over shareholders’ general meetings when the board fails to
perform the duty of convening and presiding over shareholders’ general meetings
under the PRC Company Law;
(v) to submit proposals to the shareholders’ general meetings;
(vi) to bring actions against directors and senior management pursuant to the relevant
provisions of the PRC Company Law; and
(vii) to exercise any other authority stipulated in the articles of association.
Supervisors may be present at board meetings and make inquiries or proposals in respect
of the resolutions of the board. The board of supervisors may investigate any irregularities
identified in the operation of the company and, when necessary, may engage an accounting firm
to assist its work at the cost of the company.
Manager and Senior Management
Pursuant to the PRC Company Law, a company shall have a manager who shall be
appointed or removed by the board of directors. The manager shall exercise his/her powers in
accordance with the company’s articles of association or the authorization of the board of
directors.
Other provisions in the articles of association on the manager’s powers shall also be
complied with. The manager shall be present at meetings of the board of directors. However,
the manager shall have no voting rights at meetings of the board of directors unless he/she
concurrently serves as a director.
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Pursuant to the PRC Company Law, senior management refers to the manager, deputy
manager, financial officer, secretary to the board of directors of a listed company and other
personnel as stipulated in the articles of association.
Duties of Directors, Supervisors, Managers and Other Senior Management
Directors, supervisors and senior management are required under the PRC Company Law
to comply with the relevant laws, regulations and the articles of association, and shall be
obliged to be faithful and diligent towards the company. Where the controlling shareholder or
actual controller of the company who does not serve as a director but actually attends to the
company’s affairs, shall comply with the foregoing provisions.
Directors, supervisors and management personnel are prohibited from abusing their
authority in accepting bribes or other unlawful income and from misappropriating the
company’s property.
Directors, supervisors and senior management are prohibited from:
(i) seizing the assets of the company or misappropriating company funds;
(ii) depositing company funds into accounts under their own names or the names of
other individuals;
(iii) taking advantage of power to accept bribes or other illegal income;
(iv) accepting commissions paid by a third party for transactions conducted with the
company for their own benefit;
(v) unauthorised divulgence of confidential information of the company; and
(vi) other acts in violation of their duty of loyalty to the company.
Where directors, supervisors and senior management directly or indirectly conclude any
contract or engage in transactions with the company, they shall report to the board of directors
or the shareholders’ meeting and seek approval by resolutions of the board of directors or the
shareholders’ meeting in accordance with the articles of association. The requirement shall also
apply to the conclusion of contracts or engagement in transactions by close relatives of the
directors, supervisors and senior management or enterprises directly or indirectly controlled by
close relatives of the directors, supervisors and senior management as well as persons who are
otherwise related to the directors, supervisors and senior management.
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--- page 539 ---
Directors, supervisors and senior management shall not take advantage of duty to seek
business opportunities for themselves or others that would have been directed to the company,
unless such act has been reported to and approved by the board of directors or the shareholders’
meeting in accordance with the articles of association or the company is unable to take the
business opportunity in accordance with applicable laws, administrative regulations, and the
articles of association.
Directors, supervisors and senior management shall not engage in the business similar to
those of the company for themselves or others, unless such act has been reported to and
approved by the board of directors or the shareholders’ meeting in accordance with the articles
of association.
Income generated by directors or senior management in violation of aforementioned shall
be returned to the company.
A director, supervisor or senior management who contravenes any laws, regulations or the
company’s articles of association in the performance of his/her duties resulting in any loss to
the company shall be liable to the company for compensation.
The Guidance for Articles of Association provides that a company’s directors and senior
management shall have duties of diligence towards the company, for example, the directors
shall be prudent, serious and diligent in exercising the authority conferred by the company to
ensure that the business activities of the company comply with state’s laws, administrative
regulations and various economic policy requirements and that the business activities do not
go beyond the scope of business activities specified in the company’s business licence; the
directors shall treat all shareholders equally; the shareholders shall keep abreast of the
company’s business management status; both the directors and the senior management shall
sign written statements confirming periodic reports of the company and ensure that the
information disclosed by the company is true, accurate and complete; both the directors and the
senior management shall provide accurate information and materials to the board of
supervisors and shall not interfere with the performance of duties by the board of supervisors
or individual supervisors; both the directors and the senior management shall have other
diligence duties prescribed by laws, administrative regulations, departmental rules and the
company’s articles of association.
Finance and Accounting
Pursuant to the PRC Company Law, 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.
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--- page 540 ---
The company’s financial reports shall be made available for shareholders’ inspection at
the company twenty 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 distributing each year’s profits after taxation, the company shall set aside 10% of
its profits after taxation for the company’s statutory common reserve fund until the fund has
reached 50% of the company’s registered capital. When the company’s statutory common
reserve fund is not sufficient to make up for the company’s losses for the previous years, the
current year’s profits shall first be used to make good the losses before any allocation is set
aside for the statutory common reserve fund. After the company has made allocations to the
statutory common reserve fund from its profits after taxation, it may, upon passing a resolution
at a shareholders’ general meeting, make further allocations from its profits after taxation to
the discretionary common reserve fund. After the company has made good its losses and made
allocations to the abovementioned reserve fund, the remaining profits after taxation shall be
distributed in proportion to the number of shares held by the shareholders, except for those
which are not distributed in a proportionate manner as provided by the articles of association.
Profits distributed to shareholders in violation of the requirements described above must
be returned to the company. The company shall not be entitled to any distribution of profits in
respect of shares held by it.
The premium over the nominal value of the shares of the company on issue and other
income as required by relevant government authorities to be treated as the capital reserve fund
shall be accounted for as the capital reserve fund. The common reserve fund of a company shall
be applied to make good the company’s losses, expand its business operations or increase its
capital. Where any losses need to be covered with reserve fund of the company, discretionary
reserve fund and statutory common reserve fund shall first be used and if still insufficient,
capital reserve fund can be used in accordance with applicable provisions. Upon the transfer
of the statutory common reserve fund into increasing capital, the balance of the statutory
common fund shall not be less than 25% of the registered capital of the company before such
transfer.
The company shall have no accounting books other than the statutory books. The
company’s capital shall not be deposited in any account opened under the name of an
individual.
Appointment and Retirement of Auditors
The Guidance for Articles of Association provides that a company shall engage an
accounting firm which is qualified with the PRC Securities Law to provide services including
the audit of financial statements, the verification of net assets and other relevant consultancy
services. The engagement term is one year and may be extended.
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--- page 541 ---
Pursuant to the PRC Company Law, the appointment or dismissal of an accounting firm
responsible for the company’s auditing shall be determined by shareholders at a shareholders’
general meeting or the board of directors or the board of supervisors in accordance with the
articles of association. The accounting firm should be allowed to make representations when
the general meeting or the board of directors conduct a vote on the dismissal of the accounting
firm. The company should provide true and complete accounting evidence, accounting books,
financial and accounting reports and other accounting information to the engaged accounting
firm without any refusal, withholding or falsification of information. Furthermore, the
Guidance for Articles of Association provides that the audit fee for the accounting firm shall
also be determined by shareholders at a general meeting.
Profit Distribution
According to the PRC Company Law, a company shall not distribute profits before losses
are covered and the statutory common reserve fund is provided.
Amendments to the Articles of Association
Pursuant to the PRC Company Law, the resolution of a shareholders’ general meeting
regarding any amendment to a company’s articles of association requires affirmative votes by
two-thirds or more of the votes held by shareholders attending the meeting.
Pursuant to the Guidance for Articles of Association, the company shall amend its articles
of association under any of the following circumstances:
(i) where, after any amendment to the PRC Company Law or any other applicable law
or administrative regulation, the provisions of the articles of association conflict
with the law and/or administrative regulations amended;
(ii) where the company’s circumstances change to such an extent that they are
inconsistent with what is recorded in the articles of association; and
(iii) where the shareholders’ general meeting decides to amend the articles of
association.
The Guidance for Articles of Association further provides that where any amendment to
the articles of association adopted by a shareholders’ general meeting is subject to approval by
the competent authorities, such amendment shall be submitted for approval; where any
amendment involves the company’s registration items, the company’s registration with the
authority shall also be amended. In addition, an announcement shall be made in accordance
with the applicable provisions provided that the amendment to the articles of association is
required to be disclosed by any law or regulation.
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--- page 542 ---
Dissolution and Liquidation
Pursuant to the PRC Company Law, a company shall be dissolved for any of the following
reasons:
(i) 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;
(ii) the shareholders have resolved at a shareholders’ general meeting to dissolve the
company;
(iii) the company is dissolved by reason of its merger or division;
(iv) 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; or
(v) the company is dissolved by a people’s court in response to the request of
shareholders holding shares that represent 10% or more of the voting rights of all
shareholders 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’ interests.
On the occurrence of the abovementioned events, the company shall make an
announcement on the National Enterprise Credit Information Publicity System within ten days.
In the event of paragraphs (i) and (ii) above, the company may carry on its existence by
amending its articles of association if no property has been distributed to any shareholder. The
amendments to the articles of association in accordance with the provisions described above
shall require the approval of two-thirds or more of voting rights of shareholders attending a
shareholders’ general meeting.
Where the company is dissolved under the circumstances set forth in paragraph (i), (ii),
(iv) or (v) above, the liquidation procedures shall be conducted and directors shall be the
company’s liquidation obligor and it should establish a liquidation committee within fifteen
days of the date on which the dissolution event occurs. The liquidation committee shall be
composed of directors or any other persons determined by a shareholders’ general meeting. If
a liquidation committee is not established within the prescribed period or the liquidation fails
to effect after the establishment of a liquidation committee, the interested party may file an
application with a people’s court, requesting that the court appoint relevant personnel to form
a liquidation committee to administer the liquidation. The people’s court should accept such
application and form a liquidation committee to conduct liquidation in a timely manner.
APPENDIX IV SUMMARY OF PRINCIPAL LA WS AND REGULATIONS
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--- page 543 ---
The liquidation committee may exercise following powers during the liquidation:
(i) to dispose of the company’s assets and to prepare a balance sheet and an inventory
of assets;
(ii) to notify the company’s creditors or publish announcements;
(iii) to deal with and settle any outstanding business related to the liquidation;
(iv) to pay any outstanding tax together with any tax arising during the liquidation
process;
(v) to settle the company’s claims and liabilities;
(vi) to distribute the company’s remaining assets after its debts have been paid off; and
(vii) to represent the company in any civil procedures.
The liquidation committee shall notify the company’s creditors within ten days from its
establishment, and publish an announcement in newspapers or on the National Enterprise
Credit Information Publicity System within sixty days.
A creditor shall lodge his claim with the liquidation committee within thirty days of
receipt of the notification or within forty-five days of the date of the announcement if he has
not received any notification.
A creditor shall, in making his claim, state matters relevant to his 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.
Upon disposal of the company’s property and preparation of the required balance sheet
and inventory of assets, the liquidation committee shall draw up a liquidation plan and submit
this plan to a shareholders’ general meeting or a people’s court for endorsement. The remaining
assets of the company, 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 engage in 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.
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--- page 544 ---
Upon liquidation of the company’s property and preparation of the required balance sheet
and inventory of assets, if the liquidation committee becomes aware that the company does not
have sufficient assets to repay its liabilities, it must apply to a people’s court for a declaration
of bankruptcy in accordance with the laws. Following such declaration by the people’s court,
the liquidation committee shall hand over the administration matters to the bankruptcy
administrator designated by the people’s court.
Upon completion of the liquidation, the liquidation committee shall prepare a liquidation
report and submit it to the shareholders’ general meeting or a people’s court for confirmation
of its completion, and to the company registration authority to cancel the company’s
registration, and an announcement of its termination shall be published. Members of the
liquidation committee are required to discharge their duties in good faith and in compliance
with relevant laws. Members of the liquidation committee shall be prohibited from abusing
their authority in accepting bribes or other unlawful income and from misappropriating the
company’s properties. Members of the liquidation committee are liable to indemnify the
company and its creditors in respect of any loss arising from their wilful or material default.
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 Overseas Listing Trial Measures, both initial public offerings or listings
in overseas markets shall be filed with the CSRC within three business days after the relevant
application is submitted overseas. Subsequent securities offerings of an issuer in the same
overseas market where it has previously offered and listed securities shall be filed with the
CSRC within three business days after the offering is completed. Moreover, where the filing
documents are complete and in compliance with stipulated requirements, the CSRC will, within
twenty business days after receiving the filing documents, conclude the filing procedure and
publish the filing results on the CSRC website. Where the filing documents are incomplete or
do not conform to stipulated requirements, the CSRC shall request supplementation and
amendment thereto within five business days after receiving the filing documents. The issuer
shall then complete supplementation and amendment within thirty business days.
Loss of Share Certificates
A shareholder may, in accordance with the public notice procedures set out in the PRC
Civil Procedure Law, apply to a people’s court if his share certificate(s) in registered form is
either stolen, lost or destroyed, for a declaration that such certificate(s) will no longer be valid.
After such a declaration has been obtained, the shareholder may apply to the company for the
issue of a replacement certificate(s).
APPENDIX IV SUMMARY OF PRINCIPAL LA WS AND REGULATIONS
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--- page 545 ---
Merger and Demerger
Merger of companies may be conducted by absorption or consolidation. If companies
adopt the method of absorption, the absorbed company shall be dissolved. If companies are
incorporated in the form of consolidation, the parties to the merger shall be dissolved.
The parties to the merger shall enter into a merger agreement and prepare a balance sheet
and a list of properties. Within ten days of the date on which the resolution on merger is made,
the creditors shall be notified by the company and a public announcement shall be in the press
or on the National Enterprise Credit Information Publicity System within thirty days. The
creditors may require the company to repay its debts or provide guarantees for covering the
debts within thirty days of receipt of the notification or within forty-five days of the date of
the announcement if the creditor has not received any notification; and in case of a merger, the
credits and debts of the merging parties shall be assumed by the surviving or the new company.
Where a company merges with another company in which the former holds not less than
90% of the shares, the acquired company is not required to obtain approval by resolution of its
shareholders’ meeting, but shall notify the other shareholders who have the right to request the
company to buy its equities or shares as a reasonable price. If the price paid for a company’s
merger dose not exceed 10% of the company’s net assets, approval by resolution of its
shareholder’s meeting may not be required unless otherwise provided by the company’s articles
of association. Where a company’s merger is exempt from approval by resolution of the
shareholders’ meeting in the previous two cases, it shall be subject to approval by resolution
of the board of directors.
In case of a division, the company’s assets shall be divided and a balance sheet and an
inventory of assets shall be prepared. Within ten days of the date on which the resolution on
division is made, the creditors shall be notified by the company and a public announcement
shall be made in the press or on the National Enterprise Credit Information Publicity System
within thirty days. The liabilities of the company which have accrued prior to the division shall
be jointly borne by the separated companies, unless otherwise stipulated in the agreement in
writing entered into by the company with creditors in respect of the settlement of debts prior
to division.
The PRC Securities Law, Regulations and Regulatory Regimes
The PRC has promulgated a series of regulations that relate to the issue and trading of the
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 governing
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 Securities Committee and the CSRC and reformed the CSRC.
APPENDIX IV SUMMARY OF PRINCIPAL LA WS AND REGULATIONS
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--- page 546 ---
The PRC Securities Law (جis the first national securities law in
China, and the regulatory matters include the issuance and trading of securities, the acquisition
of listed companies, information disclosure, obligations and responsibilities of stock
exchanges, securities companies and securities regulatory authorities, etc. The PRC Securities
Law comprehensively regulates activities in the PRC securities market.
Pursuant to the PRC Securities Law, domestic enterprises issuing securities overseas
directly or indirectly or listing and trading their securities overseas shall comply with the
relevant provisions of the State Council. At present, the issuance and trading of shares issued
overseas is mainly regulated by rules and regulations issued by the State Council and the
CSRC.
Arbitration and Enforcement of Arbitral Awards
The PRC Arbitration Law (جwas enacted by the SCNPC on
August 31, 1994, which became effective on September 1, 1995 and was last amended on
September 1, 2017. 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 the 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.
If the respondent puts forward evidence to prove that the arbitral award is under any of
the following circumstances, the award shall not be enforced upon examination and
verification by an arbitration tribunal of the people’s court:
(i) the parties have no arbitration clause in their contract, nor have subsequently
reached a written agreement on arbitration;
(ii) the matter to be ruled does not fall within the scope of the arbitration agreement or
the arbitration institution has no right to arbitrate;
(iii) the composition of the arbitration tribunal or the arbitration procedure violates the
legal procedure;
(iv) the evidence on which the award is based is forged;
(v) the other party conceals evidence sufficient to influence the impartial award from
the arbitration institution;
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--- page 547 ---
(vi) the arbitrators have committed acts of embezzlement, bribery, favouritism and
malpractice, or perverting the law in arbitrating the case.
If the people’s court determines that the enforcement of the award violates the public
interest, the award shall not be enforced.
Any party seeking to enforce an arbitral award of a foreign affairs arbitration organ of the
PRC against a party who or whose property is not located within the PRC may 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 arbitration 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 (ߒthe “ New Y ork Convention ”) adopted on
June 10, 1958 pursuant to a resolution of the SCNPC passed on December 2, 1986. The New
Y ork Convention provides that all arbitral awards made in a state which is a party to the New
Y ork 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 SCNPC declared that (i) the PRC will only apply the New Y ork
Convention to the recognition and enforcement of arbitral awards made in the territory of
another contracting state based on the principle of reciprocity; and (ii) the New Y ork
Convention will only apply to disputes deemed under PRC law to be arising from contractual
or non-contractual mercantile legal relations.
The Arrangements on the Mutual Enforcement of Arbitral Awards between the Mainland
and the Hong Kong Special Administrative Region (ʝੂБ΀൒
τર) were passed at the Judicial Committee meetings of the Supreme People’s Court
on June 18, 1999, which went into effect on February 1, 2000, and was amended by the
Supplemental Arrangement of the Supreme People’s Court for the Mutual Enforcement of
Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region
(2021) (໾̂τર(2021) ).
In accordance with this arrangement, awards made by PRC arbitral authorities under the
Arbitration Law can be enforced in Hong Kong, and Hong Kong arbitration awards are also
enforceable in the PRC.
The Supplementary Arrangements of Supreme People’s Court on Reciprocal Enforcement
of Arbitration Awards between the Mainland and the Hong Kong Special Administrative
Region (໾̂τર) were promulgated by the
Supreme People’s Court on November 26, 2020. Under these arrangements, if a party fails to
perform the arbitral award rendered in the Mainland or the Hong Kong, the other party may
apply for enforcement to the relevant court in the place where the respondent is domiciled or
where the property is located.
APPENDIX IV SUMMARY OF PRINCIPAL LA WS AND REGULATIONS
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--- page 548 ---
Judicial Judgement and its Enforcement
On January 14, 2019, the Judicial Committee of the Supreme People’s Court adopted the
Arrangement on Reciprocal Recognition and Enforcement of Judgements in Civil and
Commercial Matters by the Courts of the Mainland and of the Hong Kong Special
Administrative Region (τ
ર), which took effect on January 29, 2024 and seeks to establish a mechanism with greater
clarity and certainty for recognition and enforcement of judgements in wider range of civil and
commercial matters between Hong Kong and the mainland China. The arrangement
discontinued the requirement for a choice of court agreement for bilateral recognition and
enforcement. The arrangement further regulates, among others, the scope and particulars of
judgements, the procedures and methods of the application for recognition or enforcement, the
review of the jurisdiction of the court that issued the original judgement, the circumstances
where the recognition and enforcement of judgement shall be refused, and the approaches
towards remedies for the reciprocal recognition and enforcement of judgements in civil and
commercial matters between the courts in mainland China and those in the Hong Kong. Upon
implementation of this Arrangement, the Arrangement between the Mainland and the Hong
Kong Special Administrative Region on Reciprocal Recognition and Enforcement of
Judgements of Civil and Commercial Matters under Consensual Jurisdiction (ಥ
τર) which was
adopted by the Judicial Committee of the Supreme People’s Court on June 12, 2006 and took
effect on August 1, 2008 has been repealed.
APPENDIX IV SUMMARY OF PRINCIPAL LA WS AND REGULATIONS
– IV-27 –


--- page 549 ---
This appendix contains a summary of the main provisions of the Articles of Association
of the Company adopted on November 22, 2024, which will take effect from the date of listing
of H shares on the Hong Kong Stock Exchange. The main purpose of this appendix is to
provide potential investors with an overview of the Articles of Association of the Company, so
it may not contain all the information that is important to potential investors.
SHARES AND REGISTERED CAPITAL
The total number of shares at the time of incorporation was 20,000,000 and the capital
structure of the Company was: 20,000,000 ordinary shares and no other classes of shares.
The shares of the Company shall be issued in the form of share certificates.
All shares issued by the Company shall be shares with par value, and each share shall
have a par value of RMB1.
The Company shall issue shares in an open, fair and just manner, and each share of the
same.
Shares of the same class issued at the same time shall be issued under the same conditions
and at the same price per share; subscribers shall pay the same price per share for the shares
they subscribe for.
The ordinary shares issued by the Company comprise domestic shares and overseas listed
shares (H shares). Domestic shares and overseas listed shares have the same rights in respect
of any distribution in the form of dividends (including distributions in cash and in kind) or
otherwise.
INCREASE AND REDUCTION OF CAPITAL AND REPURCHASE OF SHARES
The Company may, based on its business and development needs and in accordance with
the laws and regulations, increase its capital in the following manners upon resolutions being
adopted by the general meetings:
(i) public offering of shares;
(ii) non-public offering of shares;
(iii) distributing bonus shares to its existing shareholders;
(iv) conversion of capital reserve to share capital;
(v) other means required by the laws, administrative regulations and approved by CSRC
and SEHK.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-1 –


--- page 550 ---
The Company may reduce its registered capital. The Company shall reduce its registered
capital in accordance with the procedures stipulated in the Company Law, other relevant
regulations of the PRC, the Listing Rules, other relevant regulations and the Articles of
Association.
The Company shall not repurchase its own shares, except in one of the following
circumstances:
(i) to reduce the registered capital of the Company;
(ii) to merge with other companies which hold the shares of the Company;
(iii) to utilize its shares in employee stock ownership plans or share incentive;
(iv) where the shareholders, who disagree with the resolution in relation to merger or
division of the Company made at the general meeting, require the Company to
repurchase the shares held by such shareholders;
(v) to use the shares for conversion of corporate bonds issued by the Company which
are convertible into shares;
(vi) to safeguard the value of the Company and the interests of the shareholders when
necessary;
(vii) any other circumstances permitted by the laws, administrative regulations, securities
regulatory rules of the place where the Company’s shares are listed.
The Company may repurchase its shares by open centralized transaction method or other
method approved by laws, administrative regulations, the Listing Rules and the CSRC as well
as the securities regulatory authorities of the place where the shares of the Company are listed.
The repurchase of the Company’s shares under the circumstances of utilizing its shares
in employee stock ownership plans or share incentive, using the shares for conversion of
corporate bonds issued by the Company which are convertible into shares and safeguarding the
value of the Company and the interests of the shareholders when necessary, subject to
compliance with the requirements of the Listing Rules and other securities regulatory rules of
the place where the Company’s shares are listed, shall be conducted by way of open and
centralized trading.
When the Company repurchases its own shares under any of the circumstances specified
in item (i) or (ii) mentioned above, a resolution adopted by shareholders’ general meeting is
required. Where the Company repurchases its own shares pursuant to the provisions of items
(iii), (v) and (vi), it shall be resolved by a resolution of a meeting of Board of Director attended
by at least two-thirds of the directors in accordance with the provisions of the Company’s
Articles of Association or the authorization of the shareholders’ general meeting.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-2 –


--- page 551 ---
In the event that the Company repurchases its shares under the circumstances set out in
item (i) thereof, the shares shall be cancelled within 10 days after the date of repurchase; where
it falls under the circumstances set out in item (ii) or (iv) thereof, the shares shall be transferred
or cancelled within 6 months, where it falls under the circumstances set out in items (iii), (v)
and (vi) thereof, the total number of shares of the Company held by the Company shall not
exceed 10% of the total number of shares issued by the Company and shall be transferred or
cancelled within three years. Where laws, regulations or the securities regulatory authority at
the place where the Company’s stocks are listed have other provisions on the relevant matters
related to the aforementioned share repurchase, subject to compliance with the requirements of
the Listing Rules and other securities regulatory rules of the place where the Company’s shares
are listed, such provisions shall prevail.
TRANSFER OF SHARES
Shares of the Company may be transferred in accordance with the law.
The shares of the Company issued before public offering shall not be transferred for one
year from the date on which the Company’s shares are listed and traded on a stock exchange.
The Directors, Supervisors and senior officers of the Company shall report to the
Company their shareholdings and changes thereof and shall not transfer more than 25% of the
total number of their shares of the same class in the Company per annum during their terms
of office as determined when they take office. The shares of the Company they hold shall not
be transferred within one year from the date when the Company’s shares are listed and traded
on the stock exchange. The aforesaid persons shall not transfer their shares in the Company
within half a year after they terminate service with the Company.
If there are other provisions on the transfer restrictions of overseas listed shares in the
Listing Rules or the relevant regulations of the securities regulatory authority in the place
where the Company’s stocks are listed, such provisions shall prevail.
SHAREHOLDERS
The Company shall establish a register of members in accordance with certificates from
the share registrar. The register of members is sufficient evidence of the shareholders’
shareholdings in the Company. A shareholder shall enjoy the relevant rights and assume the
relevant obligations in accordance with the class of shares he/she holds. Shareholders holding
the same class of shares shall enjoy the same rights and assume the same obligations.
The transfer and assignment of shares shall be registered in the register of members. In
respect of the register of shareholders of overseas-listed H shares, the original register of
members of shares listed in the Hong Kong Stock Exchange shall be maintained in Hong Kong.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-3 –


--- page 552 ---
The shareholders of the Company shall enjoy the following rights:
(i) the right to receive dividends and other distributions in proportion to their
shareholdings;
(ii) the right to request, convene, preside over, attend or appoint a proxy to attend
general meetings and to exercise the corresponding voting rights in accordance with
the law;
(iii) the right to supervise the Company’s business operations, to present proposals and
to raise enquiries;
(iv) the right to transfer, give as a gift or pledge shares held by them in accordance with
laws, administrative regulations and the Articles of Association;
(v) the right to inspect and duplicate the Articles of Association, the register of
members, minutes of general meetings, resolutions of Board meetings, resolutions
of Board of Supervisors and financial accounting reports;
(vi) in the event of the termination or liquidation of the Company, the right to participate
in the distribution of remaining assets of the Company in proportion to the
shareholdings;
(vii) for shareholders who vote against any resolution adopted at the general meeting on
the merger or division of the Company, the right to demand the Company to buy
back their shares;
(viii) other rights under laws, administrative regulations, departmental rules, normative
documents, listing rules of the places where the shares of the Company are listed and
the Articles of Association.
Shareholders of the Company who abuse their shareholders’ rights and cause losses to the
Company or other shareholders shall be liable for compensation in accordance with the law.
Where shareholders of the Company abuse the Company’s position as an independent
legal person and the limited liability 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.
The controlling shareholder or the de facto controller of the Company shall not make use
of his/her connected relationship to harm the interests of the Company. If a breach of the
regulations causes losses to the Company, they shall be liable for compensation.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-4 –


--- page 553 ---
The controlling shareholders and de facto controllers of the Company who do not serve
as directors but who actually carry out the affairs of the Company shall have a duty of loyalty
to the Company and shall take measures to avoid conflicts between their own interests and the
interests of the Company and shall not make use of their powers to gain undue advantage; they
shall have a duty of diligence to the company, and they shall carry out their duties in the best
interests of the Company to the extent of the reasonable care that is normally required of
managers.
GENERAL MEETINGS
The general meeting shall be the authority of power of the Company and shall exercise
the following functions and powers in accordance with laws:
(i) to elect and change Directors and Supervisors who are not employees’
representatives, and decide on the remunerations of Directors and Supervisors;
(ii) to consider and approve reports of the Board;
(iii) to consider and approve reports of the Supervisory Committee;
(iv) to consider and approve the Company’s profit distribution plans and loss recovery
plans;
(v) to resolve on the increase or reduction of the registered capital of the Company;
(vi) to resolve on the issuance of corporate bonds;
(vii) to resolve on the merger, division, dissolution, liquidation or change in the form of
the Company;
(viii) to amend the Articles of Association;
(ix) to resolve on the Company’s appointment or dismissal of accounting firms;
(x) to consider and approve the transactions, financial assistance and guarantees which
shall be approved at the general meeting;
(xi) to consider the purchase or sale of significant assets by the company within one year
that exceed 30% of the company’s latest audited total assets;
(xii) to consider the connected transactions which shall be approved at the general
meeting according to the Company’s connected transactions policies;
(xiii) to consider and approve the change of use of proceeds;
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-5 –


--- page 554 ---
(xiv) to consider share incentive schemes and employee stock ownership plans;
(xv) to consider other matters which shall be resolved at the general meeting in
accordance with laws, administrative regulations, departmental rules, Listing Rules
and relevant requirements of securities regulatory authorities of the places where the
shares of the Company are listed or the Articles of Association.
General meetings consist of annual general meetings and extraordinary general meetings.
The annual general meeting shall be held once a year within six months after the end of the
previous accounting year.
The Company shall convene an extraordinary general meeting within two months upon
occurrence of the following events:
(i) when the number of Directors falls below the minimum requirement of the Company
Law, or is less than two thirds of the number specified by the Articles of Association;
(ii) when the unrecovered losses of the Company amount to one third of the total amount
of its paid-up share capital;
(iii) when shareholder(s) severally or jointly holding at least ten percent of the
Company’s shares request(s) to convene such meeting;
(iv) when the Board considers necessary;
(v) when the Supervisory Committee proposes to convene such meeting; and
(vi) other circumstances stipulated by laws, administrative regulations, departmental
rules, normative documents, the Listing Rules and the listing rules of the places
where the shares of the Company are listed or the Articles of Association.
CONVENING OF GENERAL MEETINGS
General meeting shall be convened by the Board of Directors, unless otherwise provided
by law or these Articles of Association.
The Chairman of the board, at least one third of the board members, and any independent
director may propose to the board of directors to hold an extraordinary general meeting. For
the aforesaid proposal, the board of directors shall, in accordance with laws, administrative
regulations, the Listing Rules and the Articles of Association, give a written feedback on
whether or not it agrees to hold an extraordinary general meeting within 10 days of receipt of
the proposal. Where the Board of Directors agrees to hold an extraordinary general meeting,
it will send out a notice thereon within 5 days after the relevant resolution of the Board of
Directors is made. If the Board of Directors does not agree to hold an extraordinary general
meeting, it shall state reasons and make an announcement.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-6 –


--- page 555 ---
The Supervisory Committee may propose to the Board of Directors to hold an
extraordinary general meeting and shall put forward the proposal to the Board of Directors in
written form. The Board of Directors shall, in accordance with laws, administrative
regulations, the Listing Rules and the Articles of Association, give a written feedback on
whether or not it agrees to hold an extraordinary general meeting within 10 days of receipt of
the proposal.
Where the Board of Directors agrees to hold an extraordinary general meeting, it shall
send out a notice thereon within 5 days after the relevant resolution of the Board of Directors
is made; any change to the original proposal in the notice is subject to the consent of the
Supervisory Committee. In case the Board of Directors refuses to convene an extraordinary
general meeting of shareholders, or does not give any response within 10 days upon receipt of
the proposal, the Board of Directors shall be deemed to be unable or have failed to perform its
duty to convene the general meeting of shareholders, and the Supervisory Committee may
convene and preside over the meeting by itself.
Shareholder(s) severally or jointly holding at least 10% of the shares of the Company
shall be entitled to request the Board to convene an extraordinary general meeting and to add
resolutions to the agenda of the meeting, and shall put forward such request to the Board in
written form. The Board shall, in accordance with laws, administrative regulations, the Listing
Rules and the Articles of Association, inform in writing whether it agrees or disagrees to
convene an extraordinary general meeting within 10 days upon receipt of the request.
If the Board of Directors agrees to convene an extraordinary general meeting, a notice for
convening such meeting shall be issued within 5 days after the date of the resolution of the
Board of Directors and any changes to the original proposal contained in the notice shall be
subject to the approval of the relevant shareholders.
If the Board of Directors does not agree to convene such meeting, or fails to give a
response within 10 days after receipt of the request, shareholders holding at least 10% of the
shares of the Company separately or in aggregate shall have the right to propose to the
Supervisory Committee to convene an extraordinary general meeting, and shall put forward
such request to the Supervisory Committee in writing.
If the Supervisory Committee agrees to convene an extraordinary general meeting, a
notice for convening such meeting shall be issued within 5 days after receipt of the request and
any changes to the original proposal contained in the notice shall be subject to the approval of
the relevant shareholders.
If the Supervisory Committee fails to issue a notice convening the shareholders’ general
meeting by the prescribed period, the Supervisory Committee shall be deemed to refuse to
convene and preside over such meeting, and shareholders holding at least 10% of the shares of
the Company separately or in aggregate for no less than 90 consecutive days shall have the
right to convene and preside over the meeting on their own.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-7 –


--- page 556 ---
PROPOSALS AND NOTICES OF GENERAL MEETINGS
The proposals put forward to the shareholders’ general meetings shall fall within the
scope of functions and powers of the shareholders’ general meeting, have clear issues for
discussion and specific matters to be resolved, and comply with the laws, administrative
regulations, the Listing Rules and the Articles of Association.
When the Company convenes a general meeting, the Board of Directors, the Supervisory
Committee and shareholders holding 1% or more of the shares of the Company separately or
in aggregate shall be entitled to put forward proposals to the Company.
Shareholders individually or jointly holding 1% or more of the shares of the Company
may submit ad hoc proposals to the convener of a shareholders’ general meeting in writing ten
days prior to shareholders’ general meeting. The convener shall issue a supplementary notice
of the shareholders’ general meeting to announce the information of such ad hoc proposals
within 2 days after receipt thereof, and submit such proposals to the shareholders’ general
meetings.
Except as provided in the preceding paragraph, the convener of a shareholders’ general
meeting shall not amend the proposals set out in the notice of the shareholders’ general meeting
or put up any new proposals after the issuance of the notice of the shareholders’ general
meeting.
The Company shall convene an annual general meeting by notifying the shareholders in
writing 21 days prior to the meeting and an extraordinary general meeting by notifying the
shareholders in writing 15 days prior to the meeting.
When calculating the time limit of the notice, the date of the general meeting convened
shall not be included but the issue date of such notice shall be included.
After the notice of the shareholders’ general meeting is issued, the meeting shall not be
postponed or cancelled and the proposals set out in the notice shall not be cancelled without
proper reasons. In the case of any postponement or cancellation of the meeting, the convenor
shall make an announcement at least two working days prior to the original date of the
convening and state the reasons therefor. If the convening is postponed, the date of the
postponed convening shall be stated in the announcement.
HOLDING OF GENERAL MEETINGS
All shareholders registered on the record date or their proxies shall be entitled to attend
the general meeting. They shall exercise their voting rights in accordance with the relevant
laws and regulations, listing rules of the places where the shares of the Company are listed and
the Articles of Association of the Company.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-8 –


--- page 557 ---
Shareholder may attend the general meeting in person, or appoint a proxy to attend and
vote on his/her behalf.
If such shareholder is a Recognized Clearing House (or its nominee(s)) as defined in the
relevant regulations from time to time in Hong Kong, the clearing house shall be entitled to
appoint a proxy or corporate representative to attend general meetings of the issuer and
meetings of creditors, and such proxy or corporate representative shall have the same statutory
rights as other shareholder s, including the right to speak and vote.
A general meeting shall be presided over by the chairman of the Board of Directors. If the
chairman is unable or fails to discharge his/her duties, the vice chairman shall preside over the
meeting. If the vice chairman is unable or fails to discharge his/her duties, half or more of the
directors shall designate a director to preside over the meeting.
If a general meeting is convened by the Supervisory Committee, the chairman of the
Supervisory Committee shall preside over the meeting. If the chairman of the Supervisory
Committee is unable or fails to discharge his/her duties, half or more of the supervisors shall
designate a supervisor to preside over the meeting.
If a general meeting is convened by the shareholders themselves, the convener shall
nominate a representative to preside over the meeting.
When a general meeting is convened, if the presider of the meeting contravenes the rules
of procedure, rendering the meeting impossible to proceed, with the consent from more than
half of the attending shareholders with voting rights, one person may be nominated at the
general meeting to serve as the presider and the meeting may proceed.
Individual shareholders attending a general meeting in person shall produce their identity
cards or other valid proof or evidence of their identities or stock account card, and in the case
of attendance by proxies, the proxies shall produce valid proof of their identities and the proxy
forms from shareholders.
For a corporate shareholder, its legal representative or a proxy appointed by such legal
representative shall attend he general meeting. In the case of attendance by legal
representatives, they shall produce their identity cards and valid proof of their capacities as
legal representatives and, in the case of attendance by proxies of such legal representatives,
such proxies shall produce their identity cards and the letters of authorization issued by such
legal representatives according to the laws.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-9 –


--- page 558 ---
VOTING AND RESOLUTIONS AT GENERAL MEETINGS
Resolutions of the general meetings shall be divided into ordinary resolutions and special
resolutions.
Ordinary resolution at a general meeting shall be adopted by more than one half of the
voting rights held by shareholders (including their proxies) attending the general meeting.
Special resolution at a general meeting shall be adopted by at least two thirds of the voting
rights held by shareholders (including their proxies) attending the general meeting.
The following matters shall be resolved by way of ordinary resolutions at a general
meeting:
(i) the work reports of the Board of Directors and the Supervisory Committee;
(ii) the profit distribution plans and plans for making up losses drafted by the Board of
Directors;
(iii) the dismissal and remuneration of the members of the Board of Directors and the
Supervisory Committee and the method of payment of the remuneration;
(iv) the annual report of the Company;
(v) to resolve on the Company’s appointment or dismissal of accounting firms;
(vi) to consider and approve the transactions, financial assistance and guarantees which
shall be approved at the general meeting;
(vii) to consider the connected transactions which shall be approved at the general
meeting according to the Company’s connected transactions policies;
(viii) to consider and approve the change of use of proceeds;
(ix) the matters other than those that laws, administrative regulations, the Listing Rules,
the listing rules of the places where the shares of the Company are listed or the
Articles of Association require to be adopted by special resolution.
The following matters shall be resolved by way of special resolutions at a general
meeting:
(i) increase or reduction of the registered capital of the Company;
(ii) issuance of corporate bond;
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-10 –


--- page 559 ---
(iii) division, merger, dissolution, liquidation and change of corporate form of the
Company;
(iv) amendments of the Articles of Association;
(v) purchase or disposal of major assets or guarantee of the Company within one year
with the amount exceeding 30% of the latest audited total assets of the Company;
(vi) share incentive schemes;
(vii) other matters as required by laws, administrative regulations, the Listing Rules, the
listing rules of the places where the shares of the Company are listed or the Articles
of Association, and matters which, as resolved by way of an ordinary resolution at
a general meeting, will have a material impact on the Company and need to be
approved by way of special resolutions.
Shareholders (including proxies) shall exercise their voting rights according to the
number of voting shares they represent, with one vote for each share, unless individual
shareholders are required by the Listing Rules to abstain from voting on individual matters.
When a ballot voting is held, the shareholders (including proxies) having two or more
votes need not use all of their voting rights to vote for or against such matters.
Where any shareholder is required by the Listing Rules to abstain from voting on any
particular matter or is restricted to voting only for or only against any particular matter, such
shareholder shall abstain from voting or casting his vote in accordance with such requirement;
any votes cast by or on behalf of such shareholder in contravention of such requirement or
restriction shall not be counted in the voting result.
Shares in the Company which are held by the Company do not carry any voting rights,
and shall not be counted in the total number of voting shares represented by shareholders
present at a general meeting.
When the general meeting considers matters relating to a connected transaction, the
connected shareholders shall not participate in the vote, and the number of voting shares
represented by them shall not be counted in the total number of valid voting shares. The
resolution of the general meeting shall fully disclose the voting by the unconnected
shareholders.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-11 –


--- page 560 ---
DIRECTORS AND BOARD OF DIRECTORS
Directors shall be elected or replaced by the general meeting, and may further be removed
from their office prior to the conclusion of the term thereof by the general meeting. Directors
shall have a term of three years, renewable upon expiry if re-elected. The term of office of
independent Directors is the same as other Directors, and the term is renewable upon
re-election when it expires.
A director’s term of office shall commence from the date when he/she takes office and end
upon expiry of the term of the current session of the Board of Directors. The existing director
shall continue to perform the duties of a director in accordance with laws, administrative
regulations, departmental rules and the Articles of Association after the expiry of his/her term
if no re-election is held in time.
The Company shall have a Board of Directors which shall be accountable to the general
meeting.
The Board of Directors is composed of seven directors. The directors are composed of
executive directors and independent non-executive directors.
An independent director shall perform his/her duties and responsibilities independently,
without the interference of the Company, the substantial shareholders or the actual controller
of the Company or other entities or individuals that have a material interest in the Company.
The Board shall exercise the following powers and duties:
(i) to convene a general meeting and report its work to such meeting;
(ii) to implement the resolutions of a general meeting;
(iii) to decide on the operation plans and investment plans for the Company;
(iv) to prepare the Company’s profit distribution plans and loss recovery plans;
(v) to prepare the plan for the Company to increase or reduce its registered capital, issue
bonds or other securities and listing plans;
(vi) to prepare plans of the Company with respect to material acquisitions and
acquisitions of the Company’s shares or merger, division, dissolution or change in
the form of the Company;
(vii) within the scope of authorisation by the shareholders’ meeting, to decide on matters
such as foreign investment, acquisition and sale of assets, pledge of assets, external
guarantee matters, entrusted financial management, and connected transactions;
(viii) to decide on the establishment of the internal organizations;
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-12 –


--- page 561 ---
(ix) to decide to appoint or remove the general manager, secretary of the Board and other
senior management of the Company, and decide on the remunerations and rewards
and punishments thereof; to decide to appoint or remove the deputy general
manager, financial controller and other senior management members of the
Company nominated by the general manager, and decide on the remunerations and
rewards and punishments thereof;
(x) to formulate the Company’s basic management system;
(xi) to prepare plans to amend the Articles of Association;
(xii) to manage the disclosure of information of the Company;
(xiii) to propose to the general meeting with respect to the appointment or replacement of
the accounting firm for the audit of the Company;
(xiv) to receive the work report of the general manager of the Company and examine such
work;
(xv) to decide on the investment, the purchase or disposal of assets, the pledge of assets,
guarantee of the Company, financial management, connected transactions within the
scope of authorization of the shareholders’ meeting. The Board may authorize the
general manager to decide on daily operating matters within the scope of its
authority; and
(xvi) to exercise any other duties and powers specified in laws, administrative regulations,
departmental rules, the Listing Rules and the listing rules of the places where the
shares of the Company are listed or the Articles of Association.
A director shall not enter into contracts with the Company or carry out transactions with
the Company in violation of the provisions of the Articles of Association of the Company or
without the consent of shareholders or a shareholders’ general meeting.
The Board of Directors of the Company shall establish special committees such as audit
committee, remuneration committee and nomination committee etc. according to the relevant
resolutions of the shareholder’s general meeting. All of the special committees shall be
accountable to the Board of Directors. The proposal of each special committee shall be
submitted to the Board of Directors for deliberation and decision.
The members of specialized committees shall be exclusively composed of directors. The
president of the audit committee and remuneration committee shall be selected from the
independent non-executive directors. The president of the nomination committee shall be the
chairman or the independent non-executive director.
The Board of Directors is responsible for formulating the rules of procedure and work
protocols of the special committees and regulating the operation of the special committees.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-13 –


--- page 562 ---
SECRETARY TO THE BOARD
The company shall have a secretary of the Board of Directors. The secretary of the Board
is a senior officer of the Company, responsible to the Board of Directors. The secretary of the
Board of Directors shall comply with laws, regulations, normative documents, the Listing
Rules, the working rules of the secretary of the board of directors, and relevant provisions of
the Articles of Association.
The secretary of the Board of Directors shall possess the necessary professional
knowledge and experience to perform his/her duties, as well as good professional ethics and
personal character.
The circumstances stipulated in the Articles of Association that prohibit the appointment
of the director apply to the secretary of the Board of Directors as well.
The Secretary of the Board of Directors is responsible for the preparation of the General
Meeting of Shareholders and the Board of Directors, the custody of meeting minutes and
documents, the management of shareholder information, information disclosure, and other
daily affairs; as well the secretary is responsible for filing the documents of the general
meeting of shareholders, the Board of Directors, and the Supervisory Committee with the
relevant securities regulatory departments where the shares of Company are listed (if
necessary).
SUPERVISORY COMMITTEE
The Company shall have a Supervisory Committee. The Supervisory Committee shall
consist of three supervisors. A supervisory chairman will be appointed by election by all
supervisors in a majority vote. The chairman of the Supervisory Committee shall convene and
preside over a meeting of the Supervisory Committee. If the chairman of the Supervisory
Committee is unable or fails to perform his/her duties, a supervisor selected by more than one
half of all supervisors shall convene and preside over the meeting of the Supervisory
Committee.
The Supervisory Committee shall consist of shareholder representatives and an
appropriate proportion of the Company’s employee representatives and the percentage of
employee representatives shall not be less than one-third. The employee representatives of the
Supervisory Committee shall be elected by employees of the Company at the employee
representatives’ meeting, the employee meeting or otherwise democratically.
The directors, the general manager and the senior management officers of the Company
shall not act concurrently as supervisors.
The term of office of a supervisor shall be 3 years. The supervisors are renewable upon
re-election and re-appointment.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-14 –


--- page 563 ---
The appointment and removal of the chairman of the Supervisory Committee shall be
determined by the affirmative votes of more than half of the members of the Supervisory
Committee.
The Supervisory Committee shall exercise the following duties and powers:
(i) to review the regular reports of the Company prepared by the Board of Directors and
to submit written review opinions thereon;
(ii) to review the financial position of the Company;
(iii) to supervise the performance of Directors and senior management members of their
duties to the Company, and propose dismissal of Directors and senior management
members that have violated the laws, administrative regulations, the Articles of
Association or the resolutions of the general meetings;
(iv) to demand rectification by Directors and senior management members when the acts
of such persons are prejudicial to the Company’s interest and, if necessary, report to
the general meeting or relevant national competent authorities;
(v) to propose the convening of an extraordinary general meeting, and to convene and
preside over the general meeting when the Board fails to perform such duties as
specified by the Company Law or the Articles of Association;
(vi) to put forward proposals to general meetings;
(vii) to initiate litigations against Directors and senior management member in
accordance with provisions of Article 189 of the Company Law;
(viii) to initiate investigations into any irregularities identified in the operation of the
Company and, where necessary, may engage an accounting firm and a law firm to
assist their work at the Company’s expense;
(ix) to require directors and senior management to submit reports on the execution of
their duties; and
(x) to exercise any other duties and powers specified in the Articles of Association or
the general meeting.
The Supervisory Committee meets at least once every six months. The Supervisory
Committee may convene an interim meeting within 5 days when the supervisory chairman
receive the proposal to convene it.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-15 –


--- page 564 ---
A meeting of the Supervisory Committee shall be held only when a majority of the
supervisors are present. Resolutions of the Supervisory Committee shall be passed by a
majority of all supervisors.
GENERAL MANAGER AND OTHER SENIOR MANAGEMENT MEMBERS
The Company shall have one general manager, who shall be appointed or dismissed by the
Board of Directors. The Company shall have several vice general managers, who shall be
appointed or dismissed by the Board of Directors.
The Company’s general manager, vice general manager, the chief financial officer, and
the secretary of the Board of Directors are members of the senior management of the Company.
The general manager serves for a term of three years, subject to re-appointment upon the
expiry of the term.
The general manager shall report to the Board and have the following duties and powers:
(i) to take charge of the production operations and management tasks of the Company
and organize the implementation of the Board’s resolutions, and to report work to
the Board;
(ii) to organize the implementation of the Company’s annual operating plan and
investment plan;
(iii) to devise the set-up of the Company’s internal management structure;
(iv) to devise the basic management policy of the Company;
(v) to formulate the specific rules of the Company;
(vi) to propose the appointment or dismissal of deputy managers, financial officers, and
assistant to the general manager of the Company;
(vii) to appoint or dismissal management officers, aside from those requiring the Board
to decide the appointment or removal;
(viii) to decide on the investment, the purchase or disposal of assets, corporate financing,
the pledge of assets, guarantee of the Company, connected transactions within the
scope of authorization of the board, except for the ordinary sales and purchase; and
(ix) other duties as granted by the Company’s Articles of Association and the Board.
The general manager attend the board meetings.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-16 –


--- page 565 ---
FINANCIAL AND ACCOUNTING SYSTEM
The company formulates its financial and accounting system in accordance with laws,
administrative regulations, and relevant national departments. If there are other provisions in
the Listing Rules or the securities regulatory authorities of the place where the company’s
stocks are listed, such provisions shall apply.
The financial and accounting reports are prepared in accordance with relevant laws,
administrative regulations, departmental rules, the Listing Rules, and other securities
regulatory rules of the company’s stock listing location.
The company will not establish separate accounting books except for statutory accounting
books. The assets of the company shall not be stored in any individual’s account.
PROFIT ALLOCATION
The Company shall allocate 10% of the annual after-tax profits as the statutory reserve
fund of the Company. When the cumulated amount of the statutory reserve fund of the
Company has reached 50% or more of its registered capital, no further allocations is required.
If the statutory reserve fund of the Company is insufficient to make up for the losses of
the preceding year, the profits of the current year shall first be used to make up the said losses
before any statutory reserve fund is withdrawn as per the provision of the preceding paragraph.
After withdrawing the statutory reserve fund out of its after-tax profits, the Company may
also allocate some of its after-tax profits into its discretionary reserve if so resolved by the
shareholders’ general meeting.
After making up for the losses and making contributions to the common reserve fund, any
remaining profits after tax shall be distributed to the shareholders in proportion to their
respective shareholdings, except it is stipulated in the Articles of Association of the Company
that profit distributions shall not be made in accordance with the shareholding proportion.
DISSOLUTION AND LIQUIDATION OF THE COMPANY
The Company shall be dissolved for the following reasons:
(i) the circumstances for dissolution specified in the Articles of Association arise;
(ii) the general meeting has resolved to dissolve the Company;
(iii) the merger or division of the Company requires a dissolution;
(iv) the business license is revoked, or the Company is ordered to close down or is
dissolved according to laws; and
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-17 –


--- page 566 ---
(v) if the Company suffers significant hardship in its operation and management, and
the ongoing existence would bring significant losses for shareholders that cannot be
resolved through other means, the shareholders holding at least ten percent of the
total voting rights of the Company may request the People’s Court to dissolve the
Company.
In the case of item (i) (ii) mentioned above, the Company may survive by amending the
Articles of Association, which shall be approved by more than two-thirds of the voting rights
represented by the shareholders present at the general meeting.
Where the Company is dissolved under the circumstances set out in items (i), (ii), (iv) and
(v) above, the Company shall establish a liquidation group to commence liquidation within
fifteen days upon the occurrence of the circumstances for dissolution. The composition of the
liquidation group shall be determined by Directors or general meeting. If the Company fails to
establish a liquidation group on time, creditors may request the People’s Court to designate
certain persons to form a liquidation group to perform liquidation.
The liquidation team shall exercise the following functions and power during the period
of liquidation:
(i) liquidating the properties of the Company, and preparing the balance sheets and
asset checklists separately;
(ii) informing creditors by a notice or public announcement;
(iii) disposing of and liquidating the unfinished businesses of the Company;
(iv) clearing off the outstanding taxes and the taxes incurred from the process of
liquidation;
(v) clearing off credits and debts;
(vi) disposing of the residual properties after settling such debt; and
(vii) participating in the civil litigation on behalf of the Company.
The liquidation team shall, within 10 days of its formation, notify the creditors, and shall,
within 60 days, make public announcements in a newspaper or the National Enterprise Credit
Information Publication System. Creditors shall, within 30 days of the receipt of the notice or
within 45 days of the release of the public announcement in the case of failure to receive said
notice, file their creditors’ rights with the liquidation team.
After the liquidation team has liquidated the properties of the Company and has prepared
the balance sheets and checklists of properties, it shall prepare a plan of liquidation, and report
it to the shareholders’ general meeting or the People’s Court for confirmation.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-18 –


--- page 567 ---
The remaining assets that result from paying off the liquidation expenses, wages of
employees, social insurance premiums and statutory compensation, the outstanding taxes and
the debts of the Company may be distributed according to the ratios of shareholding of the
shareholders.
During the liquidation period, the Company still exists but shall not carry out any
business activities not related to liquidation. The property of the Company shall not be
distributed to shareholders until all liabilities have been paid off in accordance with the
provisions of the preceding paragraph.
AMENDMENT TO ARTICLES OF ASSOCIATION
Under any one of the following circumstances, the Company shall amend the Articles of
Association:
(i) after amendment has been made to the Company Law, the relevant laws,
administrative regulations or the Listing Rules, the contents of the Articles of
Association shall conflict with the amended laws, administrative regulations or the
Listing Rules;
(ii) the changes that the Company have undergone are not in consistence with the
records made in the Articles of Association; and
(iii) the shareholders’ general meeting decides that the Articles of Association should be
amended.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-19 –


--- page 568 ---
A. FURTHER INFORMATION ABOUT OUR GROUP
1. Incorporation
Our Company was established as a limited liability company in the PRC on July 10, 2007
and was converted into a joint stock company with limited liability under the laws of the PRC
on December 24, 2014. Our registered office is situated at Room 5, 11/F and Rooms 601,
608-612, 6/F, Huayin Building, No. 786 Minzhu Road, Zhongnan Road Sub-District, Wuchang
District, Wuhan, Hubei Province, the PRC. As of the Latest Practicable Date, the registered
capital of our Company was RMB38,517,242.
Our Company has established a principal place of business in Hong Kong at Room 1920,
19/F, Lee Garden One, 33 Hysan Avenue, Causeway Bay, Hong Kong, and has been registered
with the Registrar of Companies in Hong Kong as a non-Hong Kong company under Part 16
of the Companies Ordinance on December 9, 2024. Ms. Pau So Yi (׋has been appointed
as the authorized representative of our Company for acceptance of service of process and
notices required to be served on our Company in Hong Kong. The address for acceptance of
service of process and notices is the same as our registered place of business in Hong Kong.
As our Company was established in the PRC, our operations are subject to the relevant
laws and regulations of the PRC. A summary of the relevant aspects of PRC laws and principal
regulatory provisions is set out in Appendix IV to this prospectus. A summary of the Articles
of Association is set out in Appendix V to this prospectus.
2. Changes in the Share Capital of Our Company
On July 10, 2007, our Company was established with a registered capital of RMB2.42
million.
On October 8, 2024, our Company repurchased an aggregate of 8,379,306 Shares from
CITIC Securities Investment, Zhongyuan Jiupai, Mr. Li Jiansheng, Mr. Zhu Chao, Zhidao
Capital and Mr. Wang Qingsong, and the registered capital of our Company was reduced from
RMB46,896,548 to RMB38,517,242.
Save as disclosed above, there has been no alteration in the share capital of our Company
within two years immediately preceding the date of this prospectus.
Immediately after the completion of the Global Offering and the Conversion of Unlisted
Shares into H Shares (assuming no exercise of the Over-allotment Option), our registered share
capital will be RMB49,379,042, consisting of 32,352,902 Unlisted Shares and 17,026,140 H
Shares, which represent approximately 65.52% and 34.48% of our total issued share capital,
respectively.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-1 –


--- page 569 ---
3. Changes in the Share Capital of Our Subsidiaries
Particulars of our principal subsidiaries are included in Note 1 to the Accountants’ Report
set out in Appendix I to this prospectus.
Save as disclosed in “History, Development and Corporate Structure” and below, there
has been no alteration in the registered share capital of any of our subsidiaries within the two
years immediately preceding the date of this prospectus:
Wuhan Jiangxia Dazhong Hejun Dental Out-patient Service Co., Ltd. (
ɽ଺ձ
ʮ̡)
On August 29, 2023, Wuhan Jiangxia Dazhong Hejun Dental Out-patient Service
Co., Ltd. was established in the PRC with a registered capital of RMB1.5 million.
Shaoyang Beita
On August 31, 2023, Shaoyang Beita was established in the PRC with a registered
capital of RMB1.0 million. On April 25, 2024, the registered capital of Shaoyang Beita
was increased from RMB1.0 million to RMB1.2 million.
Shaoyang Shuangqing
On September 1, 2023, Shaoyang Shuangqing was established in the PRC with a
registered capital of RMB1.0 million. On May 7, 2024, the registered capital of Shaoyang
Shuangqing was increased from RMB1.0 million to RMB1.25 million.
Wuhan Dazhong Heyuan Dental Out-patient Service Co., Ltd. (
ൢ
ʮ̡)
On September 8, 2023, Wuhan Dazhong Heyuan Dental Out-patient Service Co.,
Ltd. was established in the PRC with a registered capital of RMB1.8 million.
Wuhan Dazhong Dental Houhu Out-patient Service Co., Ltd. (ژ
ʮ̡)
On December 29, 2023, Wuhan Dazhong Dental Houhu Out-patient Service Co.,
Ltd. was established in the PRC with a registered capital of RMB0.5 million.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-2 –


--- page 570 ---
Wuhan Dazhong Wanda Dental Out-patient Service Co., Ltd. (ൢϞ
ʮ̡)
On February 2, 2024, Wuhan Dazhong Wanda Dental Out-patient Service Co., Ltd.
was established in the PRC with a registered capital of RMB0.5 million. On June 14,
2024, the registered capital of Wuhan Dazhong Wanda Dental Out-patient Service Co.,
Ltd. was increased from RMB0.5 million to RMB0.9 million.
Wuhan Dazhong Baishazhou Dental Out-patient Service Co., Ltd. (
ɹ
ʮ̡)
On February 22, 2024, Wuhan Dazhong Baishazhou Dental Out-patient Service Co.,
Ltd. was established in the PRC with a registered capital of RMB1.0 million.
Jingzhou Dazhong Shabei Dental Out-patient Service Co., Ltd. (ൢ
ʮ̡)
On May 16, 2024, Jingzhou Dazhong Shabei Dental Out-patient Service Co., Ltd.
was established in the PRC with a registered capital of RMB0.9 million.
Xiangyang Kaidi
On July 4, 2024, Xiangyang Kaidi was established in the PRC with a registered
capital of RMB0.7 million.
4. Resolutions Passed by Our Shareholders’ Meeting in Relation to the Global Offering
At the extraordinary general meeting of our Company held on November 22, 2024, the
following resolutions, among others, were passed by our Shareholders:
(1) the Global Offering be approved and the Board and its authorized representatives be
authorized to handle all matters relating to, among others, the Global Offering and
the Listing of the H Shares on the Main Board of the Stock Exchange;
(2) the issuance by our Company of the H Shares with a nominal value of RMB1.00
each and such H Shares be listed on the Stock Exchange. The number of H Shares
to be issued shall not be more than 25% of our enlarged total issued share capital
immediately following the Global Offering (assuming no exercise of the Over-
allotment Option) and the number of H Shares to be issued under the Over-allotment
Option shall not be more than 15% of the number of H Shares issued pursuant to the
Global Offering;
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-3 –


--- page 571 ---
(3) subject to the filing with the CSRC, upon completion of the Global Offering,
6,164,340 Unlisted Shares held by Wuhan Xinglin, Wuhan Taolin, Wuhan Zhulin,
Ms. Li Zhen ( ҽጲ) and Mr. Chen Wei ( ௓ᙯ) be converted into H shares on a
one-for-one basis;
(4) subject to the completion of the Global Offering, the granting of a general mandate
to our Board 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 our Shareholders or the date on
which our 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 its absolute discretion deems fit, and to complete all
necessary procedures, provided that, the number of Shares to be issued shall not
exceed 20% of the number of the Shares in issue as of the Listing Date;
(5) subject to the completion of the Global Offering, the granting of a general mandate
to our Board to exercise all the powers of our Company to repurchase H Shares
listed on the Stock Exchange at any time within a period up to the date of the
conclusion of the next annual general meeting of our Shareholders or the date on
which our Shareholders pass a special resolution to revoke or change such mandate,
whichever is earlier, and to complete all necessary procedures, provided that, the
number of H Shares to be repurchased shall not exceed 10% of the number of H
Shares in issue as of the Listing Date; and
(6) 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 the
Board has been authorized to revise and amend the Articles of Association, in
accordance with the requirements of the laws, regulations and Listing Rules.
5. Explanatory Statement on Repurchase of Our Own Securities
The following paragraphs include, among others, certain information required by the
Stock Exchange to be included in this prospectus concerning the repurchase of our own
securities.
(1) Reasons for Repurchase
Our Directors believe that the repurchase of H Shares would be beneficial to and in the
best interests of our Company and Shareholders as a whole. It can strengthen the investors’
confidence in our Company and promote a positive effect on maintaining our Company’s
reputation in the capital market. Such repurchases will only be made when our Board believes
that such repurchases will benefit our Company and Shareholders as a whole.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-4 –


--- page 572 ---
(2) Exercise of the General Mandate to Repurchase H Shares
Pursuant to the resolutions passed by the general meeting of our Shareholders held on
November 22, 2024, our Board was granted general mandate to repurchase H Shares until the
end of the relevant period. The general mandate to repurchase Shares would expire on the date
of the conclusion of the next annual general meeting of our Shareholders or the date on which
our Shareholders pass a special resolution to revoke or change such mandate, whichever is
earlier.
Furthermore, we need to complete necessary procedures with relevant government
authorities for the actual grant of the general mandate to repurchase H Shares to our Board, as
applicable. The exercise in full of the general mandate to repurchase H Shares (on the basis of
17,026,140 H Shares in issue as of the Listing Date) would result in a maximum of 1,702,614
H Shares being repurchased by our Company during the relevant period, being the maximum
of 10% of the H Shares in issue as of the Listing Date.
(3) Source of Funds
In repurchasing H Shares, our Company intends to apply funds from our Company’s
internal resources (which may include surplus funds and retained profits) legally available for
such purpose in accordance with the Articles of Association and the applicable laws, rules and
regulations of the PRC.
Our Company is entitled under the Articles of Association to repurchase our Shares. Any
repurchases by our Company may only be made out of either the funds of our Company that
would otherwise be available for dividend or distribution or out of the proceeds of a new issue
of shares made for such purpose. Our Company may not purchase securities on the Stock
Exchange for a consideration other than cash or for settlement otherwise than in accordance
with the listing rules of the Stock Exchange from time to time.
(4) Suspension of Repurchase
A listed company shall not repurchase its shares on the Stock Exchange at any time after
inside information has come to its knowledge until the information is made publicly available.
In particular, during the period of one month immediately preceding the earlier of: (i) the date
of the board meeting (as such date is first notified to the Stock Exchange in accordance with
the Listing Rules) for the approval of the company’s results for any year, half-year, quarterly
or any other interim period (whether or not required under the Listing Rules); and (ii) the
deadline for the issuer to announce its results for any year or half-year under the Listing Rules,
or quarterly or any other interim period (whether or not required under the Listing Rules), until
the date of the results announcement, the company may not repurchase its shares on the Stock
Exchange unless there are exceptional circumstances.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-5 –


--- page 573 ---
(5) Trading Restrictions
A listed company may not issue or announce a proposed issue of new securities for a
period of 30 days immediately following a repurchase (other than an issue of securities
pursuant to an exercise of warrants, share options or similar instruments requiring the company
to issue securities which were outstanding prior to such repurchase) without the prior approval
of the Stock Exchange. In addition, a listed company is prohibited from repurchasing its shares
on the Stock Exchange if the purchase price is 5% or more than the average closing market
price for the five preceding trading days on which its shares were traded on the Stock
Exchange.
A listed company may not repurchase its shares if that repurchase would result in the
number of listed securities which are in the hands of the public falling below the relevant
prescribed minimum percentage as required by the Stock Exchange.
A listed company is required to procure that the broker appointed by it to affect a
repurchase of securities disclose to the Stock Exchange such information with respect to the
repurchase made on behalf of the listed company as the Stock Exchange may require.
(6) Close Associates and Core Connected Persons
None of our Directors or, to the best of their knowledge having made all reasonable
inquiries, any of their close associates have a present intention, in the event the general
mandate to repurchase H Shares is approved, to sell any Shares to our Company.
No core connected persons of our Company have notified our Company that they have a
present intention to sell Shares to our Company, or have undertaken to do so, if the general
mandate to repurchase H Shares is approved.
A listed company shall not knowingly purchase its shares on the Stock Exchange from a
core connected person (namely a director, supervisor, chief executive or substantial
shareholder of the company or any of its subsidiaries, or a close associate of any of them), and
a core connected person shall not knowingly sell their interest in shares of the company to it.
(7) Status of Repurchased Shares
Subject to the Articles of Association, the Listing Rules and any other applicable laws and
regulations, the H Shares repurchased by our Company will be cancelled or transferred within
certain period and the registered capital of our Company will be reduced by an amount
equivalent to the aggregate nominal value of the H Shares if such H Shares were cancelled.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-6 –


--- page 574 ---
(8) Takeover Implications
If, as a result of any repurchase of H Shares, a Shareholder’s proportionate interest in the
voting rights of our Company increases, such increase will be treated as an acquisition for the
purposes of the Takeovers Code. Accordingly, a Shareholder or a group of Shareholders acting
in concert could obtain or consolidate control of our Company and become obliged to make a
mandatory offer in accordance with Rule 26 of the Takeovers Code.
Save as disclosed above, our Directors are not aware of any consequences which would
arise under the Takeovers Code as a consequence of any repurchases pursuant to the general
mandate to repurchase H Shares.
(9) General
If the general mandate to repurchase H Shares was to be carried out in full at any time,
there may be a material and adverse impact on our working capital or gearing position (as
compared with the position disclosed in our most recent published audited accounts). However,
our Directors do not propose to exercise the general mandate to repurchase H Shares to such
an extent as would have a material and adverse effect on our working capital or gearing
position.
Our Directors will exercise the general mandate to repurchase H Shares in accordance
with the Listing Rules and the applicable laws in the PRC.
6. Restriction on Share Repurchase
For details of the restrictions on the share repurchase by our Company, see “Appendix V
— Summary of Articles of Association.”
B. FURTHER INFORMATION ABOUT OUR BUSINESS
1. Summary of Material Contract
The following contract (not being contract entered into in the ordinary course of business)
has been entered into by members of our Group within the two years preceding the date of this
prospectus and is or may be material:
(1) the Hong Kong Underwriting Agreement.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-7 –


--- page 575 ---
2. Intellectual Property Rights of Our Group
(1) Trademarks
As of the Latest Practicable Date, we were the registered owner of and had the right to
use the following trademarks which we consider to be or may be material to our business:
No. Trademark
Place of
registration
Registration
number Registered owner Class
Registration
date Expiry date
1. /H1118
 PRC 59046971 Our Company 44 2022-05-28 2032-05-27
2. /H1118
 PRC 59071423 Our Company 41 2022-05-28 2032-05-27
3. /H1118
 PRC 59063601 Our Company 44 2022-05-28 2032-05-27
4. /H1118
 PRC 55503505 Our Company 44 2022-01-07 2032-01-06
5. /H1118
 PRC 55488668 Our Company 16 2022-11-07 2032-01-06
6. /H1118
 PRC 55523359 Our Company 42 2022-11-07 2032-01-06
7. /H1118
 PRC 55497315A Our Company 5 2022-03-07 2032-03-06
8. /H1118
 PRC 55514835 Our Company 10 2022-11-07 2032-11-06
9. /H1118
 PRC 55521862 Our Company 20 2022-11-07 2032-11-06
10.
 PRC 55518369A Our Company 21 2022-03-07 2032-03-06
11.
 PRC 52482054 Our Company 44 2021-10-21 2031-10-20
12.
 Hong Kong 306637258 Our Company 10,
21,
44
2024-08-09 2034-08-08
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-8 –


--- page 576 ---
(2) Patents
As of the Latest Practicable Date, we have registered the following patents which we
consider to be or may be material to our business:
No. Patent Patent type Registration number Registered owner Filing date Expiry date
1. /H1118/H1118A mouth mirror with
a saliva pump
that is easy to
separate (ک
੭іఌኜ
ɹᗝ)
Utility model 202120841266.4 Our Company 2021-04-22 2031-04-21
2. /H1118/H1118An automatic nail
gun for membrane
nailing ( ɓ၇Іਗ
ᇫ৥࿻)
Utility model 202120843602.9 Our Company 2021-04-22 2031-04-21
3. /H1118/H1118A bone scraper that
can increase the
amount of bone
powder scraping
and is easy to
collect ( ɓ၇ঐ੄
ᄣ̋৶४Ւ՟ඎ˲
৶н)
Utility model 202120858160.5 Our Company 2021-04-25 2031-04-24
4. /H1118/H1118A new type of
autologous bone
holder (ۨ
ኜ)
Utility model 202120923628.4 Our Company 2021-04-30 2031-04-29
5. /H1118/H1118A tent nail for
supporting and
maintaining the
GBR bone graft
space (׵
ܵGBRಔ
੮ᐫ৥)
Utility model 202120926945.1 Our Company 2021-04-30 2031-04-29
6. /H1118/H1118A bone
augmentation
bio-agent support
device and its
installation tool
(ي
Ⴁኒ˕ᅟኜʿՉτ
ༀʈՈ)
Utility model 202123214169.1 Our Company 2021-12-20 2031-12-19
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-9 –


--- page 577 ---
No. Patent Patent type Registration number Registered owner Filing date Expiry date
7. /H1118/H1118A new type of soft
tissue cutting
device (ۨ
ழଡ଼ᔌʲ௲ༀໄ)
Utility model 202123341777.9 Our Company 2021-12-28 2031-12-27
8. /H1118/H1118A periosteal cutter
with soft tissue
tension reduction
and separation
function ( ੭ழଡ଼
ٙ
৶ᇫʲ௲ኜ)
Utility model 202220387915.2 Our Company 2022-02-24 2032-02-23
9. /H1118/H1118A mounting device
for tooth position
adjuster and its
tooth position
adjuster ( ɓ၇˫
Зʩሜ዆ኜ͜τༀ
ༀໄʿՉ˫Зʩሜ
዆ኜ)
Utility model 202220473097.8 Our Company 2022-03-04 2032-03-03
10. /H1118A bite pad with a
lifting and saliva
suction function
(і
Υྦ)
Utility model 202322395841.4 Our Company 2023-09-05 2033-09-04
(3) Copyrights
As of the Latest Practicable Date, we have registered the following copyrights which we
consider to be or may be material to our business:
No. Copyright Registered owner Registration number
Place of
registration
Registration
date
1. /H1118/H1118Dazhong Dental
Information
Management
Platform V1.0 ( ɽ଺
၍ଣ̻ၽ
V1.0)
Our Company 2017SR1987242 PRC 2017-07-26
2. /H1118/H1118Dazhong Dental
Diagnosis and
Treatment System
V1.0 ( ɽ଺ɹഢൢᐕ
ӻ୕V1.0)
Our Company 2017SR1984206 PRC 2017-07-26
3. /H1118/H1118Electronic Medical
Record System V1.0
(ཥɿषዝӻ୕V1.0)
Our Company 2021SR7785717 PRC 2021-07-19
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-10 –


--- page 578 ---
No. Copyright Registered owner Registration number
Place of
registration
Registration
date
4. /H1118/H1118V oice Paging System
V1.0 (̣໮ӻ୕
V1.0)
Our Company 2021SR7792480 PRC 2021-07-20
5. /H1118/H1118Office Mini Program
V1.0 ( ፬ʮʃ೻ҏ
V1.0)
Our Company 2022SR9001584 PRC 2022-01-07
6. /H1118/H1118Human Resource
Management System
V1.0 ( ɛɢ༟๕၍ଣ
ӻ୕V1.0)
Our Company 2022SR 9001586 PRC 2022-01-07
7. /H1118/H1118Cost Accounting and
Analysis System
V1.0 (ؓ
ӻ୕V1.0)
Our Company 2022SR 9001585 PRC 2022-01-07
8. /H1118/H1118Medical Insurance
Settlement
Management System
(ഐၑ၍ଣӻ୕
V1.0)
Our Company 2023SR11076904 PRC 2023-04-20
9. /H1118/H1118Dental Treatment Plan
Management System
(ྌ၍ଣӻ
୕V1.0)
Our Company 2023SR 11110901 PRC 2023-05-08
10. /H1118/H1118Patient Appointment
Mini Program (٫
ʃ೻ҏV1.0)
Our Company 2023SR11233706 PRC 2023-06-13
11. /H1118/H1118Intelligent Data
Analysis Platform
(1.0) (ؓ
̨̻(1.0))
Our Company 2023SR11700148 PRC 2023-09-20
(4) Domain Names
As of the Latest Practicable Date, we have registered the following domain names which
we consider to be or may be material to our business:
No. Domain name Registrant Date of registration Expiry date
1. /H1118dzkq.net Our Company 2013-10-09 2025-10-09
2. /H1118dzkq.cn Our Company 2013-10-09 2025-10-09
3. /H1118chinadzyl.com Our Company 2007-06-09 2026-06-09
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-11 –


--- page 579 ---
C. FURTHER INFORMATION ABOUT OUR DIRECTORS, SUPERVISORS AND
SUBSTANTIAL SHAREHOLDERS
1. Disclosure of Interests
(1) Interests and Short Positions of the Directors, Supervisors and Chief Executive of Our
Company in the Shares, Underlying Shares or Debentures of Our Company and Our
Associated Corporation
Immediately following the completion of the Global Offering and assuming the
Over-allotment Option is not exercised, the interests or short positions of our Directors,
Supervisors and the chief executive in any Shares, underlying shares and debentures of our
Company or any of its associated corporations (within the meaning of Part XV of the SFO),
which, once the H Shares are listed, will be required (a) to be notified to our Company and the
Stock Exchange pursuant to Division 7 and 8 of Part XV of the SFO (including interests and
short positions which they were taken or deemed to have under such provisions of the SFO);
or (b) pursuant to section 352 of Part XV of the SFO, to be entered in the register referred to
therein; or (c) to be notified to our Company and the Stock Exchange pursuant to the Model
Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules,
are as follows:
(i) Interests in the Shares of Our Company
Name of Director/
Supervisor/chief
executive Nature of interest Number of Shares Description of Shares
Approximate
percentage of
shareholding in our
total share capital
(1)
Mr. Y ao(2) /H1118/H1118/H1118/H1118Interest in a
controlled
corporation
31,324,102 Unlisted Shares 63.44%
Beneficial interest 475,800 Unlisted Shares 0.96%
Interest of concert
party
31,774,102 Unlisted Shares 64.35%
Ms. Shen
(2) /H1118/H1118/H1118Interest in a
controlled
corporation
31,324,102 Unlisted Shares 63.44%
Beneficial interest 450,000 Unlisted Shares 0.91%
Interest of concert
party
31,799,902 Unlisted Shares 64.40%
Mr. Guo
Jiaping
(3) /H1118/H1118/H1118
Interest in a
controlled
corporation
1,505,000 H Shares 3.05%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-12 –


--- page 580 ---
Notes:
(1) The calculation is based on the total number of 32,352,902 Unlisted Shares in issue and
17,026,140 H Shares in issue immediately after completion of the Global Offering and the
Conversion of Unlisted Shares into H Shares (assuming the Over-allotment Option is not
exercised). Unlisted Shares and H Shares are both ordinary Shares in the share capital of our
Company, and are considered as one class of Shares.
(2) As of the Latest Practicable Date, Zhongshan Medical Investment was held by Mr. Y ao and Ms.
Shen as to 44.11% and 31.38%, respectively. Pursuant to an acting-in-concert agreement entered
into between Mr. Y ao and Ms. Shen on June 3, 2014, Mr. Y ao and Ms. Shen agreed to act in
concert in respect of their voting rights in Zhongshan Medical Investment and our Company. See
“History, Development and Corporate Structure — Our Major Corporate Development — Early
Development” for details. Therefore, Mr. Y ao and Ms. Shen are deemed to be interested in the
Shares directly held by Zhongshan Medical Investment and each other by virtue of the SFO.
(3) Mr. Guo Jiaping is the general partner of Wuhan Zhulin. Therefore, Mr. Guo Jiaping is deemed
to be interested in the Shares directly held by Wuhan Zhulin by virtue of the SFO. Upon the
Listing, the 1,505,000 Unlisted Shares held by Wuhan Zhulin will be converted to H Shares.
(ii) Interests in Our Associated Corporation
Name of Director/
Supervisor/chief
executive Nature of interest
Name of associated
corporation
Approximate
percentage of
shareholding
Mr. Y ao(1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Beneficial interest Zhongshan Medical
Investment
44.11%
Interest of concert
party
Zhongshan Medical
Investment
31.38%
Ms. Shen (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118Beneficial interest Zhongshan Medical
Investment
31.38%
Interest of concert
party
Zhongshan Medical
Investment
44.11%
Ms. Liu Hongchan /H1118/H1118Beneficial interest Zhongshan Medical
Investment
0.86%
Interest of spouse Zhongshan Medical
Investment
1.29%
Ms. Huang Meiyun /H1118/H1118Beneficial interest Zhongshan Medical
Investment
1.72%
Ms. Xu Cen /H1118/H1118/H1118/H1118/H1118/H1118/H1118Beneficial interest Zhongshan Medical
Investment
0.86%
Note:
(1) Pursuant to an acting-in-concert agreement entered into between Mr. Y ao and Ms. Shen on June
3, 2014, Mr. Y ao and Ms. Shen agreed to act in concert in respect of their voting rights in
Zhongshan Medical Investment. See “History, Development and Corporate Structure — Our
Major Corporate Development — Early Development” for details. Therefore, each of them is
deemed to be interested in the equity interest in Zhongshan Medical Investment held by each
other by virtue of the SFO.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-13 –


--- page 581 ---
(2) Interests and Short Positions of Substantial Shareholders in the Shares and Underlying
Shares
(i) Interests of Substantial Shareholders in Our Company
Save as disclosed in “Substantial Shareholders” of this prospectus, our Directors are
not aware of any other person who will, immediately following the Global Offering, have
an interest or short position in the Shares or underlying shares which are required 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, directly or indirectly, be interested in 10% or more of
the nominal value of any class of share capital carrying the rights to vote in all
circumstances at the general meetings of our Company.
(ii) Interests of Substantial Shareholders in Members of Our Group (Other Than Our
Company)
So far as the Directors are aware, as of the Latest Practicable Date, the following
persons were interested in 10% or more of the nominal value of the share capital carrying
rights to vote in all circumstances at general meetings of the members of our Group (other
than our Company).
Our subsidiary
Parties with 10% or
more equity interest
Approximate percentage
of shareholding
Wuhan Dazhong Wanda Dental
Out-patient Service Co., Ltd.
(ʮ
̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Li Y ahui ( ҽԭึ) 25%
Li Y ang (ݱ24%
Wuhan Dazhong Dental Xudong
Out-patient Department
Co., Ltd. (ɹ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Y uan Kaisen ( ঺කಌ) 49%
Wuhan Dazhong Dental Out-
patient Department Co., Ltd.
(ʮ
̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Wang Derong ( ˮᅃ࿲) 25%
Hu Mingjin (ږ׼ߡ24%
Wuhan Dazhong Hefeng Kaide
Dental Out-patient Department
Co., Ltd. (௱ᅃɹ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Zhao Fenglin (؍ࢤ49%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-14 –


--- page 582 ---
Our subsidiary
Parties with 10% or
more equity interest
Approximate percentage
of shareholding
Wuhan Dazhong Heqiu
Panlongcheng Dental Out-
patient Department Co., Ltd.
(ൢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Zhang Qiu (߇49%
Wuhan Dazhong Hewang
Xunlimen Dental Out-patient
Service Co., Ltd. (ဏɽ଺ձ
ʮ̡) /H1118/H1118
Ke Wangju (ૐീ) 49%
Wuhan Dazhong Hesong
Huashiyuan Dental Out-patient
Service Co., Ltd. (ဏɽ଺ձ
ʮ̡) /H1118/H1118
Y u Jinsong (ؒږ35%
Sun Dan (ʗ) 14%
Wuhan Dazhong Helei Pingan
Chuntian Dental Out-patient
Service Co., Ltd. (ဏɽ଺ձ
ʮ̡) /H1118
Wu Lei ( юᆾ) 49%
Wuhan Dazhong Hejian
Baibuting Dental Out-patient
Department Co., Ltd. (ဏɽ
ࠢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Wang Jian ( ˮ਄) 49%
Wuhan Dazhong Heyuan Dental
Out-patient Service Co., Ltd.
(ʮ
̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Tian Y uzhi (ٺ40%
Wuhan Jiangxia Dazhong Hejun
Dental Out-patient Service
Co., Ltd. (ɹ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Wang Junfeng (ቜ) 49%
Wuhan Dazhong Baishazhou
Dental Out-patient Service
Co., Ltd. (ɹഢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Ma Jun (ڲ49%
Wuhan Dazhong Hexu
Guannanyuan Dental Out-
patient Service Co., Ltd. (ဏ
ࠢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Wuhan Jintian
Management
Consulting Co., Ltd.
(͞၍ଣፔ༔Ϟ
ப΂ʮ̡)
49%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-15 –


--- page 583 ---
Our subsidiary
Parties with 10% or
more equity interest
Approximate percentage
of shareholding
Wuhan Dazhong Hesen
Zhongbeilu Dental Out-patient
Department Co., Ltd. (ဏɽ
ࠢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Y uan Kaisen ( ঺කಌ) 49%
Wuhan Dazhong Dental Jiyuqiao
Out-patient Department Co.,
Ltd. (ൢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Lei Sifeng (ቜ) 49%
Wuhan Dazhong Heyu Gujie
Dental Out-patient Service
Co., Ltd. (ဏɽ଺ձ͗ոᆎɹ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Dong Y umei ( ໨͗ૠ) 39%
Wang Huolin (؍10%
Jingzhou Dazhong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Huang Y ong (ۇ30%
Xiangyang Dazhong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Du Chongli ( Ӂ̂ͭ) 10.52%
Zaoyang Hospital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Su Shengfeng (ࢤ44%
Xinshao Dazhong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Liang Chengliang
(ڥו)
16.5%
Zhang Zhengfang
(ੵ͍˙)
16.5%
Chenzhou Hospital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Xiong Zhongcai
(ʑ)
12.4%
Xie Liwen ( ᑽͭ˖) 12%
Zhang Chengyuan
(ੵ೻ʩ)
10.13%
Shaoyang Hospital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Liang Chengliang
(ڥו)
14.95%
Jingzhou Dazhong Keya Dental
Out-patient Service Co., Ltd.
(ࠢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Huang Yi ( රᆇ) 49%
Jingzhou Dazhong Dental
Jiangjin Out-patient
Department Co., Ltd. ( ঠψɽ
ʮ̡) /H1118/H1118
Hu Huanhuan (ᛇᛇ) 49%
Jingzhou Dazhong Xiangzhang
Dental Out-patient Service
Co., Ltd. (ژ
ʮ̡
) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Y ang Y an (เᝣ) 29.4%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-16 –


--- page 584 ---
Our subsidiary
Parties with 10% or
more equity interest
Approximate percentage
of shareholding
Songzi Dazhong Chuxing Dental
Clinic Co., Ltd. (݋
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
He Haoran ( ൭ख್) 49%
Gongan Dazhong Chuxing Dental
Out-patient Department Co.,
Ltd. (ൢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Huang Wen ( රၲ) 49%
Huarong Dazhong Chuxing
Dental Out-patient Service
Co., Ltd. (ɹഢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Huang Zhilong
(Ꮂ)
49%
Anxiang Dazhong Chuxing
Dental Out-patient Service
Co., Ltd. (ژ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Huang Zhilong
(Ꮂ)
49%
Jingzhou Dazhong Chongwen
Dental Out-patient Department
Co., Ltd. (ژ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Gong Y anhong
(ߎ)
49%
Jingzhou Dazhong Huafu Dental
Out-patient Department Co.,
Ltd. (ൢ௅
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Huang Wen ( රၲ) 49%
Jingzhou Dazhong Dental
Dongmen Out-patient
Department Co., Ltd. ( ঠψɽ
ʮ̡) /H1118/H1118
Xiong Jie (؏)
Huang Rong ( රႂ)
34%
15%
Shishou Dazhong Chuxing
Dental Out-patient Department
Co., Ltd. (ژ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Huang Zhilong
(Ꮂ)
Chen Lu ( ௓༩)
38.7%
10.3%
Zhongxiang Dazhong Chuxing
Wanchang Dental Out-patient
Department Co., Ltd. ( ᙒୂ̹
ࠢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Guo Shiming (׼49%
Zhongxiang Dazhong Chuxing
Dongjie Dental Out-patient
Department Co., Ltd. ( ᙒୂ̹
ࠢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Guo Shiming (׼49%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-17 –


--- page 585 ---
Our subsidiary
Parties with 10% or
more equity interest
Approximate percentage
of shareholding
Zhongxiang Dazhong Chuxing
Y ulong Dental Out-patient
Department Co., Ltd. ( ᙒୂ̹
ࠢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Zhou Y anhong (ߎ45%
Jingzhou Dazhong Zhanqian
Dental Out-patient Service
Co., Ltd. (ژ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Wu Di (ࠔ49%
Xiangyang Fancheng /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Peng Chong ( ుላ) 19%
Wang Sihong (҃) 15%
Jiang Songbo (تؒ10%
Xiangyang Kaidi /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Peng Chong ( ుላ) 19%
Wang Sihong (҃) 15%
Jiang Songbo (تؒ10%
Xiangyang Xiangcheng /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Wuhan Haobochuan
Enterprise
Management
Co., Ltd. (ဏख௹
ʮ̡)
49%
Shaoyang Shuangqing /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Tan Jing ( ᗈዽ) 20%
Huang Ziqian (࠺13%
Shaoyang Beita /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Y ang Pan ( เᖂ) 20%
Liu Yingzi (۶ߵ13%
2. Particulars of Service Contracts and Letters of Appointment
Each of our Directors and Supervisors has entered into a service contract or letter of
appointment with our Company. The service contracts and letters of appointment (a) are for a
term of three years commencing from the date on which the relevant Shareholders’ approvals
for the appointment were obtained and (b) are subject to termination in accordance with their
respective terms. The service contracts and letters of appointment may be renewed in
accordance with our Articles of Association and the applicable laws, rules and regulations from
time to time.
Save as disclosed above, none of our Directors or Supervisors has or is proposed to have
a service contract with any member of our Group (excluding agreements expiring or
determinable by any member of our Group within one year without payment of compensation
other than statutory compensation).
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-18 –


--- page 586 ---
3. Compensation of Directors and Supervisors
Save as disclosed in “Directors, Supervisors and Senior Management” and Note 8 to the
Accountants’ Report as set out in Appendix I to this prospectus, none of our Directors or
Supervisors received other remuneration or benefits in kind from our Company in respect of
each of the financial years ended December 31, 2022, 2023 and 2024.
4. Agency Fees or Commissions Received
Save as disclosed in this prospectus, none of our Directors, Supervisors or any of the
persons whose names are listed under the sub-section headed “— E. Other Information — 9.
Consents of Experts” below had received any commissions, discounts, agency fee, brokerages
or other special terms in connection with the issue or sale of any capital of any member of our
Group within the two years immediately preceding the date of this prospectus.
5. Disclaimers
Save as disclosed in this prospectus:
(1) none of our Directors, Supervisors or experts referred to under “— E. Other
Information — 8. Qualification of Experts” in this appendix 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;
(2) 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;
(3) taking no account of Shares which may be taken up under the Global Offering, none
of our Directors, Supervisors or chief executive is aware of any person (not being
a Director, Supervisor or chief executive of our Company) who will, immediately
following completion of the Global Offering, have an interest or short position in the
Shares or underlying shares of our Company which would fall to be disclosed to our
Company under the provisions of Divisions 2 and 3 of Part XV of SFO or be
interested, directly or indirectly, 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; and
(4) so far as is known to our Directors, none of our Directors, Supervisors, their
respective associates (as defined under the Listing Rules) or our Shareholders who
are interested in more than 5% of the issued share capital of our Company has any
interest in the five largest customers or the five largest suppliers of our Group.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-19 –


--- page 587 ---
D. PRE-IPO RESTRICTED SHARE SCHEME
The following is a summary of the principal terms of the Pre-IPO Restricted Share
Scheme adopted by our Company on July 27, 2017 and amended on October 28, 2024. The
Pre-IPO Restricted Share Scheme is not subject to the provisions of Chapter 17 of the Listing
Rules as it does not involve grant of Restricted Shares by our Company after the Listing.
1. Purposes
The purposes of the Pre-IPO Restricted Share Scheme are to (i) establish a long-term
effective incentive mechanism to enhance our employees’ sense of responsibility and promote
continuous and healthy development of our Company, and (ii) provide incentives to our
Directors, Supervisors, senior management, key employees and consultants to recognize their
contributions to our Company and align their interests with our Company’s long-term
development.
2. Eligible Participants
Persons eligible to receive the Restricted Shares under the Pre-IPO Restricted Share
Scheme are senior management, key employees and consultants of our Group, and other
employees who, in the opinion of the Board, have great contribution to our Group’s operating
performance and future development and should be incentivized.
Each selected participant has entered into a restricted share incentive agreement (the
“Restricted Share Agreement(s) ”) with our Company for subscription of the Restricted
Shares under the Pre-IPO Restricted Share Scheme.
3. Administration
The Pre-IPO Restricted Share Scheme is administered by our Company’s manager office.
The manager office is responsible for implementing the Pre-IPO Restricted Share Scheme
according to the rules of the Pre-IPO Restricted Share Scheme as approved by the
shareholders’ meeting of our Company, formulating detailed implementing rules, determining
list of selected participants and number of the Restricted Shares to be purchased by each
participant and making other adjustments under specific circumstances during the incentive
period.
4. Restrictions on the Restricted Shares
The Restricted Shares are subject to the following terms and conditions:
(a) Purchase price: the purchase price of the Restricted Shares shall be determined by
our Company with reference to the latest net assets, profitability and development
potential of our Company and set forth in the Restricted Share Agreement;
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-20 –


--- page 588 ---
(b) Lock-up period: the Restricted Shares are subject to a lock-up period starting from
the date on which the participants received the Restricted Share until the expiry of
thirty-six (36) months therefrom. During the lock-up period, the selected
participants shall not dispose of the Restricted Shares held by them under the
Pre-IPO Restricted Share Scheme;
(c) Restriction on transfer price: the Restricted Shares shall be transferred to the general
partner of the employee stock ownership platform or third party designated by the
general partner at the transfer price as negotiated and agreed between the transferor
and transferee with reference to the latest net assets of our Company as
recommended by the Board in the event that, among others, (i) the selected
participant terminates employment with our Group or retires upon the expiry of the
36-month lock-up period; and (ii) the selected participant decides to voluntarily
transfer the Restricted Shares upon the expiry of the lock-up period; and
(d) Share repurchase: the Restricted Shares held by the selected participants are subject
to repurchase by the general partner of the employ stock ownership platform or third
party designated by the general partner at the initial purchase price under certain
circumstances including, among others, (i) the selected participant terminates
employment with our Group or retires during the 36-month lock-up period; (ii) the
selected participant is disqualified from being an eligible participant in certain
circumstances as set out in the Pre-IPO Restricted Share Scheme; (iii) in the event
of transfer of any Restricted Shares, the transferor and transferee cannot agree on the
transfer price and refuse to accept the transfer price as determined by the Board; and
(iv) the selected participant lose his or her ability to work or die for any non
working-related reasons.
Upon the Listing, the above transfer restriction under the Pre-IPO Restricted Share
Scheme will not be applicable to the Restricted Shares held by the selected participants, and
no further Restricted Shares will be issued or granted under the Pre-IPO Restricted Share
Scheme.
5. Rights Attached to the Restricted Shares
The selected participants own the Restricted Shares through the employee stock
ownership platforms and are entitled to the economic interests of the Restricted Shares,
including the rights to receive dividends and other economic benefits. V oting rights of the
Restricted Shares held by the employee stock ownership platforms can only be exercised by the
general partner of the employee stock ownership platforms.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-21 –


--- page 589 ---
6. Adjustments
In the event of any capital reserve conversion into shares, distribution of dividends, share
split or reduction of capital of the Company, the number of the Restricted Shares indirectly
held by the selected participants through the employee stock ownership platforms will be
adjusted accordingly.
7. Tax
The Company will withhold and remit the personal income tax and other taxes that the
elected participants are required to pay in accordance with applicable tax laws.
8. Purchase of the Restricted Shares
Pursuant to the Pre-IPO Restricted Share Scheme, an aggregate of 5,750,740 Restricted
Shares, representing approximately 14.93% of the total issued share capital of our Company as
of the Latest Practicable Date, were issued to the three employee stock ownership, the general
partner and limited partners of which are the participants of the Pre-IPO Restricted Share
Scheme including (i) 2,740,740 Shares held by Wuhan Xinglin, (ii) 1,505,000 Shares held by
Wuhan Taolin and (iii) 1,505,000 Shares held by Wuhan Zhulin. The Restricted Shares have
been issued on a one-off basis and no Shares will be issued under the Pre-IPO Restricted Share
Scheme after the Listing. As all Restricted Shares under the Pre-IPO Restricted Share Scheme
have already been issued, the Restricted Shares will not have any dilution effect on the
shareholding of the Company upon Listing.
From accounting perspectives, the Restricted Shares are recognized as treasury shares
prior to the Listing as they cannot be freely transferred and are under the control of the
Company pursuant to the terms of the Pre-IPO Restricted Share Scheme. Upon the Listing, the
Restricted Shares will be transferable and cease to be under the control of the Company, and
hence the Restricted Shares will no longer be recognized as treasury shares from accounting
perspectives. For details, see Note 29 to the Accountants’ Report in Appendix I to this
prospectus.
Immediately following completion of the Global Offering, the number of Restricted
Shares issued pursuant to the Pre-IPO Restricted Share Scheme amounts to 5,750,740 Shares,
representing 11.65% of the total issued share capital of our Company (assuming no exercise of
the Over-allotment Option).
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-22 –


--- page 590 ---
As of the Latest Practicable Date, all Restricted Shares had been granted to 68 selected
participants pursuant to the Pre-IPO Restricted Share Scheme. No further Restricted Shares
will be granted under the Pre-IPO Restricted Share Scheme after the Listing. Particulars of the
Restricted Shares granted to the selected participants as of the Latest Practicable Date are set
forth below:
Name of participants (1)
Position held within
our Group
Number of
Restricted
Shares
Approximate
percentage of
enlarged issued
share capital of
our Company
immediately after
completion of the
Global Offering (2)
Director
Guo Jiaping (̻)/H1118/H1118/H1118/H1118/H1118/H1118/H1118Executive
Director and
vice general
manager
460,000 0.93%
Liu Hongchan (ᄬ) /H1118/H1118/H1118/H1118/H1118Executive
Director, vice
general
manager and
secretary of the
Board
75,000 0.15%
Supervisor
Y a nG e(ࣸ)H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Supervisor and
accountant
25,000 0.05%
Senior management (excluding those who are also Directors)
Wang Lixia ( ˮᘆᒳ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118Vice general
manager
100,000 0.20%
Joint company secretary
Xu Liman ( ஢஁ਟ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118joint company
secretary and
general
management
officer
20,000 0.04%
Other participants
Zhou Xianlue ( մ΋ଫ) /H1118/H1118/H1118/H1118/H1118Employee 548,148 1.11%
Lei Minglang (ࣦ׼)H1118/H1118/H1118/H1118/H1118Former employee 548,148 1.11%
Li Y ongjun (ࠏ)H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 467,040 0.95%
Cui Y ongping ( ੦̻͑) /H1118/H1118/H1118/H1118/H1118Consultant
(3) 400,000 0.81%
He Xiangdong (؇)H1118/H1118/H1118/H1118/H1118Employee 274,074 0.56%
Y ang Songping (̻) /H1118/H1118/H1118/H1118Employee 187,040 0.38%
Peng Chong ( ుә) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 167,030 0.34%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-23 –


--- page 591 ---
Name of participants (1)
Position held within
our Group
Number of
Restricted
Shares
Approximate
percentage of
enlarged issued
share capital of
our Company
immediately after
completion of the
Global Offering (2)
Jiang Shu ( ᇸ⤳) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 129,260 0.26%
Ma Jun (ڲ)H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 100,000 0.20%
Xiao Zhongji (Λ) /H1118/H1118/H1118/H1118/H1118/H1118Employee 100,000 0.20%
Zhang Y ouxian ( ੵʾ΋) /H1118/H1118/H1118/H1118Employee 100,000 0.20%
Sun Xiaohong (ߎ)H1118/H1118/H1118/H1118/H1118Employee 100,000 0.20%
Tang Xizhen (ޜ)H1118/H1118/H1118/H1118/H1118/H1118Employee 100,000 0.20%
Qin Fan ( ॢ๨) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 100,000 0.20%
Huang Y aoping ( රᘴ̻) /H1118/H1118/H1118/H1118Employee 100,000 0.20%
Ma Zhenrong (࿲) /H1118/H1118/H1118/H1118/H1118Employee 100,000 0.20%
He Zedong (؇)H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 100,000 0.20%
Li Meiqiu (߇ߕ)H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 50,000 0.10%
Luo Y ue ( ᖯຽ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 50,000 0.10%
Xiao Shuanglin (؍)H1118/H1118/H1118/H1118Employee 50,000 0.10%
Fu Wei ( ௩ਃ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 50,000 0.10%
Zhou Y ubi ( մ͗၀) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 50,000 0.10%
Hu Ting (ణ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 50,000 0.10%
Gao Xuefeng (ࢤ)H1118/H1118/H1118/H1118/H1118/H1118Employee 50,000 0.10%
Hu Dejin (ᅃආ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 50,000 0.10%
Y i nX i( ʙᘙ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 50,000 0.10%
Li Guowu (؛)H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 50,000 0.10%
Guan Jinyan (ᝣ) /H1118/H1118/H1118/H1118/H1118/H1118Employee 50,000 0.10%
Kuang Liping (ᘆറ) /H1118/H1118/H1118/H1118/H1118Employee 50,000 0.10%
Zhang Weiwei ( ੵᑢᑢ) /H1118/H1118/H1118/H1118/H1118Employee 45,000 0.09%
Mao Y anhui ( ˣᝣሾ)/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 45,000 0.09%
Chen Jing ( ௓᎑) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 40,000 0.08%
Y ang Huaiyi ( เᕿ๐) /H1118/H1118/H1118/H1118/H1118/H1118Employee 40,000 0.08%
Cai Xiangqin ( ᇹΣා) /H1118/H1118/H1118/H1118/H1118/H1118Employee 30,000 0.06%
Xiao Tianying (ߵ)H1118/H1118/H1118/H1118/H1118Employee 30,000 0.06%
Gan Zhongming (׼׀)H1118/H1118/H1118Employee 30,000 0.06%
Y a oQ i(೘) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 25,000 0.05%
Zhang Y uwei (۾)H1118/H1118/H1118/H1118/H1118/H1118Employee 25,000 0.05%
Wang Lei ( ˮᆾ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 25,000 0.05%
Han Qiudi (ࠔ߇)H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 25,000 0.05%
Li Li ( ҽᘆ)/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 25,000 0.05%
Liu Hongmei (ૠ) /H1118/H1118/H1118/H1118/H1118/H1118Employee 25,000 0.05%
Fang Y unzhi (ڈ)H1118/H1118/H1118/H1118/H1118/H1118Employee 25,000 0.05%
Lu Shan (ޙ)H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 25,000 0.05%
Y u Ting ( Яణ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 25,000 0.05%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-24 –


--- page 592 ---
Name of participants (1)
Position held within
our Group
Number of
Restricted
Shares
Approximate
percentage of
enlarged issued
share capital of
our Company
immediately after
completion of the
Global Offering (2)
Xu Qi (ೡ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 25,000 0.05%
Nie Ting ( ᔗణ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 25,000 0.05%
Y ao Hui (ᅆ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 25,000 0.05%
Gong Liqiong ( ᛵᘆᖘ) /H1118/H1118/H1118/H1118/H1118Employee 25,000 0.05%
Wang Ruiyun ( ˮ๿ථ) /H1118/H1118/H1118/H1118/H1118Employee 25,000 0.05%
Tao Fen (ځ)H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 25,000 0.05%
Zuo Juan (ࢇ)H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 25,000 0.05%
Hu Xiu (Ӹ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 20,000 0.04%
Chen Fengping ( ௓ჾറ) /H1118/H1118/H1118/H1118Employee 20,000 0.04%
Zou Peng ( ཅᘄ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 20,000 0.04%
Jia Xiaowen ( ༠ወත) /H1118/H1118/H1118/H1118/H1118/H1118Employee 20,000 0.04%
Sun Y an (ف࢑)H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 20,000 0.04%
Xie Zuqing ( ᑽख़૶) /H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 20,000 0.04%
Zhang Ying ( ੵ጑)/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 20,000 0.04%
Y uan Feifei (࠭࠭)H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 20,000 0.04%
Wei Jia ( ᕧԳ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 10,000 0.02%
Gao Qi ( ৷೘) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Employee 10,000 0.02%
Sun Qianyun (ථ) /H1118/H1118/H1118/H1118/H1118/H1118Employee 10,000 0.02%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,750,740 11.65%
Notes:
(1) The Restricted Shares issued to the participants were held by the employee stock ownership platforms,
namely Wuhan Xinglin, Wuhan Taolin and Wuhan Zhulin, the general partner and limited partners of
which are the participants of the Pre-IPO Restricted Share Scheme.
(2) The percentage is for illustrative purpose only and is calculated based on the number of Shares in issue
immediately following the completion of the Global Offering (assuming no exercise of the Over-
allotment Option).
(3) The consultant refers to a retired employee who is rehired by our Group as a consultant.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-25 –


--- page 593 ---
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 of our subsidiaries.
2. Litigation
During the Track Record Period and up to the Latest Practicable Date, save as disclosed
in this prospectus and so far as our Directors are aware, we were not engaged in any litigation,
arbitration or claim of material importance and no litigation, arbitration or claim of material
importance was known to our Directors to be pending or threatened by or against us, that would
have a material adverse effect on our results of operations or financial conditions, taken as a
whole.
3. Sole Sponsor
The Sole Sponsor has declared its independence pursuant to Rule 3A.07 of the Listing
Rules. Our Company has entered into an engagement agreement with the Sole Sponsor,
pursuant to which our Company agreed to pay an aggregate of US$600,000 to the Sole Sponsor
to act as the sponsor to our Company in connection with the Listing.
The Sole Sponsor has made an application on our behalf to the Stock Exchange for the
listing of, and permission to deal in, our H Shares. All necessary arrangements have been made
to enable the H Shares to be admitted into CCASS.
4. Compliance Advisor
We appointed Haitong International Capital Limited as our compliance adviser effective
upon the Listing in compliance with Rules 3A.19 of the Listing Rules.
5. Preliminary Expenses
We have not incurred any material preliminary expenses.
6. Promoter
The promoters of our Company are Zhongshan Medical Investment and Wuhan Xinglin.
Save as disclosed in this prospectus, within the two years immediately preceding the date of
this prospectus, no cash, securities or other benefit has been paid, allotted or given nor are any
proposed to be paid, allotted or given to any promoter in connection with the Global Offering
and the related transactions described in this prospectus.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-26 –


--- page 594 ---
7. Taxation of Holders of H Shares
The sale, purchase and transfer of H Shares are subject to Hong Kong stamp duty if such
sale, purchase and transfer is effected on the H Share register of members of our Company,
including in circumstances where such transaction is effected on the Stock Exchange. The
current rate charged on each of the purchaser and seller is 0.1% of the consideration of or, if
higher, of the fair value of our Shares being sold or transferred.
8. Qualification of Experts
The following are the qualifications of the experts who have given opinion or advice
which are contained in this prospectus:
Name Qualifications
Haitong International Capital Limited /H1118/H1118Licensed corporation under the SFO for type
6 (advising on corporate finance) of the
regulated activities as defined under the SFO
Tian Y uan Law Firm /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118PRC legal advisors to our Company
Tahota Law Firm /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118PRC legal advisors to our Company on data
compliance matters
Ernst & Y oung /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Certified Public Accountants and Registered
Public Interest Entity Auditor
Frost & Sullivan (Beijing) Inc.,
Shanghai Branch Co. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Industry consultant
9. Consents of Experts
Each of Haitong International Capital Limited, Tian Y uan Law Firm, Tahota Law Firm,
Ernst & Y oung and Frost & Sullivan (Beijing) Inc., Shanghai Branch Co. 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 certificates and/or legal opinion (as the case may be), which is made as of
the date of this prospectus, and references to its name included herein in the form and context
in which it respectively appears.
None of the experts named above has any shareholding interests in our Company or any
of our subsidiaries or the right (whether legally enforceable or not) to subscribe for or to
nominate persons to subscribe for securities in our Company or any of our subsidiaries.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-27 –


--- page 595 ---
10. Bilingual Prospectus
The English language and Chinese language versions of this prospectus are being
published separately in reliance upon the exemption provided under Section 4 of the
Companies Ordinance (Exemption of Companies and Prospectuses from Compliance with
Provisions) Notice (Chapter 32L of the Laws of Hong Kong).
11. 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.
12. Miscellaneous
Save as disclosed in this prospectus,
(1) within the two years immediately preceding the date of this prospectus:
(i) no share or loan capital of our Company or any of our subsidiaries had been
issued or agreed to be issued or proposed to be fully or partly paid either for
cash or a consideration other than cash;
(ii) no commissions, discounts, brokerages or other special terms had been granted
or agreed to be granted in connection with the issue or sale of any share or loan
capital of our Company or any of our subsidiaries; and
(iii) no commission had been paid or payable for subscription, agreeing to
subscribe, procuring subscription or agreeing to procure subscription of any
share in our Company or any of our subsidiaries;
(2) no share or loan capital of our Company or any of our subsidiaries had been under
option or agreed conditionally or unconditionally to be put under option;
(3) our Company has no outstanding convertible debt securities or debentures;
(4) there is no restriction affecting the remittance of profits or repatriation of capital by
us into Hong Kong from outside Hong Kong;
(5) there are no founder, management or deferred shares nor any debentures in our
Company or any of our subsidiaries;
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-28 –


--- page 596 ---
(6) our Directors confirm that there has been no material adverse change in the financial
or trading position of our Group since December 31, 2024 (being the date to which
the latest audited consolidated financial statements of our Group were made up);
(7) 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;
(8) all necessary arrangements have been made to enable the Shares to be admitted to
CCASS;
(9) no company within or Group is listed on any stock exchange or traded on any trading
system and at present, and our Group is not seeking or proposing to seek any listing
of, or permission to deal in, the share or loan capital of our Company on any other
stock exchange;
(10) our Company is a joint stock company with limited liability and is subject to the
PRC Company Law; and
(11) there is no arrangement under which future dividends are waived or agreed to be
waived.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-29 –


--- page 597 ---
DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG KONG
The documents attached to the copy of this prospectus delivered to the Registrar of
Companies in Hong Kong for registration were, among other documents:
(a) the written consents referred to in the section headed “Statutory and General
Information — E. Other Information — 9. Consents of Experts” in Appendix VI to
this prospectus; and
(b) a copy of the material contract referred to in the section headed “Statutory and
General Information — B. Further Information about Our Business — 1. Summary
of Material Contract” in Appendix VI to this prospectus.
DOCUMENTS A V AILABLE ON DISPLAY
Copies of the following documents will be available on display on the website of the
Stock Exchange at www.hkexnews.hk and our website at www.chinadzyl.com during a period
of 14 days from the date of this prospectus:
(a) the Articles of Association;
(b) the Accountants’ Report from Ernst & Y oung, the text of which is set out in
Appendix I to this prospectus;
(c) the report on unaudited pro forma financial information of our Group from Ernst &
Y oung, the text of which is set out in Appendix II to this prospectus;
(d) the audited consolidated financial statements of our Group for the financial years
ended December 31, 2022, 2023 and 2024;
(e) the legal opinion issued by Tian Y uan Law Firm, our PRC Legal Advisors, in respect
of certain aspects of our Group in the PRC;
(f) the legal opinion issued by Tahota Law Firm, our PRC Legal Advisors relating to
Data Compliance, in respect of PRC data compliance law;
(g) the industry report issued by Frost & Sullivan, from which information in the section
headed “Industry Overview” of this prospectus is extracted;
(h) the material contract referred to in “Statutory and General Information — B. Further
Information about Our Business — 1. Summary of Material Contract” in Appendix
VI to this prospectus;
APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES IN HONG KONG AND ON DISPLAY
– VII-1 –


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(i) the service contracts and letters of appointment referred to in “Statutory and General
Information — C. Further Information about our Directors, Supervisors and
Substantial Shareholders — 2. Particulars of Service Contracts and Letters of
Appointment” in Appendix VI to this prospectus;
(j) the written consents referred to “Statutory and General Information — E. Other
Information — 9. Consents of Experts” in Appendix VI to this prospectus; and
(k) the PRC Company Law, the PRC Securities Law, the Overseas Listing Trial
Measures together with their unofficial English translation.
APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES IN HONG KONG AND ON DISPLAY
– VII-2 –


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GLOBAL OFFERING
Sole Sponsor, Sole Overall Coordinator, Sole Global Coordinator, Sole Bookrunner and Joint Lead Manager
(A joint stock company with limited liability incorporated in the People's Republic of China)
Stock Code: 2 6 5 1
武漢大眾口腔醫療股份有限公司
Wuhan Dazhong Dental Medical Co., Ltd.
武漢大眾口腔醫療股份有限公司
Wuhan Dazhong Dental Medical Co., Ltd.
