--- page 1 ---
Stock Code : 2499
(A joint stock company incorporated in the People’s Republic of
China with limited liability)
廣州佛朗斯股份有限公司
FOLANGSI CO., LTD
GLOBAL
OFFERING
Sole Sponsor, Sole Overall Coordinator, Sole Global Coordinator, Joint Bookrunner and Joint Lead Manager
Joint Bookrunners and Joint Lead Managers
 (In no particular order)


--- page 2 ---
IMPORTANT: If you are in any doubt about any of the contents of this prospectus, you should obtain professional independent advice.
FOLANGSI CO., LTD
ʮ̡
(A joint stock company incorporated in the People’ s Republic of China with limited liability)
Global Offering
Number of Offer Shares under
the Global Offering
: 12,136,000 H Shares (subject to
the Over-allotment Option)
Number of Hong Kong Offer Shares : 1,213,600 H Shares (subject to
reallocation)
Number of International Offer Shares : 10,922,400 H Shares (subject to
reallocation and the Over-allotment
Option)
Maximum Offer Price : HK$16.18 per H Share, plus brokerage
of 1.0%, SFC transaction levy of
0.0027%, AFRC transaction levy of
0.00015% and Hong Kong Stock
Exchange trading fee of 0.00565%
(payable in full on application in Hong
Kong dollars and subject to refund)
Nominal value : RMB0.25 per H Share
Stock code : 2499
Sole Sponsor, Sole Overall Coordinator, Sole Global Coordinator, Joint Bookrunner and
Joint Lead Manager
Joint Bookrunners and Joint Lead Managers
(In no particular order)
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 an y loss howsoever
arising from or in reliance upon the whole or any part of the contents of this prospectus.
A copy of this prospectus, having attached thereto the documents specified in the section headed “Appendix VII – Documents Delivered to the Registrar of Companies
and Available on Display” in this prospectus, has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companie s (Winding
Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission of Hong Kong and the Registrar of
Companies in Hong Kong take no responsibility as to the contents of this prospectus or any other documents referred to above.
The Offer Price is expected to be determined by agreement between the Sole Overall Coordinator (for itself and on behalf of the Hong Kong Underwriters) and our
Company on the Price Determination Date. The Price Determination Date is expected to be on or around Friday, November 3, 2023 (Hong Kong time) and, in an y
event, not later than Thursday, November 9, 2023 (Hong Kong time). The Offer Price will not be more than HK$16.18 per Offer Share and is currently expect ed to
be not less than HK$14.18 per Offer Share unless otherwise announced. If, for any reason, the Offer Price is not agreed by Thursday, November 9, 2023 (Ho ng Kong
time) between the Sole Overall Coordinator (for itself and on behalf of the Hong Kong Underwriters) and our Company, the Global Offering will not proce ed and
will lapse.
The Sole Overall Coordinator, for itself and on behalf of the Underwriters, may, where considered appropriate and with the consent of our Company, red uce the
number of Hong Kong Offer Shares and/or the indicative Offer Price range below that is stated in this prospectus (being HK$14.18 per Offer Share to HK$1 6.18
per Offer Share) at any time prior to the morning of the last day for lodging applications under the Hong Kong Public Offering. In such case, notices of th e reduction
in the number of Hong Kong Offer Shares and/or the indicative Offer Price range will be published on the website of our Company at www.fls123.com and on the
website of the Hong Kong Stock Exchange at www.hkexnews.hk as soon as practicable following the decision to make such reduction, and in any event not later
than the morning of the last day for lodging applications under the Hong Kong Public Offering. For further details, please see the sections headed “Str ucture of the
Global Offering” and “How to Apply for Hong Kong Offer Shares” in this prospectus.
The obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Agreement are subject to termination by the Sole Overall Coordinator ( for itself
and on behalf of the Underwriters) if certain events occur prior to 8:00 a.m. on the Listing Date. Please see the section headed “Underwriting” in this p rospectus.
The Offer Shares have not been, and will not be, registered under the U.S. Securities Act or the securities laws of any state of the United States and may b e offered
or sold only outside the United States in offshore transactions in reliance on Regulation S under the U.S. Securities Act.
ATTENTION
We have adopted a fully electronic application process for the Hong Kong Public Offering. We will not provide printed copies of this prospectus or prin ted
copies of any application forms to the public in relation to the Hong Kong Public Offering. This prospectus is available at the website of the Stock
Exchange at www.hkexnews.hk
and our website at www.fls123.com . If you require a printed copy of this prospectus, you may download and print from
the website addresses above.
IMPORTANT
October 31, 2023


--- page 3 ---
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 or printed
copies of any application forms to the public in relation to the Hong Kong Public
Offering.
This prospectus is available at the website of the Hong Kong Stock Exchange
at www.hkexnews.hk under the “ HKEXnews > New Listings > New Listing
Information ” section, and our website at www.fls123.com. If you require a printed
copy of this prospectus, you may download and print from the website addresses
above.
To apply for the Hong Kong Offer Shares, you may:
(1) apply online via the HK eIPO White Form service in the IPO App
(which can be downloaded by searching “ IPO App ” in App Store or
Google Play or downloaded at www.hkeipo.hk/IPOApp or
www.tricorglobal.com/IPOApp )o ra t www.hkeipo.hk ;o r
(2) apply through the CCASS EIPO service to electronically cause HKSCC
Nominees to apply on your behalf, including by:
i. instructing your broker or custodian who is a CCASS Clearing
Participant or a CCASS Custodian Participant to give electronic
application instructions via CCASS terminals to apply for the Hong
Kong Offer Shares on your behalf; or
ii. (if you are an existing CCASS Investor Participant ) giving electronic
application instructions through the CCASS Internet System
(https://ip.ccass.com ) or through the CCASS Phone System by calling
+852 2979 7888 (using the procedures in HKSCC’s “An Operating
Guide for Investor Participants” in effect from time to time). HKSCC
can also input electronic application instructions for CCASS Investor
Participants through HKSCC’s Customer Service Centre at 1/F, One &
Two Exchange Square, 8 Connaught Place, Central, Hong Kong by
completing an input request.
We will not provide any physical channels to accept any application for the Hong
Kong Offer Shares by the public. The contents of the electronic version of this
prospectus are identical to the printed prospectus as registered with the Registrar of
Companies in Hong Kong pursuant to Section 342C of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance.
If you are an intermediary , broker or agent , please remind your customers, clients
or principals, as applicable, that this prospectus is available online at the website
addresses above.
IMPORTANT
–i–


--- page 4 ---
Please see 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.
Y our application through the HK eIPO White Form service or the CCASS EIPO
service must be for a minimum of 200 Hong Kong Offer Shares and in one of the
numbers set out in the table. Y ou are required to pay the amount next to the number you
select.
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
HK$ HK$ HK$ HK$
200 3,268.63 4,000 65,372.71 60,000 980,590.52 300,000 4,902,952.59
400 6,537.27 5,000 81,715.87 70,000 1,144,022.27 350,000 5,720,111.35
600 9,805.90 6,000 98,059.06 80,000 1,307,454.02 400,000 6,537,270.12
800 13,074.54 7,000 114,402.23 90,000 1,470,885.78 450,000 7,354,428.89
1,000 16,343.17 8,000 130,745.39 100,000 1,634,317.54 500,000 8,171,587.66
1,200 19,611.81 9,000 147,088.58 120,000 1,961,181.03 606,800
(1) 9,917,038.78
1,400 22,880.44 10,000 163,431.75 140,000 2,288,044.54
1,600 26,149.08 20,000 326,863.51 160,000 2,614,908.05
1,800 29,417.72 30,000 490,295.27 180,000 2,941,771.55
2,000 32,686.35 40,000 653,727.01 200,000 3,268,635.05
3,000 49,029.52 50,000 817,158.76 250,000 4,085,793.83
(1) Maximum number of Hong Kong Offer Shares you may apply for.
No application for any other number of Hong Kong Offer Shares will be considered
and any such application is liable to be rejected.
IMPORTANT
–i i–


--- page 5 ---
If there is any change in the following expected timetable of the Hong Kong Public
Offering, we will issue an announcement in Hong Kong to be published on the websites of the
Stock Exchange at www.hkexnews.hk , and the Company at www.fls123.com , respectively.
Hong Kong Public Offering commences ...................... .9:00 a.m. on Tuesday,
October 31, 2023
Latest time for completing electronic applications under
the HK eIPO White Form service through (a) the IPO App ,
which can be downloaded by searching “ IPO App ”
in App Store or Google Play or download at
www.hkeipo.hk/IPOApp or www.tricorglobal.com/IPOApp ,
or (b) the designated website www.hkeipo.hk (2) ................ 1 1:30 a.m. on Friday,
November 3, 2023
Application Lists open (3) .................. .................. 1 1:45 a.m. on Friday,
November 3, 2023
Latest time for (a) completing payment of HK eIPO
White Form applications by effecting internet banking
transfer(s) or PPS payment transfer(s) and (b) giving
electronic application instructions to HKSCC
(4) ............. .12:00 noon on Friday,
November 3, 2023
If you are instructing your broker or custodian who is a CCASS Clearing Participant or
a CCASS Custodian Participant to give electronic application instructions via CCASS
terminals to apply for the Hong Kong Offer Shares on your behalf, you are advised to contact
your broker or custodian for the latest time for giving such instructions which may be different
from the latest time as stated above.
Application Lists close
(3) .................................. .12:00 noon on Friday,
November 3, 2023
Expected Price Determination Date (5) .................. .................. Friday,
November 3, 2023
(1) Announcement of the Offer Price, the level of indications of
interest in the International Offering, the level of applications
in the Hong Kong Public Offering and basis of allocation of
the Hong Kong Offer Shares under the Hong Kong Public
Offering to be published in the website of the Stock Exchange
at www.hkexnews.hk and our Company’s website
at www.fls123.com on or before (10) .............................. .Thursday,
November 9, 2023
EXPECTED TIMETABLE (1)
– iii –


--- page 6 ---
(2) Announcement of the results of allocations in the Hong Kong
Public Offering (with successful applicants’ identification
document numbers, where appropriate) to be available
through a variety of channels, including the website of the
Stock Exchange at www.hkexnews.hk and our Company’s
website at www.fls123.com (6) (see “How to Apply for
Hong Kong Offer Shares – 11. Publication of Results”
in this prospectus) from (10) .................................... .Thursday,
November 9, 2023
Results of allocations in the Hong Kong Public Offering
will be available at “IPO Results” function in the IPO App or
at www.tricor.com.hk/ipo/result
and www.hkeipo.hk/IPOResult
with a “search by ID” function from (10) .................... .8:00 a.m. on Thursday,
November 9, 2023 to
12:00 midnight on Wednesday,
November 15, 2023
H Share certificates in respect of wholly or partially successful
applications to be dispatched or deposited into CCASS
on or before
(7)(9)(10) .............................................. .Thursday,
November 9, 2023
HK eIPO White Form e-Auto Refund payment instructions/refund
cheques in respect of wholly or partially successful applications
(if applicable) or wholly or partially unsuccessful applications
to be dispatched on or before
(8)(9)(10) ................................. .Thursday,
November 9, 2023
Dealings in the H Shares on the Stock Exchange expected
to commence at (10) ...................................... .9:00 a.m. on Friday,
November 10, 2023
(1) All times refer to Hong Kong local time, except as otherwise stated.
(2) Y ou will not be permitted to submit your application under the HK eIPO White Form service through the IPO
App or the designated website at www.hkeipo.hk after 11:30 a.m. on the last day for lodging applications. If
you have already submitted your application and obtained an application reference number from the IPO App
or 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 of lodging applications, when the
Application Lists close.
(3) If there is a tropical cyclone warning signal number 8 or above, or a “black” rainstorm warning in force and/or
Extreme Conditions in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Friday, November 3,
2023, the Application Lists will not open or close on that day. See “How to Apply for Hong Kong Offer Shares
– 10. Effect of Bad Weather and/or Extreme Conditions on the Opening of the Application Lists” in this
prospectus.
EXPECTED TIMETABLE (1)
–i v–


--- page 7 ---
(4) Applicants who apply for Hong Kong Offer Shares by giving electronic application instructions to HKSCC
should see the section headed “How to Apply for Hong Kong Offer Shares – 6. Applying Through the CCASS
EIPO Service” in this prospectus.
(5) The Price Determination Date is expected to be on or around Friday, November 3, 2023 and, in any event, not
later than Thursday, November 9, 2023. If, for any reason, the Offer Price is not agreed between the Sole
Overall Coordinator (for itself and on behalf of the Hong Kong Underwriters) and us by Thursday,
November 9, 2023, the Global Offering will not proceed and will lapse.
(6) None of the website or any of the information contained on the website forms part of this prospectus.
(7) 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” in this
prospectus has not been exercised. Investors who trade H Shares prior to the receipt of H Share certificates
or the H Share certificates becoming valid do so at their own risk.
(8) e-Auto Refund payment instructions/refund cheques will be issued in respect of wholly or partially
unsuccessful applications pursuant to the Hong Kong Public Offering and also in respect of wholly or partially
successful applications in the event that the final Offer Price is less than the price payable per Offer Share on
application. Part of the applicant’s identification document number, or, if the application is made by joint
applicants, part of the identification document number of the first-named applicant, provided by the
applicant(s) may be printed on the refund cheque, if any. Such data would also be transferred to a third party
for refund purposes. Banks may require verification of an applicant’s identification document number before
encashment of the refund cheque. Inaccurate completion of an applicant’s identification document number may
invalidate or delay encashment of the refund cheque.
(9) Applicants who have applied on the HK eIPO White Form service for 500,000 or more Hong Kong Offer
Shares may collect any refund cheques and/or H Share certificates in person from the Company’s H Share
Registrar, Tricor Investor Services Limited, at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong
between 9:00 a.m. and 1:00 p.m. on Thursday, November 9, 2023 or such other date as notified by the
Company in the newspapers as the date of dispatch/collection of H Share certificates/e-Auto Refund payment
instructions/refund cheques. Applicants being individuals who are eligible for personal collection may not
authorize any other person to collect on their behalf. Applicants being corporations who are eligible for
personal collection must attend through their authorized representatives bearing letters of authorization from
their corporation stamped with the corporation’s chop. Both individuals and authorized representatives of
corporations must produce evidence of identity acceptable to our H Share Registrar at the time of collection.
Applicants who have applied for Hong Kong Offer Shares through the CCASS EIPO service should see the
section headed “How to Apply for Hong Kong Offer Shares – 14. Despatch/Collection of H Share
Certificate/e-Auto Refund Payment Instruction/Refund Cheque(s) – Personal Collection – (ii) If Y ou Apply
Through the CCASS EIPO Service” in this prospectus 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 bank account in the form of
e-Auto Refund payment instructions. Applicants who have applied through the HK eIPO White Form service
and paid their application monies through multiple bank accounts may have refund monies (if any) dispatched
to the address as specified in their application instructions in the form of refund cheques in favour of the
applicant (or, in the case of joint applications, the first-named applicant) by ordinary post at their own risk.
H Share certificates and/or refund cheques (if applicable) for applicants who have applied for less than 500,000
Hong Kong Offer Shares and any uncollected H Share certificates and/or refund cheques will be dispatched
by ordinary post, at the applicants’ risk, to the addresses specified in the relevant applications.
Further information is set out in the sections headed “How to Apply for Hong Kong Offer Shares – 13. Refund
of Application Monies” and “How to Apply for Hong Kong Offer Shares – 14. Despatch/Collection of H Share
Certificate/e-Auto Refund Payment Instruction/Refund Cheque(s) – Personal Collection – (ii) If Y ou Apply
Through the CCASS EIPO Service” in this prospectus.
(10) In case a typhoon warning signal no. 8 or above, a black rainstorm warning signal and/or Extreme Conditions
is/are in force in any days between Tuesday, October 31, 2023 to Friday, November 10, 2023, then the day of
(i) announcement of results of allocations in the Hong Kong Public Offering; (ii) dispatch of H Share
certificates and refund cheques/ HK eIPO White Form e-Auto Refund payment instructions; and (iii) dealings
in the H Shares on the Stock Exchange may be postponed and an announcement may be made in such event.
EXPECTED TIMETABLE (1)
–v–


--- page 8 ---
The above expected timetable is a summary only. Y ou should see the sections headed
“Structure of the Global Offering” and “How to Apply for Hong Kong Offer Shares” in
this prospectus for details of the structure of the Global Offering, including the conditions
of the Global Offering, and the procedures for application for the Hong Kong Offer
Shares.
If the Global Offering does not become unconditional or is terminated in accordance
with its terms, the Global Offering will not proceed. In such a case, the Company will
make an announcement as soon as practicable thereafter.
EXPECTED TIMETABLE (1)
–v i–


--- page 9 ---
IMPORTANT NOTICE TO PROSPECTIVE INVESTORS
This prospectus is issued by us solely in connection with the Hong Kong Public
Offering and the Hong Kong Offer Shares and 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 making, and does not constitute, an offer or
invitation in any other jurisdiction or in any other circumstances. No action has been
taken to permit a public offering of the Hong Kong Offer Shares in any jurisdiction
other than Hong Kong and no action has been taken to permit the distribution of this
prospectus in any jurisdiction other than Hong Kong. The distribution of this
prospectus for purposes of a public offering and the offering and sale of the Hong Kong
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.
Y ou should rely only on the information contained in this prospectus to make your
investment decision. The Hong Kong Public Offering is made solely on the basis of the
information contained and the representations made in this prospectus. 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 contained nor
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 Joint
Bookrunners, the Joint Lead Managers, the Capital Market Intermediaries, the
Underwriters, any of our or their respective directors, officers, employees, agents, or
representatives of any of them or any other parties involved in the Global Offering.
Page
Expected Timetable ................................................. i i i
Contents .......................................................... v i i
Summary ......................................................... 1
Definitions ........................................................ 2 8
Glossary of Technical Terms ........................................... 4 1
Forward-looking Statements ........................................... 4 5
Risk Factors ....................................................... 4 7
Waivers from Strict Compliance with the Listing Rules ...................... 8 2
CONTENTS
– vii –


--- page 10 ---
Information about this Prospectus and the Global Offering .................... 8 6
Directors, Supervisors and Parties Involved in the Global Offering ............. 9 1
Corporate Information ............................................... 9 7
Industry Overview .................................................. 9 9
Regulatory Overview ................................................ 1 1 1
History, Development and Corporate Structure ............................. 1 3 0
Business .......................................................... 1 6 6
Directors, Supervisors and Senior Management ............................ 2 6 5
Relationship with Our Controlling Shareholders ............................ 2 8 5
Substantial Shareholders .............................................. 2 8 8
Share Capital ...................................................... 2 9 3
Cornerstone Placing ................................................. 2 9 7
Financial Information ................................................ 3 0 3
Future Plans and Use of Proceeds ...................................... 3 6 0
Underwriting ...................................................... 3 6 4
Structure of the Global Offering ........................................ 3 7 9
How to Apply for Hong Kong Offer Shares ............................... 3 9 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 Legal and Regulatory Provisions .......... 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 and
Available on Display ................................... VII-1
CONTENTS
– viii –


--- page 11 ---
This summary aims to give you an overview of the information contained in this
prospectus. As it is a summary, it 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
H Shares.
There are risks associated with any investment. Some of the particular risks in
investing in the H Shares are set forth in “Risk Factors” of this prospectus. You should
read that section carefully before you decide to invest in the H Shares.
OVERVIEW
We are a leading intralogistics equipment solution provider in China. During the Track
Record Period, we primarily provided intralogistics equipment subscription services, which
contributed 65.2%, 63.0%, 61.8% and 55.9% of the total revenue in 2020, 2021, 2022 and the
four months ended April 30, 2023. In addition, we also provided maintenance and repair
services, and sales of intralogistics equipment and parts.
Intralogistics equipment is an industrial machinery used to replace intensive labor in
mechanical work, such as carrying, moving, sorting, and stacking of cargo and heavy loads, in
manufacturing plants, logistics parks, warehouses, airports, ports, and other similar worksites.
There are various types of intralogistics equipment, including but not limited to, forklifts,
stackers, sorters, conveyors, etc. Subscription of forklifts, including counterbalanced forklifts,
reach trucks, and walkie stackers, is important in the Company’s intralogistics equipment
subscription services. According to CIC, forklifts comprised around 92.9% of all intralogistics
equipment in intralogistics equipment subscription services in 2022 in PRC. Focusing on
intralogistics equipment subscription services, we strive to provide enterprises with one-stop
solutions for intralogistics equipment utilization and management. According to CIC, we are
the largest intralogistics equipment solution provider in China in terms of revenue for 2022,
accounting for 7.7% of the total market. Furthermore, we have established a service network
aiming for coordinated equipment engagement and management. As of April 30, 2023, we had
67 offline service outlets in 47 cities throughout China, managing over 40,000 units of
intralogistics equipment. During the Track Record Period, as part of the intralogistics
equipment subscription services, the Company provided management optimization services to
its customers, such as monitoring and management of the subscribed intralogistics equipment’s
operation, without extra charges in addition to intralogistics equipment subscription fees.
Intralogistics equipment utilization and management present inherent challenges,
including high purchase and maintenance costs, a need for specialized expertise, and
significant management complexity. However, it is not easy for enterprises to have satisfying
services from traditional service providers which only provide equipment with limited
maintenance services, as most enterprises are not experts in intralogistics equipment, and may
need assistance in monitoring, checking and maintaining, and operating such equipment. Our
customers are offered with different subscription arrangements in terms of equipment portfolio,
SUMMARY
–1–


--- page 12 ---
equipment operation guidance, scheduled maintenance and repair, and real-time operation
monitoring, which help customers to save costs related to fixed asset procurement and
maintenance afterwards. According to CIC, intralogistics equipment solutions can help
enterprises reduce costs by approximately 20% throughout the equipment’s lifecycle compared
to traditional intralogistics equipment procurement mode.
According to CIC, despite the growing demand for intralogistics equipment solutions in
China, the penetration rate remains low at around 3.7% in 2022. In comparison, developed
countries like the U.S. had a much higher penetration rate of approximately 54.6% in 2022,
demonstrating significant potential for improvement and expansion in China. According to
CIC, the market size of intralogistics equipment solutions in China is expected to reach
RMB34.9 billion by 2027, representing a CAGR of 25.0% from 2022 to 2027. See “Business
– Overview” for more information.
OUR BUSINESS MODEL
We invested in developing and improving our intralogistics equipment solutions, which
comprise the following three business segments during the Track Record Period:
 Intralogistics Equipment Subscription Services : We provide intralogistics
equipment to customers for their usage with value-added services, including but not
limited to, equipment selection, on-site operation training, general and necessary
maintenance and repair, and real-time monitoring of equipment status and operation
through our Intelligent Asset and Operation Management Platform. In managing this
business segment, we charge customers services fees mainly based on types and
configurations of equipment selected, duration they use the subscribed intralogistics
equipment, and customization of related services (if applicable).
 Maintenance and Repair Services : In this business segment, we generate revenue
from providing on-site maintenance and repair services to customers for their
intralogistics equipment. We charge fees either on project basis for one-off repair
services, or based on service plans where we charge fees on monthly basis for
certain contract period covering equipment specified in the relevant agreement.
 Sales of Intralogistics Equipment and Parts : We sell new and used intralogistics
equipment to enterprises in China; and intralogistics equipment parts to enterprises
in China and abroad. We conduct sales through our own sales team directly to end
customers. We had a broad range of customers, such as manufacturers, logistics
companies, and trading companies, with intralogistics need, including movement of
heavy goods and material in indoor and limited outdoor spaces.
For details, see “Business – Our Business” in this prospectus.
SUMMARY
–2–


--- page 13 ---
The following table sets forth a breakdown of our revenue by business segments for the
periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Intralogistics equipment
subscription services 639,701 65.2 739,176 63.0 738,001 61.8 236,373 68.2 243,944 55.9
Maintenance and repair
services 111,463 11.4 128,484 11.0 140,987 11.8 35,172 10.1 54,539 12.5
Sales of intralogistics
equipment and parts 229,479 23.4 304,522 26.0 315,221 26.4 75,264 21.7 137,808 31.6
Total 980,643 100.0 1,172,182 100.0 1,194,209 100.0 346,809 100.0 436,291 100.0
The following table sets forth a breakdown of our revenue by geographic locations for the
periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Northern Region (1) 133,153 13.6 159,361 13.6 144,464 12.1 42,978 12.4 47,573 10.9
East Central Region (2) 495,579 50.5 566,548 48.3 555,363 46.5 172,205 49.7 213,757 49.0
Southern Region (3) 198,209 20.2 257,309 22.0 272,634 22.8 73,467 21.2 90,676 20.8
Western Region (4) 59,275 6.0 78,452 6.7 89,260 7.5 25,668 7.4 26,822 6.1
Overseas Region (5) 94,427 9.7 110,512 9.4 132,488 11.1 32,491 9.3 57,463 13.2
Total 980,643 100.0 1,172,182 100.0 1,194,209 100.0 346,809 100.0 436,291 100.0
Notes:
(1) Including Beijing, Tianjin, Hebei province, Shanxi province, Inner Mongolia province, Heilongjiang
province, Jilin province, and Liaoning province.
(2) Including Shanghai, Jiangsu province, Zhejiang province, Anhui province, Fujian province, Jiangxi
province, Shandong province, Henan province, Hubei province, Hunan province, Shaanxi province,
Gansu province, Qinghai province, Ningxia province, and Xinjiang province.
(3) Including Guangdong province, Guangxi province, Hainan province, Hong Kong Special Administration
Region, Macau Special Administration Region, and Taiwan province.
(4) Including Sichuan province, Chongqing, Guizhou province, Y unnan province, and Tibet province.
(5) Including over 100 foreign countries, such as United States, Thailand, Brazil, etc. In addition, all of the
revenue from overseas regions was attributable to the sales of intralogistics equipment parts.
SUMMARY
–3–


--- page 14 ---
The following table sets forth a breakdown of our gross profit and gross profit margin by
business segments for the periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Intralogistics equipment
subscription services 228,175 35.7 250,672 33.9 226,087 30.6 67,120 28.4 70,270 28.8
Maintenance and repair
services 45,585 40.9 52,359 40.8 57,698 40.9 13,916 39.6 21,201 38.9
Sales of intralogistics
equipment and parts 56,420 24.6 71,136 23.4 77,879 24.7 19,863 26.4 30,743 22.3
Total gross
profit/overall gross
profit margin 330,180 33.7 374,167 31.9 361,664 30.3 100,899 29.1 122,214 28.0
Leveraging our extensive experience in intralogistics equipment subscription business,
we aim to offer one-stop intralogistics equipment solutions for our customers, covering the
entire lifecycle of intralogistics equipment from equipment subscription, repair and
maintenance, and disposal. The following flowchart illustrates the full cycle of our
intralogistics equipment operation management services:
Upstream Equipment
Manufacturers Downstream Customers
Manufacture of
Intralogistics
Equipment and Parts
Intralogistics Equipment Solutions Equipment Utilization
and Operation
Management
/onesans Selecting equipment and
parts and executing
 purchase contracts
/twosans Equipment delivery and
acceptance
/threesans Making payments for
intralogistics equipment
and parts
/onesans Making requests for
relevant services, and
executing contracts
/twosans Delivering equipment
and/or offering related
services
/threesans Making payments for
services
OUR STRENGTHS
We believe the following competitive strengths contributed to our success and position us
for continued growth:
 pioneer and leading provider of intralogistics equipment solutions in China;
 continuous improvement of intralogistics equipment operational efficiency
benefited from highly synergistic service portfolio;
SUMMARY
–4–


--- page 15 ---
 intelligent asset and operation management platform with IoT integration for
efficient management;
 comprehensive supply chain management that effectively connects upstream and
downstream enterprises along the industry value chain;
 service network with online and offline coverage serving multiple industries and
large customer base; and
 visionary management team with profound industry experience.
OUR STRATEGIES
To establish ourselves as the first choice for enterprises’ intralogistics equipment
utilization and management, we plan to implement the following strategies:
 to keep improving customer coverage and expanding the categories of intralogistics
equipment;
 to continue improving intralogistics equipment supply chain management
capability;
 to continually enhance our technological capabilities; and
 to explore strategic collaboration with various industry participants.
OPERATIONAL PERFORMANCE
During the Track Record Period, we achieved significant growth in equipment fleet size.
As of December 31, 2020, 2021, 2022 and April 30, 2023, we had 31,213 units, 36,257 units,
39,145 units and 40,644 units of intralogistics equipment, respectively. Our customer base has
also grown steadily. The number of our customers increased from 7,477 in 2020 to 7,929 in
2021, and further to 8,170 in 2022. For the four months ended April 30, 2022 and 2023, the
number of our customers increased from 5,237 to 5,711. In particular, a significant portion of
our customer base comprises of manufacturing and logistics enterprises. In 2020, 2021, 2022
and for the four months ended April 30, 2023, in our customers, manufacturing enterprises
amounted for 3,042, 3,094, 3,290 and 2,541, respectively; logistics enterprises amounted for
1,814, 1,929, 1,916 and 1,440, respectively.
In terms of our intralogistics equipment subscription service business, considering the
customer’s contribution to us individually, certain customers are deemed KA customers under
our intralogistics equipment subscription service business segment. KA customer means a
customer who (i) subscribed 50 units or more in that particular year/period, or (ii) subscribed
50 units or more in the preceding year and continued to subscribed intralogistics equipment
(one unit or more) from us in that particular year/period under our intralogistics equipment
SUMMARY
–5–


--- page 16 ---
subscription service business segment. KA customer retention rate equals total number of KA
customers at the end of the given 12-month period carving out total number of new KA
customers in that given 12-month period, divided by the number of KA customers as of the
beginning date of the given 12-month period. We calculate net dollar retention rate in a given
12-month period by starting with all KA customers in the prior 12-month period. We calculate
the revenue from the returning KA customers in the given 12-month period. We then divide the
given 12-month period revenue by the prior 12-month period revenue contributed by the
returning KA customers to arrive at our net dollar retention rate.
For the years ended December 31, 2020, 2021, and 2022 and the four months ended April
30, 2023, we had 87, 122, 123 and 118 KA customers, respectively, with their total revenue
contribution of RMB314.9 million, RMB363.1 million, RMB332.8 million, and RMB117.9
million, respectively; representing approximately 49.2%, 49.1%, 45.1% and 48.3% of the total
revenue derived from intralogistics equipment subscription services in the same period,
respectively. Additionally, we have maintained a KA customer retention rate of 87%, 99%, 98%
and 87% for the years ended December 31, 2020, 2021 and 2022 and the four months ended
April 30, 2023, respectively, and net dollar retention rate of KA customers at 98%, 99%, 97%
and 100% for the years ended December 31, 2020, 2021 and 2022 and the four months ended
April 30, 2023, respectively.
During the Track Record Period, we provided counterbalanced forklifts, reach trucks,
walkie stackers and other kinds of intralogistics equipment for subscription. The table below
sets out the equipment subscription volume in and revenue derived from our intralogistics
equipment subscription services by equipment types for the periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
Equipment
Subscription
Volume(1) Revenue
Percentage
of Revenue
Equipment
Subscription
Volume(1) Revenue
Percentage
of Revenue
Equipment
Subscription
Volume(1) Revenue
Percentage
of Revenue
Equipment
Subscription
Volume(1) Revenue
Percentage
of Revenue
Equipment
Subscription
Volume(1) Revenue
Percentage
of Revenue
(RMB’000) (%) (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) (RMB’000) (%)
(unaudited)
Counterbalanced
Forklifts 135,245 388,136 60.7 150,936 439,920 59.5 150,274 455,567 61.7 45,306 146,587 62.0 46,637 153,647 63.0
Reach Trucks 27,846 70,607 11.0 27,088 74,316 10.1 26,879 69,739 9.4 8,045 23,196 9.8 8,255 21,980 9.0
Walkie Stackers 160,569 172,755 27.0 167,159 199,643 27.0 174,799 180,564 24.5 51,832 62,951 26.6 56,385 63,264 25.9
Others 1,930 8,203 1.3 2,476 25,297 3.4 2,087 32,131 4.4 2,407 3,639 1.5 451 5,053 2.1
Total 325,590 639,701 100.0 347,659 739,176 100.0 354,039 738,001 100.0 107,590 236,373 100.0 111,728 243,944 100.0
Note: Total equipment subscription volume for a given year/period represents the aggregation of amount of times that
intralogistics equipment in the fleet is subscribed in every month within a given year/period.
SUMMARY
–6–


--- page 17 ---
For details, see “Business – Our Equipment Fleet”, “Business – Our Customers and
Suppliers – Our Customers” and “Business – Our Business – Intralogistics Equipment
Subscription Services” in this prospectus.
As of April 30, 2023, the backlog of intralogistics equipment subscription service
agreements on hand amounted to RMB746.9 million. Looking forward, RMB348.9 million is
expected to mature in 2023, RMB233.2 million is expected to mature in 2024, RMB100.5
million is expected to mature in 2025, RMB49.2 million is expected to mature in 2026, and
RMB15.1 million is expected to mature in 2027.
The following table sets forth the movement of backlog of our on-hand equipment
subscription service agreements during the Track Record Period and up to August 31, 2023:
Y ear ended December 31,
Four
months
ended
April 30,
Subsequent to
Track Record
Period until
August 31, 20232020 2021 2022 2023
(RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)
Opening balance of
backlog 644,131 724,795 748,883 695,157 746,930
Aggregate estimated
revenue of new service
contracts executed 720,365 763,264 684,275 295,717 208,543
Less: (aggregated
revenue recognized for
completed works)
(1) (639,701) (739,176) (738,001) (243,944) (259,229)
Closing balance of
backlog 724,795 748,883 695,157 746,930 696,244
Note: The amount of “aggregated revenue recognized for completed works” here equals to the amount of
revenue derived from intralogistics equipment subscription services in the same year/period.
All backlog of intralogistics equipment subscription service agreements on-hand as of
August 31, 2023 is expected to mature by 2027.
OUR EQUIPMENT FLEET
As of April 30, 2023, we managed a fleet of 40,644 units of intralogistics equipment,
which were mostly forklifts. A forklift is an industrial equipment with a metal fork platform
attached to its front that can be used to lift heavy loads by inserting the fork platform under
cargo, pallets, or machines for moving them or placing them in warehouses, production sites,
distribution centers and other scenarios. During the Track Record Period, we mainly procured
intralogistics equipment manufactured by internationally and nationally renowned
intralogistics equipment manufacturers. The major types of intralogistics equipment in our
equipment fleet include counterbalanced forklifts, reach trucks, and walkie stackers. For more
information, please see “Business – Our Equipment Fleet” in this prospectus.
SUMMARY
–7–


--- page 18 ---
We prioritize our commitment to responding to our customer’s needs in a timely manner,
and manage to ensure that we have sufficient supplies of different kinds of intralogistics
equipment at any time. To this end, we have continuously expanded our equipment fleet. As of
December 31, 2020, 2021 and 2022, and April 30, 2023, our equipment fleet size was 31,213
units, 36,257 units, 39,145 units and 40,644 units, respectively. During the Track Record
Period, our utilization rates of intralogistics equipment were 78.9%, 78.5%, and 73.1% for
2020, 2021, and 2022, and 72.7% for the four months ended April 30, 2023, respectively. The
slight down trend of the utilization rates was mainly affected by the negative impact of
COVID-19 during this period and our proactive expansion of our fleet size for the prompt
response to our customers’ needs.
We typically have a lower volume of business around off season, i.e., the Chinese New
Y ear holiday in the first quarter of each year as most of our customers take Chinese New Y ear
holiday and stop production and operation or substantially lower production and operation
during such period. During off season, the utilization rate of our fleet was around 75.6%,
75.4%, 70.7% and 71.4%, in 2020, 2021, 2022 and for the eight months ended August 31, 2023,
respectively.
Correspondingly, we generally observe a surge in business during peak seasons, such as
periods around 618 Shopping Festival, Double 11 Shopping Festival, and Double 12 Shopping
Festival as logistics companies have higher demand of handling, transferring, sorting, and
stacking huge amount of good during such periods. During peak seasons, the utilization rate of
our fleet was around 84.1%, 82.2%, 76.1% and 78.8%, in 2020, 2021, 2022 and for the eight
months ended August 31, 2023, respectively.
The following table sets forth the number of intralogistics equipment by types as of the
dates indicated:
As of December 31,
As of
April 30,
2020 2021 2022 2023
Equipment Volume
Counterbalanced
Forklifts 12,805 14,514 15,610 15,940
Reach Trucks 2,450 2,618 2,694 2,743
Walkie Stackers 15,864 18,989 20,609 21,533
Others 94 136 232 428
Total 31,213 36,257 39,145 40,644
SUMMARY
–8–


--- page 19 ---
The following table sets forth details of our intralogistics equipment by ownership as of
the dates indicated:
As of December 31,
As of
April 30,
2020 2021 2022 2023
Equipment Volume
Self-owned Equipment
– Without payment
obligations
(1) 5,846 7,925 8,823 9,876
– With bank loan
obligations (1) 1,963 4,475 4,544 5,245
– With finance lease
obligations (2) 22,664 23,640 25,469 25,273
Leased Equipment 740 217 309 250
Total 31,213 36,257 39,145 40,644
Notes:
(1). The legal titles of intralogistics equipment procured either with our own capital or proceeds from bank
loans belong to us under the PRC laws.
(2). The legal titles of intralogistics equipment with finance lease obligations belong to the financial
institutions as of the dates indicated, which shall be immediately transferred to us at nil or nominal
consideration upon maturity of the respective finance leases. Notwithstanding that under PRC laws, the
legal titles belong to the financial institutions temporarily during the terms of the finance leases, the
Directors of the Company is of the view that the Group is reasonably certain to obtain ownership of the
leased assets upon the maturity of the lease terms. Thus, the Group recognized these leased hold
intralogistics equipment as right-of-use assets since the beginning of the finance lease arrangements, in
accordance with the relevant accounting policies as set forth on page I-20 of the Prospectus.
In 2020, 2021, 2022 and the first four months of 2023, our gross profit margin for the
self-owned equipment without payment obligation was 34.6%, 29.4%, 27.5% and 27.6%,
respectively. For the same period, our gross profit margin for the self-owned equipment with
bank loan obligations was 32.3%, 27.0%, 24.7% and 25.9%, respectively, and the gross profit
margin for the self-owned equipment under finance lease was 36.9%, 36.4%, 32.6% and 29.4%,
respectively. In general, equipment under finance lease often demonstrates superior financial
performance in terms of gross profit margin when compared equipment that is procured with
our own capital or proceeds from bank loans. One primary reason is that equipment under
finance lease typically represents newer equipment with a higher utilization rate. During the
Track Record Period, the gross profit margin for our self-owned equipment generally showed
a declining trend. This downturn was largely due to a reduction in the utilization rate, which
was affected by the negative impact of COVID-19 during this period. Furthermore, we are
dedicated to maintaining a healthy utilization rate by promptly responding to our customers’
needs and ensuring a consistent supply of diverse intralogistics equipment. Additionally, in
2020, 2021, 2022 and the first four months of 2023, our gross profit margin for leased
equipment was 16.2%, 30.1%, 15.1% and 34.6%, respectively. The gross profit margin for
leased equipment might vary based on the total gross profit, which can be influenced by
specific customer demands at given times.
SUMMARY
–9–


--- page 20 ---
During the Track Record Period, we recorded RMB73.2 million, RMB81.2 million,
RMB76.4 million and RMB24.7 million in interest expenses in relation to the procurement of
our equipment, respectively, which accounted for 11.5%, 11.0%, 10.4% and 10.1%,
respectively, of our revenue of intralogistics equipment subscription services in the same
period. Such ratio generally showed a decline during the Track Record Period primarily
because we continue to actively manage such interest expenses to control our finance costs.
Considering our relatively stable portion of interest expenses to revenue, our Directors are of
the view that there is a manageable impact on our business in relation to our interest expenses.
For risks in relation to interest expenses, please see “Risk Factors – Risks Relating to Our
Business and Industry – We incurred bank loans and other borrowings to invest in the
expansion of our equipment fleet during the Track Record Period. Changes in interest rates of
such bank loans and other borrowings could have a material adverse impact on our business,
results of operations and financial condition.”
We conduct sensitivity analysis on interest rate to measure the potential impact of a
reasonably possible change in interest rates on profit and profit margin, assuming all other
variables were constant. Assuming a parallel change in interest rate without taking into account
any possible risk management activities that may be taken by management to reduce the
relevant risks, our sensitivity analysis is as follows:
Y ear ended December 31,
Four months
ended April 30,
2020 2021 2022 2023
Increase/
(decrease)
in net
profit
Increase/
(decrease)
in net
profit
margin
Increase/
(decrease)
in net
profit
Increase/
(decrease)
in net
profit
margin
Increase/
(decrease)
in net
profit
Increase/
(decrease)
in net
profit
margin
Increase/
(decrease)
in net
profit
Increase/
(decrease)
in net
profit
margin
RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Changes in
interest rates
Decrease 100 basis
point 8,613 1.4 8,295 1.1 8,476 1.2 2,805 1.2
Decrease 50 basis
point 4,307 0.7 4,148 0.6 4,238 0.6 1,403 0.6
Increase 50 basis
point (4,307) (0.7) (4,148) (0.6) (4,238) (0.6) (1,403) (0.6)
Increase 100 basis
point (8,613) (1.4) (8,295) (1.1) (8,476) (1.2) (2,805) (1.2)
SUMMARY
–1 0–


--- page 21 ---
The following table sets forth the movement of the number of intralogistics equipment by
ownership during the Track Record Period:
Y ear ended December 31,
Four months
ended April 30,
2020 2021 2022 2023
Self-
owned Leased
Self-
owned Leased
Self-
owned Leased
Self-
owned Leased
Equipment Volume at the
Beginning of the
Y ear/Period 23,664 1,419 30,473 740 36,040 217 38,836 309
Increase
(1) 7,215 567 6,773 587 4,640 677 2,186 116
Decrease (2) 406 1,246 1,206 1,110 1,844 585 628 175
Equipment Volume at the
End of the Y ear/Period 30,473 740 36,040 217 38,836 309 40,394 250
Notes:
1. The increase in self-owned intralogistics equipment represented newly procured from suppliers or obtained by
way of finance leasing arrangement; the increase in leased intralogistics equipment represented newly leased
equipment from equipment rental companies.
2. The decrease in self-owned intralogistics equipment represented used equipment sold to end users; the
decrease in leased intralogistics equipment represented equipment returned to the lessors at the end of the lease
terms.
In October 2021, the State Council of China set the target to optimize energy consumption
structure, boost low-carbon transformation in use of energy, and increase the consumption ratio
of non-fossil energy to 25% by 2030, according to the Action Plan for Carbon Dioxide Peaking
Before 2030 ( 2030), which is the national climate policy, aiming at
achieving “peak CO
2 emissions” by 2030 and “carbon neutrality” by 2060. Over years, we have
been committed to promoting the green economies. As part of our commitment to
environmental responsibility and sustainable intralogistics equipment solutions, we have
significantly increased the proportion of electric forklifts in our equipment fleet during the
Track Record Period, which increased from approximately 88.6% in 2020 to approximately
90.0% in 2021 and further increased to approximately 91.1% in 2022 and approximately 91.7%
for the four months ended April 30, 2023.
SUMMARY
–1 1–


--- page 22 ---
OUR CONTROLLING SHAREHOLDERS
As of the Latest Practicable Date, Mr. Hou was entitled to exercise voting rights attached
to the 13,230,171 Shares directly held by him representing approximately 15.76% of the total
issued share capital of our Company. Mr. Hou Zebing (ዣж), brother of Mr. Hou, was
entitled to exercise voting rights attached to the Shares representing approximately 24.39% of
the total issued share capital of our Company through (i) 12,702,820 Shares directly held by
him, representing approximately 15.13% of the total issued share capital of our Company, and
(ii) 7,775,054 Shares held by Guangzhou Daze of which he is a general partner, representing
approximately 9.26% of the total issued share capital of our Company. Upon completion of the
Subdivision and the Global Offering (assuming the Over-allotment Option is not exercised),
Mr. Hou will be entitled to exercise voting rights attached to the 52,920,684 Shares directly
held by him representing approximately 15.21% of the total issued share capital of our
Company and Mr. Hou Zebing was entitled to exercise voting rights attached to the Shares
representing approximately 23.54% of the total issued share capital of our Company through
(i) 50,811,280 Shares directly held by him, representing approximately 14.60% of the total
issued share capital of our Company, and (ii) 31,100,216 Shares held by Guangzhou Daze of
which he is a general partner, representing approximately 8.94% of the total issued share
capital of our Company.
Mr. Hou and Mr. Hou Zebing entered into an acting-in-concert agreement on May 18,
2020 with a supplemental agreement dated March 24, 2023 to acknowledge and confirm their
acting-in-concert relationship in our Company, pursuant to which Mr. Hou and Mr. Hou Zebing
have agreed to continue to act in concert and reach consensus on any matter considered at
board meetings and general meetings of our Company.
Therefore, Mr. Hou, Mr. Hou Zebing and Guangzhou Daze collectively are able to
exercise approximately 38.74% voting rights in our Company and will be considered as the
Controlling Shareholders of our Company upon Listing.
PRE-IPO INVESTMENTS
Throughout the development of our Group, we have entered into several rounds of
financing agreements with our Pre-IPO Investors. For further details of the identity and
background of the Pre-IPO Investors, see “History, Development and Corporate Structure –
Pre-IPO Investments” in this prospectus.
SUMMARY
–1 2–


--- page 23 ---
SUMMARY HISTORICAL FINANCIAL INFORMATION
Selected Consolidated Statements of Profit or Loss and Other Comprehensive Income
The following tables set forth summary financial data from our consolidated statements
of profit or loss and other comprehensive income for the periods indicated, derived from the
Accountants’ Report set out in Appendix I. The summary consolidated financial data set forth
below should be read together with the consolidated financial statements in this prospectus,
including the related notes. Our consolidated financial information was prepared in accordance
with HKFRS.
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
RMB’000
%o f
Revenue RMB’000
%o f
Revenue RMB’000
%o f
Revenue RMB’000
%o f
Revenue RMB’000
%o f
Revenue
(unaudited)
Revenue 980,643 100.0 1,172,182 100.0 1,194,209 100.0 346,809 100.0 436,291 100.0
Cost of sales (650,463) (66.3) (798,015) (68.1) (832,545) (69.7) (245,910) (70.9) (314,077) (72.0)
Gross profit 330,180 33.7 374,167 31.9 361,664 30.3 100,899 29.1 122,214 28.0
Other income and gains 4,853 0.5 4,022 0.3 6,276 0.5 2,693 0.8 1,753 0.4
Selling and distribution
expenses (72,270) (7.4) (84,018) (7.2) (86,072) (7.2) (27,873) (8.0) (26,431) (6.1)
Administrative expenses (120,746) (12.3) (143,199) (12.2) (156,858) (13.1) (50,625) (14.6) (52,213) (12.0)
Impairment loss on
financial assets (6,808) (0.7) (4,498) (0.4) (4,178) (0.3) (884) (0.3) (2,106) (0.5)
Other expenses (197) –* (262) –* (2,750) (0.2) (719) (0.2) (12,684) (2.9)
Finance costs (73,604) (7.5) (81,838) (7.0) (83,609) (7.0) (27,398) (7.9) (27,308) (6.3)
Share of profits/(losses)
of associates (228) –* (4,929) (0.4) 948 0.1 (1,041) (0.3) (762) (0.2)
Profit/(loss) before tax 61,180 6.2 59,445 5.1 35,421 3.0 (4,948) (1.4) 2,463 0.6
Income tax
credit/(expenses) (6,970) (0.7) (4,267) (0.4) (20) –* 2,396 0.7 918 0.2
Profit/(loss) and total
comprehensive
income/(loss) for the
year/period 54,210 5.5 55,178 4.7 35,401 3.0 (2,552) (0.7) 3,381 0.8
Attributable to:
Owners of the
Company 54,210 5.5 55,178 4.7 35,401 3.0 (2,552) (0.7) 3,381 0.8
Note:
* Less than 0.1%.
SUMMARY
–1 3–


--- page 24 ---
During the Track Record Period, our gross profit margin was 33.7%, 31.9%, 30.3%,
29.1% and 28.0% in 2020, 2021, 2022 and the first four months of 2022 and 2023. The decrease
in our gross profit margin in 2021 was primarily due to (i) the lower utilization rates resulted
from the negative impact of COVID-19 and (ii) the increasing staff costs in relation to our
expansion of intralogistics equipment business in that period. The decrease in our gross profit
margin in 2022 was primarily due to the facts that we closed relevant service outlets due to the
COVID-19, while fixed costs, such as staff costs, depreciation charges and other operation
related expenses, continued to incur during the corresponding period. The decline in the first
four months of 2023 was contributed to business mix, where in that period, we have
experienced an increase in sales of intralogistics equipment and parts, which carried a
relatively lower gross profit margin compared to our intralogistics equipment subscription
services and maintenance and repair services.
The net profit for the year ended December 31, 2021 increased by RMB1.0 million
compared to the year ended December 31, 2020. This increase was mainly attributable to
revenue growth stemming from business expansion. Conversely, the net profit for the year
ended December 31, 2022, decreased by RMB19.8 million from the prior year. The decline was
primarily due to a drop in gross profit following the re-emergence of COVID-19, combined
with an increase in administrative expenses. The higher administrative expenses was driven by
increased research and development costs, higher depreciation charges, and increased rental
expenses.
We recorded net loss of RMB2.6 million for the four months ended April 30, 2022 and
net profit of RMB3.4 million for the four months ended April 30, 2023. The change was
primarily because there was a significant increase in our revenue in the four months ended
April 30, 2023 mainly due to the subsequent recovery of the manufacturing industry, which led
to a surge in demand for our maintenance and repair services, as well as increased demand for
high-quality equipment and parts in the first four months of 2023.
The resurgence of the COVID-19 pandemic in multiple regions of China in 2022 had a
significant impact on our business operations and financial performance. Temporary
suspensions of operations at certain affected service outlets limited our ability to provide
services to customers. For example, in 2022, 45 outlets were temporarily closed for less than
30 days, 7 outlets were closed temporarily for a period between 30 to 50 days, and 8 outlets
were closed for more than 50 days. Furthermore, the closures and reduced operations of our
customers during the re-emergence of COVID-19 resulted in an overall subdued demand for
our services. Consequently, our overall gross profit margin decreased from 31.9% in 2021 to
30.3% in 2022. This decline can be attributed to the combined effects of limited service
availability and subdued customer demand caused by the pandemic. Despite the decrease in
services we provided, our fixed costs, including staff costs, depreciation charges, and other
operation-related expenses, continued to be incurred. As a result, our revenue during the
corresponding period increased at a lower rate than the costs of sales. Additionally, there was
an increase in administrative expenses due to an increase in research and development
expenses, depreciation charges, and rental expenses. Consequently, our net profit decreased
from RMB55.2 million in 2021 to RMB35.4 million in 2022.
SUMMARY
–1 4–


--- page 25 ---
Being a leading intralogistics equipment solution provider in China and considering the
growing demand for these solutions in China according to CIC, our Directors believe that we
are able to mitigate risks associated with price pressure. In particular, in line with its business
strategy, we intend to continue to enhance our business growth and profitability through: (i)
improving our customer coverage and expanding the categories of our intralogistics equipment
based on our study on market demand trends; (ii) optimizing our cost and expense structure to
improve net profit margins; and (iii) increasing operation leverage through economies of scale
and optimized supply chain management capability.
Selected Items of Our Consolidated Statements of Financial Position
The table below sets forth selected information from our consolidated statements of
financial position as of the dates indicated:
As of December 31,
As of
April 30,
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Total non-current assets 1,674,443 1,889,224 2,026,436 2,019,284
Total current assets 500,649 669,909 636,054 722,580
Total current liabilities (801,919) (818,594) (903,435) (946,866)
Net current liabilities (301,270) (148,685) (267,381) (224,286)
Total non-current liabilities (689,612) (876,479) (859,594) (892,156)
Net assets 683,561 864,060 899,461 902,842
Share capital 80,484 83,972 83,972 83,972
Reserves 603,077 780,088 815,489 818,870
Total equity 683,561 864,060 899,461 902,842
We recorded net assets of RMB683.6 million, RMB864.1 million, RMB899.5 million and
RMB902.8 million as of December 31, 2020, 2021 and 2022 and April 30, 2023. The
significant increase of net assets in 2021 was primarily due to (i) the issuance of additional
ordinary shares amounting to RMB130.0 million; and (ii) an increase in profit of RMB55.2
million for the year ended December 31, 2021. The increase of net assets in 2022 was primarily
due to an increase in profit of RMB35.4 million for the year ended December 31, 2022. The
slight increase of net assets in the first four months of 2023 was due to an increase in profit
of RMB3.4 million for the four months ended April 30, 2023.
SUMMARY
–1 5–


--- page 26 ---
We recorded net current liabilities and relatively high gearing ratio as of December 31,
2020, 2021, 2022, and April 30, 2023, due to our substantial investments in capital
expenditures, including property, plant, equipment, and right-of-use assets, which were
classified as non-current assets, leading to a net current liability position. Simultaneously, to
finance these investments, we relied on external borrowings, leading to a high gearing ratio.
While this situation creates short-term financial pressures, it stems from our strategy of
prioritizing long-term capital investments. 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, taking into account our financial resources, including internally generated
funds, the proceeds from the Global Offering, and available facilities from bank and other
borrowings. In addition, our Directors are of the view that we are able to match our loans and
borrowings to support our long-term operational needs. We base this confidence on the
following factors:
 Cash flow generated from operations : Our net cash generated from operating
activities was RMB451.6 million, RMB527.6 million, RMB522.2 million, and
RMB155.3 million in 2020, 2021, 2022 and the first four months of 2023,
respectively. This steady cash flow is a testament to our execution capabilities, as
well as the industry recognition we have received. In the future, by expanding into
untapped markets and streamlining our cost structures, we foresee the continuation
of this positive cash flow trend. Furthermore, we are placing a renewed emphasis on
enhancing communication with both our suppliers and customers.
 Bank and other borrowings : As of August 31, 2023, we had unutilized facilities for
bank and other borrowings of RMB1,436.8 million, providing us with additional
financial resources. We believe that our long-term and healthy relationships with
banks and financial institutions will continue to support our borrowing needs in the
future. In the upcoming quarters, we are geared to engage in negotiations to secure
more favorable borrowing terms. We believe that our commitment to financial
prudence will enable us to navigate any economic uncertainties that may arise while
seizing growth opportunities.
 Proceeds from the Global Offering : We expect to receive proceeds from the Global
Offering of approximately HK$126.8 million, after deducting underwriting
commissions, fees, and estimated expenses payable by us in connection with the
Global Offering. These proceeds will further strengthen our financial position and
support our business development initiatives.
 Stringent cash management : We closely monitor and manage our cash position and
requirements to ensure that we have sufficient working capital for our operations.
We prioritize planned and systematic cash flow management and match short-term
loans with our operational needs to ensure we have sufficient liquidity to cover its
immediate expenses while maintaining flexibility for future investments in
equipment. During the Track Record Period, our trade receivable turnover days
remained relatively stable around 80 days, and as of August 31, 2023, RMB244.5
million, or 80.7%, of our trade receivables as of April 30, 2023, had been settled.
SUMMARY
–1 6–


--- page 27 ---
For more information, see “Financial Information – Liquidity and Capital Resources –
Net Current Liabilities” in this prospectus.
Summary Consolidated Statements of Cash Flows
The following table sets forth our consolidated statements of cash flows for the periods
indicated:
Y ear ended December 31,
Four months
ended April 30,
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Net cash flows
generated from
operating activities 451,583 527,631 522,192 143,611 155,268
Net cash flows used
in investing
activities (157,637) (285,358) (226,168) (75,263) (103,710)
Net cash flows used
in financing
activities (328,375) (137,722) (363,548) (85,538) (38,899)
Cash and cash
equivalents at end
of the year/period 83,611 188,162 120,638 170,972 133,297
KEY FINANCIAL RATIOS
The table below sets forth the key financial ratios as of the dates indicated:
As of December 31,
As of
April 30,
2020 2021 2022 2023
Current ratio (1) 0.6 0.8 0.7 0.8
Gearing ratio (2) 171.8% 153.9% 152.0% 154.9%
Notes:
(1) equals current assets divided by current liabilities as of the same date.
(2) equals bank loans and other borrowings divided by total equity as of the same date.
SUMMARY
–1 7–


--- page 28 ---
OUR MAJOR CUSTOMERS AND MAJOR SUPPLIERS
During the Track Record Period, almost all of our customers were corporate entities,
which comprised of manufacturers, logistics companies, and trading companies. For the years
ended December 31, 2020, 2021 and 2022 and the four months ended April 30, 2023, revenue
generated from our five largest customers in each year/period during the Track Record Period
amounted to RMB166.3 million, RMB184.7 million, RMB166.2 million, and RMB69.7
million, respectively, representing 17.0%, 15.8%, 13.9%, and 16.0% of our total revenue,
respectively. For the years ended December 31, 2020, 2021 and 2022 and for the four months
ended April 30, 2023, revenue generated from our largest customer in each year/period during
the Track Record Period amounted to RMB60.2 million, RMB75.8 million, RMB69.2 million
and RMB19.9 million, respectively, representing 6.1%, 6.5%, 5.8% and 4.6% of our total
revenue, respectively. For more information, please see “Business – Our Customers and
Suppliers – Our Customers” in this prospectus.
During the Track Record Period, we primarily procured intralogistics equipment and
parts. Our suppliers primarily consisted of intralogistics equipment and parts manufacturers.
For the years ended December 31, 2020, 2021 and 2022 and the four months ended April 30,
2023, procurement from our five largest suppliers in each year/period during the Track Record
Period amounted to RMB395.0 million, RMB420.0 million, RMB379.5 million and RMB137.9
million, respectively, representing 50.7%, 49.0%, 46.7% and 41.2% of our total purchases,
respectively; and procurement from our largest supplier in each year/period during the Track
Record Period amounted to RMB161.4 million, RMB151.5 million, RMB179.8 million and
RMB44.8 million, respectively, representing 20.7%, 17.7%, 22.1% and 13.4% of our total
purchases, respectively. For more information, please see “Business – Our Customers and
Suppliers – Our Suppliers” in this prospectus.
Due to the nature of our business, certain of our five largest suppliers was also our
customer, which is an industry norm in the intralogistics equipment solution industry, as
advised by CIC. Our Directors confirmed that the transactions with the overlapping customer
and supplier were conducted in the ordinary course of business under normal commercial terms
and on arm’s length basis. For details, please see “Business – Our Customers and Suppliers”
in this prospectus.
COMPETITIVE LANDSCAPE
We are the largest intralogistics equipment solution provider in China, with total revenue
from intralogistics equipment solutions of RMB0.9 billion in 2022, accounting for 7.7% of the
total market. The intralogistics equipment solution market in China has experienced significant
growth, increasing from RMB6.9 billion in 2018 to RMB11.4 billion in 2022, representing a
CAGR of 13.6% from 2018 to 2022. Driven by the increasing demand and adoption of
technology-enabled solutions for optimizing operations and increasing efficiency, accordingly
to CIC, the market size of intralogistics equipment solutions in China is expected to reach
RMB34.9 billion by 2027, representing a CAGR of 25.0% from 2022 to 2027.
For details, please see “Industry Overview – Intralogistics Equipment Solution Market in
China – Competitive Landscape of the Intralogistics Equipment Solution Market in China” in
this prospectus.
SUMMARY
–1 8–


--- page 29 ---
LEGAL PROCEEDINGS AND COMPLIANCE
During the Track Record Period and up to the Latest Practicable Date, to the best
knowledge of our Directors, we had not been and were not a party to any legal, arbitral or
administrative proceedings, and we were not aware of any pending or threatened legal, arbitral
or administrative proceedings against us or our Directors, except for certain lawsuits arising
from the ordinary course of business which would not individually or in the aggregate, have
a material adverse effect on our business, financial condition, and results of operations. See
“Business – Legal Proceedings and Compliance” and “Risk Factors – Risks Relating to Our
Business and Industry – We may be subjected to litigations, legal or contractual disputes,
government investigations or administrative proceedings” in this prospectus for more
information. According to our PRC Legal Adviser, our business operations had been carried out
in compliance with applicable laws and regulations in material aspects during the Track Record
Period and up to the Latest Practicable Date. For more information, see “Risk Factors – Risks
Relating to Our Business and Industry – We may be demanded to pay the outstanding
contributions of social insurance and housing provident fund and late payments and fines
imposed by relevant governmental authorities” in this prospectus.
BUSINESS ACTIVITIES WITH CUSTOMERS IN RELATION TO COUNTRIES
SUBJECT TO INTERNATIONAL SANCTIONS
During the Track Record Period, we made sales and deliveries of intralogistics equipment
parts to customers in Belarus, Russia, V enezuela, Iran, and Syria (each, a “Relevant Region”,
and collectively, “Relevant Regions”). Among the Relevant Regions, Iran and Syria are subject
to comprehensive U.S. economic sanctions. Russia, Belarus, and V enezuela are not currently
subject to comprehensive U.S. economic sanctions, but significant numbers of entities,
individuals, and industries in Russia, Belarus, and V enezuela are subject to U.S. economic
sanctions. To the best knowledge of our Directors, in 2020, 2021 and 2022, and for the four
months ended April 30, 2023, our revenue generated from transactions related to Relevant
Regions was approximately RMB13.9 million, RMB19.0 million, RMB24.0 million and
RMB13.8 million, respectively, representing approximately 1.4%, 1.6%, 2.0% and 3.2% of our
total revenue for the same periods, respectively.
In particular, in 2020, 2021 and 2022 and for the four months ended April 30, 2023, our
revenue generated from transactions related to Iran was approximately RMB3.8 million,
RMB7.2 million, RMB6.9 million and RMB2.8 million, respectively, representing
approximately 0.4%, 0.6%, 0.6% and 0.6% of our total revenue for the same periods,
respectively.
In addition, in 2020, 2021 and 2022 and for the four months ended April 30, 2023, our
revenue generated from transactions related to Syria was approximately RMB127,000,
RMB122,000, RMB108,000 and nil, respectively, representing approximately 0.01%, 0.01%,
0.01% and nil of our total revenue for the same periods, respectively.
SUMMARY
–1 9–


--- page 30 ---
In 2020, 2021 and 2022 and for the four months ended April 30, 2023, our total revenue
generated from sales to customers in Belarus, Russia, and V enezuela was RMB10.0 million,
RMB11.7 million, RMB17.0 million, and RMB11.0 million respectively, representing
approximately 1.0%, 1.0%, 1.4% and 2.5% of our total revenues for the same periods,
respectively.
Our International Sanctions Legal Adviser has advised us that International Sanctions
administered by the Office of Foreign Assets Control (OFAC) of the U.S. may be applicable
to activities involving a U.S. nexus, such as funds transfer in U.S. currency that clear through
the U.S. financial system.
During the Track Record Period, we made sales of intralogistics equipment parts
manufactured in China to customers located in Iran and Syria, which are subject to
comprehensive U.S. economic sanctions. Such sales to Iran and Syria include sales
denominated in RMB and other currencies. However, we received payments in USD for certain
sales to Iran (“ Iran USD Sales ”) and certain sales to Syria ( “Syria USD Sales”) . The Iran USD
Sales include 69 distinct transactions to 15 distinct Iran customers with delivery dates between
December 2019 and April 2023, in which we received approximately USD1.8 million in
payments denominated in USD to our bank accounts in China. The Syria USD Sales include
three distinct transactions to one customer in Syria with delivery dates between January 8, 2022
and August 3, 2022 in which we received approximately USD26,200 in payments denominated
in USD to our bank accounts in China. We have ceased all sales involving Iran and Syria since
May 20, 2023.
Our International Sanctions Legal Adviser has advised us that such USD-denominated
transactions appear to be in violation of U.S. primary sanctions laws that prohibit the use of
the U.S. financial system for this type of trade with Iran and Syria. Accordingly, the Iran USD
Sales and Syria USD sales likely constituted Primary Sanctioned Activity.
After consulting with our International Sanctions Legal Adviser, we made an initial
notification of voluntary self-disclosure (“ VSD”) to OFAC on May 23, 2023 related to the Iran
USD Sales and the Syria USD Sales, and made a supplemental VSD report regarding these
transactions to OFAC on September 19, 2023.
In addition, our Controlling Shareholders signed a deed of indemnity on May 22, 2023
(“Deed of Indemnity ”), pursuant to which, our Controlling Shareholders have undertaken to
fully indemnify us against, amongst other things, any liability or penalty arising from the sales
activities with customers in relation to countries subject to International Sanctions. As a result,
the Directors confirm that there is no financial impact to the Group’s profit and loss regarding
recognition of the potential penalties since the expenses recognized is fully offset by the gain
arising from the aforesaid indemnity.
SUMMARY
–2 0–


--- page 31 ---
Based on the facts and circumstances and the assessment made by our International
Sanctions Legal Adviser, our International Sanctions Legal Adviser has advised us that there
is a reasonable likelihood that OFAC may close this matter by issuing a cautionary letter to our
Company without imposing any monetary penalty. Alternatively, we may be required to pay an
administrative penalty for such Iran USD Sales and Syria USD Sales. If OFAC was to impose
a monetary penalty, the base monetary penalty for the violation would be approximately
USD912,000, taking into consideration that a VSD has been filed to OFAC and that the matter
is likely not “egregious” in nature. Such penalty amount is likely to be reduced by OFAC from
the likely base penalty amount of approximately USD912,000 to a lower amount during a
negotiated settlement process by taking into account of mitigating factors such as first-time
offense, voluntary disclosure and cooperation with OFAC. Our International Sanctions Legal
Adviser has advised us that the submission of a VSD has materially reduced the legal and
reputational risks to us arising from the Iran USD Sales and Syria USD Sales.
Our International Sanctions Legal Adviser has advised us that the risk that our sales to
Relevant Regions (excluding Iran USD Sales and Syria USD Sales) during the Track Record
Period might constitute Sanctioned Activity under International Sanctions enacted by Relevant
Jurisdictions is low.
With respect to Primary Sanctions Risks under U.S. law, our International Sanctions
Legal Adviser has advised us that our export sales to customers in the Relevant Regions
(excluding the Iran USD Sales and Syria USD Sales) the Track Record Period did not involve
Sanctioned Targets or otherwise involve the sectors, industries, or activities necessary to
satisfy the jurisdictional and substantive elements of offenses constituting Primary Sanctioned
Activities under U.S. law. As advised by our Legal Adviser, none of our contracting parties
located in the Relevant Regions are Sanctioned Targets specifically identified on the Specially
Designated Nationals and Blocked Persons List or the Sectoral Sanctions Identifications List
maintained by OFAC (the “SDN Lists”).
With respect to Secondary Sanctions Risks under U.S. law, the Iran USD Sales and Syria
USD Sales would likely be addressed as Primary Sanctioned Activity rather than Secondary
Sanctionable Activity. The remaining sales did not involve the parties, sectors, industries, or
activities likely to result in the imposition of Secondary Sanctions under U.S. law. Accordingly,
our activities during the Track Record Period (excluding the Iran USD Sales and Syria USD
Sales) pose a low risk of being deemed to include Secondary Sanctionable Activities.
Our International Sanctions Adviser has advised us that International Sanctions enacted
by the U.K., E.U., and Australia are Primary Sanctions that generally apply within territory of
such jurisdictions, to entities or nationals of such jurisdictions, or to business within such
jurisdictions. Accordingly, the risk that our sales of Chinese manufactured products to
customers in the Relevant Regions might be subject to the jurisdiction of U.K., E.U., and
Australia sanctions is low. Our customers within the U.K., E.U., and Australia during the Track
Record Period, moreover, did not include Sanctioned Targets under U.K., E.U., and Australia
law. The U.K., E.U., and Australia generally do not utilize Secondary Sanctions.
SUMMARY
–2 1–


--- page 32 ---
For reasons, our International Sanctions Legal Adviser has advised us on the assumption
that the customer lists and other information provided by us is accurate, complete, and not
misleading, that (a) the Iran USD Sales and Syria USD sales likely constituted Primary
Sanctioned Activity; and (b) the risk that our sales to the Relevant Regions (excluding Iran
USD Sales and Syria USD sales) during the Track Record Period might constitute Sanctioned
Activity under International Sanctions enacted by Relevant Jurisdictions is low.
Sanctions Risks to Relevant Persons Resulting from Participation in Global Offering
Given the scope of the Global Offering and the expected use of proceeds as set out in this
prospectus, our International Sanctions Legal Adviser is of the view that parties involved in the
Global Offering will not be implicated by any applicable International Sanctions, including our
Company and our subsidiaries, the respective Directors and employees of our Company and
our subsidiaries, our Company’s or our subsidiaries’ investors, Shareholders, the Stock
Exchange, the Listing Committee and group companies, or any person involved in the Global
Offering, and accordingly, the sanctions risk exposure to our Company, its investors and
Shareholders, and persons who might, directly or indirectly, be involved in permitting the
listing, trading, and clearing of our Shares (including the Stock Exchange, the Listing
Committee and related group companies) as a result of such involvement in the Global Offering
is low.
Please refer to “Risk Factors – Risks Relating to Our Business and Industry – We could
be adversely affected as a result of any sales we made to customers in certain countries that
are, or become subject to, sanctions administered by the U.S., the EU, the UN, Australia and
other relevant sanctions authorities” for further details regarding sanctions risks.
For further information, please see “Business – Business Activities with Customers in
Relation to Countries Subject to International Sanctions” in this prospectus.
SUMMARY OF MATERIAL RISK FACTORS
Our business faces risks including those set out in the “Risk Factors” section. 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 Shares. Some of the major risks that we face include: (i) our business, growth and prospects
are significantly affected by the demand of our services in China; (ii) any economic slowdown
or decrease in general economic activities may adversely affect our business, results of
operations, financial condition, and prospects; (iii) we incurred bank loans and other
borrowings to invest in the expansion of our equipment fleet during the Track Record Period.
Changes in interest rates of such bank loans and other borrowings could have a material
adverse impact on our business, results of operations and financial condition; (iv) significant
fluctuations in the price for our intralogistics equipment subscription services may adversely
affect our business, results of operations, financial condition, and prospects; (v) we could be
adversely affected as a result of any sales we made to customers in certain countries that are,
or become subject to, sanctions administered by the U.S., the EU, the UN, Australia and other
relevant sanctions authorities; (vi) our historical results may not be indicative of our future
prospects and results of operations; and (vii) changes in the political and economic policies, as
well as the interpretation and enforcement law, rules and regulations, may affect our business,
financial condition, results of operations and prospects.
SUMMARY
–2 2–


--- page 33 ---
RECENT DEVELOPMENTS
Selected Operating and Financial Data for the Eight Months Ended August 31, 2023
Our business operations have maintained an overall growth trend during the Track Record
Period. Subsequent to the Track Record Period, we have successfully implemented our
development strategies, leading to steady growth of our business and quick recovery from the
COVID-19 pandemic. The following table sets forth a summary of the utilization rate for the
eight months ended August 31, 2023 in our management account:
For the eight months ended
August 31,
2022 2023
(unaudited)
Utilization rate 72.9% 74.0%
As of August 31, 2023, our equipment fleet size expanded to 42,012 units.
As compared with revenue for the eight months ended August 31, 2022, revenue for the
same period in 2023 increased by 18.0%, primarily due to an increase in revenue from
intralogistics equipment subscription services mainly driven by the post-COVID-19 business
recovery, and growing customer base. As compared with gross profit for the eight months
ended August 31, 2022, gross profit for the same period in 2023 increased by 20.2%.
Our utilization rate of intralogistics equipment increased from 72.9% to 74.0% from the
eight months ended August 31, 2022 to the same period in 2023 primarily due to the increase
of our intralogistics equipment subscription service orders in line with the post-COVID-19
recovery of economy and our acquisition of new customers. In addition, we continued to
strategically expand our fleet size in line with our strategy to keep improving customer
coverage and expanding the categories of intralogistics equipment.
Although we maintained a general growing trend in revenue during the Track Record
Period and for the eight months ended August 31, 2023, we cannot assure you that we will be
able to maintain the revenue growth rates in future periods. We expect to see a decrease in our
net profit in 2023 as compared to 2022, primary because we incurred large amount of listing
expenses in 2023. In addition, our business may be affected negatively by various factors,
including but not limited to increasing competition, emergence of alternative business models,
decreasing demand for our services, increasing regulatory costs, or changes in general
economic conditions. If any of the foregoing were to occur, we may face fluctuations in our
revenue growth or even decrease in our revenue.
SUMMARY
–2 3–


--- page 34 ---
Regulatory Development
The regulatory environment in China has been undergoing a number of recent changes
and reforms in various areas.
The Trial Administrative Measures of the Overseas Securities Offering and Listing by
Domestic Enterprises
On February 17, 2023, the CSRC promulgated the Administrative Trial Implementation
Measures for Filing of Overseas Securities Offering and Listing by Domestic Companies ( ྤ
) and the Notice on the Administrative Filing
Arrangement Concerning Overseas Offering and Listing by Domestic Companies (ྤʫ
) (collectively, the “Overseas Listing Trial
Measures”), which require indirect overseas offering and listing by PRC domestic companies
to be subject to the CSRC’s filing requirement starting from March 31, 2023. The Overseas
Listing Trial Measures will comprehensively improve and reform the existing regulatory
regime for overseas offering and listing by PRC domestic companies and will regulate both
direct and indirect overseas offering and listing by PRC domestic companies.
As advised by our PRC Legal Adviser, we are subject to the CSRC filing as the Listing
constitutes a direct overseas offering and listing by domestic companies under the Overseas
Listing Trial Measures. On August 18, 2023, the CSRC publicly informed us that they have
confirmed the Company’s overseas offering and listing information submitted to them, and
therefore, we have completed the CSRC filing for application of listing of the Shares on the
Stock Exchange and Global Offering.
Effects of the COVID-19 Pandemic
Our business operations and financial performance were affected by COVID-19 pandemic
in multiple regions in China, especially in Guangzhou from October to November 2022, and
in Shanghai from March to June 2022. In 2022, 45 service outlets were temporarily closed for
less than 30 days, 7 service outlets were closed temporarily for a period between 30 to 50 days,
and 8 service outlets were closed for more than 50 days.
During the COVID-19 pandemic, we took several steps to support our customers during
these challenging times. Between 2020 and 2021, we occasionally offered informal discounts
with a total amount of approximately RMB2.7 million as a gesture to alleviate the financial
burdens many of our clients faced due to the pandemic. The exact amount of informal discounts
granted to any customer would be subject to the negotiation between us and our customers, and
normally, the informal discount granted would not exceed 2% of that customer’s monthly
billing with us. This approach became formalized in 2022 when we offered discounts totaling
approximately RMB10.0 million to customers. The discounts were based on the weakening of
the customer’s economic activity, their equipment downtime, or the duration they were affected
by the epidemic, reflecting our response to the ongoing economic challenges posed by
COVID-19. However, throughout this period, we did not terminate any material contracts with
our customers because of our inability to provide services resulting from the pandemic’s
impact.
SUMMARY
–2 4–


--- page 35 ---
Trademark Right Infringement Dispute
In July 2023, a PRC company brought legal proceedings against us at the Intermediate
People’s Court of Weifang in Shandong Province, the PRC, claiming that we had infringed its
trademark rights. See “Risk Factors – Risks Relating to Our Business and Industry – We may
be subjected to litigations, legal or contractual disputes, government investigations or
administrative proceedings” and “Business – Legal Proceedings and Compliance – Trademark
Right Infringement Dispute” in this prospectus.
Construction Work Dispute
With respect to the construction work dispute as disclosed under “Business – Legal
Proceedings and Compliance – Construction Work Dispute”, on October 16, 2023, the Hefei
Intermediate Court ruled that the Claimant had withdrawn its appeal, and the judgment made
by the Feixi Court became effective. In addition, we have fully settled the payment required
by the Feixi Court to the plaintiff, which payment had no material impact on our liquidity
considering our business scale. For more information about the legal proceedings, please see
“Business – Legal Proceedings and Compliance – Construction Work Dispute” in this
prospectus.
Fire Incident Dispute
With respect to the fire incident dispute as disclosed under “Business – Legal Proceedings
and Compliance – Fire Incident Dispute”, on August 24, 2023, the Shanghai Financial Court
issued a judgment, reducing the amount that we were initially ordered to compensate in the
ruling of the Qingpu Court. Shanghai Financial Court’s judgment ruled that we and the lessor
shall each respectively pay approximately RMB877,300 to the plaintiff, and both parties shall
be jointly and severally liable for the aforementioned compensation. In addition, we have fully
settled such payment to the plaintiff, which payment had no material impact on our liquidity
considering our business scale. For more information about the legal proceedings, please see
“Business – Legal Proceedings and Compliance – Fire Incident Dispute” in this prospectus.
No Material Adverse Change
Our Directors confirm that up to the date of this prospectus, other than as disclosed under
the “Recent Developments – No Material Adverse Change” in the “Summary” section in this
prospectus, there had been no material adverse change in our financial, operational or prospects
since April 30, 2023, being the latest balance sheet date of our consolidated financial
statements as set out in the Accountant’s Report in Appendix I to this prospectus.
DIVIDENDS
No dividend has been paid or declared by us during the Track Record Period. After
completion of the Global Offering, our shareholders will be entitled to receive dividends
declared by us. Any future declarations and payments of dividends may or may not reflect the
historical declarations and payments of dividends. For details, see “Financial Information –
Dividends” in this prospectus.
SUMMARY
–2 5–


--- page 36 ---
THE GLOBAL OFFERING
The Global Offering by us consists of:
 the offer by us of initially 1,213,600 H Shares, or Hong Kong Offer Shares, for
subscription by the public in Hong Kong, referred to in this prospectus as the Hong
Kong Public Offering; and
 the offer by us of initially 10,922,400 H Shares, or International Offer Shares,
outside the U.S. (including to professional, institutional and other investors within
Hong Kong) in offshore transactions in reliance on Regulation S, referred to in this
prospectus as the International Offering.
The number of Hong Kong Offer Shares and International Offer Shares, or together, Offer
Shares, is subject to reallocation as described in the section headed “Structure of the Global
Offering” in this prospectus.
GLOBAL OFFERING STATISTICS
Based on the
Offer Price of
HK$14.18
Based on the
Offer Price of
HK$16.18
Market capitalization of our Shares
(approximation) (2)
HK$4,935
million
HK$5,631
million
Unaudited pro forma adjusted net tangible assets
per Share (3) HK$3.13 HK$3.19
Notes:
(1) All statistics in this table are on the assumption that the Over-allotment Option are not exercised.
(2) The calculation of market capitalization is based on 348,022,816 Shares expected to be in issue
immediately after completion of the Subdivision and the Global Offering (assuming the Over-Allotment
Option is not exercised).
(3) The unaudited pro forma adjusted net tangible assets per Share is calculated after making the
adjustments referred to in “Financial Information – Unaudited Pro Forma Statement of Adjusted
Consolidated Net Tangible Assets” in this prospectus.
USE OF PROCEEDS
We estimate that we will receive net proceeds from the Global Offering of approximately
HK$126.8 million, after deducting underwriting commissions, fees and estimated expenses
payable by us in connection with the Global Offering, and assuming the Over-Allotment
Option being not exercised and an Offer Price of HK$15.18 per Share, which is the mid-point
of the indicative Offer Price range stated in this prospectus. We intend to use the net proceeds
from the Global Offering for the following purposes: (i) 45.0%, or approximately HK$57.0
SUMMARY
–2 6–


--- page 37 ---
million, will be used to enhance our service capabilities, improve customer coverage, and
expand categories of intralogistics equipment; (ii) 20.0%, or approximately HK$25.4 million,
will be used to expand and upgrade our supply chain infrastructure. This includes both
improving our existing supply chain facilities and constructing new supply chain bases
according to our strategies; (iii) 15.0%, or approximately HK$19.0 million, will be used to
strengthen our technology capabilities and infrastructure; (iv) 10.0%, or approximately
HK$12.7 million, will be used to conduct strategic mergers and acquisitions that align with our
regional coverage, industry focus, and business priorities; and (v) 10.0%, or approximately
HK$12.7 million, will be used for our general working capital and general corporate purposes.
LISTING EXPENSES
Our listing expenses mainly include sponsor’s fee, underwriting commissions,
professional fees paid to legal advisers, the reporting accountants and other professional
advisers 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 RMB52.7 million (HK$57.4 million), representing 31.2% of the
gross proceeds (based on the mid-point of our indicative price range for the Global Offering
and assuming that the Over-allotment Option is not exercised) of the Global Offering. Our
listing expenses are categorized into underwriting-related expenses of approximately RMB12.1
million (HK$13.2 million) and non-underwriting-related expenses of approximately RMB40.6
million (equivalent to HK$44.2 million), representing 7.2% and 24.0%, respectively, of the
gross proceeds (based on the mid-point of our indicative price range for the Global Offering
and assuming that the Over-allotment Option is not exercised) of the Global Offering. The
non-underwriting-related expenses can be further classified into fees and expenses of legal
advisors and accountants of approximately RMB26.5 million (HK$28.9 million) and other fees
and expenses of approximately RMB14.1 million (HK$15.3 million), representing 15.7% and
8.3%, respectively, of the gross proceeds (based on the mid-point of our indicative price range
for the Global Offering and assuming that the Over-allotment Option is not exercised) of the
Global Offering. During the Track Record Period, we incurred listing expenses in aggregate of
RMB19.6 million (equivalent to HK$21.4 million), of which RMB12.4 million (equivalent to
HK$13.6 million) was charged to the consolidated statements of profit or loss and RMB7.2
million (equivalent to HK$7.8 million) was deducted from equity as of April 30, 2023. We
expect to incur additional listing expenses of approximately RMB33.1 million (equivalent to
HK$36.0 million), of which approximately RMB30.3 million (equivalent to HK$33.0 million)
is expected to be charged to the consolidated statements of profit or loss and approximately
RMB2.8 million (equivalent to HK$3.0 million) is expected to be recognized as a deduction in
equity directly upon Listing. The listing expenses above are the latest practicable estimate for
reference only, and the actual amount may differ from this estimate.
SUMMARY
–2 7–


--- page 38 ---
In this prospectus, unless the context otherwise requires, the following terms and
expressions shall have the meanings set out below.
“affiliate(s)” with respect to any specified person, any other person,
directly or indirectly, controlling or controlled by or
under direct or indirect common control with such
specified person
“AFRC” Accounting and Financial Reporting Council
“Anhui Folangsi” Anhui Folangsi Machinery Co., Ltd. (౶ዚ૛Ϟ
ʮ̡), a limited liability company incorporated in the
PRC on August 17, 2018 and one of our subsidiaries
“Articles” or “Articles of
Association”
the articles of association to be adopted by our Company
with effect upon Listing (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
“Board” or “Board of Directors” the board of Directors
“Business Day” a day on which banks in Hong Kong are generally open
for normal 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)” or “capital
market intermediary(ies)” or
“CMI(s)”
the capital market intermediary(ies) as named in the
section headed “Directors, Supervisors and Parties
Involved in the Global Offering” in this prospectus
“CCASS” the Central Clearing and Settlement System established
and operated by HKSCC
“CCASS Clearing Participant” a person admitted to participate in CCASS as a direct
clearing participant or a general clearing participant
“CCASS Custodian Participant” a person admitted to participate in CCASS as a custodian
participant
DEFINITIONS
–2 8–


--- page 39 ---
“CCASS 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 or a
designated CCASS Participant’s stock account through
causing HKSCC Nominees to apply on your behalf,
including by (i) instructing your broker or custodian who
is a CCASS Clearing Participant or a CCASS Custodian
Participant to give electronic application instructions
via CCASS terminals to apply for the Hong Kong Offer
Shares on your behalf, or (ii) if you are an existing
CCASS Investor Participant, giving electronic
application instructions through the CCASS Internet
System ( https://ip.ccass.com ) or through the CCASS
Phone System +852 2979 7888 (using the procedures in
HKSCC’s “An Operating Guide for Investor
Participants” in effect from time to time). HKSCC can
also input electronic application instructions for
CCASS Investor Participants through HKSCC’s
Customer Service Centre at 1/F., One & Two Exchange
Square, 8 Connaught Place, Central, Hong Kong by
completing an input request
“CCASS Investor Participant” a person admitted to participate in CCASS as an investor
participant who may be an individual, joint individuals or
a corporation
“CCASS Operational Procedures” the Operational Procedures of HKSCC in relation to
CCASS, containing the practices, procedures and
administrative requirements relating to operations and
functions of CCASS, as from time to time in force
“CCASS Participant” a CCASS Clearing Participant, a CCASS Custodian
Participant or a CCASS Investor Participant
“China” or “the PRC” the People’s Republic of China excluding, for the
purposes of this prospectus, Hong Kong, the Macau
Special Administrative Region of the People’s Republic
of China and Taiwan
“close associate(s)” has the meaning ascribed thereto under the Listing Rules
“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of
Hong Kong), as amended, supplemented or otherwise
modified from time to time
DEFINITIONS
–2 9–


--- page 40 ---
“Companies (Winding Up and
Miscellaneous Provisions)
Ordinance”
the Companies (Winding Up and Miscellaneous
Provisions) Ordinance (Chapter 32 of the Laws of Hong
Kong), as amended, supplemented or otherwise modified
from time to time
“Company” or “our Company” FOLANGSI CO., LTD (ʮ̡)
(formerly known as Guangzhou Folangsi Machinery Co.,
Ltd. (ʮ̡)), a limited liability
company incorporated in the PRC on December 5, 2007
which was converted into a joint stock company with
limited liability on November 25, 2016
“connected person(s)” has the meaning ascribed thereto under the Listing Rules
“Controlling Shareholders” has the meaning ascribed to it under the Listing Rules and
unless the context otherwise requires, refers to Mr. Hou,
Mr. Hou Zebing (ዣж) and Guangzhou Daze for
further details of which, please see the section headed
“Relationship with Our Controlling Shareholders” in this
prospectus
“core connected person(s)” has the meaning ascribed thereto under the Listing Rules
“CSRC” China Securities Regulatory Commission ( ʕ਷ᗇՎ္ຖ
ึ)
“Director(s)” the director(s) of our Company
“EIT” enterprise income tax
“EIT Law” the PRC Enterprise Income Tax Law ( ʕശɛ͏΍ձ਷
)
“Employee Incentive Platform” Guangzhou Daze
“Extreme Conditions” extreme conditions caused by a super typhoon as
announced by the government of Hong Kong
“Ferretto Intelligent” Ferretto Intelligent Equipment (Shanghai) Co., Ltd. ( ̿ᚆ
౽ঐண௪(ɪऎ)ʮ̡) (formerly known as
Shanghai Audiofly Warehousing Equipment Co., Ltd. ( ɪ
ʮ̡)), a limited liability
company incorporated in the PRC on January 15, 2013
and is directly held as to 28.5% by our Company
DEFINITIONS
–3 0–


--- page 41 ---
“Foshan Folangsi” Foshan Folangsi Forklift Co., Ltd. (౶ɸԓϞ
ʮ̡), a limited liability company incorporated in the
PRC on August 3, 2006 and one of our subsidiaries
“General Rules of CCASS” General Rules of CCASS published by the Stock
Exchange and as amended from time to time
“Global Offering” the Hong Kong Public Offering and the International
Offering
“GREEN Application Form(s)” the application form(s) to be completed by the HK eIPO
White Form Service Provider designated by our
Company
“Group”, “our Group”, “our”,
“we”, or “us”
the Company and all of its subsidiaries, or any one of
them as the context may require
“Guangzhou Daze” Guangzhou Daze Investment Partnership (Limited
Partnership) (ᄿψ༺ዣҳ༟ΥྫΆุ(Υྫ)), a limited
partnership established under the laws of the PRC on
August 16, 2011 and one of our Controlling Shareholders
upon Listing
“Guangzhou Pengze” Guangzhou Pengze Machinery Equipment Co., Ltd. ( ᄿψ
ʮ̡), a limited liability company
incorporated in the PRC on March 19, 2010 and one of
our subsidiaries
“Guangzhou Xinze” Guangzhou Xinze Forklift Leasing Co., Ltd. ( ᄿψอዣɸ
ʮ̡), a limited liability company
incorporated in the PRC on June 7, 2010 and one of our
subsidiaries
“H Share(s)” overseas listed foreign ordinary share(s) in the share
capital of our Company with a nominal value of
RMB0.25 each, which are to be subscribed for and traded
in Hong Kong dollars and to be listed on the Hong Kong
Stock Exchange
“H Share Registrar” Tricor Investor Services Limited
“Hefei Langyun” Hefei Langyun Intelligent Equipment Co., Ltd. (ࣦ٭
ʮ̡), a limited liability company
incorporated in the PRC on February 19, 2019 and one of
our subsidiaries
DEFINITIONS
–3 1–


--- page 42 ---
“Hefei Xunyun” Hefei Xunyun Intelligent Equipment Co., Ltd. (ৃථ
ʮ̡), a limited liability company
incorporated in the PRC on August 1, 2019 and is wholly
owned by Ferretto Intelligent, which in turn is held as to
28.5% by our Company
“HKFRS” Hong Kong Financial Reporting Standard
“HK eIPO White Form ” the application for Hong Kong Offer Shares to be issued
in the applicant’s own name, submitted online through
the IPO App or on 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 in the IPO App and on the
designated website at www.hkeipo.hk
“HKSCC” the Hong Kong Securities Clearing Company Limited, a
wholly owned subsidiary of Hong Kong Exchanges and
Clearing Limited
“HKSCC Nominees” HKSCC Nominees Limited, a wholly owned subsidiary
of the HKSCC
“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the
PRC
“Hong Kong dollars” or “HK$” Hong Kong dollars and cents respectively, the lawful
currency of Hong Kong
“Hong Kong Offer Shares” the 1,213,600 H Shares being initially offered by us for
subscription pursuant to the Hong Kong Public Offering
(subject to reallocation as described in the section headed
“Structure of the Global Offering”)
“Hong Kong Public Offering” the offer for subscription of the Hong Kong Offer Shares
to the public in Hong Kong, on and subject to the terms
and conditions described in the section headed “Structure
of the Global Offering” in this prospectus
“Hong Kong Stock Exchange” or
“Stock Exchange”
The Stock Exchange of Hong Kong Limited, a wholly
owned subsidiary of Hong Kong Exchanges and Clearing
Limited
DEFINITIONS
–3 2–


--- page 43 ---
“Hong Kong Underwriters” the underwriters of the Hong Kong Public Offering as
listed in the section headed “Underwriting” in this
prospectus
“Hong Kong Underwriting
Agreement”
the underwriting agreement dated October 30, 2023
relating to the Hong Kong Public Offering entered into
by, among others, the Company, the Sole Overall
Coordinator and the Hong Kong Underwriters as further
described in the section headed “Underwriting –
Underwriting Arrangements and Expenses” in this
prospectus
“IIT Law” the Individual Income Tax Law of the PRC ( ʕശɛ͏
)
“Independent Third Party(ies)” any person(s) or entity(ies) who is not a connected person
of the Company within the meaning of the Listing Rules
“International Offer Shares” the 10,922,400 H Shares being initially offered by us for
subscription under the International Offering (subject to
reallocation as described in the section headed “Structure
of the Global Offering” in this prospectus) together with
any additional Shares that may be allotted and issued
pursuant to the exercise of the Over-allotment Option
“International Offering” the conditional placing of the International Offer Shares
at the Offer Price outside the United States in offshore
transactions in reliance on Regulation S, on and subject
to the terms and conditions described in the section
headed “Structure of the Global Offering” in this
prospectus
“International Sanctions” any measures enacted by jurisdictions as trade or
economic sanctions against foreign countries,
governments, entities or persons by restricting the
enacting jurisdictions’ nationals from making assets or
services available, directly or indirectly, to them, dealing
with their assets or otherwise conducting commercial
transactions with them
“International Sanctions Legal
Adviser” or “DLA Piper”
DLA Piper Singapore Pte. Ltd., our legal adviser as to
International Sanctions laws in connection with the
Global Offering
DEFINITIONS
–3 3–


--- page 44 ---
“International Underwriters” the group of underwriters, led by the Sole Overall
Coordinator, that are expected to enter into the
International Underwriting Agreement to underwrite the
International Offering
“International Underwriting
Agreement”
the international underwriting agreement relating to the
International Offering, which is expected to be entered
into by, among others, the Sole Overall Coordinator, the
International Underwriters and our Company on or about
the Price Determination Date, as further described in the
section headed “Underwriting – International Offering”
in this prospectus
“IPO App ” the mobile application for the HK eIPO White
Form service which can be downloaded by
searching “ IPO App ” in App Store or Google Play
or downloaded at www.hkeipo.hk/IPOApp or
www.tricorglobal.com/IPOApp
“Joint Bookrunners” the joint bookrunners as named in the section headed
“Directors, Supervisors and Parties involved in the
Global Offering” in this prospectus
“Joint Lead Managers” the joint lead managers as named in the section headed
“Directors, Supervisors and Parties involved in the
Global Offering” in this prospectus
“Latest Practicable Date” October 23, 2023, being the latest practicable date for the
purpose of ascertaining certain information contained in
this prospectus prior to its publication
“Listing” listing of the H Shares on the Main Board of the Stock
Exchange
“Listing Committee” the listing committee of the Hong Kong Stock Exchange
“Listing Date” the date, expected to be on or about Friday, November 10,
2023, on which the H Shares are listed and on which
dealings in the H Shares are first permitted to commence
on the Hong Kong Stock Exchange
“Listing Rules” or “Hong Kong
Listing Rules”
the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited (as amended,
supplemented or otherwise modified from time to time)
DEFINITIONS
–3 4–


--- page 45 ---
“Main Board” the stock market (excluding the option market) operated
by the Hong Kong Stock Exchange which is independent
from and operated in parallel with the GEM of the Hong
Kong Stock Exchange
“MOF” Ministry of Finance of the PRC (௅)
“MOFCOM” Ministry of Commerce of the PRC ( ʕശɛ͏΍ձ਷ਠਕ
௅)
“Mr. Hou” Hou Zekuan (ዣᄱ), our executive Director and one of
our Controlling Shareholders upon Listing
“NDRC” the National Development and Reform Commission of
the PRC (ึ)
“NPC” the National People’s Congress of the PRC ( ʕശɛ͏΍
ɽึ)
“Offer Price” the final offer price per Offer Share (exclusive of
brokerage fee of 1.0%, SFC transaction levy of 0.0027%,
AFRC transaction levy of 0.00015% and Hong Kong
Stock Exchange trading fee of 0.00565%) of not more
than HK$16.18 and expected to be not less than
HK$14.18 at which the Offer Shares are to be subscribed
for and issued pursuant to the Global Offering as
described in the section headed “Structure of the Global
Offering” in this prospectus
“Offer Shares” the Hong Kong Offer Shares and the International Offer
Shares, together with, where relevant, any additional H
Shares which may be issued by our Company pursuant to
the exercise of the Over-allotment Option
“Over-allotment Option” the option to be granted by us to the International
Underwriters exercisable by the Sole Overall Coordinator
(on behalf of the International Underwriters) under the
International Underwriting Agreement, to require our
Company to allot and issue up to an aggregate of
1,820,400 additional H Shares at the Offer Price,
representing 15% of the total number of Offer Shares
initially available under the Global Offering to, among
others, cover over-allocations in the International
Offering, if any, further details of which are described in
the section headed “Structure of the Global Offering” in
this prospectus
DEFINITIONS
–3 5–


--- page 46 ---
“PBOC” the People’s Bank of China ( ʕ਷ɛ͏ვБ), the central
bank of the PRC
“PRC Company Law” the Company Law of the People’s Republic of China ( ʕ
ج)
PRC Government” the central government of the PRC and all governmental
subdivisions (including provincial, municipal and other
regional or local government entities) and
instrumentalities thereof or, where the context requires,
any of them
“PRC Legal Adviser” Jingtian & Gongcheng
“Pre-IPO Investment(s)” the investment(s) in our Company undertaken by
the Pre-IPO Investors pursuant to the respective
equity transfer agreement(s) and/or capital increase
agreement(s), details of which are set out in the section
headed “History, Development and Corporate Structure”
in this prospectus
“Pre-IPO Investor(s)” the investor(s) from whom our Company obtained several
rounds of investments, details of which are set out in the
section headed “History, Development and Corporate
Structure” in this prospectus
“Price Determination Date” the date, expected to be on or around Friday, November
3, 2023 (Hong Kong time) on which the Offer Price is
determined, or such later time as our Company, and the
Sole Overall Coordinator (for itself and on behalf of the
Hong Kong Underwriters) may agree, but in any event
not later than Thursday, November 9, 2023
“Primary Sanctioned Activity” any activity in a Sanctioned Country or (1) with; or (2)
directly or indirectly benefiting, or involving the property
or interests in property of, a Sanctioned Target by a
listing applicant, such as the Company, incorporated or
located in a Relevant Jurisdiction or which otherwise has
a nexus with such jurisdiction with respect to the relevant
activity, such that it is subject to the relevant sanctions
law or regulation
“Regulation S” Regulation S under the U.S. Securities Act
DEFINITIONS
–3 6–


--- page 47 ---
“Relevant Jurisdiction” any jurisdiction that is relevant to a listing applicant,
such as the Company, and has sanctions related law or
regulation restricting, among other things, its nationals
and/or entities which are incorporated or located in that
jurisdiction from directly or indirectly making assets or
services available to or otherwise dealing in assets of
certain countries, governments, persons, or entities
targeted by such law or regulation
“Relevant Persons” the Company, together with its investors and shareholders
and persons who might, directly or indirectly, be involved
in permitting the listing, trading, clearing and settlement
of its shares, including the Stock Exchange and related
group companies
“RMB” or “Renminbi” Renminbi, the lawful currency of the PRC
“SAFE” the State Administration of Foreign Exchange of the PRC
(ʕശɛ͏΍ձ਷̮ි၍ଣ҅)
“SAMR” the State Administration for Market Regulation of the
PRC ( ʕശɛ͏΍ձ਷̹ఙ္ຖ၍ଣᐼ҅), formerly
known as the State Administration for Industry and
Commerce of the PRC (၍
ଣᐼ҅)
“Sanctioned Activity” Primary Sanctioned Activity and Secondary Sanctionable
Activity
“Sanctioned Country” any country or territory subject to a general and
comprehensive export, import, financial or investment
embargo under sanctions related law or regulation of the
Relevant Jurisdiction
“Sanctioned Target” any person or entity: (1) designated on any list of targeted
persons or entities issued under the sanctions-related law
or regulation of a Relevant Jurisdiction; (2) that is, or is
owned or controlled by, a government of a Sanctioned
Country; or (3) that is the target of sanctions under the
law or regulation of a Relevant Jurisdiction because of a
relationship of ownership, control, or agency with a
person or entity described in (1) or (2)
“SA T” the State Administration of Taxation of the PRC ( ʕശɛ
೼ਕᐼ҅)
DEFINITIONS
–3 7–


--- page 48 ---
“Secondary Sanctionable
Activity”
certain activity by a listing applicant that may result in
the imposition of sanctions against the Relevant
Person(s) by a Relevant Jurisdiction (including
designation as a Sanctioned Target or the imposition of
penalties), even though the listing applicant is not
incorporated or located in that Relevant Jurisdiction and
does not otherwise have any nexus with that Relevant
Jurisdiction
“Securities and Futures
Commission” or “SFC”
the Securities and Futures Commission of Hong Kong
“Securities Law” the Securities Law of the PRC (ج,)
as amended, supplemented or otherwise modified from
time to time
“SFO” the Securities and Futures Ordinance (Chapter 571 of the
Laws of Hong Kong), as amended, supplemented or
otherwise modified from time to time
“Share(s)” ordinary share(s) in the capital of our Company with a
nominal value of RMB0.25 each after Subdivision,
including both Unlisted Shares and H Shares
“Shareholder(s)” holder(s) of the Share(s)
“Shenyang Tianshun” Shenyang Tianshun Toyota Forklift Sales Co., Ltd. ( ᓨජ
ʮ̡), a limited liability company
incorporated in the PRC on November 26, 2010 and one
of our subsidiaries
“Sole Global Coordinator” the sole global coordinator as named in the section
headed “Directors, Supervisors and Parties Involved in
the Global Offering”
“Sole Sponsor” Haitong International Capital Limited
“Sole Sponsor-Overall
Coordinator” or
“Sole Overall Coordinator”
Haitong International Securities Company Limited
“Stabilizing Manager” Haitong International Securities Company Limited
“State Council” the State Council of the PRC ( ʕശɛ͏΍ձ਷਷ਕ৫)
DEFINITIONS
–3 8–


--- page 49 ---
“Subdivision” the subdivision of each authorized issued and unissued
Share of a par value of RMB1.00 each in the Company
into four Shares of a par value of RMB0.25 each pursuant
to the resolutions passed by our Shareholders on April 21,
2023, the details of which are set out in “History,
Development and Corporate Structure – Subdivision of
Our Shares”
“subsidiary(ies)” has the meaning ascribed thereto under the Listing Rules
“substantial shareholder(s)” has the meaning ascribed thereto under the Listing Rules
“Supervisor(s)” member(s) of our Supervisory Committee
“Supervisory Committee” the supervisory committee of our Company
“Takeovers Code” the Code on Takeovers and Mergers and Share Buybacks
published by the SFC (as amended, supplemented or
otherwise modified from time to time)
“Track Record Period” the financial years ended December 31, 2020, 2021, 2022
and the four months ended April 30, 2023
“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” ordinary shares in the share capital of our Company, with
a nominal value of RMB0.25 each after Subdivision,
which are not listed on any stock exchange
“U.S. dollars”, “US$” or “USD” United States dollars, the lawful currency of the United
States
“U.S. Securities Act” the U.S. Securities Act of 1933, as amended
“V A T” value-added tax; all amounts are exclusive of V A T in this
prospectus except where indicated otherwise
DEFINITIONS
–3 9–


--- page 50 ---
“Zhongshan TCM” Zhongshan TCM Forklift Sales Co., Ltd. (֍
ʮ̡), a limited liability company
incorporated in the PRC on March 19, 2003 and one of
our subsidiaries
“Zhuhai TCM” Zhuhai TCM Forklift Co., Ltd. (ࠢ
ʮ̡), a limited liability company incorporated in the
PRC on October 12, 2004 and one of our subsidiaries
“%” percent
For ease of reference, the names of PRC laws and regulations, governmental authorities,
institutions, nature 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 versions shall prevail.
DEFINITIONS
–4 0–


--- page 51 ---
This glossary of technical terms contains terms used in this prospectus in
connection with us and our business. Some of these terms and their meanings may not
correspond to standard industry meanings or usage of such terms.
“AI” artificial intelligence
“average equipment service
capacity per employee”
the number of units that one employee can supervise at
the same time
“Bohai Economic Rim” the economic region surrounding Tianjin, which also
includes areas in Hebei, Liaoning and Shandong
surrounding the Bohai Sea
“Controller Area Network” or
“CAN bus”
a vehicle bus standard designed to allow microcontrollers
and devices to communicate with each other’s
applications without a host computer
“counterbalanced forklifts” Counterbalanced forklifts are one of the most common
forms of forklifts and come in three and four wheel
models. The forks of a counterbalance forklift stick out
from the front of the equipment with legs or arms for
stabilization. The name of a counterbalance forklift
comes from the counterweight at the rear of the
equipment behind the motor. It is positioned such that it
compensates for heavy loads.
“e-commerce” electronic commerce, a transaction of online buying or
selling which draws on technologies such as mobile
commerce, electronic funds transfer, supply chain
management, Internet marketing, online transaction
processing, electronic data interchange, inventory
management systems, and automated data collection
systems
“Electronic Control Units” or
“ECUs”
an embedded system in automotive electronics that
controls one or more of the electrical systems or
subsystems in a car or other motor vehicle
“ESG” environmental, social and governance
GLOSSARY OF TECHNICAL TERMS
–4 1–


--- page 52 ---
“forklift” an industrial equipment with a metal fork platform
attached to its front that can be used to lift heavy loads by
inserting the fork platform under cargo, pallets, or
machines for moving them or placing them in
warehouses, production sites, distribution centers and
other scenarios
“GFA” gross floor area
“ICE-powered forklift” forklifts fueled by diesel, gasoline or liquefied petroleum
gas
“intralogistics equipment” Intralogistics equipment is an industrial machinery used
to replace intensive labor in mechanical work, such as
carrying, moving, sorting, and stacking of cargo and
heavy loads, in manufacturing plants, logistics parks,
warehouses, airports, ports, and other similar worksites
“IoT” internet of things, the network of physical objects that are
embedded with sensors, software, and other technologies
for the purpose of connecting and exchanging data with
other devices and systems over the internet
“IT” information technology
“KA customer(s)” customer who (i) subscribed 50 units or more in that
particular year/period, or (ii) subscribed 50 units or more
in the preceding year and continued to subscribed
intralogistics equipment (one unit or more) from us in
that particular year/period under our intralogistics
equipment subscription service business segment
“KA customer retention rate” KA customer retention rate equals total number of KA
customers at the end of the given 12-month period
carving out total number of new KA customers in that
given 12-month period, divided by the number of KA
customers as of the beginning date of the given 12-month
period, multiplied by 100%
GLOSSARY OF TECHNICAL TERMS
–4 2–


--- page 53 ---
“Net dollar retention rate” net dollar retention rate, a metric used to measure a
company’s capability to generate revenue from returning
KA customers by comparing the amount of revenue that
a company brings in a given period from the previous
period’s KA customers. We calculate net dollar retention
rate in a given 12-month period by starting with all KA
customers in the prior 12-month period. We calculate the
revenue from returning KA customers in the given
12-month period, which includes the revenue from new
KA customers in the prior 12-month period who may
contribute to our revenue for only several months in the
prior 12-month period. We then divide the given 12-
month period revenue by the prior 12-month period
revenue contributed by the returning KA customers to
arrive at our net dollar retention rate
“Pearl River Delta” the southern-central part of Guangdong Province with
dynamic activities in manufacturing, trade and tertiary
services
“reach truck” Reach trucks are a form of narrow aisle forklifts used in
warehouses and have two outer legs to distribute the load
with a set of wheels in the back located below the
operator. They have a long horizontal platform behind the
mast that allows the forklift to pick up bulky and heavy
items in high places.
“sensor” a device that detects and responds to some type of input
from the physical environment. The input can be light,
heat, motion, moisture, pressure or any number of other
environmental phenomena
“Series F IoT Smart Device” a self-developed device utilizing CAN bus, or Controller
Area Network, which serves as nerve system in the
intralogistics equipment that allows communication
among various Electronic Control Units (ECUs) and
other parts, as well as central measurement of the
equipment dynamics, such as working time, speed, brake
condition, oil pressure, etc.
GLOSSARY OF TECHNICAL TERMS
–4 3–


--- page 54 ---
“sq.m.” square meter(s)
“walkie stacker” Walkie stackers are a form of walk behind pallet trucks
with a mast for lifting pallets to heights. Walkie Stackers
can be either powered or manual. They are most
commonly used for transporting & lifting pallets where a
forklift is not necessary; such as in store rooms, small
warehouses and specialized warehousing sections.
“Y angtze River Delta Region” the metropolis of Shanghai and the provinces of
Zhejiang, Jiangsu and Anhui
GLOSSARY OF TECHNICAL TERMS
–4 4–


--- page 55 ---
This prospectus contains certain forward-looking statements relating to our plans,
objectives, beliefs, expectations, predictions and intentions, which are not historical facts and
may not represent our overall performance for the periods of time to which such statements
relate. Such statements reflect the current views of our management with respect to future
events, operations, liquidity and capital resources, some of which may not materialize or may
change. These statements are subject to certain risks, uncertainties and assumptions, including
the other risk factors as described in this prospectus. Y ou are strongly cautioned that reliance
on any forward-looking statements involves known and unknown risks and uncertainties. The
risks, uncertainties and other factors facing our Company which could affect the accuracy of
forward-looking statements include, but are not limited to, the following:
 our future business development, financial condition and results of operations;
 our business strategies and plans to achieve these strategies;
 our ability to identify and satisfy user demands and preferences;
 our ability to maintain good relationships with business partners;
 general economic, political and business conditions in the industries and markets in
which we operate;
 relevant government policies and regulations relating to our industry, business and
corporate structure;
 the actions and developments of our competitors; and
 all other risk and uncertainties described in the section headed “Risk Factors” in this
prospectus.
In some cases, we use the words “aim,” “anticipate,” “believe,” “can,” “continue,”
“could,” “estimate,” “expect,” “going forward,” “intend,” “ought to,” “may,” “might,” “plan,”
“potential,” “predict,” “project,” “seek,” “should,” “will,” “would” and similar expressions to
identify forward-looking statements. In particular, we use these forward-looking statements in
the “Business” and “Financial Information” sections of this prospectus in relation to future
events, our future financial, business or other performance and development, the future
development of our industry and the future development of the general economy of our key
markets.
FORW ARD-LOOKING STATEMENTS
–4 5–


--- page 56 ---
The forward-looking statements are based on our current plans and estimates and speak
only as of the date they were made. We undertake no obligation to update or revise any
forward-looking statements in light of new information, future events or otherwise. Forward-
looking statements involve inherent risks and uncertainties and are subject to assumptions,
some of which are beyond our control. We caution you that a number of important factors could
cause actual outcomes to differ, or to differ materially, from those expressed in any
forward-looking statements.
Our Directors confirm that the forward-looking statements are made after reasonable care
and due consideration. Nonetheless, due to the risks, uncertainties and assumptions, the
forward-looking events and circumstances discussed in this prospectus might not occur in the
way we expect, or at all.
Accordingly, you should not place undue reliance on any forward-looking statements in
this prospectus. All forward-looking statements contained in this prospectus are qualified by
reference to this cautionary statement.
FORW ARD-LOOKING STATEMENTS
–4 6–


--- page 57 ---
An investment in our Shares involves significant risks. You should carefully consider
all of the information in this prospectus, including the risks and uncertainties described
below, before making an investment in our Shares. The following is a description of what
we consider to be our material risks. Any of the following risks could have a material and
adverse effect on our business, financial condition and results of operations. In any such
case, the market price of our Shares could decline, and you may lose all or part of your
investment. These factors are contingencies that may or may not occur , and we are not
in a position to express a view on the likelihood of any such contingency occurring. The
information given is as of the Latest Practicable Date unless otherwise stated, will not
be updated after the date hereof, and is subject to the cautionary statements in the section
titled “Forward-Looking Statements” of this prospectus.
We believe there are certain risks and uncertainties involved in our operations, some of
which are beyond our control. We have categorized these risks and uncertainties into: (i) risks
relating to our business and industry; and (ii) risks relating to the Global Offering. Y ou should
consider our business and prospects in light of the challenges we face, including those
discussed in this section.
RISKS RELATING TO OUR BUSINESS AND INDUSTRY
Our business, growth and prospects are significantly affected by the demand of our
services in China.
During the Track Record Period, we generated our revenue primarily from providing
intralogistics equipment solutions to customers across different industry sectors in China. In
2020, 2021, 2022 and for the four months ended April 30, 2023, revenue derived from
intralogistics equipment subscription services accounted for 65.2%, 63.0%, 61.8% and 55.9%.
With our intralogistics equipment subscription service customers mainly comprising of
manufacturers, logistics companies, and trading companies, any material turbulences or
downturn in such customers’ industries may reduce their demands for our services, which in
turn, may have a material impact on our business operations and financial conditions. For
example, if the consumers’ demands for the goods or products produced by our manufacturer
customers decrease, such customers’ demands for intralogistics equipment, in turn, may
decrease as well, as they handle or transport fewer products and materials in warehousing,
transportation or production operations. In addition, for enterprises engaged in trading
industries, any slow-down in the general economy, or market trend that is relevant to their
businesses, may cause reduced business activities from their end, which in turn, may reduce
their needs for intralogistics equipment used in warehousing or transportation.
Furthermore, the future growth of our business depends on several factors, including our
ability to maintain our market position, to maintain our KA customers, and to expand our
customer portfolio and service network. We cannot guarantee that our services and our
technologies can satisfy the customers’ evolving needs. For example, if our competitors
RISK FACTORS
–4 7–


--- page 58 ---
managed to develop more advanced technologies, their intralogistics equipment solutions
could become more competitive, which in turn could lead to a decrease in the demand for our
services. As a result, we cannot predict with certainty the demand for our services or the future
growth rate and size of the market we operate in. If there is a reduction in demand for our
services caused by weakening economic conditions, decreases in corporate spending, technical
challenges, data security or privacy concerns, relevant regulations and policies, competing
solutions or services or otherwise, our revenue and gross profit margins would be adversely
affected, which would in turn materially affect our business, growth and prospects.
Any economic slowdown or decrease in general economic activities may adversely affect
our business, results of operations, financial condition, and prospects.
As a leading intralogistics equipment solution provider, our services are primarily utilized
by customers in manufacturing, logistics, and trading industries. As a result, the demand of our
services is strongly connected to these industries, which experience cyclical fluctuations and
can be affected by macroeconomic conditions to varying degrees. The nature, timing and extent
of changes in industry-wide conditions are unpredictable. Any economic slowdown or decrease
in general economic activities may result in a decline in logistics, manufacturing and trading
activities, which may in turn result in a downturn in activities in our industry. For example, an
economic slow-down can lead to decreased mass consumption across the nation, affected by
which, manufacturing and logistics demands may decrease as well. Demands for subscribing
intralogistics equipment, thus, may be affected. In particular, in 2022, affected by the
resurgence of COVID-19 pandemic, some of our customers’ stores or sites are temporarily
closed or had reduced operations, as a result, the demands for our services were reduced. For
details, please also see “Business – Impact of COVID-19 on our Operations”. Our customers’
demands for our services are also affected by conditions and prospects of industries that they
are engaged in and related industries. For instance, the significant growth of e-commerce
business in China has fueled the business development of logistics services in recent years,
which had a meaningful contribution to the growth of our intralogistics equipment subscription
service business. However, there is no assurance that such industries will continue to grow in
the future.
In addition, any deterioration in the economic environment subjects our business to
various risks that may have a material impact on our operating results and future prospects. For
instance, some of our customers may face difficulties in making payments to us. These
customers may not complete their payments as quickly as they had in the past, if at all, which
may have adverse impact on our working capital. Furthermore, in an economic downturn, we
may not be able to promptly adjust our expenses in response to changing market demands and
it may be more difficult to match our staffing levels to our business needs. Therefore, in the
event of an industry downturn, unfavorable economic and market conditions may lead to a
decline in the overall demand for our services, and an increase in the possibility of our
customers’ default, which may, in turn, materially and adversely affect our business, financial
condition, and results of operations.
RISK FACTORS
–4 8–


--- page 59 ---
The following factors during an economic downturn, among others, may result in
weakness in our end markets, either temporarily or in the long term, which could in turn
materially and adversely affect our results of operations:
 a decrease in the demand of our customers for our services;
 an increase in the repair and maintenance costs of our equipment;
 suspension of some of our ongoing contracts;
 an increase in default risks of our customers or counterparties;
 a decline in manufacturing, logistics, and trading industries;
 excess fleet in intralogistics equipment production;
 a lack of availability of credit facilities to us from financial institutions;
 volatility in interest rates of our credit facilities;
 inability to effectively execute our business plans and strategies; and
 public health crises and epidemics.
In addition, our business, financial condition and results of operations are subject to the
macroeconomic policies in China, including monetary and industry policies. If we fail to
promptly respond to such policy changes, our business, results of operations, financial
condition, and prospects may be adversely affected.
We incurred bank loans and other borrowings to invest in the expansion of our equipment
fleet during the Track Record Period. Changes in interest rates of such bank loans and
other borrowings could have a material adverse impact on our business, results of
operations and financial condition.
We incurred bank loans and other borrowings to invest in the expansion of our equipment
fleet during the Track Record Period. A major portion of our intralogistics equipment for
subscription was purchased with financial lease obligations. As of December 31, 2020, 2021
and 2022, and April 30, 2023, we had current and non-current interest-bearing bank loans and
other borrowings of RMB1,174.1 million, RMB1,329.8 million, RMB1,367.2 million, and
RMB1,398.2 million, respectively. Our bank loans and other borrowings bore interest at rate
equivalents ranging from approximate 3.7% to 9.9% per year. As of December 31, 2020, 2021
and 2022, and April 30, 2023, we recorded RMB73.2 million, RMB81.2 million, RMB76.4
million and RMB24.7 million of interest expenses in relation to the procurement of our
equipment, respectively. We are exposed to interest rate risk of our bank loans and other
borrowings in relation to the expansion of our equipment fleet during the Track Record Period.
RISK FACTORS
–4 9–


--- page 60 ---
During the Track Record Period, some of the equipment in the equipment fleet had finance
lease obligations. With respect to the equipment with finance lease obligations, if there are
increase in the interest rates of such finance leases, our interest expenses may increase, which
could in turn adversely affect the profit and profit margin for the equipment. For more
information, see “Business – Our Equipment Fleet – Source and Ownership of Our Fleet” and
“Business – Our Equipment Fleet – Measures to Maintain Quality and Profitability” in the
prospectus.
In addition, as our business scale continues to grow at a rapid pace, we may require
additional cash resources to finance our continuous growth or other future development plans.
The amount and timing of such additional financing needs will vary depending on the growth
of our business and the amount of internally generated funds from our operations. Also, the
promptness and adequacy of the funding from banks and other financial institutions are subject
to many external factors beyond our control, including the financial institutions’ internal
procedures. If we cannot obtain sufficient and prompt borrowings from bank and other
financial institutions at satisfactory interest rates to fund our business, we may be forced to
delay or abandon our growth plans, and our liquidity would be negatively affected, adversely
affecting our financial condition, results of operations and growth prospects.
Significant fluctuations in the price for our intralogistics equipment subscription services
may adversely affect our business, results of operations, financial condition, and
prospects.
During the Track Record Period, we derived a large portion of revenue from our
intralogistics equipment subscription services, which accounted for 65.2%, 63.0%, 61.8%, and
55.9% of our total revenue in 2020, 2021, 2022, and the four months ended April 30, 2023,
respectively, amounting to RMB639.7 million, RMB739.2 million, RMB738.0 million, and
RMB243.9 million. We offer a wide variety of intralogistics equipment brands and models to
customers through our intralogistics equipment subscription services. For our intralogistics
equipment subscription services, we charge customers fees based on duration they use our
intralogistics equipment, where they make payments generally on monthly or yearly basis. In
addition to duration that customers use the subscribed equipment, we also consider other
factors in determining the subscription price, such as equipment types, subscription term,
equipment’s depreciation, maintenance and repair expenses, and operating expenses. Although
the average monthly equipment subscription price (excluding V A T) remained relatively stable
during the Track Record Period, which was RMB1,965 per unit in 2020, RMB2,126 per unit
in 2021, RMB2,085 per unit in 2022 and RMB2,183 per unit for the four months ended April
30, 2023, there is no assurance that our equipment subscription price will not experience
significant fluctuations due to factors beyond our control, including, among others, general
economic condition in China, competition and technology development, the occurrence of
which may adversely affect our business, results of operations, financial condition, and
prospects.
RISK FACTORS
–5 0–


--- page 61 ---
We could be adversely affected as a result of any sales we made to customers in certain
countries that are, or become subject to, sanctions administered by the U.S., the EU, the
UN, Australia and other relevant sanctions authorities.
Certain countries and international organizations, including the U.S., the European
Union, the United Kingdom, and Australia, have, through executive order, passing of
legislation or other governmental means, implemented International Sanctions targeting
entities and individuals, including Sanctioned Targets, entities and individuals that are
nationals of or located in certain Sanctioned Countries, and entities and individuals that are
associated with certain industries or sectors in specific countries.
During the Track Record Period, we made sales and deliveries of intralogistics equipment
parts to customers in Belarus, Russia, V enezuela, Iran, and Syria (each, a “Relevant Region”,
and collectively, “Relevant Regions”). Among the Relevant Regions, Iran and Syria are subject
to comprehensive U.S. economic sanctions. Russia, Belarus, and V enezuela are not currently
subject to comprehensive U.S. economic sanctions, but significant numbers of entities,
individuals, and industries in Russia, Belarus, and V enezuela are subject to subject to U.S.
economic sanctions.
To the best knowledge of our Directors, in 2020, 2021 and 2022, and for the four months
ended April 30, 2023, our revenue generated from transactions related to Relevant Regions was
approximately RMB13.9 million, RMB19.0 million, RMB24.0 million and RMB13.8 million,
respectively, representing approximately 1.4%, 1.6%, 2.0% and 3.2% of our total revenue for
the same periods, respectively. In 2020, 2021, 2022 and the four months ended April 30, 2023,
our revenue generated from transactions related to Iran was approximately RMB3.8 million,
RMB7.2 million, RMB6.9 million and RMB2.8 million, respectively, representing
approximately 0.4%, 0.6%, 0.6% and 0.6% of our total revenue for the same periods,
respectively. In addition, in 2020, 2021, 2022 and the four months ended April 30, 2023, our
revenue generated from transactions related to Syria was approximately RMB127,000,
RMB122,000, RMB108,000 and nil, respectively, representing approximately 0.01%, 0.01%,
0.01% and nil of our total revenue for the same periods, respectively. Similarly, in 2020, 2021,
2022 and the four months ended April 30, 2023, our total revenue generated from sales to
customers in Belarus, Russia, and V enezuela was RMB10.0 million, RMB11.7 million,
RMB17.0 million and RMB11.0 million, respectively, representing approximately 1.0%, 1.0%,
1.4% and 2.5% of our total revenues for the same periods, respectively.
As advised by our International Sanctions Legal Advisors, we received payments in USD
for certain sales to Iran (“ Iran USD Sales ”) including 69 distinct transactions to 15 distinct
Iran customers with delivery dates between December 2019 and April 2023, in an aggregate
amount of approximately USD1.8 million, and payments in USD for certain sales to Syria
(“Syria USD Sales ”) including three distinct transactions to one customer in Syria with
delivery dates between January 8, 2022 and August 3, 2022 in an aggregate amount of
approximately USD26,200. These payments appear to be potential violations of U.S. sanctions
regulations that are applicable to transactions with Iran and Syria.
RISK FACTORS
–5 1–


--- page 62 ---
Based on the facts and circumstances and the assessment made by our International
Sanctions Legal Adviser, our International Sanctions Legal Adviser has advised us that there
is a reasonable likelihood that OFAC may close this matter by issuing a cautionary letter to our
Company without imposing any monetary penalty. Alternatively, we may be required to pay an
administrative penalty for such Iran USD Sales and Syria USD Sales. If OFAC were to impose
a monetary penalty, the base monetary penalty for the violation would be approximately
USD912,000, taking into consideration that a VSD is filed to OFAC and that the matter is likely
not “egregious” in nature. Such penalty amount is likely to be reduced by OFAC from the likely
base penalty amount of approximately USD912,000 to a lower amount during a negotiated
settlement process by taking into account mitigating factors such as first-time offense,
voluntary disclosure and cooperation with OFAC. Our International Sanctions Legal Adviser
has advised that submission of a VSD has materially reduced the legal and reputational risks
to us arising from the Iran USD Sales and Syria USD Sales. We have ceased all sales involving
the Iran and Syria since May 20, 2023. For further details and our potential risk exposure,
please see “Business – Business Activities With Customers in Relation to Countries Subject to
International Sanctions” in this Prospectus.
We have implemented numerous internal control and risk management measures by
October 2, 2023 to control and monitor our exposure to sanction risks, and undertakes to the
Stock Exchange and its related group companies with respect to sanction risks. For more
details of related internal control measures and our undertakings to the Stock Exchange and its
related group companies, please see “Business – Business Activities With Customers in
Relation to Countries Subject to International Sanctions” in this prospectus. If we were in
breach of such undertakings to the Stock Exchange, we would be subject to the risk of possible
delisting of our Shares on the Stock Exchange.
Sanction laws and regulations are constantly evolving, and new persons and entities are
regularly added to the list of Sanctioned Persons. Further, new requirements or restrictions
could come into effect which might increase the scrutiny on our business or result in one or
more of our business activities being deemed to have violated sanctions. We cannot provide
any assurance that our future business will be free of sanctions risk or our business will
conform to the expectations and requirements of the authorities of U.S. or any other
jurisdictions. Our business and reputation could be adversely affected if the authorities of U.S.,
the EU, the UN, the U.K., the United Kingdom overseas territories Australia or any other
jurisdictions were to determine that any of our future activities constitutes a violation of the
sanctions they impose or provides a basis for a sanctions designation of us. For more details
of our business operations in the Sanctioned Countries and our undertakings to the Stock
Exchange and its related group companies, please see “Business – Business Activities With
Customers in Relation to Countries Subject to International Sanctions” in this prospectus.
RISK FACTORS
–5 2–


--- page 63 ---
Our historical results may not be indicative of our future prospects and results of
operations.
We recorded revenue of RMB980.6 million, RMB1,172.2 million, RMB1,194.2 million
and RMB436.3 million in 2020, 2021, 2022 and the four months ended April 30, 2023,
respectively. Although we experienced steady revenue growth during the Track Record Period,
we cannot assure you that we can always achieve such growth in the future. Our profitability
depends partially on our ability to control costs and operating expenses, which may increase
as our business expands, or get affected by factors beyond our control, such as supply shortages
due to economic conditions or increases in raw material prices, and industry competition for
equipment or qualified personnel. In addition, we may continue to devote resources to
expanding our equipment fleet and developing our technologies. Such initiatives may
negatively impact our short-term profitability. If our efforts in these initiatives prove
ineffective, and we fail to increase revenue, or if our costs and operating expenses grow faster
than our revenue growth, our business, results of operations, and financial condition may be
negatively affected.
The intralogistics equipment solution industry in the PRC is competitive and we may not
be able to compete successfully against existing and new competitors.
According to the CIC, in 2022, the top five market players in China’s intralogistics
equipment solution market hold a combined market share of 18.2%. A large number of
small-scale to medium-scale service providers exist in the market, each of which usually
operates and manages less than 100 devices. See “Industry Overview” in this prospectus.
Competition may intensify as our competitors expand their equipment fleet or service
offerings, or as new competitors enter our existing or new markets. We believe that we compete
with our competitors based on a number of factors, primarily including service quality, brand
recognition, business scale, price and financial resources. Our competitors may have longer
track records, greater financial, technical, sales, marketing and other resources, stronger brand
recognition and larger customer bases. As a result, these competitors may be able to devote
more resources to the development, promotion, sale and support of their services. In addition,
we may face competition from emerging companies that enter our existing or new markets.
These emerging companies may have stronger capital resources, greater expertise in
management and human resources, greater financial, technical resources, and better
understanding and insight on industry trend and policies than we do. Competition pressures
could adversely affect our revenues and operating results by, among other things, adversely
affecting market demand for our services, depressing the prices that we can charge or
increasing our costs to hire and retain employees. In addition, our competitors may emulate our
business model, and we may lose competitive advantages that distinguish ourselves from our
competitors. As a result, we may fail to compete successfully against existing and new
competitors, which may have a material adverse impact on our business, results of operations,
and financial condition.
RISK FACTORS
–5 3–


--- page 64 ---
Maintaining or increasing the utilization rate of our intralogistics equipment is crucial for
the success of our business.
During the Track Record Period, our intralogistics equipment had maintained a consistent
level of utilization, with rates of 78.9%, 78.5%, 73.1% and 72.7% for 2020, 2021, 2022 and
the four months ended April 30, 2023, respectively. The utilization rate for a particular
year/period is arrived at by dividing the aggregation of the number of subscribed equipment in
each day during the given year/period, by the aggregation of the number of equipment in the
fleet each day during same year/period. For details, please see “Business – Our Equipment
Fleet” in this prospectus. Our ability to maintain or increase the utilization rate of our
intralogistics equipment depends on the overall development trend in the intralogistics
equipment solution industry, as well as general economic conditions that may further affect
business operations of our customers. In addition, the maintenance, damage, and operating
history of relevant equipment can impact customers’ decision on whether to engage relevant
equipment, resulting in changes of our overall utilization rate. Any fluctuations in market
demand may also affect our ability to maintain or increase equipment utilization. Failure to
maintain or increase our utilization rate could have an adverse effect on our operations and
profitability.
We are subject to various risks relating to third-party payments.
During the Track Record Period, certain of our customers settled payments with us
through third-party payment arrangements (the “Third-party Payment Arrangements”). In
2020, 2021, 2022 and the four months ended April 30, 2023, the aggregate amount of
third-party payments (the “Third-Party Payments”) we received from Third-Party Payers was
RMB5.3 million, RMB10.4 million, RMB17.9 million and RMB6.2 million, which
respectively accounted for 0.5%, 0.9%, 1.5% and 1.4% of our Group’s total revenue for the
corresponding year/period. Since May 20, 2023, we have ceased to allow our customers to
settle payments through Third-Party Payers and all new orders thereafter can only be settled by
our customers’ own accounts. For further information, see “Business – Third-Party Payment
Arrangement.” We are subject to various risks relating to such Third-party Payment
Arrangements, including possible claims from third-party payers for the return of funds as we
have not entered into contractual relations with such payers, and possible claims from
liquidators of third-party payers. In the event of any claims from third-party payers or their
liquidators, or legal proceedings (whether civil or criminal) instituted or brought against us in
respect of third-party payments, we may have to expend financial and managerial resources to
defend against such claims and legal proceedings, and our results of operations and financial
condition may as a result be adversely affected.
RISK FACTORS
–5 4–


--- page 65 ---
Improper management or use of our equipment may lead to a shortening of its useful life
and/or a decline in market value, which could impact our business.
In addition to general economic conditions and daily use of our equipment by our
customers, the useful life and market value of our equipment can also be influenced by the
following non-exclusive factors:
 the history and documented records of equipment maintenance and operation;
 whether the equipment has experienced serious incidents;
 the load capacity and lift power of the equipment; and
 the costs and availability of equipment parts.
We cannot guarantee that our current equipment will not be replaced or superseded by
more advanced equipment or technique as a result of continuous developments in science and
technology. If we are required to replace our current equipment with more advanced ones, we
may experience significant depreciation of our current equipment and may not be able to sell
it at commercially acceptable prices, or at all.
The decrease in the market value of our equipment may reduce the proceeds we receive
in disposing of such equipment, or impact the utilization rates of the equipment. Our business,
results of operations, and financial condition may in turn be materially and adversely affected.
We may not be able to maintain, expand or optimize our nationwide service network.
As of April 30, 2023, we have established a nationwide service network consisting of 67
service outlets, covering 47 cities in China. Our service outlets enable us to quickly dispatch
technicians and deploy equipment to customers nearby to ensure timeliness of service. For
sustainable development, we may need to continue exploring regions with growth potential.
Our efforts to expand our operations geographically depend on a number of factors beyond our
control, including the macroeconomic conditions and policies implemented by the central and
the local governments, the level of competition in the equipment operation service industry,
changes in customer demand, prices of equipment and materials, and transportation costs. We
may lack knowledge and experience with certain local markets, and our competitors in these
new markets may have stronger financial resources, more established presence, better
understanding and insight on industry trend and policies, and better understanding of customer
requirements and preferences. As such, we may not be able to expand or optimize our
nationwide service network within the timeframe or at satisfactory costs, which could
adversely affect our operating results.
RISK FACTORS
–5 5–


--- page 66 ---
Our performance is subject to seasonality.
Our business experiences seasonality due to the nature of our intralogistics equipment
subscription services and maintenance and repair services, which are primarily provided to
customers in the manufacturing and logistics industries. We typically have a lower volume of
business around the Chinese New Y ear holiday in the first quarter of each year as most of our
customers take Chinese New Y ear holiday and stop production and operation or substantially
lower production and operation during such period. Correspondingly, we generally observe a
surge in business during peak seasons, such as periods around 618 Shopping Festival, Double
11 Shopping Festival, and Double 12 Shopping Festival as logistics companies have higher
demand of handling, transferring, sorting, and stacking huge amount of good during such
periods. As such, any comparisons of our operating results between different periods within a
single financial year are not necessarily meaningful and cannot be relied on as indicators of our
performance. Our financial condition and results of operations for future periods may continue
to fluctuate, from time to time, due to seasonality.
We may experience failures in or disruptions to our comprehensive technology platform.
We have continuously devoted resources in developing and optimizing our advanced and
comprehensive technology platform, namely Intelligent Asset and Operation Management
Platform. For details, please see “Business – Our Technology” in this prospectus. If we are
unable to detect or promptly remedy any system malfunction or misconfiguration, we may
experience system interruptions or delays, which could adversely affect our operating results.
In addition, we may experience occasional system interruptions and delays or other technical
problems that make platform unavailable or difficult to access, and prevent us from promptly
responding or providing services to our customers, which may reduce our customers’
willingness to use our platform and even incur losses to our customers who may bring legal
proceedings against us. Moreover, failures of, or disruptions to, our information technology
systems, loss or leakage of confidential information, or breach of network security could cause
processing inefficiencies and the loss of customers and sales, and subject us to increased costs,
litigation and other liabilities, which could materially and adversely affect our business, results
of operations, financial condition, and our reputation.
The cost of acquiring intralogistics equipment and parts may increase, which may
increase our cost of operation, and we may not be able to procure equipment due to
supplier constraints.
We procure intralogistics equipment and parts from suppliers to facilitate the sustainable
development of our business, in line with our business strategies and market demand for our
services. We cannot guarantee that our suppliers will continue to provide us with intralogistics
equipment and parts at acceptable prices, or always ensure timely delivery. The cost of
intralogistics equipment and parts could increase, due to factors beyond our control, such as
inflation, complying with governmental regulations or increased costs of raw materials. If the
cost of intralogistics equipment and parts increases, we may not be able to transfer some or all
of the increase in procurement costs to our customers. As a result, cost increases could
materially adversely affect our business, financial condition and results of operations.
RISK FACTORS
–5 6–


--- page 67 ---
V arious factors, such as trade disputes and industry policies and trends, can affect the
production of intralogistics equipment and parts. This could result in long lead times for certain
types of equipment or parts, and we cannot guarantee that we will be able to acquire sufficient
numbers of certain types of equipment and parts according to our expected schedule. As a
result, we may not be able to obtain sufficient supplies of necessary replacement equipment or
new equipment and parts from our suppliers in a timely manner, which could have a material
adverse impact on our business, results of operations, and financial condition.
We rely on a number of key suppliers to supply our intralogistics equipment and parts.
In 2020, 2021, 2022 and the four months ended April 30, 2023, our five largest suppliers
in each year/period during the Track Record Period accounted for 50.7%, 49.0%, 46.7% and
41.2% of our total purchases, respectively. In particular, our largest supplier in each
year/period during the Track Record Period accounted for 20.7%, 17.7%, 22.1% and 13.4% of
our total purchases in 2020, 2021, 2022 and the four months ended April 30, 2023, respectively.
We may rely on our key suppliers to provide us with intralogistics equipment and parts. Loss
of supply from some of our key suppliers, or a significant adverse change in the relationship
with them, could cause interruptions to our business. Our failure to obtain the necessary
equipment or parts in a timely manner could substantially limit our ability to meet our
contractual obligations to deliver our equipment or parts to our customers or to efficiently
deploy our equipment fleet. Any failure to meet such obligations could have a material adverse
effect on our reputation, ability to retain customers, market share, and results of operations.
Any loss of or failure to obtain or renew the certificates, licenses, approvals and permits
may materially and adversely affect our business, results of operations, and financial
condition.
We are subject to extensive PRC laws and regulations at the national and local level,
which govern various aspects of our operations. We are required to obtain and maintain certain
certificates, licenses, approvals and permits in order to provide our comprehensive service
offerings to customers. These operating certificates, licenses, approvals and permits are
granted, renewed and maintained upon our satisfactory compliance with, among others, the
applicable criteria set by the relevant governmental departments or organizations. For further
information, see “Regulatory Overview” and “Business – Certificates, Licenses and Permits”
in this prospectus. The certificates, licenses, approvals and permits that we had obtained during
the Track Record Period and as of the Latest Practicable Date may only be valid for a limited
period of time and may be subject to periodic review and renewal by government authorities
or relevant organizations. In addition, the standards of compliance required in relation thereto
may change in the future. As advised by our PRC Legal Adviser, the PRC laws and regulations
may continue to evolve, which exposes us to the risk of non-compliance. If deemed
non-compliant, we could be subjected to administrative or regulatory fines and penalties,
including the suspension or revocation of our certificates, licenses, approvals and permits, and
our operations may be hindered or halted, which could have a material and adverse effect on
our business and results of operations. As the PRC legal system and intralogistics equipment
solution industry may continue to evolve, we are also subject to laws, regulations and related
compliance requirements, as amended in the future.
RISK FACTORS
–5 7–


--- page 68 ---
We are subject to laws and regulations regarding regulatory matters that may have
increased or will increase both our costs and the risk of non-compliance.
We are or will be subject to rules and regulations by various governing bodies, including,
for example, once we have become a public company, Hong Kong Stock Exchange and the
Securities and Futures Commission, which are charged with the protection of investors and the
oversight of companies whose securities are publicly traded, as well as the various regulatory
authorities in China, and to new regulatory measures under applicable laws. Our efforts to
comply with new laws and regulations have resulted in, and are likely to continue to result in,
increased general and administrative expenses and a diversion of management time and
attention from revenue-generating activities to compliance activities.
In addition, compliance measures and practice is subject to guidance and interpretation on
relevant laws and policies, which may change in the future. If we fail to address and comply
with these regulations and any subsequent changes, we may be subject to penalties and our
business may be harmed.
We may be subjected to litigations, legal or contractual disputes, government
investigations or administrative proceedings.
We may from time to time become subject to various litigation, legal or contractual
disputes, investigations or administrative proceedings arising in the ordinary course of our
business, including but not limited to various disputes with, or claims from, our suppliers,
customers, business partners and other third parties that we engage for our business operations.
On-going or threatened litigation, legal or contractual disputes, investigations or administrative
proceedings may divert our management’s attention and consume their time and our other
resources. Furthermore, any litigation, legal or contractual disputes, 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 subject matter of the disputes,
the likelihood of loss, the monetary amount at stake and the parties involved.
On March 1, 2023, a PRC company (the “Claimant”) initiated legal proceedings against
Anhui Folangsi (the “Anhui Folangsi Proceedings”) in the People’s Court of Feixi County in
Hefei of Anhui Province, the PRC (the “Feixi Court”), pursuant to which the Claimant alleged
that (the “Claims”) Anhui Folangsi had failed to pay the Claimant for certain construction work
performed for Anhui Folangsi. On June 8, 2023, the Feixi Court ordered Anhui Folangsi to pay
the Claimant an aggregated amount of RMB376,000 and dismissed other claims of the
Claimant. Both we and the Claimant appealed to the Intermediate People’s Court of Hefei in
Anhui Province (the “Hefei Intermediate Court”). On October 16, 2023, the Hefei Intermediate
Court ruled that the Claimant had withdrawn its appeal, and the judgment made by the Feixi
Court became effective. In addition, we have fully settled the payment required by the Feixi
Court to the plaintiff, which payment had no material impact on our liquidity considering our
business scale.
RISK FACTORS
–5 8–


--- page 69 ---
On March 15, 2021, a PRC insurance company (the “Insurance Company”) initiated legal
proceedings against us in the People’s Court of Qingpu District in Shanghai, the PRC (the
“Qingpu Court”), pursuant to which the Insurance Company claimed that we should be liable
for the losses caused by a fire that broke out at the factory. On March 7, 2022, the Qingpu Court
ruled that we and the lessor of the factory where the fire occurred (the “Lessor”) shall each
respectively pay approximately RMB1.46 million to the plaintiff, and both parties shall be
jointly and severally liable for the aforementioned compensation. On March 22, 2022, we
appealed to the Shanghai Financial Court. The Insurance Company, the Lessor and the
company that leased the factory involved from the Lessor (“Lessee”) have also appealed. The
Shanghai Financial Court issued a judgment on August 24, 2023, reducing the amount we were
initially ordered to compensate by the Qingpu Court. The judgment ruled that we and the lessor
shall each respectively pay approximately RMB877,300 to the plaintiff, and both parties shall
be jointly and severally liable for the aforementioned compensation. In addition, we have fully
settled such payment to the plaintiff, which payment had no material impact on our liquidity
considering our business scale. For more information about the legal proceedings, please see
“Business – Legal Proceedings and Compliance” in this prospectus.
In May, 2023, a PRC company (the “Claimant”) reported us to Weifang High-tech Zone
Market Supervision Bureau, claiming that we had infringed the Claimant’s trademark rights by
placing the Claimant’s trademark on 13 forklifts (the “Alleged Infringement Action”) provided
by us to the relevant equipment subscription client (the “Client A”). The Weifang High-tech
Zone Market Supervision Bureau, after investigating the said claims, had issued its decision in
June, 2023, ruling in favor of us and having found that there had not been infringement of the
Claimant’s trademark right by us (the “Decision”). However, in July, 2023, the Claimant had
brought proceedings against us at the Intermediate People’s Court of Weifang in Shandong
Province, the PRC (the “Weifang Court”), claiming that we had infringed its trademark rights
by placing a trademark owned by the Claimant on 13 forklifts that we provided to Client A (the
“Relevant Proceedings”). Pursuant to the Relevant Proceedings, the Claimant has requested
that: (i) we cease Alleged Infringement Action which the Claimant allege to be an infringement
of its trademark right, and (ii) compensate the Claimant for the economic loss and the costs
incurred by the Claimant in relation to such claims in the total amount of RMB3,912,800. In
addition, the 13 forklifts relating to the Alleged Infringement Action have been seized pursuant
to a injunctive order granted by Weifang Court in June. The Weifang Court had held a first
hearing on September 19, 2023, but had not granted any judgment on the Relevant Proceedings
yet.
During the Track Record Period and up to the Latest Practicable Date, to the best
knowledge of our Directors, we had not been and were not a party to any legal, arbitral or
administrative proceedings, and we were not aware of any pending or threatened legal, arbitral
or administrative proceedings against us or our Directors, except for the above-mentioned legal
proceedings, which would not, individually or in the aggregate, cause a material adverse effect
on our business, financial condition, and results of operations. However, if any verdict or
award is rendered against us, or if we settle with any third parties, we could be required to pay
significant monetary damages, assume other liabilities and even to suspend or terminate the
related business activities. In addition, negative publicity arising from litigation, legal or
contractual disputes, investigations or administrative proceedings may damage our reputation
and adversely affect the image of our brands and products, which further materially and
adversely affect our business.
RISK FACTORS
–5 9–


--- page 70 ---
We face risks related to complying with applicable laws, rules and regulations relating to
the collection, use, disclosure and security of operating data and related information.
In the ordinary course of our business, we generally collect and process operating data of
subscribed intralogistics equipment (such as, location, speed, working time), and service
process of our technicians. Laws and regulations governing cybersecurity, information security,
privacy and data protection may be amended in the future. On June 10, 2021, the Standing
Committee of the National People’s Congress of China promulgated the PRC Data Security
Law, which took effect on September 1, 2021. The PRC Data Security Law provides for data
security protection obligations on entities and individuals carrying out data processing
activities, introduces a data classification and hierarchical protection system based on the
importance of data in economic and social development, as well as the degree of harm it will
cause to national security, public interests, or legitimate rights and interests of individuals or
organizations when such data is tampered with, destroyed, leaked, or illegally acquired or used,
and provides for a national security review procedure for those data activities which may affect
national security and imposes export restrictions on certain data and information. The PRC
Data Security Law provides that “data” refers to any recording of information by electronic or
other means. Data processing includes the collection, storage, use, processing, transmission,
provision and public disclosure of data, etc.
Furthermore, on December 28, 2021, the Cyber Administration of China, together with 12
other departments, promulgated the Measures for Cybersecurity Review (፬
), which came into effect on February 15, 2022 and repeals the previous version
promulgated on April 13, 2020. According to the Measures for Cybersecurity Review, critical
information infrastructure operators purchasing network products and services and online
platform operators carrying out data processing activities, which affect or may affect national
security, shall conduct a cybersecurity review. Online platform operators holding personal
information of more than 1 million users seeking to be listed abroad must apply for a
cybersecurity review as well. The interpretation and applicability of the Measures for
Cybersecurity Review shall be determined in accordance with the laws and regulations in force
at the time, especially the criteria for the determination of the risks that “affect or may affect
national security.” In addition, on November 14, 2021, the Cyberspace Administration of China
issued the Regulations on the Administration of Cyber Data Security (Draft for Comment) (the
“Draft Regulations”) ( ၣഖᅰኽτΌ၍ଣૢԷ(ᅄӋจԈᇃ)), which reiterate that a data
processing operator which processes personal information of more than one million individuals
seeking to be listed in foreign countries should apply for the cybersecurity review which
differentiate “listing in a foreign country” with “listing in Hong Kong”; moreover, such Draft
Regulations also specifically require that if the listing in Hong Kong by a data processing
operator affects or may affect the national security, the data processing operator shall apply for
cybersecurity review in accordance with the relevant provisions of the state. The above Draft
Regulations were released for public comment only and their operative provisions and the
anticipated adoption or effective date may be subject to amendments. The future supervision
of companies like us depends on the laws and regulations in force at the time. We cannot
predict the impact of the Draft Regulations, if any, at this stage, and we will closely monitor
and assess any development in the rule-making process.
RISK FACTORS
–6 0–


--- page 71 ---
We pay close attention to risk management relating to our IT system, as storage and
protection of operating data and related information is critical to us. For details, please see
“Business – Data Privacy and Information Security Risk Management” in this prospectus.
However, if the enacted version of the Draft Regulations mandates clearance of cybersecurity
review and other specific actions to be completed by companies like us, we may not be able
to complete the cybersecurity review in the future or meet the requirements of relevant laws
and regulations in force at the time. If we are not able to comply with the cybersecurity and
data privacy requirements in a timely manner, or at all, we may be subject to government
investigations, fines, penalties, suspension of our non-compliant operations, which could
materially and adversely affect our business and results of operations.
These and other similar legal and regulatory developments could affect how we design
our IT systems, how we operate our business, and how we process data. We may incur
substantial costs to comply with such laws and regulations, to meet the demands of our
customers relating to their own compliance with applicable laws and regulations, and to
establish and maintain internal compliance policies.
Our success largely depends on the retention of our senior management team and our
ability to attract and retain qualified and experienced employees.
Our continued success depends on the efforts of our senior management team and other
key employees. As they possess key connections with potential business partners and industry
expertise, losing their services may have a material adverse effect on our business. Should any
or all members of our senior management team join or form a competing business with their
expertise, connections and knowledge of our business operations, we may not be able to
estimate the extent of and mitigate such damage. If any of our key employees leaves and we
are unable to promptly hire a qualified replacement, our business, results of operations, and
financial condition may be materially and adversely affected. In addition, the future growth of
our business will depend, in part, on our ability to attract and retain qualified personnel in all
areas of our business. If we are unable to attract and retain these qualified personnel, our
growth may be limited and our business, results of operations, and financial condition could
be materially and adversely affected.
We are exposed to risks associated with failing to detect and prevent fraud, negligence or
other misconduct committed by our employees, agents, customers, suppliers or other third
parties.
We are exposed to fraud or other misconduct committed by our employees, agents,
customers, suppliers or other third parties that could subject us to financial losses, investigation
and penalty imposed by governmental authorities as well as seriously harm our reputation. For
example, loss caused by misconduct of our technicians in the process of providing maintenance
or repair services may cause us to make compensation if we were held to be negligent or
reckless and will also cause us to suffer damage to our reputation in the market. In addition,
misconduct by the operator(s) of a customer in intralogistics equipment subscription services
may cause malfunctions or damages to the subscribed equipment.
RISK FACTORS
–6 1–


--- page 72 ---
Our internal control procedures may be unable to identify non-compliance and/or
suspicious transactions in a timely manner, or at all. There will therefore continue to be the risk
that fraud and other misconduct may occur, resulting in financial loss, negative publicity or
other negative outcomes, which may have an adverse effect on our business, reputation,
financial condition, and results of operations.
We recorded net current liabilities during the Track Record Period and may not generate
sufficient cash flows in the future to finance our operations or satisfy our current
liabilities.
We recorded net current liabilities of RMB301.3 million, RMB148.7 million, RMB267.4
million, and RMB224.3 million as of December 31, 2020, 2021 and 2022, and April 30, 2023,
respectively. As of December 31, 2020, 2021 and 2022, and April 30, 2023, we recorded
interest-bearing bank loans and other borrowings of RMB1,174.1 million, RMB1,329.8
million, RMB1,367.2 million, and RMB1,398.2 million, respectively. Our future liquidity, the
payment of trade and other payables and the repayment of our outstanding debts when they
become due will primarily depend on future operating and financial performance, including our
ability to maintain adequate cash inflows from operating activities and our ability to obtain
adequate financing. Our future performance will be impacted by prevailing economic
conditions and a range of other business and competitive factors which are beyond our control.
Therefore, there is no assurance that we will not experience net current liabilities in the future.
The net current liabilities position would expose us to liquidity risk which could restrict our
ability to make necessary capital expenditure or develop business opportunities, and our
business, operating results and financial condition could be materially and adversely affected.
There is also no assurance that we will always have adequate funds to meet our repayment
obligations, or that our historical net current liabilities will not impair our ability to obtain new
borrowings to finance our operation or capital commitments. In such circumstances, our
business, financial position, results of operations and prospects may be materially and
adversely affected.
Failure to accurately forecast market demand may result in excessive or insufficient
inventory levels, which could lead to increased costs or losses of sales opportunities.
Incorrect forecasting of demand in the future could result in us experiencing an excess or
a shortage of inventories. The failure to manage the increase in our inventories or accurately
forecast the demand of our customers may result in the obsolescence of our inventories and
adversely affect the result of our business operations. Our inventories primarily consist of
intralogistics equipment and parts. Our inventories increased from RMB56.6 million as of
December 31, 2020 to RMB69.2 million as of December 31, 2021, to RMB84.5 million as of
December 31, 2022, and further to RMB95.2 million as of April 30, 2023. Therefore,
maintaining optimal inventory levels is critical to our financial condition and results of
operations. We are exposed to risks as a result of a variety of factors beyond our control,
including changes in demand for relevant parts as a result of actual use, or incidents occurred
during our customers’ use of subscribed equipment and preferences and product generation
replacement due to technological development. We cannot assure you that we can accurately
predict these trends and events and maintain adequate levels of inventory at all times. If orders
do not match actual demand, we could have higher or lower anticipated stock levels and this
could lead to higher interest charges or less interest income, price reductions, inventory
obsolescence or write downs of slow moving or excessive stock resulting in lower profits.
RISK FACTORS
–6 2–


--- page 73 ---
We assess impairment to inventories at each period end during the Track Record Period,
and may make provision to write down our inventories to the net realizable value if they
become obsolete, out-of-season or are damaged or their prices went down and their net
realizable value is lower than the costs. However, we cannot assure you that we will not
experience material write-offs in the future. If we cannot manage our inventory level efficiently
in the future, it could increase our costs or cause us to lose sales opportunities, and our liquidity
and cash flow may be adversely affected.
We may not be able to obtain additional financing or generate sufficient cash from our
operations to expand our business or meet unforeseen contingencies.
To grow our business and remain competitive, we may need to obtain financing to support
our operations and expansion plans, the success of which depends on a number of factors,
including but not limited to general economic and capital market conditions, credit availability
from banks and other lenders, and investor confidence. In addition, our ability to generate
sufficient cash from our operating activities depends on various factors beyond our control,
including competition, general economic conditions in China and the business performance of
our customers.
We cannot assure you that sufficient financing will be available to us. The level of our
indebtedness and the amount of our interest payments could limit our ability to obtain
additional financing or obtain favorable terms for the financing for future capital expenditures
and working capital. Without sufficient funds, we will be forced to curtail our operations and
expansion plans. Disruption, uncertainty or volatility in the capital markets or credit markets
may limit our access to capital funds for our operations and expansion of our business, decrease
our profitability, and significantly reduce our financial flexibility. Furthermore, our liquidity
also depends on cash generated from operating activities and our cash and cash equivalents.
The higher level of our indebtedness may require us to allocate more cash to repay our debts,
thereby reducing the amount of general working capital that we can use for daily operations,
capital expenditure and other general corporate purposes. As a result, our business, results of
operations, and financial condition may be materially and adversely affected.
We may not be able to satisfy our working capital requirements if we experience
significant delays or defaults in payments from customers, or significant delays in our
billing and settlement process.
We usually require our customers to pay service fees on a regular basis. Our customers
may not be able to settle their payment with us in a timely manner or at all. As of December
31, 2020, 2021 and 2022, and April 30, 2023, our trade and bills receivables amounted to
RMB239.9 million, RMB269.6 million, RMB294.0 million, and RMB321.7 million,
respectively. In the event that our customers experience financial distress or are unable to settle
their payments due to us in a timely manner or at all, our results of operations and financial
condition may be materially and adversely affected.
RISK FACTORS
–6 3–


--- page 74 ---
Delays or defaults in payments from customers or delayed billing process may adversely
affect our ability to satisfy working capital requirements, and in turn increase our working
capital needs. We are subject to the credit risk of our customers and rely on the timelines of
receipt of progress payment from our customers to meet our payment obligations to our
suppliers or financial institutions. If there is any delay of payment from our customers, we
would experience a cash flow mismatch when there is a significant timing difference between
the making of payments to our suppliers and receiving payments from our customers. If any
of our customers runs into financial difficulties or we have disputes with our customers which
lead to the delay of payment by our customers to us, we may not be able to receive payments
in full or at all. Our trade receivable turnover days decreased from 81.3 days in 2020 to 72.3
days in 2021, increased to 78.1 days in 2022, and remained stable at 78.6 days in the four
months ended April 30, 2023. As of December 31, 2020, 2021, 2022 and April 30, 2023, our
impairment on trade and bills receivables were RMB21.0 million, RMB15.9 million, RMB19.0
million and RMB21.0 million, respectively. However, we cannot guarantee that such
impairment will be sufficient in the future.
While we monitor material overdue payments closely, we cannot assure you that we will
be able to recover all or any part of the amounts due from our customers within the agreed
credit terms or at all. If we fail to collect such payments at the end of the agreed credit terms,
we may take longer than our average turnover days of trade receivables to collect payments and
our provisions for payments in arrears and losses may increase. Furthermore, restructuring
payments for delinquent customers may result in lower revenue. Any material delay in payment
or non-payment by our customers may materially and adversely affect our business, results of
operations, and financial condition.
We may face risk regarding investment in associates, and the share of results of an
associate may adversely affect our financial performance.
We recorded investment in associates of RMB18.2 million, RMB8.9 million, RMB10.6
million, and RMB9.8 million as of December 31, 2020, 2021 and 2022, and April 30, 2023
primarily due to the initial investment costs in the associates adjusted by sharing the profit or
loss of the investees after the date of acquisition. However, our investment in associates may
not guarantee a share of profits, and any loss incurred by such associate shall be apportioned
among our Group and other shareholders of the associate. If the associate does not perform as
expected or does not generate sufficient revenue in any financial year, our return of investment
in associates, financial performance and financial position, could be materially and adversely
affected.
There can be no assurance that our investment in associates will achieve the results
intended and we may be subject to liquidity risk. Our investments in an associate are not as
liquid as other investment products as there is no cash flow until dividends are received even
if such associate reported profits under the equity accounting. Furthermore, the possibility to
promptly sell one or more of our interests in the associate in response to changing economic,
financial and investment conditions is uncertain. The market is affected by various factors,
such as general economic conditions, availability of financing, interest rates and supply and
demand, many of which are beyond our control. We cannot predict whether we will be able to
sell any of our interests in such associate for the price or on the terms set by us, or whether
any price or other terms offered by a prospective purchaser would be acceptable to us.
RISK FACTORS
–6 4–


--- page 75 ---
Therefore, the illiquidity nature of our investment in associates may significantly limit our
ability to respond to adverse changes in the performance of such associate. In addition, if there
is no share of results or dividends from the associate, we will also be subjected to liquidity risk
and our financial condition or result or operations could be materially affected.
Going forward, from time to time, we may evaluate various investment opportunities,
including investment in other associates or joint ventures in relation to associates. Any future
investment in associates may entail numerous risks, such as increased cash requirements and
additional indebtedness or contingent or unforeseen liabilities.
Any discontinuation, reduction or delay of any government grants, tax refund, or
preferential tax treatments would have a material and adverse impact on our business.
During the Track Record Period, we received government grants of RMB2.8 million,
RMB1.5 million, RMB1.5 million, and RMB1.0 million in 2020, 2021 and 2022, and the four
months ended April 30, 2023, respectively. In addition, we have benefited from preferential tax
treatments from the PRC government during the Track Record Period. Our government grants
mainly represented subsidies received from the local governments in connection with the
business development and rewards for financial and employment contributions. As the
determination and granting of such subsidies are subject to the discretion of the government
and are non-recurring in nature, the receipt of such subsidies is varied from period to period.
We cannot assure you that we will continue to receive government grants at the same level or
at all, or that we will continue to enjoy the current preferential tax treatments, in which case
our business, financial condition and result of operations may be materially and adversely
affected.
We may suffer from impairment losses for prepayments, deposits and other receivables.
We recorded prepayments, deposits and other receivables of RMB168.1 million,
RMB184.4 million, and RMB202.5 million as of December 31, 2020, 2021 and 2022, and
RMB210.7 million as of April 30, 2023, respectively. During the track record period, our
prepayments, deposits, and other receivables primarily consisted of (i) current portion of
deposits, mainly represented deposits for our leased properties and intralogistics equipment,
and non-current portion of deposits mainly represented deposits for finance leases of
intralogistics equipment; (ii) prepayments, mainly represented prepayments for listing
expenses, rental expenses related to the lease of our branch office, and procurements of parts
and other supplies in relation to our operation; and (iii) tax recoverable, mainly represented our
prepaid value-added tax and corporate income tax. For details, see “Financial information –
Discussion of Certain Selected Items From the Consolidated Statements of Financial Position
– Prepayments, Deposits, and Other Receivables” in this prospectus. There can be no assurance
that we will not have bad debts in the future. In the event that the actual recoverability of
prepayments, deposits and other receivables is lower than the expected level, we may need to
make provision for impairment of prepayments, deposits and other receivables, which could
adversely affect our cash flow position and our ability to meet our working capital
requirements, thereby materially and adversely affecting our business, financial position and
results of operations.
RISK FACTORS
–6 5–


--- page 76 ---
Some of our property lease agreements were not filed with the relevant government
authorities and may in turn subject us to administrative fines.
As of the Latest Practicable Date, we leased 74 properties in various locations with an
aggregated GFA of approximately 71,132.1 sq.m. As of the Latest Practicable Date, we had not
register 65 of our leased properties, with an aggregated GFA of approximately 36,462.6 sq.m.,
which were used as office buildings and warehouses. As of the Latest Practicable Date, none
of the relevant properties are used as our headquarter or supply chain bases, except for our
main supply chain base in Foshan, Guangdong. According to applicable PRC administrative
regulations, the lessor and the lessee of a property lease agreement are required to file the
property lease agreement with relevant governmental authorities within 30 days after the
execution of the property lease agreement. If the filing is not made, the governmental
authorities may require that the filing be made within a stated period of time, failing which,
they may impose a fine ranging from RMB1,000 to RMB10,000 for each agreement that has
not been properly filed. In the event that we are required by the competent authorities to
register the property lease agreements, we may be subject to a maximum penalty of RMB0.65
million for the failure to register the property lease agreements, which could adversely affect
our financial condition and results of operations.
We may incur additional costs as a result of any dispute or claim arising from the title
defects of our leased properties.
As of the Latest Practicable Date, the lessors of nine of our leased properties were unable
to provide valid ownership certificates or other sufficient ownership documents to us,
representing approximately 5.4% of the total GFA of our leased properties. As a result, we
cannot continue to use such properties if the lessors’ rights to lease such properties are
successfully challenged by any third party. We primarily use these leased properties as offices
or warehouses. See “Business – Properties – Leased Properties” in this prospectus. Any dispute
or claim in relation to the titles of the properties that we occupy, including any litigation
involving allegations of illegal or unauthorized use of these properties, could require us to
relocate our offices. If any of our leases are terminated or voided as a result of challenges from
third parties or the government, we would need to seek alternative premises and incur
relocation costs. If we fail to find suitable replacement properties on terms acceptable to us,
or if we are subject to any material liability resulting from third-party challenges for our lease
of properties for which we or our lessors do not hold valid title certificates or authorizations,
such may adversely affect our business, financial position, results of operations and growth
prospects.
We may not be able to renew our current leases or locate desirable alternatives for our
offices and warehouses.
We lease properties as our offices and warehouses, and we may not be able to extend or
renew such leases on commercially reasonable terms, or at all, as we will have to compete with
other businesses for premises at desired locations. Rental payments may significantly increase
as a result of the high demand for the leased properties. Moreover, we may not be able to
RISK FACTORS
–6 6–


--- page 77 ---
extend or renew such leases upon expiration of the current term and may therefore be forced
to relocate the affected operations. This could disrupt our operations and result in significant
relocation expenses. We may not be able to locate desirable alternative sites for our offices and
warehouses. We may also face the risk of being included in the list of enterprises with abnormal
business operations if we fail to extend such leases or relocate the registered address and file
such leases with the local authorities. The occurrence of such events could materially and
adversely affect our business, financial condition, results of operations and prospects.
Any non-compliance with applicable anti-bribery and anti-corruption laws, economic
sanctions and other forms of illegal acts and misconduct by our employees, customers or
suppliers may materially and adversely affect our business operations.
We may be exposed to bribery, corruption, economic sanctions or other illegal acts and
misconduct committed by our employees, customers, suppliers or any other third parties that
could subject us to financial losses and sanctions imposed by governmental authorities, which
may adversely affect our reputation. While we have adopted and implemented internal controls
and procedures to monitor both internal and external compliance with anti-bribery and
anti-corruption laws, regulations and policies, we cannot guarantee that such internal controls
and procedures will always be effective in preventing non-compliance and exculpating us from
penalties or liabilities that may be imposed by relevant government authorities due to
violations committed by our employees. If our employees are found or alleged to have violated
anti-bribery or anti-corruption laws and regulations, we may face or be involved in fines,
lawsuits and damage to our reputation, which could have a material adverse effect on our
business, financial condition and results of operations.
We may be unable to obtain, maintain and protect our intellectual property rights and
proprietary information or prevent third parties from any unauthorized use of our
technologies.
Our trade secrets, trademarks, patents, software copyrights, and other intellectual
property rights are critical to our success. We rely on, and expect to continue to rely on, unfair
competition laws and contractual rights, such as confidentiality agreements with our employees
and third parties with whom we have relationships to protect our intellectual properties.
However, these agreements may be inadequate or may be breached, either of which could
potentially result in unauthorized use or disclosure of our trade secrets and other proprietary
information to third parties, including our competitors. As a result, we may lose our crucial
competitive advantages derived from such intellectual property. Significant impairments on our
intellectual property rights may result in a material and adverse effect on our business. In
addition, events beyond our control may pose threats to our intellectual property rights, as well
as to our brand. Effective protection of our trademarks, patents, software copyrights, domain
names, and other intellectual property rights is expensive and difficult to maintain, both in
terms of application and costs, as well as the costs of defending and enforcing those rights.
Therefore, we cannot assure you that our protection efforts are effective or sufficient to guard
against any potential infringement and misappropriation, which could result in our intellectual
property rights being narrowed in scope or declared invalid or unenforceable.
RISK FACTORS
–6 7–


--- page 78 ---
We may be involved in intellectual property disputes and claims.
We depend to a large extent on our ability to effectively develop and maintain intellectual
property rights relating to our business. However, we cannot assure you that our competitors
and other third parties will not bring legal claims against us for infringing on their patents,
copyrights, trademarks or other intellectual property rights, whether such claims are valid or
otherwise. The intellectual property laws and relevant regulations, which cover the validity,
enforceability and scope of protection of intellectual property rights, may be subject to
amendments in the future, and litigation is becoming a more commonly pursued method for
resolving commercial disputes. Given the foregoing and the increasing competition in the
market, we may be exposed to a higher litigation risk. Any intellectual property lawsuits
against us, whether successful or not, may harm our brand and reputation.
Defending against intellectual property claims may be time consuming and costly, and
can impose a significant burden on our management and resources. Further, there is no
guarantee that we can obtain favorable judgment in all legal cases, in which case we may need
to pay damages or be forced to cease using certain technologies or content that are critical to
our services. Any resulting liabilities or expenses or any changes to our services that we have
to make to limit future liabilities may have a material adverse effect on our business, results
of operations and prospects.
We may not be able to successfully develop or adopt new technologies, which may limit
our future growth.
The market for our business operations may change rapidly because of changes in
customer requirements, technological innovations, new service offerings, prices, industry
standards and domestic and international economic factors. New service offerings and
technologies may render existing services or technology obsolete, excessively costly or
otherwise unmarketable. If we are unable to introduce and integrate new technologies into our
business operations in a timely and cost-effective manner, our competitive position will suffer
and our prospects for growth will be impaired, which could have a material adverse effect on
our business, financial condition, and results of operations.
Any failure or deterioration of our quality control system could result in defects in our
services, which in turn may have a material adverse effect on our business and operations.
The quality of the services that we provide is one of the factors critical to our success.
In order to sustain such success, we need to continue to maintain an effective quality control
system for our business, particularly for our intralogistics equipment subscription services. The
effectiveness of our quality control system depends significantly on a number of factors,
including a timely update of the quality control system to suit ever-changing business needs,
training programs as well as our ability to ensure that our quality control policies and
guidelines are adhered to. Any failure or deterioration of our quality control system could result
in defects in our services, which in turn may jeopardize our reputation, reduce demand for our
services or even subject us to contractual liabilities and other claims. Any such claims,
RISK FACTORS
–6 8–


--- page 79 ---
regardless of whether they are ultimately successful or not, may cause us to incur significant
costs, harm our reputation and/or result in significant disruption to our operations.
Furthermore, if any of such claims were ultimately successful, we may be required to pay for
the claims, which could have a material adverse impact on our business, financial condition,
and results of operations.
We may be demanded to pay the outstanding contributions of social insurance and
housing provident fund and late payments and fines imposed by relevant governmental
authorities.
During the Track Record Period and up to the Latest Practicable Date, we did not make
full social insurance and housing provident fund contribution for certain employees in strict
compliance with relevant laws and regulations. As of December 31, 2020, 2021 and 2022, and
April 30, 2023, our aggregate outstanding amount of social insurance and housing provident
fund contributions were approximately RMB270,000, RMB334,000, RMB442,000 and
RMB431,000. As of the Latest Practicable Date, no administrative action, fine or penalty had
been taken or imposed by the relevant regulatory authorities against us with respect to our
social security insurance contributions or housing provident fund, nor had we received any
order or been informed to settle the under-contributions. As advised by our PRC Legal Adviser,
an employer that has not made social insurance contributions at a rate and based on an amount
prescribed by the law, or at all, may be ordered to rectify the non-compliance and pay the
required contributions within a stipulated deadline and be subject to a late payment fee of up
to 0.05% per day. If the employer still fails to rectify the failure to make social insurance
contributions within the stipulated deadline, it may be subject to a fine ranging from one to
three times of the amount overdue. In addition, as advised by our PRC Legal Adviser, an
employer that has failed to pay the housing provident fund on time or underpaid the housing
provident fund in violation of relevant regulations, may be ordered to make the payment within
a stipulated deadline. If the employer still fails to make the payment within the stipulated
deadline, the employee may apply to the court for compulsory enforcement. As of the Latest
Practicable Date, we were not aware of any complaint filed by any of our employees regarding
our social security insurance and housing provident fund policy.
However, we cannot assure you that the relevant government authorities will not require
us to pay the outstanding amount and impose late payment fees or fines on us. Pursuant to
relevant PRC laws and regulations, the relevant PRC authorities may demand us to pay the
outstanding social insurance contributions within a stipulated deadline and we may be liable
to a late payment fee equal to 0.05% of the outstanding amount for each day of delay. If we
fail to make such payments, we may be liable to a fine of one to three times the amount of the
outstanding contributions. Pursuant to relevant PRC laws and regulations, the relevant PRC
authorities may demand us to pay the outstanding contributions of the housing provident fund
within a stipulated deadline. If we fail to make such payments within the stipulated deadline,
the relevant authorities may apply to the court for compulsory enforcement. In addition, as the
interpretation and implementation of labor laws and regulations may be subject to amendments
in the future, we cannot assure you that our employment practice policy will be deemed to be
in full compliance with labor-related laws and regulations in China. If we are otherwise subject
to investigations related to non-compliance with labor laws and are imposed severe penalties
or incur relevant legal fees in connection with labor law disputes or investigations, our
business, financial condition and results of operations may be adversely affected.
RISK FACTORS
–6 9–


--- page 80 ---
Labor shortage or increase in labor cost may affect our business growth and profitability.
Our services rely on recruiting and retaining qualified professionals and successful
training of these professionals. According to the CIC, the aging population in China has led to
the insufficient supply of labor in some industries, which has in turn led to an increase in labor
costs. With the intensification of the aging problem of workforce in the PRC, professionals
with health conditions suitable for the intralogistics equipment solutions industry may be in
short supply. As a result, we may incur more costs to hire suitable professionals. If our
recruitment and retention efforts are not successful, qualified professionals may not be
integrated into our workforce in a timely manner to meet our business needs.
In 2020 and 2021, 2022 and the four months ended April 30, 2023, our employee benefit
expenses (excluding directors’ and supervisors’ remunerations) were RMB149.6 million,
RMB197.6 million, RMB215.1 million and RMB71.0 million, respectively, which constituted
a significant portion of our cost of sales, administrative expenses, and distribution and selling
expenses. For further details of our employee benefit expenses, please see Note 7 of the
Accountants’ Report set out in Appendix I to this prospectus. It is expected that the labor cost
in the PRC will continue to increase, and the PRC Government may promulgate additional laws
and regulations on labor protection, such as increasing the statutory minimum wage. Such
developments may place a heavier burden on us as an employer and we may have to pay more
benefits to employees. Any significant increase in our direct labor cost will increase our cost
of sales. If we cannot transfer the increased cost to customers, our business, financial
condition, and results of operations may be materially and adversely affected.
During the Track Record Period, we did not experience any labor shortage or significant
increase in labor cost which had a material impact on our daily operation or profitability.
However, we cannot guarantee that we will not experience shortage of skilled labor or the labor
cost will not increase in the future or that our performance of contracts or profitability will not
be adversely affected.
Accidents in our business or in relation to our intralogistics equipment subscription
services may expose us to liability and reputational risk.
Accidents, such as work injuries, may occur during the course of our business. In
particular, the operation, and maintenance of our equipment carry inherent occupational risk of
accidents. As a result, we are exposed to risks in relation to work safety, including but not
limited to claims for injuries, fatal or otherwise, sustained by our employees. To the extent that
we incur additional costs, we may suffer material adverse effects on our business, results of
operations, financial condition and brand value. We may be held liable for the injuries of
employees or others. In addition, accidents may also occur when third parties are using the
equipment subscribed, which may be difficult to detect and prevent could also subject us to
financial loss, sanctions imposed by governmental authorities and seriously harm our
reputation. Such accidents may occur as a result of (i) the defective equipment which we
purchased from our suppliers or (ii) third parties improper use of the equipment. With respect
to the defective equipment, although we will conduct safety and quality checks of purchased
RISK FACTORS
–7 0–


--- page 81 ---
equipment to make sure they meet our operation standards, there is no guarantee that we will
be able to identify any defects of such equipment. In addition, we cannot guarantee that our
customers will properly operate our equipment afterwards. If accidents happen in relation to
our equipment after such equipment is delivered to our customers, we may incur significant
time, efforts and costs to deal with such accidents upon occurrence of such accidents even
without our fault. Furthermore, if such accidents are wrongly publicized, our reputation and
reliability may be harmed, and our customers may end their cooperation with us.
In addition, we cannot guarantee that our insurance may fully cover the claims or costs
arising from such accidents. See “– Our insurance coverage may not sufficiently cover the risks
related to our business” in this section. We may also experience interruptions to our business
and may be required to change the manner in which we operate as a result of governmental
investigations or the implementation of safety measures upon occurrence of accidents.
Moreover, such occurrences may also damage our reputation and brand in the intralogistics
equipment solution industry. Furthermore, certain claims arising from accidents may be the
result of defects in equipment purchased from third-party suppliers. Such third-party suppliers
may not indemnify us for such defects or may only provide us with limited indemnification that
is insufficient to cover our or clients’ damages resulting from the product liability claim. Any
of the foregoing could adversely affect our reputation, brand, business, results of operations,
and financial condition.
Our business operations are subject to various environmental, health and safety laws and
may be exposed to pertinent litigation or other liabilities.
We are subject to various occupational health and safety and environmental laws and
regulations governing, among other things, the generation, storage, handling, use,
transportation, presence of or exposure to hazardous materials and the emission and discharge
of hazardous materials into the ground, air or water and the health and safety of our employees.
With the social development, the PRC government or the relevant government authorities
in the PRC may impose more stringent environmental, occupational health and safety laws,
regulations and government policies in the future, and we cannot assure you that we will be
deemed to be in full compliance with relevant laws, regulations and government policies in
force at that time. In the event that the PRC government imposes more stringent environmental,
occupational health and safety laws, regulations and government policies, we may need to
make significant capital or operating expenditures to comply with the new laws and
regulations, and we may be unable to pass on these costs to our customers.
Any change or amendment to these laws, regulations or government policies may require
us to introduce new preventive or remedial measures, purchase new pollution control
equipment and update our compliance and monitoring systems in order to ensure compliance,
which may have a material and adverse effect on our business, financial condition and results
of operations.
RISK FACTORS
–7 1–


--- page 82 ---
Our current risk management and internal control system may not be sufficient to protect
us against various risks.
Our business operation is exposed to various risks, primarily including credit risk, market
risk, liquidity risk, operational risk and legal and compliance risk. To manage such risks, we
have established, and will continue to improve, our risk management and internal control
system. See “Business – Risk Management and Internal Control” in this prospectus. However,
we cannot assure you that such risk management and internal control system will be effective
in identifying, monitoring and mitigating all types of risks.
Our risk management capability is limited by the information, tools and technologies
available to us. As some of our risk management measures are based on our historical market
data and management’s judgment, they may not accurately predict the types of risks that may
arise in the future. In addition, we have developed and continually updated our IT systems for
risk management and internal control, but we cannot guarantee that such systems would
achieve the expected results or will not experience disruptions from time to time. See “– We
may experience failures in or disruptions to our comprehensive technology platform” in this
section. We also rely on our employees to effectively implement our risk management and
internal control system. However, we cannot guarantee that our employees will always comply
with or properly implement the relevant internal policies and procedures. If we are unable to
effectively improve our risk management and internal control system, or timely achieve the
expected results, our business, financial condition, and results of operations may be materially
and adversely affected.
Negative publicity about us, our Shareholders and affiliates, our brand and our
management may have a material adverse effect on our business, reputation, and the
trading price of our Shares.
Negative publicity about us, our Shareholders and affiliates, the equipment we provided,
including possible defects of the equipment, even without our fault, our service quality, our
brand, our management and other aspects of our business operations may arise from time to
time. They may appear in the form of comments on internet postings and other media sources.
For example, in the event that we fail to meet our customers’ expectations as to the quality of
our services, our customers may disseminate negative comments on social media platforms. In
addition, our customers or suppliers may also become the subject of negative publicity for
various reasons, such as customer complaints about the quality of their services. Negative
publicity about our customers or suppliers, their business, results of operations and financial
condition could adversely affect our reputation, business and share price. In the long term, if
such negative publicity about us, our Shareholders and affiliates, our brand, our management
and other aspects of our business operations damage our reputation and result in a loss of
customer confidence, it would affect our future ability to attract and retain new customers and
employees. As a result, our business, results of operations, financial condition, and prospects
would be materially and adversely affected.
RISK FACTORS
–7 2–


--- page 83 ---
Our business operations and reputation may be materially and adversely affected by
delays in the delivery or poor handling of our equipment and parts by external logistics
service providers.
During the Track Record Period, we engaged external logistic companies to deliver our
equipment, relevant parts to our customers. The timely delivery of our equipment and parts
depends highly on, among others, the external logistics service providers’ ability to fulfil their
obligations in accordance with the terms of respective service contracts, such as their
responsiveness to our logistic orders and provide us the required logistic services. Any failure
to provide on-time delivery may have a material adverse impact on our business operations and
reputation, as well as expose us to potential contractual claims with our external logistics
service providers or our customers. In such events, we may not be able to seek full indemnity
from the external logistics service providers or enforce in full any favorable judgment
obtained.
Further, we may also be obligated under the respective service contracts with our
customers to compensate them for any loss or damage incurred due to failure to comply with
the terms. Any contractual disputes about material breaches by our external logistics service
providers, which may arise in the future, may severely affect our business operations and divert
our management’s attention and resources.
Our insurance coverage may not sufficiently cover the risks related to our business.
We maintain insurance policies against major risks and liabilities arising from our
business operations. For details, see “Business – Insurance” in this prospectus. We cannot
assure you that our insurance coverage will be sufficient or available to cover damage,
liabilities or losses we may incur in the course of our business. Moreover, there are certain
losses for which insurance may not be available for us on commercially practicable terms, such
as losses suffered due to business interruptions, earthquakes, typhoons, flooding, war or civil
disorder. In the event of a dispute with our insurers, we may be required to engage in protracted
litigation or negotiations in order to obtain benefits for which we are legally due, and those
efforts may be wholly or partly unsuccessful. If we are held responsible for any such damage,
liabilities or losses and there is an insufficiency or unavailability of insurance, there could be
a material adverse effect on our business, results of operations, and financial condition.
The potential loss of our contracts due to force majeure events or other reasons beyond
our control could materially and adversely affect our business, results of operations, and
financial condition.
In accordance with PRC laws, if any force majeure event or any event beyond our control
happens, our customers may terminate the contracts, and they may only be required to
compensate the us after taking into consideration the depreciation of the equipment and shall
not be obliged to make service payments in full in the event that the contracts have been
terminated due to damage to or loss of the equipment as a result of force majeure or other
reasons that are not caused our customers. If the equipment subscribed are damaged or lost due
to the foregoing reasons which result in termination of the relevant contracts, we may be forced
to assume losses to the extent our insurance coverage is inadequate. Any uninsured loss could
materially and adversely affect our business, results of operations, and financial condition.
RISK FACTORS
–7 3–


--- page 84 ---
Changes and development in the regulatory environment over the industries in which our
customers operate could negatively impact our own results of operations and financial
condition.
We provide services primarily to customers in the manufacturing, logistics, and trading
industries in China. See “Business – Our Customers and Suppliers – Our Customers” in this
prospectus. Our customers in these industries could be vulnerable to changes in the regulatory
environment of the industry in which they operate.
We cannot guarantee that the regulatory environment over the industries in which our
customers operate will remain favorable in the future. The government could reduce the
amount of tax or policy incentives available to enterprises in these industries. Any material and
adverse change could lead to a significant revenue decline. If any of the above happens to one
or more of the industries in which our customers operate, our customers’ business operations
and expansions could be materially and adversely affected, leading to significant decline in
their needs for intralogistics equipment solutions. As a result, our results of operations and
financial condition could in turn be materially and adversely affected.
Any catastrophe could severely disrupt our business operations.
Health pandemics, such as the COVID-19 outbreak or other similar diseases, may
adversely impact in the long term, on the economy and social conditions globally, which may
cause temporary decrease in service demand for intralogistics equipment subscription services
and maintenance and repair service, and adversely affect our business, financial condition and
operations. For details, please see “Business – Impact of COVID-19 on Our Operations” in this
prospectus.
Our operations are also vulnerable to interruption and damage from natural disasters and
other calamities. Due to their nature, we cannot predict the incidence, timing and severity of
catastrophes. In addition, changing climate conditions, primarily rising global temperatures,
may be increasing, or may in the future increase, the frequency and severity of natural
catastrophes. If any such catastrophes or extraordinary events were to occur in the future, our
ability to operate our business could be seriously impaired. Such events could make it difficult
or impossible for us to deliver our services to our customers and could decrease demand for
our services, and therefore adversely affect our operations and financial conditions.
RISK FACTORS
–7 4–


--- page 85 ---
We are subject to the risks of doing business in multiple jurisdictions.
We face risks associated with operating in multiple jurisdictions, especially in overseas
markets where we sell intralogistics equipment, equipment parts. Our business and financial
results in the future could be adversely affected due to a variety of factors, including:
 changes in a specific country’s or region’s political and cultural climate or economic
condition;
 unexpected changes in laws and regulatory requirements in relevant jurisdictions;
 the occurrence of economic weakness, including inflation or political instability;
 the burden of complying with a variety of foreign laws, including difficulties in
enforcement of contractual provisions;
 inadequate intellectual property protection in certain jurisdictions;
 enforcement of anti-corruption and anti-bribery laws;
 trade-protection measures, import or export licensing requirements and fines,
penalties or suspension or revocation of export privileges;
 delays resulting from certain barriers and restrictions, potentially longer payment
cycles, greater difficulty in accounts receivable collection and potentially adverse
tax treatment;
 the effects of applicable local tax regimes and potentially adverse tax consequences;
 significant adverse changes in local currency exchange rates; and
 business interruptions resulting from geo-political actions and cultural climate or
economic condition, including war and acts of terrorism, natural disasters, including
earthquakes, volcanoes, typhoons, floods, hurricanes and fires, or the impact of
public health pandemics or epidemics.
Furthermore, global economies could suffer dramatic downturns as the result of a
deterioration in the credit markets and related financial crisis as well as a variety of other
factors, including extreme volatility in security prices, severely diminished liquidity and credit
availability, ratings downgrades of certain investments and declining valuations of others. In
the past, governments have taken unprecedented actions in an attempt to address and rectify
these extreme market and economic conditions by providing liquidity and stability to the
financial markets. If these actions are not successful, the return of adverse economic conditions
may cause a significant impact on our ability to raise capital, if needed, on a timely basis and
on acceptable terms or at all.
RISK FACTORS
–7 5–


--- page 86 ---
Changes in the political and economic policies, as well as the interpretation and
enforcement law, rules and regulations, may affect our business, financial condition,
results of operations and prospects.
Due to our extensive operations in the PRC, our business, financial condition, results of
operations and prospects are affected by economic, political, and legal developments in the
PRC. The overall economic growth is influenced by the governmental regulations and policies
in relation to resource allocation, monetary policies, regulations of financial services and
institutions, preferential treatment to particular industries or companies and others. Any of the
foregoing would affect our business, financial condition, results of operations and prospects.
We shall comply with the applicable PRC laws, rules and regulations. With the social
development, the relevant PRC laws, rules and regulations in force at present may be amended
in the future, and their interpretation and implementation shall be determined in accordance
with relevant laws and regulations in force at the time. Any non-compliance with any existing
or new laws and regulations could materially and adversely affect our business, financial
condition, results of operations, cash flows and prospects.
Y ou may experience difficulties in effecting service of legal process and enforcing
judgments against us and our management based on Hong Kong or other foreign laws.
We are incorporated under the laws of the PRC, and all of our assets are located in the
PRC. In addition, a majority of our Directors, Supervisors and senior management personnel
reside within the PRC, and substantially all their assets are located within the PRC. As a result,
it may not be possible to effect service of process within the United States or elsewhere outside
the PRC upon us or our Directors, Supervisors and senior management personnel.
On July 14, 2006, the Supreme People’s Court of the PRC and the government of Hong
Kong Special Administrative Region entered into the Arrangement on Reciprocal Recognition
and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland
and of the Hong Kong Special Administrative Region Pursuant to Choice of Court Agreements
between Parties Concerned (ʝႩ̙ձੂБ຅ԫɛ՘ᙄ၍
τર) (the “Arrangement”) which was taken into effect on August 1,
2008. Pursuant to the Arrangement, where any designated PRC court or any designated Hong
Kong court has made an enforceable final judgment requiring payment of money in a civil or
commercial case under a choice of court agreement in writing, any party concerned may apply
to the relevant PRC court or Hong Kong court for recognition and enforcement of the
judgment. A choice of court agreement in writing is defined as any agreement in writing
entered into between parties after the effective date of the Arrangement in which a Hong Kong
court or a mainland court is expressly selected as the court having sole jurisdiction for the
dispute.
RISK FACTORS
–7 6–


--- page 87 ---
On January 18, 2019, the Supreme People’s Court and the Hong Kong SAR Government
signed the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and
Commercial Matters by the Courts of the Mainland and of the Hong Kong Special
Administrative Region (τ
ર), or the New Arrangement, which seeks to establish a mechanism with greater clarity and
certainty for recognition and enforcement of judgments in wider range of civil and commercial
matters between Hong Kong SAR and the mainland China. The New Arrangement does not
include the requirement for a choice of court agreement in writing by the parties. The New
Arrangement will only take effect after the promulgation of a judicial interpretation by the
Supreme People’s Court and the completion of the relevant legislative procedures in the Hong
Kong SAR. The New Arrangement will, upon its effectiveness, supersedes the Arrangement.
Therefore, before the New Arrangement becomes effective, it may be difficult to enforce a
judgment rendered by a Hong Kong court in China if the parties in the dispute do not agree to
enter into a choice of court agreement in writing.
Gains on the sales of H Shares and dividends on the H Shares may be subject to PRC
income taxes.
Under the applicable PRC tax laws, both the dividends we pay to non-PRC resident
individual holders of shares (“non-resident individual holders”), and gains realized through the
sale or transfer by other means of H shares by such shareholders, are subject to PRC individual
income tax at a rate of 20%, unless reduced by the applicable tax treaties or arrangements.
Under applicable PRC tax laws, the dividends we pay to, and gains realized through the
sale or transfer by other means of H shares by, non-PRC resident enterprise holders of H shares
(“non-resident enterprise holders”) are both subject to PRC enterprise income tax at a rate of
10%, unless reduced by applicable tax treaties or arrangements. Pursuant to the Arrangements
between the Mainland of China and the Hong Kong Special Administrative Region for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on
Incomes (τર) dated August
21, 2006, any non-resident enterprise registered in Hong Kong that holds directly at least 25%
of the shares of our Company shall pay Enterprise Income Tax for the dividends declared and
paid by us at a tax rate of 5% if the Hong Kong non-resident enterprise is the beneficial owner
of the equity and certain other conditions are met.
For non-resident individual holders, gains realized through the transfer of properties are
normally subject to PRC individual income tax at a rate of 20%. However, according to the
Circular of the Ministry of Finance and the State Administration of Taxation on Issues
Concerning Individual Income Tax Policies (ഄ
ٝincome received by individual foreigners from dividends and bonuses of a
foreign-invested enterprise are exempt from individual income tax for the time being.
According to the Circular Declaring that Individual Income Tax Continues to Be Exempted
over Individual Income from Transfer of Shares (ה
ٝissued by the MOF and the SA T, effective as of March 30, 1998, income from
individuals’ transfer of stocks of listed companies continued to be temporarily exempted from
RISK FACTORS
–7 7–


--- page 88 ---
individual income tax. On February 3, 2013, the State Council approved and promulgated the
Notice of Suggestions to Deepen the Reform of System of Income Distribution ( ਷ਕ৫ҭᔷ೯
ٝOn February 8, 2013, the
General Office of the State Council promulgated the Circular Concerning Allocation of Key
Works to Deepen the Reform of System of Income Distribution (ଉʷϗɝ
ٝAccording to these two documents, the PRC government
is planning to cancel foreign individuals’ tax exemption for dividends obtained from
foreign-invested enterprises, and the Ministry of Finance and the State Administration of
Taxation should be responsible for making and implementing details of such plan. However,
relevant implementation rules or regulations have not been promulgated by the Ministry of
Finance and the State Administration of Taxation.
Therefore, non-resident holders of our H Shares should be aware that they may be
obligated to pay PRC income tax on the dividends and gains realized through sales or transfers
of the H Shares.
Our operations are subject to and may be affected by changes in PRC tax laws and
regulations.
We are subject to periodic examinations on fulfillment of our tax obligation under the
PRC tax laws and regulations by PRC tax authorities. Although we believe that in the past we
had acted in compliance with the requirements under the relevant PRC tax laws and regulations
in all material aspects and had established effective internal control measures in relation to
accounting regularities, we cannot assure you that future examinations by PRC tax authorities
would not result in fines, other penalties or actions that could adversely affect our business,
financial condition and results of operations, as well as our reputation. Furthermore, the PRC
tax laws and regulations may continue to evolve. For example, under the Individual Income
Tax Law (“IIT Law”) which was amended on June 30, 2011 and came into effect on September
1, 2011, foreign nationals which have domiciles in the PRC, or have no domicile in China but
have resided in the PRC for one year or more, would be subject to PRC individual income tax
at progressive rate on their income gained within or outside the PRC. The Standing Committee
of NPC has approved the amendment of the IIT Law, which took effect on January 1, 2019.
Under the amended IIT law, foreign nationals have no domicile in China but have resided in
the PRC for a total of 183 days or more in a tax year, would be subject to PRC individual
income tax on their income gained within or outside the PRC. Should such rule be strictly
enforced, our ability to attract and retain highly skilled foreign scientists and research
technicians to work in China may be materially affected, which may in turn have a material
adverse effect on our business, financial condition, results of operations, cash flows and
prospects. Further refinement of PRC tax laws and regulations could also have an adverse
effect on our business, financial condition and results of operations.
RISK FACTORS
–7 8–


--- page 89 ---
RISKS RELATING TO THE GLOBAL OFFERING
There has been no prior public market for our H Shares, and their liquidity and market
price following the Global Offering may be volatile.
Prior to the Global Offering, there was no public market for our H Shares. We cannot
assure you that a public market for our H Shares with adequate liquidity will develop and be
sustained following the completion of the Global Offering. The initial Offer Price for our H
Shares to the public will be the result of negotiations between us and the Sole Overall
Coordinator (for itself and on behalf of the Hong Kong 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 (including any H Shares which may be issued pursuant to the exercise of
the Over-allotment Option). 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. If an active public market for our H
Shares does not develop following the completion of the Global Offering, the market price and
liquidity of our H Shares could be materially and adversely affected.
Y ou will incur immediate and significant dilution and may experience further dilution if
we issue additional Shares in the future.
The Offer Price of the Offer Shares is higher than the net tangible asset value per Share
immediately prior to the Global Offering. Therefore, purchasers of the Offer Shares in the
Global Offering will experience an immediate dilution in pro forma consolidated net tangible
asset value. 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 Shares in the future. Purchasers
of the Offer Shares may experience dilution in the net tangible asset value per Share of their
Shares if we issue additional Shares in the future at a price which is lower than the net tangible
asset value per Share at that time.
Future sales or perceived sales of substantial amounts of our H Shares in the public
market could have a material adverse effect on the price of our H Shares and our ability
to raise additional capital in the future.
The market price of our H Shares could decline as a result of future sales of a substantial
number of our H Shares or other securities relating to our H Shares in the public market, or the
issuance of new shares or other securities, or the perception that such sales or issuances may
occur. Future sales, or anticipated sales, of substantial amounts of our securities, including any
future offerings, could also materially and adversely affect our ability to raise capital at a
specific time and on terms favorable to us. In addition, our Shareholders may experience
dilution in their holdings if we issue more securities in the future. New shares or share-linked
securities issued by us may also confer rights and privileges that take priority over those
conferred by the H Shares.
RISK FACTORS
–7 9–


--- page 90 ---
There will be a gap of several days between pricing and trading of our H Shares, and the
price of our H Shares when trading begins could be lower than the Offer Price.
The initial price to the public of our H Shares sold in the Global Offering is expected to
be determined on the Price Determination Date. However, the Shares will not commence
trading on the Stock Exchange until they are delivered, which is expected to be several
business days after the Price Determination Date. As a result, investors may not be able to sell
or otherwise deal in the Offer Shares during that period. Accordingly, holders of our H Shares
are subject to the risk that the price of the Shares when trading begins could be lower than the
Offer Price as a result of adverse market conditions or other adverse developments that may
occur between the time of sale and the time trading begins.
Fluctuations in exchange rates may result in foreign currency exchange losses and may
have a material adverse effect on your investment.
During the Track Record Period, a vast majority of our expenditures were denominated
in Renminbi, and a vast majority of our financial assets are also denominated in Renminbi. Any
significant change in the exchange rates of the Hong Kong dollar against Renminbi may
materially and adversely affect our cash flows, earnings and financial position, and the value
of, and any dividends payable on, our H Shares in Hong Kong dollars. For example, a further
appreciation of Renminbi against the Hong Kong dollar would make any new Renminbi
denominated investments or expenditures more costly to us, to the extent that we need to
convert Hong Kong dollars into Renminbi for such purposes. An appreciation of Renminbi
against the Hong Kong dollar would also result in foreign currency translation losses for
financial reporting purposes when we translate our Hong Kong dollar denominated financial
assets into Renminbi, including proceeds from the Global Offering, as Renminbi is the
functional currency of our Company and our subsidiaries inside China. Conversely, if we
decide to convert our Renminbi into Hong Kong dollars for the purpose of making payments
for dividends on our H Shares or for other business purposes, appreciation of the Hong Kong
dollar against Renminbi would have a negative effect on the Hong Kong dollar amount
available to us.
Payment of dividends is subject to restrictions under the PRC law and we cannot assure
you whether and when we will pay dividends.
Under PRC law and regulations, we may only pay dividends out of distributable profits.
Distributable profits are our after-tax profits, less any recovery of accumulated losses and
appropriations to statutory and other reserves that we are required to make. As a result, we may
not have sufficient or any distributable profit to enable us to make dividend distributions to our
Shareholders, including in periods for which our financial statements indicate we are
profitable. Any distributable profit not distributed in a given year is retained and available for
distribution in subsequent years. The calculation of our distributable profits under the PRC
GAAP differs in many aspects from the calculation under HKFRS. Moreover, our operating
subsidiaries in China may not have distributable profit as determined under the PRC GAAP .
Accordingly, we may not receive sufficient distributions from our subsidiaries for us to pay
dividends. Failure by our operating subsidiaries to pay us dividends could adversely impact our
ability to make dividend distributions to our Shareholders and our cash flow, including periods
in which we are profitable.
RISK FACTORS
–8 0–


--- page 91 ---
Facts, forecasts and statistics in this prospectus relating to the PRC, the global economy
and intralogistics equipment solution industry may not be fully reliable.
Facts, forecasts and statistics in this prospectus relating to the PRC, the global economy
and the intralogistics equipment solution industry in China and oversea markets are obtained
from various sources that we believe are reliable, including official government publications
as well as a report prepared by CIC that we commissioned. However, we cannot assure you the
quality or reliability of these sources. Neither we, the Sole Sponsor, the Sole Overall
Coordinator, the Sole Global Coordinator, the Joint Bookrunners, the Joint Lead Managers, the
CMIs, the Underwriters nor our or their respective affiliates or advisers have verified the facts,
forecasts and statistics nor ascertained the underlying economic assumptions relied upon in
those facts, forecasts and statistics obtained from these sources. Due to possibly flawed or
ineffective collection methods or discrepancies between published information and factual
information and other problems, the statistics in this prospectus relating to the PRC, the global
economy and intralogistics equipment solution industry in China and oversea markets may be
inaccurate and you should not place undue reliance on it. We make no representation as to the
accuracy of such facts, forecasts and statistics obtained from various sources. Moreover, these
facts, forecasts and statistics involve risk and uncertainties and are subject to change based on
various factors and should not be unduly relied upon. Further, there can be no assurance that
they are stated or compiled on the same basis or with the same degree of accuracy, as may be
the case in other countries.
Y ou should read the entire prospectus carefully and should not rely on any information
contained in press articles or other media regarding us and the Global Offering.
There had been, prior to the publication of this prospectus, and there may be, after the
date of this prospectus but prior to the completion of the Global Offering, press and media
coverage regarding us and the Global Offering. We have not authorized the disclosure of any
information concerning the Global Offering in the press or media and do not accept
responsibility for the accuracy or completeness of such press articles or other media coverage.
We make no representation as to the appropriateness, accuracy, completeness, or reliability of
any of the projections, valuations or other forward-looking information about us. To the extent
such statements are inconsistent with, or in conflict with, the information contained in this
prospectus, we disclaim responsibility for them. Accordingly, prospective investors are
cautioned to make their decisions on the basis of the information contained in this prospectus
only and should not rely on any other information.
RISK FACTORS
–8 1–


--- page 92 ---
In preparation for the Global Offering, our Company has sought and has been granted the
following waivers from strict compliance with the relevant provisions of the Listing Rules:
W AIVER IN RESPECT OF MANAGEMENT PRESENCE IN HONG KONG
Pursuant to Rules 8.12 and 19A.15 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.
Our headquarter and most of our business operations are based, managed and conducted
in the PRC. As our executive Directors play very important roles in our business operation, it
is in our best interests for them to be based in the places where our Group has significant
operations. We consider it practicably difficult and commercially unreasonable for us to
arrange for two executive Directors to be ordinarily resident in Hong Kong, either by means
of relocation of our executive Directors to Hong Kong or appointment of additional executive
Directors. Therefore, we do not have, and in the foreseeable future will not have, sufficient
management presence in Hong Kong for the purpose of satisfying the requirements under Rules
8.12 and 19A.15 of the Listing Rules.
Accordingly, we have applied to the Hong Kong Stock Exchange for, and the Hong Kong
Stock Exchange has granted us, a waiver from strict compliance with the requirements under
Rules 8.12 and 19A.15 of the Listing Rules, provided that our Company implements the
following arrangements:
(a) We have appointed Ms. Ma Li ( ৵ᘆ) and Ms. Tang Ka Y an (ؚa so u r
authorized representatives pursuant to Rule 3.05 of the Listing Rules. The
authorized representatives will act as our Company’s principal channel of
communication with the Hong Kong Stock Exchange. The authorized
representatives will be readily contactable by phone, facsimile and email to
promptly deal with enquiries from the Hong Kong Stock Exchange, and will also be
available to meet with the Hong Kong Stock Exchange to discuss any matter within
a reasonable period of time upon request of the Hong Kong Stock Exchange;
(b) When the Hong Kong Stock Exchange wishes to contact our Directors on any
matter, each of the authorized representatives will have all necessary means to
contact all of our Directors (including our independent non-executive Directors)
promptly at all times. Our Company will also inform the Hong Kong Stock
Exchange promptly in respect of any changes in the authorized representatives. We
have provided the Hong Kong Stock Exchange with the contact details (i.e., mobile
phone number, office phone number and email address) of all Directors to facilitate
communication with the Hong Kong Stock Exchange;
W AIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES
–8 2–


--- page 93 ---
(c) All Directors who do not ordinarily reside in Hong Kong possess or can apply for
valid travel documents to visit Hong Kong and can meet with the Hong Kong Stock
Exchange within a reasonable period upon the request of the Hong Kong Stock
Exchange;
(d) We have appointed Somerley Capital Limited as our compliance adviser upon listing
pursuant to Rule 3A.19 of the Listing Rules for a period commencing on the Listing
Date and ending on 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 commencing
after the Listing Date. Our compliance adviser will have access at all times to our
authorized representatives, our Directors and our senior management as prescribed
by Rule 3A.23 of the Listing Rules, who will act as the additional channel of
communication with the Hong Kong Stock Exchange when the authorized
representatives are not available; and
(e) Meetings between the Hong Kong Stock Exchange and our Directors can be
arranged through our authorized representatives or our compliance adviser, or
directly with our Directors within a reasonable time frame.
W AIVER IN RESPECT OF APPOINTMENT OF JOINT COMPANY SECRETARY
Pursuant to Rules 3.28 and 8.17 of the Listing Rules, we must appoint a company
secretary who, by virtue of his/her academic or professional qualifications or relevant
experience, is, in the opinion of the Hong Kong Stock Exchange, capable of discharging the
functions of the company secretary. Note 1 to Rule 3.28 of the Listing Rules provides that the
Hong Kong Stock Exchange considers the following academic or professional qualifications to
be acceptable:
(a) a member of The Hong Kong Chartered Governance Institute;
(b) a solicitor or barrister as defined in the Legal Practitioners Ordinance (Chapter 159
of the Laws of Hong Kong); and
(c) a certified public accountant as defined in the Professional Accountants Ordinance
(Chapter 50 of the Laws of Hong Kong).
Note 2 to Rule 3.28 of the Listing Rules further provides that the Hong Kong Stock
Exchange considers the following factors in assessing the “relevant experience” of the
individual:
(a) length of employment with the issuer and other issuers and the roles he/she played;
(b) familiarity with the Listing Rules and other relevant laws and regulations including
the SFO, the Companies Ordinance, the Companies (Winding Up and Miscellaneous
Provisions) Ordinance and the Takeovers Code;
W AIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES
–8 3–


--- page 94 ---
(c) relevant training taken and/or to be taken in addition to the minimum requirement
under Rule 3.29 of the Listing Rules; and
(d) professional qualifications in other jurisdictions.
Pursuant to HKEX-GL108-20, the Stock Exchange will consider a waiver application by
an issuer in relation to Rules 3.28 and 8.17 of the Listing Rules based on the specific facts and
circumstances. Factors that will be considered by the Stock Exchange include:
(a) whether the issuer has principal business activities primarily outside Hong Kong;
(b) whether the issuer was able to demonstrate the need to appoint a person who does
not have the Acceptable Qualification (as defined under HKEX-GL108-20) nor
Relevant Experience (as defined under HKEX-GL108-20) as a company secretary;
and
(c) why the directors consider the individual to be suitable to act as the issuer’s
company secretary.
Further, pursuant to HKEX-GL108-20, such waiver, if granted, will be for a fixed period
of time (the “Waiver Period”) 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 can be revoked if there are material breaches of the Listing Rules by the
issuer.
Our Company has appointed Ms. Ma Li ( ৵ᘆ) (“Ms. Ma”), our executive Director, as one
of our joint company secretaries. She has extensive experience in board and corporate
management matters but presently does not possess any of the qualifications under Rules 3.28
and 8.17 of the Listing Rules, and may not be able to solely fulfill the requirements of the
Listing Rules. Therefore, we have appointed Ms. Tang Ka Y an (ؚMs. Tang”), an
associate of The Hong Kong Chartered Governance Institute and The Chartered Governance
Institute in the United Kingdom, who fully meets the requirements stipulated under Rules 3.28
and 8.17 of the Listing Rules to act as the other joint company secretary and to provide
assistance to Ms. Ma for an initial period of three years from the Listing Date to enable Ms.
Ma to acquire the “relevant experience” under Note 2 to Rule 3.28 of the Listing Rules so as
to fully comply with the requirements set forth under Rules 3.28 and 8.17 of the Listing Rules.
W AIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES
–8 4–


--- page 95 ---
Given Ms. Tang’s professional qualifications and experience, she will be able to explain
to both Ms. Ma and us the relevant requirements under the Listing Rules and other applicable
Hong Kong laws and regulations. Ms. Tang will also assist Ms. Ma in organizing Board
meetings and Shareholders’ meetings of our Company as well as other matters of our Company
which are incidental to the duties of a company secretary. Ms. Tang is expected to work closely
with Ms. Ma and will maintain regular contact with Ms. Ma. In addition, Ms. Ma will comply
with the annual professional training requirement under Rule 3.29 of the Listing Rules to
enhance her knowledge of the Listing Rules during the three-year period from the Listing Date.
She will also be assisted by our compliance adviser and our legal advisers as to Hong Kong
laws on matters in relation to our ongoing compliance with the Listing Rules and the applicable
laws and regulations.
Since Ms. Ma does not possess the formal qualifications required of a company secretary
under Rule 3.28 of the Listing Rules, we have applied to the Hong Kong Stock Exchange for,
and the Hong Kong Stock Exchange has granted, a waiver from strict compliance with the
requirements under Rules 3.28 and 8.17 of the Listing Rules such that Ms. Ma may be
appointed as a joint company secretary of our Company. The waiver is valid for an initial
period of three years from the Listing Date on the conditions that (a) Ms. Ma must be assisted
by Ms. Tang who possesses the qualifications and experience required under Rule 3.28 of the
Listing Rules; and (b) the waiver will be revoked immediately if and when Ms. Tang ceases to
provide assistance to Ms. Ma as a joint company secretary or if there are material breaches of
the Listing Rules by our Company.
Before the expiration of the initial three-year period, the qualifications of Ms. Ma will be
re-evaluated to determine whether the requirements as stipulated in Rules 3.28 and 8.17 of the
Listing Rules can be satisfied and whether the need for ongoing assistance will continue. We
will liaise with the Hong Kong Stock Exchange to enable it to assess whether Ms. Ma, having
benefited from the assistance of Ms. Tang for the preceding three years, will have acquired the
skills necessary to carry out the duties of a company secretary and the relevant experience
within the meaning of Note 2 to Rule 3.28 of the Listing Rules so that a further waiver will
not be necessary.
W AIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES
–8 5–


--- page 96 ---
DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS
This prospectus, for which our Directors (including any proposed director who is named
as such in this Prospectus) collectively and individually accept full responsibility, includes
particulars given in compliance with the Companies (Winding Up and Miscellaneous
Provisions) Ordinance, the Securities and Futures (Stock Market Listing) Rules (Cap 571V of
the Laws of Hong Kong) and the Listing Rules for the purpose of giving information to the
public 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.
CSRC FILING
We have submitted a filing to the CSRC to apply for listing of the H Shares (including
H Shares to be converted from Unlisted Shares) on the Stock Exchange and the Global Offering
on May 30, 2023. The CSRC confirmed our completion of filing on August 18, 2023. No other
approvals from the CSRC are required to be obtained for the listing of the H shares on the
Stock Exchange.
THE HONG KONG PUBLIC OFFERING AND THIS PROSPECTUS
This prospectus is published solely in connection with the Hong Kong Public Offering,
which forms part of the Global Offering. The Global Offering comprises the Hong Kong Public
Offering of initially 1,213,600 Offer Shares and the International Offering of initially
10,922,400 Offer Shares (subject to, in each case, reallocation on the basis referred to under
the section headed “Structure of the Global Offering” in this prospectus and, in the case of the
International Offering, to any exercise of the Over-allotment Option).
The listing of our H Shares on the Stock Exchange 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 pursuant to the Hong Kong
Underwriting Agreement, subject to us and the Sole Overall Coordinator (for itself and on
behalf of the Hong Kong Underwriters) agreeing on the Offer Price. The International Offering
is managed by the Sole Overall Coordinator and is expected to be fully underwritten by the
International Underwriters pursuant to the terms of the International Underwriting Agreement
which is expected to be entered into on or about the Price Determination Date. Further
information regarding the Underwriters and the Underwriting Agreements are set out in the
section headed “Underwriting” in this prospectus.
The Offer Shares are offered solely on the basis of the information contained and
representations made in this prospectus and on the terms and subject to the conditions set out
herein and therein. No person is 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
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–8 6–


--- page 97 ---
authorized by our Company, the Sole Sponsor, the Sole Overall Coordinator, the Sole Global
Coordinator, the Joint Bookrunners, the Joint Lead Managers, the CMIs, the Underwriters, any
of their respective directors, officers, employees, advisers, agents or representatives, or any
other persons or parties involved in the Global Offering.
Neither the delivery of this prospectus nor any subscription or acquisition made under it
shall, under any circumstances, create any implication that there has been no change or
development in our affairs since the date of this prospectus or that the information in this
prospectus is correct as of any date subsequent to the date of this prospectus.
STRUCTURE OF THE GLOBAL OFFERING
Details of the structure of the Global Offering (including its conditions) and the
arrangements relating to the Over-allotment Option and stabilization, are set out in the sections
headed “Structure of the Global Offering” and “Underwriting” in this prospectus.
RESTRICTIONS ON OFFER AND SALE OF THE OFFER SHARES
Each person acquiring the Hong Kong Offer Shares under the Hong Kong Public Offering
will be required to, or be deemed by his/her acquisition of Hong Kong Offer Shares to, confirm
that he/she is aware of the restrictions on the offer and sale 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 distribution
of this prospectus in any jurisdiction other than Hong Kong. Accordingly, without limitation
to the following, this prospectus may not be used for the purpose 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 for subscription. 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. In particular, the Offer Shares have not been offered and sold, and will not be
offered and sold, directly or indirectly, in the PRC or the United States.
APPLICATION FOR LISTING OF THE H SHARES ON THE HONG KONG STOCK
EXCHANGE
We have applied to the Hong Kong Stock Exchange for the granting of listing of, and
permission to deal in, our H Shares to be issued pursuant to the Global Offering (including any
H Shares which may be issued pursuant to the exercise of the Over-allotment Option) and the
H Shares to be converted from Unlisted Shares. Our Unlisted Shares may be converted to H
Shares after obtaining the approval of the CSRC or the authorized approval authorities of the
State Council, details of which are set out in the section headed “Share Capital” in this
prospectus.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–8 7–


--- page 98 ---
Dealings in the H Shares on the Hong Kong Stock Exchange are expected to commence
on Friday, November 10, 2023. No part of our Shares or loan capital is listed on or dealt in on
any other stock exchange, and no such listing or permission to list is being or proposed to be
sought as of the Latest Practicable Date.
Under section 44B(1) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, any allotment made in respect of any application will be invalid if the listing of,
and permission to deal in, the H Shares on the Hong Kong Stock Exchange is refused before
the expiration of three weeks from the date of the closing of the application lists, or such longer
period (not exceeding six weeks) as may, within the said three weeks, be notified to our
Company by or on behalf of the Hong Kong Stock Exchange.
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
Hong Kong 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 Hong Kong Stock Exchange or on any other date as determined by HKSCC.
Settlement of transactions between participants of the Hong Kong Stock Exchange is required
to take place in CCASS on the second settlement day after any trading day. All activities under
CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in
effect from time to time.
All necessary arrangements have been made enabling the H Shares to be admitted into
CCASS. Investors should seek the advice of their stockbrokers or other professional advisors
for details of the settlement arrangements as such arrangements may affect their rights and
interests.
REGISTRATION OF SUBSCRIPTION, PURCHASE AND TRANSFER OF H SHARES
We have instructed our H Share Registrar, and our H Share Registrar has agreed, not to
register the subscription, purchase or transfer of any H Shares in the name of any particular
holder unless the holder delivers a signed form to our H Share Registrar in respect of those H
Shares bearing statements to the effect that the holder:
(1) agrees with us and each of our Shareholders, and we agree with each Shareholder,
to observe and comply with the PRC Company Law, the Companies Ordinance, the
Companies (Winding Up and Miscellaneous Provisions) Ordinance and our Articles
of Association;
(2) agrees with us, each of our Shareholders, Directors, Supervisors, managers and
officers, and we, acting for ourselves and for each of our Directors, Supervisors,
managers and officers agree with each Shareholder, to refer all differences, disputes
and claims arising from our Articles of Association or any rights or obligations
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–8 8–


--- page 99 ---
conferred or imposed by the PRC Company Law or other relevant laws and
regulations concerning our affairs to arbitration in accordance with our Articles of
Association, and any reference to arbitration shall be deemed to authorize the
arbitration tribunal to conduct hearings in open session and to publish its award,
which shall be final and conclusive;
(3) agrees with us and each of our Shareholders that our H Shares are freely transferable
by the holders thereof; and
(4) authorizes us to enter into a contract on his or her behalf with each of our Directors,
Supervisors, managers and officers whereby such Directors, Supervisors, managers
and officers undertake to observe and comply with their obligations to our
Shareholders as stipulated in our Articles of Association.
Persons applying for or purchasing H Shares under the Global Offering are deemed, by
their making an application or purchase, to have represented that they are not close associates
(as defined under the Listing Rules) of any of the Directors, Supervisors or any existing
Shareholders of our Company or a nominee of any of the foregoing.
PROCEDURES FOR APPLICATION FOR HONG KONG OFFER SHARES
The procedures for applying for Hong Kong Offer Shares are set out in the section headed
“How to Apply for the Hong Kong Offer Shares” in this prospectus.
H SHARE REGISTER AND STAMP DUTY
All of the Offer Shares will be registered on our H Share register of members to be
maintained by our H Share Registrar, Tricor Investor Services Limited, in Hong Kong. Our
principal register of members will be maintained by us at our headquarter in the PRC.
Dealings in the H Shares registered on the H Share register of members of our Company
in Hong Kong will be subject to Hong Kong stamp duty.
Unless determined otherwise by our Company, dividends payable in respect of our H
Shares will be paid to the Shareholders listed on the H Share register of members of our
Company in Hong Kong, by ordinary post, at the Shareholders’ risk, to the registered address
of each Shareholder of our Company.
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 Joint Bookrunners, the
Joint Lead Managers, the CMIs, the Underwriters, any of their respective directors, officers,
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–8 9–


--- page 100 ---
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
Solely for your convenience, this prospectus contains translations among certain amounts
denominated in Renminbi, Hong Kong dollars and U.S. dollars.
Unless indicated otherwise, (i) the translations between Renminbi and U.S. dollars were
made at the rate of RMB7.1792 to US$1.00, being the PBOC rate prevailing on October 23,
2023, (ii) the translations between Hong Kong dollars and Renminbi were made at the rate of
RMB0.9174 to HK$1.00, being the PBOC rate prevailing on October 23, 2023; and (iii) the
translations between U.S. dollars and Hong Kong dollars were made at the rate of HK$7.8257
to US$1.00.
No representation is made that the amounts denominated in one currency could actually
be converted into the amounts denominated in another currency at the rates indicated or at all.
LANGUAGE
If there is any inconsistency between this prospectus and its Chinese translation, this
prospectus shall prevail. 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 version shall prevail.
ROUNDING
Certain amounts and percentage figures included in this prospectus have been subject to
rounding adjustments. Any discrepancies between totals and sums of amounts listed in any
table, chart or elsewhere in this prospectus are due to rounding.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–9 0–


--- page 101 ---
DIRECTORS
Name Address Nationality
Executive Directors
Mr. Hou Zekuan (ዣᄱ) Room 1102, Unit 1, Building 5
Xinghewan Xingyuan
No. 201 Yingbin Road
Panyu District
Guangzhou City, Guangdong Province
PRC
Chinese
Mr. Hou Zebing (ዣж) Room 1502, Building 3
No. 138 Jinxiu Road
Panyu District
Guangzhou City, Guangdong Province
PRC
Chinese
Mr. Qian Xiaoxuan ( ፺ወ৐) Madian Village Villager Group
Zhandian Village, Leqiao Town
Lujiang County
Anhui Province
PRC
Chinese
Ms. Ma Li ( ৵ᘆ) Room 1006, 1/F, Building 2
Tianfeng Third District
No. 147 Xingya Third Road
Panyu District
Guangzhou City, Guangdong Province
PRC
Chinese
Non-executive Directors
Mr. Zhu Yingchun (݆ڎRoom 301, No. 39
Lane 131, Lanping Road
Minhang District
Shanghai City
PRC
Chinese
Mr. Shu Xiaowu (؛Room 1704
No. 138, Taojin Dong Road
Dongshan District
Guangzhou City, Guangdong Province
PRC
Chinese
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–9 1–


--- page 102 ---
Independent Non-executive Directors
Mr. Chiang Edward ( ᇸ၅༐) Room 406, 4/F, Block E
Luk Y eung Sun Chuen
No. 22, Wai Tsuen Road
Tsuen Wan, New Territories
Hong Kong
Chinese
Dr. Fan Xia ( ᅾᒳ) No. 381, Wushan Road
Tianhe District
Guangzhou City, Guangdong Province
PRC
Chinese
Mr. Wang Chuanbang ( ˮෂԞ) Room 101, Building 40
No. 9, Qingshuiting East Road
Moling Street, Jiangning District
Nanjing City, Jiangsu Province
PRC
Chinese
SUPERVISORS
Ms. Li Xiaolan ( ҽʃᚆ) No. 304, Tower 1, Building 6, Phase 1
No. 498, Y ayun Avenue
Panyu District
Guangzhou City, Guangdong Province
PRC
Chinese
Mr. Zhang Xiaolong ( ੵʃᎲ) Room 601, No. 35, Lane 2875
Xiuyan Road, Kangqiao Town
Pudong New Area
Shanghai City
PRC
Chinese
Mr. He Xiaocheng ( ൭ʃϓ) Group 1, Nongke Village
Dashi Township
Leiyang City, Hunan Province
PRC
Chinese
For details with respect to our Directors and Supervisors, please see the section headed
“Directors, Supervisors and Senior Management” in this prospectus.
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–9 2–


--- page 103 ---
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
Sole Sponsor-Overall Coordinator Haitong International Securities Company
Limited
22/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
Sole Overall Coordinator Haitong International Securities Company
Limited
22/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
Sole Global Coordinator Haitong International Securities Company
Limited
22/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
Joint Bookrunners Haitong International Securities Company
Limited
22/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
GF Securities (Hong Kong) Brokerage
Limited
29-30/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
Huatai Financial Holdings (Hong Kong)
Limited
62/F The Center
99 Queen’s Road Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–9 3–


--- page 104 ---
Joint Lead Managers Haitong International Securities Company
Limited
22/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
GF Securities (Hong Kong) Brokerage
Limited
29-30/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
Huatai Financial Holdings (Hong Kong)
Limited
62/F The Center
99 Queen’s Road Central
Hong Kong
Capital Market Intermediaries Haitong International Securities Company
Limited
22/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
GF Securities (Hong Kong) Brokerage
Limited
29-30/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
Huatai Financial Holdings (Hong Kong)
Limited
62/F The Center
99 Queen’s Road Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–9 4–


--- page 105 ---
Legal Advisers to the Company As to Hong Kong law and U.S. law:
O’Melveny & Myers
31/F, AIA Central
1 Connaught Road Central
Hong Kong
As to PRC law:
Jingtian & Gongcheng
34/F, Tower 3
China Central Place
77 Jianguo Road, Chaoyang District
Beijing
PRC
Zhong Lun Law Firm
22-31/F, South Tower of CP Center
20 Jin He East Avenue
Chaoyang District
Beijing, PRC
As to International Sanctions laws:
DLA Piper Singapore Pte. Ltd.
80 Raffles Place, #48-01 UOB Plaza 1
Singapore 048624
As to PRC litigation laws:
AllBright Law Firm (Shenzhen)
22, 23/F, Tower 1
Excellence Century Center, FuHua 3 Road
Futian District Shenzhen
PRC 518048
Shandong Hanhui Law Firm
5th Floor, Building 11, Financial Square
No. 4899 Dongfeng East Street
High-tech Zone, Weifang City
Shandong Province
PRC
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–9 5–


--- page 106 ---
Legal Advisers to the Sole Sponsor
and Underwriters
As to Hong Kong law:
Norton Rose Fulbright Hong Kong
38/F, Jardine House
1 Connaught Place
Central
Hong Kong
As to PRC law:
King & Wood Mallesons
25/F, Guangzhou CTF Finance Centre
No. 6 Zhujiang East Road
Zhujiang New Town
Tianhe District
Guangzhou City,
Guangdong Province
PRC
Auditors and Reporting Accountants Ernst & Y oung
Certified Public Accountants
Registered Public Interest Entity Auditor
27/F, One Taikoo Place
979 King’s Road
Quarry Bay
Hong Kong
Industry Consultant China Insights Industry Consultancy
Limited
10/F, Block B, Jing’an International Center
88 Puji Road, Jing’an District
Shanghai
PRC
Receiving Banks CMB Wing Lung Bank Limited
45 Des V oeux Road Central
Hong Kong
China Construction Bank (Asia)
Corporation Limited
26/F, China Construction Bank Building
3 Connaught Road Central
Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–9 6–


--- page 107 ---
Registered Office No. 999, Y ayun Avenue
Shiqi Town, Panyu District
Guangzhou City, Guangdong Province
PRC
Headquarter and Principal Place of
Business in the PRC
No. 999, Y ayun Avenue
Shiqi Town, Panyu District
Guangzhou City, Guangdong Province
PRC
Principal Place of Business in Hong Kong 5/F, Manulife Place
348 Kwun Tong Road
Kowloon, Hong Kong
Company Website www.fls123.com
(Information contained on this website does
not form part of this prospectus)
Joint Company Secretaries Ms. Ma Li ( ৵ᘆ)
Room 1006, 1/F, Building 2
Tianfeng Third District
No. 147, Xingya Third Road
Panyu District
Guangzhou City, Guangdong Province
PRC
Ms. Tang Ka Y an (ؚ)
Chartered Secretary, Chartered Governance
Professional, Associate of both The Hong
Kong Chartered Governance Institute and
The Chartered Governance Institute in
the United Kingdom)
5/F, Manulife Place
348 Kwun Tong Road
Kowloon, Hong Kong
Authorized Representatives Ms. Ma Li ( ৵ᘆ)
Room 1006, 1/F, Building 2
Tianfeng Third District
No. 147, Xingya Third Road
Panyu District
Guangzhou City, Guangdong Province
PRC
CORPORATE INFORMATION
–9 7–


--- page 108 ---
Ms. Tang Ka Y an (ؚ)
5/F, Manulife Place
348 Kwun Tong Road
Kowloon, Hong Kong
Audit Committee Mr. Wang Chuanbang ( ˮෂԞ) (Chairman)
Dr. Fan Xia ( ᅾᒳ)
Mr. Zhu Yingchun (݆ڎ)
Remuneration Committee Dr. Fan Xia ( ᅾᒳ) (Chairman)
Mr. Wang Chuanbang ( ˮෂԞ)
Mr. Hou Zebing (ዣж)
Nomination Committee Mr. Hou Zekuan (ዣᄱ) (Chairman)
Dr. Fan Xia ( ᅾᒳ)
Mr. Chiang Edward ( ᇸ၅༐)
Strategy Committee Mr. Hou Zekuan (ዣᄱ) (Chairman)
Mr. Hou Zebing (ዣж)
Mr. Zhu Yingchun (݆ڎ)
Mr. Chiang Edward ( ᇸ၅༐)
Mr. Shu Xiaowu (؛)
Compliance Adviser Somerley Capital Limited
20th Floor, China Building
29 Queen’s Road Central
Hong Kong
H Share Registrar Tricor Investor Services Limited
17/F, Far East Finance Centre
16 Harcourt Road
Hong Kong
Principal Banker Industrial and Commercial Bank of China
Panyu Energy Conservation Technology
Park Sub-branch
Room 101, Area 1, Building 1
Panshan Entrepreneurship Center
North Panyu Avenue
Guangzhou City, Guangdong Province
PRC
CORPORATE INFORMATION
–9 8–


--- page 109 ---
Certain information and statistics set out in this section and elsewhere in this
prospectus are derived from various official government and other publicly available
sources, and from the market research report prepared by CIC, an independent industry
consultant which was commissioned by us (the “CIC Report”). No independent
verification has been carried out on the information from official government sources by
us, the Sole Sponsor , the Sole Overall Coordinator , the Sole Global Coordinator , the Joint
Bookrunners, the Joint Lead Managers, the CMIs, the Underwriters or any other parties
(other than CIC) involved in the Global Offering or their respective directors, officers,
employees, advisers, or agents, and no representation is given as to the accuracy. Unless
and except for otherwise specified, the market and industry information and data
presented in this “Industry Overview” section is derived from the CIC Report.
SOURCE OF INFORMATION
The contract sum to CIC is RMB550,000 for the preparation and use of the CIC Report,
and we believe that such fees are consistent with the market rate. CIC offers industry research
and market strategies and provides growth consulting and corporate training. In compiling and
preparing the CIC Report, CIC has adopted the following assumptions: (i) Chinese social,
economic and political environment is likely to remain stable in the forecast period; (ii) the
Chinese government policies on China’s intralogistics equipment solution market and China’s
intralogistics equipment and parts sales market will remain unchanged in all material respects
during the forecast period; (iii) related industry key drivers are likely to drive the markets in
the forecast period. CIC has conducted detailed primary research which involved discussing
the status of the industry with leading industry participants and key industry experts, as well
as secondary research which involved reviewing company reports, independent research
reports and data based on its own research database. CIC has obtained the figures for the
projected total market size from historical data analysis plotted against macroeconomic data as
well as specific related industry drivers. Our Directors confirm that, to the best of their
knowledge, after taking reasonable care, there is no adverse change in the market information
since the date of the CIC Report that may qualify, contradict or have a material impact on the
information disclosed in this section.
INTRALOGISTICS EQUIPMENT SOLUTION MARKET IN CHINA
Overview
Intralogistics equipment is an industrial machinery used to replace intensive labor in
mechanical work, such as carrying, moving, sorting, and stacking of cargo and heavy loads, in
manufacturing plants, logistics parks, warehouses, airports, ports, and other similar worksites.
There are various types of intralogistics equipment, including but not limited to, forklifts,
stackers, sorters and conveyors, among which, forklifts are the most widely used. A forklift is
a type of powered equipment with a fork platform in the front that can be used for lifting,
INDUSTRY OVERVIEW
–9 9–


--- page 110 ---
moving or stacking heavy objects over short distances. Forklifts are highly standardized and
can be deployed flexibly, as they have low requirements in terms of the type of goods to be
carried and the space available at the operating site, and have been widely used in various
scenarios.
Since the 21st century, the manufacturing and logistics industries in China have
experienced rapid growth, resulting in an increased demand for intralogistics equipment from
manufacturing and logistics companies. However, the manufacturing and logistics companies
face challenges rooted in the traditional intralogistics equipment procurement mode. The pain
points faced by enterprises under the traditional intralogistics equipment procurement mode
mainly include the following:
(i) huge upfront payments for procuring intralogistics equipment, which create a
significant financial burden for enterprises;
(ii) high equipment maintenance and repair costs due to the lack of structured equipment
management and monitoring which shall be supported by a professional technician
team;
(iii) lack of a flexible equipment fleet with diversified categories to meet the changing
development needs of enterprises; and
(iv) difficulties in meeting the usually high intralogistics equipment demand during peak
seasons, such as periods around 618 Shopping Festival, Double 11 Shopping
Festival.
As Chinese enterprises increasingly emphasize cost control and operational efficiency,
intralogistics equipment solutions have been introduced to address the above pain points of the
traditional intralogistics equipment procurement mode. Intralogistics equipment solutions,
with intralogistics equipment subscription services as the core business segment, also include
repair and maintenance services, management optimization services and disposal services for
manufacturing and logistics enterprises and other intralogistics equipment users. The diagram
below illustrates the main activities involved in the full lifecycle of intralogistics equipment
management:
Maintenance and Repair
• No extra maintenance and repair cost:
Identify failure types and offer free repair and
maintenance services as part of intralogistics
equipment solutions
• Efficient service: Provide predictive maintenance
and repair, which can significantly improve the
maintenance efficiency, reduce costs and
extend the useful life of equipment
Equipment Subscription
• Asset-light: Eliminate the need for customers
to bear the one-off procurement costs of
intralogistics equipment, easing their
financial burden
• Flexible deployment: Enable customers
to scale their deployments at any time
based on their actual equipment usage demands
Disposal
• Diversified treatment methods: Provide
various treatment methods such as
deep repair, disassembly and sales of
used equipment depending on the condition
of the equipment
Management Optimization
• Reduce breakdowns: Monitor the operating and
maintenance status of equipment to reduce
equipment damage
• Enhance efficiency: Improve operational
efficiency and optimize equipment utilization
Lifecycle
Management
INDUSTRY OVERVIEW
– 100 –


--- page 111 ---
Leveraging the comprehensive service coverage, intralogistics equipment solution
providers can create synergies across different service segments. They can often offer a broad
portfolio of models that can meet the diverse needs of enterprises to deploy equipment in
various scenarios, while eliminating the needs to bear the one-off procurement costs of
equipment. Furthermore, intralogistics equipment solution providers can reduce equipment
damage and enhance efficiency through management optimization, and by providing
maintenance and repair services to enterprises, they can accumulate a large number of customer
resources and further enable the mutual conversion of customers under different services. In
addition, intralogistics equipment solution providers can make the best use of equipment
through disposal services, which includes equipment refurbishment, parts disassembly and
sales of the used equipment according to the condition of the equipment. Being able to
significantly improve equipment utilization rate, operational efficiency, and overall cost-
effectiveness for enterprises, intralogistics equipment solutions have now become a recent
trend for intralogistics equipment management.
Market Size of the Intralogistics Equipment Solution Market in China
According to CIC, the intralogistics equipment solution market in China is still in the
early-stage development. Compared with developed countries and regions, such as the United
States, the penetration rate of intralogistics equipment solutions in China is relatively low. The
estimated penetration rate of intralogistics equipment solutions in the United States reached
54.6% in 2022, while the penetration rate of intralogistics equipment solutions in China was
approximately 3.5% in 2018 and approximately 3.7% in 2022, indicating huge growth potential
for the intralogistics equipment solution market in China. The penetration rate of intralogistics
equipment solutions in China is expected to increase to 5.9% in 2027.
The intralogistics equipment solution market in China has experienced rapid growth over
the past five years. The total market size increased from RMB6.9 billion in 2018 to RMB11.4
billion in 2022, at a CAGR of 13.6%. The intralogistics equipment solution market in China
is expected to further increase to RMB34.9 billion in 2027 at a CAGR of 25.0% from 2022 to
2027 driven by the development of manufacturing and logistics industries and the increasing
demands for cost reduction and efficiency improvement. China’s logistics and manufacturing
industries have developed rapidly and will continue to grow in the future. China’s
manufacturing industry added value and the total cost of social logistics are expected to
increase to RMB47.4 trillion and RMB22.9 trillion by 2027, from RMB33.4 trillion and
RMB17.8 trillion in 2022, with a CAGR of 7.2% and 5.2%, respectively. The development of
manufacturing and logistics industries has created a strong demand for intralogistics
equipment, which further boosts the growth of the intralogistics equipment solution market.
Meanwhile, enterprises are paying more attention to cost reduction and cutting down one-time
purchase expenditures, as well as improving utilization rate and operational efficiency during
the course of business development. As intralogistics equipment solutions effectively help with
cost reduction regarding intralogistics equipment utilization and efficiency improvement in
intralogistics equipment management, they are expected be more widely adopted by
enterprises. According to CIC, intralogistics equipment solutions can help enterprises reduce
operating costs by approximately 20% throughout the equipment’s lifecycle compared to
traditional intralogistics equipment procurement mode.
INDUSTRY OVERVIEW
– 101 –


--- page 112 ---
The following chart illustrates the market size of the intralogistics equipment solutions in
China in terms of revenue by service categories:
Market size of China’s intralogistics equipment solutions, 2018-2027E
2022 2026E2021202020192018 2025E 2024E2023E 2027E
RMB Billion
Subscription Services
Maintenance and Repair Services(1)
Disposal Services(1)
Total 13.6%
13.5%
12.3%
19.2%
2018-2022
25.0%
26.9%
17.2%
28.4%
Management Optimization Services 83.1% 167.7%
2022-2027E
CAGR
0.9 1.2 1.5 2.0 2.6 3.32.2 2.6 2.9 3.2 3.8 4.5 5.3 6.2 7.0
0.5 0.6 0.7 0.8 0.0 0.0 0.0 0.1 0.2 0.5
4.4 5.1 6.0 6.9 7.3 9.1
11.3
15.2
19.5
24.1
6.9
0.0
7.9 9.3 10.7 11.4
14.1
17.3
22.5
28.2
34.9
0.0 0.0 0.02.0
Source: CIC report
Notes:
(1) The market sizes of maintenance and repair services and disposal services only reflect revenue generated from
maintenance and repair services and sales of used intralogistics equipment by the market players in
intralogistics equipment solution market.
Intralogistics Equipment Subscription Services
Intralogistics equipment subscription services enable customers to subscribe a broad
portfolio of intralogistics equipment based on their actual requirements for intralogistics
equipment. Driven by the growing demand for improving operational efficiency and overall
cost-effectiveness, the intralogistics equipment subscription services market has grown rapidly
in recent years. According to the CIC, the market size of intralogistics equipment subscription
services in China increased from RMB4.4 billion in 2018 to RMB7.3 billion in 2022, at a
CAGR of 13.5%, and is expected to maintain strong growth momentum. By 2027, the market
size is expected to reach RMB24.1 billion, at a CAGR of 26.9% from 2022 to 2027.
INDUSTRY OVERVIEW
– 102 –


--- page 113 ---
Maintenance and Repair Services
Maintenance and repair services mainly target the equipment that is still in its useful life.
Intralogistics equipment solution providers offer professional maintenance and repair services
to ensure the smooth operation of equipment and to extend its useful life. Maintenance and
repair services mainly cover equipment inspections, general maintenance and accident repairs,
which can meet the various maintenance and repair demands of equipment users. By adopting
intralogistics equipment solutions, the equipment users no longer need to allocate professional
personnel for maintenance and repair or to store spare parts, and can reduce relevant costs. As
intralogistics equipment solution providers gradually extend their capability to provide
maintenance and repair services to customers, the maintenance and repair services market in
China is expected to further grow from RMB3.2 billion in 2022 to RMB7.0 billion in 2027, at
a CAGR of 17.2% during the forecast period.
Disposal Services
Unlike maintenance and repair services, which focus on equipment that still in use,
disposal services targets old, idle equipment. Disposal services include refurbishment of
intralogistics equipment, parts disassembly and sales of used equipment. Through disposal
services, intralogistics equipment solution providers can either restore the old equipment back
to working condition by the refurbishing intralogistics equipment, or dispose of the used
equipment by disassembling and selling of the equipment, thus maximizing the value of
intralogistics equipment. Encouraged by policies and incentives to promote the environmental
protection in enterprises introduced by the PRC government in recent years, the market size of
disposal services in China increased from RMB0.5 billion in 2018 to RMB0.9 billion in 2022,
at a CAGR of 19.2%, and is expected to increase further to RMB3.3 billion in 2027, at a CAGR
of 28.4%.
Management Optimization Services
Management optimization services mainly include the monitoring and managing the
usage and operation of intralogistics equipment. Intralogistics equipment solution providers
mainly rely on intelligent IoT devices, wearable devices and other hardware devices to
accurately monitor the operation and maintenance status of equipment in real time, along with
digital equipment lifecycle management and other software platforms to track and analyze
equipment information, thereby improving the operational efficiency. Currently, the market
size of management optimization services is minimal, with a revenue of less than RMB0.01
billion in 2022. However, the management optimization services market has great potential.
With the growth of the business scale and fleet size, logistics and manufacturing companies
face more difficulties and labor costs in managing equipment. In order to better improve the
operational efficiency, a growing number of logistics and manufacturing companies will need
real-time monitoring of equipment operation and maintenance status. As technologies such as
IoT, big data, and AI become increasingly sophisticated, more intralogistics equipment solution
providers are expected to leverage their technical capabilities to provide management
optimization services to logistics and manufacturing companies to further reduce equipment
damage and improve operational efficiency. The market size of management optimization
services is expected to reach RMB0.5 billion in 2027, with a CAGR of 167.7% from 2022 to
2027. During the Track Record Period, as part of the intralogistics equipment subscription
services, the Company provided management optimization services to its customers, such as
monitoring and management of the subscribed intralogistics equipment’s operation, without
extra charges in addition to intralogistics equipment subscription fees.
INDUSTRY OVERVIEW
– 103 –


--- page 114 ---
Key Growth Drivers for the Intralogistics Equipment Solution Market in China
 Development of manufacturing and logistics industries. China’s logistics and
manufacturing industries have developed rapidly and will continue to grow in the future.
The development of manufacturing and logistics industries has generated a strong demand
for intralogistics equipment, which further boosts the growth of the intralogistics
equipment solution market.
 Increasing demands for cost reduction and efficiency improvement. Enterprises are paying
more attention to cost reduction and cutting down one-time purchase expenditures, as
well as improving utilization rate and operational efficiency during the course of business
development. As intralogistics equipment solutions effectively help with cost reduction
regarding intralogistics equipment utilization and efficiency improvement in
intralogistics equipment management, they are expected be more widely adopted by
enterprises.
 Empowerment of technologies. Information technology has become an indispensable tool
to optimize equipment management. Technologies such as IoT and big data enable the
digital management of complex data generated from operation, dispatch, and maintenance
and repair of a huge amount of equipment. Intralogistics equipment solution providers can
further analyze the data collected and enhance their service quality and efficiency, and
therefore, the development of the intralogistics equipment solution market is further
promoted.
 Favorable policies. In recent years, the government has launched a series of policies
including Made in China 2025 ( ʕ਷Ⴁி2025 ), the 14th Five-Y ear Plan ( “ɤ̬ʞ”
஝ྌ) and the Implementation Plan for Promoting the Deep Integration and Innovative
Development of the Logistics Industry (˙
) to promote the integration of technology and the digitalization of manufacturing
and logistics industries. The implementation of these policies will facilitate the adoption
of efficient, cost-saving and environmentally-friendly management of intralogistics
equipment, which will in turn stimulate the demand for intralogistics equipment
solutions.
Competitive Landscape of the Intralogistics Equipment Solution Market in China
According to the CIC, in 2022, the top five market players in the intralogistics equipment
solution market in China accounted for approximately 18.2% of the total market share in terms
of revenue. There are a large number of small and medium-scale intralogistics equipment
solution providers in the market, each of which provides services with less than 100 units of
intralogistics equipment for subscription.
INDUSTRY OVERVIEW
– 104 –


--- page 115 ---
We are the largest provider of intralogistics equipment solutions in China in terms of
revenue in 2022, accounting for 7.7% of the total revenue in the market. In addition, we also
ranked first among all intralogistics equipment solution providers in terms of equipment fleet
size in 2022. Our equipment fleet size in 2022 was larger than the aggregation of fleet sizes
of all other market players among top ten market players in the same year. According to CIC,
under the effect of economies of scale and technology empowerment, the advantages of leading
suppliers will be amplified, and the market concentration is expected to be further improved.
The following table illustrates the market shares of the top five market players in China in
terms of revenue in 2022:
Ranking Name
Intralogistics
Equipment
Solution Business
Revenue
(1), 2022
Market
Share (2), 2022
Equipment
Fleet Size,
2022
RMB billion ’000
1 Company 0.9 7.7% 39
2 Company A (3) 0.5 4.7% ~10
3 Company B (4) 0.4 3.1% ~8
4 Company C (5) 0.2 1.7% ~7
5 Company D (6) 0.1 0.9% ~3
Source: CIC report
Notes:
(1) The revenue of intralogistics equipment solutions includes the revenue generated from intralogistics
equipment subscription services, maintenance and repair services and disposal services.
(2) The market shares are estimated based on each company’s revenue generated from intralogistics
equipment solution and the market size of intralogistics equipment solutions in China in the
corresponding year.
(3) Company A, an unlisted company established in 1993 with its headquarter in Fujian, is a subsidiary of
a global intralogistics equipment manufacturer listed in Germany.
(4) Company B, an unlisted company established in 2016 with its headquarter in Shanghai, is a joint venture
between a public intralogistics equipment manufacturer listed in China and a public intralogistics
equipment manufacturer listed in Germany.
(5) Company C, a company established in 2000 with its headquarter in Zhejiang, is a intralogistics
equipment manufacturer listed in China.
(6) Company D, an unlisted company established in 2006 with its headquarter in Jiangsu, is an intralogistics
equipment solution provider.
INDUSTRY OVERVIEW
– 105 –


--- page 116 ---
Entry Barriers
 Abundant supply chain resources . Intralogistics equipment solution providers should be
able to build deep collaborative relationships with, and gain strategical support from
upstream suppliers to ensure a stable supply of high-quality intralogistics equipment and
parts at favorable costs to meet the diverse needs of customers in terms of intralogistics
equipment management. New market participants may not have sufficient supply chain
resources, and therefore, may have difficulties in gaining competitive advantage or enter
the industry in the short term.
 Innovative digital capabilities . It is crucial for intralogistics equipment solution providers
to possess digital capabilities to achieve dynamic and transparent management of
intralogistics equipment to further streamline their internal management and improve
operational efficiency. New entrants without such capabilities and techniques may face
greater challenges when entering the market.
 Broad service network . When customers request for services of intralogistics equipment
solutions, the providers must respond promptly to address customers’ demand, which
requires a broad service network covering numerous cities in China, as well as a
well-trained management team with industry know-how and operational experience. Such
requirements form a high entry barrier for new market participants that are not equipped
with a broad service network and a well-trained management team.
Threats and Challenges
The major threats and challenges posed to the intralogistics equipment solutions market
in China include the following aspects:
(i) The slowdown of economic growth in China may adversely affect the
manufacturing, logistics and e-commerce industries, which in turn may reduce the
demand for intralogistics equipment solutions;
(ii) The low penetration rate of intralogistics equipment solutions in China indicates that
the solution providers need to invest more time to increase the market acceptance of
intralogistics equipment solutions among enterprise customers;
(iii) It may be difficult for solution providers to obtain sustainable, stable, sufficient and
low-cost financing resources.
INDUSTRY OVERVIEW
– 106 –


--- page 117 ---
Cost Structure of the Intralogistics Equipment Solution Market
The cost of intralogistics equipment solution mainly consists of the cost of intralogistics
equipment procurement and labor cost. Specifically, with respect to the intralogistics
equipment procurement cost, China’s producer price index (PPI) of industrial equipment for
general use is relatively stable, fluctuating around PPI 100 over the past decade, and is
expected to remain at this level in the years ahead. In recent years, the cost of intralogistics
equipment has risen as a result of the increased adoption of new energy equipment, the price
of which is usually slightly higher than the price of traditional energy equipment. In addition,
the price of lithium battery raw materials has fluctuated due to the surge in demand for lithium
batteries in the automobile and other industries, which has also affected the equipment
procurement cost. Regarding the labor cost, the average annual salary in the subscription and
business services industry has risen from RMB81,393 in 2017 to RMB102,537 in 2021, and is
expected to reach RMB137,409 in 2027. In the future, as upstream production capacity
expands, the cost of intralogistics equipment is expected to decline. The intralogistics
equipment procurement cost has increased from RMB76,300 in 2018 to RMB87,000 in 2022,
but is expected to decrease to RMB76,600 in 2027. The following chart illustrates the historical
and forecasted intralogistics equipment procurement costs.
Intralogistics Equipment Procurement Costs, 2018-2027E
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
76.3 78.0 78.8
83.3
87.0 84.8 82.7 80.6 78.6 76.6
RMB thousand
Source: CIC report
Note:
/H11569The above intralogistics equipment procurement costs are calculated or estimated based on the price
of counterbalanced forklifts, including ICE-powered counterbalanced forklifts and electric
counterbalanced forklifts.
Future Trends of the Intralogistics Equipment Solution Market in China
 Continuous increase in market concentration . The intralogistics equipment solution
market in China is still in the early stage of development, with a significant market share
occupied by a large number of small- and medium-scale players. In the future, the market
players with low equipment amount, limited customer resources and weak service
INDUSTRY OVERVIEW
– 107 –


--- page 118 ---
capabilities will not be able to compete with leading players in the market that can
provide a broad portfolio of equipment and comprehensive services covering the full
lifecycle of equipment management. As a result, the leading intralogistics equipment
solution providers will gain larger market shares and the market will further consolidate.
 Growing penetration rate . The penetration rate of the intralogistics equipment solution
market in China is relatively low as compared to those of the developed countries.
According to CIC, the estimated penetration rate of intralogistics equipment solutions in
the United States reached 54.6% in 2022, while the penetration rate of intralogistics
equipment solutions in China was approximately 3.7% in the same year. As Chinese
enterprises increasingly emphasize cost control and operational efficiency, intralogistics
equipment solutions have now become a recent trend for intralogistics equipment
management, and the market penetration rate is expected to further increase in the future.
 Diversified equipment categories. Enterprises’ needs for various intralogistics equipment
categories will continue to expand in the coming years. In order to meet the changing
needs of enterprises, intralogistics equipment solution providers will build a more flexible
equipment fleet with a more diversified range of equipment categories.
 Broadened service portfolio. As the needs for full cycle management of intralogistics
equipment are increasing, intralogistics equipment solution providers have gradually
begun to provide a broad portfolio of services including intralogistics equipment
subscription services, repair and maintenance services, management optimization
services and disposal services. In the future, driven by higher requirements for
environmental-friendly measures and overall efficiency, the equipment deep repair
business will be further developed to restore the performance and condition of
intralogistics equipment and extend its useful life as much as possible.
 Adoption of environmentally friendly development path. With a series of policies issued
by the PRC government to promote the principles of waste reduction and the recycling of
equipment and materials, intralogistics equipment solution providers are expected to
explore new ways to dispose of equipment, and develop environmentally friendly
businesses such as equipment ecological treatment and battery recycling.
INTRALOGISTICS EQUIPMENT AND PARTS SALES MARKET IN CHINA
According to CIC, many market players in the intralogistics equipment solution market
start with certain main business segments in the market, such as intralogistics equipment
subscription services, or business in related industries, such as sales of intralogistics equipment
and parts. However, along with the increasing demand of downstream enterprises for cost
reduction and efficiency improvement, and considering development of e-commerce platforms
and intensification of market competition in the intralogistics equipment and parts sales
market, these market players are thus gradually evolving into intralogistics equipment solution
providers by expanding their business to include intralogistics equipment subscription services
as well as maintenance and repair services to meet the demands of customers.
INDUSTRY OVERVIEW
– 108 –


--- page 119 ---
Market Size of the Intralogistics Equipment And Parts Sales Market In China
The intralogistics equipment and part sales market includes the sales of new intralogistics
equipment and parts. According to the CIC, the market size of the intralogistics equipment and
parts sales market in China reached RMB154.9 billion in 2022. With the further automation and
intelligence of intralogistics equipment, the demand for intralogistics equipment will further
expand. Driven by the growing domestic demand for intralogistics equipment from various
industries, coupled with the continuous expansion of intralogistics equipment exports, the
intralogistics equipment and parts sales market in China continues to maintain a growth trend,
which is expected to reach RMB321.7 billion in 2027, growing at a CAGR of approximately
15.7% from 2022 to 2027.
Future Trends of the Intralogistics Equipment And Parts Sales Market In China
 Intelligent development. Currently, industrial intelligence has become a key strategy
for the development of manufacturing and logistics industries. With the rapid
development of innovative technologies such as industrial internet, AI, and cloud
computing, intelligent logistics equipment has further been developed and
downstream applications are supported by these technologies to achieve real-time
monitoring, intelligent scheduling, and unmanned operation, thereby further
improving supply chain management efficiency and reducing labour costs.
Therefore, the trend towards intelligence is expected to continue to drive the
development of the intralogistics equipment and parts sales market.
 Domestication of intralogistics equipment and parts. In recent years, leading
domestic manufacturers have accelerated the transformation of research results into
products that can be applicable to various industries. They have gradually achieved
domestication of sensors, power systems, and core components, and steadily
reduced the procurement price and comprehensive delivery costs by building
industrial chain clusters and production bases. In the future, the comprehensive
competitiveness of leading domestic suppliers is expected to be further improved,
and the process of domestication is expected to accelerate.
Competitive Landscape of the Intralogistics Equipment And Parts Sales Market In China
In the intralogistics equipment and parts sales market in China, the sales network is
relatively diversified, including direct sales by intralogistics equipment manufacturers, and
indirect sales by authorized and franchised dealers including intralogistics equipment service
providers, dealers, agents, and e-commerce platforms, etc. Intralogistics equipment
manufacturers typically serve customers with more concentrated orders through direct sales
channels, and meet the relatively dispersed order demand through non-direct sales channels. As
of 2022, approximately 37.1% of the market was sold through non-direct sales channels,
according to the CIC report. The market size of the intralogistics equipment and parts sales
market in China in the non-direct sales channel increased from approximately RMB31.8 billion
in 2018 to RMB57.5 billion in 2022, and is expected to further grow to RMB110.1 billion in
INDUSTRY OVERVIEW
– 109 –


--- page 120 ---
2027. As intralogistics equipment manufacturers usually restrict the geographic coverage of
their authorized dealers, and may restrict them from carrying out equipment from other
manufacturers, the market of non-direct sales channels is highly fragmented, with more than
3,000 market participants scattered across the country. Only a few distributors are able to cover
the market at multiple provincial levels in the non-direct sales channel. According to the CIC
report, in the non-direct sales channels of the intralogistics equipment and parts sales market
in China, we ranked first in terms of sales revenue of intralogistics equipment and parts in
2022. The following table illustrates the market shares of the top five market players in China
in terms of sales revenue in 2022.
Ranking Name
Intralogistics
Equipment and Part
Sales Revenue, 2022
Market
Share
(1), 2022
RMB billion
1 Company 0.3 ~0.2%
2 Company E (2) 0.1 <0.1%
3 Company F (3) <0.1 <0.1%
4 Company G (4) <0.1 <0.1%
5 Company H (5) <0.1 <0.1%
Source: CIC report
Notes:
(1) The market shares are estimated based on each company’s revenue generated from sales of new
intralogistics equipment and parts and the market size of intralogistics equipment and part sales in China
in the corresponding year.
(2) Company E, an unlisted company established in 1993 with its headquarter in Guangdong, is an
intralogistics equipment sales company covering southern China regional markets.
(3) Company F, an unlisted company established in 2003 with its headquarter in Beijing, is an intralogistics
equipment sales company covering the regional markets of Beijing and its surrounding areas.
(4) Company G, an unlisted company established in 2015 with its headquarter in Tianjin, is an intralogistics
equipment and part sales company covering northern China regional markets.
(5) Company H, an unlisted company established in 2001 with its headquarter in Beijing, is an intralogistics
equipment and parts sales company covering northern and central China regional markets.
INDUSTRY OVERVIEW
–1 1 0–


--- page 121 ---
LA WS AND REGULATIONS RELATING TO PROPERTY LEASE
Pursuant to the Civil Code of the PRC (Պ) (the “Civil Code”),
which was approved by the National People’s Congress (the “NPC”) on 28 May 2020 and came
into effect on 1 January 2021, a lease contract is a contract under which the lessor delivers to
the lessee the leased object for the lessee to use or benefit therefrom, and the lessee pays the
rent for the lease; with the consent of the lessor, the lessee may sublease the leased object to
a third party; where the lessee subleases the leased object, the lease contract between the lessee
and the lessor shall continue to be valid, and the lessee shall be liable to the lessor for any
damage caused to the leased object by the third party.
LA WS AND REGULATIONS RELATING TO PRODUCT LIABILITY AND
PROTECTION OF CONSUMERS’ RIGHTS
Pursuant to the Product Quality Law of the PRC () (the
“Product Quality Law”) which was promulgated by the SCNPC on 22 February 1993 and last
amended on 29 December 2018, producers and sellers shall establish a sound internal product
quality control system and strictly adhere to a job responsibility system in relation to quality
standards and quality liabilities together with implementing corresponding examination and
inspection measures. The counterfeiting or imitation of quality marks such as certification
marks, falsifying the place of origin of products, and falsifying or imitating the name or
address of another factory or adulteration of, or mixing of improper elements with products,
passing off the sham as the genuine or passing off the inferior as the superior is prohibited. Any
manufacturer or seller who violates the Product Quality Law may be subject to (1)
administrative penalties including suspension of production or sale, ordered correction of
illegal activities, confiscation of products subject to illegal production or sale, imposition of
fines, confiscation of illegal gains and, in severe cases, revocation of business license, and (2)
criminal liabilities if the illegal activity constitutes crime.
LA WS AND REGULATIONS RELATING TO SPECIAL EQUIPMENT
Pursuant to the Special Equipment Safety Law of the PRC ( ʕശɛ͏΍ձ਷त၇ண௪
) (the “Special Equipment Safety Law”) released by the SCNPC on 29 June 2013 and
taking effect on 1 January 2014, “special equipment” includes boilers, pressure vessels
(including gas cylinders), pressure pipelines, elevators, lifting machinery, passenger ropeways,
large-scale amusement devices, and non-road motor vehicles, which pose a relatively high risk
to personal and property safety, as well as other special equipment as provided for by PRC laws
and administrative regulations, which generally refers to the equipment provided for under the
Special Equipment Catalogue ( त၇ண௪ͦ፽) promulgated by the General Administration
of Quality Supervision, Inspection and Quarantine of PRC on 19 January 2004 with the latest
amendment taking effect on 30 October 2014.
REGULATORY OVERVIEW
– 111 –


--- page 122 ---
Special Equipment Safety Law provides that production of special equipment includes
design, manufacturing, installment, transform and repair of special equipment, and a licensing
system is applied to the production of special equipment under the principle of categorized
supervision and administration in the PRC. Special equipment producers, traders or users, as
well as the primary persons in charge thereof, shall be responsible for the safety of special
equipment produced, marketed or used by them. Special equipment producers, traders and
users shall have special equipment safety management personnel, testing personnel and
operating personnel according to the relevant state provisions, and provide necessary safety
education and skill training for them. Special equipment users shall, before or within 30 days
after putting special equipment to use, register the use with the department responsible for
special equipment safety supervision and administration, obtain a use registration certificate,
and place the registration mark in a conspicuous position of the special equipment.
According to the Special Equipment Safety Law, an entity engaged in repair of special
equipment shall meet the following conditions and be licensed by the department responsible
for special equipment safety supervision and administration: (1) having professional technical
personnel, (2) having equipment, facilities and work places as required by applicable laws and
regulations, and (3) having sound quality assurance, safety management and job responsibility
rules.
With respecting to leasing of special equipment, the Special Equipment Safety Law
provides that special equipment leasing entities may not lease out any special equipment
produced without a permit, any special equipment that has been officially phased out and
scrapped by the state, or any special equipment not maintained according to the requirements
of safety technical specifications or without undergoing inspection or failing to pass
inspection. Special equipment leasing entities shall assume the obligations of managing the use
of and maintaining special equipment during the leasing period, except as otherwise provided
for by law or agreed on by the parties.
The Special Equipment Safety Law also sets out rules regarding inspection and testing of
special equipment conducted by agencies. According to the Special Equipment Safety Law, an
entity engaging in services with respect to inspection or testing of special equipment shall meet
the following conditions and obtain approval from the department responsible for special
equipment safety supervision and administration before conducting inspection or testing work:
(1) having inspection or testing personnel required for the inspection or testing work; (2)
having inspection or testing instruments and equipment required for the inspection or testing
work; and (3) having sound inspection or testing management rules and accountability rules.
The inspection or testing personnel shall obtain the license to conduct inspection or testing
activities.
Pursuant to the Regulations on Safety Supervision of Special Equipment ( त၇ண௪τ
Ό္࿀ૢԷ) promulgated by the State Council on 11 March 2003 with the latest amendment
taking effect on 1 May 2009, an entity producing or using special equipment shall establish a
sound management system and a post-specific responsibility system for safety and energy
conservation of special equipment. An entity producing special equipment shall assume
REGULATORY OVERVIEW
–1 1 2–


--- page 123 ---
responsibility for the safety performance and energy efficiency index of special equipment, and
shall not produce any special equipment that does not conform to the requirements on the
safety performance or energy efficiency index, or any special equipment that is declared
eliminated in the national industrial policies.
Pursuant to the Measures for Special Equipment Safety Supervisory Inspections ( त၇
), which was promulgated by the SAMR on 26 May 2022 and took
effect on 1 July 2022, special equipment safety supervisory inspections shall be classified into
routine supervisory inspections, special supervisory inspections, post-licensing supervisory
inspections and other supervisory inspections. Market regulatory departments shall, based on
annual routine supervisory inspection plans, conduct routine supervisory inspections of special
equipment production and relevant entities. Market regulatory departments shall conduct
post-licensing supervisory inspections regarding whether the special equipment production and
filling entities and inspection and testing institutions that have been licensed by them
continuously meet licensing requirements and engage in licensed activities in accordance with
applicable laws.
Other than the business license, we are not required to possess any other license for
providing special equipment leasing services under the applicable PRC laws and regulations.
However, in addition to the intralogistics equipment subscription services, we also provide
intralogistics equipment inspection and repair services to our customers, for which services, we
shall obtain the Production License of Special Equipment ( त၇ண௪͛ପ஢̙ᗇ) as required
by applicable PRC laws and regulations. As of the Latest Practicable Date, we and our
subsidiary Anhui Folangsi, and Guangzhou Pengze have obtained the Production License of
Special Equipment PRC ( त၇ண௪͛ପ஢̙ᗇ) for purposes of conducting our business with
respect to repair and inspection of special equipment as required by the Special Equipment
Safety Law. See “Business – Certificates, Licenses and Permits” for details.
LA WS AND REGULATIONS RELATING TO PRODUCTION SAFETY
Pursuant to the Production Safety Law of the PRC ()
which was promulgated on 29 June 2002 and amended on 27 August 2009, 31 August 2014 and
10 June 2021, production and operation entities shall abide by the Production Safety Law of
the PRC and other laws and regulations concerning work safety, and redouble their efforts to
ensure work safety by setting up and perfecting the responsibility system for work safety of all
employees and rules and regulations on work safety, increasing the input and guarantee of
funds, materials, technologies, and personnel in terms of work safety, improving the conditions
for work safety, strengthening the development of standards and adoption of information
technologies for work safety, building a dual prevention mechanism of level-to-level safety
risk management and control and hidden danger identification and management, and perfecting
the risk prevention and resolution mechanism, to raise the work safety level and ensure work
safety.
REGULATORY OVERVIEW
–1 1 3–


--- page 124 ---
LA WS AND REGULATIONS RELATING TO IMPORT AND EXPORT OF GOODS
Pursuant to the Foreign Trade Law of the PRC ()
promulgated by the SCNPC on 12 May 1994 and was last amended on 30 December 2022 and
the “Notice by the Department of Enterprise Management and Audit-Based Control of the
General Administration of Customs of Matters Concerning the Recordation of the Consignees
and Consignors of Imported and Exported Goods” (ආ̈ɹ
) promulgated by the General Administration of Customs
of the PRC on 3 January 2023, a consignee or consignor of imported or exported goods who
applies for recordation shall be qualified as a market entity and is not required to be filed as
a foreign trade business operator.
According to the Customs Law of the PRC (), which was
promulgated by the SCNPC on 22 January 1987, and was last amended on 29 April 2021,
unless otherwise stipulated, the declaration of import and export goods may be made by the
consignees or the consignors, or the entrusted customs brokers. To undergo customs declaration
formalities, the consignee or consignor of imported or exported goods and the customs
declaration enterprise shall file with the Customs in accordance with the law.
According to the Provisions on the Recordation of Customs Declaration Entities of the
PRC (), which was promulgated by the
General Administration of Customs on 19 November 2021 and executed on 1 January 2022, the
consignee or consignor of imported or exported goods or a customs declaration enterprise, as
filed with the customs (hereinafter referred to as “a customs declaration entity”) may undergo
customs declaration within the customs territory of the PRC. Where a consignee or consignor
of imported or exported goods or a customs declaration enterprise applies for recordation, it
shall obtain the qualification of market entities.
We and our subsidiary Guangzhou Pengze have obtained the PRC Customs Declaration
Unit Registration Certificate (ࣣfor import and export of goods. See
“Business – Certificates, Licenses and Permits” for details.
LA WS AND REGULATIONS RELATING TO REAL ESTATES
Pursuant to the Land Administration Law of the PRC ()
promulgated by the SCNPC on 25 June 1986 with the latest amendment taking effect on 1
January 2020, the PRC applies a system of control over the purposes of use of land, including
land for agriculture, land for construction and unused land. All units and individuals shall use
land in strict compliance with the purposes of use defined in the overall plans for land
utilization. Registration of the ownership and the right to the use of land shall be governed by
the laws and administrative regulations relating to real estate registration and the legally
registered ownership and right to the use of land shall be protected by law and may not be
infringed upon by any entities or individuals.
REGULATORY OVERVIEW
–1 1 4–


--- page 125 ---
Under the Interim Regulations on Assignment and Transfer of the Rights to the Use of the
State-Owned Urban Land (ᕄ਷ϞɺήԴ͜ᛆ̈ᜫձᔷᜫᅲБૢԷ) promulgated by the
State Council on 19 May 1990 with the latest amendment taking effect on 29 November 2020,
a system of assignment and transfer of the right to use state-owned land was adopted. A land
user shall pay land premiums to the state as consideration for the assignment of the right to use
a land site within a certain term, and the land user who obtained the right to use the land may
transfer, lease out, mortgage, or otherwise commercially exploit the land within the term of
use. Under the Interim Regulations on Assignment and Transfer of the Rights to the Use of the
State-Owned Urban Land, the local land administration authority may enter into an assignment
contract with the land user for the assignment of land use rights. The land user is required to
pay the land premium as provided in the assignment contract. After the full payment of the land
premium, the land user must register with the land administration authority and obtain a land
use rights certificate that evidences the acquisition of land use rights.
The Interim Regulations on Real Estate Registration ( ʔਗପ೮াᅲБૢԷ),
promulgated by the State Council on 24 November 2014 and amended on 24 March 2019, and
the Implementing Rules of the Interim Regulations on Real Estate Registration ( ʔਗପ೮া
) promulgated by the Ministry of Natural Resources of the PRC on
1 January 2016 and amended on 24 July 2019, provide that, among other things, the State
implements a uniform real estate registration system and the registration of real estate shall be
strictly administered and carried out in a stable and continuous manner that provides
convenience for people.
According to the Administrative Measures for Commodity House Leasing (ॡ
), which was promulgated by the Ministry of Housing and Urban-Rural
Development on 1 December 2010 and came into effect on 1 February 2011, the parties to
premise leasing shall, within 30 days after the conclusion of the premise leasing contract,
handle the premise leasing registration and filing formalities at the competent government
authority, failing which the competent authority may order the parties concerned to register and
file the lease in a prescribed period of time, and may impose fines of RMB1,000 or more and
up to RMB10,000.
LA WS AND REGULATIONS RELATING TO ENVIRONMENTAL PROTECTION AND
FIRE CONTROL
Environment Impact Assessment
According to the Environmental Protection Law of the PRC (ᚐ
), promulgated by the SCNPC on 26 December 1989 and amended on 24 April 2014, the
Administrative Regulations on the Environmental Protection of Construction Project (ண
ᚐ၍ଣૢԷ) (the “Construction Environmental Protection Rule”), promulgated
by the State Council on 29 November 1998 and amended on 16 July 2017, and other relevant
environmental laws and regulations, enterprises which plan to construct projects shall provide
the assessment reports, assessment form, or registration form on the environmental impact of
such projects with relevant environmental protection administrative authority for approval or
filing.
REGULATORY OVERVIEW
–1 1 5–


--- page 126 ---
According to the Environmental Impact Assessment Law of the PRC ( ʕശɛ͏΍ձ਷
), promulgated by the SCNPC on 28 October 2002 and amended on 2 July
2016 and 29 December 2018 respectively, 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.
The Construction Environmental Protection Rule also requires that upon completion of
construction for which an environmental impact report or environmental impact statement is
formulated, the constructor shall conduct an acceptance inspection of the environmental
protection facilities pursuant to the standards and procedures stipulated by the environmental
protection administrative authorities of the State Council, formulate the acceptance inspection
report, and announce the acceptance inspection report pursuant to the law except for
circumstances where there is a need to keep confidentiality pursuant to the provisions of the
State. Where the environmental protection facilities have not undergone acceptance inspection
or do not pass acceptance inspection, the construction project shall not be put into production
or use.
Completion and Acceptance
The Interim Measures for Acceptance of Environmental Protection upon Completion of
Construction Projects () (the “Measures”) was
promulgated and implemented by the former Ministry of Environmental Protection (now the
Ministry of Ecology and Environment) on 20 November 2017. The Measures regulates the
procedures and standards for environmental protection independent acceptance by construction
units upon the completion of construction projects.
Water Pollution and Pollutant Discharge
According to the Measures for the Administration of Pollution Discharge Permits (Trial)
(ج(༊Б)) which was promulgated by the Ministry of Ecology and
Environment on 6 November 2017 and amended on 22 August 2019, the MEP shall lawfully
formulate and issue the catalogue of classified management of pollutant discharge licenses for
stationary pollution sources, and define the scope of stationary pollution sources included in
pollutant discharge licensing management and the time limit for the application for pollutant
discharge licenses. Enterprises, public institutions and other production operators (the
“pollutant discharge entities”) included in the catalogue of classified management of pollutant
discharge licenses for stationary pollution sources shall apply for and obtain a pollutant
discharge license as per the prescribed time limit; and, it is temporarily unnecessary for
pollutant discharge entities not included in the catalogue of classified management of pollutant
discharge licences for stationary pollution sources to apply for a pollutant discharge license.
REGULATORY OVERVIEW
–1 1 6–


--- page 127 ---
According to the Catalog of Classified Administration of Pollutant Discharge License for
Stationary Pollution Sources (2019 V ersion) (๕રϮ஢̙ʱᗳ၍ଣΤ፽(2019 ϋ
و)) issued by the Ministry of Ecology and Environment on 20 December 2019, key
management, simplified management and registration management of pollutant discharge
permits are implemented according to factors such as the amount of pollutants generated, the
amount of emissions, the degree of impact on the environment, etc., and only pollutant
discharge entities that implement registration management do not need to apply for a pollutant
discharge permit.
According to the PRC Law on the Prevention and Control of Environment Pollution
Caused by Solid Wastes (), which was
promulgated by the SCNPC on 30 October 1995 with the latest amendment taking effect on 1
September 2020, an entity engaged in the business activities of collecting, storing, utilizing or
treating hazardous wastes shall apply for a permit in accordance with applicable laws and
regulations; It shall be prohibited to provide or entrust hazardous wastes to an entity or any
other producer or trader without a permit to engage in collection, storage, utilization, and
treatment.
Fire Control
The Fire Prevention Law of the PRC () (the “Fire Prevention
Law”) was adopted on 29 April 1998 and most recently amended on 29 April 2021. According
to the Fire Prevention Law and other relevant laws and regulations of the PRC, where the
housing and urban-rural development authority under the State Council requires that an
application for fire protection final inspection of an as-built construction project should be
filed, the construction entity shall file such an application with the housing and urban-rural
development authority. For construction projects other than those specified in the preceding
paragraph, the construction entity shall report for record to the housing and urban-rural
development authority after final inspection, and the housing and urban-rural development
authority shall conduct random inspection.
According to the Interim Provisions on the Administration of Fire Protection Design
Review and Final Inspection of Construction Projects (᜕ϗ၍ଣᅲБ
) (the “Interim Provisions”), issued by the Ministry of Housing and Urban-Rural
Development on 1 April 2020 and effective on 1 June 2020, special construction projects as
defined under such Interim Provisions shall conduct fire protection design review and fire
protection final inspection; construction projects other than such special construction projects
shall file protection design and acceptance of the project with competent authority.
LA WS AND REGULATIONS RELATING TO ADVERTISEMENT
Pursuant to the Advertisement Law of the PRC (), which was
promulgated by the SCNPC on 27 October 1994, and most recently amended and effective from
29 April 2021, advertisements shall not contain false statements or be deceitful or misleading
to consumers.
REGULATORY OVERVIEW
–1 1 7–


--- page 128 ---
Pursuant to the Measures for the Administration of Internet Advertising ( ʝᑌၣᄿѓ၍
) (the “Administration of Internet Advertising”), which was promulgated by the
SAMR on 25 February 2023, and came into force on 1 May 2023, internet advertisements shall
be authentic and lawful. Where any law or administrative regulation prohibits the production
or sale of a product or the provision of a service or prohibits the advertising of a good or
service, no entity or individual may design, produce, serve as an agent for, or publish any
advertisement through the Internet. The Administration of Internet Advertising also provides
that internet advertisement shall be identifiable, enabling consumers to identify it as an
advertisement; for goods or services that appear resulting from paid listing, an advertisement
publisher shall clearly indicate “advertisement” to clearly distinguish them from search engine
optimization.
LA WS AND REGULATIONS RELATING TO ANTI-BRIBERY
According to the Anti-Unfair Competition Law () promulgated by
the SCNPC, as amended and effective as of 23 April 2019, and the Interim Provisions on the
Prohibition of Commercial Bribery () promulgated by
the SAIC on 15 November 1996, any business operator shall not provide or promise to provide
economic benefits (including cash, other property or by other means) to a counter-party in a
transaction or a third party that may be able to influence the transaction, in order to entice such
party to secure a transactional opportunity or a competitive advantages for the business
operator. Any business operator breaching the relevant anti-bribery rules above-mentioned may
be subject to administrative punishment or criminal liability depending on the seriousness of
the cases.
LA WS AND REGULATIONS RELATING TO CYBER SECURITY AND DATA
SECURITY
Regulations Relating to Cyber Security
Internet information in China is regulated and restricted from a national security
standpoint. The SCNPC enacted the Decisions on Maintaining Internet Security (ၪᚐ
) on 28 December 2000 and amended on 27 August 2009, which 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.
On 13 December 2005, the Ministry of Public Security of the PRC (the “MPS”) enacted
the Provisions on Technical Measures of the Cyber Security Protection (ᚐҦ
) (the “Technical Measures of Cyber Security Protection”), effective as of 1
March 2006. The Technical Measures of Cyber Security Protection sets out several technical
measures for the protection of cyber security, including (i) technical measures for preventing
any matter or act that may harm the network security; (ii) measures for backing up any
redundant disaster of key data base or major systematic equipment; (iii) technical measures for
recording and keeping the login and exit time of uses, advocate calls, accounts, internet web
REGULATORY OVERVIEW
–1 1 8–


--- page 129 ---
addresses or domain names and log files of system maintenance; and (iv) any other technical
measures for the protection of internet security as prescribed by other laws, regulations or
rules. According to the Technical Measures of Cyber Security Protection, the providers and
entity uses of internet services shall be responsible for carrying out effective technical
measures for the protection of cyber security and shall guarantee the functioning of the
technical measures for the protection of cyber security.
On 7 November 2016, the SCNPC promulgated the Cyber Security Law of the PRC, or
the Cyber Security Law (), which became effective on 1 June 2017. The Cyber
Security Law requires network operators to comply with laws and regulations and fulfill their
obligations to safeguard security of the network when conducting business and providing
services. The Cyber Security Law further requires network operators to take all necessary
measures in accordance with applicable laws, regulations and compulsory national
requirements to safeguard the safe and stable operation of the networks, respond to cyber
security incidents effectively, prevent illegal and criminal activities, and maintain the integrity,
confidentiality and usability of network data.
According to the Measures for Cybersecurity Review () which was
jointly promulgated by the CAC and other twelve PRC regulatory authorities on 28 December
2021 and effective on 15 February 2022, (i) the purchase of cyber products and services by
critical information infrastructure operators (the “CIIO(s)”) and the network platform operators
(the “Network Platform Operators”) who engage in data processing activities that affect or may
affect national security shall be subject to the cybersecurity review by the Cybersecurity
Review Office, which is responsible for the implementation of cybersecurity review under the
CAC and (ii) the Network Platform Operators possessing personal information data of more
than one million users that seek for listing in a foreign country are obliged to apply for a
cybersecurity review by the Cybersecurity Review Office. Further, the relevant governmental
authorities in the PRC may initiate cybersecurity review if such governmental authorities
determine the cyber products or services, and data processing activities affect or may affect the
national security.
Since as of the date of this prospectus, (i) we only collect and process limited type of data
such as operating data of subscribed intralogistics equipment (such as, location, speed, working
time), and service process of our technicians in the ordinary course of our business and we have
in place a robust data protection policy to ensure our compliance with the applicable laws and
regulations, (ii) we are not the CIIO or the Network Platform Operator under the Measures for
Cybersecurity Review, (iii) we did not hold, control or process more than one million users’
personal information, (iv) we had not been notified by any authority of being classified as a
data processor carrying out data processing activities that affect or may affect national security,
or that our listing affects or may affect national security, and (v) we have never been involved
in any investigations on cybersecurity review by the CAC, nor have we received any regulatory
inquiries, notice, warnings, sanctions or penalties in relation to cybersecurity and data
protections regulations, our Directors are of the view that the Measures for Cybersecurity
Review will not have a material adverse impact on us in material aspects, and the Sole Sponsor
concurs with the Directors’ view based on the reasons above.
REGULATORY OVERVIEW
–1 1 9–


--- page 130 ---
However, we cannot guarantee whether we will be subject to the cybersecurity review in
the future if new rules or regulations promulgated in the future impose additional compliance
requirements on us. Further, the cybersecurity review office could initiate a cybersecurity
review against any entity after completing necessary procedures in accordance with the
Measures for Cybersecurity Review, if the members of the cybersecurity review working
mechanism consider that an entity’s data processing activities affect or may affect national
security. The interpretation and application of the Measures for Cybersecurity Review shall be
determined in accordance with the then applicable laws and regulations in force.
Regulations Relating to Data Security
On 10 June 2021, the SCNPC promulgated the Data Security Law of People’s Republic
of China () (the “PRC Data Security Law”), which became
effective on 1 September 2021. Pursuant to the PRC Data Security Law, data refers to any
record of information in electronic or any other form and data processing, including but is not
limited to, the collection, storage, use, processing, transmission, provision, and public
disclosure of data. Industrial sector, telecommunications, transportation, finance, natural
resources, health, education, science and technology, and other departments shall undertake the
duty to supervise data security in their respective industries and fields. The PRC Data Security
Law stipulates that each organization or individual collecting data shall adopt legal and proper
methods, and shall not steal or obtain data by any illegal methods, and the data processing
activities shall comply with laws and regulations, respect social mores and ethics, comply with
commercial ethics and professional ethics, be honest and trustworthy, perform obligations to
protect data security, and undertake social responsibility; and it shall not endanger national
security, the public interest, or individuals’ and organizations’ lawful rights and interests.
On 8 December 2022, the MIIT published the Data Security Administration Measures in
Industry and Information Technology (Interim) (ج(༊
Б)) (the “Industry and Information Technology Measures”), which took effect on January 1,
2023. The Industry and Information Technology Measures requires that industrial and telecom
data processors shall manage the industrial and telecom data by three levels according to
relevant regulations and shall apply certain administrative rules corresponding to its level
during collecting, storing, using, processing, transferring, providing and publicizing such data.
On 7 July 2022, the Measures for the Security Assessment of Cross-border Data
Transmission () (the “Data Transmission Measures”) was released
by the CAC and became effective on 1 September 2022, which requires that any data processor
providing important data collected and generated during operations within the PRC or personal
information that should be subject to security assessment according to law to an overseas
recipient shall conduct security assessment. The Data Transmission Measures provides five
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 data cross-border transfer. These circumstances include: (i) where the
data to be transferred to an overseas recipient are personal information or important data
collected and generated by operators of critical information infrastructure; (ii) where the data
to be transferred to an overseas recipient contain important data; (iii) where a personal
REGULATORY OVERVIEW
– 120 –


--- page 131 ---
information processor that has processed personal information of more than one million people
provides personal information overseas; (iv) where the personal information of more than
100,000 people or sensitive personal information of more than 10,000 people are transferred
overseas accumulatively; or (v) other circumstances under which security assessment of data
cross-border transfer is required as prescribed by the national cyberspace administration.
On 14 November 2021, the CAC publicly solicited opinions on the Regulations on the
Administration of Cyber Data Security (Draft for Comments) ( ၣഖᅰኽτΌ၍ଣૢԷ(ᅄӋ
จԈᇃ)), or the Draft Data Security Regulations. According to the Draft Data Security
Regulations, data processors shall, in accordance with relevant state provisions, apply for
cybersecurity review if its intended listing in Hong Kong affects or may affect national
security. Furthermore, the Draft Data Security Regulations stipulate that data processors
processing personal information of more than one million users shall be subject to the various
requirements that apply to important data processors.
At present, the Draft Data Security Regulations provide no clear definition of “listed
overseas”. According to mainstream opinions, “listing overseas” does not include “listing in
Hong Kong”. In addition, the Draft Data Security Regulations provides no further explanation
or interpretation for “affects or may affect national security”. It is also possible that there may
be major differences between the officially promulgated regulations and the drafted version.
Since as of the date of this prospectus, (i) we only collect and process limited type of data
such as operating data of subscribed intralogistics equipment (such as, location, speed, working
time), and service process of our technicians in the ordinary course of our business and we have
in place a robust data protection policy to ensure our compliance with the applicable laws and
regulations, (ii) we did not hold, control or process more than one million users’ personal
information, (iii) we had not been notified by any authority of being classified as a data
processor carrying out data processing activities that affect or may affect national security, or
that our listing affects or may affect national security, and (iv) we have never been involved
in any investigations on cybersecurity review by the CAC, nor have we received any regulatory
inquiries, notice, warnings, sanctions or penalties in relation to cybersecurity and data
protections regulations, our PRC Legal Adviser did not foresee any material impediment for us
to comply with the relevant requirements if the Draft Data Security Regulations are
implemented in their current form.
However, since the Draft Data Security Regulations have been solicited public opinions
recently and some of the requirements shall be subject to more specific rules, the requirements
under the Draft Data Security Regulations on our business shall be determined in accordance
with the then applicable laws and regulations in force. Therefore, it is hard for the PRC Legal
Adviser to preclude the possibility that new rules or regulations promulgated in the future will
impose additional compliance requirements on us which we may be unable to comply with. As
advised by the PRC Legal Adviser, we shall pay close attention to legislative developments of
the Draft Data Security Regulations as well as its specific provisions or implementation
standards. After the Draft Data Security Regulations and relevant rules come into effect, we
shall strictly follow the requirements under the applicable legal requirements at that time
accordingly.
REGULATORY OVERVIEW
– 121 –


--- page 132 ---
LA WS AND REGULATIONS RELATING TO INTELLECTUAL PROPERTY
Trademarks
The Trademark Law of the PRC () which was amended by the
SCNPC on 23 April 2019 and came into effect on 1 November 2019, and the Implementation
Rules of the Trademark Law of the PRC (ૢԷ) which was
adopted by the State Council on 3 August 2002 and amended on 29 April 2014, stipulate the
application, examination and approval, renewal, alternation, transfer, use and invalidation of
trademark registration, and protect the trademark rights entitled to trademark registrants. In
China, registered trademarks include commodity trademarks, service trademarks, collective
marks and certification marks. The Trademark Office under the State Administration for
Industry and Commerce of the PRC (the China National Intellectual Property Administration
has been established to undertake the duties of the Trademark Office in March 2018) handles
trademark registrations and grants a term of ten years to registered trademarks. Trademarks are
renewable every ten years where a registered trademark needs to be used after the expiration
of its validity term. An application of registration renewal shall be filed within twelve months
prior to the expiration of the term. A trademark registrant may license its registered trademark
to another party by entering into a trademark license contract. Trademark license agreements
must be filed with the Trademark Office for record. The licensor shall supervise the quality of
the commodities on which the trademark is used, and the licensee shall guarantee the quality
of such commodities. Where trademark for which a registration application has been made is
identical or similar to another trademark which has already been registered or been subject to
a preliminary examination and approval for use on the same kind of or similar commodities or
services, the application for registration of such trademark may be rejected. Any person
applying for the registration of a trademark may not prejudice the existing right first obtained
by others, nor may any person register in advance a trademark that has already been used by
another party and has already gained a “sufficient degree of reputation” through such party’s
use.
Patent
According to the Patent Law of the PRC () (the “Patent
Law”), promulgated by the SCNPC on 12 March 1984 and most recently amended on 17
October 2020 and taking effect on 1 June 2021, and the Implementation Rules of the Patent
Law of the PRC () (the “Implementation Rules of the
Patent Law”), the patent administrative department under the State Council is responsible for
the administration of patent-related work nationwide and the patent administration departments
of provincial or autonomous regions or municipal governments are responsible for
administering patents within their respective administrative areas. The Patent Law and
Implementation Rules of the Patent Law provide for three types of patents, namely
“inventions,” “utility models” and “designs.” Invention patents are valid for twenty years,
while utility model patents and design patents are valid for ten years and fifteen years,
respectively, in each case from the date of application. An invention or a utility model must
possess novelty, inventiveness and practical applicability to be patentable. Third Parties must
obtain consent or a proper license from the patent owner to use the patent.
REGULATORY OVERVIEW
– 122 –


--- page 133 ---
Copyright
Pursuant to the Copyright Law of the PRC () which was
promulgated by the SCNPC on 7 September 1990 and last amended on 11 November 2020 and
came into effect on 1 June 2021, Chinese citizens, legal persons or other organizations shall,
whether published or not, enjoy copyright in their works, which include, among others, works
of literature, art, natural science, social science, engineering technology and computer software
created in writing or oral or other forms. A copyright holder shall enjoy a number of rights,
including the right of publication, the right of authorship and the right of reproduction.
Pursuant to the Measures for the Registration of Computer Software Copyright (ၑ
) promulgated by the National Copyright Administration on 20
February 2002, and the Regulation on Computers Software Protection (ᚐૢ
Է) promulgated by the State Council on 4 June 1991 and amended on 30 January 2013 and
taking effect on 1 March 2013, the National Copyright Administration is mainly responsible for
the registration and management of software copyright in China and recognizes the China
Copyright Protection Center as the software registration organization. The China Copyright
Protection Center shall grant certificates of registration to computer software copyright
applicants in compliance with the regulations of the Measures for the Registration of Computer
Software Copyright and the Regulation on Computers Software Protection.
Domain Names
Pursuant to the Administrative Measures for Internet Domain Names ( ʝᑌၣਹΤ၍ଣ
) promulgated by the MIIT on 24 August 2017 and taking effect on 1 November 2017,
establishing any domain name root server and institution for operating domain name root
servers, managing the registration of domain name and providing registration services in
relation to domain name within the territory of China shall be subject to the approval of the
MIIT or provincial, autonomous regional and municipal communications administration. The
registration of domain name shall follow the principle of “first apply, first register.” The Notice
of the Ministry of Industry and Information Technology on Regulating the Use of Domain
Names in Internet Information Services (ਕԴ͜ਹΤ
) promulgated by the MIIT on 27 November 2017 and taking effect on 1 January 2018
specifies the obligation of anti-terrorism and maintaining network security of internet
information service providers.
REGULATORY OVERVIEW
– 123 –


--- page 134 ---
LA WS AND REGULATIONS RELATING TO EMPLOYMENT AND SOCIAL
WELFARE
Labor Law
According to the Labor Law of the PRC () issued by the
SCNPC on 5 July 1994, most recently amended on 29 December 2018 and taking effect on the
same day, every employer must ensure workplace safety and sanitation in accordance with
national regulations, provide relevant training to its employees, prevent accidents in the
process of work, and lessen occupational hazards.
The Labor Contract Law of the PRC () issued by the
SCNPC on 29 June 2007, amended on 28 December 2012 and taking effect on 1 July 2013,
requires every employer to enter into a written contract of employment with each of its
employees. No employer may force its employees to work beyond the time limit and each
employer must pay overtime compensation to its employees. The wage of each employee is to
be no less than the local standard on minimum wages.
Regulations on Social Insurance and Housing Provident Funds
In accordance with the Social Insurance Law of the PRC (ᎈ
) issued by the SCNPC on 28 October 2010, last amended on 29 December 2018 and
taking effect on the same day, as well as other relevant provisions, an employee shall
participate in five types of social insurance funds, including pension, medical, unemployment,
maternity and occupational injury insurance. If the employer fails to fully contribute to social
insurance funds on time, the collection agency for such social insurance may demand the
employer to make full payment or to pay the shortfall within a set period and collect a late
charge. If the employer fails to pay after the due date, the relevant government administrative
body may impose a fine on the employer.
In accordance with the Regulation on the Administration of Housing Provident Funds
(၍ଣૢԷ) issued by the State Council on 3 April 1999, last revised on 24
March 2019 and taking effect on the same day, an employer must register with the competent
managing center for housing funds and shall contribute to the Housing Provident Fund for any
employee on its payroll. Where an employer fails to pay up housing provident funds within the
prescribed time limit, the employer may be ordered to make payment within a certain period,
where the payment has not been made after the expiration of the time limit, an application may
be made to the court for compulsory enforcement.
REGULATIONS RELATING TO FOREIGN EXCHANGE
The principal law governing foreign currency exchange in the PRC is the Regulations of
the PRC on Foreign Exchange Administration ( ʕശɛ͏΍ձ਷̮ි၍ଣૢԷ), which was
promulgated by the State Council on 29 January 1996, came into effect on 1 April 1996, and
was amended on 14 January 1997 and 5 August 2008 (the “Forex Regulations”). According to
REGULATORY OVERVIEW
– 124 –


--- page 135 ---
the Forex Regulations, international payments in foreign currencies and transfers of foreign
currencies under current account, such as payments of dividends or interests, shall not be
restricted. Foreign currency transactions under the capital account, such as direct investment
and capital contributions, require approvals from, or registration with, the SAFE and other
relevant PRC governmental authorities.
According to the Circular of the State Administration of Foreign Exchange on Issues
concerning the Administration of Foreign Exchange Involved in Overseas Listing (̮ි
) announced by the SAFE on 26 December
2014, the SAFE and its branch offices and administrative offices shall oversee, regulate and
inspect domestic companies regarding their business registration, opening and use of accounts,
trans-border payments and receipts, exchange of funds and other conducts involved in overseas
listing. Domestic company shall, within 15 working days upon the end of its public offering
overseas, handle registration formalities for overseas listing with the foreign exchange
authority at its place of registration with the required materials.
On 9 June 2016, SAFE issued the Notice of the State Administration of Foreign Exchange
on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of
Capital Accounts (), the
“Circular 16”), which came into effect on the same day. The Circular 16 provides that
discretionary foreign exchange settlement applies to foreign exchange capital, foreign debt
offering proceeds and remitted listed overseas proceeds, and the corresponding RMB capital
converted from foreign exchange may be used to extend loans to related parties or repay
inter-company loans (including advances by third parties).
According to the Circular on Optimizing Administration of Foreign Exchange to Support
the Development of Foreign-related Business (ஷ
) issued by the SAFE on 10 April 2020, eligible enterprises are allowed to make domestic
payments by using their capital, foreign credits and the income under capital accounts of
overseas listing, with no need to provide the evidentiary materials concerning authenticity of
such capital for banks in advance, provided that their capital use shall be authentic and in line
with provisions, and conform to the prevailing administrative regulations on the use of income
under capital accounts. The concerned bank shall conduct spot checking in accordance with the
relevant requirements.
REGULATIONS RELATING TO TAX
Enterprise Income Tax
According to the Law of the PRC on Enterprise Income Tax (੻
) (the “EIT Law”), which was promulgated on 16 March 2007, became effective from
1 January 2008 and was amended on 24 February 2017 and 29 December 2018, respectively,
a domestic enterprise which is established within the PRC in accordance with the laws shall be
regarded as a resident enterprise. A resident enterprise shall be subject to an EIT of 25% of any
income generated within the PRC. A preferential EIT rate shall be applicable to any key
industry or project which is supported or encouraged by the state.
REGULATORY OVERVIEW
– 125 –


--- page 136 ---
Enterprises that are recognized as high and new technology enterprises in accordance
with the Administrative Measures for the Determination of High and New Tech Enterprises
() issued by the Ministry of Science and Technology of the
PRC, the MOF and the SA T, are entitled to enjoy a preferential enterprise income tax rate of
15%. Under these measures, the validity period of the recognition as a high and new
technology enterprise shall be three years from the date of issuance of the certificate. An
enterprise can re-apply for such recognition before or after the previous certificate expires.
Value-Added Tax
Pursuant to the Interim Regulations on V alue-Added Tax of the PRC ( ʕശɛ͏΍ձ਷
೼ᅲБૢԷ), which was promulgated by the State Council on 13 December 1993 and
amended on 5 November 2008, 6 February 2016 and 19 November 2017, respectively, and the
Implementation Rules for the Interim Regulations on V alue-Added Tax of the PRC ( ʕശɛ
), which was promulgated by the MOF and SA T on 15
December 2008 and became effective on 1 January 2009 and was amended on 28 October 2011,
entities or individuals engaging in sale of goods, provision of processing services, repairs and
replacement services or importation of goods within the territory of the PRC shall pay V A T.
Unless provided otherwise, the rate of V A T is 17% on sales and 6% on the services.
On 4 April 2018, MOF and SA T jointly promulgated the Circular of the Ministry of
Finance and the State Administration of Taxation on Adjustment of V alue-Added Tax Rates
() (the “Circular 32”), according to which
(i) for V A T taxable sales acts or import of goods originally subject to V A T rates of 17% and
11%, respectively, such tax rates shall be adjusted to 16% and 10%, respectively; (ii) for
purchase of agricultural products originally subject to tax rate of 11%, such tax rate shall be
adjusted to 10%; (iii) for purchase of agricultural products for the purpose of production and
sales or consigned processing of goods subject to tax rate of 16%, such tax shall be calculated
at the tax rate of 12%; (iv) for exported goods originally subject to tax rate of 17% and export
tax refund rate of 17%, the export tax refund rate shall be adjusted to 16%; and (v) for exported
goods and cross-border taxable acts originally subject to tax rate of 11% and export tax refund
rate of 11%, the export tax refund rate shall be adjusted to 10%. Circular 32 became effective
on May 1, 2018 and shall supersede existing provisions which are inconsistent with Circular
32.
Since 16 November 2011, the MOF and the SA T have implemented the Pilot Plan for
Imposition of V alue-Added Tax to Replace Business Tax (),
the “V A T Pilot Plan”), which imposes V A T in lieu of business tax for certain “modern service
industries” in certain regions and eventually expanded to nation-wide application in 2013.
According to the Implementation Rules for the Pilot Plan for Imposition of V alue-Added
Tax to Replace Business Tax () released by the MOF and
the SA T on the V A T Pilot Program, the “modern service industries” include research,
development and technology services, information technology services, cultural innovation
services, logistics support, lease of corporeal properties, attestation and consulting services.
REGULATORY OVERVIEW
– 126 –


--- page 137 ---
The Notice on comprehensively promoting the Pilot Plan of the Conversion of Business
Tax to V alue-Added Tax (), which was
promulgated on 29 April 2016, sets out that V A T in lieu of business tax be collected in all
regions and industries.
On 20 March 2019, MOF, SA T and the General Administration of Customs jointly
promulgated the Announcement on Relevant Policies for Deepening V alue-Added Tax Reform
(ʮѓ), which became effective on 1 April 2019 and
provides that (i) with respect to V A T taxable sales acts or import of goods originally subject
to V A T rates of 16% and 10% respectively, such tax rates shall be adjusted to 13% and 9%,
respectively; (ii) with respect to purchase of agricultural products originally subject to tax rate
of 10%, such tax rate shall be adjusted to 9%; (iii) with respect to purchase of agricultural
products for the purpose of production or consigned processing of goods subject to tax rate of
13%, such tax shall be calculated at the tax rate of 10%; (iv) with respect to export of goods
and services originally subject to tax rate of 16% and export tax refund rate of 16%, the export
tax refund rate shall be adjusted to 13%; and (v) with respect to export of goods and
cross-border taxable acts originally subject to tax rate of 10% and export tax refund rate of
10%, the export tax refund rate shall be adjusted to 9%.
FULL CIRCULATION OF H SHARES
“Full circulation” represents the shareholders of domestic unlisted shares of domestic
companies, which directly offer and list securities in overseas markets, converting its domestic
unlisted shares into foreign listed shares circulating in overseas markets. “Full circulation”
shall comply with relevant regulations of the CSRC and the shareholders of domestic unlisted
shares shall entrust the domestic company to report the “Full circulation” with CSRC by filing
materials on key compliance issues, including whether the “Full circulation” has fulfilled
adequate internal decision-making procedures, necessary internal approvals and authorizations,
and whether the “Full circulation” involves approval or filing procedures set out in the laws,
regulations and policies for state-owned asset administration, and industry supervision, and if
so, whether such approval or filing procedures have been performed.
On 31 December 2019, the CSDC and Shenzhen Stock Exchange jointly announced the
Measures for Implementation of H-share “Full Circulation” Business. 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.
In order to fully promote the reform of H-shares “full circulation” and clarify the business
arrangement and procedures for the relevant shares’ registration, custody, settlement and
delivery, the CSDC has issued the Circular on Issuing the Guidelines to the Program for “Full
Circulation” of H-shares in February 2020, which specified the business preparation, account
arrangement, cross-border share transfer registration and overseas centralized custody, etc. In
February 2020, China Securities Depository and Clearing (Hong Kong) Co., Ltd., or the CSDC
REGULATORY OVERVIEW
– 127 –


--- page 138 ---
HK, promulgated the Guidelines to the Program for Full Circulation of H-shares of China
Securities Depository and Clearing (Hong Kong) Co., Ltd. ( ʕ਷ᗇՎ೮াഐၑ(ಥ)ʮ
̡Hٰ“ஷ”) to specify the relevant escrow, custody, agent service of CSDC
HK, arrangement for settlement and delivery and other relevant matters.
REGULATIONS RELATING TO OVERSEAS SECURITIES OFFERING AND LISTING
The CSRC promulgated the Trial Administrative Measures of Overseas Securities
Offering and Listing by Domestic Companies ( ྤʫΆุྤ̮೯БᗇՎձɪ̹၍ଣ༊Б፬
) (the “Overseas Listing Trial Measures”) and five relevant guidelines on 17 February
2023, which took effect on 31 March 2023. The Overseas Listing Trial Measures
comprehensively reformed the regulatory regime for overseas offering and listing of PRC
domestic companies’ securities, either directly or indirectly, into a filing-based system.
According to the Overseas Listing Trial Measures, the PRC domestic companies that seek to
offer and list securities in overseas markets, either in direct or indirect means, are required to
fulfill the filing procedure with the CSRC and report relevant information. The Overseas
Listing Trial Measures provides that an overseas listing or offering is explicitly prohibited, if
any of the following applies: (i) such securities offering or listing is explicitly prohibited by
provisions in PRC laws, administrative regulations or relevant state rules; (ii) the proposed
securities offering or listing may endanger national security as reviewed and determined by
competent authorities under the State Council in accordance with laws; (iii) the domestic
company intending to be listed or offer securities in overseas markets, or its controlling
shareholder(s) and the actual controller, have committed crimes such as corruption, bribery,
embezzlement, misappropriation of property or undermining the order of the socialist market
economy during the latest three years; (iv) the domestic company intending to be listed or offer
securities in overseas markets is currently under investigations for suspicion of criminal
offenses or major violations of laws and regulations, and no conclusion has yet been made
thereof; or (v) there are material ownership disputes over equity held by the domestic
company’s controlling shareholder(s) or by other shareholder(s) that are controlled by the
controlling shareholder(s) and/or actual controller. Where an issuer submits an application for
initial public offering to competent overseas regulators, filing application with the CSRC shall
be submitted within three business days thereafter. Subsequent securities offering 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. Subsequent
securities offering and listing of an issuer in other overseas markets shall be filed as initial
public offering. Moreover, upon the occurrence of any of the material events specified below
after an issuer has offered and listed securities in an overseas market, the issuer shall submit
a report thereof to CSRC within 3 working days after the occurrence and public disclosure of
the event: (i) change of control; (ii) investigations or sanctions imposed by overseas securities
regulatory agencies or other relevant competent authorities; (iii) change of listing status or
transfer of listing segment; (iv) voluntary or mandatory delisting. Where an issuer’s main
business undergoes material changes after overseas offering and listing, and is therefore
beyond the scope of business stated in the filing documents, such issuer shall submit to the
CSRC an ad hoc report and a relevant legal opinion issued by a domestic law firm within 3
working days after occurrence of the changes.
REGULATORY OVERVIEW
– 128 –


--- page 139 ---
On 24 February 2023, the CSRC and other relevant government authorities promulgated
the Provisions on Strengthening the Confidentiality and Archives Administration of Overseas
Securities Issuance and Listing by Domestic Enterprises (̋੶ྤʫΆุྤ̮೯БᗇՎձ
) (the “Provision on Confidentiality”), which took
effect on 31 March 2023. Pursuant to the Provision on Confidentiality, where a domestic
enterprise provides or publicly discloses to the relevant securities companies, securities service
institutions, overseas regulatory authorities and other entities and individuals, or provides or
publicly discloses through its overseas listing subjects, documents and materials involving
state secrets and working secrets of state organs, it shall report the same to the competent
department with the examination and approval authority for approval in accordance with the
law, and submit the same to the secrecy administration department of the same level for filing.
Domestic enterprises providing accounting archives or copies thereof to entities and
individuals concerned such as securities companies, securities service institutions and overseas
regulatory authorities shall perform the corresponding procedures pursuant to the relevant
provisions of the State.
REGULATORY OVERVIEW
– 129 –


--- page 140 ---
OVERVIEW
We are a leading intralogistics equipment solution provider in China. Focusing on
intralogistics equipment subscription services, we strive to provide enterprises with one-stop
solutions for intralogistics equipment utilization and management.
The origins of our Company can be traced back to the establishment of our Company in
2007 by Mr. Hou, our founder, chairman of the Board, executive Director and one of our
Controlling Shareholders, together with his brother, Mr. Hou Zebing (ዣж), our executive
Director, general manager (chief executive) and one of our Controlling Shareholders. For
further information about Mr. Hou and Mr. Hou Zebing, please see “Directors, Supervisors and
Senior Management – Board of Directors – Executive Directors” in this prospectus.
BUSINESS DEVELOPMENT MILESTONES
The following table sets forth certain development milestones of our Group:
Y ear Milestones
2007 Our Company was incorporated and we established our distribution
channels for intralogistics equipment, and began the sales model of
intralogistics equipment
2008 We promoted the digitalization research of components of intralogistics
equipment, and began the digital application mode of intralogistics
equipment parts
2013 We focused on promoting the construction of nationwide service outlets
and established our intralogistics equipment service model for end users
across the country
We introduced Eastern Bell II as our Pre-IPO Investor
2015 We innovatively used the IoT and the new generation of information
technology to commence our intralogistics equipment subscription
business and created a full lifecycle solution model for our intralogistics
equipment
2016 We introduced Dachen Chuanglian as our Pre-IPO Investor
We upgraded our smart asset management system
We have been qualified as “high and new technology enterprises” by the
Department of Science and Technology of Guangdong Province (߅޲؇
ኪҦஔᝂ), the Guangdong Provincial Department of Finance (݁
ᝂ) and the relevant tax authorities
2017 The number of intralogistics equipment under our management exceeded
10,000
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 130 –


--- page 141 ---
Y ear Milestones
2020 We launched our wearable devices with multidimensional sensors to
support us in realizing the visualization of services and promote the
upgrading of our service model
2022 Our first nationwide supply chain base, headquartered in Hefei, was
established and officially launched
2023 The number of intralogistics equipment under our management exceeded
40,000
OUR GROUP
As of the Latest Practicable Date, our Group comprised of our Company and our 13
subsidiaries. For details of our subsidiaries, see Note 1 to the Accountants’ Report in Appendix
I to this prospectus.
We primarily operate our business through our Company and principal operating
subsidiaries. As of the Latest Practicable Date, we had three principal operating entities,
including our Company, Guangzhou Pengze and Anhui Folangsi, which made material
contribution to our results of operation during the Track Record Period, the details of which
are set forth below:
Place of
Incorporation
Date of
Incorporation
Shareholding
Change
Principal Business
activities
Our Company PRC December 5,
2007
For details of the
shareholding
changes of our
Company, see
“– Corporate
Development
and
Shareholding
Changes of Our
Company” in
this section
The centralized
management
platform of our
Group where we
run our overall
business
operation
Guangzhou
Pengze
PRC March 19,
2010
A wholly-owned
subsidiary of our
Company since
its incorporation
Sales of the
intralogistics
equipment and
parts
Anhui Folangsi PRC August 17,
2018
A wholly-owned
subsidiary of our
Company since
its incorporation
Operation of our
nationwide
supply chain
base located
in Hefei
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 131 –


--- page 142 ---
CORPORATE DEVELOPMENT AND SHAREHOLDING CHANGES OF OUR
COMPANY
Incorporation of Our Company
Our Company was established in the PRC on December 5, 2007. Upon incorporation, the
registered capital of our Company was RMB0.5 million, which was owned by Mr. Hou,
Mr. Hou Zebing and Foshan Folangsi as to 40%, 40% and 20%, representing RMB0.2 million,
RMB0.2 million and RMB0.1 million of the registered capital of our Company, respectively.
Subsequent Capital Changes and Equity Transfers
1. Equity Transfer in June 2009
On May 20, 2009, Mr. Hou, Mr. Hou Zebing and Foshan Folangsi entered into an equity
transfer agreement, pursuant to which Foshan Folangsi transferred 10% and 10% equity
interest in our Company to Mr. Hou and Mr. Hou Zebing at the consideration of RMB50,000
and RMB50,000, respectively. The then shareholders of Foshan Folangsi were Mr. Y ang Ziyun
(เІථ), Mr. Hou’s brother-in-law, and Ms. Zhu Xiaotao ( ϡወᏹ), Mr. Hou’s spouse, with
80% and 20% equity interest in Foshan Folangsi, respectively.
Upon the completion of such equity transfers on June 23, 2009, our Company was owned
as to 50% and 50% by Mr. Hou and Mr. Hou Zebing, respectively, with a registered capital of
RMB0.5 million.
2. Capital Increase in November 2010
On November 1, 2010, Mr. Hou and Mr. Hou Zebing, being the then Shareholders of our
Company, resolved to increase the registered capital of our Company from RMB0.5 million to
RMB2.0 million. Mr. Hou and Mr. Hou Zebing agreed to contribute to the increased registered
capital in proportion to their then respective equity interests of 50% and 50% in our Company
and the capital increase of RMB1.5 million was completed on November 10, 2010.
3. Equity Transfer in August 2011
On August 14, 2011, Mr. Hou, Mr. Hou Zebing and Guangzhou Daze (our Employee
Incentive Platform) entered into an equity transfer agreement, pursuant to which each of Mr.
Hou and Mr. Hou Zebing transferred 14% equity interest (representing RMB280,000 of our
then registered capital) to Guangzhou Daze at a consideration of RMB280,000. Guangzhou
Daze is our Employee Incentive Platform, which is a limited partnership established in the PRC
on August 16, 2011 whose sole general partner is Mr. Hou Zebing. For further details on
Guangzhou Daze, please see the paragraph headed “– Employee Incentive Scheme” in this
section.
Upon the completion of such equity transfers on August 22, 2011, our Company was
owned as to 36%, 36% and 28% by Mr. Hou, Mr. Hou Zebing and Guangzhou Daze,
respectively, with a registered capital of RMB2.0 million.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 132 –


--- page 143 ---
4. Capital Increase in November 2011
On November 10, 2011, the then Shareholders of our Company resolved to increase the
registered capital of our Company from RMB2.0 million to RMB2.5 million. Shenzhen Xinyu
Equity Investment Enterprise (Limited Partnership) (ᛆҳ༟Άุ(Υྫ))
(“Shenzhen Xinyu ”), a Pre-IPO Investor, subscribed for the increased registered capital of
RMB0.5 million, representing 20% equity interest in our Company upon completion of the
capital increase, at the consideration of RMB15.0 million (the “ Nov-2011 Capital Increase ”).
Upon the completion of such capital increase on November 24, 2011, our Company was
owned as to 28.8%, 28.8%, 22.4% and 20.0% by Mr. Hou, Mr. Hou Zebing, Guangzhou Daze
and Shenzhen Xinyu, respectively, with a registered capital of RMB2.5 million.
5. Capital Increase in October 2012
On September 16, 2012, the then Shareholders of our Company resolved to increase the
registered capital of our Company from RMB2.5 million to RMB2,551,020. Ms. Zheng Ying
(ቍ጑), a Pre-IPO Investor, subscribed for the increased registered capital of RMB51,020,
representing approximately 2.00% equity interest in our Company upon completion of the
capital increase, at the consideration of RMB1.68 million (the “ Oct-2012 Capital Increase ”).
Upon the completion of such capital increase on October 15, 2012, our Company was
owned as to 28.22%, 28.22%, 21.95%, 19.60% and 2.00% by Mr. Hou, Mr. Hou Zebing,
Guangzhou Daze, Shenzhen Xinyu and Ms. Zheng Ying, respectively, with a registered capital
of RMB2,551,020.
6. Equity Transfer in June 2013
On May 20, 2013, Shenzhen Xinyu and Mr. Wang Jing ( ӓ౺) entered into an equity
transfer agreement, pursuant to which Shenzhen Xinyu transferred the registered capital of
RMB0.1 million, representing approximately 3.92% equity interest, in our Company to Mr.
Wang Jing, a Pre-IPO Investor, at the consideration of RMB3.0 million (the “ Jun-2013
Transfer ”).
Upon the completion of such equity transfer on June 18, 2013, the shareholding of our
Company was as follows:
Shareholders Registered capital Equity interest
(RMB) (%)
Mr. Hou 720,000 28.22
Mr. Hou Zebing 720,000 28.22
Guangzhou Daze 560,000 21.95
Shenzhen Xinyu 400,000 15.68
Mr. Wang Jing 100,000 3.92
Ms. Zheng Ying 51,020 2.00
Total 2,551,020 100.00
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 133 –


--- page 144 ---
7. Capital Increase in June 2013
On June 8, 2013, the then Shareholders of our Company resolved to increase the
registered capital of our Company from RMB2,551,020 to RMB2,869,860. Suzhou Eastern
Bell II Investment Center (Limited Partnership) ( ᘽψᙒཻ௴ุɚ໮ҳ༟ʕː(Υྫ))
(“Eastern Bell II ”), a Pre-IPO Investor, subscribed for the increased registered capital of
RMB318,840, representing approximately 11.11% equity interest in our Company upon
completion of the capital increase, at the consideration of RMB30.0 million (the “ Jun-2013
Capital Increase ”).
Upon the completion of such capital increase on June 27, 2013, the shareholding of our
Company was as follows:
Shareholders Registered capital Equity interest
(RMB) (%)
Mr. Hou 720,000 25.09
Mr. Hou Zebing 720,000 25.09
Guangzhou Daze 560,000 19.51
Shenzhen Xinyu 400,000 13.94
Eastern Bell II 318,840 11.11
Mr. Wang Jing 100,000 3.48
Ms. Zheng Ying 51,020 1.78
Total 2,869,860 100.00
8. Equity Transfer and Capital Increase in July 2014
On May 15, 2014, each of Mr. Wang Jing, Ms. Zheng Ying and Mr. Hou Zebing entered
into an equity transfer agreement with Eastern Bell II, pursuant to which (i) Mr. Wang Jing
transferred registered capital of RMB50,000, representing approximately 1.74% equity
interest, in our Company to Eastern Bell II at the consideration of RMB5,096,100; (ii)
Ms. Zheng Ying transferred registered capital of RMB25,510, representing approximately
0.89% equity interest, in our Company to Eastern Bell II at the consideration of
RMB2,600,000; and (iii) Mr. Hou Zebing transferred registered capital of RMB28,699,
representing approximately 1.00% equity interest, in our Company to Eastern Bell II at the
consideration of RMB2,925,000 (the “ Jul-2014 Transfer ”).
On July 23, 2014, the then Shareholders of our Company resolved to increase the
registered capital of our Company from RMB2,869,860 to RMB3,139,677. Eastern Bell II
subscribed for the increased registered capital of RMB269,817, representing approximately
8.59% equity interest in our Company upon completion of the capital increase, at the
consideration of RMB30.0 million (the “ Jul-2014 Capital Increase ”).
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 134 –


--- page 145 ---
Upon the completion of such equity transfers and capital increase on July 29, 2014, the
shareholding of our Company was as follows:
Shareholders Registered capital Equity interest
(RMB) (%)
Mr. Hou 720,000 22.93
Mr. Hou Zebing 691,301 22.02
Eastern Bell II 692,866 22.07
Guangzhou Daze 560,000 17.84
Shenzhen Xinyu 400,000 12.74
Mr. Wang Jing 50,000 1.59
Ms. Zheng Ying 25,510 0.81
Total 3,139,677 100.00
9. Equity Transfer in March 2015
On October 22, 2014, Guangzhou Daze entered into an equity transfer agreement with
each of Eastern Bell II and Shanghai Dingmin Investment Management Center (Limited
Partnership) ( ɪऎཻ͏ҳ༟၍ଣʕː(Υྫ)) (“ Shanghai Dingmin ”), pursuant to which
Guangzhou Daze transferred registered capital of RMB62,794 and RMB12,559, representing
approximately 2.00% and 0.40% equity interest, in our Company to Eastern Bell II and
Shanghai Dingmin, each a Pre-IPO Investor, at the consideration of RMB6.40 million and
RMB1.28 million, respectively (the “ Mar-2015 Transfer ”).
Upon the completion of such equity transfers on March 4, 2015, the shareholding of our
Company was as follows:
Shareholders Registered capital Equity interest
(RMB) (%)
Mr. Hou 720,000 22.93
Mr. Hou Zebing 691,301 22.02
Eastern Bell II 755,659 24.07
Guangzhou Daze 484,648 15.44
Shenzhen Xinyu 400,000 12.74
Mr. Wang Jing 50,000 15.93
Ms. Zheng Ying 25,510 0.81
Shanghai Dingmin 12,559 0.40
Total 3,139,677 100.00
10. Capital Increase in December 2015
On November 25, 2015, the then Shareholders of our Company resolved to increase the
registered capital of our Company from RMB3,139,677 to RMB3,265,264. Shanghai Xingfu
V enture Capital Management Center (Limited Partnership) ( ɪऎጳబ௴ุҳ༟၍ଣʕː(ࠢ
Υྫ)) (“ Shanghai Xingfu ”), a Pre-IPO Investor, and Fujian Xinghe Equity Investment
Limited Partnership (ΥྫΆุ)( “ Fujian Xinghe ”) subscribed for
the increased registered capital of RMB94,190 and RMB31,397, representing approximately
2.88% and 0.96% equity interest in our Company upon completion of the capital increase, at
the consideration of RMB15.0 million and RMB5.0 million, respectively (the “ Dec-2015
Capital Increase ”).
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 135 –


--- page 146 ---
Upon the completion of such capital increase on December 23, 2015, the shareholding of
our Company was as follows:
Shareholders Registered capital Equity interest
(RMB) (%)
Mr. Hou 720,000 22.05
Mr. Hou Zebing 691,301 21.17
Eastern Bell II 755,659 23.14
Guangzhou Daze 484,648 14.84
Shenzhen Xinyu 400,000 12.25
Shanghai Xingfu 94,190 2.88
Mr. Wang Jing 50,000 1.53
Fujian Xinghe 31,397 0.96
Ms. Zheng Ying 25,510 0.78
Shanghai Dingmin 12,559 0.38
Total 3,265,264 100.00
11. Capital Increase in July 2016
On June 20, 2016, the then Shareholders of our Company resolved to increase the
registered capital of our Company from RMB3,265,264 to RMB60,000,000. The increased
registered capital of RMB56,734,736 was converted from the capital reserve of our Company,
as a result, the registered capital of each Shareholder was increased in proportion to their then
respective equity interest in our Company.
Upon the completion of such capital increase on July 12, 2016, the shareholding of our
Company was as follows:
Shareholders Registered capital Equity interest
(RMB) (%)
Mr. Hou 13,230,171 22.05
Mr. Hou Zebing 12,702,820 21.17
Eastern Bell II 13,885,413 23.14
Guangzhou Daze 8,905,522 14.84
Shenzhen Xinyu 7,350,094 12.25
Shanghai Xingfu 1,730,764 2.88
Mr. Wang Jing 918,762 1.53
Fujian Xinghe 576,927 0.96
Ms. Zheng Ying 468,752 0.78
Shanghai Dingmin 230,775 0.38
Total 60,000,000 100.00
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 136 –


--- page 147 ---
12. Joint-Stock Reform in November 2016
Pursuant to the shareholders’ resolutions on October 22, 2016 and the promoters’
agreement dated October 22, 2016, the then existing Shareholders of our Company agreed to
convert our Company into a joint stock limited liability company with a registered capital of
RMB60,000,000. Pursuant to the promoters’ agreement, the net asset value of our Company as
of July 31, 2016 amounted to RMB105,603,841.01, of which (i) RMB60,000,000 was
converted into 60,000,000 Shares of RMB1.0 par value each, which were subscribed by and
issued to the then Shareholders of our Company in proportion to their respective equity interest
in our Company; and (ii) the remaining amount of RMB45,603,841.01 was converted to capital
reserve of our Company. Upon the completion of registration with the then Guangzhou
Administration for Industry and Commerce (၍ଣ҅) on November 25, 2016,
our Company was converted into a joint stock company with limited liability and renamed as
FOLANGSI CO., LTD (ʮ̡).
Upon the completion of the joint-stock reform on November 25, 2016, the shareholding
of our Company was as follows:
Shareholders Number of Shares Equity interest
(%)
Mr. Hou 13,230,171 22.05
Mr. Hou Zebing 12,702,820 21.17
Eastern Bell II 13,885,413 23.14
Guangzhou Daze 8,905,522 14.84
Shenzhen Xinyu 7,350,094 12.25
Shanghai Xingfu 1,730,764 2.88
Mr. Wang Jing 918,762 1.53
Fujian Xinghe 576,927 0.96
Ms. Zheng Ying 468,752 0.78
Shanghai Dingmin 230,775 0.38
Total 60,000,000 100.00
13. Capital Increase in December 2016
On December 15, 2016, the then Shareholders of our Company resolved to increase the
share capital of our Company from 60,000,000 Shares to 62,000,000 Shares with registered
capital of our Company increased from RMB60,000,000 to RMB62,000,000. Suzhou Eastern
Bell III Investment Center (Limited Partnership) ( ᘽψᙒཻɧ໮௴ุҳ༟ʕː(Υྫ))
(“Eastern Bell III ”), a Pre-IPO Investor, subscribed the increased share capital of 2,000,000
Shares, representing approximately 3.23% equity interest in our Company upon completion of
the capital increase, at the consideration of RMB20.0 million (the “ Dec-2016 Capital
Increase ”).
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 137 –


--- page 148 ---
Upon the completion of such capital increase on December 20, 2016, the shareholding of
our Company was as follows:
Shareholders Number of Shares Equity interest
(%)
Mr. Hou 13,230,171 21.34
Mr. Hou Zebing 12,702,820 20.49
Eastern Bell II 13,885,413 22.40
Guangzhou Daze 8,905,522 14.36
Shenzhen Xinyu 7,350,094 11.86
Eastern Bell III 2,000,000 3.23
Shanghai Xingfu 1,730,764 2.79
Mr. Wang Jing 918,762 1.48
Fujian Xinghe 576,927 0.93
Ms. Zheng Ying 468,752 0.76
Shanghai Dingmin 230,775 0.37
Total 62,000,000 100.00
14. Capital Increase in January 2017
On December 22, 2016, the then Shareholders of our Company resolved to increase the
share capital of our Company from 62,000,000 Shares to 69,682,997 Shares with registered
capital of our Company increased from RMB62,000,000 to RMB69,682,997. Shenzhen Dachen
Chuanglian Equity Investment Fund Partnership (Limited Partnership) (ᛆ
ΥྫΆุ(Υྫ)) (“ Dachen Chuanglian ”), a Pre-IPO Investor, Zhuhai Qianheng
Investment Management Co., Ltd. (ʮ̡)( “ Zhuhai Qianheng ”) and
Shanghai Zezhen Investment Center (Limited Partnership) ( ɪऎዣ၄ҳ༟ʕː(Υྫ))
(“Shanghai Zezhen ”), a Pre-IPO Investor, subscribed for the additional 5,360,231 Shares,
1,786,743 Shares and 536,023 Shares, representing approximately 7.69%, 2.56% and 0.77%
equity interest in our Company upon completion of the capital increase, at the considerations
of RMB60.0 million, RMB20.0 million and RMB6.0 million, respectively (the “ Jan-2017
Capital Increase ”).
Upon the completion of such capital increase on January 19, 2017, the shareholding of our
Company was as follows:
Shareholders Number of Shares Equity interest
(%)
Mr. Hou 13,230,171 18.99
Mr. Hou Zebing 12,702,820 18.23
Eastern Bell II 13,885,413 19.93
Guangzhou Daze 8,905,522 12.78
Shenzhen Xinyu 7,350,094 10.55
Dachen Chuanglian 5,360,231 7.69
Eastern Bell III 2,000,000 2.87
Shanghai Xingfu 1,730,764 2.48
Zhuhai Qianheng 1,786,743 2.56
Mr. Wang Jing 918,762 1.32
Fujian Xinghe 576,927 0.83
Shanghai Zezhen 536,023 0.77
Ms. Zheng Ying 468,752 0.67
Shanghai Dingmin 230,775 0.33
Total 69,682,997 100.00
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 138 –


--- page 149 ---
15. Capital Increase in November 2017
On October 30, 2017, the then Shareholders of our Company resolved to increase the
share capital of our Company from 69,682,997 Shares to 74,642,477 Shares with registered
capital of our Company increased from RMB69,682,997 to RMB74,642,477. The five
subscribers including AEON LIFE INSURANCE COMPANY , LTD. (ʮ
̡)( “ Aeon Life ”), Zhuhai Hengqin 01 Wotu No. 10 Investment Partnership (Limited
Partnership) ( मऎዑೞཧఠӜɺɤ໮ҳ༟ΥྫΆุ(Υྫ)) (“ Wotu No. 10 ”), Guangzhou
Tianhe Zhongke No. 1 V enture Capital Fund Partnership (Limited Partnership) (߅
ΥྫΆุ(Υྫ)) (“ Zhongke No. 1 ”), Guangdong Zhongke Baiyun
Emerging Industry V enture Capital Fund Co., Ltd. (ࠢ
ʮ̡)( “ Zhongke Baiyun ”) and Shanghai Longwin Jingjie Investment Partnership (Limited
Partnership) (ၲԯᨊҳ༟ΥྫΆุ(Υྫ)) (“ Longwin Jingjie ”), each a Pre-IPO
Investor, subscribed for the increased share capital of 4,959,480 Shares at a total consideration
of RMB106,758,065 (the “ Nov-2017 Capital Increase ”).
The respective subscription amount and consideration for each subscriber were as
follows:
Subscribers
Number of Shares
subscribed for Consideration
Corresponding
equity interest in our
Company (upon
completion of the
capital increase and
subscription)
(RMB) (%)
Aeon Life 1,858,213 40,000,000 2.49
Wotu No.10 1,498,559 32,258,065 2.01
Zhongke No.1 673,602 14,500,000 0.90
Zhongke Baiyun 464,553 10,000,000 0.62
Longwin Jingjie 464,553 10,000,000 0.62
Total 4,959,480 106,758,065 6.64
Upon the completion of such capital increase on November 20, 2017, the shareholding of
our Company was as follows:
Shareholders Number of Shares Equity interest
(%)
Mr. Hou 13,230,171 17.72
Mr. Hou Zebing 12,702,820 17.02
Eastern Bell II 13,885,413 18.60
Guangzhou Daze 8,905,522 11.93
Shenzhen Xinyu 7,350,094 9.85
Dachen Chuanglian 5,360,231 7.18
Eastern Bell III 2,000,000 2.68
Aeon Life 1,858,213 2.49
Shanghai Xingfu 1,730,764 2.32
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 139 –


--- page 150 ---
Shareholders Number of Shares Equity interest
(%)
Zhuhai Qianheng 1,786,743 2.39
Wotu No. 10 1,498,559 2.01
Mr. Wang Jing 918,762 1.23
Zhongke No. 1 673,602 0.90
Fujian Xinghe 576,927 0.77
Shanghai Zezhen 536,023 0.72
Ms. Zheng Ying 468,752 0.63
Zhongke Baiyun 464,553 0.62
Longwin Jingjie 464,553 0.62
Shanghai Dingmin 230,775 0.31
Total 74,642,477 100.00
16. Equity Transfer in January 2018
On December 8, 2017, Ms. Zheng Ying, Guangzhou Daze and Jiaxing Dace Lejiehui
Investment Partnership (Limited Partnership) ( ྗጳɽഄᆀ௫౉ҳ༟ΥྫΆุ(Υྫ))
(“Jiaxing Dace ”), a Pre-IPO Investor, entered into an equity transfer agreement, pursuant to
which Ms. Zheng Ying transferred 139,366 Shares and Guangzhou Daze transferred 812,968
Shares of our Company, representing approximately 0.19% and 1.09% equity interest in our
Company, to Jiaxing Dace at the consideration of RMB3.0 million and RMB17.5 million,
respectively (the “ Jan-2018 Transfer ”).
Upon the completion of such equity transfers on January 2, 2018, the shareholding of our
Company was as follows:
Shareholders Number of Shares Equity interest
(%)
Mr. Hou 13,230,171 17.72
Mr. Hou Zebing 12,702,820 17.02
Eastern Bell II 13,885,413 18.60
Guangzhou Daze 8,092,554 10.84
Shenzhen Xinyu 7,350,094 9.85
Dachen Chuanglian 5,360,231 7.18
Eastern Bell III 2,000,000 2.68
Aeon Life 1,858,213 2.49
Shanghai Xingfu 1,730,764 2.32
Zhuhai Qianheng 1,786,743 2.39
Wotu No. 10 1,498,559 2.01
Jiaxing Dace 952,334 1.28
Mr. Wang Jing 918,762 1.23
Zhongke No. 1 673,602 0.90
Fujian Xinghe 576,927 0.77
Shanghai Zezhen 536,023 0.72
Zhongke Baiyun 464,553 0.62
Longwin Jingjie 464,553 0.62
Ms. Zheng Ying 329,386 0.44
Shanghai Dingmin 230,775 0.31
Total 74,642,477 100.00
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 140 –


--- page 151 ---
17. Equity Transfer in June 2018
On February 20, 2018, Shenzhen Xinyu and Mr. Y ang Tao ( เᏹ), a Pre-IPO Investor,
entered into an equity transfer agreement, pursuant to which Shenzhen Xinyu transferred
1,411,100 Shares of our Company, representing approximately 1.89% equity interest in our
Company, to Mr. Y ang Tao at the consideration of RMB30,375,338.6 (the “ Jun-2018
Transfer ”).
Upon the completion of such equity transfer on June 27, 2018, the shareholding of our
Company was as follows:
Shareholders Number of Shares Equity interest
(%)
Mr. Hou 13,230,171 17.72
Mr. Hou Zebing 12,702,820 17.02
Eastern Bell II 13,885,413 18.60
Guangzhou Daze 8,092,554 10.84
Shenzhen Xinyu 5,938,994 7.96
Dachen Chuanglian 5,360,231 7.18
Eastern Bell III 2,000,000 2.68
Aeon Life 1,858,213 2.49
Shanghai Xingfu 1,730,764 2.32
Zhuhai Qianheng 1,786,743 2.39
Wotu No. 10 1,498,559 2.01
Mr. Y ang Tao 1,411,100 1.89
Jiaxing Dace 952,334 1.28
Mr. Wang Jing 918,762 1.23
Zhongke No. 1 673,602 0.90
Fujian Xinghe 576,927 0.77
Shanghai Zezhen 536,023 0.72
Zhongke Baiyun 464,553 0.62
Longwin Jingjie 464,553 0.62
Ms. Zheng Ying 329,386 0.44
Shanghai Dingmin 230,775 0.31
Total 74,642,477 100.00
18. Capital Increase in September 2018
On August 10, 2018, the then Shareholders of our Company resolved to increase the share
capital of our Company from 74,642,477 Shares to 80,484,062 Shares with registered capital
of our Company increased from RMB74,642,477 to RMB80,484,062. Shenzhen Dachen
Chuangtong Equity Investment Enterprise (Limited Partnership) (ᛆҳ༟Ά
ุ(Υྫ)) (“ Dachen Chuangtong ”) and Xiamen Lantu Tianxing Investment L.P . (ᔝ
ྡ˂ጳҳ༟ΥྫΆุ(Υྫ)) (“ Lantu Tianxing ”), each a Pre-IPO Investor, subscribed for
the increased share capital of 4,867,988 Shares and 973,597 Shares, representing
approximately 6.05% and 1.21% equity interest in our Company upon completion of the capital
increase, at the considerations of RMB150.0 million and RMB30.0 million, respectively (the
“Sep-2018 Capital Increase ”).
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 141 –


--- page 152 ---
Upon the completion of such capital increase on September 19, 2018, the shareholding of
our Company was as follows:
Shareholders Number of Shares Equity interest
(%)
Mr. Hou 13,230,171 16.44
Mr. Hou Zebing 12,702,820 15.78
Eastern Bell II 13,885,413 17.25
Guangzhou Daze 8,092,554 10.05
Shenzhen Xinyu 5,938,994 7.38
Dachen Chuanglian 5,360,231 6.66
Dachen Chuangtong 4,867,988 6.05
Eastern Bell III 2,000,000 2.49
Aeon Life 1,858,213 2.31
Shanghai Xingfu 1,730,764 2.15
Zhuhai Qianheng 1,786,743 2.22
Wotu No. 10 1,498,559 1.86
Mr. Y ang Tao 1,411,100 1.75
Lantu Tianxing 973,597 1.21
Jiaxing Dace 952,334 1.18
Mr. Wang Jing 918,762 1.14
Zhongke No. 1 673,602 0.84
Fujian Xinghe 576,927 0.72
Shanghai Zezhen 536,023 0.67
Zhongke Baiyun 464,553 0.58
Longwin Jingjie 464,553 0.58
Ms. Zheng Ying 329,386 0.41
Shanghai Dingmin 230,775 0.29
Total 80,484,062 100.00
19. Equity Transfer and Capital Increase in November 2021
On July 22, 2021, Shenzhen Xinyu and TZGF Assets Management Co. Ltd. ( ˂ዣΛబ༟
ʮ̡)( “ TZGF ”) entered into an equity transfer agreement, pursuant to which
Shenzhen Xinyu transferred 300,000 Shares of our Company, representing approximately
0.37% equity interest in our Company, to TZGF, a Pre-IPO Investor, at the consideration of
RMB9.0 million (the “ Nov-2021 Transfer ”).
On August 24, 2021, the then Shareholders of our Company resolved to increase the share
capital of our Company from 80,484,062 Shares to 83,971,704 Shares with registered capital
of our Company increased from RMB80,484,062 to RMB83,971,704. The six subscribers
including, Guangzhou Huangpu Digital Economy Industry Investment Fund Partnership
(Limited Partnership) (ΥྫΆุ(Υྫ)) (“ Huangpu
Digital ”), Jiaxing Y ongzhong Equity Investment Partnership (Limited Partnership) (׀
ᛆҳ༟ΥྫΆุ(Υྫ)) (“ Jiaxing Y ongzhong ”), Jiaxing Tengyin Equity Investment
Partnership (Limited Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ)) (“ Jiaxing
Tengyin ”), Changzhou Y ongyuan V enture Capital Partnership (Limited Partnership) ( ੬ψ͑ʩ
௴ุҳ༟ΥྫΆุ(Υྫ)) (“ Changzhou Y ongyuan ”), Jiaxing Y ongli Equity Investment
Partnership (Limited Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ)) (“ Jiaxing Y ongli ”)
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 142 –


--- page 153 ---
and Changzhou Y ongcai V enture Capital Partnership (Limited Partnership) ( ੬ψ͑ʑ௴ุҳ༟
ΥྫΆุ(Υྫ)) (“ Changzhou Y ongcai ”), each a Pre-IPO Investor, subscribed the
increased share capital of 3,487,642 Shares at a total consideration of RMB130.0 million (the
“Nov-2021 Capital Increase ”).
The respective subscription amount and consideration for each subscriber were as
follows:
Subscribers
Number of Shares
subscribed for Consideration
Corresponding
equity interest in
our Company (upon
completion of the
capital increase)
(RMB) (%)
Huangpu Digital 482,904 18,000,000 0.58
Jiaxing Y ongzhong 858,497 32,000,000 1.02
Jiaxing Tengyin 348,764 13,000,000 0.42
Changzhou Y ongyuan 536,560 20,000,000 0.64
Jiaxing Y ongli 321,936 12,000,000 0.38
Changzhou Y ongcai 938,981 35,000,000 1.12
Total 3,487,642 130,000,000 4.15
Upon the completion of such equity transfer and capital increase on November 9, 2021,
the shareholding of our Company was as follows:
Shareholders Number of Shares Equity interest
(%)
Mr. Hou 13,230,171 15.76
Mr. Hou Zebing 12,702,820 15.13
Eastern Bell II 13,885,413 16.54
Guangzhou Daze 8,092,554 9.64
Shenzhen Xinyu 5,638,994 6.72
Dachen Chuanglian 5,360,231 6.38
Dachen Chuangtong 4,867,988 5.80
Eastern Bell III 2,000,000 2.38
Aeon Life 1,858,213 2.21
GF Qianhe Investment Co., Ltd. ( ᄿ೯৻ձ
ʮ̡)( “ GF Qianhe ”)
(1) 1,786,743 2.13
Shanghai Xingfu 1,730,764 2.06
Wotu No. 10 1,498,559 1.78
Mr. Y ang Tao 1,411,100 1.68
Jiaxing Dace 952,334 1.13
Lantu Tianxing 973,597 1.16
Mr. Wang Jing 918,762 1.09
Changzhou Y ongcai 938,981 1.12
Jiaxing Y ongzhong 858,497 1.02
Zhongke No. 1 673,602 0.80
Fujian Xinghe 576,927 0.69
Changzhou Y ongyuan 536,560 0.64
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 143 –


--- page 154 ---
Shareholders Number of Shares Equity interest
(%)
Shanghai Zezhen 536,023 0.64
Huangpu Digital 482,904 0.58
Zhongke Baiyun 464,553 0.55
Longwin Jingjie 464,553 0.55
Jiaxing Tengyin 348,764 0.42
Ms. Zheng Ying 329,386 0.39
Jiaxing Y ongli 321,936 0.38
TZGF 300,000 0.36
Shanghai Dingmin 230,775 0.27
Total 83,971,704 100.00
Note:
1. On August 2, 2019, Zhuhai Qianheng and GF Qianhe entered into a merger agreement, pursuant to
which Zhuhai Qianheng was absorbed and merged by GF Qianhe. As a result, GF Qianhe became one
of our Shareholders.
20. Equity Transfer in July 2022
On December 31, 2021, Fujian Xinghe and Fuzhou Xinghe Y uanjing Equity Investment
Partnership (Limited Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ)) (“ Xinghe
Yuanjing ”), a Pre-IPO Investor, entered into an equity transfer agreement, pursuant to which
Fujian Xinghe transferred 576,927 Shares of our Company, representing approximately 0.69%
equity interest in our Company, to Xinghe Y uanjing at the consideration of RMB18,461,664.
On December 31, 2021, Shanghai Xingfu and Xinghe Y uanjing entered into an equity
transfer agreement, pursuant to which Shanghai Xingfu transferred 630,000 Shares of our
Company, representing approximately 0.75% equity interest in our Company, to Xinghe
Y uanjing at the consideration of RMB20,160,000.
On May 20, 2022, Xinghe Y uanjing, Guangzhou Daze, Wotu No. 10, Zhongke No. 1 and
Zhongke Baiyun entered into an equity transfer agreement, pursuant to which (i) Guangzhou
Daze transferred 317,500 Shares of our Company, representing approximately 0.38% equity
interest in our Company, to Xinghe Y uanjing at the consideration of RMB10,160,000; (ii) Wotu
No. 10 transferred 177,608 Shares of our Company, representing approximately 0.21% equity
interest in our Company, to Xinghe Y uanjing at the consideration of RMB5,683,456; (iii)
Zhongke No. 1 transferred 79,834 Shares of our Company, representing approximately 0.10%
equity interest in our Company, to Xinghe Y uanjing at the consideration of RMB2,554,688; and
(iv) Zhongke Baiyun transferred 55,058 Shares of our Company, representing approximately
0.07% equity interest in our Company, to Xinghe Y uanjing at the consideration of
RMB1,761,856 (collectively, the “ Jul-2022 Transfer ”).
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 144 –


--- page 155 ---
Upon the completion of such equity transfers on July 11, 2022, Fujian Xinghe ceased to
be our Shareholder and the shareholding of our Company was as follows:
Shareholders Number of Shares Equity interest
(%)
Mr. Hou 13,230,171 15.76
Mr. Hou Zebing 12,702,820 15.13
Eastern Bell II 13,885,413 16.54
Guangzhou Daze 7,775,054 9.26
Shenzhen Xinyu 5,638,994 6.72
Dachen Chuanglian 5,360,231 6.38
Dachen Chuangtong 4,867,988 5.80
Eastern Bell III 2,000,000 2.38
Aeon Life 1,858,213 2.21
Xinghe Y uanjing 1,836,927 2.19
GF Qianhe 1,786,743 2.13
Mr. Y ang Tao 1,411,100 1.68
Wotu No. 10 1,320,951 1.57
Shanghai Xingfu 1,100,764 1.31
Lantu Tianxing 973,597 1.16
Jiaxing Dace 952,334 1.13
Mr. Wang Jing 918,762 1.09
Changzhou Y ongcai 938,981 1.12
Jiaxing Y ongzhong 858,497 1.02
Zhongke No. 1 593,768 0.71
Changzhou Y ongyuan 536,560 0.64
Shanghai Zezhen 536,023 0.64
Huangpu Digital 482,904 0.58
Longwin Jingjie 464,553 0.55
Zhongke Baiyun 409,495 0.49
Jiaxing Tengyin 348,764 0.42
Ms. Zheng Ying 329,386 0.39
Jiaxing Y ongli 321,936 0.38
TZGF 300,000 0.36
Shanghai Dingmin 230,775 0.27
Total 83,971,704 100.00
EMPLOYEE INCENTIVE SCHEME
In recognition of the contributions of our employees and to incentivize them to further
promote our development, pursuant to the employee incentive scheme approved and adopted
by our Shareholders’ meeting on June 16, 2012 (the “ Employee Incentive Scheme ”),
Guangzhou Daze was established in the PRC as our Employee Incentive Platform.
Guangzhou Daze was established in the PRC as a limited partnership on August 16, 2011.
Mr. Hou Zebing is the sole general partner of Guangzhou Daze. Thus, in effect, all management
powers and voting rights of the Employee Incentive Platform reside with Mr. Hou Zebing. Our
Shareholders have discretion over the approval of the Employee Incentive Scheme and our
Board is responsible for the execution of Employee Incentive Scheme. As of the Latest
Practicable Date, Guangzhou Daze had 47 limited partners of which 44 are grantees including,
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 145 –


--- page 156 ---
Mr. Hou (an executive Director and chairman of our Board and owned approximately 17.75%
partnership interest in Guangzhou Daze), Mr. Qian Xiaoxuan ( ፺ወ৐) (cousin of Mr. Hou and
Mr. Hou Zebing and an executive Director and deputy general manager of our Company and
owned approximately 6.06% partnership interest in Guangzhou Daze), Ms. Ma Li ( ৵ᘆ) (an
executive Director and secretary of our Board and owned approximately 1.47% partnership
interest in Guangzhou Daze), Ms. Li Xiaolan ( ҽʃᚆ) (a Supervisor of our Company, chairman
of the Supervisory Committee and director of procurement center of our Company and owned
approximately 1.34% partnership interest in Guangzhou Daze), Mr. He Xiaocheng ( ൭ʃϓ)( a
Supervisor and director of asset center of our Company and owned approximately 0.68%
partnership interest in Guangzhou Daze), Mr. Zhou Limin ( մл͏) (deputy general manager
of our Company and owned approximately 2.91% partnership interest in Guangzhou Daze), Mr.
Y ang Qingyuan ( เᅅʩ) (deputy general manager of our Company and owned approximately
3.05% partnership interest in Guangzhou Daze), Mr. Pan Fei ( ᆙി) (the chief financial officer
of our Company and owned approximately 1.07% partnership interest in Guangzhou Daze), 33
existing employees of our Company, one retired employee and two former employees of our
Company. The remaining three limited partners of Guangzhou Daze include (i) Ms. Wu Aihua
(юฌശ) who was the then shareholder of Changchun Guanting Machinery Co., Ltd. (ڿ݆ڗ
ʮ̡)( “ Changchun Guanting ”) and became a limited partner of Guangzhou Daze
with approximately 1.81% partnership interest in Guangzhou Daze after Guangzhou Pengze
acquired Changchun Guanting in August 2012. Subsequently, Changchun Guanting was
deregistered by our Company in December 18, 2019; (ii) Mr. Y ao Daqi (ɽᄁ) who was the
then beneficial owner of Shanghai Zhenhao Equipment Leasing Co., Ltd. ( ɪऎแ㒊ண௪ॡ༣
ʮ̡)( “ Shanghai Zhenhao ”) and became a limited partner of Guangzhou Daze with
approximately 3.34% partnership interest in Guangzhou Daze after the Company acquired
certain assets of Shanghai Zhenhao in August 2018; and (iii) Mr. Li Changlin (᜝), a friend
of Mr. Hou and Mr. Hou Zebing who has extensive experience in business management,
became acquainted with Mr. Hou in 2007 and has provided valuable assistance, such as
introducing business resources and advice on how to conduct intralogistics equipment
subscription business segment, to our Group during the early stage of our development, while
we were commencing our intralogistics equipment subscription business in 2015, who
expressed his optimistic outlook on the development of our Company and interest in being a
limited partner of Guangzhou Daze and became a limited partner of Guangzhou Daze with
approximately 3.71% partnership interest in Guangzhou Daze in November 2015. Ms. Wu
Aihua had first expressed her interest in becoming an investor of our Company in November
2010, when at the time of such communication in 2010, Guangzhou Daze had yet to be
established. During the equity acquisition of Changchun Guanting, Ms. Wu Aihua negotiated
with our Company again regarding her wish to invest in the Company. During the assets
acquisition of Shanghai Zhenhao, Mr. Y ao Daqi expressed his optimistic outlook on the
development of our Company and interest in investment of our Company. Taking into account
their contributions to Changchun Guanting and Shanghai Zhenhao’s development and the
assistance during transitional period of respective acquisitions (for example, the overseeing
and procurement of asset and documentation transfer by relevant personnel, and continued
liaising with relevant customers regarding contract transfer or novation), each of Ms. Wu Aihua
and Mr. Y ao Daqi became a limited partner of Guangzhou Daze. Since it is at the early
development stage of the Company and a minor interest in Guangzhou Daze represented a
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 146 –


--- page 157 ---
passive investment interest in the Company, the Company agreed to grant Ms. Wu Aihua a right
to subscribe for Guangzhou Daze’s partnership interest at such price with reference to the
negotiated then valuation of the Company in November 2010. To the best knowledge of our
Directors, each of Ms. Wu Aihua, Mr. Y ao Daqi and Mr. Li Changlin is an Independent Third
Party and there are no other past or present relationship (whether business, employment,
family, trust, fund flow, financing or otherwise) between each of Ms. Wu Aihua, Mr. Y ao Daqi
and Mr. Li Changlin and the Company, our subsidiaries, Shareholders, Directors or senior
management, or any of the respective associates.
Certain employees who hold partnership interest in Guangzhou Daze are family members
of Mr. Hou and Mr. Hou Zebing, including: (i) Ms. Hou Zeyan (ዣዲ), cousin of Mr. Hou
and Mr. Hou Zebing, holds approximately 1.80% partnership interest in Guangzhou Daze; (ii)
Mr. Zhu Xiaodong (؇brother of Mr. Hou’s wife, holds approximately 15.83%
partnership interest in Guangzhou Daze; (iii) Mr. Y ang Ziyun ( เІථ), husband of Mr. Hou
and Mr. Hou Zebing’s sister, holds approximately 1.46% partnership interest in Guangzhou
Daze; (iv) Mr. Hou Zezhao (ዣ๫), brother of Mr. Hou and Mr. Hou Zebing, holds
approximately 1.39% partnership interest in Guangzhou Daze; (v) Mr. Ma Nanyu (Я),
cousin of Mr. Hou and Mr. Hou Zebing, holds approximately 1.94% partnership interest in
Guangzhou Daze; (vi) Mr. Zhang Lijie (؏son of Mr. Hou and Mr. Hou Zebing’s sister,
holds approximately 0.13% partnership interest in Guangzhou Daze; and (vii) Ms. Li Zhenglan
(ҽ͍ᚆ), daughter of Mr. Hou and Mr. Hou Zebing’s cousin, holds approximately 0.49%
partnership interest in Guangzhou Daze.
As of the Latest Practicable Date, the awards under the Employee Incentive Scheme has
been fully granted and vested.
PRE-IPO INVESTMENTS
Overview
During the period from November 2011 to July 2022, our Company obtained multiple
rounds of investments, including Nov-2011 Capital Increase, Oct-2012 Capital Increase,
Jun-2013 Transfer, Jun-2013 Capital Increase, Jul-2014 Transfer, Jul-2014 Capital Increase,
Mar-2015 Transfer, Dec-2015 Capital Increase, Dec-2016 Capital Increase, Jan-2017 Capital
Increase, Nov-2017 Capital Increase, Jan-2018 Transfer, Jun-2018 Transfer, Sep-2018 Capital
Increase, Nov-2021 Transfer, Nov-2021 Capital Increase and Jul-2022 Transfer, from the
Pre-IPO Investors through subscriptions for increased registered capital of our Company and/or
through transfers by the then shareholders of our Company. For further details, see the
subsection headed “– Corporate Development and Shareholding Changes of Our Company –
Subsequent Capital Changes and Equity Transfers” in this section.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 147 –


--- page 158 ---
Principal Terms of the Pre-IPO Investments
The following table (1) summarizes the key terms of the Pre-IPO Investments to our Company made by the Pre-IPO Investors:
Nov-2011
Capital
Increase
Oct-2012
Capital
Increase
Jun-2013
Capital
Increase
Jul-2014
Capital
Increase
Dec-2015
Capital
Increase
Dec-2016
Capital
Increase
Jan-2017
Capital
Increase
Nov-2017
Capital Increase
Sep-2018
Capital
Increase
Nov-2021
Capital
Increase
Amount of consideration paid (RMB) 15,000,000 1,680,000 30,000,000 30,000,000 20,000,000 20,000,000 86,000,000 106,758,065 180,000,000 130,00 0,000
Date of payment of full consideration November 17,
2011
September 26,
2012
June 21, 2013 June 13, 2014 December 4,
2015
December 26,
2016
December 29,
2016
November 23,
2017
October 16,
2018
November 5,
2021
Post-money valuation of our Company
(RMB) (approximation)
75 million 84 million 270 million 349 million 520 million 620 million 780 million 1,607 million (3) 2,480 million 3,130 million
Date of agreements September 3,
2011
September 16,
2012
June 11, 2013 June 5, 2014 November 20,
2015
December 16,
2016
December 25,
2016
November 15,
2017
August 25,
2018
August 5,
2021
Cost per Share paid under the Pre-IPO
Investments (RMB) (approximation)
0.41 0.45 1.28 1.51 2.17 2.50 2.80 5.38 7.70 9.32
Discount to the Offer Price
(approximation) (2)
97.1% 96.8% 90.8% 89.2% 84.4% 82.0% 79.9% 61.4% 44.7% 33.1%
Basis of determination of the valuation and
consideration
The valuation and consideration for each round of the Pre-IPO Investments were determined based on arm’s length negotiations between our Company and the Pre-IPO Investors after
taking into consideration the timing of the investments and the business, operations and status of our business and operating entities.
Lock-up period Pursuant to the applicable PRC law, all existing Shareholders (including the Pre-IPO Investors) could not dispose of any of the Shares held by them within 12 months following the
Listing Date.
Use of proceeds from the Pre-IPO
Investments
We utilized the proceeds from the Pre-IPO Investments for the principal business of our Company, including but not limited to research and developmen t activities, the growth and
expansion of our Company’s business and general working capital purposes. As of the Latest Practicable Date, 100% of the net proceeds from the Pre-IPO Investments paid to our
Company had been utilized.
Strategic benefits to our Company brought
by the Pre-IPO Investors
At the time of the Pre-IPO Investments, our Directors were of the view that our Company could benefit from the additional funds provided by the Pre-IPO I nvestors’ investments in
our Company and the knowledge and experience of the Pre-IPO Investors.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 148 –


--- page 159 ---
Notes:
(1) The Jun-2013 Transfer is not included in the above table since the RMB3.0 million, being the amount of consideration, was paid to Shenzhen Xinyu ins tead of our Company
by the Pre-IPO Investors. The cost per Share of the Jun-2013 Transfer was approximately RMB0.41 with the post-money valuation of our Company was appro ximately RMB77
million. Based on the indicative price of HK$15.18 (being the mid-point of the proposed range of the Offer Price as stated in this prospectus) and the in dicative exchange rate
of HK$1.00=RMB0.9174, the discount of the Offer Price of the Jun-2013 Transfer is approximately 97.1%. For details of the Jun-2013 Transfer, please s ee “– Corporate
Development and Shareholding Changes of our Company – Subsequent Capital Changes and Equity Transfers – 6. Equity Transfer in June 2013” in this secti on.
The Jul-2014 Transfer is not included in the above table since the RMB10,621,100, being the amount of consideration, was paid to Mr. Wang Jing, Ms. Zhen g Ying and Mr.
Hou Zebing instead of our Company by the Pre-IPO Investors. The cost per Share of the Jul-2014 Transfer was approximately RMB1.39 with the post-money v aluation of our
Company was approximately RMB320 million. Based on the indicative price of HK$15.18 (being the mid-point of the proposed range of the Offer Price as st ated in this
prospectus) and the indicative exchange rate of HK$1.00=RMB0.9174, the discount of the Offer Price of the Jul-2014 Transfer is approximately 90.0%. For details of the
Jul-2014 Transfer, please see “– Corporate Development and Shareholding Changes of our Company – Subsequent Capital Changes and Equity Transfers – 8 . Equity Transfer
and Capital Increase in July 2014” in this section.
The Mar-2015 Transfer is not included in the above table since the RMB7.68 million, being the amount of consideration, was paid to Guangzhou Daze inste ad of our Company
by the Pre-IPO Investors. The cost per Share of the Mar-2015 Transfer was approximately RMB1.39 with the post-money valuation of our Company was appro ximately RMB320
million. Based on the indicative price of HK$15.18 (being the mid-point of the proposed range of the Offer Price as stated in this prospectus) and the in dicative exchange rate
of HK$1.00=RMB0.9174, the discount of the Offer Price of the Mar-2015 Transfer is approximately 90.0%. For details of the Mar-2015 Transfer, please s ee “– Corporate
Development and Shareholding Changes of our Company – Subsequent Capital Changes and Equity Transfers – 9. Equity Transfer in March 2015” in this sect ion.
The Jan-2018 Transfer is not included in the above table since the RMB20.5 million, being the amount of consideration, was paid to Guangzhou Daze and Ms . Zheng Ying instead
of our Company by the Pre-IPO Investors. The cost per Share of the Jan-2018 Transfer was approximately RMB5.38 with the post-money valuation of our Com pany was
approximately RMB1,607 million. Based on the indicative price of HK$15.18 (being the mid-point of the proposed range of the Offer Price as stated in th is prospectus) and
the indicative exchange rate of HK$1.00=RMB0.9174, the discount of the Offer Price of the Jan-2018 Transfer is approximately 61.4%. For details of th e Jan-2018 Transfer,
please see “– Corporate Development and Shareholding Changes of our Company – Subsequent Capital Changes and Equity Transfers – 16. Equity Transfer i n January 2018”
in this section.
The Jun-2018 Transfer is not included in the above table since the RMB30,375,338.6, being the amount of consideration, was paid to Shenzhen Xinyu inst ead of our Company
by the Pre-IPO Investors. The cost per Share of the Jun-2018 Transfer was approximately RMB5.38 with the post-money valuation of our Company was appro ximately
RMB1,607 million. Based on the indicative price of HK$15.18 (being the mid-point of the proposed range of the Offer Price as stated in this prospectus) and the indicative
exchange rate of HK$1.00=RMB0.9174, the discount of the Offer Price of the Jun-2018 Transfer is approximately 61.4%. For details of the Jun-2018 Tran sfer, please see “–
Corporate Development and Shareholding Changes of our Company – Subsequent Capital Changes and Equity Transfers – 17. Equity Transfer in June 2018” i n this section.
The Nov-2021 Transfer is not included in the above table since the RMB9.0 million, being the amount of consideration, was paid to Shenzhen Xinyu instea d of our Company
by the Pre-IPO Investor. The cost per Share of the Nov-2021 Transfer was approximately RMB7.5 with the post-money valuation of our Company was approxi mately RMB2,519
million. Based on the indicative price of HK$15.18 (being the mid-point of the proposed range of the Offer Price as stated in this prospectus) and the in dicative exchange rate
of HK$1.00=RMB0.9174, the discount of the Offer Price of the Nov-2021 Transfer is approximately 46.1%. For details of the Nov-2021 Transfer, please s ee “– Corporate
Development and Shareholding Changes of our Company – Subsequent Capital Changes and Equity Transfers – 19. Equity Transfer and Capital Increase in N ovember 2021”
in this section.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 149 –


--- page 160 ---
The Jul-2022 Transfer is not included in the above table since the RMB58,781,664, being the amount of consideration, was paid to Fujian Xinghe, Shangh ai Xingfu, Guangzhou
Daze, Wotu No. 10, Zhongke No. 1 and Zhongke Baiyun instead of our Company by the Pre-IPO Investors. The cost per Share of the Jul-2022 Transfer was appro ximately
RMB8.00 with the post-money valuation of our Company was approximately RMB2,687 million. Based on the indicative price of HK$15.18 (being the mid-po int of the proposed
range of the Offer Price as stated in this prospectus) and the indicative exchange rate of HK$1.00=RMB0.9174, the discount of the Offer Price of the Jul -2022 Transfer is
approximately 42.6%. For details of the Jul-2022 Transfer, please see “– Corporate Development and Shareholding Changes of our Company – Subsequent Capital Changes
and Equity Transfers – 20. Equity Transfer in July 2022” in this section.
(2) The discount is based on the indicative price of HK$15.18 (being the mid-point of the indicative Offer Price of as stated in this prospectus) and the indicative exchange rate
of HK$1.00=RMB0.9174.
(3) The post-money valuation of our Company increased after Jan-2017 Capital Increase was primarily due to (i) the continuous expansion of our busine ss scale benefit from our
upgrade of operation information analysis system and (ii) establishment of our market position as an intralogistics equipment solution provider.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 150 –


--- page 161 ---
Pre-IPO Investors’ Rights
Pursuant to the capital increase agreements during the Pre-IPO Investments, the Pre-IPO
Investors had been granted certain special rights, including, among others, pre-emptive right,
right of first refusal and co-sale, anti-dilution right, preferred dividend right and veto right.
Pursuant to the special rights termination agreements dated October 28, 2019 and April 12,
2023 entered into and among relevant Shareholders and as confirmed by our Directors, all
special rights entitled to the Pre-IPO Investors either ceased to be effective since June 27,
2019, being the date on which the Shanghai Stock Exchange accepted our listing application
or having been void ab initio as agreed among relevant Shareholders.
Information About the Pre-IPO Investors
The background information of our Pre-IPO Investors is set out below.
Eastern Bell II, Eastern Bell III
and Shanghai Dingmin
Each of Eastern Bell II and Eastern Bell III is a
limited partnership established under the laws of the
PRC, the general partner of which is Shanghai
Dingxiao Enterprise Management Consulting
Center (Limited Partnership) ( ɪऎཻጽΆุ၍ଣፔ
༔ʕː(Υྫ)), whose general partner is
Shanghai Dingman Enterprise Management Co.,
Ltd. (ʮ̡), which in turn is
ultimately controlled by Mr. Y an Li ( ᘌɢ).
As of the Latest Practicable Date, Eastern Bell II had
15 limited partners and the interest held by the
limited partners in Eastern Bell II ranged from 0.66%
to 31.20% with Ningbo Eastern Bell Zeya V enture
Capital Partnership (Limited Partnership) (ᙒཻ
ዣԭ௴ุҳ༟ΥྫΆุ(Υྫ)) (“ Ningbo
Eastern Bell ”) as the largest limited partner with
31.20% interest in Eastern Bell II. The general
partner of Ningbo Eastern Bell was Mr. Zhu
Yingchun (an non-executive Director of our
Company) with approximately 0.64% interest in
Ningbo Eastern Bell. The limited partner of Ningbo
Eastern Bell was Ningbo Eastern Bell Lilong
Investment Management Center (Limited
Partnership) (ᙒཻɢᗬҳ༟၍ଣʕː (Υ
ྫ)) which was ultimately controlled by Mr. Y an Li
(ᘌɢ) with approximately 99.36% interest in
Ningbo Eastern Bell.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 151 –


--- page 162 ---
As of the Latest Practicable Date, Eastern Bell III
had 25 limited partners and the interest held by the
limited partners in Eastern Bell III ranged from
0.6% to 18% with Guochuang Kaiyuan Equity
Investment Fund (Limited Partnership) ( ਷௴කʩ
ږ(Υྫ)) (“Kaiyuan Fund ”) as the
largest limited partner with 18% interest in Eastern
Bell III. The general partner of Kaiyuan Fund is
CDB Kaiyuan Equity Investment Fund
Management Co., Ltd. (၍ଣ
ʮ̡)( “ CDB Kaiyuan ”) whose equity interest
was owned as to 70% and 30% by CDB Capital Co.,
Ltd. (ப΂ʮ̡)( “ CDB Capital ”) (a
company wholly owned by China Development
Bank (ක೯ვБ)( “ CDB”)) and Suzhou
Y uanhe Holding Co., Ltd. (ࠢ
ʮ̡)( “ Suzhou Yuanhe ”), respectively. Suzhou
Y uanhe was ultimately controlled by Suzhou
Industrial Park Management Committee ( ᘽψʈุ
ึ).
To the best knowledge of our Directors, each of
Kaiyuan Fund, CDB Kaiyuan, CDB Capital, CDB,
Suzhou Y uanhe and Suzhou Industrial Park
Management Committee is an Independent Third
Party.
Shanghai Dingmin is a limited partnership
established under the laws of the PRC, whose
partnership interest is owned as to 99% by Ningbo
Eastern Bell Lilong Investment Management Center
(Limited Partnership) (ᙒཻɢᗬҳ༟၍ଣʕː
(Υྫ)) (“ Eastern Bell Lilong ”). The general
partner of Eastern Bell Lilong is ultimately
controlled by Mr. Y an Li. Since Eastern Bell II is a
substantial Shareholder, each of Eastern Bell II,
Eastern Bell III and Shanghai Dingmin is ultimately
controlled by Mr. Y an Li. Upon the completion of
the Global Offering (assuming the Over-allotment
Option is not exercised), Mr. Y an Li would control
approximately 18.52% voting right of our Company
and become a substantial Shareholder of our
Company. As a result, each of Eastern Bell II,
Eastern Bell III and Shanghai Dingmin is a
Connected Person. For further details, please see
the section headed “Substantial Shareholders” in
this prospectus.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 152 –


--- page 163 ---
Dachen Chuanglian and Dachen
Chuangtong
Each of Dachen Chuanglian and Dachen
Chuangtong is a limited partnership established
under the laws of the PRC, the general partner of
which is Shenzhen Dachen Caizhi V enture Capital
Management Co., Ltd. ( ଉέ̹༺ોৌ౽௴ุҳ༟၍
ʮ̡). To the best knowledge of our
Directors, each of Dachen Chuanglian and Dachen
Chuangtong is an Independent Third Party. For
further details, please see the section headed
“Substantial Shareholders” in this prospectus.
As of the Latest Practicable Date, Dachen
Chuanglian had 47 limited partners and the interest
held by the limited partners in Dachen Chuanglian
ranged from 0.07% to 20.20% with Wuhu Shengbin
Investment Center (Limited Partnership) ( ጾಳ௷Ⴗ
ҳ༟ʕː(Υྫ)) (“ Wuhu Shengbin ”) as the
largest limited partner with 20.20% interest in
Dachen Chuanglian. The general partner of Wuhu
Shengbin was Shanghai Gefei Asset Management
Co., Ltd. (ʮ̡)( “ Shanghai
Gefei ”) which was an indirectly wholly-owned
subsidiary of Shanghai Nuoya Investment
Management Co., Ltd. (ʮ
̡)( “ Nuoya Investment ”) who was owned as to
46% and 25% by Ms. Wang Jingbo (تand
Mr. He Boquan ( ОЬᛆ), respectively.
As of the Latest Practicable Date, Dachen
Chuangtong had 43 limited partners and the interest
held by the limited partners ranged from 0.28% to
20.43% with Zhuhai Junfei Equity Investment
Center (Limited Partnership) (ᛆҳ༟ʕ
ː(Υྫ)) (“ Zhuhai Junfei ”) as the largest
limited partner with 20.43% interest in Dachen
Chuangtong. The general partner of Zhuhai Junfei
was Gefei Asset Management Co., Ltd. ( ဂ౵༟ପ
ʮ̡)( “ Gefei Asset ”) which was a
wholly-owned subsidiary of Nuoya Investment.
To the best knowledge of our Directors, each of
Wuhu Shengbin, Shanghai Gefei, Nuoya
Investment, Zhuhai Junfei and Gefei Asset is an
Independent Third Party.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 153 –


--- page 164 ---
Huangpu Digital, Jiaxing
Y ongzhong, Changzhou
Y ongyuan, Jiaxing Y ongli and
Changzhou Y ongcai
Each of Huangpu Digital, Jiaxing Y ongzhong,
Changzhou Y ongyuan, Jiaxing Y ongli and
Changzhou Y ongcai is a limited partnership
established under the laws of the PRC, the general
partner of which is Shanghai Y ongping Private
Equity Fund Management Partnership (Limited
Partnership) (၍ଣΥྫΆุ(ࠢ
Υྫ)) (“Shanghai Y ongping ”). The general partner
of Shanghai Y ongping is Shanghai Hengjiu
Financial Consulting Partnership (Limited
Partnership) ( ɪऎፅӯৌਕፔ༔ΥྫΆุ (Υ
ྫ)) (“ Shanghai Hengjiu ”) with 60% partnership
interest of Shanghai Y ongping, and Shanghai
Hengjiu is ultimately controlled by Mr. Zhou Bin
(մ੸).
As of the Latest Practicable Date, Huangpu Digital
had 6 limited partners and the interest held by the
limited partners in Huangpu Digital ranged from
approximately 1.67% to 41.67% with two limited
partners namely Changzhou Y ongyuan as the largest
limited partner with approximately 41.67% interest
in Huangpu Digital and Huangpu Investment
Holdings (Guangzhou) Co., Ltd. (ٰ(ᄿ
ψ)ʮ̡)( “ Huangpu Investment ”) with
approximately 33.33% interest in Huangpu Digital.
Huangpu Investment was indirectly wholly owned
by Guangzhou Development District Committee ( ᄿ
ψක೯ਜ၍։ึ).
As of the Latest Practicable Date, Jiaxing
Y ongzhong had 32 limited partners and the interest
held by the limited partners in Jiaxing Y ongzhong
ranged from approximately 0.62% to 18.49% with
Ru Heng ( ন㛬) as the largest limited partner with
approximately 18.49% interest in Jiaxing
Y ongzhong.
As of the Latest Practicable Date, Changzhou
Y ongyuan had 36 limited partners and the interest
held by the limited partners in Changzhou
Y ongyuan ranged from approximately 0.68% to
13.64% with Shenzhen Zhiling Investment
Holdings Co., Ltd. (ʮ̡)
(“Shenzhen Zhiling ”) as the largest limited partner
with approximately 13.64% interest in Changzhou
Y ongyuan. Shenzhen Zhiling was owned as to 50%
and 50% by Cao Shuhan ( ૎ዓဏ) and Y ang
Y uanchao ( เჃ൴), respectively.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 154 –


--- page 165 ---
As of the Latest Practicable Date, Jiaxing Y ongli
had 9 limited partners and the interest held by the
limited partners in Jiaxing Y ongli ranged from
approximately 6.67% to 16.67% with each of Xiong
Siming (׼Feng Y ueqi ( ᔮ˜ೡ) and Zhuo
Jinde (ᅃ) as the largest limited partners with
16.67% interest in Jiaxing Y ongli.
As of the Latest Practicable Date, Changzhou
Y ongcai had 6 limited partners and the interest
held by the limited partners in Changzhou
Y ongcai ranged from approximately 4.45% to
71.41% with Changzhou Xiangnong Industrial
Investment Partnership (Limited Partnership) ( ੬ψ
ୂ䙣ྼุҳ༟ΥྫΆุ(Υྫ)) (“ Changzhou
Xiangnong ”) as the largest limited partner with
approximately 71.41% interest in Changzhou
Y ongcai. The general partner of Changzhou
Xiangnong was Han Mingxiang (ୂ) with 50%
interest in Changzhou Xiangnong. Changzhou
Xiangnong had one limited partner, namely Xu
Taofen (ځࣹࢱwith 50% interest in Changzhou
Xiangnong.
To the best knowledge of our Directors, each of
Huangpu Digital, Jiaxing Y ongzhong, Changzhou
Y ongyuan, Jiaxing Y ongli and Changzhou Y ongcai,
Huangpu Investment, Guangzhou Development
District Committee, Ru Heng, Shenzhen Zhiling,
Cao Shuhan, Y ang Y uanchao, Xiong Siming, Feng
Y ueqi, Zhuo Jinde, Changzhou Xiangnong, Han
Mingxiang and Xu Taofen is an Independent Third
Party.
Zhongke No. 1 and Zhongke
Baiyun
Zhongke No. 1 is a limited partnership established
under the laws of the PRC, the general partner of which
is Guangdong Zhongke Kechuang V enture Capital
Management Co., Ltd. (௴௴ุҳ༟၍ଣ
ப΂ʮ̡) whose approximately 92.50% equity
interest is owned by China Science and Merchants
Capital Management Group Co., Ltd. (ਠҳ༟
ʮ̡) which in turn is ultimately
controlled by Mr. Shan Xiangshuang ( ఊ༉ᕐ).
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 155 –


--- page 166 ---
Zhongke Baiyun is a company with limited liability
established under the laws of the PRC and was owned
as to 45.00%, 16.25%, 15.00%, 10.00%, 10.00% and
3.75% by Zhongshan Bangzhi Enterprise Management
Consulting Co., Ltd. (ࠢ
ʮ̡), Guangdong Airport Management Group Co.,
Ltd. (ʮ̡), Tianjin Bangze
Investment Co., Ltd. (ʮ̡),
Guangdong Zhongke Kechuang V enture Capital
Management Co., Ltd. (௴௴ุҳ༟၍ଣ
ப΂ʮ̡), Guangzhou Panyu Information
Technology Investment Development Co., Ltd. ( ᄿψ
ʮ̡) and Mr. Y e
Delin (؍respectively. To the best knowledge of
our Directors, each of Zhongke No. 1 and Zhongke
Baiyun is an Independent Third Party.
Mr. Wang Jing and Shenzhen
Xinyu
Shenzhen Xinyu is a limited partnership established
under the laws of the PRC, the general partner of which
is Mr. Zhang Gaozhao ( ੵ৷๫). Mr. Wang Jing is a
nephew-in-law of Mr. Zhang Gaozhao. To the best
knowledge of our Directors, each of Mr. Wang Jing and
Shenzhen Xinyu is an Independent Third Party.
As of the Latest Practicable Date, Shenzhen Xinyu had
12 limited partners, all of whom were individuals, and
the interest held by the limited partners in Shenzhen
Xinyu ranged from 1.67% to 25.00% with Mr. Liang
Qingchao ( ૑ᅅಃ) as the largest limited partner with
25.00% interest in Shenzhen Xinyu. To the best
knowledge of our Directors, Mr. Liang Qingchao is an
Independent Third Party.
Aeon Life Aeon Life is a joint stock company with limited
liability established under the laws of the PRC. Aeon
Life is owned by 17 shareholders with the largest
shareholder named Dalian Wanda Group Co., Ltd. ( ɽ
ʮ̡) with shareholding of
approximately 11.55%. To the best knowledge of our
Directors, Aeon Life is an Independent Third Party.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 156 –


--- page 167 ---
Xinghe Yuanjing Xinghe Y uanjing is a limited partnership established
under the laws of the PRC, the general partner of which
is Fujian Xinghe Wealth Management Co., Ltd. (ܔ
ʮ̡)( “ Xinghe Wealth ”), which
was owned by Fujian Innovation and V enture Capital
Management Co., Ltd. (௴อ௴ุҳ༟၍ଣϞ
ʮ̡)( “ Fujian Innovation ”) and Chen Xiaodong
(؇Lin Shushun (න), Y an Hui (⠤ሾ) and
Chen Jinrong (࿰) as to 30%, 30%, 20%, 15% and
5%, respectively. Fujian Innovation was 70% indirectly
owned by State-owned Assets Supervision and
Administration Commission of the People’s
Government of Fujian Province (਷Ϟ
ึ). As of the Latest Practicable
Date, Xinghe Y uanjing had 9 limited partners and the
interest held by the limited partners in Xinghe Y uanjing
ranged from approximately 3.85% to 23.08% with
Seewell International Art Development Group Co.,
Ltd. (ʮ̡)( “ Seewell
International”) as the largest limited partner with
approximately 23.08% interest in Xinghe Y uanjing.
Seewell International was 90% owned by Chen Qijie
(௓ᄁ௫). To the best knowledge of our Directors, each
of Xinghe Y uanjing, Xinghe Wealth, Chen Xiaodong,
Fujian Innovation, Lin Shushun, Y an Hui, Chen Jinrong
(࿰), Seewell International and Chen Qijie is an
Independent Third Party.
GF Qianhe GF Qianhe is a company with limited liability
established under the laws of the PRC and a wholly-
owned subsidiary of GF Securities Co., Ltd. ( ᄿ೯൛Վ
ʮ̡), a listed company on the Stock
Exchange (stock code: 1776.HK) and Shenzhen Stock
Exchange (stock code: 000776.SZ). To the best
knowledge of our Directors, GF Qianhe is an
Independent Third Party.
Mr. Y ang Tao Mr. Y ang Tao is an individual investor and an
Independent Third Party, who has also made
investments in a series of other companies, such as,
Dongtai Qiheng Pharmaceutical Partnership (Limited
Partnership) (઼̨̹㛬ᔼᖹΥྫΆุ(Υྫ)),
Xinjiang Baihe Y ongsheng Equity Investment
Partnership (Limited Partnership) (ᛆ
ҳ༟ΥྫΆุ(Υྫ)) and Anhui Huizhifu
V enture Capital Co., Ltd. (ࠢ
ʮ̡), etc.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 157 –


--- page 168 ---
Wotu No. 10 Wotu No.10 is a limited partnership established under
the laws of the PRC, the general partner of which is
Zhuhai Hengqin Greater Bay Area Investment
Management Co., Ltd. ( मऎዑೞᝄਜཧఠҳ༟၍ଣ
ʮ̡)( “ Hengqin Investment ”) which was 90%
owned by Guangzhou 01 Wotu Internet Financial
Information Service Co., Ltd. ( ᄿψཧఠӜɺʝᑌၣ
ʮ̡)( “Guangzhou Wotu”). As of
the Latest Practicable Date, Guangzhou Wotu had 12
shareholders with the largest shareholder, namely
Zhuhai Hengqin Xingcheng Times Investment
Partnership (Limited Partnership) (˾
ҳ༟ΥྫΆุ(Υྫ)) (“ Hengqin Times ”), with
approximately 16.14% interest in Guangzhou Wotu.
Wotu No. 10 had 4 limited partners and the interest held
by the limited partners in Wotu No. 10 ranged from
approximately 15.50% to 49.60% with Zhuhai
Hengqin Zhongke Lingyi Angel Fund Partnership
(L.P .) (ΥྫΆุ(Υ
ྫ)) (“ Hengqin Zhongke ”) as the largest limited
partner with approximately 49.60% interest in Wotu
No. 10. Hengqin Investment is also the general partner
of Hengqin Zhongke and it held 0.85% partnership
interest. Hengqin Zhongke has 9 limited partners with
Mr. ZHANG Keqiang ( ੵд੶) and Guangdong
Zhongke Baiyun Emerging Industry V enture Capital
Fund Co., Ltd. (ͣථอጳପุ௴ุҳ༟ਿ
ʮ̡) holding approximately 26.96% and
26.09% partnership interests, respectively. The
partnership interests held by the remaining 7 limited
partners ranged from 2.61% to 13.04%. To the best
knowledge of our Directors, each of Wotu No. 10,
Hengqin Investment, Guangzhou Wotu, Hengqin Times
and Hengqin Zhongke is an Independent Third Party.
Shanghai Xingfu Shanghai Xingfu is a limited partnership established
under the laws of the PRC, the general partner of which
is Xingfu Investment Management Co., Ltd. ( ጳబҳ༟
ʮ̡). To the best knowledge of our
Directors, Shanghai Xingfu is an Independent Third
Party.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 158 –


--- page 169 ---
Lantu Tianxing Lantu Tianxing is a limited partnership established
under the laws of the PRC, the general partner of which
is Xiamen Lantu Lanbiao Investment Partnership
(Limited Partnership) (ᔝྡᔝᅺҳ༟ΥྫΆุ(Ϟ
Υྫ)). To the best knowledge of our Directors,
Lantu Tianxing is an Independent Third Party.
Jiaxing Dace Jiaxing Dace is a limited partnership established under
the laws of the PRC, the general partner of which is
Shanghai Dace Asset Management Co., Ltd. ( ɪऎɽഄ
ʮ̡). To the best knowledge of our
Directors, Jiaxing Dace is an Independent Third Party.
Shanghai Zezhen Shanghai Zezhen is a limited partnership established
under the laws of the PRC, the general partner of which
is Huang Miao ( ර↿). To the best knowledge of our
Directors, Shanghai Zezhen is an Independent Third
Party.
Longwin Jingjie Longwin Jingjie is a limited partnership established
under the laws of the PRC, the general partner of which
is Shanghai Longwin Investment Management
Partnership (General Partnership) (ၲҳ༟၍ଣ
ΥྫΆุ(౷ஷΥྫ)). To the best knowledge of our
Directors, Longwin Jingjie is an Independent Third
Party.
Jiaxing Tengyin Jiaxing Tengyin is a limited partnership established
under the laws of the PRC, the general partner of which
is Shanghai Tengwu Equity Investment Fund
Management Co., Ltd. (၍ଣ
ʮ̡). To the best knowledge of our Directors,
Jiaxing Tengyin is an Independent Third Party.
Ms. Zheng Ying Ms. Zheng Ying is an individual investor and was one
of the then shareholders of Shenyang Tianshun before
Shenyang Tianshun became one of our Subsidiaries. In
view of her optimistic outlook on the development of
our Company, she invested in our Company in October
2012 after we acquired Shenyang Tianshun.
TZGF TZGF is a company with limited liability established
under the laws of the PRC and a wholly-owned
subsidiary of Jifu V enture Capital Co., Ltd. ( Λబ௴ุ
ʮ̡). To the best knowledge of our
Directors, TZGF is an Independent Third Party.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 159 –


--- page 170 ---
Compliance With Interim Guidance and Guidance Letter
On the basis that (i) the consideration for the Pre-IPO Investments has been settled more
than 28 clear days before the date of our submission of the listing application to the Stock
Exchange; and (ii) the special rights granted to the Pre-IPO Investors were terminated pursuant
to the agreements dated October 28, 2019 and April 12, 2023 entered into by and among
relevant Shareholders, the Sole Sponsor confirms that the terms of the pre-IPO investments as
described above are in compliance with (i) the Interim Guidance on pre-IPO investments issued
by the Stock Exchange in October 2010 and as updated in March 2017 in the Guidance Letter
HKEX-GL29-12; (ii) the Guidance Letter HKEX-GL43-12 issued by the Stock Exchange in
October 2012 and as updated in July 2013 and March 2017; and (iii) the Guidance Letter
HKEX-GL44-12 issued by the Stock Exchange in October 2012 and as updated in March 2017.
SUBDIVISION OF OUR SHARES
Pursuant to the resolutions of our Shareholders passed on April 21, 2023, each Share with
a par value of RMB1.00 was sub-divided into four Shares with a par value of RMB0.25 each
with effective from the Listing Date. Immediately following the Subdivision of our Shares, the
share capital of our Company will be RMB83,971,704 divided into 335,886,816 Shares with
a par value of RMB0.25 each.
PUBLIC FLOAT
As of the Latest Practicable Date, the 35,357,020 Shares held by Mr. Hou, Mr. Hou
Zebing, Guangzhou Daze, Shenzhen Xinyu, Dachen Chuanglian, Dachen Chuangtong, Xinghe
Y uanjing, Mr. Wang Jing and Shanghai Zezhen, representing approximately 42.11% of our total
issued Shares, or approximately 40.64% of our total issued Shares upon Listing (assuming the
Over-allotment Option is not exercised), or approximately 40.43% of our total issued Shares
upon exercise of the Over-allotment Option in full, will not be considered as part of the public
float for the purpose of Rule 8.08 of the Listing Rules as these Shares are Unlisted Shares
which will not be converted into H Shares and listed upon completion of the Global Offering.
As of the Latest Practicable Date, the 27,783,612 Unlisted Shares held by Mr. Hou, Mr.
Hou Zebing, Eastern Bell II, Guangzhou Daze, Eastern Bell III and Shanghai Dingmin,
representing 33.09% of our total issued Shares, or approximately 31.93% of our total issued
Shares upon Listing (assuming the Over-allotment Option is not exercised), or approximately
31.77% of our total issued Shares upon exercise of the Over-allotment Option in full, will be
converted into H Shares and listed upon completion of the Global Offering. As these
Shareholders will constitute core connected persons of our Company upon Listing, the H
Shares held by them will not be counted towards the public float for the purpose of Rule 8.08
of the Listing Rules after the Listing.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 160 –


--- page 171 ---
As of the Latest Practicable Date, the 20,831,072 Unlisted Shares held by Shenzhen
Xinyu, Aeon Life, Xinghe Y uanjing, GF Qianhe, Mr. Y ang Tao, Wotu No. 10, Shanghai Xingfu,
Lantu Tianxing, Jiaxing Dace, Changzhou Y ongcai, Mr. Wang Jing, Jiaxing Y ongzhong,
Zhongke No. 1, Changzhou Y ongyuan, Huangpu Digital, Longwin Jingjie, Zhongke Baiyun,
Jiaxing Tengyin, Ms. Zheng Ying, Jiaxing Y ongli and TZGF, representing 24.81% of our total
issued Shares, or approximately 23.94% of our total issued Shares upon Listing (assuming the
Over-allotment Option is not exercised), or approximately 23.82% of our total issued Shares
upon exercise of the Over-allotment Option in full, will be converted into H Shares and listed
upon completion of the Global Offering. As these Shareholders will not constitute core
connected persons of our Company upon Listing, are not accustomed to take instructions from
core connected persons of our Company in relation to the acquisition, disposal, voting or other
disposition of their Shares, and as their acquisition of Shares were not financed directly or
indirectly by core connected persons of our Company, the H Shares held by them will be
counted towards the public float for the purpose of Rule 8.08 of the Listing Rules after the
Listing.
Based on the above, it is expected that immediately following completion of the Global
Offering and assuming the Over-allotment Option is not exercised, the total number of listed
H Shares (including H Shares to be converted from Unlisted Shares) of our Company held by
the public represents 27.43% of the total number of issued Shares of our Company. Therefore,
our Company will be able to meet the minimum public float requirement under Rule 8.08.
CAPITALIZATION OF OUR COMPANY
The table below is a summary of the capitalization of our Company as of the date of this
prospectus and the Listing Date (assuming the Over-Allotment Option is not exercised):
Shareholders
Number of
Shares as of
the date of
this prospectus
Number of
Shares after
Subdivision
as of the
Listing Date
Ownership
percentage as
of the date of
this prospectus
Ownership
percentage
as of the
Listing Date
(%) (%)
Mr. Hou (3) 13,230,171 52,920,684 15.76 15.21
Mr. Hou Zebing (3) 12,702,820 50,811,280 15.13 14.60
Eastern Bell II (2) 13,885,413 55,541,652 16.54 15.96
Guangzhou Daze (3) 7,775,054 31,100,216 9.26 8.94
Shenzhen Xinyu (3) 5,638,994 22,555,976 6.72 6.48
Dachen Chuanglian (1) 5,360,231 21,440,924 6.38 6.16
Dachen Chuangtong (1) 4,867,988 19,471,952 5.80 5.60
Eastern Bell III (2) 2,000,000 8,000,000 2.38 2.30
Aeon Life (2) 1,858,213 7,432,852 2.21 2.14
Xinghe Y uanjing (3) 1,836,927 7,347,708 2.19 2.11
GF Qianhe (2) 1,786,743 7,146,972 2.13 2.05
Mr. Y ang Tao (2) 1,411,100 5,644,400 1.68 1.62
Wotu No. 10 (2) 1,320,951 5,283,804 1.57 1.52
Shanghai Xingfu (2) 1,100,764 4,403,056 1.31 1.27
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 161 –


--- page 172 ---
Shareholders
Number of
Shares as of
the date of
this prospectus
Number of
Shares after
Subdivision
as of the
Listing Date
Ownership
percentage as
of the date of
this prospectus
Ownership
percentage
as of the
Listing Date
(%) (%)
Lantu Tianxing (2) 973,597 3,894,388 1.16 1.12
Jiaxing Dace (2) 952,334 3,809,336 1.13 1.09
Changzhou Y ongcai (2) 938,981 3,755,924 1.12 1.08
Mr. Wang Jing (3) 918,762 3,675,048 1.09 1.06
Jiaxing Y ongzhong (2) 858,497 3,433,988 1.02 0.99
Zhongke No. 1 (2) 593,768 2,375,072 0.71 0.68
Changzhou Y ongyuan (2) 536,560 2,146,240 0.64 0.62
Shanghai Zezhen (1) 536,023 2,144,092 0.64 0.62
Huangpu Digital (2) 482,904 1,931,616 0.58 0.56
Longwin Jingjie (2) 464,553 1,858,212 0.55 0.53
Zhongke Baiyun (2) 409,495 1,637,980 0.49 0.47
Jiaxing Tengyin (2) 348,764 1,395,056 0.42 0.40
Ms. Zheng Ying (2) 329,386 1,317,544 0.39 0.38
Jiaxing Y ongli (2) 321,936 1,287,744 0.38 0.37
TZGF (2) 300,000 1,200,000 0.36 0.34
Shanghai Dingmin (2) 230,775 923,100 0.27 0.27
Investors taking part in the
Global Offering – 12,136,000 – 3.49
Total 83,971,704 348,022,816 100.00 100.00
Notes:
(1) The Shares held by these Shareholders are Unlisted Shares and will remain as Unlisted Shares upon
Listing.
(2) The Shares held by these Shareholders are Unlisted Shares which will be converted into H Shares upon
Listing.
(3) Upon the completion of Subdivision and Global Offering, among (i) the 52,920,684 Unlisted Shares
held by Mr. Hou, 15,876,204 Shares will be converted into H Shares upon Listing; (ii) the 50,811,280
Unlisted Shares held by Mr. Hou Zebing, 15,243,384 Shares will be converted into H Shares upon
Listing; (iii) the 31,100,216 Unlisted Shares held by Guangzhou Daze, 15,550,108 Shares will be
converted into H Shares upon Listing; (iv) the 22,555,976 Unlisted Shares held by Shenzhen Xinyu,
18,555,976 Shares will be converted into H Shares upon Listing; (v) the 7,347,708 Unlisted Shares held
by Xinghe Y uanjing, 2,939,080 Shares will be converted into H Shares upon Listing; and (vi) the
3,675,048 Unlisted Shares held by Mr. Wang Jing, 1,875,048 Shares will be converted into H Shares
upon Listing.
PREPARATION FOR POTENTIAL A SHARE LISTINGS
Our Company submitted an application for listing on Shanghai Stock Exchange on June
27, 2019 and withdrawn the application on November 18, 2019 (the “ Shanghai Listing
Application ”). Subsequently, our Company submitted an application for listing on Shenzhen
Stock Exchange on July 7, 2020 and withdrawn the application on February 26, 2021 (the
“Shenzhen Listing Application ”, together with the Shanghai Listing Application, the
“A-Share Listing Applications” ). With regard the A-Share Listing Applications, our Company
has addressed certain enquiries received from the Shanghai Stock Exchange and the Shenzhen
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 162 –


--- page 173 ---
Stock Exchange which were primarily disclosure-based, requesting further details on
shareholding changes, financial information, business model description and legal compliance,
etc. No major comments or issues were raised or identified in the enquiries from the Shanghai
Stock Exchange and the Shenzhen Stock Exchange that would affect the Company’s suitability
for Listing on the Stock Exchange. To the best of their knowledge and belief, our Directors are
of the view that, to which the Sole Sponsor concurs, (i) there are no matters relating to the
A-Share Listing Applications that might potentially affect the suitability of our Company to be
listed on the Stock Exchange; and (ii) there are no matters relating to the A-Share Listing
Applications that ought to be drawn to the attention of the potential investors and the Stock
Exchange. As advised by our PRC Legal Adviser and based on relevant applicable rules and
regulations, we, may at our sole and absolute discretion, withdraw our listing application at any
time during the A-Share Listing Applications and the withdrawal of the A-Share Listing
Applications did not constitute contravention of regulatory requirements applicable to the
A-Share Listing Applications.
Due to the general market sentiment and the change in the overall strategic development
of our Company and our observation of the successful listing of a number of peer companies
on the Stock Exchange, which opened doors to the international capital markets for those
market players, our Company decided to pursue the Listing on the Stock Exchange.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 163 –


--- page 174 ---
OUR SHAREHOLDING AND CORPORATE STRUCTURE
Corporate Structure Immediately Before Completion of the Global Offering
The chart below sets out the shareholding structure of our Company immediately before completion of the Subdivision and the Global Offering:
Our Company
Mr. Hou(3) Guangzhou
Daze(3)
Shenzhen
Xinyu(3)
Dachen
Chuangtong(1)
Aeon
Life(2)
GF
Qianhe(2)
Wotu
No. 10(2)
Lantu
Tianxing(2)
Changzhou
Yongcai(2)
Jiaxing
Yongzhong(2)
Changzhou
Yongyuan(2)
Huangpu
Digital(2)
Zhongke
Baiyun(2)
Ms. Zheng
Ying(2) TZGF(2)
Mr. Hou
Zebing(3)
Eastern
Bell II(2)
Dachen
Chuanglian(1)
Eastern
Bell III(2)
Xinghe
Yuanjing(3)
Mr. Yang
Tao(2)
Shanghai
Xingfu(2)
Jiaxing
Dace(2)
Mr. Wang
Jing(3)
Zhongke
No. 1(2)
Shanghai
Zezhen(1)
Longwin
Jiangjie(2)
Jiaxing
Tengyin(2)
Jiaxing
Yongli(2)
Shanghai
Dingmin(2)
100% 100% 100% 100% 100% 100%100%100%100%100%
5.80% 2.21% 2.13% 1.57% 1.16% 1.12% 1.02% 0.64% 0.58% 0.49% 0.39% 0.36%
0.27%0.38%0.42%0.55%0.64%0.71%1.09%1.13%1.31%1.68%2.19%2.38%6.38%16.54%15.13%
6.72%9.26%15.76%
Guangzhou
Xinze
Anhui
Folangsi
Foshan
Folangsi
Zhuhai
TCM
Zhongshan
TCM
Guangzhou
Pengze
Hefei
Langyun
Shenyang
Tianshun
100% 100% 100%
Hefei Langhui New
Energy Technology
Co., Ltd.
(ᅆอঐ๕
ʮ̡)
Shanghai Yingji
Forklift
Co., Ltd.
Λɸԓ
ʮ̡)
Guangzhou Folangsi
Forklift Co., Ltd.
(ᄿψНଠ౶ɸԓ
ʮ̡)
Dongguan Folangsi
Construction
Machinery
Co., Ltd.
(౶ʈ೻
ʮ̡)
Qingdao Taizheng
New Trading
Co., Ltd.
(׸
ʮ̡)
Notes:
(1) The Shares held by these Shareholders are Unlisted Shares and will remain as Unlisted Shares upon Listing.
(2) The Shares held by these Shareholders are Unlisted Shares which will be converted into H Shares upon Listing.
(3) Upon the Completion of Subdivision and the Global Offering, among (i) the 52,920,684 Unlisted Shares held by Mr. Hou, 15,876,204 Shares will be con verted into H Shares
upon Listing; (ii) the 50,811,280 Unlisted Shares held by Mr. Hou Zebing, 15,243,384 Shares will be converted into H Shares upon Listing; (iii) the 31, 100,216 Unlisted Shares
held by Guangzhou Daze, 15,550,108 Shares will be converted into H Shares upon Listing; (iv) the 22,555,976 Unlisted Shares held by Shenzhen Xinyu, 18 ,555,976 Shares
will be converted into H Shares upon Listing; (v) the 7,347,708 Unlisted Shares held by Xinghe Y uanjing, 2,939,080 Shares will be converted into H Shar es upon Listing; and
(vi) the 3,675,048 Unlisted Shares held by Mr. Wang Jing, 1,875,048 Shares will be converted into H Shares upon Listing.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 164 –


--- page 175 ---
Corporate Structure Immediately After Completion of the Global Offering
The chart below sets out the shareholding structure of our Company immediately after completion of the Subdivision and the Global Offering
(assuming the Over-allotment Option is not exercised):
Our Company
Mr. Hou(3) Guangzhou
Daze(3)
Shenzhen
Xinyu(3)
Dachen
Chuangtong(1)
Aeon
Life(2)
GF
Qianhe(2)
Wotu
No. 10(2)
Lantu
Tianxing(2)
Changzhou
Yongcai(2)
Jiaxing
Yongzhong(2)
Changzhou
Yongyuan(2)
Huangpu
Digital(2)
Zhongke
Baiyun(2)
Ms. Zheng
Ying(2) TZGF(2)
Mr. Hou
Zebing(3)
Eastern
Bell II(2)
Dachen
Chuanglian(1)
Eastern
Bell III(2)
Xinghe
Yuanjing(3)
Mr. Yang
Tao(2)
Shanghai
Xingfu(2)
Jiaxing
Dace(2)
Mr. Wang
Jing(3)
Zhongke
No. 1(2)
Shanghai
Zezhen(1)
Longwin
Jiangjie(2)
Jiaxing
Tengyin(2)
Jiaxing
Yongli(2)
Shanghai
Dingmin(2)
100% 100% 100% 100% 100% 100%100%100%100%100%
5.60% 2.14% 2.05% 1.52% 1.12% 1.08% 0.99% 0.62% 0.56% 0.47% 0.38% 0.34%
Public
Shareholder
3.49%
0.27%0.37%0.40%0.53%0.62%0.68%1.06%1.09%1.27%1.62%2.11%2.30%6.16%15.96%14.60%
6.48%8.94%15.21%
Guangzhou
Xinze
Anhui
Folangsi
Foshan
Folangsi
Zhuhai
TCM
Zhongshan
TCM
Guangzhou
Pengze
Hefei
Langyun
Shenyang
Tianshun
100% 100% 100%
Hefei Langhui New
Energy Technology
Co., Ltd.
(ᅆอঐ๕
ʮ̡)
Shanghai Yingji
Forklift
Co., Ltd.
Λɸԓ
ʮ̡)
Guangzhou Folangsi
Forklift Co., Ltd.
(ᄿψНଠ౶ɸԓ
ʮ̡)
Dongguan Folangsi
Construction
Machinery
Co., Ltd.
(౶ʈ೻
ʮ̡)
Qingdao Taizheng
New Trading
Co., Ltd.
(׸
ʮ̡)
Notes:
(1) The Shares held by these Shareholders are Unlisted Shares and will remain as Unlisted Shares upon Listing.
(2) The Shares held by these Shareholders are Unlisted Shares which will be converted into H Shares upon Listing.
(3) Upon the Completion of Subdivision and the Global Offering, among (i) the 52,920,684 Unlisted Shares held by Mr. Hou, 15,876,204 Shares will be con verted into H Shares
upon Listing; (ii) the 50,811,280 Unlisted Shares held by Mr. Hou Zebing, 15,243,384 Shares will be converted into H Shares upon Listing; (iii) the 31, 100,216 Unlisted Shares
held by Guangzhou Daze, 15,550,108 Shares will be converted into H Shares upon Listing; (iv) the 22,555,976 Unlisted Shares held by Shenzhen Xinyu, 18 ,555,976 Shares
will be converted into H Shares upon Listing; (v) the 7,347,708 Unlisted Shares held by Xinghe Y uanjing, 2,939,080 Shares will be converted into H Shar es upon Listing; and
(vi) the 3,675,048 Unlisted Shares held by Mr. Wang Jing, 1,875,048 Shares will be converted into H Shares upon Listing.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 165 –


--- page 176 ---
OVERVIEW
We are a leading intralogistics equipment solution provider in China. Focusing on
intralogistics equipment subscription services, we strive to provide enterprises with one-stop
solutions for intralogistics equipment utilization and management. According to CIC, we are
the largest intralogistics equipment solution provider in China in terms of revenue for 2022. We
also have an established presence in the industry, providing services that span the entire
lifecycle of intralogistics equipment, including equipment subscription, repair and
maintenance, and disposal. As of April 30, 2023, we had 67 offline service outlets in 47 cities
throughout China, managing over 40,000 units of intralogistics equipment.
Intralogistics equipment utilization and management present challenges, including high
purchase and maintenance costs, a need for specialized expertise, and significant management
complexity. However, it is not easy for enterprises to have satisfying services from traditional
service providers, as most enterprises are not experts in intralogistics equipment, and may need
assistance in monitoring, checking and maintaining, and operating such equipment. Our
customers are offered with different subscription arrangements in terms of equipment portfolio,
equipment operation guidance, scheduled maintenance and repair, and real-time operation
monitoring, which help customers to save costs related to fixed asset procurement and
equipment maintenance afterwards. According to CIC, intralogistics equipment solutions can
help enterprises reduce costs by approximately 20% throughout the equipment’s lifecycle
compared to traditional intralogistics equipment procurement mode. Occasionally, upon
requests, we offer suitable equipment disposal solutions to relevant customers, so that they may
conveniently make adjustment to their fleet based on their needs. By revitalizing the value of
used intralogistics equipment that may otherwise remain idle, we are able to effectively
identify and serve market demands.
According to CIC, despite the growing demand for intralogistics equipment solutions in
China, the penetration rate remains low at around 3.7% in 2022. In comparison, developed
countries like the U.S. had a much higher penetration rate of approximately 54.6% in 2022,
demonstrating significant potential for improvement and expansion in China. According to
CIC, the market size of intralogistics equipment solutions in China is expected to reach
RMB34.9 billion by 2027, representing a CAGR of 25.0% from 2022 to 2027.
BUSINESS
– 166 –


--- page 177 ---
The chart below illustrates the major participants in related industrial chains and the
industry ecosystem:
Intelligent Asset and Operation
Management Platform
 Services
Supply Chain
Manufacturing
enterprises
Equipment
Manufacturers
Logistics
enterprises
Supply of
equipment
and parts
Provision of
one-stop
services
Equipment Parts
Manufacturers
Equipment
Subscription
Equipment
Maintenance and
Repair
 Equipment
Management and
Optimization
Equipment
Disposal
Our Business Model
We invested in developing and improving our intralogistics equipment solutions, which
comprise the following three business segments during the Track Record Period:
 Intralogistics Equipment Subscription Services : We provide intralogistics
equipment to customers for their usage with value-added services, including but not
limited to, equipment selection, on-site operation training, general and necessary
maintenance and repair, and real-time monitoring of equipment status and operation
through our Intelligent Asset and Operation Management Platform. In managing this
business segment, we charge customers services fees mainly based on types and
configurations of equipment selected, duration they use the subscribed intralogistics
equipment, and customization of related services (if applicable).
 Maintenance and Repair Services : In this business segment, we generate revenue
from providing on-site maintenance and repair services to customers for their
intralogistics equipment. We charge fees either on project basis for one-off repair
services, or based on service plans where we charge fees on monthly basis for
certain contract period covering equipment specified in the relevant agreement.
 Sales of Intralogistics Equipment and Parts : We sell new and used intralogistics
equipment to enterprises in China; and intralogistics equipment parts to enterprises
in China and abroad. We conduct sales through our own sales team directly to end
customers. We had a broad range of customers, such as manufacturers, logistics
companies, and trading companies, with intralogistics need, including movement of
heavy goods and material in indoor and limited outdoor spaces.
BUSINESS
– 167 –


--- page 178 ---
ESG Initiatives and Commitment
For years, we have been dedicated to promoting sustainability and resource sharing. We
address resource allocation challenges during peak equipment demand and help customers
reduce associated costs. For example, our predictive maintenance service prolongs the useful
life of assets, contributing to a more sustainable and efficient use of resources. We aim to build
a supply chain ecosystem, connecting upstream suppliers and downstream customers through
technology-based solutions.
As part of our commitment to environmental responsibility and sustainable intralogistics
equipment solutions, we have significantly increased the proportion of electric forklifts in our
equipment fleet during the Track Record Period, which increased from approximately 88.6%
in 2020 to approximately 90.0% in 2021 and further increased to approximately 91.1% in 2022
and approximately 91.7% for the four months ended April 30, 2023. According to CIC, electric
equipment can potentially reduce energy consumption costs by up to 82.2% compared to
ICE-powered equipment, assuming a standard eight-hour workday. Moreover, electric
equipment produces zero emissions and much lower noise. During the Track Record Period, we
also invest primarily in new energy equipment, with lithium battery equipment accounting for
about 70.0% of our total intralogistics equipment as of April 30, 2023. We believe that our ESG
initiatives and commitment to sustainable intralogistics solutions will facilitate the
transformation of equipment towards more environmentally-friendly alternatives and promote
environmental protection.
Operational Performance
During the Track Record Period, we achieved significant growth in equipment fleet size.
As of December 31, 2020, 2021, 2022 and April 30, 2023, we had 31,213 units, 36,257 units,
39,145 units and 40,644 units of intralogistics equipment, respectively. Our customer base has
also grown steadily. The number of our customers increased from 7,477 in 2020 to 7,929 in
2021, and further to 8,170 in 2022. For the four months ended April 30, 2022 and 2023, the
number of our customers increased from 5,237 to 5,711. In particular, a significant portion of
our customer base comprises of manufacturing and logistics enterprises. In 2020, 2021, 2022
and for the four months ended April 30, 2023, in our customers, manufacturing enterprises
amounted for 3,042, 3,094, 3,290 and 2,541, respectively; logistics enterprises amounted for
1,814, 1,929, 1,916 and 1,440, respectively.
BUSINESS
– 168 –


--- page 179 ---
OUR COMPETITIVE STRENGTHS
We believe the following competitive strengths contributed to our success and position us
for continued growth:
Pioneer and Leading Provider of Intralogistics Equipment Solutions in China
According to CIC, we are the largest intralogistics equipment solution provider in China
in terms of revenue for 2022. We leverage our expertise to provide equipment solution plans
that could optimize equipment performance and minimize downtime in an efficient way. With
fleet arrangement and streamlined management and maintenance, we help our customers
reduce costs for equipment procurement without sacrificing their intralogistics equipment
need. Strategically focusing on the intralogistics equipment solution industry since our
inception, we have accumulated rich experience in managing intralogistics equipment and
parts. Despite the growing demand for intralogistics equipment solutions in China, the
penetration rate remains low at around 3.7% in 2022. In comparison, developed countries like
the U.S. had a much higher penetration rate of approximately 54.6% in 2022, demonstrating
significant potential for improvement and expansion in China. Building upon our technological
capabilities, extensive operation and management experience, and brand recognition, we are
able to solidify our leading industry position and achieve sustainable growth.
During the Track Record Period, we achieved significant growth in equipment fleet size.
As of December 31, 2020, 2021, 2022 and April 30, 2023, we had 31,213 units, 36,257 units,
39,145 units and 40,644 units, respectively. We have received various honors and prizes in the
industry, including the 2022-2023 Outstanding Supply Chain Enterprise (2022-2023 ϋᎴӸԶ
ᏐᗡΆุᆤ) awarded by the Guangdong Procurement and Supply Chain Association,
Guangdong Smart Manufacturing Partner (౽ঐႡி͛࿒ΥЪྫМ) awarded by the
Department of Industry and Information Technology of Guangdong Province in 2021, and the
Most Innovative Award in the “Power of Example” Science and Technology Pioneer
Competition (“ɢඎ”௴΋ቜɽᒄ௰Ո௴อɢᆤ) awarded by Department of Science
and Technology of Guangdong Province (ኪҦஔᝂ), China Construction Bank
Technology Finance Innovation Center (ፄ௴อʕː) and Nanfang Daily
Newspaper Group Co., Ltd. (˙జุෂదණྠ), collectively, in 2020. Moreover, we are a
director unit of the Industrial Truck Institution of China Construction Machinery Association
and are used as a case study for supply chain benchmarking by the Guangdong Procurement
and Supply Chain Association.
BUSINESS
– 169 –


--- page 180 ---
Since our establishment in 2007, we have been at the forefront of the industry, pioneering
the development of intralogistics equipment solutions for manufacturing and logistics
enterprises. Through over 16 years of efforts, we have built comprehensive competitive edges
over industry peers, including:
 Supply Chain Capabilities : Leveraging years of first-hand management experience
and continuous optimization, we have developed and maintained long-term and
stable relationships with leading manufacturers in the industry, ensuring the timely
and cost-effective procurement of equipment and parts, which had influence on
upstream industry participants.
 Intelligent Asset and Operation Management Capabilities : Through our Intelligent
Asset and Operation Management Platform, we have established a service network
aiming for coordinated equipment engagement and management. Our platform
features a visualized interface that results in continuous operation efficiency
improvement and growing customer loyalty.
 Predictive Maintenance Capabilities : Our predictive maintenance services utilize
advanced detection and repair technologies, enabling us to effectively restore and
optimize functionality and endurance in a cost-efficient way, resulting in effective
extension of equipment’ useful life.
 Scale Effect : The continuous expansion of our equipment fleet highlights the
efficiency advantage of our integrated operation and management supported by
technology capability. We leverage this scale effect to optimize the allocation of
equipment and personnel resources, reducing costs and improving operation
efficiency.
Continuous Improvement of Intralogistics Equipment Operational Efficiency Benefited
From Highly Synergistic Service Portfolio
We also have an established presence in the industry, providing services that span the
entire lifecycle of intralogistics equipment, including equipment subscription, repair and
maintenance, and disposal. Intralogistics equipment utilization and management present
inherent challenges, including high purchase and maintenance costs, a need for specialized
expertise, and significant management complexity. However, it is not easy for enterprises to
have satisfying services from traditional service providers, as most enterprises are not experts
in intralogistics equipment, and may need assistance in monitoring, checking and maintaining,
and operating such equipment. Our customers are offered with different subscription
arrangements in terms of equipment portfolio, equipment operation guidance, scheduled
maintenance and repair, and real-time operation monitoring, which help customers to save
costs related to fixed asset procurement and equipment maintenance afterwards. According to
CIC, intralogistics equipment solutions can help enterprises reduce costs by approximately
20% throughout the equipment’s lifecycle compared to traditional intralogistics equipment
procurement mode. Furthermore, capitalizing on our broad service network and customer base,
BUSINESS
– 170 –


--- page 181 ---
we offer suitable equipment disposal solutions to relevant customers, so that they may
conveniently make adjustment to their fleet based on business plan at different stages. By
revitalizing the value of used intralogistics equipment that may otherwise remain idle, we are
able to effectively identify and serve market demands.
Our comprehensive service portfolio provides us with cross-selling opportunities across
different business segments, resulting in synergistic effects that facilitate the quick and
continuous expansion of our equipment fleet. We start with equipment subscription services
and introduce customers to our diverse range of service offerings through cross-selling efforts.
In managing our repair and maintenance business segment, we earn customers’ trust in our
technology and execution capability, promoting their decision to engage us for equipment
subscription services. During the Track Record Period, nearly 70% of our intralogistics
equipment subscription service customers had previously utilized our repair and maintenance
services, demonstrating the effectiveness of our cross-selling strategy. Our sales of
intralogistics equipment and parts business segment enable us to serve customers’ diverse
needs while providing us with first-hand knowledge on evolving market demands by attending
relevant exhibitions and events in the sales market and having frequent discussion with
existing/potential customers with respect to their needs. Our comprehensive knowledge in
equipment and components, as well as robust sales capabilities and results contributed to
enhanced relationships with reputable suppliers and expanded customer subscription channels.
The synergy among our three business segments has created a foundation for expanding our
equipment fleet management capabilities, leading to increased customer subscription.
Our predictive maintenance services utilize advanced detection and repair technologies,
enabling us to effectively restore and optimize functionality and endurance to the maximum
extent in a cost-efficient way, resulting in effective extension of equipment’ useful life. As a
result, the useful life of intralogistics equipment under our management has been extended to
up to 13 years, which is longer than the average useful life of intralogistics equipment in China,
typically ranging from 5 to 10 years. Taken together our technology capability of improving
our fleet’s operation efficiency while reducing downtime, the effective extension of useful life
of our equipment, is expected to lay a solid foundation for continuous optimization of our
profitability.
Intelligent Asset and Operation Management Platform With IoT Integration for Efficient
Management
We developed our technology platform, namely Intelligent Asset and Operation
Management Platform, based on IoT technologies, through which, we are able to achieve
real-time equipment status supervision, supply chain and inventory management, as well as
responsive dispatch of personnel and equipment. To be specific, this platform helps us
categorize, organize and update equipment and parts information and configurations. We will
then use big-data analytical capabilities to analyze the function and efficiency of the equipment
from various dimensions in a highly efficient and automated way, based on which, our
management may quickly make business decisions in relation to the relevant operations on a
well-informed basis.
BUSINESS
– 171 –


--- page 182 ---
We managed to ensure optimized resource allocation and operation management, without
incurring significantly larger labor costs, in spite of our continuous business expansion during
the Track Record Period. As of the Latest Practicable Date, our Intelligent Asset and Operation
Management Platform covered over 97.3% of our equipment fleet, allowing effective operation
management. For further details, please see “– Our Technology” in this section.
We aim to maximize the use of efficiency of intralogistics equipment and minimize
operation and maintenance costs through repair and maintenance based on real-time
supervision on equipment status. Utilizing our Intelligent Asset and Operation Management
Platform, we create customized operation plans based on fleet specifications such as brand,
vehicle type, quantity, and age. This is expected to improve equipment use efficiency, minimize
operation costs and expenses, and reduces waste of resources due to idleness.
We have been at the forefront of the digital transformation of the intralogistics equipment
industry, implementing comprehensive digitalization across our equipment procurement,
maintenance, and management. Based on this achievement, our Intelligent Asset and Operation
Management Platform is able to effectively support business development across all business
segments, promoting synergy and enhancing our competitiveness. Drawing on our extensive
practical experience, deep industry inception, and various product and service portfolio, we are
able to continuously enhance our service efficiency and technology feature.
Comprehensive Supply Chain Management That Effectively Connects Upstream and
Downstream Enterprises Along the Industry Value Chain
Our comprehensive supply chain capabilities have enabled us to establish reliable
relationships with upstream suppliers. This allows us to secure a steady and consistent supply
of intralogistics equipment and parts, ensuring the proper solution for the demands of all
equipment and parts during our daily operations. With our experience in managing numerous
brands and types of intralogistics equipment and parts, we have bargaining power that enables
us to reduce purchasing and logistics costs while gaining a competitive edge.
Our extensive nationwide service network provides high-quality services with flexibility
and convenience in a timely manner. As of April 30, 2023, our national service network
included our headquarter, three main supply chain bases, and 67 service outlets in 47 cities
across China, ensuring efficient and agile equipment supply. Our regional supply chain base
layout, in conjunction with our Intelligent Asset and Operation Management Platform, enables
us to match suitable equipment from the nearest base and arrange transportation based on
customers’ demands. We strategically place our service network to ensure our response time to
reach the customer’s designated work site is generally limited to approximately eight hours
upon reception of notice.
BUSINESS
– 172 –


--- page 183 ---
We have also established a comprehensive supply chain database to efficiently and
systematically manage intralogistics equipment. As of April 30, 2023, the database contained
information on around 331,000 spare parts, including types, specifications, performance
indicators, inventory levels, and purchase details for all equipment brands. Each spare part has
a unique identification code for accurate matching and rapid delivery to efficiently meet
customer demands.
Service Network with Online and Offline Coverage Serving Multiple Industries and Large
Customer Base
We are able to provide high-quality services to a large and diverse customer base across
China through our integrated services. The online component, our Intelligent Asset and
Operation Management Platform, offers real-time equipment status supervision, acting as our
digital arm for customer support. Our offline services are delivered through our strategically
positioned service outlets. As of April 30, 2023, we had 67 service outlets located in 47 cities
across China. Through this integrated approach, we were able to effectively serve corporate
customers, including top logistics enterprises, such as Shanghai ANE, Best Logistics, Yimi
Dida, and FAW Group, as well as large manufacturing enterprises like Swire Coca-Cola during
the Track Record Period. According to the List of Top 50 Logistics Enterprises in 2022 in
China issued by China Federation of Logistics & Purchasing, among the top ten logistics
enterprises in China in 2022, seven of them are our customers.
We strive to continuously enhance the customer experience and fully explore customer
value to meet the demands of manufacturing and logistics enterprises for intralogistics
equipment. We have secured relationships with various leading customers throughout our
development process, and have maintained long-term and stable cooperation with them.
Customers who had our intralogistics equipment subscription services in the preceding year
and also in the given year are deemed as our retained customers for intralogistics equipment
subscription services. The revenue contribution of such retained customers in 2020, 2021 and
2022 amounted to 85.9%, 88.0% and 89.8%, respectively. Such revenue contribution equals to
the result of intralogistics equipment subscription service revenue generated from such
retained customers in the given year divided by total intralogistics equipment subscription
service revenue in the same year. Such figure demonstrates our customer retention capabilities.
Our one-stop service model sets us apart from our competitors and allows us to deliver
exceptional customer experiences and build partnerships. We are committed to meeting the
diverse demands of our customers on a daily basis. With our expertise in equipment
management, customer service, and data utilization, we have established a solid industry
reputation and earned recognition from our customers. During the Track Record Period, we
received several awards, including the Outstanding Contribution Supplier and Best Practice
Prize from JD Logistics in 2022 and Best Partner of JD Logistics in 2021.
BUSINESS
– 173 –


--- page 184 ---
Visionary Management Team With Profound Industry Experience
Our founder and management team have spent years deeply immersed in the industry,
accumulating valuable sales, management, and operational experience in intralogistics
equipment solution industry. Possessing keen business insights, they have successfully led the
continuous evolution and growth of our business. Mr. Hou Zekuan, our founder and executive
Director of our Company, has over 29 years of industry experience. In 2007, he co-founded
Folangsi with Mr. Hou Zebing, who possesses 22 years of experience in intralogistics
equipment industry. Together, they strategically positioned the company in both the upstream
and downstream segments of the intralogistics equipment industry. Over the course of 16 years
of development, they have consistently built resources across the entire industry, thereby
enhancing our comprehensive service capabilities and pioneering the development of
intralogistics equipment solutions for manufacturing and logistics enterprises.
Our core management and executive team, who have worked together for over a decade,
demonstrate stability and cohesion. They possess extensive knowledge of China’s intralogistics
equipment market and have a deep understanding of industry trends, the value of our products
and services, and the internal management style required for success in the industry. Our team
possesses extensive expertise in intralogistics equipment solutions, which enables us to
establish an efficient management framework and business strategy aligned with our
operations. In addition, we have assembled a highly skilled team that seamlessly connects
front, middle, and back offices. Our research and development and business teams are
characterized by their rich professional experience and high levels of loyalty, which has helped
us establish robust industry barriers. Our research and development staff, with an average of
5.8 years of experience, consistently explore the industry in-depth, while our business
personnel maintain a keen understanding of customer needs and design effective solutions that
receive high praise from our customers. We place emphasis on talent recognition,
incentivization, and strategies that foster and develop our company culture. As a result, we
have achieved a retention rate of nearly 100% for employees at director-level and above over
the past three years. This has allowed us to maintain a stable and highly experienced team that
drives our success and ensures that we continue to provide effective solutions to our customers.
OUR STRATEGIES
To establish ourselves as the first choice for enterprises’ intralogistics equipment
utilization and management, we plan to implement the following strategies:
To Keep Improving Customer Coverage and Expanding the Categories of Intralogistics
Equipment
We aim to expand our sales network, diversify customer acquisition channels, and
improve customer acquisition by conducting in-depth studies of regional markets to enhance
service coverage over existing customers. We will also tap into new customer base. To achieve
these goals, we will implement the following measures:
 Increase Marketing Investment and Accurately Target Customers : We plan to expand
our sales teams and utilize various sales and marketing channels, including offline
promotion, magazines and media, sponsorships, and association activities, to
enhance our brand awareness and influence and attract more corporate customers.
BUSINESS
– 174 –


--- page 185 ---
 Expand our Service Outlets and Improve Service Quality : We aim to increase the
number of offline service outlets across China and strengthen connections with
customers to improve our service coverage. By promoting one-stop services with
intralogistics equipment subscription service as the primary business and repair and
sales as auxiliary businesses, we aim to efficiently and comprehensively meet the
high-standard and personalized service demands of our customers and improve
customer retention.
We will continuously invest in acquiring intralogistics equipment, expanding our range of
intralogistics equipment beyond forklifts, and providing corresponding lifecycle solutions to
expand our share in the market and fully demonstrate our scale advantages. We will develop
businesses in categories with forklifts and other transport equipment and covering storage,
sorting, and conveying equipment in stereoscopic warehouses and other intralogistics
equipment. Furthermore, we will gradually explore and expand into other industrial equipment
categories, such as small machine tools, air compressors, and industrial sweeping machines,
aiming to provide comprehensive solutions to our customers. In addition, we plan to continue
R&D efforts in developing a battery management system that serves as the key component,
allowing accurate reading and efficient transmission of battery status. By working together
with other IoT Smart Terminals, it could enhance the performance of our Intelligent Asset and
Operation Management Platform.
To Continue Improving Intralogistics Equipment Supply Chain Management Capability
We aim to expand our business breadth and deepen our penetration into upper and
downstream sectors of industry value chain in China. By doing so, we can further strengthen
our capability to serve clients’ demand for intralogistics equipment solutions. To achieve this,
we plan to build four new supply chain bases in the future, in line with our strategic vision of
enhancing geographic coverage and optimizing penetration. We also plan to expand our
product and service offering portfolio at our outlets, with a proper assignment of technician
staff to improve the efficiency of supply, dispatch, operation, and subsequent management of
intralogistics equipment.
We consider the continuous recruitment and development of quality staff with specific
skills and experience to be a key element in supporting the sustainable development of our
business and promoting further innovation. We plan to continue investing in the development
of career promotion plans for our employees while attracting suitable talents to support the
sustainable growth of our business.
BUSINESS
– 175 –


--- page 186 ---
To Continually Enhance our Technological Capabilities
We plan to invest in technological capabilities and enhance our overall management and
control capabilities to improve the quality and efficiency of our comprehensive services. Our
strategies for technological capabilities include:
 IoT hardware : We plan to improve our hardware technologies. This will involve
upgrading our technology infrastructure by investing in advanced hardware devices.
For example, we plan to upgrade our IoT infrastructure by launching more wearable
devices and installing multidimensional sensors to efficiently track and record
intralogistics equipment.
 IT systems : We will upgrade our digital IT management system to expand our
coverage and enhance our capabilities in operation and follow-up management of
intralogistics equipment. This will help reduce the cost and difficulty of managing
large-scale equipment and provide more efficient services to customers and
management personnel. We will also invest in big data, cloud computing, and other
new software technologies.
 AI technology : We plan to introduce AI video review technology to achieve
automatic management, analyze video content, and quickly identify faults,
improving service technology empowerment and management.
 Other new technologies : We plan to keep observing new industry trend closely, such
as intelligent warehousing, and keep exploring the development and
commercialization of different innovative technologies.
To Explore Strategic Collaboration with Various Industry Participants
To strengthen and expand our market position, we plan to continue exploring
opportunities for strategic alliances and investments. We will particularly focus on participants
that have strengths in terms of asset quality, service capacities, customer resources, market
influence and talent pool that complement our business and strategy. This includes those with
a strong market presence in respective regional markets and those with strong technology
capabilities. As of the Latest Practicable Date, we had no specific acquisition plans nor
identified any specific targets. We will seek collaboration opportunities in a sustainable and
prudent manner after the Listing.
BUSINESS
– 176 –


--- page 187 ---
OUR BUSINESS
We are a leading intralogistics equipment solution provider in China. During the Track
Record Period, we primarily generated revenue from business segments as follows:
(i) Intralogistics Equipment Subscription Services . We provide intralogistics
equipment to customers for their usage with value-added services, including but not
limited to, equipment selection, on-site operation training, general and necessary
maintenance and repair, and real-time monitoring of equipment status and operation
through our Intelligent Asset and Operation Management Platform. In managing this
business segment, we charge customers services fees mainly based on types and
configurations of equipment selected, duration they use the subscribed intralogistics
equipment, and customization of related services (if applicable).
(ii) Maintenance and Repair Services . In this business segment, we generate revenue
from providing on-site maintenance and repair services to customers for their
intralogistics equipment. We charge fees either on project basis for one-off repair
services, or based on service plans where we charge fees on monthly basis for
certain contract period covering equipment specified in the relevant agreement.
(iii) Sales of Intralogistics Equipment and Parts . We sell new and used intralogistics
equipment to enterprises in China; and intralogistics equipment parts to enterprises
in China and abroad. We conduct sales through our own sales team directly to end
customers. We had a broad range of customers, such as manufacturers, logistics
companies, and trading companies, with intralogistics need, including movement of
heavy goods and material in indoor and limited outdoor spaces.
We believe that our maintenance and repair service business segment, as well as our sales
of intralogistics equipment and parts business segment, complement our intralogistics
equipment subscription service business segment. This integration allows us to benefit from (i)
close collaboration with reputable suppliers of intralogistics equipment and parts; (ii) expanded
customer acquisition channels; and (iii) optimized utilization of our technician workforce.
In addition, these services provide us with valuable insights into customers’ evolving
preferences and market trends for intralogistics equipment. By leveraging these insights, we
can stay ahead of market trends, anticipate customer needs, and provide superior solutions that
meet their specific requirements.
BUSINESS
– 177 –


--- page 188 ---
The following table sets forth a breakdown of our revenue by business segments for the
periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Intralogistics equipment
subscription services 639,701 65.2 739,176 63.0 738,001 61.8 236,373 68.2 243,944 55.9
Maintenance and repair
services 111,463 11.4 128,484 11.0 140,987 11.8 35,172 10.1 54,539 12.5
Sales of intralogistics
equipment and parts 229,479 23.4 304,522 26.0 315,221 26.4 75,264 21.7 137,808 31.6
Total 980,643 100.0 1,172,182 100.0 1,194,209 100.0 346,809 100.0 436,291 100.0
The overall growth in revenue from 2020 to 2021 was primarily driven by the growth of
our intralogistics equipment subscription services as we strategically expanded our equipment
fleet in line with the increased customer demand. In 2022, notwithstanding that the COVID-19
resurgence affected our operations in relevant local market, we still managed to achieve slight
business growth in that year. The increase in revenue for the four months ended April 30, 2022
to the four months ended April 30, 2023 was in line with the increased customer demand. For
more information on the impact of COVID-19 on our business and results of operations during
the Track Record Period, please see “– Impact of COVID-19 on our Operations” in this section.
The following table sets forth a breakdown of our gross profit and gross profit margin by
business segments for the periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Intralogistics equipment
subscription services 228,175 35.7 250,672 33.9 226,087 30.6 67,120 28.4 70,270 28.8
Maintenance and repair
services 45,585 40.9 52,359 40.8 57,698 40.9 13,916 39.6 21,201 38.9
Sales of intralogistics
equipment and parts 56,420 24.6 71,136 23.4 77,879 24.7 19,863 26.4 30,743 22.3
Total gross
profit/overall gross
profit margin 330,180 33.7 374,167 31.9 361,664 30.3 100,899 29.1 122,214 28.0
BUSINESS
– 178 –


--- page 189 ---
During the Track Record Period, our gross profit margin was 33.7%, 31.9%, 30.3%,
29.1% and 28.0% in 2020, 2021, 2022 and the first four months of 2022 and 2023. The
declining trend in our gross profit margin from 2020 to 2022 was primarily due to the negative
impact of COVID-19 on the utilization rates and the operations of our service outlets. The
decline in the first four months of 2023 was contributed to business mix, where in that period,
we have experienced an increase in sales of intralogistics equipment and parts, which carried
a relatively lower gross profit margin compared to our intralogistics equipment subscription
services and maintenance and repair services.
Being a leading intralogistics equipment solution provider in China and considering the
growing demand for these solutions in China according to CIC, our Directors believe that we
are able to mitigate risks associated with price pressure. In particular, in line with its business
strategy, we intend to continue to enhance our business growth and profitability through: (i)
improving our customer coverage and expanding the categories of our intralogistics equipment
based on our study on market demand trend; (ii) optimizing our cost and expense structure to
improve net profit margins; and (iii) increasing operation leverage through economies of scale
and optimized supply chain management capability.
Leveraging our extensive experience in intralogistics equipment, we aim to offer one-stop
intralogistics equipment solutions for our customers, covering the entire lifecycle of
intralogistics equipment from equipment subscription, repair and maintenance, and disposal.
The following flowchart illustrates the full cycle of our intralogistics equipment operation
management services:
Upstream Equipment
Manufacturers Downstream Customers
Manufacture of
Intralogistics
Equipment and Parts
Intralogistics Equipment Solutions Equipment Utilization
and Operation
Management
/onesans Selecting equipment and
parts and executing
 purchase contracts
/twosans Equipment delivery and
acceptance
/threesans Making payments for
intralogistics equipment
and parts
/onesans Making requests for
relevant services, and
executing contracts
/twosans Delivering equipment
and/or offering related
services
/threesans Making payments for
services
BUSINESS
– 179 –


--- page 190 ---
As of April 30, 2023, we had established a nationwide service network consisting of our
headquarter in Guangzhou, three main supply chain bases and 67 service outlets, covering 47
cities in China. The following map sets forth the geographical distribution of our service
network as of April 30, 2023:
West China
Number of Service Outlets: 5
Number of Technicians: 71
Number of Service Outlets: 5
Number of Technicians: 30
Number of Service Outlets: 7
One Main Supply Chain Base in
Langfang, Hebei
Number of Technicians: 67
South China Sea
North China
South China
Northeast
China
East
China
Central
China
Number of Service Outlets: 5
Number of Technicians: 36
Number of Service Outlets: 28
One Main Supply Chain Base in
Hefei, Anhui
Number of Technicians: 257
Number of Service Outlets: 17
One Main Supply Chain Base in
Foshan, Guangdong
Number of Technicians: 212
Headquarter in
Guangzhou,
GuangdongIntralogistics Equipment Subscription Services
There has been an increasing demand for different intralogistics equipment subscription
options compared to direct procurement of such equipment in recent years. According to CIC,
a number of factors, such as high initial investment and excessive maintenance costs of
intralogistics equipment, development of e-commerce and logistics industry, and regularity of
the intralogistics equipment subscription service industry, contributed to the development of
the intralogistics equipment subscription service market. In the past five years, the market size
of the intralogistics equipment subscription service market in China increased from RMB4.4
billion in 2018 to RMB7.3 billion in 2022, at a CAGR of 13.5%.
To properly address such growing market needs, we have strategically expanded our
equipment fleet. By doing so, we are committed to offering cost-effective intralogistics
equipment subscription services for enterprises in different sizes and industries.
Customers can conveniently choose intralogistics equipment they would like to subscribe
from our fleet portfolio based on their intralogistics equipment needs, including brands, types,
configurations and quantity. Where applicable, we also assist customers in determining the
right composition of equipment and key parts they need, as well as appropriate working
schedule of such equipment and key parts. After determining equipment composition, our
customers can choose an subscription period depending on different business purposes, and the
fee arrangement shall be determined accordingly. For details, please see “– Our Customers and
Suppliers – Contracts with Customers” in this section. As confirmed by the PRC Legal Adviser,
other than the business license, we are not required to obtain any other license for providing
our intralogistics equipment subscription services under the applicable PRC laws and
regulations.
BUSINESS
– 180 –


--- page 191 ---
During the contract term, we also carry out on-site inspections and maintenance of the
intralogistics equipment on a regular basis. In case of any equipment failure or malfunction,
our technician or engineer shall arrive within eight hours and provide on-site repairs
emergently. For details of the summary of key terms of our intralogistics equipment
subscription services, please see “– Our Customers and Suppliers – Contracts with Customers”
in this section.
Since the Intelligent Asset and Operation Management Platform enables 24/7 monitoring
and supervision of the equipment and provides daily utilization rates of the equipment, the
customers are able to know how efficiently the subscribed equipment are used. For instance,
if the utilization rate is relatively low, the customer may ask to adjust the equipment volume
in the service contract upon discussion with us. Otherwise, the customer may choose to
subscribe less equipment for same or similar work load for future subscriptions. If the customer
is behind schedule of the related works even though the operation information shows that
subscribed equipment are used at maximum, the customer may consider to subscribe more
equipment to meet its scheduled deadline. If the customer happens to have additional
requirements, such as reaching higher shelves or going through narrower aisles, it may ask to
replace the subscribed equipment with different models that we have.
The customers may adjust the service scope of the contract during the service period, such
as upgrade, downgrade, replacement of equipment. To make such adjustment, the parties will
have amicable discussion and execute a supplemental agreement (if needed) to the existing
service contract. Once we and the customer enter into a subscription service agreement, we
generally do not charge any penalty or separate service fees when there is no material
adjustment to contract terms and conditions, including the service scope.
If the customer opts to extend the contract term, or replace existing equipment with
equipment with higher unit subscription prices, or increase subscription volume, where
additional fees will be incurred, we will further negotiate with the customer to enter into
supplemental agreement to cover such extra amount. The exact amount will be determined case
by case based on changed equipment volume, contract period, and/or unit subscription price.
In addition, if the customer opts to reduce subscription period or subscription volume, or
change for cheaper equipment, the parties shall revise the agreement to reduce the subscription
price accordingly.
With respect to early terminations, if either party unilaterally requests early termination
or cancellation of the contract, it shall pay the other party penalty of six month’s subscription
price in the contract, or the residual amount of fees for the remaining period, whichever is
higher. If both parties agree to terminate the contract in advance, the customer only needs to
settle the contract price for the period that has expired. There was no early termination or
cancellation of contracts during the Track Record Period. During the Track Record Period, the
customers had not returned to or exchanges any intralogistics equipment with us.
BUSINESS
– 181 –


--- page 192 ---
We believe that our customers are benefited from our customized intralogistics equipment
subscription services in the way that they could save huge upfront investment or capital
expenditure on intralogistics equipment, as well as equipment management resources
associated therein, so that they may focus on developing their own key competing attributes,
without sacrificing their intralogistics equipment needs. Our technology and operation
competitiveness successfully distinguished us from industry peers, and helped us achieve quick
and sustainable development during the Track Record Period.
During the Track Record Period, we derived a large portion of revenue from providing
intralogistics equipment subscription services. To be specific, for the years ended December
31, 2020, 2021 and 2022 and the four months ended April 30, 2023, revenue derived from
intralogistics equipment subscription services amounted to RMB639.7 million, RMB739.2
million, RMB738.0 million and RMB243.9 million, respectively, accounting for 65.2%, 63.0%,
61.8%, and 55.9%, of our total revenue for the corresponding years, respectively.
During the Track Record Period, we provided counterbalanced forklifts, reach trucks,
walkie stackers and other kinds of intralogistics equipment for subscription. The table below
sets out the equipment subscription volume in and revenue derived from our intralogistics
equipment subscription services by equipment types for the periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
Equipment
Subscription
Volume(1) Revenue
Equipment
Subscription
Volume(1) Revenue
Equipment
Subscription
Volume(1) Revenue
Equipment
Subscription
Volume(1) Revenue
Equipment
Subscription
Volume(1) Revenue
(RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)
(unaudited)
Counterbalanced
Forklifts 135,245 388,136 150,936 439,920 150,274 455,567 45,306 146,587 46,637 153,647
Reach Trucks 27,846 70,607 27,088 74,316 26,879 69,739 8,045 23,196 8,255 21,980
Walkie Stackers 160,569 172,755 167,159 199,643 174,799 180,564 51,832 62,951 56,385 63,264
Others 1,930 8,203 2,476 25,297 2,087 32,131 2,407 3,639 451 5,053
Total 325,590 639,701 347,659 739,176 354,039 738,001 107,590 236,373 111,728 243,944
Note: Total equipment subscription volume for a given year/period represents the aggregation of amount of
times that intralogistics equipment in the fleet is subscribed in every month within a given year/period.
BUSINESS
– 182 –


--- page 193 ---
During the Track Record Period, we experienced an increase in equipment subscription
volume for intralogistics equipment subscription services primarily due to growing business
needs of enterprises. In the meanwhile, the average monthly equipment subscription price
remained relatively stable during the Track Record Period. To be specific, our average monthly
equipment subscription price (excluding V A T) (the price equals revenue derived from
intralogistics equipment subscription services in a particular year divided by the equipment
subscription volume in the same period) was RMB1,965 per unit in 2020, RMB2,126 per unit
in 2021, RMB2,085 per unit in 2022 and RMB2,183 per unit for the four months ended April
30, 2023. According to CIC, for equipment of similar brands, configurations and conditions,
there has been no material difference between the monthly subscription fees charged by us and
those charged by industry peers of similar market position.
The following table set forth a portfolio of our existing intralogistics equipment
subscription agreements by contract duration and contract value as of the dates indicated:
As of December 31, As of April 30,
2020 2021 2022 2022 2023
Number of
Agreements
Aggregated
Contract
Value
Number of
Agreements
Aggregated
Contract
Value
Number of
Agreements
Aggregated
Contract
Value
Number of
Agreements
Aggregated
Contract
Value
Number of
Agreements
Aggregated
Contract
Value
(RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)
Less Than One
Y ear (Inclusive) 6,212 86,083 8,237 160,806 9,738 168,597 6,418 105,507 11,463 192,565
One to Three Y ears
(Inclusive) 19,085 1,106,627 15,959 1,006,715 12,983 800,409 14,067 863,747 12,941 737,786
Three to Four
Y ears (Inclusive) 1,276 137,839 6,251 659,081 7,097 684,927 7,062 674,909 7,648 706,519
Four to Five Y ears
(Inclusive) 641 100,787 1,040 172,098 1,845 262,704 1,926 272,308 1,773 235,054
Over Five Y ears
(Exclusive) 165 28,985 877 177,639 1,224 259,768 1,249 269,025 1,647 325,867
Total(1) 27,379 1,460,321 32,364 2,176,339 32,887 2,176,405 30,722 2,185,496 35,472 2,197,791
Note: The aggregated number of agreements exceeded the total equipment number in each year indicated because
certain equipment were subscribed for several times within a year for multiple short term service contracts.
During the Track Record Period, the number of our intralogistics equipment subscription
agreements on hand experienced steady growth primary due to growing business needs of
enterprises, as well as the expansion of our equipment fleet. In particular, the proportion of
long-term equipment subscription agreements increased steadily during the Track Record
Period as the customer stickiness of our existing customers increased.
BUSINESS
– 183 –


--- page 194 ---
The following table shows the movement of the number and aggregated contract value of
our subscription service agreements on hand during the Track Record Period and up to
August 31, 2023:
Y ear ended December 31,
Four months ended
April 30, Subsequent to Track
Record Period until
August 31, 20232020 2021 2022 2023
Number of
Agreements
Aggregated
Contract
Value
Number of
Agreements
Aggregated
Contract
Value
Number of
Agreements
Aggregated
Contract
Value
Number of
Agreements
Aggregated
Contract
Value
Number of
Agreements
Aggregated
Contract
Value
(RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)
Contracts at the
Beginning of the
Y ear/Period 19,838 1,030,452 27,379 1,460,321 32,364 2,176,339 32,887 2,176,405 35,472 2,197,791
Additions of newly
executed contracts
during the
year/period 13,423 524,148 16,550 810,676 15,104 525,808 5,772 206,949 6,463 365,076
Deductions (either
terminated or
expired) of existing
contracts during the
year/period (5,882) (94,279) (11,565) (94,658) (14,581) (525,742) (3,187) (185,563) (10,418) (277,231)
Contracts at the End
of the Y ear/Period 27,379 1,460,321 32,364 2,176,339 32,887 2,176,405 35,472 2,197,791 31,517 2,285,636
The following table sets forth the movement of backlog of our on-hand equipment
subscription service agreements during the Track Record Period and up to August 31, 2023:
Y ear ended December 31,
Four
months
ended
April 30,
Subsequent to
Track Record
Period until
August 31, 20232020 2021 2022 2023
(RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)
Opening balance of
backlog 644,131 724,795 748,883 695,157 746,930
Aggregate estimated
revenue of new service
contracts executed 720,365 763,264 684,275 295,717 208,543
Less: (aggregated
revenue recognized for
completed works)
(1) (639,701) (739,176) (738,001) (243,944) (259,229)
Closing balance of
backlog (2) 724,795 748,883 695,157 746,930 696,244
Notes:
1. The amount of “aggregated revenue recognized for completed works” here equals to the amount of
revenue derived from intralogistics equipment subscription services in the same year/period.
BUSINESS
– 184 –


--- page 195 ---
2. The balance of backlog refers to our estimate of the aggregated amounts of the contract value allocated
to the remaining performance obligations, if any, under our on-hand intralogistics equipment
subscription service agreements and the corresponding amounts of revenue to be recognized pursuant
to such contracts. Such estimate is based on the best knowledge, information and belief of our Directors.
In particular, in terms of all equipment subscription agreements on-hand as of April 30,
2023, RMB348.9 million is expected to mature in 2023, RMB233.2 million is expected to
mature in 2024, RMB100.5 million is expected to mature in 2025, RMB49.2 million is
expected to mature in 2026, and RMB15.1 million is expected to mature in 2027.
All backlog of intralogistics equipment subscription service agreements on-hand as of
August 31, 2023 is expected to mature by 2027.
Considering the customer’s revenue contribution to us individually, certain customers are
deemed KA customers under our intralogistics equipment subscription service business
segment. KA customers play an important role in the business development. Although the exact
scope of KA customers among different companies may vary due to their different business
strategies and layout, the common key features for KA customers mainly consist of two
aspects: (i) customers with large contribution to the company’s revenue, and (ii) customers
with high potential to contribute to the company’s business and revenue growth in the future.
Given that KA customers have large contribution and/or high potential to contribute to the
company’s revenue growth, the number of KA customers and the associated retention rates and
net dollar retention rates have been commonly used as key metrics to evaluate their business
growth. The following table sets forth a summary of operating data of our KA customers for
the periods indicated:
Y ear ended December 31,
Four months
ended April 30,
2020 2021 2022 2022 2023
Number of KA customers (1) 87 122 123 114 118
Revenue contribution of KA
customers (RMB in
million) 314.9 363.1 332.8 111.8 117.9
KA customer retention rate (2) 87% 99% 98% 84% 87%
Net dollar retention rate of
KA customers (3) 98% 99% 97% 101% 100%
Notes:
1. A customer is deemed a KA customer under the intralogistics equipment subscription business if (i) the
customer subscribes 50 units or more in that given year/period, or (ii) the customer subscribes 50 units
or more in the preceding 12-month period and continued to subscribe intralogistics equipment (one unit
or more) from us in that given year/period. Such calculation methodology is concurred by CIC.
2. KA customer retention rate measures the capability of us to retain existing customers. KA customer
retention rate = ((total number of KA customers at the end of the given 12-month period – total number
of new KA customers in that given 12-month period)/number of KA customers as of the beginning date
of the given 12-month period)*100%. Such calculation methodology is concurred by CIC.
BUSINESS
– 185 –


--- page 196 ---
3. Net dollar retention rate is a metric used to measure our capability to generate revenue from
intralogistics equipment subscription returning KA customers by comparing the amount of revenue that
a company brings in a given period from the previous period’s KA customers. We calculate net dollar
retention rate in a given 12-month period by starting with all KA customers in the prior 12-month period.
We calculate the revenue from the returning KA customers in the given 12-month period, which includes
the revenue from new KA customers in the prior 12-month period who may contribute to our revenue
for only several months in the prior 12-month period. We then divide the given 12-month period revenue
by the prior 12-month period revenue contributed by the returning KA customers to arrive at our net
dollar retention rate. Such calculation methodology is concurred by CIC.
Case Studies
Shanghai Anneng Juchuang Supply Chain Management Co., Ltd. ( ɪऎτঐၳ௴ԶᏐᗡ၍ଣϞ
ʮ̡)
Shanghai Anneng Juchuang Supply Chain Management Co., Ltd. ( ɪऎτঐၳ௴ԶᏐᗡ၍
ʮ̡)( “ Shanghai ANE ”) is a comprehensive logistics service enterprise located in
Shanghai. It is a subsidiary of ANE (Cayman) Inc., a listed Company on the Hong Kong Stock
Exchange (Stock code: 09956). It is one of the major customers of our intralogistics equipment
subscription services. We have established a stable business partnership with Shanghai ANE
since 2016.
As a national logistics company, Shanghai ANE has service outlets with different site
conditions across the nation. Therefore, it requires suppliers with comprehensive intralogistics
equipment portfolio, rapid response capabilities, and professional technical support teams.
Before its cooperation with us, Shanghai ANE mostly subscribed intralogistics equipment from
different local subscription service providers, which generally have limited types of
intralogistics equipment and serve limited geographic areas. In addition, such local service
providers generally could not respond fast in reaction to repair or maintenance needs. As a
company with comprehensive equipment portfolio and service outlets across the nation, we
were able to help Shanghai ANE solve the aforementioned pain points properly. Since 2016,
Shanghai ANE gradually became one of our major customers in intralogistics equipment
subscription service business.
In particular, the subscription volume from Shanghai ANE increased from around 60 units
as of December 31, 2016 to around 3,100 units as of December 31, 2022. Meanwhile, Shanghai
ANE’s contribution to our revenue derived from intralogistics equipment subscription services
increased from approximately 0.1% in 2016 to 9.0% in 2022. Leveraging our advantages in
supply chain capabilities and equipment management, we have helped Shanghai ANE improve
its working efficiency with reduced costs, which was highly appreciated by Shanghai ANE.
BUSINESS
– 186 –


--- page 197 ---
Customer X
Customer X is a leading home appliance and air conditioner manufacturing company
headquartered in Foshan, Guangdong. We started to sell intralogistics equipment to Customer
X in 2014, and has established business relationship with it since then. We sold different types
of intralogistics equipment to Customer X and its subsidiaries in different cities based on their
intralogistics service needs.
To meet intralogistics service needs by way of procuring relevant equipment requires
huge upfront investment or capital expenditure, professional team and technologies in
managing the equipment, and large associated management expenses. Through close
communications with Customer X, we offered to provide intralogistics equipment subscription
services to Customer X, which helped Customer X reduce its one-off capital expenditure, while
fulfilling its intralogistics demand with quality intralogistics equipment and professional
equipment management and maintenance services during subscription period. Since 2015,
Customer X has gradually become a customer of our intralogistics equipment subscription
services.
As of December 31, 2022, Customer X had subscribed around 430 units of intralogistics
equipment from us. We will deliver the intralogistics equipment to its requested destinations
across the country after it placing orders. Meanwhile, in addition to providing quality
intralogistics equipment, we will assign professional service technicians to provide on-site
guidance and trainings to Customer X’s equipment operators, as well as regular inspections and
maintenance to ensure the smooth running of the equipment. By transforming from an
equipment procurement customer to an equipment subscription customer, we helped Customer
X optimize its intralogistics equipment utilization and saving equipment management costs.
Maintenance and Repair Services
Leveraging our well-recognized market reputation as a leading company with rich
maintenance and repair know-how on all makes and models, our force of technicians and
engineers with expertise, and long-term relationship with reputable suppliers of intralogistics
equipment and parts, we provided maintenance and repair services during the Track Record
Period to our customers for their intralogistics equipment. Specifically, we offer (i) one-off
repair services in response to emergent function failures or other problems; and (ii)
maintenance and repair service plans where we provide scheduled inspections and regular
maintenance services, as well as necessary part replacements and repairs. In managing this
business segment, we charge on project basis for one-off repair services, and package price for
maintenance and repair service plans.
BUSINESS
– 187 –


--- page 198 ---
The following table briefly summarizes the main types of maintenance and repair services
we provided during the Track Record Period:
Service Types Brief Introduction Main Customers Payments
Price range
per repair unit
during the Track
Record Period
One-off repair Precisely identify the
cause of the
malfunction, and repair
only the faulty unit(s) as
necessary when our
customers has a
particular repair request
Manufacturers One-off payment Approximately
RMB200-
RMB280
Maintenance and
repair service
plan
Provide scheduled
inspections and all
maintenance services
(including general
maintenance services at
planned intervals, and
predictive maintenance)
proactively to ensure
daily smooth running of
equipment; additional
fixes and repairs are
included as well
Manufacturers,
logistics
companies
Flat monthly
payment/unit
Approximately
RMB500-
RMB590
The following table sets forth a breakdown of our revenue derived from maintenance and
repair services for the periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
One-off Repair 89,085 79.9 105,780 82.3 87,436 62.0 21,217 60.3 37,244 68.3
Maintenance and Repair
Service Plan 22,378 20.1 22,704 17.7 53,551 38.0 13,955 39.7 17,295 31.7
Total 111,463 100.0 128,484 100.0 140,987 100.0 35,172 100.0 54,539 100.0
BUSINESS
– 188 –


--- page 199 ---
The following table sets forth the gross profit and gross profit margin of maintenance and
repair services for the periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
Gross
Profit
Gross
Profit
Margin
Gross
Profit
Gross
Profit
Margin
Gross
Profit
Gross
Profit
Margin
Gross
Profit
Gross
Profit
Margin
Gross
Profit
Gross
Profit
Margin
(RMB’000) (%) (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) (RMB’000) (%)
(unaudited)
One-off Repair 34,311 38.5 40,790 38.6 29,903 34.2 7,039 33.2 12,312 33.1
Maintenance and
Repair Service
Plan 11,274 50.4 11,569 51.0 27,795 51.9 6,877 49.3 8,889 51.4
Our gross profit margin for the maintenance and repair service plan is higher than the
one-off repair service. A primary reason is the structured menu of services in the maintenance
plan, which enables our staff to efficiently deliver multiple services in a shorter time frame,
leading to reduced staff costs. Regularly serviced equipment under our plan tends to be in
better condition, which decreases the incidence of costly unforeseen repairs. With a steady
customer base and consistently serviced intralogistic equipment, we can allocate resources
more effectively, resulting in further cost savings and supporting the premium pricing of the
maintenance and repair service plan.
As of April 30, 2023, we had a dedicated team of 673 personnel in our technician and
engineer team, around 50% of whom had more than four years’ experience in intralogistics
equipment industry. Our technician team is responsible for managing, inspecting and
supervising our intralogistics equipment in stock, offering operational training services to our
customers on site, and providing maintenance or repair services regularly to subscribed
intralogistics equipment as included in the intralogistics equipment subscription services and
to intralogistics equipment owned by customers as requested as included in maintenance and
repair services.
Case Study
Swire Coca-Cola Beverages Jiangsu Limited (
ʮ̡)
Swire Coca-Cola Beverages Jiangsu Limited (ʮ̡)( “ Swire
Coca-Cola ”) is a soft drinks manufacturer located in Nanjing, Jiangsu. It is one of our major
customers which subscribe maintenance and repair service plans. We started to establish
business relationship with it since 2015. As of December 31, 2022, Swire Coca-Cola owned
nearly 100 units of forklifts and had a huge demand for forklift maintenance and repair.
BUSINESS
– 189 –


--- page 200 ---
Since 2015, we started to provide one-off repair services based on the requests of Swire
Coca-Cola every now and then, including but not limited to the replacement of various types
of equipment parts. With a better understanding of Swire Coca-Cola’s equipment fleet
condition through our long-term repair service relationship with it, we proposed our
maintenance and repair service plans to Swire Coca-Cola, after making a multi-dimensional
analysis on the types, ages, conditions, utilization rates and maintenance costs in relation to its
equipment fleet.
To offer maintenance and repair service plans for the whole fleet of Swire Coca-Cola, we
conducted comprehensive inspections and created an equipment profile for each forklift in the
fleet, formulated a service plan based on the actual operating condition and maintenance
history of each forklift, and monitored the operating parameters of each forklift. The Company
helped the client shift the maintenance and repair pattern from passively solving existing
problems to actively preventing major problems, which in turn help reduces fleet maintenance
costs. Since the provision of maintenance and repair service plans in 2021, we have helped
Swire Coca-Cola reduce its total forklift maintenance expenses to no more than RMB1.0
million per year, representing around 30% decrease from its average annual maintenance
expenses before having the maintenance and repair service plans.
Sales of Intralogistics Equipment and Parts
During the Track Record Period, upon requests, we sold intralogistics equipment and
parts catered to the diverse needs of our customers. As we have over a decade’s experience in
sales of intralogistics equipment and parts, we have established business relationship with
major manufacturers and suppliers of intralogistics equipment and parts. As such, we have
bargaining power in the procurement process, and are thus generally capable of providing our
existing customers with quality intralogistics equipment and parts with competitive prices.
With our established procurement and sales channels, we trade new and used intralogistics
equipment to match requirements of customers in China, which helps increase the customer
adherence, and attract new customers to our intralogistics equipment subscription business
segment and maintenance and repair business segment. In addition, we sold around 331,000
types of intralogistics equipment parts to customers in China and to over 100 foreign countries,
such as United States, Thailand, Brazil, etc.
The following table sets forth a breakdown of our revenue by categories of goods sold for
the periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Intralogistics equipment 116,195 50.6 162,505 53.4 156,664 49.7 36,416 48.4 71,268 51.7
Related parts 113,284 49.4 142,017 46.6 158,557 50.3 38,848 51.6 66,540 48.3
Total 229,479 100.0 304,522 100.0 315,221 100.0 75,264 100.0 137,808 100.0
BUSINESS
– 190 –


--- page 201 ---
With our established procurement and sales channels, we trade new and used
intralogistics equipment to match requirements of our customers in China, which helps
increase the customer adherence, and attract new customers to our intralogistics equipment
subscription business segment and maintenance and repair business segment. The following
table sets forth a breakdown of our revenue derived from sales of intralogistics equipment for
the periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Revenue
New Intralogistics
Equipment 103,680 89.2 152,735 94.0 140,170 89.5 31,652 86.9 62,369 87.5
Used Intralogistics
Equipment 12,515 10.8 9,770 6.0 16,494 10.5 4,764 13.1 8,899 12.5
Total 116,195 100.0 162,505 100.0 156,664 100.0 36,416 100.0 71,268 100.0
The following table sets forth the gross profit and gross profit margin of sales of
intralogistics equipment for the periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
(RMB’000) (%) (RMB’000) (%) (RMB’000) (%) (RMB’000) (%) (RMB’000) (%)
(unaudited)
New Intralogistics
Equipment 15,018 14.5 21,808 14.3 19,809 14.1 4,258 13.5 8,642 13.9
Used
Intralogistics
Equipment 1,978 15.8 999 10.2 1,466 8.9 485 10.2 642 7.2
Total 16,996 14.6 22,807 14.0 21,275 13.6 4,743 13.0 9,284 13.0
During the Track Record Period, in terms of the used intralogistics equipment sold,
98.1%, 98.2%, 97.8% and 97.5% of them were sourced from the Group’s own fleet,
respectively.
BUSINESS
– 191 –


--- page 202 ---
The following table sets out the number of customers that procured intralogistics
equipment by regions during the Track Record Period:
Y ear ended December 31,
Four
months
ended
April 30,
2020 2021 2022 2023
Northern Region (1) 136 128 105 29
East Central Region (2) 353 365 431 217
Southern Region (3) 397 469 380 145
Western Region (4) 84 102 95 46
Nationwide (5) 91 61 5 6
Total 979 1,080 1,026 443
Notes:
(1) Including Beijing, Tianjin, Hebei province, Shanxi province, Inner Mongolia province, Heilongjiang
province, Jilin province, and Liaoning province.
(2) Including Shanghai, Jiangsu province, Zhejiang province, Anhui province, Fujian province, Jiangxi
province, Shandong province, Henan province, Hubei province, Hunan province, Shaanxi province,
Gansu province, Qinghai province, Ningxia province, and Xinjiang province.
(3) Including Guangdong province, Guangxi province, Hainan province, Hong Kong Special Administration
Region, Macau Special Administration Region, and Taiwan province.
(4) Including Sichuan province, Chongqing, Guizhou province, Y unnan province, and Tibet province.
(5) Some of the customers are group companies comprised of multiple subsidiaries across the nation.
The customers that procure intralogistics equipment and/or parts are not allowed to return
the procured intralogistics equipment and/or parts to us only except for product defects. Up to
the Latest Practicable Date, we had not experienced any material product returns.
BUSINESS
– 192 –


--- page 203 ---
OUR EQUIPMENT FLEET
As of April 30, 2023, we managed a fleet of 40,644 units of intralogistics equipment,
which were mostly forklifts, and a few other intralogistics equipment, such as tractors and floor
washers. A forklift is an industrial equipment with a metal fork platform attached to its front
that can be used to lift heavy loads by inserting the fork platform under cargo, pallets, or
machines for moving them or placing them in warehouses, production sites, distribution centers
and other scenarios. During the Track Record Period, we mainly procured intralogistics
equipment manufactured by internationally and nationally renowned intralogistics equipment
manufacturers. The major types of intralogistics equipment in our equipment fleet include
counterbalanced forklifts, reach trucks, and walkie stackers, details of which are set out in
chart below:
Counterbalanced Forklift
Counterbalanced forklifts are one of the
most common forms of forklifts and come
in three and four wheel models. The forks
of a counterbalance forklift truck stick out
from the front of the equipment with legs or
arms for stabilization. The name of a
counterbalance forklift equipment comes
from the counterweight at the rear of the
equipment behind the motor. It is
positioned such that it compensates for
heavy loads.
Reach Truck
Reach trucks are a form of narrow aisle
forklifts used in warehouses and have two
outer legs to distribute the load with a set
of wheels in the back located below the
operator. They have a long horizontal
platform behind the mast that allows the
forklift to pick up bulky and heavy items in
high places.
Walkie Stacker
Walkie stackers are a form of walk behind
pallet trucks with a mast for lifting pallets
to heights. Walkie Stackers can be either
powered or manual. They are most
commonly used for transporting & lifting
pallets where a forklift is not necessary;
such as in store rooms, small warehouses
and specialized warehousing sections.
BUSINESS
– 193 –


--- page 204 ---
The following table sets out information on the number of the intralogistics equipment we
managed by categories as of April 30, 2023:
Energy Sources Equipment Types Volume Percentage
(Units) (%)
Electric Counterbalanced Forklifts 12,847 31.6
Reach Trucks 2,743 6.7
Walkie Stackers 21,368 52.6
Others 328 0.8
ICE-powered Counterbalanced Forklifts 3,093 7.6
Walkie Stackers 50 0.1
Others 84 0.2
Non-power
(2) Walkie Stackers 115 0.3
Others 16 –
(1)
Total 40,644 100.0
Notes:
(1) Less than 0.1%;
(2) Equipment that can be pushed or used manually by users.
The following tables set forth the number of intralogistics equipment by ages and types
as of the dates indicated:
Aged within one year:
As of December 31,
As of
April 30,
2020 2021 2022 2023
Equipment Volume
Counterbalanced Forklifts 2,335 2,297 1,908 2,176
Reach Trucks 365 272 148 209
Walkie Stackers 4,709 4,139 2,630 3,838
Others 37 45 119 313
Total 7,446 6,753 4,805 6,536
BUSINESS
– 194 –


--- page 205 ---
Aged from one to three years:
As of December 31,
As of
April 30,
2020 2021 2022 2023
Equipment Volume
Counterbalanced Forklifts 6,042 4,994 4,637 4,641
Reach Trucks 1,273 869 563 516
Walkie Stackers 7,960 8,581 8,851 8,463
Others 54 73 70 57
Total 15,329 14,517 14,121 13,677
Aged over three years:
As of December 31,
As of
April 30,
2020 2021 2022 2023
Equipment Volume
Counterbalanced Forklifts 4,428 7,223 9,065 9,123
Reach Trucks 812 1,477 1,983 2,018
Walkie Stackers 3,195 6,269 9,128 9,232
Others 3 18 43 58
Total 8,438 14,987 20,219 20,431
As of May 31, 2023, the intralogistics equipment that was aged within three years
amounted to 20,542, representing approximately 49.7% of the whole equipment fleet.
During the Track Record Period, the range of useful life of intralogistics equipment was
similar among different types of intralogistics equipment, which was from four years to eight
years.
BUSINESS
– 195 –


--- page 206 ---
The following table sets out the average useful life by types of intralogistics equipment
during the Track Record Period:
As of December 31,
As of
April 30,
2020 2021 2022 2023
(years)
Counterbalanced Forklifts 5.9 6.1 6.2 6.3
Reach Trucks 5.3 5.4 5.4 5.4
Walkie Stackers 5.7 6.0 5.9 5.8
Others 4.9 4.5 4.5 7.0
During the Track Record Period, we generally sold used equipment around six years after
procurement of such equipment, at the price lower than market price of new intralogistics
equipment in similar kinds. We generally sold used equipment to small enterprises in remote
areas, which had consistent intralogistics needs for the carrying or moving of products or
goods, but with cost constraints. The following table sets forth the number of intralogistics
equipment by types as of the dates indicated:
As of December 31,
As of
April 30,
2020 2021 2022 2023
Equipment Volume
Counterbalanced
Forklifts 12,805 14,514 15,610 15,940
Reach Trucks 2,450 2,618 2,694 2,743
Walkie Stackers 15,864 18,989 20,609 21,533
Others 94 136 232 428
Total 31,213 36,257 39,145 40,644
We prioritize our commitment to responding to our customer’s needs in a timely manner,
and manage to ensure that we have sufficient supplies of different kinds of intralogistics
equipment at any time. To this end, we have continuously expanded our equipment fleet. As of
December 31, 2020, 2021 and 2022, and April 30, 2023, our equipment fleet size was 31,213
units, 36,257 units, 39,145 units and 40,644 units, respectively. During the Track Record
Period, our intralogistics equipment had maintained a consistent level of utilization, with rates
at 78.9%, 78.5%, 73.1% and 72.7% for 2020, 2021, and 2022 and the four months ended April
30, 2023, respectively. The utilization rate for a particular year/period is arrived at by dividing
the aggregation of the number of subscribed equipment in each day during the given
year/period, by the aggregation of the number of equipment in the fleet each day during same
year/period. The utilization rates of its fleet during the Track Record Period is generally in line
with the industry average, which ranges from 60% to 80% as advised by CIC. Such relatively
stable utilization reflects our dedication to efficient equipment management, prioritizing timely
customer response.
BUSINESS
– 196 –


--- page 207 ---
In October 2021, the State Council of China set the target to optimize energy consumption
structure, boost low-carbon transformation in use of energy, and increase the consumption ratio
of non-fossil energy to 25% by 2030, according to the Action Plan for Carbon Dioxide Peaking
Before 2030 ( 2030), which is the national climate policy, aiming at
achieving “peak CO
2 emissions” by 2030 and “carbon neutrality” by 2060. Since our
establishment, we have been committed to promoting the green economies. As part of our
commitment to environmental responsibility and sustainable intralogistics equipment
solutions, we had increased the proportion of electric forklifts in our equipment fleet during the
Track Record Period, which increased from approximately 88.6% in 2020 to approximately
90.0% in 2021 and further increased to approximately 91.1% in 2022 and approximately 91.7%
for the four months ended April 30, 2023.
Compared to ICE-powered forklifts, electric forklifts produce zero emissions and much
lower noises, making them ideal for working indoor use. In addition, electric forklifts are much
more cost-effective than ICE-powered forklifts in term of refueling. According to CIC, electric
intralogistics equipment can potentially reduce energy consumption costs by up to 82.2%
compared to ICE-powered intralogistics equipment, assuming a standard eight-hour workday.
Leveraging our extensive industry know-how, as well as maintenance and repair
capabilities, we can effectively extend the service life of an intralogistics equipment through
the combination of 24/7 monitoring, supervision and predictive maintenance. By identifying
warning signs of incipient problems before they accumulate into major damage or failure that
would require significant maintenance costs or total replacement, we can improve the
cost-efficiency of our fleet operations. With our predictive maintenance capabilities, we can
ensure that our customers’ intralogistics equipment remains in optimal condition, reduce
down-time and increase operational efficiency.
According to our Group’s accounting policies, our intralogistics equipment for
subscription are depreciated over their estimated useful lives, which generally range from three
to eight years. For more information, please see “Financial Information – Significant
Accounting Policies and Critical Accounting Judgments and Estimates – Significant
Accounting Policies – Property, Plant and Equipment and Depreciation” in this prospectus. For
intralogistics equipment works beyond its estimated useful life, no additional depreciation or
amortization costs of such equipment will be incurred thereafter. As advised by our PRC Legal
Adviser, according to the Special Equipment Safety Law of the People’s Republic of China
() and Safety and Technical Regulations of Specialized
Intralogistics V ehicle (TSG 81-2022) ( ఙ(ᅀ)ʫਖ਼͜ዚਗԓሿτΌҦஔ஝೻(TSG
81-2022) ), the intralogistics equipment shall be mandatorily scrapped only if such
intralogistics equipment has serious potential safety hazards to the extent that additional repair
is meaningless, or other mandatory scrapping condition as stipulated in related laws and
regulations is triggered. In other words, our intralogistics equipment is not subject to
mandatory scrapping as long as such intralogistics equipment duly passes the inspection as
required (once every two years) under such laws and regulations, which manifests that there
is no triggering event for mandatory scrapping. As of April 30, 2023, 34,212 intralogistics
equipment in our fleet were still in the depreciation and amortization period, and 6,182 units
BUSINESS
– 197 –


--- page 208 ---
had fully depreciated. Fully depreciated equipment can be used for subscription continuously
without any future depreciation charges. During the Track Record Period, we procured
intralogistics equipment from renowned national and international brands. However, very
occasionally, upon requests and where we deem appropriate, we may choose to procure idle
intralogistics equipment from corporate entities which own idle intralogistics equipment and
have the intention to dispose such equipment by way of selling it/them to the willing buyers
in the market. Upon inspection and necessary repair and maintenance, we may choose to
include such equipment into our fleet for subscription services, or, sell them based on market
demands. We believe such arrangement allows us to realize our environmental, social and
governance commitment by effectively improving the utilization of the idle equipment of our
corporate partners; and to reinforce our leading position as a trustworthy intralogistics
equipment solution provider in the market.
During the Track Record Period, we had not sold any equipment to scrap collection units
or recyclers. Instead, to make the best use of the used equipment and to maximize its financial
gains, we always sold our used equipment to willing buyers, i.e., end users, in a usable
condition with careful maintenance, before such equipment become too old or unusable.
Source and Ownership of Our Fleet
During the Track Record Period, taking into account our liquidity position and capital
needs, we acquired intralogistics equipment by using our own funds, as well as by raising
external financings, including bank loans and financial lease arrangements from the financial
institutions. In determining financing plan for our intralogistics equipment procurement, we
take into account a broad range of factors, including our debt ratio, applicable interest rates,
repayment schedule, and our financial position. The Company holds the ownership of
equipment procured with its own funds and bank loans. With respect to equipment procured
with finance lease arrangements, according to the terms of the finance leases, the legal titles
of relevant equipment belong to the financial institutions temporarily, which, upon maturity of
the finance leases, shall be immediately transferred to the Company at nil or nominal
consideration. It is of this transaction nature, based on relevant accounting policies and the fact
that the Group is reasonably certain to obtain ownership of the underlying leased assets at the
end of the lease terms, the Company records relevant equipment as right-of-use assets in the
balance sheet. For more information, please see “Risk Factors – Risks Relating to Our Business
and Industry – We incurred bank loans and other borrowings to invest in the expansion of our
equipment fleet during the Track Record Period. Changes in interest rates of such bank loans
and other borrowings could have a material adverse impact on our business, results of
operations and financial condition” and “Financial Information – Liquidity and Capital
Resources – Net Current Liabilities” in this prospectus.
BUSINESS
– 198 –


--- page 209 ---
In addition, we rented a limited number of intralogistics equipment from third-party
equipment rental companies which mainly engage in leasing different types of equipment, as
our customers occasionally asked to subscribe certain special type(s) of intralogistics
equipment for temporary short terms (generally within three months). We subscribed such
equipment to our customers, and would return such equipment back to the lessor by the end of
the term. The ownership of the equipment remains with the lessors during and after the terms
of the leases. The types of intralogistics equipment rented from us generally include certain
special models of the three major types of intralogistics equipment, i.e., counterbalanced
forklifts, reach trucks, and walkie stackers, that are not included in our fleet, as well as a few
other types, such as aerial work platform, and floor washers. As of December 31, 2020, 2021
and 2022, and April 30, 2023, intralogistics equipment rented from third party rental companies
amounted to 740, 217, 309, 250, respectively.
Measures to Maintain Quality and Profitability
We take the following measures to maintain the quality and profitability of its fleet:
 In procuring equipment for intralogistics equipment subscription services, the
Company chooses equipment from reputable manufacturers, so that the quality and
after-procurement services of the equipment is guaranteed. In addition, the
Company customizes some configuration on equipment components, for example,
traditionally, the lights on intralogistics equipment are incandescent lights on
default, in the process of procuring the equipment, the Company would ask the
sellers to change such lights into LED lights, or have its technicians to replace such
incandescent lights after procurements, which are more durable and energy-saving
than incandescent lights. Therefore, the profitability of the fleet is increased as
frequency and associated costs of equipment maintenance are reduced.
 The Company strategically locates its three supply chain bases in Foshan, Hefei and
Langfang, which are close to most tier-one and new tier-one cities. However, the
land use or property rent related fees in such cities are much lower than tier-one and
new tier-one cities nearby. Such strategic placement enables the Company to
minimize the transportation time and costs of its equipment to the customers’
destinations, which in turn helps increase the utilization efficiency and profitability
of its fleet.
 The Group owns Production Licenses of Special Equipment ( त၇ண௪͛ପ஢̙ᗇ).
With such licenses, the Group is able to maintain and repair the equipment
comprehensively, so that the equipment in the fleet always function in good
conditions and quality, and rarely have down-times. Leveraging the Group’s repair
technique, as of April 30, 2023, over 6,000 equipment in the fleet had fully
depreciated. Such equipment can be used for subscription continuously without
future depreciation, which contributes to higher profitability of the fleet as well.
BUSINESS
– 199 –


--- page 210 ---
The following table sets forth details of the Company’s intralogistics equipment by
ownership as of the dates indicated:
As of December 31,
As of
April 30,
2020 2021 2022 2023
Equipment Volume
Self-owned Equipment
– Without payment
obligations
(1) 5,846 7,925 8,823 9,876
– With bank loan
obligations (1) 1,963 4,475 4,544 5,245
– With finance lease
obligations (2) 22,664 23,640 25,469 25,273
Leased Equipment 740 217 309 250
Total 31,213 36,257 39,145 40,644
Notes:
(1). The legal titles of intralogistics equipment procured either with our own capital or proceeds from bank
loans belong to us under the PRC laws.
(2). The legal titles of intralogistics equipment with finance lease obligations belong to the financial
institutions as of the dates indicated, which shall be immediately transferred to us at nil or nominal
consideration upon maturity of the respective finance leases. Notwithstanding that under PRC laws, the
legal titles belong to the financial institutions temporarily during the terms of the finance leases, the
Directors of the Company is of the view that the Group is reasonably certain to obtain ownership of the
leased assets upon the maturity of the lease terms. Thus, the Group recognized these leased hold
intralogistics equipment as right-of-use assets since the beginning of the finance lease arrangements, in
accordance with the relevant accounting policies as set forth on page I-20 of the Prospectus.
During the Track Record Period, we recorded RMB73.2 million, RMB81.2 million,
RMB76.4 million and RMB24.7 million in interest expenses in relation to the procurement of
our equipment, respectively, which accounted for 11.5%, 11.0%, 10.4% and 10.1%,
respectively, of our revenue of intralogistics equipment subscription services in the same
period. Such ratio generally showed a decline during the Track Record Period primarily
because we continue to actively manage such interest expenses to control our finance costs.
Considering our relatively stable portion of interest expenses to revenue, our Directors are of
the view that there is a manageable impact on our business in relation to our interest expenses.
For risks in relation to interest expenses, please see “Risk Factors – Risks Relating to Our
Business and Industry – We incurred bank loans and other borrowings to invest in the
expansion of our equipment fleet during the Track Record Period. Changes in interest rates of
such bank loans and other borrowings could have a material adverse impact on our business,
results of operations and financial condition.”
BUSINESS
– 200 –


--- page 211 ---
We conduct sensitivity analysis on interest rate to measure the potential impact of a
reasonably possible change in interest rates on profit and profit margin, assuming all other
variables were constant. Assuming a parallel change in interest rate without taking into account
any possible risk management activities that may be taken by management to reduce the
relevant risks, our sensitivity analysis is as follows:
Y ear ended December 31,
Four months
ended April 30,
2020 2021 2022 2023
Increase/
(decrease)
in net
profit
Increase/
(decrease)
in net
profit
margin
Increase/
(decrease)
in net
profit
Increase/
(decrease)
in net
profit
margin
Increase/
(decrease)
in net
profit
Increase/
(decrease)
in net
profit
margin
Increase/
(decrease)
in net
profit
Increase/
(decrease)
in net
profit
margin
RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Changes in
interest rates
Decrease 100 basis
point 8,613 1.4 8,295 1.1 8,476 1.2 2,805 1.2
Decrease 50 basis
point 4,307 0.7 4,148 0.6 4,238 0.6 1,403 0.6
Increase 50 basis
point (4,307) (0.7) (4,148) (0.6) (4,238) (0.6) (1,403) (0.6)
Increase 100 basis
point (8,613) (1.4) (8,295) (1.1) (8,476) (1.2) (2,805) (1.2)
The following table sets forth the movement of the number of intralogistics equipment by
ownership during the Track Record Period:
Y ear ended December 31,
Four months
ended April 30,
2020 2021 2022 2023
Self-
owned Leased
Self-
owned Leased
Self-
owned Leased
Self-
owned Leased
Equipment Volume at the
Beginning of the
Y ear/Period 23,664 1,419 30,473 740 36,040 217 38,836 309
Increase
(1) 7,215 567 6,773 587 4,640 677 2,186 116
Decrease (2) 406 1,246 1,206 1,110 1,844 585 628 175
Equipment Volume at the
End of the Y ear/Period 30,473 740 36,040 217 38,836 309 40,394 250
BUSINESS
– 201 –


--- page 212 ---
Notes:
1. The increase in self-owned intralogistics equipment represented newly procured from suppliers or obtained by
way of finance leasing arrangement; the increase in leased intralogistics equipment represented newly leased
equipment from equipment rental companies.
2. The decrease in self-owned intralogistics equipment represented used equipment sold to end users; and the
decrease in leased intralogistics equipment represented equipment returned to the lessors at the end of the lease
terms.
A summary of key terms of short-term leasing agreements with third-party rental
companies is as follows:
 Term. The lessor provides different rental terms, generally ranging from a few days
to several months based on our needs.
 Obligations . The lessor shall provide door-to-door delivery of the leased equipment
as specified in the contract to us. The Company shall keep the equipment in good
condition during the rental term, and conduct proper inspections, and basic
maintenance (if applicable).
 Payment . Generally, the rental fee shall be payable by month. If the Company is late
in payment, it shall be liable for default payment until the actual payment date; if
the Company is late in payment for certain period, for instance, one week or more,
the lessor shall has the right to terminate the contract.
 Ownership . The ownership of the equipment belongs to the lessor during and after
the term of the lease.
 Terminations . Events of default that entitle the lessor to take immediate repossession
of the equipment include, among others, situations in which (i) the Company
defaults in payment of rental fees or other payables; and (ii) assignment of the rights
and obligations in the rental contracts to third parties without prior consent of the
lessor.
OUR TECHNOLOGY
We consider technology capability our key strength to continuously innovate our service
offerings, enhance customers’ experience and optimize operation efficiency. We have
continuously devoted resources in developing and optimizing our comprehensive technology
platform, namely Intelligent Asset and Operation Management Platform. This platform enables
us to integrate and connect key operating sectors, as well as assets involved, through which,
we have been able to facilitate an intelligent, efficient and cost-effective management on
equipment operation and utilization, service supervision, as well as asset management.
Furthermore, leveraging this platform, we believe we are able to achieve quick expansion of
our business network across China, as well as management of equipment and customer
portfolio with consistent quality and optimized operational efficiency.
BUSINESS
– 202 –


--- page 213 ---
Our Intelligent Asset and Operation Management Platform, consists of (i) IoT Smart
Terminals, which consist of sensors, wearable devices, and other smart hardware serving as
gateway for the collection and transmission of information on equipment status and usage
patterns, which lay the foundation for our efficient business management and customer
interaction; (ii) Operating Information Analysis System, which enables centralized
management of intralogistics equipment and parts, and integrates, processes and analyzes
comprehensive information in relation to our fleet and usage patterns collected through IoT
Smart Terminals. This system delivers to us detailed equipment information at multiple
dimensions as well as analytical diagrams designed to present key operating information of
such equipment at multiple dimensions, based on which, our management may quickly make
business decisions in relation to relevant operation arms on a well-informed basis; and (iii)
Information Management and Application, where we integrate information and analytical
results developed through IoT Smart Terminals and Operating Information Analysis System, to
facilitate proper equipment and technician dispatch, remote control of our equipment,
cost-efficient maintenance and repair service plans, and customization of services, etc.
Leveraging our technology capability, we believe we may ensure efficient resource
allocation and operation management, without incurring significantly larger labor costs, in
spite of our continuous business expansion during the Track Record Period. As of the Latest
Practicable Date, our Intelligent Asset and Operation Management Platform covered over
97.3% of our equipment fleet, which may allow effective operation management.
The chart below illustrates our Intelligent Asset and Operation Management Platform:
Data Collections
Operating
Information Analysis
Information Management
and Application
Remote Control Maintenance and Repair Technician ReviewEquipment and
Operator Management
Equipment and
Technician Dispatch
Multi-personnel
Authorization
Equipment
Utilization Analysis
IoT Technology Multi-source Data
Storage
Malfunction and
Failure Analysis
Operator Efficiency
Analysis
Equipment
Operation
Records
Centralized
Equipment
Configuration
Management
Real-time Monitoring
& Recording
Visualized
Interface
Multi-dimension Movement
Detections, Sound & Light
Alerts
BUSINESS
– 203 –


--- page 214 ---
Data Collection – IoT Smart Terminals
Our IoT Smart Terminals mainly consist of our proprietary Series F IoT Smart Device,
wearable devices (remote-vision-based safety helmet), and various sensors, such as speed
sensor, load sensor, air filter clogging sensor and off-seat detection sensor. By placing our
Series F IoT Smart Device and add-on sensors on relevant equipment and requiring relevant
operator to wear our remote-vision based safety helmet, such terminals are able to capture and
transmit operating information on such equipment and operator, such as movement, weight
load, collision, status of key parts and driving pattern, which allows us to perform 24/7 remote
monitoring and supervision of relevant intralogistics equipment and operators, and, when
emergent, timely interfere to ensure safety of equipment and operators.
They capture movements of, and then generate and process operational information of our
operating equipment and relevant operators. Such information will be shared across Series F
IoT Smart Device and then transmitted to our cloud servers for storage and further analysis,
allowing us to perform 24/7 remote monitoring and supervision of our intralogistics equipment
and relevant operators.
The IoT Smart Terminals serve as the solid foundation for offering intralogistics solutions
at a later stage. Leveraging our data analytics capabilities, we are able to study information
gathered and processed through our IoT Smart Terminals, such as movements and operating
information of the intralogistics equipment, as well as usage patterns, in the way to generate
work orders or alerts in reaction to anomalies, to formulate maintenance schedule, so as to
facilitate safe and proper use of our equipment.
Series F IoT Smart Device is a self-developed device utilizing CAN bus, or Controller
Area Network, which serves as nerve system in the intralogistics equipment that allows
communication among various Electronic Control Units (ECUs) and other parts, so that we
could have central measurement of the equipment dynamics, such as working time, speed,
brake condition, oil pressure, etc. In addition, we could place additional sensors on the
intralogistics equipment to read more operating data of the intralogistics equipment, which will
be gathered through CAN bus as well. Series F IoT Smart Device is equipped with a visualized
screen, which displays real-time operating information, such as operator identity, equipment
load and speed. Set forth below is a picture of IoT Smart Terminals:
Series F IoT Smart Device
Audio & Light Alerts
Power Level Detection Device
Sensors
BUSINESS
– 204 –


--- page 215 ---
The remote-vision-based safety helmet enables us to record audio and high-definition
video of service process of maintenance and repair services. In addition, our technician is able
to recognize each equipment as well as the task assigned to such technician for that equipment
by scanning the QR code generated specifically for such task in the WeChat mini program
of Intelligent Asset and Operation Management Platform, using the safety-helmet. The
safety-helmet will then record and upload the service process entry for such equipment in the
Operating Information Analysis System. Set forth below are pictures of the remote-vision-
based safety helmet and a snapshot of video recording of certain maintenance and repair
service via the safety helmet:
1.5W high-power flashlight
Battery box
Laser
positioning light
Wide-angle
industrial camera
Main board
Working indicator light
Switch button
Horn
Power level broadcast button
Horn
Battery box
Magnetic
charging
port
SIM card/
charging port
In addition, we develop certain sensors, such as speed sensor, load sensor, air filter
clogging sensor and voltage sensor, to detect the changes in key parts of our intralogistics
equipment. The sensors convert the physical phenomenon into digital signals, which data
would be captured and processed by our Series F IoT Smart Device. In addition, as
occasionally requested by certain clients, we will customize sensor modules to be placed on the
intralogistics equipment tailored to our client’s desired functions. For more information, please
see “– Our Technology – Information Management and Application” in this section.
BUSINESS
– 205 –


--- page 216 ---
Data Processing – Operating Information Analysis System
We have been making strategic investments in developing information analysis and
cloud-edge collaboration capabilities for years. After over a decade’s upgrades and
optimization, our Operating Information Analysis System now is a comprehensive telematics
suite that tracks and analyzes equipment operation and operator performance to help drive
productivity across our business operations. Leveraging the big data analytics algorithms of
our Operating Information Analysis System, we are able to analyze real-time information
gathered from IoT Smart Terminals and transmitted through our cloud servers, and form
various diagrams at multiple dimensions, including but not limited to, working status analysis,
aging analysis, loading analysis, utilization analysis, irregular operation analysis of the whole
fleet and each intralogistics equipment separately, which generally allow us to drive
productivity by allocating our equipment and personnel resources properly, reducing
equipment down-time, and extending average useful life of our equipment fleet.
In addition, the Operating Information Analysis System enables centralized management
of intralogistics equipment and parts. In particular, our intralogistics equipment is categorized
in multiple dimensions, including but not limited to, equipment types, equipment
configurations, models, brands, tonnage, engine types, etc. By entering the unique
identification number of an equipment into the analysis system, we can easily pull up
equipment information, as well as all maintenance and repair history of such equipment.
Set forth below are some examples of analytical interface of the Operating Information
Analysis System:
Note : this is a screen shot of the main page of Operating Information Analysis System on May 22, 2023, and the data
on the page shall change from time to time.
BUSINESS
– 206 –


--- page 217 ---
The map distribution interface above serves as the main page of our Operating
Information Analysis System, where our management and personnel can have a snapshot on
key information summary of our fleet on real-time basis, including fleet size, working status
of the fleet, geographic distribution, recognized malfunctions, maintenance status of the fleet,
irregular operations of the operators, risk alerts, etc.
Note : this is a screen shot of certain single equipment analysis interface of Operating Information Analysis System
on May 22, 2023, and the data on the page shall change from time to time.
The single equipment analysis interface shows diagrams and results of key operating data
of each intralogistics equipment separately, such as working time summary and equipment
utilization analysis. In particular, our clients can access the operating information and analysis
of their subscribed intralogistics equipment and operators during service period, with their
client log-in information (i.e., account number and password provided by the Company), which
information and analysis allow our clients to assess and manage the utilization of the
subscribed equipment.
The Company’s technicians can set up various control parameters, such as speed limit,
load limit, and oil pressure, in the Operating Information Analysis System. In the process of
supervising the equipment status, if certain indicator, exceeds the limits, the Operating
Information Analysis System could automatically generate instructions, which information will
be sent to Series F IoT Smart Device through wireless Internet, and then the embedded control
units in the Series F IoT Smart Device will generate action orders to the equipment, to slow
it down or alarm loudly.
During the Track Record Period, we took efforts to maximize coverage of our Intelligent
Asset and Operation Management Platform on our fleet and to upgrade related hardware
devices when necessary. As a result, the percentage of equipment in our fleet that is covered
by the Intelligent Asset and Operation Management Platform continued to increase. As of April
30, 2023, 2,266 customers, representing 81.2% of all intralogistics equipment subscription
service customers on the same date, had access to the operating information and analysis of
their subscribed intralogistics equipment and operators.
BUSINESS
– 207 –


--- page 218 ---
Information Management and Application
Our IoT Smart Terminals and Operating Information Analysis System jointly serve as a
base for our Information Management and Application for asset and personnel resource
allocation, equipment subscription and service monitoring for our clients, safe operation and
predictive maintenance of our equipment, and human resources management. The centralized
management of our equipment may liberate our people from labor-intensive manual recording
and frequent on-site inspections, generally allowing them to react nimbly to various situations
and requests. To be specific, the average equipment service capacity per employee substantially
increased from around seven units in 2016 to around 57 units in 2022 after the utilization of
Intelligent Asset and Operation Management Platform.
Leveraging the detailed equipment configuration management, intralogistics equipment
and parts that matches the configuration requests of the clients can be properly selected, and
dispatched from the warehouse or main supply chain bases closest to the client’s site. After
client engagement, we manage to improve transparency of service process by assisting clients
to collect, categorize, and study the operating data in relation to their subscribed equipment,
operators, working environment and load conditions. For instance, the client is able to obtain
actual working time and standby time of the subscribed intralogistics equipment, as well as the
analytical results of utilization rates and workloads of the intralogistics equipment, so that we
could assist our clients to properly adjust equipment subscription plan and maintenance
schedule, so as to help them achieve optimized working efficiency in a cost-effective way.
To ensure safe operation of our intralogistics equipment, we generally set limits on certain
operating parameters, such as speed acceleration, top speed, load, oil pressure, operational
boundaries, to reduce occurrence of avoidable accidents or unnecessary worn-outs of key parts.
If certain parameter exceeds the limits, we will instantly generate alerts and work orders
accordingly. For example, once we detect speeding of a forklift, we could generate commands
to slow down the forklift remotely through Series F IoT Smart Device, and gradually stop it
so as to ensure safe operation.
Occasionally, certain clients ask us to add features for their subscribed equipment, such
as collision alerts, etc. After the requests arise, our research and development department
works closely with such clients for the realization of the requested functions, usually by way
of placing related sensors on the equipment body so that the concerned actions can be properly
captured by the Series F IoT Smart Device, and creating add-ons to the existing Operating
Information Analysis System so that once the actions are captured, certain alerts or reactions
can be generated through Intelligent Asset and Operation Management Platform automatically.
We are able to foresee and identify maintenance needs before the problems become too
costly to fix as our IoT Smart Terminals enable 24/7 remote monitoring and supervision of our
intralogistics equipment. For example, once we detect lubricant starvation through the analysis
system, our technician will be able to add lubricant in a timely manner to prevent cylinder
scoring at a later stage, which will be substantially more expensive to fix. In addition, upon
detection of incorrect maneuver of the operators, our Intelligent Asset and Operation
Management Platform will generate alerts swiftly so as to decrease damages to equipment and
to regulate the operators’ driving behaviors. The customers are not charged additional fees to
gain access to this platform.
BUSINESS
– 208 –


--- page 219 ---
The Intelligent Asset and Operation Management Platform can also serve customers who
purchase the Company’s maintenance and repair service plans. For instance, as the technician
provides maintenance and repair services for the customer’s equipment, they will usually wear
a remote-vision-based safety helmet, which records the whole process of the service, which
record shall be uploaded to the Operating Information Analysis System in real-time. Utilizing
such device, the technician on site can communicate remotely with our supporting team, which
can provide technical advice and support to the technician on site by viewing the real-time
images recorded by the remote-vision-based safety helmet. Occasionally, customers
subscribing maintenance and repair service plans, ask us to equip their intralogistics equipment
with our IoT Smart Terminals, so that the operation of the equipment will be monitored and
predicative maintenance will be provided to ensure optimal condition of the equipment.
In addition, by reviewing the video records of our technicians’ services, and analysis
outcomes of such technicians’ work efficiency, our human resources department will be able
to produce proper performance results for internal reviews, and make decisions in relation to
personnel management accordingly.
OUR NATIONWIDE SERVICE NETWORK
As of April 30, 2023, our national service network consisted of our headquarter, three
main supply chain bases, and 67 service outlets in 47 cities across China, with a focus on cities
in Y angtze River Delta and Pearl River Delta. In particular, we had 16 service outlets in
tier-one cities, namely Beijing, Shanghai, Guangzhou and Shenzhen, and additional 21 service
outlets in new tier-one cities, namely Chengdu, Hangzhou, Chongqing, Xi’an, Suzhou, Wuhan,
Nanjing, Tianjin, Zhengzhou, Changsha, Dongguan, Foshan, Ningbo, Qingdao, and Shenyang,
representing 55.2% of our total service outlets. The following table sets out the summary of our
service network as of April 30, 2023:
Service Network
Segment Number Location Main Functions
Headquarter One Guangzhou,
Guangdong
Overall administration and
management of the Group;
research and development
Main Supply
Chain Bases
Three Foshan, Guangdong;
Hefei, Anhui;
Langfang, Hebei
Supply chain management;
warehousing of intralogistics
equipment
Service Outlets 67 47 cities across the
nation
Equipment management;
offering services; sales and
marketing
BUSINESS
– 209 –


--- page 220 ---
The number of our service outlets was 66, 67, 67 and 67 as of December 31, 2020, 2021,
2022 and April 30, 2023. Each of the service outlets across the nation has one or a few
technicians and stores certain amount of equipment parts expected to be used for maintenance
and repair of equipment. On the other hand, the intralogistics equipment for equipment
subscription services is stored in the main bases of the Group, and shall be transported directly
from such main bases to the customer’s destination, rather than from any service outlets. Our
broad service network allows us to consistently deliver high-quality services nationwide with
flexibility and convenience for our customers in a timely manner. In case of regular
maintenance needs, or any equipment failure or malfunction, our technicians will provide
on-site maintenance or repairs for our customers. As generally agreed with our customers, our
response time (i.e., the period of time required to reach the site of work designated by the
customer from any service outlet) is approximately eight hours. However, the Company’s
customers are spread widely across the nation, including northwest China, north China, east
China, west China, central China, and south China. As such, the strategic placement of 67
service outlets across the nation is a response to such widespread and large customer bases in
47 cities. Having relatively large number of service outlets is necessary to optimize the
Company’s response time to reach the customer’s designated work sites across the nation.
As of April 30, 2023, there were 67 service outlets located in 47 cities. Intralogistics
equipment is a kind of industrial machinery generally designed for heavy duty works, such as
moving or lifting heavy loads. Due to such nature, intralogistics equipment are expected to
experience high wear and tear during usage, thus require relatively frequent maintenance and
repair. In addition, we believe that our capability to deliver timely service to customers
constitutes an important step stone for its success.
In line with such observance and business strategy, we maintain a relatively large number
of service outlets, to make sure that: there is at least one service outlet in each of the tier-one
cities (namely Beijing, Shanghai, Guangzhou and Shenzhen) and new tier-one cities (namely
Chengdu, Hangzhou, Chongqing, Xi’an, Suzhou, Wuhan, Nanjing, Tianjin, Zhengzhou,
Changsha, Dongguan, Foshan, Ningbo, Qingdao, and Shenyang); for other cities, we will make
sure that the technicians arrive within eight hours after the service requests arise. By doing
that, we can make sure that its technicians can reach the customer’s site within eight hours
whenever the service requests arise.
Points of Services (“PoS”)
During the Track Record Period, we had PoSs that were located on properties provided
by the Company’s customers. In such circumstances, the customers had amicable
communications with us, and offered to provide free spaces on the customers’ working sites for
a few of our technicians, so that the customers could get services and professional
consultations fast and easily. On the other hand, we generally agreed to dispatch a few
technicians and store a small amount of spare parts on the customers’ sites, as a way to increase
customer stickiness. The customers offered such spaces for free and we did not have leasing
agreements or similar arrangements with the customers for using the properties.
BUSINESS
– 210 –


--- page 221 ---
Out of the friendly cooperative relationship between us and the customers, and to achieve
mutual benefits for us and the customers, the customers generally agree that technicians on site
can also serve other customers nearby, so that we could also utilize its technicians efficiently.
According to CIC, such arrangement is not uncommon in the industry. As of April 30, 2023,
the Company had 110 PoSs around the nation.
During the Track Record Period, we had 65, 88, 94, and 110 PoSs as of December 31,
2020, 2021, 2022 and April 30, 2023.
The following table sets forth comparison of service outlets and PoSs:
Functionality
Range of the
number of
technicians
Range of
spaces
(sq.m.)
Opening
hours
Service outlets providing support for
high-quality on-site
repair and
maintenance to
customers who
subscribe the
Company’s
equipment or
procure maintenance
and repair service
plans in surrounding
areas
1-43 around 39.0
to 3,200.0
8:30 to
17:30
Points of services providing support for
high-quality on-site
repair and
maintenance to
subscription service
or maintenance and
repair service
customers which
provide working
spaces
1-5 around 20.0
to 100.0
8:30 to
17:30
BUSINESS
–2 1 1–


--- page 222 ---
PRODUCT LIABILITIES
Intralogistics Equipment Subscription Services
It is clearly stipulated in the intralogistics equipment subscription service agreements that
the customer shall ensure that its equipment operators hold valid license for equipment
operation and use the equipment properly. The Company shall not be responsible for any
damages, accidents or injuries to the customers or any third parties caused by the customer’s
own misconduct, negligence, or mistake. The Company shall bear losses and/or liabilities for
any accidents, injuries or damages only if such accidents, injuries or damages are caused by
the inherent defects of the equipment itself, including intralogistics equipment under
subscription period. Under such circumstances, in accordance with “Product Quality Law of
the PRC” (), the Company can ask the manufacturers of the
flawed products to reimburse the Company in full after the Company bears such
responsibilities. For more information, please refer to “– Product Liabilities – Producer
Liabilities” below.
Maintenance and Repair Services
In terms of the maintenance and repair services, the Company does not provide its
equipment to the customers. Instead, the Company only assigns its technician(s) to the site of
the customers to conduct on-site repair or maintenance of the customers’ equipment. Thus, the
Company does not assume any product liability in such circumstances.
If there is any accident, injury or damage caused by the gross negligence of the
Company’s technician(s), the Company shall bear losses and/or liabilities for such accident,
injury or damage.
Sales of Intralogistics Equipment
In terms of the sales of intralogistics equipment to customers, as stipulated in the sales
agreements with the customers, the Company shall not be responsible for any damages,
accidents or injuries to the customers or any third parties caused by the customer’s own
misconduct, negligence, or mistake.
The Company generally warrants for quality issues, such as equipment part damage, of
the equipment within the warranty period the Company grants to the customers. The scope and
period of the Company’s warranty period is not wider or longer than the scope and period of
the warranty period granted by the suppliers. During the warranty period, the Company will
adjust, repair or replace parts of the relevant faulty equipment free of charge. As agreed in the
procurement agreements with the suppliers, and as advised by the PRC Legal Adviser, under
such circumstances, the Company can ask the suppliers to reimburse it in full if it incurs certain
costs associated with the quality issues of the equipment sourced from such suppliers.
BUSINESS
– 212 –


--- page 223 ---
Aside from above, the Company shall bear losses and/or liabilities for any accidents,
injuries or damages only if such accidents, injuries or damages are caused by the inherent
defects of the equipment itself. In accordance with “Product Quality Law of the PRC” ( ʕ
), the Company can ask the manufacturers of the flawed products
to reimburse the Company in full after the Company bears such responsibilities. For more
information, please refer to “– Product Liabilities – Producer Liabilities” below.
Producer Liabilities
The Company is not a manufacturer of the equipment. The PRC Legal Adviser advises
that, as stipulated in “Product Quality Law of the PRC” (),
whenever the accidents, injuries or damages are caused by inherent defects of the products,
such as manufacture defects, and design defects, which are inherent to the products, the
customer may ask the Company or the manufacturer of the products to pay for the losses or
damages; if the customer chooses to ask the Company to pay for the losses, then the Company
can ask the manufacturers of the flawed products to reimburse the Company in full after the
Company bears any responsibility for the losses of its customer or other third parties because
of such accidents, injuries or damages.
SALES MODEL
During the Track Record Period, we sold intralogistics equipment and parts directly to
corporate end customers in China and abroad, including but not limited to manufacturers,
logistics carriers, and trading companies. During the Track Record Period, our revenue derived
from sales of intralogistics equipment and parts amounted to RMB229.5 million, RMB304.5
million, RMB315.2 million, and RMB137.8 million in 2020, 2021 and 2022, and the four
months ended April 30, 2023, respectively.
PRICING
Intralogistics Equipment Subscription Services
For our intralogistics equipment subscription services, the prices are mainly determined
by the equipment’s depreciation, maintenance and repair expenses, and operating expenses.
The equipment types and subscription term selected by a customer also play an important role
in pricing. We may adjust the prices based on the customization requested by certain
customers, estimated daily working time of the equipment, market demand, corresponding
intensity of competition among competitors in the same region, and the working environment.
During the Track Record Period, our average unit subscription price of intralogistics
equipment (excluding V A T) ranged from approximately RMB1,965 to RMB2,183 per month
depending on different types of devices and their brands, configurations and models.
BUSINESS
– 213 –


--- page 224 ---
Maintenance and Repair Services
For our maintenance and repair services, the prices are primarily determined through a
cost-plus basis, the services fees vary due to various factors, such as (a) the nature and
complexity of the maintenance and/or repair services; (b) labor costs of technicians of different
seniority and level of experience; and (c) the overall quantity of the materials required.
Sales of Intralogistics Equipment and Parts
We determine the selling price of new intralogistics equipment and parts based on our
research of prevailing market price and conditions. We also take into consideration our
expected gross profit margin in determining the selling prices. With respect to used
intralogistics equipment, we determine the selling price for the used equipment generally
taking into consideration the net replacement value of the relevant equipment by making
reference to the market selling price of the relevant equipment or similar equipment, the
estimated selling costs and repair costs for the equipment.
RESEARCH AND DEVELOPMENT
We always attach great importance to technologies and research and development in order
to enhance our operational efficiency and provide customers with more standardized services.
Our research and development efforts primarily focus on the upgrades of our service
capabilities. Apart from the general upgrades and optimization of our existing technologies, our
research and development team also attend to specific customization requests from our clients,
in offering our intralogistics equipment subscription services, such as collision alerts. For more
information, please see “– Our Technology – Information Management and Application” in this
section.
For the years ended December 31, 2020, 2021 and 2022, and the four months ended April
30, 2023 our research and development expenses amounted to RMB29.3 million, RMB35.7
million, RMB39.7 million, and RMB11.8 million, respectively. As of April 30, 2023, our
research and development employees amounted to 139, representing 8.7% of our total number
of employees as of the same date. As a reflection of our sustained investment in technologies,
we possessed numerous intellectual property rights as of the Latest Practicable Date. Please see
“– Intellectual Property” in this section for more information.
MARKETING AND PROMOTION
As of April 30, 2023, we had a dedicated team responsible for our sales and marketing
activities. Our sales and marketing activities are primarily conducted through on-site marketing
events, and telephone calls. We secure customers and orders through different kinds of
marketing channels. For instance, we would send our staff to visit the sites and contact or
directly negotiate with the person in charge on site. Through online promotion or posters on
trade shows, we would be able to attract attention of potential customers, and then conduct
contract negotiations. We would also obtain business opportunities through referrals from
existing customers and suppliers.
BUSINESS
– 214 –


--- page 225 ---
INVENTORIES
Our inventories primarily consist of intralogistics equipment and parts. For more
information, please see “Financial Information – Discussion of Certain Selected Items From
the Consolidated Statements of Financial Position – Inventories” in this prospectus. We have
implemented policies to optimize our inventory level. According to such policies, we
standardize our inventory management through our digital warehousing system across our
general warehouses in main supply chain bases and sub-warehouses in our local subsidiaries.
Each of the inventories is given an unique identification code at the time of storage and we
keep track of all inventories at all stages.
We analyze our inventory level on a monthly basis, and prepare annual inventory
inspection report at the end of each fiscal year, so that we are able to deal with slow-moving
inventories in a timely manner. For slow-moving intralogistics equipment and parts held for
sale, we collect information about prices of comparable brands and models in the market and
adjust our selling prices to the extent appropriate.
OUR CUSTOMERS AND SUPPLIERS
Our Customers
During the Track Record Period, almost all of our customers were corporate entities,
which comprised of manufacturers, logistics companies, and trading companies. During the
Track Record Period, we effectively served corporate customers, including leading logistics
enterprises such as Shanghai ANE, Best Logistics, Yimi Dida, and FAW Group and large
manufacturing enterprises, such as, Swire Coca-Cola. According to the List of Top 50 Logistics
Enterprises in 2022 in China issued by China Federation of Logistics & Purchasing, among the
top ten logistics enterprises in China in 2022, seven of them are our customers.
The following table sets forth a summary of the number of our customers by industries
for the periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
(%) (%) (%) (%) (%)
(unaudited)
Manufacturers (1) 3,042 40.7 3,094 39.0 3,290 40.3 1,807 34.5 2,541 44.5
Logistics companies (1) 1,814 24.3 1,929 24.3 1,916 23.5 1,236 23.6 1,440 25.2
Trading companies (1) 2,157 28.8 2,373 29.9 2,183 26.7 1,830 34.9 1,279 22.3
Others 464 6.2 533 6.7 781 9.6 364 7.0 451 8.0
Total 7,477 100.0 7,929 100.0 8,170 100.0 5,237 100.0 5,711 100.0
Note: Customers that we categorized as manufacturers, logistics companies, trading companies and others
were based on publicly available information on the background of our customers.
BUSINESS
– 215 –


--- page 226 ---
The following table sets out revenue derived from customers in different industries during
the Track Record Period:
Y ears ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Revenue
Manufacturers 355,793 36.3 419,892 35.8 450,937 37.8 122,567 35.3 159,338 36.5
Logistics companies 403,683 41.2 455,673 38.9 427,561 35.8 132,482 38.2 161,118 36.9
Trading companies 179,596 18.3 223,799 19.1 243,274 20.4 76,629 22.1 92,425 21.2
Others 41,571 4.2 72,818 6.2 72,437 6.0 15,131 4.4 23,410 5.4
Total 980,643 100.0 1,172,182 100.0 1,194,209 100.0 346,809 100.0 436,291 100.0
In particular, the Company categorized some of its customers into the category of “trading
companies” based on such companies’ business nature as indicated in publicly available
information, and such categorization does not entirely refer to the nature of transactions
effected between the Company and such customers during the Track Record Period.
During the Track Record Period, trading companies included, but not limited to, retail
group companies (Suning.com, Miss Fresh, V anguard, etc.); machinery and equipment
companies, materials companies (paints, metal, paper, forage, glasswork, packing materials,
etc.), automobile and automobile parts companies, equipment sales companies, storage and
warehousing companies in China, and, to a lesser extent, abroad.
Transactions between the Company and trading companies covered the Company’s main
business segments in its business model, which include (i) the provision of intralogistics
equipment subscription services; (ii) maintenance and repair services; and (iii) sales of
intralogistics equipment and/or parts. Based on the best knowledge of our Directors, relevant
trading companies procured equipment and/or parts primarily to satisfy their own intralogistics
need, including movement of goods and material.
BUSINESS
– 216 –


--- page 227 ---
The following tables set out the number of trading company customers, and revenue
derived from trading company customers, for each business segment of the Company during
the Track Record Period:
1. Number of Trading Company Customers
Y ear Ended December 31, Four Months Ended April 30,
2020 2021 2022 2022 2023
Number
of trading
company
customers
Percentage
of total
number of
customers
Number
of trading
company
customers
Percentage
of total
number of
customers
Number
of trading
company
customers
Percentage
of total
number of
customers
Number
of trading
company
customers
Percentage
of total
number of
customers
Number
of trading
company
customers
Percentage
of total
number of
customers
(%) (%) (%) (%) (%)
Intralogistics
equipment
subscription services 575 7.7 662 8.3 632 7.7 457 8.7 385 6.7
Maintenance and
repair services 451 6.0 583 7.4 648 7.9 793 15.1 353 6.2
Sales of intralogistics
equipment and/or
parts 1,315 17.6 1,374 17.3 1,151 14.1 726 13.9 635 11.1
Subtotal 2,341 31.3 2,619 33.0 2,431 29.7 1,976 37.7 1,373 24.0
Less: Overlapping
across business
segments
(1) (184) (2.5) (246) (3.1) (248) (3.0) (146) (2.8) (94) (1.6)
Total number of
trading companies 2,157 28.8 2,373 29.9 2,183 26.7 1,830 34.9 1,279 22.3
Note :
(1) Certain customers overlap across the business segments (i.e., intralogistics equipment subscription services,
maintenance and repair services, sales of intralogistics equipment and/or parts), therefore, the total number of
trading company customers does not necessarily equal to the sum of trading company customers under each
business segment above.
2. Revenue Derived from Trading Company Customers
Y ear Ended December 31, Four Months Ended April 30,
2020 2021 2022 2022 2023
Revenue
derived
from
trading
company
customers
Percentage
of total
revenue
Revenue
derived
from
trading
company
customers
Percentage
of total
revenue
Revenue
derived
from
trading
company
customers
Percentage
of total
revenue
Revenue
derived
from
trading
company
customers
Percentage
of total
revenue
Revenue
derived
from
trading
company
customers
Percentage
of total
revenue
RMB’000 (%) RMB’000 (%) RMB’000 (%) RMB’000 (%) RMB’000 (%)
Intralogistics
equipment
subscription services 42,559 4.3 44,032 3.8 45,733 3.8 15,109 4.4 13,743 3.2
Maintenance and
repair services 10,611 1.1 15,471 1.3 17,205 1.4 10,226 2.9 6,109 1.4
Sales of intralogistics
equipment and/or
parts 126,426 12.9 164,295 14.0 180,336 15.1 51,294 14.8 72,573 16.6
Total 179,596 18.3 223,799 19.1 243,274 20.3 76,629 22.1 92,425 21.2
BUSINESS
– 217 –


--- page 228 ---
With respect to transactions in the third business segment, during the Track Record
Period, among all trading companies, 1,315, 1,374, 1,151 and 635 were customers who
procured intralogistics equipment and/or parts from the Company, accounted for 17.6%,
17.3%, 14.1% and 11.1% of the Company’s total customers in the same period, respectively.
In addition, revenue derived from sales to such trading companies only accounted for 12.9%,
14.0%, 15.1% and 16.6% of the total revenue in the same period, respectively. Our business
relationships with such customers are of a buyer/seller nature. The risks and ownership of
relevant equipment and/or parts were transferred to such customers upon acceptance. Such
customers did not have a legal right to return products to the Company except for product
defects. In addition, the Company had no knowledge on the subsequent use of relevant
intralogistics equipment and/or parts that such trading companies purchased from the
Company.
The remaining group of “trading companies” only procured intralogistics equipment
subscription services or maintenance or repair services from the Company.
The following table sets out the number of overlapping customers during the Track
Record Period
(1):
Y ear ended December 31,
Four months
ended April 30,
2020 2021 2022 2022 2023
Overlapping customers of
A and B 763 851 909 487 509
Overlapping customers of
A and C 111 107 130 46 50
Overlapping customers of
B and C 323 353 317 93 122
Overlapping customers
across three business
segments 165 187 171 61 61
Customers that only had
one of A, B or C 6,115 6,431 6,643 4,550 4,969
Total 7,477 7,929 8,170 5,237 5,711
Note : In the chart above, “A” represents “intralogistics equipment subscription services”, “B” represents
“maintenance and repair services”, and “C” represents “sales of intralogistics equipment and parts.”
BUSINESS
– 218 –


--- page 229 ---
We review our customers on a regular basis. For the years ended December 31, 2020,
2021 and 2022 and the four months ended April 30, 2023, (i) our five largest customers in each
year/period during the Track Record Period contributed to 17.0%, 15.8%, 13.9% and 16.0% of
our total revenue, respectively; and (ii) our largest customer in each year/period during the
Track Record Period contributed to 6.1%, 6.5%, 5.8% and 4.6% of our total revenue,
respectively.
Customer Revenue
% of Total
Revenue in
Same
Period
Customers’
Background (1) Services Rendered by us
Credit
Terms
Y ear in Which
the Group
Commenced
Business with
the Customer
(RMB’000)
For the year ended
December 31, 2020
Customer A 60,223.7 6.1% Logistics
company
Intralogistics equipment
subscription services,
maintenance and repair
services, sales of
intralogistics equipment
and parts
90 days 2016
Customer B 47,781.9 4.9% Logistics
company
Intralogistics equipment
subscription services,
maintenance and repair
services
30 days 2017
Customer C 31,970.5 3.3% Logistics
company
Intralogistics equipment
subscription services,
maintenance and repair
services, sales of
intralogistics equipment
and parts
90 days 2017
Customer D 13,255.9 1.4% Logistics
company
Intralogistics equipment
subscription services,
maintenance and repair
services
30 days 2017
Customer E 13,108.4 1.3% Logistics
company
Intralogistics equipment
subscription services,
maintenance and repair
services, sales of
intralogistics equipment
and parts
30 days 2020
Total 166,340.4 17.0%
BUSINESS
– 219 –


--- page 230 ---
Note:
(1) Customer A: founded in 2010, is a listed company on Hong Kong Stock Exchange and headquartered
in Shanghai, offering a wide range of services including logistics and transportation services,
value-added services and dispatch services. According to the public information available, it is the first
one to establish the freight partner platform model in 2012.
Customer B: founded in 2007, is a listed company in the U.S. and headquartered in Hangzhou, Zhejiang.
It is a leading smart supply chain service provider in China, offering a wide range of services including
integrated logistics and supply chain services, last-mile services and value-added services.
Customer C: founded in 2015, is a non-listed company headquartered in Shanghai, offering a wide range
of services including freight transportation services, cargo agency services, supply chain management,
etc.
Customer D: founded in 2017, is a non-listed company headquartered in Shanghai, offering a wide range
of services including logistics services, and warehousing services.
Customer E: founded in 2001, is a non-listed company headquartered in Changchun, Jilin, concentrating
on transportation services, cargo agency services, warehousing services, etc.
Customer Revenue
% of Total
Revenue in
Same
Period
Customers’
Background (1) Services Rendered by us
Credit
Terms
Y ear in Which
the Group
Commenced
Business with
the Customer
(RMB’000)
For the year ended
December 31, 2021
Customer A 75,752.4 6.5% Logistics
company
Intralogistics equipment
subscription services,
maintenance and repair
services, sales of
intralogistics equipment
and parts
90 days 2016
Customer B 42,764.2 3.6% Logistics
company
Intralogistics equipment
subscription services,
maintenance and repair
services, sales of
intralogistics equipment
and parts
30 days 2017
Customer C 31,180.4 2.7% Logistics
company
Intralogistics equipment
subscription services,
maintenance and repair
services, sales of
intralogistics equipment
and parts
90 days 2017
BUSINESS
– 220 –


--- page 231 ---
Customer Revenue
% of Total
Revenue in
Same
Period
Customers’
Background (1) Services Rendered by us
Credit
Terms
Y ear in Which
the Group
Commenced
Business with
the Customer
(RMB’000)
Customer F 21,172.5 1.8% Logistics
company
Intralogistics equipment
subscription services,
maintenance and repair
services, sales of
intralogistics equipment
and parts
30 days 2020
Customer G 13,847.3 1.2% Logistics
company
Intralogistics equipment
subscription services,
maintenance and repair
services, sales of
intralogistics equipment
and parts
30 days 2015
Total 184,716.8 15.8%
Note:
(1) Customer F: founded in 2018, is a non-listed company headquartered in Beijing, concentrating on
technology development and consultation, supply chain management, cargo agency services,
warehousing services, etc.
Customer G: founded in 1998, is a dual-listed company in the U.S. and Hong Kong Stock Exchange,
headquartered in Beijing. It is one of the major e-commerce and online retail company in China, and also
offers logistics and transportation services.
Customer Revenue
% of Total
Revenue in
Same
Period
Customers’
Background (1) Services Rendered by us
Credit
Terms
Y ear in Which
the Group
Commenced
Business with
the Customer
(RMB’000)
For the year ended
December 31, 2022
Customer A 69,244.1 5.8% Logistics
company
Intralogistics equipment
subscription services,
maintenance and repair
services, sales of
intralogistics equipment
and parts
90 days 2016
BUSINESS
– 221 –


--- page 232 ---
Customer Revenue
% of Total
Revenue in
Same
Period
Customers’
Background (1) Services Rendered by us
Credit
Terms
Y ear in Which
the Group
Commenced
Business with
the Customer
(RMB’000)
Customer B 33,534.4 2.8% Logistics
company
Intralogistics equipment
subscription services,
maintenance and repair
services
90 days 2017
Customer C 26,018.0 2.2% Logistics
company
Intralogistics equipment
subscription services,
maintenance and repair
services, sales of
intralogistics equipment
and parts
90 days 2017
Customer H 21,861.6 1.8% Manufacturing
group of
automobiles,
intralogistics
equipment,
rechargeable
batteries and
other related
parts
Intralogistics equipment
subscription services,
maintenance and repair
services, sales of
intralogistics equipment
and parts
90 days 2016
Customer G 15,514.2 1.3% Logistics
company
Intralogistics equipment
subscription services,
maintenance and repair
services
30 days 2015
Total 166,172.2 13.9%
Note:
(1) Customer H: founded in 1995, is a dual-listed company in Shenzhen Stock Exchange and Hong Kong
Stock Exchange, headquartered in Shenzhen, Guangdong. It is a leading manufacturing group company
of automobiles, intralogistics equipment, rechargeable batteries and other related products in China.
BUSINESS
– 222 –


--- page 233 ---
Customer Revenue
% of Total
Revenue in
Same
period
Customers’
Background (1) Services Rendered by us
Credit
Terms
Y ear in Which
the Group
Commenced
Business with
the Customer
(RMB’000)
For four months ended
April 30,2023
Customer A 19,940.7 4.6% Logistics
company
Intralogistics equipment
subscription services,
maintenance and repair
services, sales of
intralogistics equipment
and parts
90 days 2016
Customer I
(2) 17,340.7 4.0% Logistics
company
Sales of intralogistics
equipment and parts
90 days 2023
Customer J 13,851.5 3.2% Manufacturing
group of
automobiles
Intralogistics equipment
subscription services,
maintenance and repair
services, sales of
intralogistics equipment
and parts
90 days 2017
Customer B 9,617.3 2.2% Logistics
company
Intralogistics equipment
subscription services,
maintenance and repair
services
30 days 2017
Customer H 8,914.3 2.0% Manufacturing
group of
automobiles,
intralogistics
equipment,
rechargeable
batteries and
other related
parts
Intralogistics equipment
subscription services,
maintenance and repair
services
90 days 2016
Total 69,664.6 16.0%
BUSINESS
– 223 –


--- page 234 ---
Notes:
(1) Customer I: founded in 2021, is a state-owned company headquartered in Chengdu, Sichuan,
concentrating on the construction, development, operation and management of Chengdu International
Railway Port. It also engages in logistics and transportation services.
Customer J: founded in 1953, is a non-listed company headquartered in Changchun, Jilin. It is a leading
manufacturing company of automobiles, and related parts.
(2) According to public information available, Customer I is a state-owned company established by
Chengdu government for the purpose of constructing, developing and operating an international railway
port. The Company has no pre-existing business relationship with Customer I. However, at the end of
2022, Customer I invited public tenders through the China Government Procurement website (݁
મᒅၣ)( www.ccgp.gov.cn ) for the procurement of heavy-duty intralogistics equipment to be used for
loading, unloading, moving and stacking port containers in the railway port (the “Project”).
The Company learned about this invitation through the internet and actively participated in the bidding.
As a reputable and well-known supplier in the industry of intralogistics equipment, the Company was
eventually selected by Customer I to be its equipment supplier for the Project. The Company signed two
equipment procurement agreements with Customer I in March, 2023 and sold intralogistics equipment
to it in the consideration (excluding tax) of RMB17.3 million in total. As of April 30, 2023, such
equipment had been delivered.
Customer I is a state-owned enterprise with a registered capital of RMB5.0 billion. Although it has not
been established for a long time, it has strong economic and business strengths and resources supported
by Chengdu government, and its procurements were commensurate with the scale of its operations.
As of the Latest Practicable Date, none of our Directors, their associates or any
shareholders which, to the knowledge of our Directors, owned more than 5% of the issued
share capital of the Company as of the Latest Practicable Date, had any interest in any of our
five largest customers in each year/period during the Track Record Period.
Contracts with Customers
A summary of the key terms of our intralogistics equipment subscription service contract
is as follows:
 Term. The contract term varies based on customers’ needs. During the Track Record
Period, the contracts generally had durations ranging from three months to 48
months. The average contract term was around 19.7 months, 22.7 months, 14.5
months, and 13.7 months in 2020, 2021, 2022 and the four months ended April 30,
2023, respectively. The service term generally starts at the date when the requested
equipment is received by the customer;
 Services. We provide door-to-door delivery of the subscribed equipment as specified
in the contract to our customer. We assist our customer to finish set-up the
equipment, and provide guidance to our customer’s in-house equipment operators.
We will provide periodic inspections and maintenance to the equipment to ensure
their smooth operation on site;
BUSINESS
– 224 –


--- page 235 ---
 Subscription price. The average monthly subscription price (excluding V A T) of
different types of intralogistics equipment varies significantly based on
specifications of relevant equipment. For instance, in respect of simple-structured
and inexpensive stackers used for moving small goods, such price can be as low as
approximately RMB50/unit, while for complex and expensive intralogistics
equipment for moving heavy products, such price can generally reach approximately
RMB32,000/unit. Taken as a whole, our overall average monthly equipment
subscription price (excluding V A T) was RMB1,965 per unit in 2020, RMB2,126 per
unit in 2021, RMB2,085 per unit in 2022, and RMB2,183 per unit for the four month
ended April 30, 2023.
 Payment term. The subscription fee shall be payable by month. The cumulative
usage duration of each intralogistics equipment shall not exceed certain hour limit
per month, and any excessive hours shall be paid by the customer at pre-determined
hourly rates in the contract;
 Ownership. The ownership of the subscribed equipment will not be transferred to the
customer either during or after the subscription service agreement;
 Termination. If the customer fails to pay the service fees as stipulated in contact to
us within the prescribed period in the contract, the customer shall pay us a late fee
at the rate of 0.5% of the overdue amount per day. If the payment is overdue for
more than 20 days, then we have the right to use customer’s security deposit (if any)
directly to offset overdue service fee and late fee. We generally charge three months’
equipment subscription service fees as security deposit (if applicable), within three
business days after the execution of the service agreement. If the payment is overdue
for more than 30 days, then we have the right to take back the subscribed equipment,
suspend or cancel the contract in advance, and require the customer to pay the
corresponding liquidated damages;
If either party unilaterally requests early termination of the contract, it shall pay the
other party penalty of six months’ subscription price in the contract, or the residual
amount of fees for the remaining period, whichever is higher. If both parties agree
to terminate the contract in advance, the customer only needs to settle the contract
price for the period that has expired.
 Renewal. If the customer wants to renew the service agreement after the expiration,
it should cooperate with us to complete the renewal within 30 days before the
expiration of such contract; if the customer does not go through formal termination
or renewal procedures with us after the expiration, it will be regarded as customer’s
automatic choice to renew the contract.
BUSINESS
– 225 –


--- page 236 ---
 Service scope adjustment . During the Track Record Period, we allowed our
customers to adjust the service scope if needed. To make such adjustment, the
parties will have amicable discussion and execute a supplemental agreement to the
existing service contract. Once the Company and its customer enter into a
subscription service agreement, the Company generally does not charge any penalty
or separate service fees when there is no material adjustment to contract terms and
conditions, including service scope. If the customer opts to extend the contract term,
or replace existing equipment with equipment with higher unit subscription prices,
or increase subscription volume, where additional fees will be incurred, the
Company will further negotiate with its customer to enter into supplemental
agreement to cover such extra amount. The exact amount will be determined case by
case based on changed equipment volume, contract period, and/or unit subscription
price. In addition, if the customer opts to reduce subscription period or subscription
volume, or change for cheaper equipment, the parties shall revise the agreement to
reduce the subscription price accordingly. However, in fact, as the Company
generally assisted its customers to evaluate the workload and equipment volume
needed before the execution of the service contracts, the Company had not
encountered material reductions during the Track Record Period. In addition, there
was no dispute with any customer in relation to service scope adjustment during the
Track Record Period.
 Option to purchase . There is no option under the intralogistics equipment
subscription service contact for the customers to acquire the subscribed equipment.
A summary of the key terms of our one-off repair service contract is as follows:
 Services. We carry out one-off repair, and provide necessary replacement parts and
materials for the customer’s intralogistics equipment on as-needed basis. After the
execution of the service contract, we shall assign technician(s) to the designated site
of the customer for performing the service;
 Prices and payment. The agreed unit rates of each item and quantities of various
items of works are set out in the service agreement. The customer is required to
make full payment within an agreed period of time after the performance of the
repair service;
 Duration of work. Our technician(s) on site shall finish the repair works within the
agreed period of time.
A summary of the key terms of our maintenance and repair service plan contract is as
follows:
 Term. The contract term varies based on customers’ needs, which is usually from 12
months to 36 months;
BUSINESS
– 226 –


--- page 237 ---
 Services. The customers may choose to have regular maintenance packages only,
where we provide inspection and maintenance services at specific intervals (for
example, every 200 hours, 600 hours, 1,200 hours, etc.), or to have maintenance and
repair service plans where we provide scheduled inspections and all maintenance
services proactively to ensure daily smooth running of equipment; additional fixes
and repairs are included in the plans as well. We shall keep and update maintenance
record for the serviced equipment;
 Payment term. The service fees shall be payable by month, at a pre-determined price
as agreed by both parties; service fees include labor costs and costs of replacement
parts (barring specific exclusions, such as replacement of tires, batteries, electric
motors, and other major parts, costs in relation to damages to the equipment caused
by willful or gross negligent conducts of the customer’s operators; fuels, etc.);
 Termination. If any party wants to terminate the maintenance and repair contract due
to its material change of operation, such party shall notify the other party in writing
for one month in advance, and the contract can be terminated in advance after both
parties agree and settle all costs; if any party fails to notify the other party in
advance before terminating the contract, the other party pay ask for compensation
equal to one month’s service fees.
A summary of the key terms of purchase and sale contract is as follows:
 Specification. The purchase and sale agreement typically sets out the specifications,
models, quantities and total sales amount of the intralogistics equipment and parts
we sell;
 Payment term. The customer shall pay deposit after the execution of the contract,
and the balance of the purchase price shall be paid within certain days after the
delivery of product. The ownership of the products belongs to us until the payment
is paid in full;
 Inspection and acceptance. The customer shall inspect the products on site after
delivery. Within three working days after acceptance, if the customer discovers any
quality issue(s) of the products, the customer can notify us in writing, we are
responsible to handle the issue(s) at our own costs if such issue(s) are bilaterally
confirmed to be quality issue(s). If the customer does not contact us within such
agreed period, the products are deemed to be without quality issues.
BUSINESS
– 227 –


--- page 238 ---
Our Suppliers
During the Track Record Period, we primarily procured intralogistics equipment and
parts. Our suppliers primarily consisted of intralogistics equipment and parts manufacturers.
For the years ended December 31, 2020, 2021 and 2022 and the four months ended April 30,
2023, (i) our five largest suppliers in each year/period during the Track Record Period
contributed to 50.7%, 49.0%, 46.7% and 41.2% of our total purchases, respectively; and (ii)
our largest supplier in each year/period during the Track Record Period contributed to 20.7%,
17.7%, 22.1% and 13.4% of our total purchases, respectively.
Supplier
Transaction
Amount
% of Total
Purchases
in Same
Period Suppliers’ Background
Products
Purchased
by us
Credit
Terms
Y ear in Which
the Group
Commenced
Business with
the Supplier
(RMB’000)
For the year ended
December 31, 2020
Supplier A 161,371.6 20.7% Manufacturing group of
automobiles,
intralogistics
equipment,
rechargeable batteries
and other related
parts
Intralogistics
equipment and
parts
60 days 2016
Supplier B 123,096.2 15.8% Manufacturer of
intralogistics
equipment and parts
Intralogistics
equipment and
parts
60 days 2016
Supplier C 42,453.4 5.4% Manufacturer of
intralogistics
equipment and parts
Intralogistics
equipment and
parts
30 days 2007
Supplier D 40,253.9 5.2% Manufacturer of
intralogistics
equipment and parts
Intralogistics
equipment and
parts
60 days 2019
Supplier E 27,814.2 3.6% Manufacturer of
intralogistics
equipment and parts
Intralogistics
equipment and
parts
30 days 2014
Total 394,989.3 50.7%
BUSINESS
– 228 –


--- page 239 ---
Supplier
Transaction
Amount
% of Total
Purchases
in Same
Period Suppliers’ Background
Products
Purchased
by us
Credit
Terms
Y ear in Which
the Group
Commenced
Business with
the Supplier
(RMB’000)
For the year ended
December 31, 2021
Supplier A 151,541.1 17.7% Manufacturing group of
automobiles,
intralogistics
equipment,
rechargeable batteries
and other related
parts
Intralogistics
equipment and
parts
60 days 2016
Supplier B 145,946.5 17.0% Manufacturer of
intralogistics
equipment and parts
Intralogistics
equipment and
parts
60 days 2016
Supplier C 57,165.1 6.7% Manufacturer of
intralogistics
equipment and parts
Intralogistics
equipment and
parts
30 days 2007
Supplier E 38,074.1 4.4% Manufacturer of
intralogistics
equipment and parts
Intralogistics
equipment and
parts
30 days 2014
Supplier F 27,204.6 3.2% Manufacturer of
intralogistics
equipment and parts
Intralogistics
equipment and
parts
30 days 2015
Total 419,931.4 49.0%
BUSINESS
– 229 –


--- page 240 ---
Supplier
Transaction
Amount
% of Total
Purchases
in Same
Period Suppliers’ Background
Products
Purchased
by us
Credit
Terms
Y ear in Which
the Group
Commenced
Business with
the Supplier
(RMB’000)
For the year ended
December 31, 2022
Supplier A 179,846.8 22.1% Manufacturing group of
automobiles,
intralogistics
equipment,
rechargeable batteries
and other related
parts
Intralogistics
equipment and
parts
60 days 2016
Supplier B 134,924.0 16.6% Manufacturer of
intralogistics
equipment and parts
Intralogistics
equipment and
parts
60 days 2016
Supplier C 36,628.1 4.5% Manufacturer of
intralogistics
equipment and parts
Intralogistics
equipment and
parts
30 days 2007
Supplier G 14,588.1 1.8% Manufacturer of
intralogistics
equipment parts
Intralogistics
equipment
parts
30 days 2014
Supplier H 13,464.4 1.7% Manufacturer of
intralogistics
equipment parts
Intralogistics
equipment
parts
30 days 2019
Total 379,451.4 46.7%
BUSINESS
– 230 –


--- page 241 ---
Supplier
Transaction
Amount
% of Total
Purchases
in Same
Period Suppliers’ Background
Products
Purchased
by us
Credit
Terms
Y ear in Which
the Group
Commenced
Business with
the Supplier
(RMB’000)
For four months ended
April 30, 2023
Supplier A 44,778.2 13.4% Manufacturing group of
automobiles,
intralogistics
equipment,
rechargeable batteries
and other related
parts
Intralogistics
equipment and
parts
60 days 2016
Supplier B 43,455.6 13.0% Manufacturer of
intralogistics
equipment and parts
Intralogistics
equipment and
parts
60 days 2016
Supplier G 18,293.1 5.5% Manufacturer of
intralogistics
equipment parts
Intralogistics
equipment
parts
30 days 2014
Supplier C 16,583.6 4.9% Manufacturer of
intralogistics
equipment and parts
Intralogistics
equipment
parts
30 days 2007
Supplier I 14,792.9 4.4% Trading company of
intralogistics
equipment and parts
Intralogistics
equipment
90 days 2017
Total 137,903.4 41.2%
As of the Latest Practicable Date, none of our Directors, their associates or any
shareholders which, to the knowledge of our Directors, owned more than 5% of the issued
share capital of the Company as of the Latest Practicable Date, had any interest in any of our
five largest suppliers in each year/period during the Track Record Period.
We believe we have sufficient alternative suppliers for our business that can provide us
with substitutes of comparable quality and prices. During the Track Record Period, we did not
experience any disruption to our business as a result of any significant shortage or delay in
supply.
The Company’s suppliers were not related to the employees or former employees of the
Company during the Track Record Period and up to the Latest Practicable Date.
BUSINESS
– 231 –


--- page 242 ---
Contracts With Suppliers
A summary of the key terms of our equipment and/or parts procurement agreement is as
follows:
 Specification . The procurement agreement typically sets out the specifications,
models, quantities, the unit purchase price and total purchase amount of the
equipment and/or parts we purchase;
 Unit purchase price . The unit purchase price of the equipment and/or parts is
specified in the procurement agreement;
 Logistics . Unless otherwise agreed, the supplier is required to deliver the equipment
and/or parts we purchased to locations designated by us;
 Payment term . We will pay the purchase price of the equipment and/or parts to the
supplier under the conditions that (i) we receive the original copy of V A T invoice
issued by the supplier for 100% of the purchase price; and (ii) all purchased
equipment and/or parts are properly delivered to us;
 Product warranty and liability . The suppliers are responsible for quality issues of
the products within the warranty period, which is generally 12 months after the
acceptance of the products. During the warranty period, they will adjust, repair or
replace the relevant product(s) free of charge. In addition, if the Company bears any
responsibilities to adjust, repair or replace parts of the relevant faulty products for
its customers and incurs costs accordingly, the suppliers shall reimburse the
Company in full.
Due to the nature of our business, during the Track Record Period, certain of our five
largest suppliers was also our customer. According to CIC, it is common that certain
conglomerate equipment manufacturing group in China has numerous subsidiaries with
different business lines and business needs/supplies from/to third parties.
Supplier A/Customer H is a leading manufacturing group company of automobiles,
intralogistics equipment, rechargeable batteries and other related products in China. It has a
number of subsidiaries with different and independent businesses in China, and the Company
has business relationship with certain of its subsidiaries. During the Track Record Period, we
purchased intralogistics equipment and parts from certain of its subsidiaries that mainly
manufacture intralogistics equipment and parts. In 2020, 2021 and 2022 and for the four
months ended April 30, 2023, our procurement from Supplier A/Customer H amounted to
RMB161.4 million, RMB151.5 million, RMB179.8 million and RMB44.8 million,
respectively. During the Track Record Period, we mainly provided maintenance and repair
services to certain of its subsidiaries that owned intralogistics equipment. Occasionally, certain
subsidiaries of Supplier A/Customer H (such subsidiaries were not the same with the
subsidiaries selling intralogistics equipment and parts to us) would subscribe or purchase
BUSINESS
– 232 –


--- page 243 ---
intralogistics equipment from us as they were looking for certain specific types of intralogistics
equipment. In 2020, 2021 and 2022 and for the four months ended April 30, 2023, our revenue
generated from Customer H amounted to RMB5.7 million, RMB13.0 million, RMB21.9
million, and RMB8.9 million, respectively. In addition, during the Track Record Period, the
gross profit attributable to Suppler A/Customer H amounted to RMB1.6 million, RMB3.0
million, RMB6.2 million and RMB3.8 million in 2020, 2021, 2022, and the four months ended
April 30, 2023, respectively. The gross profit margin attributable to Suppler A/Customer H
amounted to 27.2%, 23.1%, 28.3%, and 42.4% in 2020, 2021, 2022, and the four months ended
April 30, 2023, respectively. The fluctuations in gross profit margin attributable to Customer
H during the Track Record Period is mainly caused by the change in business mixture between
us and Customer H. In particular, the gross profit margin for the four months ended April 30,
2023 was relatively higher than that in 2020, 2021 and 2022, because the revenue contribution
of maintenance and repair service plans, out of all services procured by Customer H increased
significantly in the four months ended April 30, 2023, as compared to revenue contribution of
such service segment in 2020, 2021 and 2022, which service segment had a relatively higher
gross profit margin than other business segments. For more information about the gross profit
margin of maintenance and repair service plans, please refer to “– Our Business – Maintenance
and Repair Services” in this section.
Our Directors confirm that the transactions with the overlapping customer and supplier
were on normal commercial terms, because (a) we are knowledgeable of the industry and are
experienced in identifying whether the commercial term is in line with market practice; (b)
with respect to supplier engagement, we generally conduct negotiations with a number of
suppliers as part of our supplier selection process and we will compare the commercial terms
of supplier candidates in making the selection; and (c) with respect to transactions with
customers, the commercial terms are heavily negotiated and customers may be in negotiations
with our competitors, which ensures that the commercial terms are normal and in line with
market practice.
Our Directors further confirm that the terms of these transactions were in line with
industry norm. In particular, some suppliers/customers are conglomerates which are comprised
of multiple subsidiaries that engage in independent and different businesses. Therefore, certain
subsidiaries which mainly engage in manufacturing businesses sell intralogistics equipment to
third parties; while certain subsidiaries in the same group company require intralogistics
equipment subscription services or maintenance and repair services from third parties.
BUSINESS
– 233 –


--- page 244 ---
A W ARDS AND RECOGNITION
The following table sets out a summary of the major awards and recognition we have
received during the Track Record Period.
Y ear Award or Recognition Issuing Authority
2020 “Power of Example” Science and
Technology Pioneer Competition
– Most Innovative Award (“ ࿮ᅵ
ɢඎ”௴΋ቜɽᒄÑ௰Ո௴อ
ɢᆤ)
Department of Science and
Technology of Guangdong
Province (ኪҦஔᝂ),
China Construction Bank
Technology Finance Innovation
Center (ፄ௴
อʕː) and Nanfang Daily
Newspaper Group Co.,Ltd. (˙
జุෂదණྠ)
2021 Guangdong Smart Manufacturing
Partner (౽ঐႡி͛࿒ΥЪ
ྫМ)
Department of Industry and
Information Technology of
Guangdong Province (ʈุ
ʷᝂ)
2023 2022-2023 Outstanding Supply
Chain Enterprise (2022-2023
ϋᎴӸԶᏐᗡΆุ)
Guangdong Procurement and Supply
Chain Association (મᒅၾ
ԶᏐᗡ՘ึ)
COMPETITION
We face competition in respect of the quality and effectiveness of our intralogistics
equipment solutions, our ability to meet potential customers’ expectations and specifications,
and our experience and reputation. The principal competitive factors in our industry generally
include scope and quality of services, speed in response, marketing and sales capabilities, user
experience, pricing, brand recognition and reputation.
We believe that there are high barriers for our competitors to enter into the market, which
include, among other things, sufficient capital, extensive customer acquisition, vast equipment
resources, accumulated industry experience, effective risk control management system, and
extensive research and development capacities. For more information on the competitive
landscape of our industry, see “Industry Overview” in this prospectus. Our Directors believe
that we will maintain our competitiveness over other competitors and our market position by
strengthening and developing our competitive strengths. Our competitive strengths are
highlighted in the paragraph headed “Our Strengths” in this section.
BUSINESS
– 234 –


--- page 245 ---
THIRD-PARTY PAYMENT ARRANGEMENT
Background
During the Track Record Period, certain of our customers (the “Relevant Customer(s)”)
settled their payments with us through third-party payers (such payer(s), the “Third-Party
Payer(s),” and such arrangement(s), the “Third-Party Payment Arrangement(s)”). In 2020,
2021, and 2022 and the four months ended April 30, 2023, the number of Relevant Customers
amounted to 55, 55, 88, and 16, respectively. The aggregate amount of third-party payments
(the “Third-Party Payments”) we received from Third-Party Payers was RMB5.3 million,
RMB10.4 million, RMB17.9 million and RMB6.2 million, which respectively accounted for
0.5%, 0.9%, 1.5% and 1.4% of our Group’s total revenue in 2020, 2021, and 2022 and the four
months ended April 30, 2023. The total revenue attributable to the Third-Party Payments was
the same as the above aggregate Third-Party Payments amount for the corresponding year,
respectively, and such revenue constituted an immaterial proportion of our total revenue for
each year during the Track Record Period. No individual Relevant Customer had made material
contribution to our revenue during the Track Record Period. To the best knowledge of our
Directors after making reasonable inquiries, none of the Relevant Customers or their respective
Third-Party Payers had any other past or present relationship (whether business, employment,
family, trust, fund flow, financing or otherwise) with the Company, its subsidiaries,
shareholders, directors or senior management, or any of their respective associates. Since May
20, 2023, we had ceased to allow our customers to settle payments through Third-Party Payers
and all new orders thereafter can only be settled by our customers’ own accounts. During the
Track Record Period and up to the Latest Practicable Date, the Group had not received any
claims from third-party payers or its liquidators.
During the Track Record Period and up to the Latest Practicable Date, we had not initiated
any Third-Party Payment Arrangements, but only accepted the Third-Party Payments paid by
the third-party payers at the request of the Relevant Customers. In addition, during the Track
Record Period and up to the Latest Practicable Date, we have not provided any discount,
commission, rebate, or other benefits to any of the Relevant Customers or the Third-Party
Payers to facilitate or encourage the Third-Party Payment Arrangements. The payment, the
pricing terms and other general commercial terms of the Relevant Customers are generally the
same as our other customers. As advised by our PRC Legal Adviser, our acceptance of
payments through the Third Party Payment Arrangements do not contravene any prohibitive
provisions under PRC laws and regulations. During the Track Record Period and up to the
Latest Practicable Date, as confirmed by the Directors, (1) we had not encountered any disputes
with, nor received any refund request from, any Relevant Customer or Third-Party Payer, and
(2) we had not been subject to any disputes or administrative penalties by the relevant
government authorities with respect to the Third-party Payment Arrangements.
BUSINESS
– 235 –


--- page 246 ---
To the best knowledge of our Directors after making reasonable enquiries that, during the
Track Record Period and up to the Latest Practicable Date, (i) all the Third-Party Payments
were related to genuine transactions between us and the Relevant Customers and were made
by bank transfers; (ii) the amount of Third-Party Payments received by us from Third-Party
Payers corresponded with the transaction amount in the relevant sales orders, records, and/or
invoices between the Relevant Customers and us; (iii) all relevant transactions involving
Third-Party Payments were completed with the agreed-upon amount being settled as specified
in respective agreements; (iv) we have not encountered any incidents demanding us to return
payment in relation to relevant transactions; and (v) nothing came to our attention that would
cause our Directors to doubt the genuineness of relevant transactions or the good faith of
relevant parties involved. Based on the foregoing, our Directors confirm, and the PRC Legal
Adviser advises that, the risk of possible claims from third-party payers for the return of funds
is low.
Reasons for Utilizing Third-Party Payment Arrangements
During the Track Record Period, (A) the Relevant Customers primarily comprised
overseas customers who purchased intralogistics equipment parts from us; and (B) the
Third-Party Payers generally comprised (i) affiliates of Relevant Customers, such as entities
within the same group or under common control with the Relevant Customers, and individuals
who are owners, directors, or employees of Relevant Customers or their family members; and
(ii) independent third parties engaged by Relevant Customers, such as third party settlement
agents and their nominees, forwarders, and business partners of Relevant Customers.
According to CIC, it is common market practice for intralogistics equipment parts purchasers
to settle payments through third-party payers to their vendors to facilitate payments,
particularly for cross-border transactions. To the best knowledge of our Directors, the main
reason for the Relevant Customers to utilize Third-Party Payment Arrangements is for the
convenience and efficiency of foreign exchange settlement and customs clearance in relation
to international transactions.
Internal Control Measures for Third-Party Payment Arrangements
Our Directors are responsible for formulating and overseeing the implementation of our
internal control measures and the effectiveness of our internal control system. To safeguard our
Group’s interest against risks associated with Third-Party Payment Arrangements, the
following internal control measures have been adopted by our Group:
(1) Since May 20, 2023, we have ceased to allow our customers to settle payments
through Third-Party Payers and all new orders placed thereafter by customers can
only be settled by such customers’ own accounts;
(2) We circulated notice internally to alert and inform relevant staff members of
requirements on identification of, and prohibition on accepting, Third-Party
Payments;
BUSINESS
– 236 –


--- page 247 ---
(3) Our finance department is responsible for maintaining a receipt settlement
management ledger, which records, among other information, the customer’s name,
content of transaction, payment data, payment sum, payment method and the payer’s
name, so as to ensure that relevant payments are made directly by the relevant
customer;
(4) Since May 20, 2023, for all identified payments made by the Third-Party Payers, we
will initiate refund to such Third-Party Payers and ask the relevant customers to
re-arrange direct payment to us.
Considering that our revenue generated from Third-Party Payment Arrangements as a
percentage of our total revenue was immaterial, our Directors confirm that the cessation of the
Third-Party Payment Arrangements would not have any material adverse impact on our
business, financial conditions or results of operations.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”)
During the Track Record Period, we pay great attention to environmental protection and
are committed to operating our business in compliance with applicable environmental
protection laws and regulations. We believe our continued growth rests on integrating social
values into our business. We have been dedicated to creating a lasting positive environmental,
social, and governance impact. Under the oversight of our management, we actively identify
and monitor actual and potential impact of environmental, social and climate-related risks on
our business, strategy and financial performance, and incorporate considerations of these
issues into our business, strategic and financial planning. Our management team regulate and
instruct each of our business departments to conduct environmental protection management
properly in accordance with applicable PRC laws and regulations. Moreover, we may from
time to time engage independent professional third parties to help us make necessary
improvements.
We are committed to practicing environmental protection and promoting sustainability to
fulfil our social responsibilities as a global corporate citizen. We have formulated numerous
environmental management policies and measures such as, the Environmental Protection
Management Policy (), and the Solid Waste Management Policy ( ո
), to avoid and reduce the risks and impacts of our operations on the
environment.
BUSINESS
– 237 –


--- page 248 ---
Materiality Assessment
We identify potential material ESG issues which may affect our Group’s business or
stakeholders, based on the corporate strategies of our Group and characteristic of the industry,
as well as the development of national policies and applicable regulatory requirements and
industry standards. We assess the materiality of identified ESG issues from two dimensions
metrics of “significance to stakeholders” and “significance to our Group” by taking into
account the opinions of both stakeholders and experts and with reference to the following
factors and quantifiable metrics:
Factors considers:
 the likelihood or frequency of the occurrence of the relevant risk;
 the degree of impact on our Group if the relevant risk occurs.
Quantifiable metric:
 nil suspension or revocation of business license due to ESG-related issues.
We prioritize the ESG issues based on the assessment results. During the Track Record
Period, we pay great attention to environmental protection and are committed to operating our
business in compliance with applicable environmental protection laws and regulations. We
believe our continued growth rests on integrating social values into our business. We have been
dedicated to creating a lasting positive environmental, social, and governance impact. We have
set up metrics and targets for ESG issues and to review our key ESG performance on a regular
basis.
Energy Saving and Efficiency Enhancement
Our commitment to ESG principles is embedded in our business operations. In
intralogistics equipment selection, priority was given to equipment consuming clean electric
energy. We have increased the proportion of electric forklifts in our equipment fleet during the
Track Record Period, which increased from approximately 88.6% in 2020 to approximately
90.0% in 2021 and further increased to approximately 91.1% in 2022 and approximately 91.7%
for the four months ended April 30, 2023. According to CIC, electric equipment can potentially
reduce energy consumption costs by up to 82.2% compared to ICE-powered equipment,
assuming a standard eight-hour workday. Moreover, electric equipment produces zero
emissions and much lower noise. During the Track Record Period, we also invest primarily in
new energy equipment, with lithium battery equipment accounting for about 70.0% of our total
intralogistics equipment as of April 30, 2023. We help our customers reduce their carbon
emissions by offering options of electric forklifts with equally good functionality with
ICE-powered forklifts, and encouraging the subscription of electric forklifts.
BUSINESS
– 238 –


--- page 249 ---
In addition, we have continuously devoted resources to developing and optimizing our
Intelligent Asset and Operation Management Platform, which integrates digital technologies
and services across various aspects of our business operations. It helps us streamline service
processes and help us reduce human errors, control costs, and improve overall productivity.
Our digital infrastructure provides real-time data and insights, allowing for better decision-
making and improved performance. It helps us scale and grow more easily, by providing a solid
foundation for expansion and the ability to quickly adapt to changing market conditions. For
more information about the technologies, please see “– Our Technology” in this section.
Environmental Protection
We have established a comprehensive set of key performance indicators to assess and
guide our business operations. The following tables present quantitative analysis of our
environmental performance during our Track Record Period:
Y ear ended December 31,
Four
months
ended
April 30,
2020 2021 2022 2023
Environmental Key
Performance Indicators
Water and electricity
consumption (RMB’000) 2,135 2,374 3,573 969
Machine oil (RMB’000) 1,038 1,200 1,198 362
Hazardous waste (tons) 2.4 2.9 2.8 0.7
Units Y ear ended December 31,
Four months
ended
April 30,
2020 2021 2022 2023
Intensity of water and
electricity consumption
Costs of water
and electricity
(RMB)/total
revenue
(RMB’000)
2.17 2.02 2.99 2.22
Intensity of machine oil Costs of
machine oil
(RMB)/number
of equipment
33.25 33.11 30.59 8.92
Intensity of hazardous waste Kilograms of
hazardous
waste/total
revenue
(RMB’000)
0.0025 0.0024 0.0024 0.0017
BUSINESS
– 239 –


--- page 250 ---
To better manage our environmental, social and climate-related risks, we strive to
enhance our environmental protection performances in various aspects, such as electricity
consumption, water consumption and hazardous waste emissions through developing and
integrating environmentally sustainable practices into our operations. In relation to water and
electricity management, we implement policy on water and electricity usage, set water and
electricity consumption KPIs, and monitor water and electricity consumption regularly. In
respect of the hazardous waste emissions, we opt for machine oil with high quality to minimize
the amount of waste oil generated during operation of the equipment, and try to optimize the
functionality of the intralogistics equipment and try to reduce the frequency of major repairs
of our intralogistics equipment through continuous supervision and predictive maintenance, so
as to reduce the amount of hazardous waste generated in the process of maintenance and repair
of such equipment. In terms of disposal of used equipment, such as electronic equipment, we
always sell used equipment we no longer need to third parties at fair market price, without any
burden to deal with the scrapped equipment. For information about treatment of hazardous
waste, please refer to “Environmental, Social and Governance (“ESG”) – Treatment of
Hazardous Waste” in this section. In addition, we will conduct regular reviews and inspections
to ensure the effectiveness of energy-saving measures and encourage cross-department
communication to share good practices.
We have set the following specific ESG-related targets:
Strategy Theme Targets
Water and electricity consumption
reduction
By the end of 2027, we strive to reduce
the intensity of water and electricity
consumption/total revenue to
approximately RMB1.76 per RMB1,000
revenue.
Machine oil consumption reduction By the end of 2027, we strive to reduce
the intensity of machine oil
consumption/unit of intralogistics
equipment to approximately RMB19.03
per unit intralogistics equipment.
Waste discharge We will continue to dispose the hazardous
wastes in compliance with relevant
laws and regulations.
Treatment of Hazardous Waste
Regarding the treatment of solid waste, our operation shall abide by relevant laws and
regulations under the “Law of the People’s Republic of China on the Prevention and Control
of Environmental Pollution by Solid Waste” ()
(promulgated by the SCNPC on October 30, 1995 with the latest amendment taking effect on
September 1, 2020) and the “National Hazardous Waste List (2021 Edition).”
BUSINESS
– 240 –


--- page 251 ---
We generated limited amount of hazardous waste, such as waste engine oil and waste
oilcloths, during daily operation. In our daily operations, we added oil-saving trays and
oil-absorbing sponge to the operating environment and locations where there is a risk of oil
leakage, and strictly required technicians for enforcement. In the process of providing
maintenance and/or repair services, limited amount of hazardous waste was generated. The
customers were responsible for the treatment of such hazardous waste as generally agreed in
our service agreements with customers. However, certain customers will ask us to take care of
the treatment as they are not familiar with the requirements or procedures to dispose such
waste; therefore, occasionally, we collect waste produced in the service process and then
delegate to qualified agents. We actively strives for the harmless treatment of waste and the
recycling of resources. The treatment of hazardous waste is delegated to qualified units for
professional disposal. For scrapped batteries and scrap metal, we generally sell them to scrap
collection units for recycling and disposal. During the Track Record Period and up to the Latest
Practicable Date, we were in compliance with laws and regulations related to waste disposal
in material aspects.
We adopted the Solid Waste Management Policy () and have
assigned the hazardous waste management responsibility to our administrative office. We have
specific location and containers in our work site to store such waste, and engage qualified
disposal units and transportation units to standardize the treatment. In the daily operations, our
technicians provide proper maintenance and repair to our intralogistics equipment with the
support of our Intelligent Asset and Operation Management Platform so as to prevent frequent
repairs or major repairs that would produce more waste.
During the Track Record Period, we had not sold any equipment to scrap collection units
or recyclers. Instead, to make the best use of the used equipment and to maximize its financial
gains, we always sold our used equipment to willing buyers, i.e., end users, in a usable
condition with careful maintenance, before such equipment become too old or unusable.
Governance Regarding Environmental, Social and Climate-Related Risks
Our Group acknowledges its responsibility on environmental protection and social
responsibilities and is committed to complying with the environmental, social and governance
reporting requirements upon Listing. We believe that it requires collective effort from our
Board of Directors to evaluate and manage material ESG issues, therefore we have not
established any sub-committee for ESG issues. Instead, our Board of Directors takes up the
responsibility of monitoring and managing material ESG issues, with the assistance from the
management. Our Board of Directors is principally responsible for (i) setting up and
developing the Group’s overall ESG policies, strategies, principles and visions, (ii) monitoring
and reviewing our ESG performances and fulfillment of the Board of Directors’ ESG
objectives, (iii) keeping abreast of the latest ESG-related laws and regulations, including the
applicable sections of the Listing Rules, keeping the Board informed of any changes in such
laws and regulations and updating our ESG policies in accordance with the latest regulatory
updates; and (iv) identifying ESG risks and opportunities related to our Group, assessing the
impact arising from such risks or opportunities on our Group. Our Board of Directors is
responsible to oversee the coordination of different departments to ensure that our operations
and practices are in line with related ESG strategies.
BUSINESS
– 241 –


--- page 252 ---
Furthermore, our Board of Directors closely follows and monitors the latest requirements
regarding ESG disclosure and regulatory compliance. For instance, we place great emphasis on
the Stock Exchange’s ESG requirements, and in order to ensure compliance with the said
requirements, our Board of Directors will adjust our related policies based on such developing
ESG requirements.
Employee Care
We are committed to equal employment opportunity and workplace diversity. Equal
opportunities are given to employees in respect of recruitment, training and development, job
advancement, and compensation and benefits. Under our internal policies, the employees shall
not be discriminated against or deprived of such opportunities on the basis of gender, ethnic
background, religion, age, marital status, family status, retirement, disability, pregnancy or any
other discrimination prohibited by applicable laws and regulations.
We provide remuneration packages, which include salary and bonuses, and various
welfare benefits, such as medical care, retirement benefits, and occupational injury insurance
to our employees. We provide our employees with paid time off, including public holidays,
marital leaves, maternity leaves, compassionate leaves and annual leaves according to labour
laws and regulations. We promote our employees on a performance merit basis.
We comply with various PRC laws and regulations in respect of occupational health and
safety. We are committed to complying with PRC regulatory requirements, preventing and
reducing hazards and risks associated with our operation, and ensuring the health and safety of
our employees, with an aim to improve the satisfaction rate of our employees. We have adopted
and maintained a series of policies and measures to maintain a safe environment for our
employees, including, among others, safety incident management policy, occupational hazard
monitoring and management policy. For example, we conduct various types of training,
including onboarding and on-the-job training.
DATA PRIV ACY AND INFORMATION SECURITY RISK MANAGEMENT
Data privacy and information security is one of our top priorities. In the ordinary course
of our business, we generally collect and process operating data of subscribed intralogistics
equipment (such as, location, speed, working time), and service process of our technicians. We
have in place a robust data protection policy to ensure our compliance with the applicable laws
and regulations.
We pay close attention to risk management relating to our IT system, as storage and
protection of operating data and related information is critical to us. We have developed strict
internal control and data accessing mechanisms and detailed approval and operation procedures
regarding data storage and processing. We have established a set of internal protocols on data
security, which set forth detailed, stringent requirements in relation to the use, disclosure and
protection of confidential information. Among other things, such internal protocols:
 provide limited authorization to our employees holding specific positions and
responsibilities to access and process corporate data on a need-to-know basis, who
shall use such data only for the purposes of performing their work assignment;
 require our employees to log in our information systems with access codes provided
by the Group.
BUSINESS
– 242 –


--- page 253 ---
We provide data privacy trainings to employees on a periodic basis to increase their
compliance awareness. In addition, employees are required to sign a confidentiality agreement
with us, which prohibits them from disclosing any confidential information relating to their
work without our consent. In addition, we organize annual comprehensive risk assessment of
information assets, and adjust strategies for information risk control and security management.
We have an emergency response mechanism for information security and we carry out
emergency drills on a regular basis and improve our information management system
accordingly.
During the Track Record Period and up to the Latest Practicable Date, we did not
experience any material information leakage or loss of operating or transaction data. As
confirmed by our PRC Legal Adviser, we were in compliance with the applicable PRC data
privacy and security laws, rules and regulations relating to the collection, use or security of
operating data in material respects as of the Latest Practicable Date. Please see “Risk Factors
– Risks Relating to Our Business and Industry – We face risks related to complying with
applicable laws, rules and regulations relating to the collection, use, disclosure and security of
operating data and related information” and “Regulatory Overview – Laws and Regulations
Relating to Cyber Security and Data Security” in this prospectus.
INTELLECTUAL PROPERTY
We regard our copyrights, trademarks, trade secrets and other intellectual property rights
as critical to our business operations. As of the Latest Practicable Date, we possessed two
copyrights, 11 patents, 11 domain names, 17 trademarks and 115 computer software copyrights
in China. For detailed information about our material intellectual property, see “Appendix VI.
Statutory and General Information – Further Information about the Business of our Company
– 2. Intellectual Property Rights” to this prospectus.
In this regard, we rely primarily on a combination of copyrights, patents, trademarks,
trade secrets, and unfair competition laws and contractual rights, such as confidentiality
agreement, to protect our intellectual property rights. We generally state all rights and
obligations regarding the ownership and protection of intellectual properties in employment
confidentiality agreements and some commercial agreements we enter into. In addition, we
have taken the following key measures to protect our intellectual property rights: (i)
implementing a set of comprehensive internal policies to establish robust management over our
intellectual property rights, (ii) deploying a special team to guide, manage, supervise and
monitor our daily work regarding intellectual properties, (iii) timely registration, filing and
application for ownership of our intellectual properties, (iv) actively tracking the registration
and authorization status of intellectual properties and take action in a timely manner if any
potential conflicts with our intellectual properties are identified, and (v) engaging professional
intellectual property service providers.
During the Track Record Period and up to the Latest Practicable Date, we had not been
subject to any material disputes or claims for infringement upon third parties’ intellectual
property rights in the PRC.
BUSINESS
– 243 –


--- page 254 ---
EMPLOYEES
We recognize the importance of talents for sustainable business growth and competitive
advantages. We believe that our success depends on our ability to attract, retain and motivate
qualified personnel. As part of our human resources strategy, we offer employees competitive
salaries, performance-based bonuses, and other incentives. We typically sign non-competition
agreement with our senior management or other key employees with a two-year term. Our
employees are reviewed every month on the basis of, among other criteria, their abilities to
achieve stipulated performance targets. As a result, we have generally been able to attract and
retain qualified employees and maintain a stable core management team.
We plan to adopt recruitment plan to ensure a sufficient talent pool for key positions. We
primarily recruit our employees through on-campus recruitment, online job sites and internal
reference. We provide on-board training for all of our employees as well as periodic training
or seminars to ensure their self-development. We also strive to create a multiple-incentive
mechanism and a friendly working environment to fulfil our employees’ full potential.
As of April 30, 2023, we had 1,606 full-time employees, all of whom were based in
China. The following table sets forth the numbers of our employees categorized by function as
of the date indicated:
Number of
Employees % of Total
Technicians and engineers 673 41.9
Sales and marketing 191 11.9
General administration 603 37.5
Research and development 139 8.7
Total 1,606 100.0
We currently have a labor union for our employees. We believe that 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 material labor disputes or strikes that may have
a material and adverse effect on our business, financial condition or results of operations.
As required by laws and regulations in China, we participate in various employee social
security plans that are organized by municipal and provincial governments, including, among
other things, pension, basic medical insurance, unemployment insurance, maternity insurance,
work-related injury insurance and housing fund plans through a PRC government-mandated
benefit contribution plan. We are required under PRC law to make contributions to employee
benefit plans at specified percentages of the salaries, bonuses and certain allowances of our
staff, up to a maximum amount specified by the local government.
BUSINESS
– 244 –


--- page 255 ---
During the Track Record Period and up to the Latest Practicable Date, we did not make
full social insurance and housing provident fund contribution for certain employees in strict
compliance with relevant laws and regulations. Pursuant to relevant PRC laws and regulations,
the relevant PRC authorities may demand us to pay the outstanding social insurance
contributions within a stipulated deadline and we may be liable to a late payment fee equal to
0.05% of the outstanding amount for each day of delay. If we fail to make such payments, we
may be liable to a fine of one to three times the amount of the outstanding contributions. We
may also be subject to compulsory enforcement regarding the housing provident fund. As of
December 31, 2020, 2021 and 2022, and April 30, 2023, our aggregate outstanding amount of
social insurance and housing provident fund contributions were approximately RMB270,000,
RMB334,000, RMB442,000 and RMB431,000. As of the Latest Practicable Date, no
administrative action, fine or penalty had been taken or imposed by the relevant regulatory
authorities against us with respect to our social security insurance contributions or housing
provident fund, nor had we received any order or been informed to settle the under-
contributions. For more information, please see “Risk Factors – Risks Relating to Our Business
and Industry – We may be demanded to pay the outstanding contributions of social insurance
and housing provident fund and late payments and fines imposed by relevant governmental
authorities” in this prospectus.
As advised by the PRC Legal Adviser, we have obtained certain compliance certificates
from the relevant regulatory authorities to confirm that (i) no administrative action, fine or
penalty had been taken or imposed against us as a result of the non-compliance and (ii) the
likelihood of any administrative action, fine or penalty to be taken or imposed against us in
relation to social insurance and housing provident fund contributions is remote if we make
timely payments for the outstanding social insurance contributions once required to do so by
relevant government authorities. We will begin to make full payment of social insurance and
housing provident fund contributions based on the actual salaries of our employees from the
earliest possible time to the extent practicable under local practices. As advised by the PRC
Legal Adviser, based on relevant practices of social insurance and housing provident fund
contributions, the relevant local regulatory authorities make annual adjustments to the
maximum and minimum contribution bases of social insurance and housing provident in July
each year. Therefore, the earliest possible date for us to adjust our contribution base and make
full payment of social insurance and housing provident fund contributions based on the actual
salaries of employees is expected to be July 2024. We undertake that we will make timely
payments for the underpayment amount as soon as requested by the competent government
authorities. Furthermore, on April 7, 2023, our Controlling Shareholders signed a deed of
indemnity, pursuant to which, our Controlling Shareholders have undertaken to fully indemnify
us against any liability or penalty arising from any non-compliance in relation to our
underpayment of social insurance and housing provident fund contributions.
In addition, we have taken the following rectification measures to prevent future
occurrence of such non-compliance: (i) strengthen legal compliance training to our employees
to increase their awareness of the relevant PRC laws and regulations and encourage their
cooperation in making payments for social insurance and housing provident funds; (ii)
formulate and distribute to our employees an internal control policy with respect to social
insurance and housing provident fund contribution in compliance with relevant PRC laws and
regulations, which we have started to implement; and (iii) plan to regularly consult external
counsel to assess whether we are at risk of non-compliance with the relevant laws and
regulations.
BUSINESS
– 245 –


--- page 256 ---
INSURANCE
For operational fixed assets, we established a mature asset operation system to effectively
manage and use all assets. In addition, we insure for all operational fixed assets against risks
that may happen as follows: for our main office building in Guangzhou, we take out all-risk
property insurance against risks of loss of our assets; for our commercial vehicles, we take out
all-risk property insurance and third party liability insurance; for our intralogistics equipment,
we take out all-risk property insurance, special equipment safety liability insurance, and third
party property damage insurance. Meanwhile, for passenger vehicles and commercial vehicles,
we take out vehicle compulsory liability insurance according to applicable PRC laws and
regulations. During the Track Record Period and up to the Latest Practicable Date, the
Company has not experienced any cases of accidents, injuries or claims for damages caused by
using the Company’s equipment that would have a material and adverse effect on our business,
financial condition, or results of operations. Overall, we believe that our insurance coverage is
in line with industry practice and is sufficient to cover all scenarios and risks of our existing
operations, as well as any liabilities and claims may arise from the use of the equipment.
For our employees, we purchase social insurance for them in accordance with applicable
PRC laws and regulations, including housing, pension, medical, maternity, work injury and
unemployment insurance, which are paid at a prescribed percentage of the employee’s salary.
In addition, we are generally not responsible for accidents that happen in relation to our
equipment after delivery of such equipment to our customers, unless the accident is caused by
the defects in the equipment. However, we may incur significant time, efforts and costs to deal
with such accidents upon their occurrence, even if we are not in fault. For details, see “Risk
Factors – Risks Relating to Our Business and Industry – Accidents in our business or in relation
to our intralogistics equipment subscription services may expose us to liability and reputational
risk” in this Prospectus.
With the continuous development of our business types and models, our insurance
coverage and types may not adequately protect us against certain operating risks and other
hazards, which may result in adverse effects on our business. In such cases, we will evaluate
our insurance coverage as needed, and continue to expand insurance coverage and types. For
details, see “Risk Factors – Risks Relating to Our Business and Industry – Our insurance
coverage may not sufficiently cover the risks related to our business” in this Prospectus.
SEASONALITY
Our intralogistics equipment subscription services and maintenance and repair services
are primarily provided to customers in manufacturing and logistics industries. We generally
have a lower volume of business around the Chinese New Y ear holiday in the first quarter of
each year as most of our customers enjoy Chinese New Y ear holiday and stop production and
operation or substantially lower production and operation during such period. Correspondingly,
we generally observe a surge in business in the second and the fourth quarters of each year,
such as, 618 Shopping Festival, Double 11 Shopping Festival and Double 12 Shopping Festival
as logistics companies have higher demand of handling, transferring, sorting, and stacking
huge amount of good during such periods. As a result, our financial condition and results of
operations for future periods may continue to fluctuate from time to time due to seasonality.
For details, see “Risk Factors – Risks Relating to Our Business and Industry – Our performance
is subject to seasonality” in this prospectus.
BUSINESS
– 246 –


--- page 257 ---
PROPERTIES
Owned Properties
As of the Latest Practicable Date, we owned land use rights of two parcels of land with
a total site area of approximately 124,303.2 sq.m., which were primarily used for industrial
purposes. We had obtained the land use right certificates for such land. As of the Latest
Practicable Date, we had been building an office building on one of such two parcels of land
in Hefei, Anhui.
As of the Latest Practicable Date, we had twelve properties with an aggregated GFA of
approximately 142,286.0 sq.m., which was primarily used as the office buildings, warehouses
and dormitory. We had obtained building ownership certificates for such buildings.
Leased Properties
Pursuant to the applicable PRC laws and regulations, property lease contracts must be
registered with the local branch of the Ministry of Housing and Urban-Rural Development of
the PRC. As of the Latest Practicable Date, we leased 74 properties in various locations with
an aggregated GFA of approximately 71,132.1 sq.m. As of the Latest Practicable Date, we had
not register 65 of our leased properties, with an aggregated GFA of approximately 36,462.6
sq.m., which were used as office buildings and warehouses. As of the Latest Practicable Date,
none of the relevant properties are used as our headquarter or supply chain bases, except for
our main supply chain base in Foshan, Guangdong. Our PRC Legal Adviser has advised us that
the lack of registration of the lease contracts will not affect the validity of the lease agreements
under PRC laws, and have also advised us that a maximum penalty of RMB10,000 may be
imposed for non-registration of each lease. We may be subject to a maximum penalty of
RMB0.65 million in aggregation for the failure to register the property lease agreements, in the
event that we are required by the competent authorities to register the property lease
agreements. Our Directors consider that the lack of registration of the lease contracts would not
have a material and adverse effect on our business, financial condition, or results of operations.
During the Track Record Period and up to the Latest Practicable Date, we had not been ordered
by any authorities to register any of the lease agreements, and we will continue to seek
cooperation from the lessors of the leased properties to register executed lease agreements with
the relevant PRC government authorities in the future. We will continue to request our lessors
to provide necessary documentations and to cooperate with us in completing the registration of
the lease agreements. For more related risks, please see “Risk Factors – Risks Relating to Our
Business and Industry – Some of our property lease agreements were not filed with the relevant
government authorities and may in turn subject us to administrative fines” in this prospectus.
As of the Latest Practicable Date, the lessors of nine of our leased properties were unable
to provide valid ownership certificates or other sufficient ownership documents, representing
approximately 5.4% of the total GFA of our leased properties. We primarily used such
properties as offices and warehouses. Any dispute or claim arising from such title defects of
our leased properties may require us to relocate our premises and incur relocation costs. For
BUSINESS
– 247 –


--- page 258 ---
related risks, please see “Risk Factors – Risks Relating to Our Business and Industry – We may
incur additional costs as a result of any dispute or claim arising from the title defects of our
leased properties.” As of the Latest Practicable Date, we had not received any request of
relocation from the lessors or any third parties. Even if we are required to do so in the future,
our Directors are of the view that we will not incur substantial costs for seeking alternative
premises due to the convenience of relocating offices and warehouses. In addition, we reserve
the right to claim the lessors’ liabilities arising from an event of default under the relevant PRC
laws and the lease agreements.
As advised by our PRC Legal Adviser, as the tenant of these properties, we will not be
subject to any administrative punishment or penalties simply in this regard but we may not be
able to lease, occupy and use such leased properties if the relevant lease agreements are
deemed to be in breach of applicable laws and therefore be void. However, in the event that
we are unable to continue using these leased properties, based on our past experience we do
not expect substantial difficulties in finding properties for relocation, as each such leased
property is not large, the location is not critical, and we do not need to spend much time and
cost to select, design and decorate the new places. In addition, we will adopt stricter internal
control measures and review the property ownership certificates and sublease authorizations
before we enter into new lease agreements in the future.
We have enhanced our internal control measures in connection with property leasing. We
will require all of our lessors to provide the valid title certificates and other necessary
documentation before we enter into lease agreements with them.
Having considered the foregoing, our Directors believe that these ownership issues
described above will not, individually or in the aggregate, materially affect our business and
results of operation, on the grounds that: (i) during the Track Record Period and up to the
Latest Practicable Date, to the best knowledge of our Directors, our leases with respect to these
leased properties had never been challenged by any third parties and (ii) if we have to terminate
the leases or relocate from such leased properties with ownership issues, we are able to locate
qualified alternative premises within a short period of time under comparable terms without
incurring substantial additional costs.
CERTIFICATES, LICENSES AND PERMITS
As advised by our PRC Legal Adviser, our Directors confirm that, during the Track
Record Period and as of the Latest Practicable Date, we had obtained all material certificates,
licenses, approvals and permits from relevant authorities for our operations in material
respects. We renew all such material permits and licenses from time to time to comply in all
material aspects with the relevant laws and regulations and we do not expect any material
difficulties in such renewals so long as we comply with the applicable requirements and
conditions set by the relevant laws and regulations.
BUSINESS
– 248 –


--- page 259 ---
The following table sets forth a list of our material certificates, licenses, and permits:
Name of License,
Approval and Permit Holder Issuing Authority
Effective
From Effective as of
Production License of Special
Equipment PRC ( त၇ண௪͛
ପ஢̙ᗇ)
The Company Administration for
Market
Supervision of
Guangdong
Province (޲؇
̹ఙ္ຖ၍ଣ҅)
November 4,
2021
December 19,
2025
Production License of Special
Equipment PRC ( त၇ண௪͛
ପ஢̙ᗇ)
Anhui Folangsi
Machinery Co.,
Ltd. (౶
ʮ̡)
Administration for
Market
Supervision of
Anhui Province
(̹ఙ္ຖ
၍ଣ҅)
March 21,
2022
March 20,
2026
Production License of Special
Equipment (Self-inspection)
(त၇ண௪͛ପ஢̙ᗇ)( ІᏨዚ
࿴)
Guangzhou Pengze
Machinery
Equipment Co.,
Ltd. ( ᄿψᘄዣዚ
ʮ̡)
State Administration
for Market
Supervision and
Administration
(̹ఙ္ຖ၍
ଣᐼ҅)
June 28, 2020 June 27, 2025
PRC Customs Declaration Unit
Registration Certificate ( ऎᗫ
ࣣ)
The Company Panyu Customs,
PRC (ऎᗫ)
March 7, 2017 Long term
(1)
PRC Customs Declaration Unit
Registration Certificate ( ऎᗫ
ࣣ)
Guangzhou Pengze
Machinery
Equipment Co.,
Ltd. ( ᄿψᘄዣዚ
ʮ̡)
Panyu Customs,
PRC (ऎᗫ)
June 29, 2016 Long term
(2)
Notes:
(1) As indicated in the PRC Customs Declaration Unit Registration Certificate issued by the Panyu Customs ( ೦
ऎᗫ) on March 7, 2017, the certificate remains valid indefinitely with no expiration date.
(2) As indicated in the PRC Customs Declaration Unit Registration Certificate issued by the Panyu Customs ( ೦
ऎᗫ) on June 29, 2016, the certificate remains valid indefinitely with no expiration date.
BUSINESS
– 249 –


--- page 260 ---
LEGAL PROCEEDINGS AND COMPLIANCE
During the Track Record Period and up to the Latest Practicable Date, to the best
knowledge of our Directors, we had not been and were not a party to any legal, arbitral or
administrative proceedings, and we were not aware of any pending or threatened legal, arbitral
or administrative proceedings against us or our Directors, which would individually or in the
aggregate, have a material adverse effect on our business, financial condition, and results of
operations.
Construction Work Dispute
On March 1, 2023, a PRC construction company (the “Claimant”) initiated legal
proceedings against Anhui Folangsi (the “Anhui Folangsi Proceedings”) in the People’s Court
of Feixi County in Hefei of Anhui Province, the PRC (the “Feixi Court”), pursuant to which
the Claimant alleged that (the “Claims”) Anhui Folangsi had failed to pay the Claimant for
certain construction work performed for Anhui Folangsi. The Claimant claimed against Anhui
Folangsi for a total sum of approximately RMB16.8 million as outstanding payment for
construction work on Anhui Folangsi’s warehouse and certain construction work on the
production facilities and operational centre performed by the Claimant pursuant to a written
agreement and an oral agreement between the Claimant and Anhui Folangsi, and the interest
for the above-mentioned outstanding payment. Anhui Folangsi has engaged PRC legal counsel
(the “Litigation Counsel”) for the Anhui Folangsi Proceedings. On June 8, 2023, the Feixi
Court ordered Anhui Folangsi to pay the Claimant an aggregated amount of RMB376,000 and
dismissed other claims of the Claimant. Both the Company and the Claimant appealed to the
Intermediate People’s Court of Hefei in Anhui Province (the “Hefei Intermediate Court”). On
October 16, 2023, the Hefei Intermediate Court ruled that the Claimant had withdrawn its
appeal, and the judgment made by the Feixi Court became effective. In addition, we have fully
settled the payment required by the Feixi Court to the plaintiff, which payment had no material
impact on our liquidity considering our business scale. Based on the above, our Directors and
our PRC Legal Adviser is of the view that this legal proceeding will not have any material
adverse impact on the business, financial condition, and results of operations of the Group or
the Global Offering.
Fire Incident Dispute
In August 2018, a company (the “Lessee”) leased a warehouse from a landlord in
Shanghai (the “Lessor”) for the stock of certain products. The Lessee purchased an insurance
from an insurance company (the “Insurance Company”) against all risks to the products stored
in the warehouse. In addition, the Lessee subscribed electric forklifts from one of the
Company’s branches in Shanghai, and used such forklifts in the warehouse. In November 2019,
a fire broke out in the warehouse, which caused damages to the products of the Lessee. After
the fire, the Insurance Company paid for the damages to the products insured and obtained the
right of subrogation against third parties. On March 15, 2021, the Insurance Company initiated
legal proceedings against us in the People’s Court of Qingpu District in Shanghai, the PRC (the
“Qingpu Court”), pursuant to which the Insurance Company made a claim of approximately
BUSINESS
– 250 –


--- page 261 ---
RMB5.8 million and alleged that we should be liable for the losses caused by a fire that broke
out at the warehouse. On March 7, 2022, the Qingpu Court made a judgment stating that the
fire was caused by a malfunction in the electric circuit at the location of the charger during the
charging process of an electric forklift used by the Lessee, not caused by a malfunction of the
electric forklift itself and the Qingpu Court could not determine whether the electric circuit was
owned by us or the Lessor based on the evidence submitted to the court. According to the
judgment made by the Qingpu Court, we and the Lessor shall each respectively pay
approximately RMB1.46 million to the plaintiff, and both parties shall be jointly and severally
liable for the aforementioned compensation. On March 22, 2022, we appealed to the Shanghai
Financial Court. The Insurance Company, the Lessee and the Lessor have also appealed. The
Shanghai Financial Court issued a judgment on August 24, 2023, ruling that we and the lessor
shall each respectively pay approximately RMB877,300 to the plaintiff, and both parties shall
be jointly and severally liable for the aforementioned compensation. As advised by Allbright
Law Firm (Shenzhen) (۬(ଉέ)הthe counsel engaged by the us in
relation to this dispute, our Directors and our PRC Legal Adviser is of the view that the legal
proceedings will not have any material adverse impact on the business, financial conditions,
and results of operations of the Group or the Global Offering. In addition, we have fully settled
such payment to the plaintiff, which payment had no material impact on our liquidity
considering our business scale.
Except for the above-mentioned fire incident, there had been no similar fire incidents or
other hazards happened during the Track Record Period and up to the Latest Practicable Date.
After the fire incident, we have taken the following remedial actions in daily management of
our equipment and in providing intralogistics equipment subscription services: (i) we have
further clarified the division of responsibilities with customers and suppliers in contracts,
including specifying that customers should bear responsibilities arising from the use of
equipment, and we shall not be liable for any incidents or harm caused by such use by the
customers. Suppliers should bear responsibilities arising from product quality, design defects,
etc. If any incident or harm is caused by the intrinsic defects of the product itself, the suppliers
shall indemnify us, and the we are entitled to recover from the suppliers for any payments that
we make to our customers or third parties; (ii) we have strengthened the safety training for
customers, including providing user instructions to customers before delivering equipment and
equipment operation training to customers upon delivery of the equipment; and (iii) we have
improved our safety supervision system and internal control system. We have also standardized
and monitored the work behaviour of service personnel, with the help of the wearable devices,
effectively preventing occupational safety risks.
Trademark Right Infringement Dispute
In May, 2023, a PRC company (the “Claimant”) reported us to Weifang High-tech Zone
Market Supervision Bureau, claiming that we had infringed the Claimant’s trademark rights by
placing the Claimant’s trademark on 13 forklifts (the “Alleged Infringement Action”) provided
by us to the relevant equipment subscription client (the “Client A”). The Weifang High-tech
BUSINESS
– 251 –


--- page 262 ---
Zone Market Supervision Bureau, after investigating the said claims, had issued its decision in
June, 2023, ruling in favor of us and having found that there had not been infringement of the
Claimant’s trademark right by us (the “Decision”).
However, in July, 2023, the Claimant had brought proceedings against us at the
Intermediate People’s Court of Weifang in Shandong Province, the PRC (the “Weifang Court”),
claiming that we had infringed its trademark rights by placing a trademark owned by the
Claimant on 13 forklifts that we provided to Client A (the “Relevant Proceedings”). Pursuant
to the Relevant Proceedings, the Claimant has requested that: (i) we cease Alleged
Infringement Action which the Claimant allege to be an infringement of its trademark right,
and (ii) compensate the Claimant for the economic loss and the costs incurred by the Claimant
in relation to such claims in the total amount of RMB3,912,800. In addition, the 13 forklifts
relating to the Alleged Infringement Action have been seized pursuant to a injunctive order
granted by Weifang Court in June. The Weifang Court had held a first hearing on September
19, 2023, but had not granted any judgment on the Relevant Proceedings yet. Shandong Hanhui
Law Firm (הthe counsel engaged by us in relation to the Relevant
Proceedings (the “PRC Litigation Counsel”), is of the view that the likelihood of the Weifang
Court ruling in favor of the Claimant is very low since the forklifts in dispute were
manufactured by the Claimant and had been purchased by us from third party sellers, which is
evidenced by various supporting documents and information, including nameplates on forklifts
which record the manufacturer, sales contract between us and the relevant sellers, and V A T
invoices provided by the relevant sellers. Based on the foregoing, our Directors and our PRC
Legal Adviser believes that the Relevant Proceedings would not result in any material adverse
effect on our business, financial condition, or results of operations.
See “Risk Factors – Risks Relating to Our Business and Industry – We may be subjected
to litigations, legal or contractual disputes, government investigations or administrative
proceedings” in this prospectus. According to our PRC Legal Adviser, our business operations
had been carried out in compliance with applicable laws and regulations in material aspects
during the Track Record Period and up to the Latest Practicable Date.
Please see “– Employees” in this section and “Risk Factors – Risks Relating to Our
Business and Industry – We may be demanded to pay the outstanding contributions of social
insurance and housing provident fund and late payments and fines imposed by relevant
governmental authorities” and “– Properties – Leased Properties” in this section for a
description of certain legal matters relating to our compliance with PRC employment and real
property related laws and regulations which our Directors consider would not have a material
and adverse effect on our business, financial condition, or results of operations. Our Directors
are of the view that our Group has in place adequate internal control measures to ensure
ongoing compliance with applicable laws and regulations.
BUSINESS
– 252 –


--- page 263 ---
BUSINESS ACTIVITIES WITH CUSTOMERS IN RELATION TO COUNTRIES
SUBJECT TO INTERNATIONAL SANCTIONS
The U.S. and other jurisdictions or organizations, including the European Union, the
U.K., and Australia, have, through executive order, passing of legislation or other
governmental means, implemented International Sanctions targeting entities and individuals,
including Sanctioned Targets, entities and individuals that are nationals of or located in certain
Sanctioned Countries, and entities and individuals that are associated with certain industries or
sectors in specific countries.
During the Track Record Period, we made export sales and deliveries of intralogistics
equipment parts (i.e., export sales to customers of forklift parts procured from third-party
manufacturers) to customers located in jurisdictions affected by International Sanctions, in
particular, Belarus, Russia, V enezuela, Iran, and Syria (each, a “Relevant Region”, and
collectively, “Relevant Regions”). Among the Relevant Regions, Iran and Syria are subject to
comprehensive U.S. economic sanctions. Russia, Belarus, and V enezuela are not currently
subject to comprehensive U.S. economic sanctions, but a significant number of entities,
individuals, and industries in Russia, Belarus, and V enezuela are subject to U.S. economic
sanctions.
Our historical involvement of relevant transactions related to Relevant Regions were
mainly caused by our insufficient knowledge about risks in relation to International Sanctions,
as we primarily focused on offering intralogistics equipment subscription services and
maintenance and repair service to the customers in China. For instance, while we generally
request our overseas customers to settle payment in RMB, we occasionally received payments
in USD from some overseas customers, including certain customers in Iran and Syria.
To the best knowledge of our Directors, in 2020, 2021 and 2022, and for the four months
ended April 30, 2023, our revenue generated from transactions related to Relevant Regions was
approximately RMB13.9 million, RMB19.0 million, RMB24.0 million and RMB13.8 million,
respectively, representing approximately 1.4%, 1.6%, 2.0% and 3.2% of our total revenue for
the same periods, respectively.
In 2020, 2021 and 2022 and for the four months ended April 30, 2023, our revenue
generated from transactions related to Iran was approximately RMB3.8 million, RMB7.2
million, RMB6.9 million and RMB2.8 million, respectively, representing approximately 0.4%,
0.6%, 0.6% and 0.6% of our total revenue for the same periods, respectively.
In addition, in 2020, 2021 and 2022 and for the four months ended April 30, 2023, our
revenue generated from transactions related to Syria was approximately RMB127,000,
RMB122,000, RMB108,000 and nil, respectively, representing approximately 0.01%, 0.01%,
0.01% and nil of our total revenue for the same periods, respectively.
BUSINESS
– 253 –


--- page 264 ---
In 2020, 2021 and 2022 and for the four months ended April 30, 2023, our total revenue
generated from sales to customers in Belarus, Russia, and V enezuela was RMB10.0 million,
RMB11.7 million, RMB17.0 million, and RMB11.0 million respectively, representing
approximately 1.0%, 1.0%, 1.4% and 2.5% of our total revenues for the same periods,
respectively.
We have engaged DLA Piper, our International Sanctions Legal Adviser, to perform
procedures to assess our compliance with International Sanctions laws and regulations and
evaluate our risk of exposure and potential penalties imposed under the International Sanctions
laws and regulations for purposes of guidance letter HKEX-GL101-19 issued by the Stock
Exchange in March 2019. Our International Sanctions Legal Adviser has evaluated our
International Sanctions risk exposure by requesting and reviewing factual information
provided by the Company, including documents provided by us about our Group, our
shareholding structure, business operations, revenues, contracts, and customer lists. Our
International Sanctions Legal Adviser has relied on such information on the assumption that it
is accurate, complete, and not misleading. In addition, our International Sanctions Legal
Adviser compared our customer lists to published lists of entities and regions subject to
International Sanctions in Relevant Jurisdictions.
After such engagement, we gained the knowledge that, settlement of transactions with
entities in Iran and Syria in USD may subject us to risks associated with International
Sanctions.
As such, we ceased all sales involving Iran and Syria, the two countries that are subject
to comprehensive U.S. economic sanctions, since May 20, 2023. On the other hand, with
respect to sales activities in Relevant Regions that are not currently subject to comprehensive
U.S. economic sanctions, such as Russia, Belarus, and V enezuela, we follow recommendation
from our International Sanctions Legal Adviser and have implemented internal control
measures to prevent involvement in transactions with those entities, individuals, and industries
there that are subject to U.S. economic sanctions.
Our International Sanctions Legal Adviser has advised us that the risk that our sales to the
Relevant Regions during the Track Record Period constituting Sanctioned Activity under
International Sanctions enacted by Relevant Jurisdictions is low, with the exception of the Iran
USD Sales and Syria USD Sales discussed below.
Sanction Risks under the U.S. Law
Primary Sanction Risks
Iran USD Sales and Syria USD Sales
Our International Sanctions Legal Adviser has advised us that International Sanctions
administered by the Office of Foreign Assets Control (OFAC) of the U.S. may be applicable
to activities involving a U.S. nexus, such as funds transfer in U.S. currency that clear through
the U.S. financial system.
BUSINESS
– 254 –


--- page 265 ---
During the Track Record Period, the Company made sales of intralogistics equipment
parts manufactured in China to customers located in Iran and Syria, which are subject to
comprehensive U.S. economic sanctions. Such sales to Iran and Syria include sales
denominated in RMB and other currencies. However, we received payments in USD for certain
sales to Iran (“ Iran USD Sales ”) and certain sales to Syria ( “Syria USD Sales”) . The Iran USD
Sales include 69 distinct transactions to 15 distinct Iran customers with delivery dates between
December 2019 and April 2023, in which the Company received approximately USD1.8
million in payments denominated in USD to the Company’s bank accounts in China. The Syria
USD Sales include three distinct transactions to one customer in Syria with delivery dates
between January 8, 2022 and August 3, 2022 in which the Company received approximately
USD26,200 in payments denominated in USD to the Company’s bank accounts in China. We
have ceased all sales involving Iran and Syria since May 20, 2023.
Our International Sanctions Legal Adviser has advised us that such USD-denominated
transactions appear to be in violation of U.S. primary sanctions laws that prohibit the use of
the U.S. financial system for this type of trade with Iran and Syria. Accordingly, the Iran USD
Sales and Syria USD sales likely constituted Primary Sanctioned Activity.
After consulting with our International Sanctions Legal Adviser, we made an initial
notification of voluntary self-disclosure (“ VSD”) to OFAC on May 23, 2023 related to the Iran
USD Sales and the Syria USD Sales, and made a supplemental VSD report regarding these
transactions to OFAC on September 19, 2023.
Based on the facts and circumstances and the assessment made by our International
Sanctions Legal Adviser, our International Sanctions Legal Adviser has advised us that there
is a reasonable likelihood that OFAC may close this matter by issuing a cautionary letter to our
Company without imposing any monetary penalty. Alternatively, we may be required to pay an
administrative penalty for such Iran USD Sales and Syria USD Sales. If OFAC was to impose
a monetary penalty, the base monetary penalty for the violation would be approximately
USD912,000, taking into consideration that a VSD has been filed to OFAC and that the matter
is likely not “egregious” in nature. Such penalty amount is likely to be reduced by OFAC from
the likely base penalty amount of approximately USD912,000 to a lower amount during a
negotiated settlement process by taking into account mitigating factors such as first-time
offense, voluntary disclosure and cooperation with OFAC. Our International Sanctions Legal
Adviser has advised us that the submission of a VSD has materially reduced the legal and
reputational risks to the Company arising from the Iran USD Sales and Syria USD Sales.
Other Export Sales to Relevant Regions
Our International Sanctions Legal Adviser has advised us that the risk that our sales to the
Relevant Regions (excluding the Iran USD Sales and Syria USD Sales) during the Track
Record Period might constitute Primary Sanctioned Activity under International Sanctions
enacted by the U.S. is low. With respect to Primary Sanctions Risks under the U.S. laws, our
International Sanctions Legal Adviser has advised us that our export sales to customers in the
Relevant Regions (excluding the Iran USD Sales and Syria USD Sales) during the Track
BUSINESS
– 255 –


--- page 266 ---
Record Period did not involve Sanctioned Targets or otherwise involve the sectors, industries,
or activities necessary to satisfy the jurisdictional and substantive elements of offenses
constituting Primary Sanctioned Activities under U.S. law. As further advised by our Legal
Adviser, none of our contracting parties located in the Relevant Regions are Sanctioned Targets
specifically identified on the Specially Designated Nationals and Blocked Persons List or the
Sectoral Sanctions Identifications List maintained by OFAC (the “SDN Lists”).
For reasons above, our International Sanctions Legal Adviser has advised us on the
assumption that the customer lists and other information provided by the Company is accurate,
complete, and not misleading, that the risk that our other sales to the Relevant Regions during
the Track Record Period might constitute Primary Sanctioned Activity under International
Sanctions enacted by Relevant Jurisdictions is low.
Secondary Sanction Risks
Our International Sanctions Legal Adviser has advised us that the risk of the Company’s
activities during the Track Record Period might be considered Secondary Sanctionable
Activities and result in the imposition of secondary sanctions on our Company is low. The U.S.
is the only Relevant Jurisdiction that routinely employs secondary sanctions. Under current
U.S. law and practice, the Iran USD Sales and Syria USD Sales would likely be addressed as
Primary Sanctioned Activity rather than Secondary Sanctionable Activity. The sales to the
Relevant Regions (excluding the Iran USD Sales and Syria USD Sales) did not involve the
parties, sectors, industries, or activities likely to result in the imposition of Secondary
Sanctions under U.S. law. Accordingly, the Company’s activities during the Track Record
Period (excluding the Iran USD Sales and Syria USD Sales) pose a low risk of being deemed
to include Secondary Sanctionable Activities.
Sanction Risks under E.U. Law
Our International Sanctions Adviser has advised us that International Sanctions enacted
by the E.U. are Primary Sanctions that generally apply within territory of such jurisdictions to
entities or nationals of such jurisdictions, or to business within such jurisdictions. Accordingly,
the risk that our sales of Chinese manufactured products to customers in the Relevant Regions
might be subject to the jurisdiction of E.U. sanctions is low.
Our customers within the E.U. during the Track Record Period, moreover, did not include
Sanctioned Targets under E.U. law. The E.U. generally does not utilize Secondary Sanctions.
For these reasons, our International Sanctions Adviser has advised us that the risk that our sales
during the Track Record Period infringed International Sanctions enacted by the E.U. is low.
BUSINESS
– 256 –


--- page 267 ---
Sanction Risks under U.K. Law
Our International Sanctions Adviser has advised us that International Sanctions enacted
by the U.K. are Primary Sanctions that generally apply within territory of such jurisdictions to
entities or nationals of such jurisdictions, or to business within such jurisdictions. Accordingly,
the risks that our sales of Chinese manufactured products to customers in the Relevant Regions
might be subject to the jurisdiction of U.K. sanctions are low.
Our customers within the U.K. during the Track Record Period, moreover, did not include
Sanctioned Targets under U.K. law. The U.K. generally does not utilize Secondary Sanctions.
For these reasons, our International Sanctions Adviser has advised us that the risk that our
sales during the Track Record Period infringed International Sanctions enacted by the U.K. is
low.
Sanction Risks under Australia Law
Our International Sanctions Adviser has advised us that International Sanctions enacted
by the Australia are Primary Sanctions that generally apply within territory of such
jurisdictions to entities or nationals of such jurisdictions, or to business within such
jurisdictions. Accordingly, the risk that our sales of Chinese manufactured products to
customers in the Relevant Regions might be subject to the jurisdiction of Australian sanctions
is low. Our customers within the Australia during the Track Record Period, moreover, did not
include Sanctioned Targets under Australian law. Australia generally does not utilize Secondary
Sanctions.
For these reasons, our International Sanctions Adviser has advised us that the risk that our
sales during the Track Record Period infringed International Sanctions enacted by Australia is
low.
Sanctions Risks to Relevant Persons Resulting from Participation in Global Offering
Given the scope of the Global Offering and the expected use of proceeds as set out in this
prospectus, our International Sanctions Legal Adviser is of the view that parties involved in the
Global Offering will not be implicated by any applicable International Sanctions, including our
Company and our subsidiaries, the respective Directors and employees of our Company and
our subsidiaries, our Company’s or our subsidiaries’ investors, Shareholders, the Stock
Exchange, the Listing Committee and group companies, or any person involved in the Global
Offering, and accordingly, the sanctions risk exposure to our Company, its investors and
Shareholders, and persons who might, directly or indirectly, be involved in permitting the
listing, trading, and clearing of our Shares (including the Stock Exchange, the Listing
Committee and related group companies) as a result of such involvement in the Global Offering
is low.
BUSINESS
– 257 –


--- page 268 ---
Please see “Risk Factors – Risks Relating to Our Business and Industry – We could be
adversely affected as a result of any sales we made to customers in certain countries that are,
or become subject to, sanctions administered by the U.S., the EU, the UN, Australia and other
relevant sanctions authorities” for further details regarding sanctions risks.
Our Undertakings to the Stock Exchange
We undertake to the Stock Exchange that:
 we will implement the internal control measures to minimize International Sanctions
risk as described above;
 we will not use the net proceeds from the Global Offering, as well as any other funds
raised through the Stock Exchange, whether directly or indirectly, to finance or
facilitate any activities or businesses with, or for the benefit of, any Sanctioned
Regions or any other government, individual or entity sanctioned by the United
States, the European Union, Australia, or the U.K., including but not limited to, any
government, individual or entity that is the subject to any OFAC-administered
sanctions or that would be in breach of sanctions imposed by the United States, the
European Union, Australia, or the U.K.;
 we will not use the net proceeds from the Global Offering to pay any damages for
terminating or transferring any contract that violates International Sanctions;
 we will not undertake any future business that would cause us, the Stock Exchange,
HKSCC, HKSCC Nominees, our Shareholders, or potential investors to violate or
become a target of sanctions laws of the United States, the European Union,
Australia, or the U.K.;
 we will make timely disclosure on our website if we believe that any of our business
activities would put our Company or our Shareholders and investors at risks of being
in breach of the sanctions imposed by the United States, the European Union,
Australia, or the U.K.; and
 we will also include such disclosures in our annual or interim reports and the
discussion of our efforts on monitoring our business exposure to sanctions risk, the
status of our future business (if any) in any country subject to sanctions imposed by
the United States, the European Union, Australia, and the U.K., and our business
intention relating to customers from any such country.
BUSINESS
– 258 –


--- page 269 ---
Our Internal Control Measures to Minimize International Sanctions Risk
We will continue to enhance internal control and risk management measures which we
believe enable us to better monitor and evaluate our business and to address economic
sanctions risks.
In particular, our International Sanctions Legal Adviser has recommended the following
compliance measures (the “Recommended Measures”). Our International Sanctions Legal
Adviser is of the view that, the Recommended Measures are consistent with guidance published
by OFAC regarding sanctions compliance programs, and are adequate and effective for our
Company to comply with applicable International Sanctions laws and to address sanctions
risks.
 Our Company will adopt a Trade Compliance Policy for the purposes of complying
with applicable International Sanctions enacted by Relevant Jurisdictions.
 Our Trade Compliance Policy will include appropriate procedures:
o to screen foreign customers and suppliers against the lists of individuals,
entities, and regions subject to International Sanctions enacted by Relevant
Jurisdictions;
o to determine the extent to which our Company’s business with foreign
customers and suppliers may expose the Company to legal, commercial, or
reputational risks; and
o to determine appropriate measures to mitigate such risks.
 Our Trade Compliance Policy will prohibit the use of U.S. dollars and involvement
with U.S. financial institutions or other U.S. Persons in connection with any
transactions involving countries or regions subject to comprehensive International
Sanctions enacted by the United States.
 Our Company will establish a Sanctions Oversight Committee to coordinate the
implementation of the Trade Compliance Policy
 The Sanctions Oversight Committee will be authorized to engage external legal
advisers with relevant expertise and experience in sanctions matters to evaluate the
sanctions risk as and when necessary and will formulate risk management measures
taking into account the advice and recommendations provided by such external legal
advisers.
BUSINESS
– 259 –


--- page 270 ---
 The Sanctions Oversight Committee will be authorized to arrange appropriate
compliance training for our Directors, our senior management, and other relevant
personnel to assist them in evaluating the potential sanctions risks in our daily
operations.
 Our Company will open and maintain separate bank account(s) which is/are
designated for proceeds from the Global Offering, as well as any other funds raised
through the Stock Exchange. Our Sanctions Oversight Committee will monitor and
regulate the use of proceeds from the Global Offering, as well as any other funds
raised through the Stock Exchange, to ensure that such funds will not be used to
finance or facilitate, directly or indirectly, activities or business with, or for the
benefit of, any sanctioned country or any other government, individual, or entity
sanctioned by the United States, the European Union, Australia, or the U.K.
We have subsequently implemented the aforementioned Recommended Measures and a
few additional measures initiated by us as follows by October 2, 2023 (collectively, the
“Implemented Measures”) to control and monitor our exposure to sanctions risks:
 Our Trade Compliance Policy also includes appropriate procedures:
o to assign our financial managers to check identities of customers and the
respective countries or regions of such customers collected through our client
KYC procedures prior to each new transaction, in order to suspend any
transaction that involve individuals, entities or regions, that are subject to
International Sanctions enacted by Relevant Jurisdictions, for example,
Relevant Regions that are subject to comprehensive U.S. economic sanctions,
and parties identified in the SDN List;
o to determine the extent to which our Company’s business with foreign
customers and suppliers may expose the Company to legal, commercial, or
reputational risks, including (i) making timely updates on the list of
individuals, entities or regions that are subject to International Sanctions
enacted by Relevant Jurisdictions whenever there is any new material
development of related laws and regulations and at least once a year, which we
shall prevent having transaction with, (ii) detailed cross-checking, reporting
and reviewing procedures for our sales team, risk management and internal
control personnel in key procedures, such as, client KYC procedure, product
transportation and delivery, to ensure that we have proper screening results;
and
o to continuously observe the development of International Sanctions laws and
regulations, so as to timely and effectively determine appropriate measures to
mitigate such risks.
BUSINESS
– 260 –


--- page 271 ---
 We have established a Sanctions Oversight Committee to coordinate the
implementation of the Trade Compliance Policy. The Sanctions Oversight
Committee, led by the chairman of the Board, is responsible for reviewing,
approving, implementing and updating the Company’s compliance measures, and
shall guide and supervise all other business departments, including but not limited
to, sales department, procurement department and asset management department, to
operate in full compliance with such measure.
 Our Sanction Oversight Committee and Directors have established routine training
program for our sales team and relevant employees twice a year and whenever there
is any new material development of related laws and regulations to improve their
knowledge and awareness on applicable International Sanctions laws.
The Implemented Measures are to enable us to monitor and to avoid potential violation
of relevant sanction laws and regulations, such that, (i) with respect to any country or region
that is currently subject to comprehensive U.S. economic sanctions, we shall be prevented from
any transaction in USD involving in such country or region; (ii) with respect to any country
or region that is not currently subject to comprehensive U.S. economic sanctions, we shall be
prevented from selling any product to any entity, individual or in a particular industry in such
country or region, which are subject to economic sanctions; and (iii) parties involved in the
Global Offering shall not be implicated by any applicable International Sanctions.
In addition, our Controlling Shareholders signed a deed of indemnity on May 22, 2023
(“Deed of Indemnity”), pursuant to which, our Controlling Shareholders have undertaken to
fully indemnify us against, amongst other things, any liability or penalty arising from the sale
activities with customers in relation to countries subject to International Sanctions.
We have engaged an internal control consultant (the “Internal Control Consultant”) to
review the design, execution, and effectiveness of the Implemented Measures. According to the
aforementioned internal control review, no deficiency in relation to the adequacy and
effectiveness of the Implemented Measures has been reported by the Internal Control
Consultant. Having taken into account the view from our International Sanction Legal Adviser
on the Recommended Measures, and the work performed by our Internal Control Consultant,
our Directors are of the view, which is concurred by the Sole Sponsor, that the Implemented
Measures are adequate and effective for us to comply with applicable International Sanctions
laws and to address sanctions risks.
RISK MANAGEMENT AND INTERNAL CONTROL
It is the responsibility of our Board to ensure that we maintain sound and effective
internal controls and risk management system to safeguard our Shareholders’ investment and
our assets at all times. We maintain internal manuals setting out operating procedures, internal
control procedures and other policies and guidelines. We also adopted and implemented
comprehensive risk management policies in various aspects of our business operations, such as
IT, financial reporting, compliance, and human resources. Our Board of Directors are
BUSINESS
– 261 –


--- page 272 ---
responsible for the establishment, updating and implementation of our internal control policies
and systems, while our senior manager monitors the daily implementation of the internal
control procedures and measures with respect to each subsidiaries and functional departments.
Compliance Risk Management
In order to effectively manage our compliance and legal risk exposures, we have adopted
strict internal procedures to ensure the compliance of our business operations with the
applicable rules and regulations. In accordance with these procedures, our in-house legal
department performs the basic function of reviewing and updating the form of contracts we
enter into with our customers, partners, and suppliers. Our legal department examines the
contract terms and reviews all relevant documents for our business operations, including
licenses and permits obtained by the counterparties to perform their obligations of business
contracts and all the necessary underlying due diligence materials, before we enter into any
contract or business arrangements.
Our in-house legal department is responsible for obtaining any requisite governmental
pre-approvals or consents, including preparing and submitting all necessary documents for
filing with relevant government authorities, within the prescribed regulatory timelines. We
continuously improve our internal policies according to changes in laws, regulations and
industry standards, and update internal templates for legal documents. We undertake
compliance management over various aspects of our operations and employee activities. We
have also established an accountability system in respect of employees’ violations of laws,
regulations and internal policies. In addition, we continually review the implementation of our
risk management policies and measures to ensure our policies and implementation are effective
and sufficient.
In terms of anti-bribery and anti-corruption, we have implemented specific policies and
internal control measures against corruption and bribery, which set forth procedures for
identifying potential corruption, implementing relevant anti-corruption procedures and setting
out anti-corruption responsibilities for relevant personnel. We strictly prohibit bribery or other
improper payments in any of our business operations according to our anti-bribery and
anti-corruption policies. This prohibition applies to all business activities, whether involving
government officials, influential personnel or private or public payors. Improper payments
prohibited by these policies include bribes, kickbacks, excessive gifts or entertainment, or any
other payment made or offered to obtain an undue business advantage. Moreover, we keep
accurate books and records that reflect transactions and asset dispositions in reasonable detail.
We specifically require that the employees submit all reimbursement requests related to
entertainment expenditure or gifts presented to third parties on behalf of the Company in
accordance with our anti-bribery and anti-corruption policies, and specifically record the
reason for the expenditure. Any entertainment expenditure exceeding certain amount per
person and any expenditure incurred for entertainment not related to business meetings must
be approved in advance by our compliance officer. Payment made in violation of anti-bribery
and anti-corruption policies is strictly prohibited. Our compliance department is responsible
for investigating the reported incidents and taking appropriate measures as necessary. We
BUSINESS
– 262 –


--- page 273 ---
provide employees with adequate communication channels and encourage employees to take
the initiative to seek guidance from us regarding the implementation of anti-corruption
policies. We conduct anti-corruption compliance check and inspections regularly on employees
and senior personnel. We also have an employee code of conducts in place, which contains
internal rules and guidelines regarding basic working rules, work ethics, confidentiality,
negligence, anti-bribery and anti-corruption. We provide our employees with regular training
and resources to explain the guidelines contained in the employee code of conducts.
Asset Security Risk Management
We are exposed to asset security risk with our intralogistics equipment subscription
services as customers may damage or lose our intralogistics equipment, or we are unable to
reclaim actual control or possession of intralogistics equipment. During the Track Record
Period, we did not experience any incident of loss or damage to our intralogistics equipment
from customers during the subscription period. For more information about related risks,
please see “Risk Factors – Risks Relating to Our Business and Industry – We are exposed to
risks associated with failing to detect and prevent fraud, negligence or other misconduct
committed by our employees, agents, customers, suppliers or other third parties” in this
prospectus. Our Intelligent Asset and Operation Management Platform enables 24/7 remote
monitoring and supervision of our intralogistics equipment and relevant operators, so that we
could generate alerts or other actions in a timely manner upon detection of incorrect maneuver
of the operators. If the customer causes any loss or damage to our intralogistics equipment
during the subscription period, we would claim compensation from customers.
Credit Risk Management
We are exposed to the credit risks associated with our intralogistics equipment
subscription service business and sales of intralogistics equipment and parts. In order to
mitigate the credit risks and ensure the collectability of trade and bills receivables in our
transactions, we have delegated a team responsible for determination of credit limits and credit
approvals, and have adopted credit risk measures to review and monitor our trade and bills
receivables from time to time, including implementing security measures and monitoring
procedures on customers. Before accepting any new customers, we use Qichacha (ݟݟand
Tianyancha (ݟto assess the creditworthiness of potential customers and determine their
appropriate credit limits individually. The line of credit and scoring attributed to customers are
reviewed regularly in order to effectively monitor our customers. These procedures are
designed to provide us with the information needed to implement adjustments where necessary,
and to take proactive corrective actions in time. In addition, in order to manage our exposure
to credit risk, we have adopted credit management policies and procedures that are reviewed
and updated by our risk management team in conjunction with other relevant departments. We
have adopted procedures to deal with material overdue payments, which include (i) close
monitoring of material overdue payments; (ii) evaluation of the risk based on factors such as
its payment history, and the general economic environment; and (iii) designing of appropriate
follow-up actions such as making phone calls, issuing demand letters, visiting the customer’s
office and initiating legal proceedings. However, we cannot assure that we are able to collect
BUSINESS
– 263 –


--- page 274 ---
all trade and bills receivables. For more information, please see “Risk Factors – Risks Relating
to Our Business and Industry – We may not be able to satisfy our working capital requirements
if we experience significant delays or defaults in payments from customers, or significant
delays in our billing and settlement process” in this prospectus.
Liquidity Risk
As of December 31, 2020, 2021, and 2022, and April 30, 2023, our gearing ratio was
171.8%, 153.9%, 152.0%, and 154.9%, respectively. We aim to maintain sufficient cash and
credit lines to meet our liquidity requirements. We finance our working capital requirements
through a combination of funds generated from operations and alternative funding resources
from equity and debt.
IMPACT OF COVID-19 ON OUR OPERATIONS
Starting in January 2020, the COVID-19 pandemic has spread around the world and
adversely affected the global economy. The pandemic led to a decrease in intralogistics demand
and affected our operations and financial conditions. As COVID-19 became gradually
contained and business activities gradually recovered in China later in 2020 and 2021, our
business operations across China and market demand for intralogistics gradually improved.
Our business operations and financial performance were affected by a resurgence of the
COVID-19 pandemic in Guangzhou from October to November 2022, and in Shanghai from
March to June 2022. The resurgences of COVID-19 resulted in temporary suspensions of
operations at certain affected service outlets, thereby limiting our ability to provide services to
our customers. For example, in 2022, 45 outlets were temporarily closed for less than 30 days,
7 outlets were closed temporarily for a period between 30 to 50 days, and 8 outlets were closed
for more than 50 days. These pandemic also affected demand for our services. The subdued
demand was primarily driven by the closures and reduced operations of our customers during
the re-emergence of COVID-19. Despite such temporary disruption caused by COVID-19
pandemic, we were still able to sustain our growth momentum and deliver robust revenue
growth. In particular, the surge in e-commerce business during the COVID-19 pandemic, to
some extent, created an increased demand for intralogistics equipment, providing opportunities
for our intralogistics equipment subscription services and maintenance and repair services. For
more information about related risks, please see “Risk Factors – Risks Relating to Our
Business and Industry – Any catastrophe could severely disrupt our business operations.”
BUSINESS
– 264 –


--- page 275 ---
BOARD OF DIRECTORS
Our Board of Directors consists of nine Directors, including four executive Directors, two
non-executive Directors and three independent non-executive Directors. Our Board of
Directors is responsible and has general powers for the management and conduct of our
business. The table below sets out certain information of our Directors:
Name Age Position(s)
Date of
appointment
as Director
Date of
joining our
Company
Roles and
responsibilities
Relationship with
other Directors,
Supervisors
or senior
management
Mr. Hou
Zekuan
(ዣᄱ)
54 Executive Director
and Chairman of
the Board
December 5,
2007
December 5,
2007
Responsible for the
overall
management and
Board related
work
Brother of Mr. Hou
Zebing and
cousin of Mr.
Qian Xiaoxuan
Mr. Hou
Zebing
(ዣж)
48 Executive Director
and general
manager (chief
executive)
October 6,
2012
December 5,
2007
Responsible for the
overall
management and
daily operation
Brother of Mr. Hou
and cousin of
Mr. Qian
Xiaoxuan
Mr. Qian
Xiaoxuan
(፺ወ৐)
49 Executive Director
and deputy
general manager
October 6,
2012
December 5,
2007
Responsible for the
management of
supply chain,
base, and other
related operations
Cousin of Mr. Hou
and Mr. Hou
Zebing
Ms. Ma Li
(৵ᘆ)
35 Executive Director
and secretary of
the Board
February 10,
2018
March 18,
2008
Responsible for
investor relations
management and
equity affairs
management,
corporate
governance
None
Mr. Zhu
Yingchun
(݆ڎ)
45 Non-executive
Director
October 22,
2016
October 22,
2016
Responsible for
providing
strategic advice
on the
development
None
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 265 –


--- page 276 ---
Name Age Position(s)
Date of
appointment
as Director
Date of
joining our
Company
Roles and
responsibilities
Relationship with
other Directors,
Supervisors
or senior
management
Mr. Shu
Xiaowu
(؛)
54 Non-executive
Director
February 10,
2018
February 10,
2018
Responsible for
providing
strategic advice
on the
development
None
Mr. Chiang
Edward
(ᇸ၅༐)
42 Independent non-
executive
Director
April 3, 2023 April 3, 2023 Responsible for
providing
independent
advice and
judgement to
the Board
None
Dr. Fan Xia
(ᅾᒳ)
45 Independent non-
executive
Director
August 18,
2018
August 18,
2018
Responsible for
providing
independent
advice and
judgement to
the Board
None
Mr. Wang
Chuanbang
(ˮෂԞ)
57 Independent non-
executive
Director
April 3, 2023 April 3, 2023 Responsible for
providing
independent
advice and
judgement to
the Board
None
Executive Directors
Mr. Hou Zekuan (ዣᄱ), aged 54, is our founder, an executive Director and the
chairman of the Board of our Company. He established our Company on December 5, 2007 and
has been a Director of our Company since its establishment. Mr. Hou was re-designated as an
executive Director on April 3, 2023. He is primarily responsible for the overall management
and Board related work.
Mr. Hou has over 29 years of experience in the intralogistics equipment industry. Mr. Hou
founded our Company together with Mr. Hou Zebing in December 2007, and acted as our
executive director and general manager from December 2007 to November 2010 and then
served as our executive director from November 2010 to October 2012. Since October 2012,
he has been our chairman of the Board. Mr. Hou served as a supervisor of Foshan Shunde
Ronggui Lixin Forklift Co., Ltd. (ʮ̡)( “ Ronggui Lixin ”),
one of our wholly-owned subsidiaries, from December 2007 to December 2021, and he was
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 266 –


--- page 277 ---
responsible for managing supervisors and providing independent advice. Since July 2018,
Mr. Hou also served as a director of Ferretto Intelligent. Since August 2019, he was a director
of Hefei Xunyun, where he was responsible for providing strategic advice regarding
development.
Prior to founding our Company, Mr. Hou served as the section head of Anhui Tixiem
Forklift Co., Ltd. (ʮ̡), a company primarily engaged in the
manufacture and operation of a wide range of forklift trucks and forklift accessories, and he
was responsible for the production and procurement from April 1994 to April 2006.
Mr. Hou obtained his bachelor’s degree in mechanical engineering from Xi’an Jiaotong
University ( Гτʹஷɽኪ) in the PRC in July 1990. He obtained an engineer certificate from
the department of Industrial Machinery of Anhui Province (ʈุዚ૛ᝂ) since
November 1995.
Mr. Hou Zebing (ዣж), aged 48, is our co-founder, an executive Director and general
manager (chief executive) of our Company. Mr. Hou Zebing joined our Group on December 5,
2007. He was appointed as a Director on October 6, 2012 and was re-designated as an
executive Director on April 3, 2023. He is primarily responsible for the overall management
and daily operation.
Mr. Hou Zebing has over 22 years of experience in the in-site logistics equipment
industry. Mr. Hou Zebing founded our Company together with Mr. Hou in December 2007, and
acted as our supervisor from December 2007 to November 2010, then served as the general
manager from November 2010 to October 2012. Mr. Hou Zebing has been serving as the
director and general manager since October 2012. Since 2001, Mr. Hou Zebing has
accumulated extensive experience in management by serving as the executive director and
senior management at our subsidiaries, including as: (i) an executive director and general
manager of Guangzhou Xinze since May 2010, and he is responsible for overall management
and daily operations; (ii) an executive director and general manager of Guangzhou Pengze
since March 2010, and he is responsible for overall management and daily operations; (iii) an
executive director and general manager of Zhuhai TCM since September 2004, and he is
responsible for overall management and daily operations; (iv) an executive director and general
manager of Zhongshan TCM since March 2003, and he is responsible for overall management
and daily operations; and (v) an executive director and general manager of Ronggui Lixin from
February 2001 to December 2022, and he was responsible for overall management and daily
operations.
Prior to founding our Company, Mr. Hou Zebing served as the secretary of the Y outh
League Committee of Hubei Communication Technical College ( ಳ̏ʹஷᔖุҦஔኪ৫), a
full-time public general institutions of higher learning, and he was responsible for the work of
the Communist Y outh League from September 1996 to December 2000.
Mr. Hou Zebing received his bachelor’s degree in automotive engineering from Changsha
Transportation College (Ӎʹஷኪ৫) (currently known as Changsha University of Science &
Technology (Ӎଣʈɽኪ)) in the PRC in June 1996.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 267 –


--- page 278 ---
Mr. Qian Xiaoxuan ( ፺ወ৐), aged 49, is an executive Director and deputy general
manager of our Company. Mr. Qian joined our Group on December 5, 2007. He was appointed
as a Director on October 6, 2012 and was re-designated as an executive Director on April 3,
2023. He is primarily responsible for the management of supply chain, base, and other related
operations.
Mr. Qian has extensive experience in the in-site logistics equipment industry. Mr. Qian
has been engaged in various roles in our Company since February 2012, including (i) the
assistant to chairman from February 2012 to December 2015, and he was responsible for
supervising business affairs and the construction of the supply chain of the procurement center;
(ii) the director from October 2012 to June 2013, and he was responsible for the management
of supply chain and relevant operation; (iii) the deputy general manager from January 2016 to
November 2016, and he was responsible for supply chain management and other related
operations; (iv) the director and deputy general manager from August 2016 to December 2018,
and he was responsible for supply chain management and other related operations; and (v)
director and deputy general manager since January 2019, and he is responsible for supply chain
and supply base management and other related operations. Mr. Qian has been a director of
Hefei Langyun since February 2019, and he is responsible for the overall management. In
addition, he served as a sales manager of Ronggui Lixin from March 2001 to January 2012,and
he was responsible for the sales management.
Mr. Qian received his bachelor’s degree in mechanical engineering and automation from
Beijing Economic and Technological Research Institute (ኪ৫) in the PRC in
July 1998.
Ms. Ma Li ( ৵ᘆ), aged 35, is an executive Director and secretary to the Board. Ms. Ma
joined our Group on March 18, 2008. She was appointed as a Director on February 10, 2018
and was re-designated as an executive Director on April 3, 2023. She is primarily responsible
for investor relations management and equity affairs management, corporate governance.
Ms. Ma has extensive experience in the financial management. She served as the financial
officer of our Company from March 2008 to January 2012, then promoted as the financial
controller from February 2012 to September 2017, and she was responsible for the overall
management of the financial center. Ms. Ma has been serving as the secretary of the Board and
director of our Company since September 2017 and February 2018, respectively.
Ms. Ma has been the supervisor of our subsidiaries, including (i) Ferretto Intelligent since
July 2018; (ii) Anhui Folangsi since August 2018; (iii) Hefei Langyun since February 2019;
(iv) Hefei Xunyun since August 2019; and (v) Shenyang Tianshun since November 2011, and
she is primarily responsible for supervising and providing independent advice.
Ms. Ma received her college degree in accounting from Hubei Communications Technical
College ( ಳ̏ʹஷᔖุҦஔኪ৫) in the PRC in June 2008.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 268 –


--- page 279 ---
Non-executive Directors
Mr. Zhu Yingchun (݆ڎ)aged 45, is a non-executive Director of our Company. He
joined our Group on October 22, 2016 and has been a Director since then. He was re-designated
as a non-executive Director on April 3, 2023. He is primarily responsible for providing
strategic advice on the development of our Company.
Mr. Zhu has extensive experience in investment management. Prior to joining our Group,
he has been a partner of Eastern Bell (Shanghai) V enture Capital Management Co., Ltd. ( ᙒཻ
(ɪऎ)ʮ̡), a venture capital institute specialized in early-and growth-stage
investments and is an affiliate of Eastern Bell II, one of our Pre-IPO Investors, and he is
responsible for venture capital and investment management since September 2009.
Mr. Zhu received his bachelor’s degree and master’s degree in tourism management from
Fudan University ( ూ͇ɽኪ) in the PRC in July 1999 and July 2002, respectively.
Mr. Shu Xiaowu (؛)aged 54, is a non-executive Director of our Company. He
joined our Group on February 10, 2018 and has been a Director since then. He was
re-designated as a non-executive Director on April 3, 2023. He is primarily responsible for
providing strategic advice on the development of our Company.
Mr. Shu has extensive experience in financing. Prior to joining our Group, He has been
a business partner of Shenzhen Dachen Caizhi V enture Capital Management Co., Ltd. ( ଉέ̹
ʮ̡), one of the well-known venture capital institutions in China
and is the general partner of Dachen Chuanglian and Dachen Chuangtong, and he is responsible
for investment management since May 2007. He also served as project manager of Guangdong
Y ueke Financial Group Co., Ltd. (ʮ̡), one of the well-known
venture capital institutions in China, and he was responsible for project investment from July
1998 to May 2007.
Mr. Shu received his bachelor’s degree in English and literature from Hunan Normal
University (ᇍɽኪ) in the PRC in July 1991. He received his master’s degree in
political economy from Jinan University (ɽኪ) in the PRC in June 1998. Mr. Shu also
received his executive master of business administration from Sun Y at-sen University ( ʕʆɽ
ኪ) in the PRC in December 2012.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 269 –


--- page 280 ---
Independent Non-executive Directors
Mr. Chiang Edward ( ᇸ၅༐), aged 42, was appointed as an independent non-executive
Director on April 3, 2023. He is primarily responsible for providing independent advice and
judgement to the Board.
Mr. Chiang has over 15 years of experience in corporate financing. He has been a
non-executive director of Top Education Group Ltd. (ʮ̡) since
September 2020, one of Australia’s primary and best-in-class private tertiary education
providers whose shares are listed on the Stock Exchange (stock code: 01752.HK). He has also
been a director of investor relations department of Minsheng Education Group Company
Limited (ʮ̡) since May 2017, a company committed to constructing a
vocational education service system and whose shares are listed on the Stock Exchange (stock
code: 01569.HK), and he is responsible for planning and executing investor relations
strategies. From January 2015 to June 2017, Mr. Chiang served as a senior manager of Town
Health International Medical Group Limited (ʮ̡), a comprehensive
medical center with diversified medical services and whose shares are listed on the Stock
Exchange (Stock code: 03886.HK), and he was responsible for PRC projects and Mainland
China operations. Mr. Chiang has accumulated extensive experience in corporate financial
management by serving as the senior management at various enterprises, including as: (i) a
corporate finance manager of Sunwah Kingsway Capital Holdings Limited (ٰ
ʮ̡), a financial service provider based in Hong Kong, where he was responsible for
corporate financing transactions in Hong Kong from January 2013 to January 2014; (ii) a
manager and licensed representative of South West Capital Limited (ʮ̡), a
company engaged in dealing in securities and advising on corporate finance, where he was
responsible for advising on corporate finance from April 2012 to January 2013; (iii) a corporate
finance manager of Huntington Asia Limited (ʮ̡) (currently known as Octal
Capital Limited (ʮ̡)), a company engaged in financing services, where he was
responsible for advising on corporate finance from June 2011 to April 2012; and (iv) an
associate and was promoted to assistant manager of VC Capital Limited (ʮ̡),
a company engaged in dealing in securities and advising on corporate finance, where he was
responsible for advising on corporate finance from May 2008 to December 2010.
Mr. Chiang received his bachelor’s degree in Arts from Macquarie University in Sydney,
Australia in November 2005.
Dr. Fan Xia ( ᅾᒳ), aged 45, is an independent non-executive Director of our Company.
She joined our Group on August 18, 2018 has been an independent director of our Company
since then. She was re-designated independent-non executive Director on April 3, 2023. She is
primarily responsible for providing independent advice and judgement to the Board.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 270 –


--- page 281 ---
Prior to joining our Company, Dr. Fan has been a professor of South China University of
Technology (ଣʈɽኪ), a public comprehensive research university, and she is
responsible for teaching and research related works since September 2004. She also served as
an independent director of Guangzhou Port Company Limited (ʮ̡), a
company mainly engaged in terminal operation and whose shares are listed on Shanghai Stock
Exchange (stock code: 601228.SH), and she was responsible for providing independent advice
from December 2016 to December 2022.
Dr. Fan received her bachelor’s degree in economics from the School of Management
Northwestern Polytechnical University ( Г̏ʈุɽኪ၍ଣኪ৫) in the PRC in July 2000. She
received her master’s degree in business management from Northwestern Polytechnical
University ( Г̏ʈุɽኪ) in the PRC in April 2003. Dr. Fan received her doctoral degree in
management science and engineering from Northwestern Polytechnical University ( Г̏ʈุ
ɽኪ) in the PRC in September 2006.
Mr. Wang Chuanbang ( ˮෂԞ), aged 57, was appointed as an independent non-
executive Director on April 3, 2023. He is primarily responsible for providing independent
advice and judgement to the Board.
Mr. Wang has extensive experience in accounting filed. Prior to joining our Group, he has
been a partner of Baker Tilly China Certified Public Accountants (הan
accounting firm, and he is responsible for the overall management since December 2006.
Mr. Wang holds directorships in various companies, including (i) an independent director
of Lian Life Insurance Co., Ltd. (ʮ̡), a national life insurance
company, and he is responsible for providing independent advice since January 2021; (ii) an
independent director of Shanghai Wondertek Software Co.,Ltd. (ʮ̡),
a company engaged in software products and solutions centered on video intelligence and
whose shares are listed on Shanghai Stock Exchange (stock code: 603189.SH), and he is
responsible for providing independent advice since September 2018; (iii) an independent
director of Nantong Guosheng Intelligence Technology Group Co., Ltd. (Ҧණ
ʮ̡), a company engaged in metal cutting machine tool business and whose shares
are listed in Shanghai Stock Exchange (stock code: 688558.SH), and he was responsible for
providing independent advice from July 2016 to August 2022; (iv) an independent director of
Warom Technology Incorporated Company (ʮ̡), a company engaged in
professional lighting equipment and whose shares are listed on Shanghai Stock Exchange
(stock code: 603855.SH), and he was responsible for providing independent advice from
November 2016 to September 2022; and (v) a director of Greetec Co.,Ltd. (ࠢ
ʮ̡), a company engaged in engineering project management technology services and whose
shares are listed on Beijing Stock Exchange (stock code: 836208.BJ) from July 2015 to June
2022.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 271 –


--- page 282 ---
Mr. Wang received his college’s degree in physics from Hefei Institute of Education ( Υ
઺ԃኪ৫) (currently known as Hefei University (ኪ৫)) in the PRC in June 1990. He
also received his master’s degree in business administration through part time learning from
Xiamen University (ɽኪ) in the PRC in June 2016. Mr. Wang was qualified as a
Statistician (ࢪࠇby the National Bureau of Statistics (҅) in March 2001 and as
a Certified Public Accountant by the China Institute of Certified Public Accountants in June
2004.
General
Our Directors have confirmed that:
(1) save as disclosed in the paragraph headed “Further Information about Our Directors,
Supervisors and Substantial Shareholders – 3. Service Contracts” in Appendix VI to
this prospectus, none of our Directors has any existing or proposed service contract
with our Company other than contracts expiring or determinable by the relevant
member of our Company within one year without payment of compensation (other
than statutory compensation);
(2) save as disclosed in the paragraph headed “Further Information about Our Directors,
Supervisors and Substantial Shareholders – 1. Disclosure of Interests” in Appendix
VI to this prospectus and above, each of our Directors has no interests in the Shares
within the meaning of Part XV of the SFO;
(3) save as disclosed in “– Board of Directors” in this section, each of our Directors has
not been a director of any other publicly listed company during the three years prior
to the Latest Practicable Date and as at the Latest Practicable Date; and
(4) none of our Directors completed his/her respective education programs as disclosed
in this section by way of attendance of long distance learning or online courses.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 272 –


--- page 283 ---
SUPERVISORY COMMITTEE
Our Supervisory Committee consists of three Supervisors. The following table sets out
certain information of our Supervisors:
Name Age Position(s)
Date of
appointment
as Supervisor
Date of
joining our
Company
Roles and
responsibilities
Relationship with
other Directors,
Supervisors or
senior
management
Ms. Li
Xiaolan
(ҽʃᚆ)
42 Employee
representative,
chairman of the
Supervisory
Committee and
director of
procurement
center
December 16,
2017
December 5,
2007
Responsible for
presiding over
the work of the
Supervisory
Committee,
supervising and
providing
independent
advice to our
Board
None
Mr. Zhang
Xiaolong
(ੵʃᎲ)
47 Supervisor October 22,
2016
June 21,
2016
Responsible for
supervising and
providing
independent
advice to our
Board
None
Mr. He
Xiaocheng
(൭ʃϓ)
43 Supervisor and
director of asset
center
December 16,
2017
December 5,
2007
Responsible for
supervising and
providing
independent
advice to our
Board
None
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 273 –


--- page 284 ---
Ms. Li Xiaolan ( ҽʃᚆ), aged 42, has been a supervisor of our Company since December
2017 and was re-designated as employee representative and chairman of the Supervisory
Committee on April 3, 2023. She is primarily responsible for presiding over the work of the
Supervisory Committee, supervising and providing independent advice to our Board.
Ms. Li joined our Group on December 5, 2007 as a procurement director. She served as
a procurement personnel of Foshan Shunde Weize Construction Machinery Co., Ltd ( Нʆ̹න
ʮ̡) from August 2004 to November 2007, and she was responsible
for supply chain procurement related works. She was promoted to director of the procurement
center since December 2007, and she is responsible for the overall management of procurement
center.
Ms. Li received her college’s degree in physical distribution management from Shandong
University (ɽኪ) in the PRC in January 2016. She was qualified as a Technician (ࢪ)
from the Ministry of Human Resources and Social Security, The People’s Republic of China
(ღ௅) in September 2018.
Mr. Zhang Xiaolong ( ੵʃᎲ), aged 47, joined our Group on June 21, 2016 as a director,
and has been re-appointed as our Supervisor since October 2016. He is primarily responsible
for supervising and providing independent advice to our Board.
Mr. Zhang has extensive experience in investment management field. Prior to joining our
Group, he has been a partner and deputy general manager of Richen Investment Management
Co., Ltd. (ʮ̡), a leading new private equity investment institution in
China and one of our Pre-IPO Investors, and he is responsible for investment management
related works since May 2015. He served as a director and general manager of Guotai Junan
Innovation Investment Co., Ltd. (ʮ̡), a company engaged in equity
investment, and he was responsible for investment overall management from February 2013 to
June 2015. He served as an executive director of Industrial Capital Management Co., Ltd. ( ጳ
ʮ̡), a wholly-owned private investment fund subsidiary of Industrial
Securities Co., Ltd., whose shares are listed on Shanghai Stock Exchange (stock code:
601377.SH), and he was responsible for overseeing the investment management from October
2007 to February 2013. He also served as a manager of marketing department of Dell China
(Ꮦဧ(ʕ਷)ʮ̡), a company engaged in computer hardware, and he was responsible for
marketing related works from September 2006 to May 2007.
Mr. Zhang received his bachelor’s degree in intercomputer communication from Shanghai
Tiedao University ( ɪऎ᚛༸ኪ৫) (currently known as Tongji University ( Ν᏶ɽኪ)) in the
PRC in July 1998. He received his master’s degree in business administration from Fudan
University ( ూ͇ɽኪ) in the PRC in June 2004. He also received his executive master of
business administration through part time learning from China Europe International Business
School ( ʕᆄ਷ყʈਠኪ৫) in the PRC in August 2018.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 274 –


--- page 285 ---
Mr. He Xiaocheng ( ൭ʃϓ), aged 43, has been a Supervisor of our Company since
December 2017. He is primarily responsible for supervising and providing independent advice
to our Board.
Mr. He joined our Group on December 5, 2007. He served as a manager of maintenance
service department of Zhongshan TCM, and was responsible for maintenance management
service from March 2003 to December 2009. Since August 2007, he has been a supervisor of
Zhongshan TCM, and is responsible for supervising the overall management. Then he served
as a leader of maintenance parts business management center of our Company from December
2007 to November 2016 and was promoted as a director of maintenance parts business
management center of our Company from December 2016 to September 2018, and he was
responsible for the overall management of the center. He has been a director of asset center of
our Company since October 2018, and he is responsible for asset management.
General
Save as disclosed in “– Supervisory Committee” in this section, each of our Supervisors
has confirmed that:
(1) he/she does not hold and has not held any other positions in our Company and any
other members of our Company as at the Latest Practicable Date;
(2) he/she does not hold and has not held any other directorships in public companies
the securities of which are listed on any securities market in Hong Kong or overseas
in the three years prior to the Latest Practicable Date and as at the Latest Practicable
Date; and
(3) he/she has not completed his education programs as disclosed in this section by way
of attendance of long distance learning or online courses.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 275 –


--- page 286 ---
SENIOR MANAGEMENT
Our senior management is responsible for the day-to-day management and operation of
business of our Company. The table below sets out certain information of the senior
management of our Company:
Name Age Position(s)
Date of
appointment
as Senior
Management
Date of
joining our
Company
Roles and
responsibilities
Relationship with
other Directors,
Supervisors or
senior
management
Mr. Hou
Zekuan
(ዣᄱ)
54 Chairman of the
Board
December 5,
2007
December 5,
2007
Responsible for the
overall
management and
Board related
work
Brother of Mr. Hou
Zebing and
cousin of Mr.
Qian Xiaoxuan
Mr. Hou
Zebing
(ዣж)
48 General manager
(chief executive)
November 1,
2010
December 5,
2007
Responsible for the
overall
management and
daily operation
Brother of Mr. Hou
and cousin of
Mr. Qian
Xiaoxuan
Mr. Qian
Xiaoxuan
(፺ወ৐)
49 Deputy general
manager
January 1,
2016
December 5,
2007
Responsible for the
management of
supply chain,
base, and other
related operations
Cousin of Mr. Hou
and Mr. Hou
Zebing
Ms. Ma Li
(৵ᘆ)
35 Secretary of the
Board
February 1,
2012
March 18,
2008
Responsible for
investor relations
management and
equity affairs
management,
corporate
governance
None
Mr. Zhou
Limin
(մл͏)
56 Deputy general
manager
December 5,
2007
December 5,
2007
Responsible for the
product
technology
research and
development
management
None
Mr. Y ang
Qingyuan
(เᅅʩ)
44 Deputy general
manager
September 27,
2017
January 1,
2010
Responsible for the
operations
support and
management
None
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 276 –


--- page 287 ---
Name Age Position(s)
Date of
appointment
as Senior
Management
Date of
joining our
Company
Roles and
responsibilities
Relationship with
other Directors,
Supervisors or
senior
management
Mr. Pan Fei
(ᆙി)
48 Chief financial
officer
April 25, 2016 April 25, 2016 Responsible for
financial
planning of our
Group, investor
relations and
providing support
to our Board
None
Mr. Hou Zekuan (ዣᄱ), see “– Board of Directors – Executive Directors” in this
section for details.
Mr. Hou Zebing (ዣж), see “– Board of Directors – Executive Directors” in this
section for details.
Mr. Qian Xiaoxuan ( ፺ወ৐), see “– Board of Directors – Executive Directors” in this
section for details.
Ms. Ma Li ( ৵ᘆ), see “– Board of Directors – Executive Directors” in this section for
details.
Mr. Zhou Limin ( մл͏), aged 56, has been a deputy general manager of our Company
since December 2007. He is primarily responsible for the product technology research and
development management.
Mr. Zhou joined our Group on December 5, 2007 and served as a sales manager of
Zhongshan TCM, and he was responsible for sales management from March 2006 to December
2007. He also served as a director of our Company from October 2012 to November 2016,
where he was responsible for product technology and research and development management.
Mr. Zhou has extensive experience in the manufacturing industry. Prior to joining our
Group, he served as a sales manager of Xi’an Tiexi Em Forklift Sales Co., Ltd. (ࡾ
ʮ̡), a company engaged in forklift sales and service, and he was responsible
for corporate service from February 2002 to March 2006. He also worked at Xi’an Aviation
Engine (Group) Co., Ltd. (೯ਗዚ(ණྠ)ʮ̡), a company engaged in aircraft
engine manufacturing, from December 1985 to December 2000.
Mr. Zhou received his college’s degree in mechanical design and manufacturing through
online education from Wuhan University of Technology (ဏଣʈɽኪ) in the PRC in July
2016.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 277 –


--- page 288 ---
Mr. Y ang Qingyuan ( เᅅʩ), aged 44, has been a deputy general manager of our
Company since September 2017. He is primarily responsible for the operations support and
management.
Mr. Y ang joined our Group on January 1, 2010 and served as a sales manager of certain
subsidiaries of the Company, including in (i) Zhongshan TCM from August 2004 to July 2010;
(ii) Guangzhou Xinze from August 2010 to June 2013; and (iii) Shenyang Tianshun from July
2013 to December 2014, where he was responsible for sales management. Mr. Y ang served as
a director of our Company from October 2012 to August 2016, where he was responsible for
operations support and management. He served as a director of sales management of our
Company from January 2010 to November 2016, where he was responsible for overall sales
management. Mr. Y ang was then promoted as a director of leasing department from December
2016 to September 2017, where he was responsible for leasing management. He also served as
a chairman of supervisory committee of our Company from November 2016 to September
2017, where he was responsible for presiding over the work of the Supervisory Committee,
supervising the Board and providing independent advice to the Board.
Mr. Y ang received his bachelor’s degree in financial management from Lanzhou
University of Finance and Economics ( ᚆψਠኪ৫) in the PRC in June 2002.
Mr. Pan Fei ( ᆙി), aged 48, has been our chief financial officer since September 2017.
He is primarily responsible for financial management.
Mr. Pan joined our Group on April 25, 2016 and served as a secretary to the Board from
April 2016 to September 2017, where he was responsible for corporate governance and
financing. Further, from November 2016 to March 2017, he served as both a secretary to the
Board and as a deputy general manager, primarily responsible for corporate governance and
financing.
Mr. Pan has extensive financial management experience. Prior to joining our Group, He
served in Guangdong Qide Education Service Co., Ltd. (ʮ̡), a
company engaged in study aboard consulting, from July 2010 to April 2016. He served in
Luxottica Tristar (Dongguan) Optical Co., Ltd. ( ௔Ⴥ૒̔ശ҃(୷)ʮ̡), a
company engaged in glasses manufacturing, from October 2007 to June 2010. He also served
as a manager of Deloitte Touche Tohmatsu CPA Ltd. (Guangzhou Branch) (ԫ
הan international accounting firm, and he was responsible for accounting works
from October 2000 to August 2007.
Mr. Pan received his bachelor’s degree in auditing from Sun Y at-sen University ( ʕʆɽ
ኪ) in the PRC in June 1997. He was qualified as a Certified Practicing Accountant from
Guangdong Institute of Certified Public Accountants in January 2009 and as a Certified Public
V aluer from Guangdong Appraisal Society (༟ପ൙П՘ึ) in March 2010.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 278 –


--- page 289 ---
General
Save as disclosed in “– Senior Management” in this section, each of our senior
management has confirmed that:
(1) he does not hold and has not held any other positions in our Company and any other
members of our Company as at the Latest Practicable Date;
(2) he does not hold and has not held any other directorships in public companies the
securities of which are listed on any securities market in Hong Kong or overseas in
the three years prior to the Latest Practicable Date and as at the Latest Practicable
Date; and
(3) he has not completed his education programs as disclosed in this section by way of
attendance of long distance learning or online courses.
JOINT COMPANY SECRETARIES
Ms. Ma Li ( ৵ᘆ), was appointed as a joint company secretary of our Company. See “–
Board of Directors - Executive Directors” in this section for details.
Ms. Tang Ka Y an (ؚ)was appointed as a joint company secretary of our Company.
Ms. Tang a senior manager of corporate services of Tricor Services Limited, a global
professional services provider specializing in integrated business, corporate and investor
services.
Ms. Tang has over 15 years of experience in the corporate secretarial field and has been
providing professional corporate services to Hong Kong listed companies as well as
multinational, private and offshore companies.
Ms. Tang is a Chartered Secretary, a Chartered Governance Professional and an associate
of both The Hong Kong Chartered Governance Institute and The Chartered Governance
Institute in the United Kingdom.
Ms. Tang obtained her Bachelor of business administration in accountancy from the City
University of Hong Kong and Master of Laws in Common Law from the Chinese University
of Hong Kong.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 279 –


--- page 290 ---
COMPLIANCE ADVISER
We have appointed Somerley Capital Limited as our compliance adviser pursuant to Rule
3A.19 of the Listing Rules. Pursuant to Rule 3A.23 of the Listing Rules, the compliance
adviser will advise us on the following circumstances:
 before the publication of any announcements, circulars or financial reports required
by regulatory authorities or applicable laws;
 where a transaction, which might be a notifiable or connected transaction under
Chapters 14 and 14A of the Listing Rules is contemplated, including share issues
and share repurchases;
 where we propose to use the proceeds of the Global Offering in a manner different
from that detailed in this prospectus or where our business activities, developments
or results deviate from any forecast, estimate or other information in this prospectus;
and
 where the Stock Exchange makes an inquiry of us regarding unusual price
movement and trading volume or other issues under Rule 13.10 of the Listing Rules.
The terms of the appointment shall commence on the Listing Date and end on the date
which we distribute our annual report of our financial results for first full the financial year
commencing after the Listing Date.
BOARD COMMITTEES
In accordance with the relevant PRC laws and regulations and the Corporate Governance
Code as set out in Appendix 14 to the Listing Rules (the “ Corporate Governance Code ”), the
Company has established four committees on the Board of Directors, including the Audit
Committee, the Remuneration Committee, the Nomination Committee and the Strategy
Committee.
Audit Committee
The Company has established the Audit Committee (effective from the Listing Date) with
written terms of reference in compliance with Rule 3.21 of the Listing Rules and paragraph C.4
and paragraph D.3 of Part 2 of the Corporate Governance Code. The Audit Committee consists
of three Directors, namely Mr. Wang Chuanbang ( ˮෂԞ), Dr. Fan Xia ( ᅾᒳ) and Mr. Zhu
Yingchun (݆ڎwith Mr. Wang Chuanbang ( ˮෂԞ) serving as the chairman. Mr. Wang
Chuanbang ( ˮෂԞ) holds the appropriate professional qualifications as required under Rules
3.10(2) and 3.21 of the Listing Rules. The primary duties of the Audit Committee include, but
not limited to, the following:
 proposing the appointment or change of external auditors to the Board, and
monitoring the independence of external auditors and evaluating their performance;
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 280 –


--- page 291 ---
 examining the financial information of our Company and reviewing financial reports
and statements of our Company;
 examining the financial reporting system, the risk management and internal control
system of our Company, overseeing their rationality, efficiency and implementation
and making recommendations to the Board; and
 dealing with other matters that are authorized by the Board.
Remuneration Committee
The Company has established the Remuneration Committee (effective from the Listing
Date) with written terms of reference in compliance with Rule 3.25 of the Listing Rules and
paragraph E.1 of Part 2 of the Corporate Governance Code. The Remuneration Committee
consists of three Directors, namely Dr. Fan Xia ( ᅾᒳ), Mr. Wang Chuanbang ( ˮෂԞ) and Mr.
Hou Zebing (ዣж), with Dr. Fan Xia ( ᅾᒳ) serving as the chairman. The primary duties of
the Remuneration Committee include, but not limited to, the following:
 advising the Board on the overall remuneration plan and structure of Directors,
Supervisors and senior management and the establishment of transparent formal
procedures for determining remuneration policy of our Company;
 examining the criteria of performance evaluation of Directors, Supervisors and the
senior management of our Company, conducting performance evaluation and
making recommendations to the Board;
 formulating individual remuneration plans for Directors, Supervisors and members
of the senior management in accordance with the terms of reference of the
importance of their positions, the time they spend on such positions as well as the
remuneration benchmarks for the relevant positions in the other comparable
companies; and
 dealing with other matters that are authorized by the Board, and if necessary,
engaging external experts to provide relevant independent services.
Nomination Committee
The Company has established the Nomination Committee (effective from the Listing
Date) with written terms of reference in compliance with paragraph B.3 of Part 2 of the
Corporate Governance Code. The Nomination Committee consists of three Directors, namely
Mr. Hou, Dr. Fan Xia ( ᅾᒳ) and Mr. Chiang Edward ( ᇸ၅༐), with Mr. Hou serving as the
chairman. The primary functions of the Nomination Committee include, but not limited to, the
following:
 conducting extensive search and providing to the Board suitable candidates for
Directors, general managers and other members of the senior management;
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 281 –


--- page 292 ---
 overseeing the implementation of Board diversity policy; taking into account
various factors when determining the composition of the Board, including, but not
limited to, gender, age, cultural and educational background, ethnicity, professional
experience, skills, knowledge and service tenure;
 examining the size and composition of the Board and its members in respect of their
skills, knowledge, experience and diversity at least once every year, and making
recommendations to the Board on any change in Board composition in accordance
with our Company’s strategies;
 researching and developing standards and procedures for the election of the Board
members, general managers and members of the senior management, and making
recommendations to the Board; and
 dealing with other matters that are authorized by the Board.
Strategy Committee
Our Company has established the Strategy Committee, which consists of Mr. Hou, Mr.
Hou Zebing (ዣж), Mr. Zhu Yingchun (݆ڎMr. Chiang Edward ( ᇸ၅༐) and Mr. Shu
Xiaowu (؛and is chaired by Mr. Hou. The main duties of the Strategy Committee
include but are not limited to:
 researching and recommending on long-term development strategy of our Company;
 researching and recommending on significant investment and financing plans of our
Company;
 researching and recommending on major capital operation and asset management
project, and annual financial budget plan of our Company;
 researching and recommending on significant matters relating to the development of
our Company;
 monitoring the above matters and assessing, examining and recommending on
significant changes; and
 performing such other duties determined by the Board.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 282 –


--- page 293 ---
CORPORATE GOVERNANCE
Our Company is committed to achieving high standards of corporate governance with a
view to safeguarding the interests of our Shareholders. To accomplish this, our Company
intends to comply with the corporate governance requirements under the Corporate
Governance Code after the Listing.
BOARD DIVERSITY
We have adopted a board diversity policy (the “ Board Diversity Policy ”) to enhance the
effectiveness of our Board and to maintain a high standard of corporate governance. Pursuant
to the Board Diversity Policy, in reviewing and assessing suitable candidates to serve as a
Director of the Company, the Nomination Committee will consider a range of diversity
perspectives with reference to the Company’s business model and specific needs, including but
not limited to gender, age, language, cultural and educational background, professional
qualifications, skills, knowledge, industry and regional experience and/or length of service.
Our Directors have a balanced mixed of knowledge and skills, including but not limited
to overall business management, finance and accounting and research and development. They
obtained degrees in various majors including mechanical, economics and accounting etc..
Furthermore, our Board has a relatively wide range of ages, ranging from 35 years old to 56
years old and consists of seven male members and two female members.
The Board of Directors is of the view that the Board satisfies the Board Diversity Policy.
The Nomination Committee is responsible for reviewing the diversity of the Board, reviewing
the Board Diversity Policy from time to time, developing and reviewing measurable objectives
for implementing the Board Diversity Policy, and monitoring the progress on achieving these
measurable objectives in order to ensure that the policy remains effective. The Company will
(i) disclose the biographical details of each Director and (ii) report on the implementation of
the Board Diversity Policy (including whether we have achieved board diversity) in its annual
corporate governance report. In particular, our Company will take opportunities to increase the
proportion of female members of the Board when selecting and recommending suitable
candidates for Board appointments to help enhance gender diversity in accordance with
stakeholder expectations and recommended best practices. Our Company also intends to
promote gender diversity when recruiting staff at the mid to senior level so that our Company
will have a pipeline of female senior management and potential successors to the Board. We
believe that such merit-based selection process with reference to our diversity policy and the
nature of our business will be in the best interests of our Company and our Shareholders as a
whole.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 283 –


--- page 294 ---
COMPENSATION OF DIRECTORS, SUPERVISORS AND FIVE HIGHEST PAID
INDIVIDUALS
Our Company offers executive Directors, Supervisors and members of our senior
management, who are also employees of our Company, emolument in the form of salaries,
allowances, discretionary bonus and benefits in kind (if applicable). Our independent
non-executive Directors receive emolument based on their responsibilities (including being
members or the chair of our board committees). We adopt a market and incentive-based
employee emolument structure and implement a multi-layered evaluation system which
focuses on performance and management goals.
The aggregate amount of remuneration paid to our Directors and Supervisors for the three
financial years ended December 31, 2020, 2021 and 2022 and four months ended April 30,
2023 were RMB3.2 million, RMB4.4 million, RMB3.8 million and RMB1.4 million,
respectively.
It is estimated that remuneration and benefits in kind (excluding any possible payment of
discretionary bonus) equivalent to approximately RMB4.5 million in aggregate will be paid
and granted to our Directors and Supervisors by us in respect of the financial year ending
December 31, 2023 under arrangements in force at the date of this prospectus.
For the financial years ended December 31, 2020, 2021 and 2022 and four months ended
April 30, 2023, the aggregate amount of emolument paid to the five highest paid individuals
of our Company (excluding our Directors and Supervisors) were RMB5.5 million, RMB4.9
million, RMB5.5 million and RMB1.7 million, respectively.
During the Track Record Period, no remuneration was paid to, or receivable by, our
Directors, Supervisors or the five highest paid individuals of our Group as an inducement to
join or upon joining our Company or as a compensation for loss of office in the Track Record
Period. Further, none of our Directors had waived any emolument during the same period.
Except as disclosed above, no other payments have been paid, or are payable, by our
Company to our Directors, Supervisors or the five highest paid individuals of our Company
during the Track Record Period.
For further details, please see Notes 8 and 9 of the Accountants’ Report set out in
Appendix I and “Statutory and General Information” set out in Appendix VI to this prospectus.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 284 –


--- page 295 ---
OUR CONTROLLING SHAREHOLDERS
As of the Latest Practicable Date, Mr. Hou was entitled to exercise voting rights attached
to the 13,230,171 Shares directly held by him representing approximately 15.76% of the total
issued share capital of our Company. Mr. Hou Zebing (ዣж), brother of Mr. Hou, was
entitled to exercise voting rights attached to the Shares representing approximately 24.39% of
the total issued share capital of our Company through (i) 12,702,820 Shares directly held by
him, representing approximately 15.13% of the total issued share capital of our Company, and
(ii) 7,775,054 Shares held by Guangzhou Daze of which he is a general partner, representing
approximately 9.26% of the total issued share capital of our Company. Upon completion of the
Subdivision and the Global Offering (assuming the Over-allotment Option is not exercised),
Mr. Hou will be entitled to exercise voting rights attached to the 52,920,684 Shares directly
held by him representing approximately 15.21% of the total issued share capital of our
Company and Mr. Hou Zebing was entitled to exercise voting rights attached to the Shares
representing approximately 23.54% of the total issued share capital of our Company through
(i) 50,811,280 Shares directly held by him, representing approximately 14.60% of the total
issued share capital of our Company, and (ii) 31,100,216 Shares held by Guangzhou Daze of
which he is a general partner, representing approximately 8.94% of the total issued share
capital of our Company.
Mr. Hou and Mr. Hou Zebing entered into an acting-in-concert agreement on May 18,
2020 with a supplemental agreement dated March 24, 2023 to acknowledge and confirm their
acting-in-concert relationship in our Company, pursuant to which Mr. Hou and Mr. Hou Zebing
have agreed to continue to act in concert and reach consensus on any matter considered at
board meetings and general meetings of our Company.
Therefore, Mr. Hou, Mr. Hou Zebing and Guangzhou Daze collectively are able to
exercise approximately 38.74% voting rights in our Company and will be considered as the
Controlling Shareholders of our Company upon Listing.
INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS
The Controlling Shareholders confirm that as of the Latest Practicable Date, they did not
have any interest in a business, apart from the business of our Group, which competes or is
likely to compete, directly or indirectly, with our business, and requires disclosure under Rule
8.10 of the Listing Rules.
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 close
associates after the Listing.
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
– 285 –


--- page 296 ---
Management Independence
Our Board comprises four executive Directors, two non-executive Directors and three
independent non-executive Directors. Each of our Directors is aware of his or her fiduciary
duties as a Director which require, among other things, that he or she must act for the benefit
of and in the best interests of our Company and not allow any conflict between his or her duties
as a Director and his or her personal interests. Further, we believe our independent
non-executive Directors will bring independent judgment to the decision-making process of
our Board. For further details, see “– Corporate Governance Measures” in this section.
Based on the above, our Directors are satisfied that our Board as a whole together with
our senior management team is able to perform the managerial role in our Group
independently.
Operational Independence
We are able to make all decisions on, and to carry out, our own business operations
independently. Our Group holds the licenses and qualifications necessary to carry out our
current business, and has sufficient capital, facilities, technology and employees to operate our
business independently from our Controlling Shareholders. We have access to third parties
independently from our Controlling Shareholders for sources of suppliers and customers.
Based on the above, our Directors are satisfied that we are able to function and operate
independently from our Controlling Shareholders and their close associates.
Financial Independence
We have established our own finance department with a team of financial staff, who are
responsible for financial control, accounting, reporting, group credit and internal control
functions of our Company, independent from our Controlling Shareholders. We are able to
make financial decisions independently and our Controlling Shareholders do not intervene with
our financial matters. We have also established an independent audit system, a standardized
financial and accounting system and a complete financial management system. In addition, we
are capable of obtaining financing from third parties without relying on any guarantee or
security provided by our Controlling Shareholders or their close associates. During the Track
Record Period and as of the Latest Practicable Date, there were no loans, advances and
balances due to and from our Controlling Shareholders.
Based on the above, our Directors are of the view that they and our senior management
are capable of carrying on our business independently of, and do not place undue reliance on
our Controlling Shareholders and their close associates.
DIRECTORS’ INTEREST IN COMPETING BUSINESS
As of the Latest Practicable Date, none of our Directors had any interest in any business
which competes or is likely to compete, either directly or indirectly, with our business, that
requires disclosure under Rule 8.10 of the Listing Rules.
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
– 286 –


--- page 297 ---
CORPORATE GOVERNANCE MEASURES
Our Directors recognize the importance of good corporate governance in protecting our
Shareholders’ interests. We have adopted the following measures to promote good corporate
governance and to avoid potential conflict of interests between our Group and our Controlling
Shareholders:
(a) under the Articles of Association, where a Shareholders’ meeting is to be held for
considering proposed transactions in which any of our Controlling Shareholders or
any of their close associates has a material interest, the Controlling Shareholders or
their close associates will not vote on the relevant resolutions;
(b) our Company has established internal control mechanisms to identify connected
transactions. Upon the Listing, if our Company enters into connected transactions
with our Controlling Shareholders or any of their associates, our Company will
comply with the applicable Listing Rules;
(c) our independent non-executive Directors will review, on an annual basis, whether
there are any conflict of interests between our Group and our Controlling
Shareholders (the “ Annual Review ”) and provide advice to protect the interests of
our minority Shareholders;
(d) our Controlling Shareholders will undertake to provide all information necessary,
including all relevant financial, operational and market information and any other
necessary information as required by our independent non-executive Directors for
the Annual Review;
(e) our Company will disclose decisions on matters reviewed by the independent
non-executive Directors either in our annual reports or by way of announcements as
required by the Listing Rules;
(f) where our Directors reasonably request the advice of independent professionals such
as financial advisers, the appointment of such independent professionals will be
made at our Company’s expenses; and
(g) we have appointed Somerley Capital Limited as our compliance adviser to provide
advice and guidance to us in respect of compliance with the applicable laws and
regulations in Hong Kong as well as the Listing Rules, including various
requirements relating to corporate governance during its term of appointment.
Based on the above, our Directors are satisfied that sufficient corporate governance
measures have been put in place to manage conflict of interest that may arise between our
Group and our Controlling Shareholders, and to protect our minority Shareholders’ interests
after the Listing.
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
– 287 –


--- page 298 ---
So far as our Directors are aware, immediately following the completion of the
Subdivision and the Global Offering and without taking into account any H Shares which may
be issued pursuant to the exercise of the Over-allotment Option, the following persons will
have an interest or short position in the Shares or the underlying Shares which would fall to
be disclosed to our Company and the Hong Kong Stock Exchange under the provisions of
Divisions 2 and 3 of Part XV of the SFO or, will be, directly or indirectly, interested in 10%
or more of the nominal value of any class of share capital carrying rights to vote in all
circumstances at general meetings of our Company:
Name of Shareholder
Capacity/nature of
interest
Number and
type of Shares
to be held after
the Subdivision
and the Global
Offering
Approximate
percentage of
shareholding in the
relevant type of
Shares after
the Subdivision
and the Global
Offering (1)
Approximate
percentage of
shareholding in the
total share capital of
our Company after
the Subdivision
and the Global
Offering (2)
(%) (%)
Mr. Hou (3) Beneficial owner 15,876,204
H Shares
7.68 38.74
37,044,480
Unlisted Shares
26.19
Interest held jointly
with another person
46,669,696
H Shares
22.59
88,162,484
Unlisted Shares
62.34
Mr. Hou Zebing
(ዣж)(3)
Beneficial owner 15,243,384
H Shares
7.38 38.74
35,567,896
Unlisted Shares
25.15
Interest in controlled
corporations
15,550,108
H Shares
7.53
15,550,108
Unlisted Shares
11.00
Interest held jointly
with another person
46,669,696
H Shares
22.59
88,162,484
Unlisted Shares
62.34
Guangzhou Daze Beneficial owner 15,550,108
H Shares
7.53 8.94
15,550,108
Unlisted Shares
11.00
SUBSTANTIAL SHAREHOLDERS
– 288 –


--- page 299 ---
Name of Shareholder
Capacity/nature of
interest
Number and
type of Shares
to be held after
the Subdivision
and the Global
Offering
Approximate
percentage of
shareholding in the
relevant type of
Shares after
the Subdivision
and the Global
Offering (1)
Approximate
percentage of
shareholding in the
total share capital of
our Company after
the Subdivision
and the Global
Offering (2)
(%) (%)
Suzhou Eastern Bell II
Investment Center
(Limited Partnership)
(ᘽψᙒཻ௴ุɚ໮ҳ༟
ʕː(Υྫ))
(“Eastern Bell II ”)
Beneficial owner 55,541,652
H Shares
26.88 15.96
Shanghai Dingxiao
Enterprise Management
Consulting Center
(Limited Partnership)
(ɪऎཻጽΆุ၍ଣፔ༔
ʕː(Υྫ))
(“Shanghai
Dingxiao ”)
(4)
Interest in controlled
corporations
55,541,652
H Shares
26.88 15.96
Ningbo Dingji V enture
Capital Partnership
Enterprise (Limited
Partnership) (ཻණ
௴ุҳ༟ΥྫΆุ(ࠢ
Υྫ)) (“ Ningbo
Dingji ”)
Interest in controlled
corporations
55,541,652
H Shares
26.88 15.96
Mr. Yin Junping
(̻)
(4)
Interest in controlled
corporations
55,541,652
H Shares
26.88 15.96
Shanghai Dingman
Enterprise Management
Co., Ltd. ( ɪऎཻᇶΆุ
ʮ̡)
(“Shanghai
Dingman ”)
(4)
Interest in controlled
corporations
64,464,752
H Shares
31.20 18.52
Mr. Y an Li ( ᘌɢ)(4) Interest in controlled
corporations
64,464,752
H Shares
31.20 18.52
SUBSTANTIAL SHAREHOLDERS
– 289 –


--- page 300 ---
Name of Shareholder
Capacity/nature of
interest
Number and
type of Shares
to be held after
the Subdivision
and the Global
Offering
Approximate
percentage of
shareholding in the
relevant type of
Shares after
the Subdivision
and the Global
Offering (1)
Approximate
percentage of
shareholding in the
total share capital of
our Company after
the Subdivision
and the Global
Offering (2)
(%) (%)
Shenzhen Xinyu Equity
Investment Enterprise
(Limited Partnership)
(ᛆҳ༟Άุ
(Υྫ)) (“ Shenzhen
Xinyu ”)
Beneficial owner 18,555,976
H Shares
8.98 6.48
4,000,000
Unlisted Shares
2.83
Mr. Zhang Gaozhao ( ੵ৷
๫)
(5)
Interest in controlled
corporations
18,555,976
H Shares
8.98 6.48
4,000,000
Unlisted Shares
2.83
Shenzhen Dachen
Chuanglian Equity
Investment Fund
Partnership (Limited
Partnership) ( ଉέ̹༺
Υ
ྫΆุ(Υྫ))
(“Dachen Chuanglian ”)
Beneficial owner 21,440,924
Unlisted Shares
15.16 6.16
Shenzhen Dachen
Chuangtong Equity
Investment Enterprise
(Limited Partnership)
(ᛆҳ
༟Άุ(Υྫ))
(“Dachen
Chuangtong ”)
Beneficial owner 19,471,952
Unlisted Shares
13.77 5.60
Shenzhen Dachen Caizhi
V enture Capital
Management Co., Ltd
(ଉέ̹༺ોৌ౽௴ุҳ
ʮ̡)
(“Dachen Caizhi ”)
(6)
Interest in controlled
corporations
40,912,876
Unlisted Shares
28.93 11.76
SUBSTANTIAL SHAREHOLDERS
– 290 –


--- page 301 ---
Name of Shareholder
Capacity/nature of
interest
Number and
type of Shares
to be held after
the Subdivision
and the Global
Offering
Approximate
percentage of
shareholding in the
relevant type of
Shares after
the Subdivision
and the Global
Offering (1)
Approximate
percentage of
shareholding in the
total share capital of
our Company after
the Subdivision
and the Global
Offering (2)
(%) (%)
Hunan Dianguang Media
Co., Ltd. (ཥᄿෂద
ʮ̡)( “ Hunan
Dianguang ”)(6)
Interest in controlled
corporations
40,912,876
Unlisted Shares
28.93 11.76
Notes:
(1) Upon completion of the Subdivision and the Global Offering and conversion of Unlisted Shares into H Shares,
our Company would have Unlisted Shares and H Shares. Unlisted Shares and H Shares are regarded as two
different types of Shares. However, both Unlisted Shares and H Shares are ordinary shares in the share capital
of our Company are regarded as the same class of Shares. The calculation is based on the total number of
206,594,736 H Shares and 141,428,080 Unlisted Shares in issue immediately after completion of the
Subdivision and the Global Offering (without taking into account the H Shares which may be issued upon the
exercise of the Over-allotment Option).
(2) The calculation is based on the total number of 348,022,816 Shares in issue immediately after completion of
the Subdivision and the Global Offering (without taking into account the H Shares which may be issued upon
the exercise of the Over-allotment Option).
(3) Mr. Hou Zebing is the general partner of Guangzhou Daze. As such, Mr. Hou Zebing is deemed to be interested
in the 31,100,216 Shares held by Guangzhou Daze under SFO. Mr. Hou and Mr. Hou Zebing entered into an
acting-in-concert agreement on May 18, 2020 with a supplemental agreement dated March 24, 2023 to
acknowledge and confirm their acting-in-concert relationship in our Company, pursuant to which Mr. Hou and
Mr. Hou Zebing have agreed to continue to act in concert and reach consensus on any matter considered at
board meetings and general meetings of our Company.
(4) Eastern Bell II is a limited partnership established in the PRC. As of Latest Practicable Date, the general
partner of Eastern Bell II was Shanghai Dingxiao, whose general partner was Shanghai Dingman, which in
turn, the equity interest of Shanghai Dingman was owned by Mr. Y an Li as to 99%. Ningbo Dingji was a
limited partner of Shanghai Dingxiao and owned 60.83% partnership interest of Shanghai Dingxiao. Shanghai
Dingman was the general partner of Ningbo Dingji. Mr. Yin Junping was a limited partner of Ningbo Dingji
and held 36% partnership interest of Ningbo Dingji. As such, each of Shanghai Dingxiao, Ningbo Dingji, and
Mr. Yin Junping is deemed to be interested in the 55,541,652 Shares held by Eastern Bell II.
Suzhou Eastern Bell III Investment Center (Limited Partnership) ( ᘽψᙒཻɧ໮௴ุҳ༟ʕː(Υྫ))
(“Eastern Bell III ”) is a limited partnership established in the PRC. As of Latest Practicable Date, the general
partner of Eastern Bell III was Shanghai Dingxiao Enterprise Management Consulting Center (Limited
Partnership) ( ɪऎཻጽΆุ၍ଣፔ༔ʕː(Υྫ)) (formerly known as Jiaxing Dingxiao V enture Capital
Partnership (Limited Partnership) ( ྗጳཻጽ௴ุҳ༟ΥྫΆุ(Υྫ))), whose general partner was
Shanghai Dingman.
Shanghai Dingmin Investment Management Center (Limited Partnership) ( ɪऎཻ͏ҳ༟၍ଣʕː(Υྫ))
(“Shanghai Dingmin ”) is a limited partnership established in the PRC. As of Latest Practicable Date, Ningbo
Zhongding Lilong Investment Management Center (Limited Partnership) (ᙒཻɢᗬҳ༟၍ଣʕː(Υ
SUBSTANTIAL SHAREHOLDERS
– 291 –


--- page 302 ---
ྫ)) (“ Zhongding Lilong ”) was a limited partner of Shanghai Dingmin and held 99% partnership interest of
Shanghai Dingmin. The general partner of Zhongding Lilong was Ningbo Dingpu V enture Capital Partnership
(Limited Partnership) (ཻऌ௴ุҳ༟ΥྫΆุ(Υྫ)), whose general partner was Shanghai
Dingman.
As such, each of Mr. Y an Li and Shanghai Dingman is deemed to be interested in (i) 5,541,652 Shares held
by Eastern Bell II, (ii) 8,000,000 Shares held by Eastern Bell III and (iii) 923,100 Shares held by Shanghai
Dingmin.
(5) Shenzhen Xinyu is a limited partnership established in the PRC. As of the Latest Practicable Date, the general
partner of Shenzhen Xinyu was Mr. Zhang Gaozhao ( ੵ৷๫). As such, Mr. Zhang Gaozhao is deemed to be
interested in 22,555,976 Shares held by Shenzhen Xinyu.
(6) Each of Dachen Chuanglian and Dachen Chuangtong is a limited partnership established in the PRC. As of the
Latest Practicable Date, Dachen Caizhi was the general partner of each of Dachen Chuanglian and Dachen
Chuangtong. Dachen Caizhi was owned as to 55% equity interest by Hunan Dianguang, a company listed
Shenzhen Stock Exchange (stock code: 000917.SZ). As such, each of Dachen Caizhi and Hunan Dianguang is
deemed interested (i) 21,440,924 Shares held by Dachen Chuanglian and (ii) 19,471,952 Shares held by
Dachen Chuangtong.
Save as disclosed herein, our Directors are not aware of any persons who will,
immediately following completion of the Subdivision and the Global Offering (assuming the
Over-allotment Option is not exercised), without taking into account the Offer Shares that may
be taken up under the Global Offering, have interests or short positions in Shares or underlying
Shares which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV
of the SFO or, will be, directly or indirectly, interested in 10% or more of the nominal value
of any class of share capital carrying rights to vote in all circumstances at general meetings of
our Company.
SUBSTANTIAL SHAREHOLDERS
– 292 –


--- page 303 ---
This section presents certain information regarding our share capital prior to and upon the
completion of the Subdivision and the Global Offering.
BEFORE THE GLOBAL OFFERING
As of the Latest Practicable Date, the registered share capital of our Company was
RMB83,971,704 comprising 83,971,704 Unlisted Shares with a nominal value of RMB1.00
each.
UPON COMPLETION OF THE GLOBAL OFFERING
Immediately upon completion of the Subdivision and the Global Offering, 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
percentage of
the total issued
share capital
(%)
Unlisted Shares in issue 141,428,080 40.64
H Shares to be converted from
Unlisted Shares (note) 194,458,736 55.88
H Shares to be issued pursuant to
the Global Offering 12,136,000 3.49
Total 348,022,816 100
Immediately upon completion of the Subdivision and the Global Offering, 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
percentage of
the total issued
share capital
(%)
Unlisted Shares in issue 141,428,080 40.43
H Shares to be converted from
Unlisted Shares (note) 194,458,736 55.58
H Shares to be issued pursuant to the
Global Offering 13,956,400 3.99
Total 349,843,216 100
Note: For details of the identities of the Shareholders whose Shares will be converted into H Shares upon Listing,
see “History, Development and Corporate Structure – Public Float” in this prospectus.
SHARE CAPITAL
– 293 –


--- page 304 ---
SHARE CLASSES
Upon completion of the Subdivision and the Global Offering and conversion of
194,458,736 Unlisted Shares (after Subdivision) into H Shares, our Company would have
Unlisted Shares and H Shares. The Unlisted Shares which are currently not listed or traded on
any stock exchange or authorized trading facility. Both Unlisted Shares and H Shares are
ordinary shares in the share capital of our Company and are regarded as the same classes of
Shares. Apart from certain qualified domestic institutional investors in the PRC, certain
qualified PRC investors under the Shanghai-Hong Kong Stock Connect and the Shenzhen-
Hong Kong Stock Connect, and other persons who are entitled to hold our H Shares pursuant
to relevant PRC laws and regulations or upon approvals of any competent authorities, H Shares
generally cannot be subscribed by or traded among legal and natural persons of the PRC.
Unlisted Shares and H Shares 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. All dividends in respect of the H Shares are to be paid by us
in Hong Kong dollars or in the form of H Shares.
CONVERSION OF OUR UNLISTED SHARES INTO H SHARES
Upon completion of the Global Offering, our Company will have two types of ordinary
Shares, namely Unlisted Shares and H Shares.
According to the regulations by the securities regulatory authorities of the State Council
and our Articles of Association, the Unlisted Shares may be converted into H Shares, and such
converted Shares may be listed and traded on an overseas stock exchange provided that the
conversion, listing and trading of such converted Shares have been filed by the securities
regulatory authorities of the State Council. In addition, such conversion, trading and listing
shall complete any requisite internal approval process and in all respects comply with the
regulations prescribed by the securities regulatory authorities of the State Council and the
regulations, requirements and procedures prescribed by the relevant overseas stock exchange.
If any of the Unlisted Shares are to be converted, listed and traded as H Shares on the
Stock Exchange, such conversion, listing and trading will need the approval of the relevant
PRC regulatory authorities, including the CSRC, and the approval of the Stock Exchange.
Based on the procedures for the conversion of Unlisted Shares into H Shares as described
below, we may apply for the listing of all or any portion of the 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 listing on the
Stock Exchange is ordinarily considered by the Stock Exchange to be a purely administrative
matter, it does not require such prior application for listing at the time of our listing in Hong
Kong. Class shareholder voting is not required for the conversion of such Shares or the listing
and trading of such converted Shares on an overseas 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 our Shareholders and the public of any
proposed conversion.
SHARE CAPITAL
– 294 –


--- page 305 ---
After all the requisite approvals have been obtained, the following procedure will need to
be completed in order to effect the conversion: the relevant Unlisted Shares will be withdrawn
from the Unlisted Shares 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 conditional on (a) our H Share Registrar lodging
with the Hong Kong 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 Hong Kong Stock Exchange in compliance
with the Listing Rules, the General Rules of CCASS and the CCASS 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.
LOCK-UP PERIODS
In accordance with the PRC Company Law, the shares issued prior to any public offering
of shares by a company cannot be transferred within one year from the date on which such
publicly offered shares are listed and traded on the relevant stock exchange. As such, the
Shares issued by our Company prior to the issue of H Shares will be subject to such statutory
restriction on transfer within a period of one year from the Listing Date.
Our Directors, Supervisors and members of the senior management of our Company shall
declare their shareholdings in our Company and any changes in their shareholdings. Shares
transferred by our Directors, Supervisors and members of the senior management each year
during their term of office shall not exceed 25% of their total respective shareholdings in our
Company. The Shares that the aforementioned persons held in our Company cannot be
transferred within one year from the date on which the shares are listed and traded, nor within
half a year after they leave their positions in our Company. The Articles of Association may
contain other restrictions on the transfer of the Shares held by our Directors, Supervisors and
members of senior management of our Company.
REGISTRATION OF SHARES NOT LISTED ON THE OVERSEAS STOCK
EXCHANGE
According to the Notice of Centralized Registration and Deposit of Non-overseas Listed
Shares of Companies Listed on an Overseas Stock Exchange (ྤ̮ɪ̹
) issued by the CSRC, 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 within 15 business days upon
the Listing and provide a written report to the CSRC regarding the centralized registration and
deposit of our Shares that are not listed on the overseas stock exchange as well as the offering
and listing of our H Shares.
SHARE CAPITAL
– 295 –


--- page 306 ---
SHAREHOLDERS’ GENERAL MEETING
Please see the sections headed “Appendix IV – Summary of Principal Legal and
Regulatory Provisions – The PRC Company Law and the Trial Administrative Measures –
Shareholders’ General Meetings” and “Appendix V – Summary of Articles of Association –
Shareholders and Shareholders’ General Meeting” to this prospectus for details of
circumstances under which our general Shareholders’ meeting is required.
SHARE CAPITAL
– 296 –


--- page 307 ---
THE CORNERSTONE PLACING
We have entered into a cornerstone investment agreement (the “ Cornerstone Investment
Agreement ”) with the cornerstone investor set out below (the “ Cornerstone Investor ”),
pursuant to which the Cornerstone Investor has agreed to, subject to certain conditions,
subscribe at the Offer Price for a certain number of Offer Shares that may be purchased for an
aggregate amount of RMB100.00 million (approximately HK$109.00 million) (the
“Cornerstone Placing ”).
Assuming an Offer Price of HK$14.18, being the low-end of the Offer Price range set out
in this Prospectus, the total number of Offer Shares to be subscribed by the Cornerstone
Investor would be 7,687,200 Offer Shares, representing approximately (i) 63.34% of the H
Shares offered pursuant to the Global Offering (assuming that the Over-allotment Option is not
exercised), (ii) 2.21% of our total issued share capital immediately upon completion of the
Global Offering (assuming the Over-allotment Option is not exercised); and (iii) 2.20% of our
total issued share capital immediately upon completion of the Global Offering and the full
exercise of the Over-allotment Option.
Assuming an Offer Price of HK$15.18, being the mid-point of the Offer Price range set
out in this Prospectus, the total number of Offer Shares to be subscribed by the Cornerstone
Investor would be 7,180,800 Offer Shares, representing approximately (i) 59.17% of the H
Shares offered pursuant to the Global Offering (assuming that the Over-allotment Option is not
exercised), (ii) 2.06% of our total issued share capital immediately upon completion of the
Global Offering (assuming the Over-allotment Option is not exercised); and (iii) 2.05% of our
total issued share capital immediately upon completion of the Global Offering and the full
exercise of the Over-allotment Option.
Assuming an Offer Price of HK$16.18, being the high-end of the Offer Price range set out
in this Prospectus, the total number of Offer Shares to be subscribed by the Cornerstone
Investor would be 6,737,000 Offer Shares, representing approximately (i) 55.51% of the H
Shares offered pursuant to the Global Offering (assuming that the Over-allotment Option is not
exercised), (ii) 1.94% of our total issued share capital immediately upon completion of the
Global Offering (assuming the Over-allotment Option is not exercised); and (iii) 1.93% of our
total issued share capital immediately upon completion of the Global Offering and the full
exercise of the Over-allotment Option.
Our Company is of the view that the Cornerstone Placing will help to raise the profile of
our Company and to signify that such investors have confidence in our business and prospects.
Our Company became acquainted with the Cornerstone Investor in its ordinary course of
operation through the business network of our Group and executive Directors.
CORNERSTONE PLACING
– 297 –


--- page 308 ---
To the best knowledge of our Company, the Cornerstone Investor (i) is an Independent
Third Party and is not our connected person (as defined in the Listing Rules); (ii) the
Cornerstone Investor is not accustomed to taking instructions from our Company, the
Directors, the Supervisors, chief executive, our Controlling Shareholders, substantial
shareholders, existing Shareholders or any of their respective subsidiaries or their respective
close associates in relation to the acquisition, disposal, voting or other disposition of the Offer
Shares; (iii) none of the subscription of the relevant Offer Shares by the Cornerstone Investor
is financed by our Company, the Directors, chief executive, our Controlling Shareholders,
substantial shareholders, existing Shareholders or any of their respective subsidiaries or their
respective close associates; and (iv) the Cornerstone Investor will be utilizing its proprietary
funding or the proprietary funding of the funds under its management, as appropriate, as its
source of funding for the subscription of the Offer Shares. The Cornerstone Investor has
confirmed that all necessary approvals have been obtained with respect to the Cornerstone
Placing and that no specific approval from its shareholders is required for the cornerstone
investment.
The Cornerstone Placing will form part of the International Offering and the Cornerstone
Investor will not subscribe for any Offer Shares under the Global Offering (other than pursuant
to the Cornerstone Investment Agreement). The Offer Shares to be subscribed by the
Cornerstone Investor will rank pari passu in all respect with the fully paid Shares in issue and
will be counted towards the public float of our Company under Rule 8.08 of the Listing Rules.
Immediately following the completion of the Global Offering, the Cornerstone Investor will
not become a substantial shareholder of the Company, and the Cornerstone Investor will not
have any Board representation in our Company. Other than a guaranteed allocation of the
relevant Offer Shares at the final Offer Price, the Cornerstone Investor does not have any
preferential rights in the Cornerstone Investment Agreement compared with other public
Shareholders. As confirmed by the Cornerstone Investor, its subscription under the Cornerstone
Placing would be financed by its own internal resources. There are no side arrangements
between our Company and the Cornerstone Investor or any benefit, direct or indirect, conferred
on the Cornerstone Investor by virtue of or in relation to the Cornerstone Placing.
The total number of Offer Shares to be subscribed by the Cornerstone Investor may be
affected by reallocation of the Offer Shares between the International Offering and the Hong
Kong Public Offering in the event of over-subscription under the Hong Kong Public Offering
as described in the paragraph headed “Structure of the Global Offering – The Hong Kong
Public Offering – Reallocation and Clawback” in this Prospectus. The number of Offer Shares
to be acquired by the Cornerstone Investor may be reduced on a pro rata basis in accordance
with the terms of the Cornerstone Investment Agreement to satisfy the shortfall, after taking
into account the requirements under Appendix 6 to the Listing Rules as well as the discretion
of the Sole Global Coordinator and the Sole Overall Coordinator (for itself and on behalf of
the International Underwriters) to exercise the Over-allotment Option.
CORNERSTONE PLACING
– 298 –


--- page 309 ---
Details of the actual number of Offer Shares to be allocated to the Cornerstone Investor
will be disclosed in the allotment results announcement of our Company to be published on or
around November 9, 2023. There will be no delayed delivery or deferred settlement of Offer
Shares to be subscribed by the Cornerstone Investor pursuant to the Cornerstone Investment
Agreement and the payment for the Offer Shares to be subscribed by the Cornerstone Investor
will be settled on or before the Listing.
OUR CORNERSTONE INVESTOR
Set out below in the aggregate number of Offer Shares, and the corresponding percentages
to the Offer Shares and our Company’s total issued share capital under the Cornerstone
Placing:
Based on the Offer Price of HK$14.18 (being the low-end of the Offer Price range)
Approximately % of total
number of Offer Shares
Approximate % of H Shares
in issue immediately
following the completion of
Global Offering
Approximately % of total
Shares in issue immediately
following the completion of
Global Offering
Based on the Offer
Price of:
Investment
Amount
Number of
Offer Shares
(rounded
down to
nearest whole
board lot
of 200
H Shares)
Assuming the
Over-allotment
Option is
not exercised
Assuming the
Over-allotment
Option is
fully exercised
Assuming the
Over-allotment
Option is
not exercised
Assuming the
Over-allotment
Option is
fully exercised
Assuming the
Over-allotment
Option is
not exercised
Assuming the
Over-allotment
Option is
fully Exercised
(RMB’000)
LIUGONG
MACHINERY
HONGKONG CO.,
LIMITED (ʈዚ૛
ʮ̡)
(“Liugong
Machinery ”) 100,000 7,687,200 63.34% 55.08% 3.72% 3.69% 2.21% 2.20%
Total 100,000 7,687,200 63.34% 55.08% 3.72% 3.69% 2.21% 2.20%
CORNERSTONE PLACING
– 299 –


--- page 310 ---
Based on the Offer Price of HK$15.18 (being the mid-point of the Offer Price range)
Approximately % of total
number of Offer Shares
Approximate % of H Shares
in issue immediately
following the completion of
Global Offering
Approximately % of total
Shares in issue immediately
following the completion of
Global Offering
Based on the Offer
Price of:
Investment
Amount
Number of
Offer Shares
(rounded
down to
nearest whole
board lot
of 200
H Shares)
Assuming the
Over-allotment
Option is
not exercised
Assuming the
Over-allotment
Option is
fully exercised
Assuming the
Over-allotment
Option is
not exercised
Assuming the
Over-allotment
Option is
fully exercised
Assuming the
Over-allotment
Option is
not exercised
Assuming the
Over-allotment
Option is
fully Exercised
Liugong Machinery 100,000 7,180,800 59.17% 51.45% 3.48% 3.45% 2.06% 2.05%
Total 100,000 7,180,800 59.17% 51.45% 3.48% 3.45% 2.06% 2.05%
Based on the Offer Price of HK$16.18 (being the high-end of the Offer Price range)
Approximately % of total
number of Offer Shares
Approximate % of H Shares
in issue immediately
following the completion of
Global Offering
Approximately % of total
Shares in issue immediately
following the completion of
Global Offering
Based on the Offer
Price of:
Investment
Amount
Number of
Offer Shares
(rounded
down to
nearest whole
board lot
of 200
H Shares)
Assuming the
Over-allotment
Option is
not exercised
Assuming the
Over-allotment
Option is fully
exercised
Assuming the
Over-allotment
Option is
not exercised
Assuming the
Over-allotment
Option is fully
exercised
Assuming the
Over-allotment
Option is
not exercised
Assuming the
Over-allotment
Option is
fully Exercised
Liugong Machinery 100,000 6,737,000 55.51% 48.27% 3.26% 3.23% 1.94% 1.93%
Total 100,000 6,737,000 55.51% 48.27% 3.26% 3.23% 1.94% 1.93%
Note:
(1) Subject to the rounding down to the nearest whole board lot of 200 H Shares.
(2) Calculation based on the exchange rate of RMB0.9174 to HK$1.00 as set out in the section headed
“Information about this Prospectus and the Global Offering.”
CORNERSTONE PLACING
– 300 –


--- page 311 ---
The following information about the Cornerstone Investor was provided to our Company
by the Cornerstone Investor in relation to the Cornerstone Placing.
1. Liugong Machinery
Liugong Machinery is a company incorporated in Hong Kong with limited liability and
is mainly engaged in exportation and sales of Liugong brand’s engineering, earthwork,
pavement, agricultural equipment and industrial vehicles. It is a wholly-owned subsidiary of
Guangxi Liugong Machinery Co., Ltd., the shares of which are listed on the Shenzhen Stock
Exchange (stock code: 000528), which is principally engaged in the research and development,
manufacture, sales and service of construction machinery and key components.
CLOSING CONDITIONS
The obligation of the Cornerstone Investor to subscribe for the Offer Shares under the
Cornerstone Investment Agreement is subject to, among other things, the following closing
conditions:
(i) the Underwriting Agreements being entered into and having become effective and
unconditional (in accordance with their respective original terms or as subsequently
waived or varied by agreement of the parties thereto) by no later than the time and
date as specified in the Underwriting Agreements, and neither of the Underwriting
Agreements having been terminated;
(ii) the Offer Price having been agreed according to the Underwriting Agreements and
price determination agreement to be signed among the parties thereto in connection
with the Global Offering;
(iii) the Listing Committee having granted the listing of, and permission to deal in, the
H Shares (including the Investor Shares as well as other applicable waivers and
approvals) and such approval, permission or waiver having not been revoked prior
to the commencement of dealings in the H Shares on the Stock Exchange;
(iv) no laws shall have been enacted or promulgated by any governmental authority
which prohibits the consummation of the transactions contemplated in the Global
Offering or the Cornerstone Investment Agreement and there shall be no orders or
injunctions from a court of competent jurisdiction in effect precluding or prohibiting
consummation of such transactions; and
(v) the respective representations, warranties, undertakings and confirmations of the
relevant Cornerstone Investor under the Cornerstone Investment Agreement are (as
of the date of the Cornerstone Investment Agreement) and will be (as of the Listing
Date) accurate and true in all respects and not misleading and that there is no
material breach of the Cornerstone Investment Agreement on the part of the
Cornerstone Investor.
CORNERSTONE PLACING
– 301 –


--- page 312 ---
RESTRICTIONS ON THE CORNERSTONE INVESTOR
The Cornerstone Investor has agreed that it will not, whether directly or indirectly, at any
time during the period of six months from and including the Listing Date (the “ Lock-up
Period ”), dispose of any of the Offer Shares it has purchased pursuant to the Cornerstone
Investment Agreement, save for certain limited circumstances, such as transfers to any of its
wholly-owned subsidiaries who will be bound by the same obligations of the Cornerstone
Investor, including the Lock-up Period restriction.
CORNERSTONE PLACING
– 302 –


--- page 313 ---
The following discussion and analysis should be read in conjunction with the
consolidated financial information together with the accompanying notes in the
Accountant’ s Report included in Appendix I to this prospectus. Our historical financial
information and the consolidated financial statements of our Group have been prepared
in accordance with the HKFRS, which may differ in certain material aspects from
generally accepted accounting principles in other jurisdictions. You should read the
whole Appendix I and not rely merely on the information contained in this section. Unless
the context otherwise requires, historical financial information in this section is
described on a consolidated basis.
The discussion and analysis set forth in this section contains forward-looking
statements that involve risks and uncertainties. These statements are based on
assumptions and analyses made by us in light of our experience and perception of
historical trends, current conditions and expected future developments as well as other
factors we believe are appropriate under the circumstances. Our actual results may differ
significantly from those projected. Factors that could cause or contribute to such
differences include, without limitation, those discussed in the sections headed “Risk
Factors” and “Business” and elsewhere in this prospectus. Discrepancies between totals
and sums of amounts listed in this section in any table or elsewhere in this prospectus may
be due to rounding.
OVERVIEW
We are a leading intralogistics equipment solution provider in China. Focusing on
intralogistics equipment subscription services, we strive to provide enterprises with one-stop
solutions for intralogistics equipment utilization and management. According to CIC, we are
the largest intralogistics equipment solution provider in China in terms of revenue for 2022. We
also have an established presence in the industry, providing services that span the entire
lifecycle of intralogistics equipment, including equipment subscription, repair and
maintenance, and disposal. Furthermore, leveraging our Intelligent Asset and Operation
Management Platform, we have established a service network aiming for coordinated
equipment engagement and management. Our platform features a visualized interface that
allows for real-time monitoring of equipment usage in various locations, promoting our
continuous operational efficiency, and enhancing customer loyalty. As of April 30, 2023, we
had 67 offline service outlets in 47 cities throughout China, managing over 40,000 units of
intralogistics equipment.
FINANCIAL INFORMATION
– 303 –


--- page 314 ---
Our total revenue increased by 19.5% from RMB980.6 million in 2020 to RMB1,172.2
million in 2021, and continued to increase to RMB1,194.2 million in 2022, despite the adverse
impact of the recurring COVID-19 outbreak in China. Following the lifting of COVID-19
mitigation measures, our total revenue increased by 25.8% from RMB346.8 million for the four
months ended April 30, 2022 to RMB436.3 million for the four months ended April 30, 2023.
As our business continued to grow, we recorded profit and total comprehensive income of
RMB54.2 million, RMB55.2 million, RMB35.4 million, and RMB3.4 million in 2020, 2021,
2022, and four months ended April 30, 2023, respectively. In addition, we recorded net cash
from operating activities of RMB451.6 million, RMB527.6 million, RMB522.2 million, and
RMB155.3 million in 2020, 2021, 2022, and four months ended April 30, 2023, respectively.
MAJOR FACTORS AFFECTING OUR RESULTS OF OPERATIONS
Our business, results of operations and financial condition are affected by general factors,
including:
 the overall economic growth and the political, economic and social stability in
China;
 regulatory changes affecting the intralogistics equipment solution industry;
 the growth and competition of the intralogistics equipment solution industry; and
 the advancement in technologies affecting the intralogistics equipment solution
industry.
In particular, our results of operations are affected by the growth of the intralogistics
equipment solution industry. The size of the intralogistics equipment solution industry in China
grew rapidly from RMB6.9 billion in 2018 to RMB11.4 billion in 2022, and is expected to
reach RMB34.9 billion in 2027, representing a CAGR of 25.0% from 2022 to 2027, according
to CIC. We anticipate demand for intralogistics equipment solutions going forward. For details,
see “Industry Overview” in this prospectus.
In addition, we believe our results of operations are more directly affected by the
following major factors.
Our Ability to Grow Customer Base, Drive Customer Engagement and Settle Payments by
our Customers in a Timely Manner
Our ability to attract and retain customers is essential to our revenue growth and
long-term success. We have built a loyal customer base over the years that keep expanding,
comprising enterprises from diverse industries. Our customers include leading logistics
companies such as Shanghai ANE, Best Logistics, Yimi Dida, and FAW Group, as well as large
manufacturing enterprises like Swire Coca-Cola. For more details, please see “Business – Our
Customers and Suppliers – Our Customers” in this prospectus.
FINANCIAL INFORMATION
– 304 –


--- page 315 ---
During the Track Record Period, we were able to grow our customer base from 7,477 for
the year ended December 31, 2020 to 7,929 for the year ended December 31, 2021. Moreover,
our customer base continued to expand and reached 8,170 for the year ended December 31,
2022, reflecting our ability to adapt to changing market conditions and maintain good customer
relationships despite the challenges posed by the recurring COVID-19 outbreak in China in
2022. Following the lifting of COVID-19 mitigation measures, our customer base continued to
grow from 5,237 for the four months ended April 30, 2022 to 5,711 for the four months ended
April 30, 2023. This expansion in customer base enabled us to increase our revenue from
RMB980.6 million in 2020 to RMB1,172.2 million in 2021, and further to RMB1,194.2 million
in 2022. In addition, our revenue further increased from RMB346.8 million for the four months
ended April 30, 2022 to RMB436.3 million for the four months ended April 30, 2023. In
particular, during the Track Record Period, we have experienced an increase in the number of
KA customers under our intralogistics equipment subscription service business segment. For
the years ended December 31, 2020, 2021, and 2022, we had 87, 122, and 123 KA customers,
respectively. In addition, the number of relevant KA customers increased from 114 for the four
months ended April 30, 2022 to 118 for the four months ended April 30, 2023. The total
revenue contribution of our KA customers amounted to RMB314.9 million, RMB363.1 million,
RMB332.8 million, RMB111.8 million, and RMB117.9 million, representing approximately
49.2%, 49.1%, 45.1% and 48.3% of the total revenue derived from intralogistics equipment
subscription services respectively, for the years ended December 31, 2020, 2021, 2022, and
four months ended April 30, 2022 and 2023. Additionally, we have maintained a KA customer
retention rate of 87%, 99%, 98%, 84%, and 87% for the years ended December 31, 2020, 2021,
2022 and four months ended April 30, 2022 and 2023, respectively, and net dollar retention rate
of KA customers at 98%, 99%, 97%, 101% and 100% for the years ended December 31, 2020,
2021, 2022 and four months ended April 30, 2022 and 2023, respectively.
However, our ability to maintain and expand our customer base is subject to various
external factors beyond our control, such as changes in the general economic conditions,
competition, and shifts in our customers’ business operations and strategies. Please see “Risk
Factors – Risks Relating to Our Business and Industry – Our business, growth and prospects
are significantly affected by the demand of our services in China” and “Risk Factors – Risks
Relating to Our Business and Industry – Any economic slowdown or decrease in general
economic activities may adversely affect our business, results of operations, financial
condition, and prospects” in this prospectus.
Moreover, timely payment by our customers is crucial for our working capital and cash
flow management. While customers have generally complied with payment schedules during
the Track Record Period, unforeseen financial distress, such as the COVID-19 pandemic, may
hinder timely payment, negatively impacting our financial condition and results of operations.
Nonetheless, we have taken proactive measures to mitigate these risks, including customer
engagement and collection settlement efforts. Our trade receivable turnover days remained
stable at 81.3 days, 72.3 days, 78.1 days, and 78.6 days in 2020, 2021, 2022, and four months
ended April 30, 2023, respectively. Please also see the “Risk Factors – Risks Relating to Our
Business and Industry –We may not be able to satisfy our working capital requirements if we
experience significant delays or defaults in payments from customers, or significant delays in
our billing and settlement process” in this prospectus.
FINANCIAL INFORMATION
– 305 –


--- page 316 ---
Our Ability to Effectively Manage our Fleet, Utilization Rate, and Inventories
During the Track Record Period, a significant portion of our revenue came from
intralogistics equipment subscription services, which accounted for 65.2%, 63.0%, 61.8%,
68.2%, and 55.9% of our total revenue in 2020, 2021, 2022, and four months ended April 30,
2022 and 2023, respectively, totaling RMB639.7 million, RMB739.2 million, RMB738.0
million, RMB236.4 million and RMB243.9 million. To manage this business segment
effectively, our ability to optimize equipment utilization rates while expanding our fleet to
meet growing market demand is critical to our financial performance.
We manage our fleet with increased operation efficiency. Specifically, we invest in
enhancing our technology capability to predict, arrange, and execute maintenance solutions for
our fleet, which allows us to extend the useful life of our intralogistics equipment and ensure
their quality status. For more information, please see the “Business – Our Equipment Fleet”
and “Business – Our Technology” in this prospectus.
Despite the challenges posed by the COVID-19 pandemic, we were able to effectively
manage our fleet utilization rates, as a result, during the Track Record Period, our average
utilization rates remained relatively stable at over 72%, indicating our ability to efficiently
allocate our equipment fleet and meet the evolving needs of our customers. For details, see
“Business – Our Equipment Fleet” in this prospectus.
Our management team proactively monitors and analyzes utilization rates to identify
trends, areas for improvement, and expansion opportunities. We aim to manage our fleet size
dynamically, taking into account various factors, including customer demand, market
prospects, and our liquidity management policy, to effectively mitigate risks associated with
overcapacity and underutilization.
Efficient Centralized Procurement and Effective Supply Chain Management
Our efficient centralized procurement strategy and effective supply chain management are
key factors in our business success and financial performance. With over a decade of
experience in intralogistics equipment solution industry, we have established close
relationships with major manufacturers and suppliers of intralogistics equipment in China. This
has given us bargaining power in the procurement process, enabling us to provide quality
intralogistics equipment and parts to our customers at competitive prices.
By consolidating our orders and negotiating bulk purchasing agreements, we streamline
our procurement processes, reduce procurement costs, and secure favorable pricing and
delivery terms. We also trade new and used forklifts to match requirements of customers in
China, thereby increasing customer adherence and broadening our customer base and streams
of revenue. In addition, we sold around 331,000 types of intralogistics equipment parts to
customers in China and to over 100 foreign countries, such as United States, Thailand, Brazil,
etc.
FINANCIAL INFORMATION
– 306 –


--- page 317 ---
Our centralized procurement strategy also allows us to quickly adapt to changes in market
demand and customer needs. By closely monitoring market trends and adjusting our
procurement plans accordingly, we maintain a diverse inventories to meet the evolving needs
of our customers. This flexibility enables us to deliver timely and customized solutions,
enhancing our reputation as a trusted partner for enterprises seeking lifecycle management
solutions for intralogistics equipment.
Our Revenue and Service Mix
During the Track Record Period, our revenue primarily came from three business
segments: (i) intralogistics equipment subscription services, where we charge customers fees
based on the duration they use relevant intralogistics equipment; (ii) maintenance and repair
services, where we provide maintenance and repair services for customers’ intralogistics
equipment; and (iii) sales of intralogistics equipment and parts, where we sell new and used
intralogistics equipment as well as related parts that meet customers’ demands.
As an intralogistics equipment solution provider, we have diversified our business mix
and increased our recurring revenue. However, a shift in our revenue mix can affect our gross
profit margin, as the margin for each service category varies. The overall level of our gross
profit margin depends on the types and mix of service categories we provide. During the Track
Record Period, we maintained a relatively stable gross profit margin of 33.7%, 31.9%, 30.3%,
29.1% and 28.0% in 2020, 2021, 2022, and four months ended April 30, 2022 and 2023,
respectively. Moving forward, we will continue to optimize our revenue mix and carefully
manage our growth to maintain a healthy gross profit margin.
Our Ability to Enhance Operational Efficiency and Manage Operating Expenses
Our ability to enhance operational efficiency and manage operating expenses effectively
is crucial to our profitability. Staff costs constitute a significant portion of our administrative
expenses and selling and distribution expenses, making cost management critical to our results
of operations. As we continue to expand our business, we aim to achieve economies of scale
that will generally result in decreasing percentages of revenue accounted for by our operating
expenses. In 2020, 2021, 2022, and four months ended April 30, 2022 and 2023, our selling and
distribution expenses accounted for 7.4%, 7.2%, 7.2%, 8.0% and 6.1% of our revenue,
respectively, while our administrative expenses accounted for 12.3%, 12.2%, 13.1%, 14.6%
and 12.0% in the corresponding years.
To achieve greater operational efficiency and cost savings, we continuously seek to
optimize our business processes, reduce waste, and streamline our operations. We have
invested in technologies and equipment to enhance our operational efficiency and reduce labor
costs. For instance, we have continuously devoted resources in developing and optimizing our
technology platform, the Intelligent Asset and Operation Management Platform. This platform
enables us to integrate and connect each key operating sector, as well as the assets and
personnel involved, allowing for highly intelligent, efficient, and cost-effective management of
equipment operation and utilization. In addition, we leverage data analytics to monitor and
analyze our equipment utilization rates, optimize equipment allocation, and reduce downtime.
FINANCIAL INFORMATION
– 307 –


--- page 318 ---
BASIS OF PRESENTATION
Our historical financial information has been prepared in accordance with Hong Kong
Financial Reporting Standards (“ HKFRS ”) issued by the Hong Kong Institute of Certified
Public Accountants (“ HKICPA ”). The historical financial information has been prepared under
the historical cost convention, except for financial assets at fair value through profit or loss.
The preparation of the historical financial information in conformity with HKFRS
requires the use of certain critical accounting estimates. It also requires management to
exercise its judgment in the process of applying our accounting policies. The areas involving
a higher degree of judgment or complexity, or areas where assumptions and estimates are
significant to the historical financial information, are disclosed in Note 3 to the Accountant’s
Report included in Appendix I to this prospectus.
SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING
JUDGMENTS AND ESTIMATES
We have identified certain accounting policies that are significant to the preparation of
our consolidated financial statements. Some of our accounting policies involve subjective
assumptions and estimates, as well as complex judgments relating to accounting items. We set
out below some of the accounting policies and estimates that we believe are of critical
importance to us or involve the most significant estimates and judgments used in the
preparation of our financial statements. Our significant accounting policies, judgments and
estimates, which are important for understanding our financial condition and results of
operations, are set out in further details in Note 2.4 and Note 3 to the Accountant’s Report in
Appendix I to this prospectus.
Significant Accounting Policies
Revenue Recognition
Revenue From Contracts With Customers
Revenue from contracts with customers is recognized 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.
When the consideration in a contract includes a variable amount, the amount of
consideration is estimated to which we will be entitled in exchange for transferring the goods
or services to the customer. The variable consideration is estimated at contract inception and
constrained until it is highly probable that a significant revenue reversal in the amount of
cumulative revenue recognized will not occur when the associated uncertainty with the variable
consideration is subsequently resolved.
FINANCIAL INFORMATION
– 308 –


--- page 319 ---
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 our Group
and the customer at contract inception. When the contract contains a financing component
which provides us with a significant financial benefit for more than one year, revenue
recognized 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 HKFRS 15.
Intralogistics Equipment Subscription Services
Intralogistics equipment subscription services represent one-stop services for full-cycle
management of intralogistics equipment, covering the entire equipment lifecycle from
procurement, utilization, maintenance, and repair.
The intralogistics equipment subscription services comprise two performance obligations:
(i) the operating lease of intralogistics equipment, which is accounted for in accordance with
the policies set out for “Lease” under HKFRS 16, and (ii) the stand ready comprehensive
services package (the “Comprehensive Service”), which includes equipment management,
vehicle route planning, quick vehicle dispatch, maintenance arrangement, as well as real-time
equipment status supervision. At contract inception, we determine the stand-alone selling price
of the operating lease and the Comprehensive Service underlying, which are capable of being
distinct and separately identifiable. Regarding the Comprehensive Service, we estimate the
stand-alone selling price using an adjusted market assessment approach. However, since there
is no directly-observable market data for the stand-alone selling price of the operating lease,
we estimate it as the difference between the total transaction price and the stand-alone selling
prices of the Comprehensive Service.
The nature of our Comprehensive Service is a single performance obligation under the
service contract to stand ready to provide an unspecified quantity of services each day
throughout the contract period. Revenue from the Comprehensive Service is recognized evenly
over the contract period.
Maintenance and Repair Services
Maintenance and repair services mainly include one-off repair services and service plans
for a fixed service period. We issue invoices either on a project basis for one-off repair
services, or on a monthly basis for service plans with valid contract periods covering
equipment specified in the relevant agreements. Revenue from stand ready maintenance and
repair services is recognized evenly over the contract period.
FINANCIAL INFORMATION
– 309 –


--- page 320 ---
For maintenance and repair services except for stand ready services, we recognize
revenue over time using an input method to measure progress towards complete satisfaction of
the service. This is because we create and enhance an asset that the customer controls as we
perform the service. Our directors have assessed the stage of completion based on the
proportion of costs incurred for the maintenance and repair services (i.e., direct labor costs,
cost of materials, and other miscellaneous costs directly attributable to these services)
performed to date relative to the estimated total costs to complete the satisfaction of these
services.
Sales of Intralogistics Equipment and Parts
Revenue from the sale of intralogistics equipment and parts is recognized at the point in
time when control of the asset is transferred to the customer. This generally occurs upon receipt
of the intralogistics equipment and parts by the customers.
Revenue From Other Sources
Revenue from operating leases 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 recognized over the lease term on the same basis as revenue from operating
lease. Contingent rents or variable lease payments are recognized as revenue in the period in
which they are earned.
Other Income
Interest income is recognized, on an accrual basis using the effective interest method by
applying the rate that discounts the estimated future cash receipts over the expected life of the
financial instrument of the net carrying amount of the financial assets.
Lease
We assess whether a contract is, or contains, a lease at contract inception. A contract is
considered to be, or contain, a lease if it grants the right to control the use of an identified asset
for a period of time in exchange for consideration.
Act as a Lessee
As a lessee, we apply a single recognition and measurement approach for all leases,
except for short-term leases. We recognize lease liabilities to make lease payments and
right-of-use assets representing the right to use the underlying assets.
FINANCIAL INFORMATION
– 310 –


--- page 321 ---
Right-of-Use Assets
Right-of-use assets are recognized at the commencement date of the lease and measured
at cost, less 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 in which we are
reasonably certain to obtain ownership of the underlying leased assets at the end of the lease
term are depreciated from commencement date to the end of the estimated useful life.
Otherwise, we depreciate the recognized right-of-use assets on a straight-line basis over the
shorter of the lease terms and the estimated useful lives of the assets as follows:
Leasehold land 50 years
Office buildings 1.5 to 7 years
Intralogistics equipment 3 to 8 years
When we obtain ownership of the underlying leased assets at the end of the lease term,
upon exercising purchase options, the carrying amount of the relevant right-of-use assets are
transferred to property, plant and equipment.
Lease Liabilities
Lease liabilities are recognized 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 us and payments of penalties for
terminating a lease, if the lease term reflects us exercising the option to terminate the lease. The
variable lease payments that do not depend on an index or a rate are recognized as an expense
in the period on which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, we use the incremental borrowing rate
at the lease commencement date if 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 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
assets.
Short-Term Leases
We apply the short-term lease recognition exemption to our short-term leases of office
premises and intralogistics equipment, which are those leases with a lease term of 12 months
or less from the commencement date and do not contain a purchase option.
Lease payments on short-term leases are recognized as an expense on a straight-line basis
over the lease term.
FINANCIAL INFORMATION
–3 1 1–


--- page 322 ---
Act as a Lessor
When we act as a lessor, we classify each of our leases as either an operating lease or a
finance lease at lease inception (or when there is a lease modification). Leases in which we do
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, we
allocate the consideration in the contract to each component on a standalone selling price basis.
Revenue from operating lease 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 recognized over the lease term on the same basis as revenue from operating lease.
Contingent rents or variable lease payments are recognized as revenue in the period in which
they are earned.
Leases that transfer substantially all the risks and rewards incidental to ownership of an
underlying asset to the lessee are accounted for as finance leases. When we are an intermediate
lessor, a sublease is classified as a finance lease or operating lease with reference to the
right-of-use asset arising from the head lease. If the head lease is a short-term lease to which
we apply the on-balance sheet recognition exemption, we classify the sublease as an operating
lease.
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 capitalized in the carrying amount of the asset as a replacement.
Intralogistics equipment included in the property, plant and equipment is transferred to
construction in progress at its carrying amount when replacement incurred. Upon the
completion of replacement, the intralogistics equipment is transferred to appropriate category.
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:
Buildings 3.1%
Intralogistics equipment 11.3% – 22.5%
Leasehold improvements Over the shorter of the lease term and 33
1/3%
Motor vehicles 19.0%
Furniture, fixtures and equipment 33
1/3%
FINANCIAL INFORMATION
– 312 –


--- page 323 ---
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 or period end.
An item of property, plant and equipment including any significant part initially
recognized is derecognized upon disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss on disposal or retirement recognized in profit or loss
in the year or period the asset is derecognized is the difference between the net sales proceeds
and the carrying amount of the relevant asset.
Construction in progress represents buildings under construction, which is stated at cost
less any impairment losses, and is not depreciated. Cost comprises the direct costs of
construction and capitalized borrowing costs on related borrowed funds during the period of
construction. Construction in progress is reclassified to the appropriate category of property,
plant and equipment when completed and ready for use.
Intralogistics equipment included in the property, plant and equipment is transferred to
inventories at its carrying amount when it ceases to be rented and becomes held for sale in
ordinary activities.
Critical Accounting Judgements and Estimates
Allocation of the Transaction Price to Operating Lease and the Comprehensive Service for
Intralogistics Equipment Subscription Services
We have entered into contracts with customers for intralogistics equipment subscription
services that contain operating lease and Comprehensive Services. For such contracts,
significant assessments and interpretations are required to determine the appropriate method to
allocate the transaction prices among the operating lease and the Comprehensive Services. We
estimate the stand-alone selling price of the Comprehensive Service using an adjusted market
assessment approach. In the absence of directly-observable market data for the stand-alone
selling price of the operating lease, we estimate it as the difference between the total
transaction price and the stand-alone selling prices of the Comprehensive Service.
Estimated Useful Life and Residual V alue of Property, Plant and Equipment
We determine the estimated useful lives, residual value for our property, plant and
equipment. This estimate is based on historical experience of actual useful lives and considers
the technical or commercial obsolescence of property, plant and equipment of a similar nature
and function. We will increase the depreciation charge where useful lives are expected to be
shorter than previously estimated, or we write off or write down obsolete or non-strategic
assets that have been abandoned. Changes in these estimations may have a material impact on
our results.
FINANCIAL INFORMATION
– 313 –


--- page 324 ---
Provision for Expected Credit Losses on Trade Receivables
We use a provision matrix, or other applicable approaches, to calculate expected credit
losses (“ ECLs ”) for our trade receivables. The provision rates are based on the number of days
past due for groupings of various customer segments that have similar loss patterns (i.e., by
customer type) and initially based on our historical observed default rates, supplemented by
relevant external information as appropriate. For example, if we expect forecast economic
conditions, such as gross domestic product, to deteriorate over the next year, which could lead
to an increased number of defaults in the specific group of customers, we adjust the historical
default rates accordingly. At each reporting date, we updated the historical observed default
rates and analysed the changes in the forward-looking estimates. Regarding the trade and bills
receivables overdue over one year, we generally consider them in default, and full provision
was made for the corresponding balances during the Track Record Period. Regarding the trade
receivables overdue within one year, we evaluated impairments for them after considering
various factors, including the probability-weighted outcome, reasonable and supportable
information available at the reporting date about past events, current conditions and forecasts
of future economic conditions.
The assessment of the correlation among historical observed default rates, forecast
economic conditions, and ECLs is a significant estimate. The amount of ECLs is sensitive to
changes in circumstances and forecast economic conditions. Our historical credit loss
experience and forecast of economic conditions may not be representative of a customer’s
actual default in the future. For details, see Note 18 to the Accountant’s Report in Appendix
I to this prospectus.
Impairment of Long Term Non-Financial Assets (Other Than Goodwill)
We assess whether there are any indicators of impairment for our long term non-financial
assets (including the right-of-use assets) at the end of each reporting period. We test these
assets 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.
We calculate the fair value less costs of disposal 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 we undertake value in use calculations,
we estimate the expected future cash flows from the asset or cash-generating unit and choose
a suitable discount rate to calculate the present value of those cash flows.
Leases – Estimating the Incremental Borrowing Rate
We cannot readily determine the interest rate implicit in a lease, and therefore, we use an
incremental borrowing rate (“ IBR”) to measure lease liabilities. The IBR is the rate of interest
that we 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 we “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). We
estimate 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).
FINANCIAL INFORMATION
– 314 –


--- page 325 ---
DESCRIPTION OF SELECTED COMPONENTS OF CONSOLIDATED STATEMENTS
OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
The following table sets forth a summary of our consolidated statements of profit or loss
and other comprehensive income for the periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
RMB’000
%o f
Revenue RMB’000
%o f
Revenue RMB’000
%o f
Revenue RMB’000
%o f
Revenue RMB’000
%o f
Revenue
(unaudited)
Revenue 980,643 100.0 1,172,182 100.0 1,194,209 100.0 346,809 100.0 436,291 100.0
Cost of sales (650,463) (66.3) (798,015) (68.1) (832,545) (69.7) (245,910) (70.9%) (314,077) (72.0)
Gross profit 330,180 33.7 374,167 31.9 361,664 30.3 100,899 29.1 122,214 28.0
Other income and gains 4,853 0.5 4,022 0.3 6,276 0.5 2,693 0.8 1,753 0.4
Selling and distribution
expenses (72,270) (7.4) (84,018) (7.2) (86,072) (7.2) (27,873) (8.0) (26,431) (6.1)
Administrative expenses (120,746) (12.3) (143,199) (12.2) (156,858) (13.1) (50,625) (14.6) (52,213) (12.0)
Impairment loss on
financial assets (6,808) (0.7) (4,498) (0.4) (4,178) (0.3) (884) (0.3) (2,106) (0.5)
Other expenses (197) –* (262) –* (2,750) (0.2) (719) (0.2) (12,684) (2.9)
Finance costs (73,604) (7.5) (81,838) (7.0) (83,609) (7.0) (27,398) (7.9) (27,308) (6.3)
Share of profits/(losses)
of associates (228) –* (4,929) (0.4) 948 0.1 (1,041) (0.3) (762) (0.2)
Profit/(loss) before tax 61,180 6.2 59,445 5.1 35,421 3.0 (4,948) (1.4) 2,463 0.6
Income tax
credit/(expenses) (6,970) (0.7) (4,267) (0.4) (20) –* 2,396 0.7 918 0.2
Profit/(loss) and total
comprehensive
income/(loss) for the
year/period 54,210 5.5 55,178 4.7 35,401 3.0 (2,552) (0.7) 3,381 0.8
Attributable to: Owners
of the Company 54,210 5.5 55,178 4.7 35,401 3.0 (2,552) (0.7) 3,381 0.8
Note: *Less than 0.1%.
FINANCIAL INFORMATION
– 315 –


--- page 326 ---
Revenues
Revenue by Business Segments
During the Track Record Period, our revenue primarily came from three business
segments: (i) intralogistics equipment subscription services, where we charge customers fees
based on the duration they use relevant intralogistics equipment; (ii) maintenance and repair
services, where we provide maintenance and repair services for customers’ intralogistics
equipment; and (iii) sales of intralogistics equipment and parts, where we sell new and used
intralogistics equipment as well as related parts that meet customers’ demands. The table below
sets forth a breakdown of our revenue by business segments for the periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Intralogistics equipment
subscription services 639,701 65.2 739,176 63.0 738,001 61.8 236,373 68.2 243,944 55.9
Maintenance and repair
services 111,463 11.4 128,484 11.0 140,987 11.8 35,172 10.1 54,539 12.5
Sales of intralogistics
equipment and parts 229,479 23.4 304,522 26.0 315,221 26.4 75,264 21.7 137,808 31.6
Total 980,643 100.0 1,172,182 100.0 1,194,209 100.0 346,809 100.0 436,291 100.0
Intralogistics Equipment Subscription Services
We offer intralogistics equipment subscription services, which allow customers to choose
equipment based on their specific needs, including brand, type, configuration, and quantity.
Our comprehensive service also includes regular on-site maintenance and inspections.
During the Track Record Period, we experienced a growing demand for intralogistics
equipment subscription services primarily because more and more customers recognized our
services and brands, and chose us to subscribe more equipment to support their business
operation and expansion. The average monthly equipment subscription price remained
relatively stable during the Track Record Period. To be specific, our average monthly
equipment subscription price (excluding V A T) was RMB1,965 per unit in 2020, RMB2,126 per
unit in 2021, RMB2,085 per unit in 2022, and RMB2,183 per unit for the four months ended
April 30, 2023.
FINANCIAL INFORMATION
– 316 –


--- page 327 ---
Maintenance and Repair Services
The table below sets forth a breakdown of our revenue of maintenance and repair services
by service category for the periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
One-off repair 89,085 79.9 105,780 82.3 87,436 62.0 21,217 60.3 37,244 68.3
Maintenance and
repair service
plan 22,378 20.1 22,704 17.7 53,551 38.0 13,955 39.7 17,295 31.7
Total 111,463 100.0 128,484 100.0 140,987 100.0 35,172 100.0 54,539 100.0
We offer (i) one-off repair services in response to emergent function failures or other
problems; and (ii) maintenance and repair service plans where we provide scheduled
inspections and regular maintenance services, as well as necessary part replacements and
repairs. For details, see “Business – Our Business – Maintenance and Repair Services.” Our
one-off repair services and maintenance and repair service plans as a percentage of revenue
experience fluctuations during the Track Record Period. During the Track Record Period, our
one-off repair business line has functioned as a vital supplement to our maintenance and repair
service plan. This approach enables us to attract and retain a large number of high-quality
customers by providing them the opportunity to experience our services at a comparatively
lower price and/or commitment. This is particularly beneficial for enterprises that are
unfamiliar with our services, or those that have yet to identify their specific business needs or
allocate resources to engage us for intralogistics equipment subscription services or
maintenance and repair service plan business line. Since 2022, we expanded our maintenance
and repair service plan to meet customers’ growing demands for scheduled inspections and
regular maintenance. As our business grew and customers placed greater trust in our brand, the
percentage of revenue generated from maintenance and repair service plan increased in 2022.
For the four months ended April 30, 2023, the revenue as a percentage from maintenance and
repair service plan business line slightly decreased. This decline resulted from the heightened
demand for our one-off repair services. Following the lifting of COVID-19 restrictions, we
experienced a surge in new customers seeking our services, leading to a higher proportion of
revenue from one-off repair services.
FINANCIAL INFORMATION
– 317 –


--- page 328 ---
Sales of Intralogistics Equipment and Parts
The following table sets forth a breakdown of our revenue of sales of intralogistics
equipment and parts by categories of goods sold for the periods indicated:
Y ear ended December 31, Four months ended April 30
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Intralogistics
equipment 116,195 50.6 162,505 53.4 156,664 49.7 36,416 48.4 71,268 51.7
Related parts 113,284 49.4 142,017 46.6 158,557 50.3 38,848 51.6 66,540 48.3
Total 229,479 100.0 304,522 100.0 315,221 100.0 75,264 100.0 137,808 100.0
The following table sets forth a breakdown of our revenue by geographic locations for the
periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Northern Region (1) 133,153 13.6 159,361 13.6 144,464 12.1 42,978 12.4 47,573 10.9
East Central Region (2) 495,579 50.5 566,548 48.3 555,363 46.5 172,205 49.7 213,757 49.0
Southern Region (3) 198,209 20.2 257,309 22.0 272,634 22.8 73,467 21.2 90,676 20.8
Western Region (4) 59,275 6.0 78,452 6.7 89,260 7.5 25,668 7.4 26,822 6.1
Overseas Region (5) 94,427 9.7 110,512 9.4 132,488 11.1 32,491 9.3 57,463 13.2
Total 980,643 100.0 1,172,182 100.0 1,194,209 100.0 346,809 100.0 436,291 100.0
Notes:
(1) Including Beijing, Tianjin, Hebei province, Shanxi province, Inner Mongolia province, Heilongjiang
province, Jilin province, and Liaoning province
(2) Including Shanghai, Jiangsu province, Zhejiang province, Anhui province, Fujian province, Jiangxi
province, Shandong province, Henan province, Hubei province, Hunan province, Shaanxi province,
Gansu province, Qinghai province, Ningxia province, and Xinjiang province
(3) Including Guangdong province, Guangxi province, Hainan province, Hong Kong Special Administration
Region, Macau Special Administration Region, and Taiwan province
(4) Including Sichuan province, Chongqing, Guizhou province, Y unnan province, and Tibet province
(5) Including over 100 foreign countries, such as United States, Thailand, Brazil, etc. In addition, all of the
revenue from overseas regions was attributable to the sales of intralogistics equipment parts.
FINANCIAL INFORMATION
– 318 –


--- page 329 ---
Cost of Sales
Our cost of sales primarily consists of (i) costs of machinery and parts, which include
costs related to the parts used in providing our services, as well as costs of machinery and parts
associated with the sales of intralogistics equipment and parts; (ii) depreciation charges and
rental expenses, which primarily represent the depreciation expenses of property, plant and
equipment and right-of-use assets, as well as rental expenses for short-term leases of
intralogistics equipment; (iii) staff costs, which represent salaries and welfare for our business
operation personnel; and (iv) fulfillment costs, which primarily include (a) logistics expenses
related to the transfer and allocation of intralogistics equipment, as well as the sales of
intralogistics equipment and parts; (b) necessary annual inspection costs for intralogistics
equipment; as well as (c) insurance fees. The following table sets forth a breakdown of our cost
of sales by nature for the periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Cost of machinery
and parts 265,270 40.8 343,300 43.0 348,919 41.9 84,327 34.3 147,261 46.9
Depreciation charges
and rental expenses 319,465 49.1 366,217 45.9 383,724 46.1 127,450 51.8 134,499 42.8
Staff costs 42,811 6.6 58,465 7.3 69,045 8.3 22,986 9.4 23,650 7.5
Fulfillment costs 22,917 3.5 30,033 3.8 30,857 3.7 11,147 4.5 8,667 2.8
Total 650,463 100.0 798,015 100.0 832,545 100.0 245,910 100.0 314,077 100.0
The table below sets forth a breakdown of our costs of sales by business segments for the
periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Intralogistics equipment
subscription services 411,526 63.3 488,504 61.3 511,914 61.5 169,253 68.8 173,674 55.3
Maintenance and repair
services 65,878 10.1 76,125 9.5 83,289 10.0 21,256 8.7 33,338 10.6
Sales of intralogistics
equipment and parts 173,059 26.6 233,386 29.2 237,342 28.5 55,401 22.5 107,065 34.1
Total 650,463 100.0 798,015 100.0 832,545 100.0 245,910 100.0 314,077 100.0
FINANCIAL INFORMATION
– 319 –


--- page 330 ---
Gross Profit and Gross Profit Margin
Our gross profit represents our revenue less cost of sales. In 2020, 2021, 2022, and four
months ended April 30, 2022 and 2023, our gross profit was RMB330.2 million, RMB374.2
million, RMB361.7 million, RMB100.9 million and RMB122.2 million, respectively. Gross
profit margin represents our gross profit as a percentage of our revenue. In 2020, 2021, 2022,
and four months ended April 30, 2022 and 2023, our gross profit margin was 33.7%, 31.9%,
30.3%, 29.1% and 28.0%, respectively. The following table sets forth a breakdown of our gross
profit and gross profit margin by business segments for the periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Intralogistics equipment
subscription services 228,175 35.7 250,672 33.9 226,087 30.6 67,120 28.4 70,270 28.8
Maintenance and repair
services 45,585 40.9 52,359 40.8 57,698 40.9 13,916 39.6 21,201 38.9
Sales of intralogistics
equipment and parts 56,420 24.6 71,136 23.4 77,879 24.7 19,863 26.4 30,743 22.3
Total gross
profit/overall gross
profit margin 330,180 33.7 374,167 31.9 361,664 30.3 100,899 29.1 122,214 28.0
Selling and Distribution Expenses
Our selling and distribution expenses primarily consist of (i) staff costs, which represent
salaries and welfare for our in-house sales and marketing personnel; (ii) office expenses,
comprising expenses related to office operations and travel incurred by our sales and marketing
personnel; and (iii) depreciation charges and rental expenses, which include depreciation of
property, plant and equipment, right-of-use assets, rental expenses, and utilities fees for our
leased properties used for our sales and marketing team. The following table sets forth a
breakdown of our selling and distribution expenses for the periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Staff costs 37,262 51.5 45,687 54.3 49,950 58.0 14,431 51.8 14,552 55.1
Office expenses 16,111 22.3 16,872 20.1 18,412 21.4 7,250 26.0 6,012 22.7
Depreciation charges and
rental expenses 16,246 22.5 17,462 20.8 13,996 16.3 4,736 17.0 4,746 18.0
Others 2,651 3.7 3,997 4.8 3,714 4.3 1,456 5.2 1,121 4.2
Total 72,270 100.0 84,018 100.0 86,072 100.0 27,873 100.0 26,431 100.0
FINANCIAL INFORMATION
– 320 –


--- page 331 ---
Administrative Expenses
Our administrative expenses primarily consist of (i) staff costs, representing salaries and
welfare for our in-house administrative personnel and directors’ remuneration; (ii) research and
development expenses, primarily consist of staff costs associated with research and
development personnel, depreciation of equipment utilized for research and development
purposes, as well as rental expenses; (iii) depreciation charges and rental expenses consisting
of depreciation of property, plant and equipment and right-of-use assets, amortization of
intangible assets, as well as rental expenses and utilities fees for our leased properties used for
our administrative department; (iv) office expenses, comprising expenses related to office
operations and travel incurred by our administrative personnel; and (v) professional and
consulting service fees incurred in relation to auditing and financing services. In particular, our
professional and consulting service fees decreased significantly in 2021, primarily due to the
payments incurred for A-share listings in 2020. For details, see “History, Development And
Corporate Structure – Preparation for Potential A Share Listings.” The following table sets
forth a breakdown of our administrative expenses for the periods indicated:
Y ear ended December 31, Four months ended April 30,
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Staff costs 62,154 51.5 82,138 57.3 80,294 51.2 30,530 60.3 27,926 53.6
Research and
development expenses 29,296 24.3 35,668 24.9 39,652 25.3 11,273 22.3 11,818 22.6
– Staff costs 10,531 8.7 15,658 10.9 19,618 12.5 5,796 11.5 6,225 11.9
– Depreciation charges
and rental expenses 15,572 13.0 16,838 11.8 16,436 10.5 5,226 10.3 5,398 10.3
– Other R&D related
expenses 3,193 2.6 3,172 2.2 3,598 2.3 251 0.5 195 0.4
Depreciation charges and
rental expenses 7,401 6.1 8,027 5.6 16,110 10.3 3,994 7.9 5,891 11.3
Office expenses 10,614 8.8 12,263 8.6 13,635 8.7 3,386 6.7 4,735 9.1
Professional and
consulting service fees 7,874 6.5 1,139 0.8 1,692 1.1 99 0.2 119 0.2
Others 3,407 2.8 3,964 2.8 5,475 3.4 1,343 2.6 1,724 3.2
Total 120,746 100.0 143,199 100.0 156,858 100.0 50,625 100.0 52,213 100.0
FINANCIAL INFORMATION
– 321 –


--- page 332 ---
Other Income and Gains/(Expenses)
Our other income and gains/(expenses) primarily consists of (i) government grants,
representing subsidies received from the local governments in connection with the business
development and rewards for financial and employment contributions; (ii) interest income from
bank deposits; (iii) fair value gain of financial assets at fair value through profit or loss,
reflecting investment gains from wealth management products we purchased by using our
surplus cash; (iv) gain on remeasurement of an associate to acquisition-date fair value,
representing the gain arising from the remeasurement of our investment in an associate to its
fair value as at the acquisition date in relation to our acquisition of Hefei Langyun; (v) net
foreign exchange differences; and (vi) listing expenses in relation to the Listing and the Global
Offering. The following table sets forth a breakdown of our other income and gains for the
periods indicated:
Y ear ended December 31,
Four months
ended April 30,
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Government grants 2,751 1,481 1,547 260 1,049
Interest income 1,443 1,651 1,945 551 410
Fair value gain of
financial assets at
fair value through
profit or loss – – 892 178 93
Gain on
remeasurement of
an associate to
acquisition-date fair
value – – 1,435 1,435 –
Foreign exchange
differences, net 587 577 (2,377) (657) (186)
Listing expense –––– (12,442)
Others (125) 51 84 207 145
Total 4,656 3,760 3,526 1,974 (10,931)
FINANCIAL INFORMATION
– 322 –


--- page 333 ---
We invest our surplus cash in wealth management products, (namely, structured deposits),
which are short-term (namely, no more than three months) financial products issued by
reputable commercial banks in China. These products are typically low-risk or risk-free and
have an expected rate of approximately 3% per annum. We have implemented internal control
policies and rules to ensure that investments are made with the aim of preserving capital and
liquidity until the cash is used for our primary business operations. Our senior management
team and finance department are responsible for making and supervising investment decisions,
and we have a designated finance team with relevant background to manage our investment
portfolios. Before investing, we ensure sufficient working capital for our business needs,
operating activities, and capital expenditures. To control risk exposure, we seek low-risk
financial products with terms no longer than six months and monitor their performance
regularly. Our investment decisions are made on a case-by-case basis, taking into account
factors such as duration and expected returns. We believe our policies and risk management
mechanisms are adequate, and our investment in financial assets at fair value through profit or
loss will comply with Chapter 14 of the Listing Rules after listing.
Finance Costs
Our finance costs include (i) interests on lease liabilities; (ii) interests on bank loans; and
(iii) interests on other borrowings. The following table sets forth a breakdown of our finance
costs for the periods indicated:
Y ear ended December 31,
Four months
ended April 30,
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Interest on lease
liabilities 51,845 62,157 61,927 20,089 19,820
Interest on bank loans 6,612 12,278 16,309 5,332 4,853
Interest on other
borrowings 18,237 14,355 10,738 3,644 4,072
Subtotal 76,694 88,790 88,974 29,065 28,745
Less: Interest
capitalized (3,090) (6,952) (5,365) (1,667) (1,437)
Total 73,604 81,838 83,609 27,398 27,308
FINANCIAL INFORMATION
– 323 –


--- page 334 ---
Income tax Expenses/(Credit)
Our income tax expenses consist of current and deferred income taxes payable in the PRC
by our subsidiaries. The income tax provision for our operations in the PRC is calculated using
the applicable tax rate on the estimated assessable profits for the year or period, based on
existing legislation, interpretations, and practices. During the Track Record Period, our
Company qualified as “high and new technology enterprises,” and benefited from a preferential
income tax rate of 15%. Certain other subsidiaries qualified as “small and micro enterprises,”
and were subject to a preferential income tax rate of 5% to 10%.
In 2020, 2021 and 2022, we experienced a decrease in income tax expenses, from
RMB7.0 million in 2020, to RMB4.3 million in 2021, and further down to RMB20 thousand
in 2022. The decreases in income tax expenses were mainly attributable to (i) a decrease in our
profit before tax and (ii) an increase in the proportion of profit generated by our subsidiaries
with lower tax rates. In addition, we recorded income tax credit of RMB2.4 million for the four
months ended April 30, 2022 and RMB0.9 million for the four months ended April 30, 2023.
The tax credit was recognized due to the taxable temporary differences arising from our tax
losses and an increase in qualified research and development expenses. Our effective tax rates
were 11.4%, 7.2%, 0.1%, 48.4%, and (37.3)% in 2020, 2021, 2022, and four months ended
April 30, 2022 and 2023, respectively, calculated based on actual expenses or credit divided by
profit or loss before income tax for the same period. Our effective tax rates decreased from
11.4% in 2020 to 7.2% in 2021 due to an increase in the proportion of profit generating from
our subsidiaries with lower tax rate. Furthermore, our effective tax rate decreased substantially
from 7.2% in 2021 to 0.1% in 2022, primarily attribute to the decrease in taxable income due
to (i) an increase in the additional tax deduction for qualified research and development
expenses and (ii) a decrease in profit before tax. We had positive effective tax rates of 48.4%
for the four months ended April 30, 2022 and negative effective tax rate of (37.3)% for the four
months ended April 30, 2023 since we recorded loss before tax of RMB4.9 million for the four
months ended April 30, 2022 while profit before tax of RMB2.5 million for the four months
ended April 30, 2023. In addition, we recorded a relatively higher effective tax rate of 48.4%
for the four months ended April 30, 2022, as our lower profitability during this period deferred
the tax benefits from additional deductions for qualified research and development expenses.
RESULTS OF OPERATIONS
Four Months Ended April 30, 2023 Compared With Four Months Ended April 30, 2022
Revenue
Our revenue increased by 25.8% from RMB346.8 million for the four months ended April
30, 2022 to RMB436.3 million for the four months ended April 30, 2023.
FINANCIAL INFORMATION
– 324 –


--- page 335 ---
Intralogistics Equipment Subscription Services
Revenue generated from intralogistics equipment subscription services increased by 3.2%
from RMB236.4 million for the four months ended April 30, 2022 to RMB243.9 million for the
four months ended April 30, 2023. This was primarily due to business growth and the increase
in our equipment subscription volume supported by the lifting of COVID-19 related mitigation
measures. In particular, the equipment subscription volume increased from 107,590 for the four
months ended April 30, 2022 to 111,728 for the four months ended April 30, 2023, indicating
a rising demand for our services. In addition, the number of KA customers increased from 114
for the four months ended April 30, 2022 to 118 for the four months ended April 30, 2023.
Maintenance and Repair Services
Revenue from maintenance and repair services increased by 55.1% from RMB35.2
million for the four months ended April 30, 2022 to RMB54.5 million for the four months
ended April 30, 2023, mainly as a result of the rapid growth of equipment maintenance and
repair services following the end of the pandemic. In particular, due to the subsequent recovery
of the manufacturing industry we experienced an increase in demand for our maintenance and
repair services from such industry, reflecting an increase in demand for both one-off repair
services and maintenance and repair service plan.
Sales of Equipment and Parts
Revenue generated from sales of equipment and parts increased by 83.1% from RMB75.3
million for the four months ended April 30, 2022 to RMB137.8 million for the four months
ended April 30, 2023. This significant increase in revenue was attributed to the subsequent
recovery of the manufacturing industry and the surge in demand for high-quality equipment
and parts. As a result, our revenue from sales of intralogistics equipment increased from
RMB36.4 million for the four months ended April 30, 2022 to RMB71.3 million for the four
months ended April 30, 2023; our revenue from sales of related parts increased from RMB38.8
million for the four months ended April 30, 2022 to RMB66.5 million for the four months
ended April 30, 2023. Specifically, we successfully developed customer relationships with an
increasing number of new customers, including some state-owned enterprises. This growth was
aligned with the enhancement of our brand recognition and service quality, which motivated
new customers to purchase equipment and parts from us.
Cost of Sales
Our cost of sales increased from RMB245.9 million for the four months ended April 30,
2022 to RMB314.1 million for the four months ended April 30, 2023, primarily due to (i) an
increase in cost of machinery and parts due to the expansion of all three business lines. In
particular, due to the expansion in the services we offer, there was an increase in service
provision necessitated the use of additional equipment parts, in turn leading to a proportional
elevation in related costs; (ii) an increase in staff costs as a result of increases in salary and
employee headcount in line with service network expansion; and (iii) an increase in
depreciation charges and rental expenses due to the expansion of our intralogistics equipment
fleet. In particular, our equipment fleet size increased from 36,642 units for the four months
ended April 30, 2022 to 40,644 units for the four months ended April 30, 2023.
FINANCIAL INFORMATION
– 325 –


--- page 336 ---
Gross Profit and Gross Profit Margin
Our gross profit increased from RMB100.9 million for the four months ended April 30,
2022 to RMB122.2 million for the four months ended April 30, 2023 in line with the expansion
of our business. In particular, our three business lines experienced growth during the
corresponding periods, bolstered by the mitigation of COVID-19’s adverse impact. Our gross
profit margin slightly decreased from 29.1% for the four months ended April 30, 2022 to 28.0%
for the four months ended April 30, 2023 primarily due to a proportionate increase in our sales
of equipment and parts relative to our total revenue. The gross profit margin of sales of
equipment and parts is lower than our other service offerings, hence negatively impact our
overall gross profit margin.
Intralogistics Equipment Subscription Services
Gross profit from intralogistics equipment subscription services increased from RMB67.1
million for the four months ended April 30, 2022 to RMB70.3 million for the four months
ended April 30, 2023. The increase in gross profit was primarily due to the expansion of our
intralogistics equipment subscription services which resulted in higher service revenue, while
costs were effectively maintained at a steady level. In addition, our gross profit margin
remained relatively stable at 28.4% for the four months ended April 30, 2022 and 28.8% for
the four months ended April 30, 2023.
Maintenance and Repair Services
The gross profit from maintenance and repair services increased from RMB13.9 million
for the four months ended April 30, 2022 to RMB21.2 million for the four months ended April
30, 2023, primarily due to our business expansion as we expanded our business in more
regions. Gross profit margin of maintenance and repair services remained relatively stable at
39.6% for the four months ended April 30, 2022 and 38.9% for the four months ended April
30, 2023, respectively.
Sales of Equipment and Parts
Gross profit from sales of equipment and parts increased from RMB19.9 million for the
four months ended April 30, 2022 to RMB30.7 million for the four months ended April 30,
2023, primarily due to the growth of our business. Specifically, we successfully developed
customer relationships with an increasing number of new customers, including some
state-owned enterprises. This growth was aligned with the enhancement of our brand
recognition and service quality, which motivated new customers to purchase equipment and
parts from us. Gross profit margin of sales of equipment and parts slightly decreased from
26.4% for the four months ended April 30, 2022 to 22.3% for the four months ended April 30,
2023, due to the impact arising from certain specific equipment and parts we sold during the
corresponding period. V arious categories and specific brands of equipment and parts typically
exhibit different gross profit margins due to factors such as their cost structure, market
reputation, and demand levels. As a result, we had a slight fluctuation in gross profit margin
from sales of equipment and parts from time to time.
FINANCIAL INFORMATION
– 326 –


--- page 337 ---
Selling and Distribution Expenses
Our selling and distribution expenses decreased from RMB27.9 million for the four
months ended April 30, 2022 to RMB26.4 million for the four months ended April 30, 2023,
due to a decrease in office expenses relating to travel expenses. Alongside this, we established
a scalable service network to better accommodate our growing needs, which also attributed to
greater operational costs-efficiency.
Administrative Expenses
Our administrative expenses increased from RMB50.6 million for the four months ended
April 30, 2022 to RMB52.2 million for the four months ended April 30, 2023. The increase was
primarily due to (i) an increase in depreciation charges and rental expenses in line with the
business growth, indicating an increase in depreciation charges for our Hefei factory as well
as utilities, office consumables, and office premise related expenses and (ii) an increase in
research and development expenses in line with our enhanced efforts in research and
development activities.
Other Income and Gains/(Expenses)
Our other income and gains were RMB2.0 million for the four months ended April 30,
2022 primarily due to gain on remeasurement of an associate to acquisition-date fair value. We
had other expenses of RMB10.9 million for the four months ended April 30, 2023, primarily
due to the recognition of listing expenses.
Finance Costs
Our finance costs remained relatively stable at RMB27.4 million for the four months
ended April 30, 2022 and RMB27.3 million for the four months ended April 30, 2023,
respectively.
Income tax Credit
Our income tax credit decreased from RMB2.4 million for the four months ended April
30, 2022 to RMB0.9 million for the four months ended April 30, 2023, mainly because we
recorded loss before tax of RMB4.9 million for the four months ended April 30, 2022 while
profit before tax of RMB2.5 million for the four months ended April 30, 2023.
(Loss)/Profit for the Period
As a result of the above, we had net loss of RMB2.6 million for the four months ended
April 30, 2022 and net profit of RMB3.4 million for the four months ended April 30, 2023.
FINANCIAL INFORMATION
– 327 –


--- page 338 ---
Y ear Ended December 31, 2022 Compared With Y ear Ended December 31, 2021
Revenue
Despite the adverse impact of recurrence of COVID-19 in 2022, our revenue still
increased by 1.9% from RMB1,172.2 million in 2021 to RMB1,194.2 million in 2022.
Intralogistics Equipment Subscription Services
Revenue generated from intralogistics equipment subscription services slightly decreased
from RMB739.2 million in 2021 to RMB738.0 million in 2022. This was primarily due to the
recurrence of COVID-19 in 2022, which led to strict social distancing restrictions, an overall
subdued demand for our services, and temporary closures of our service network. These
restrictions significantly limited our ability to provide our services to customers, resulting in
a negative impact on our revenue. Despite our active efforts in business expansion during the
highly restricted period, the growth resulting from the expansion of our business was offset by
the negative impact on revenue caused by COVID-19.
Maintenance and Repair Services
Revenue from maintenance and repair services increased by 9.7% from RMB128.5
million in 2021 to RMB141.0 million in 2022, mainly as a result of our business expansion.
Although COVID-19 had a negative impact on our maintenance and repair service revenue, our
continued business growth of maintenance and repair services offset some of the losses. In
particular, our maintenance and repair service plan business line experienced a relatively
significant increase in revenue as a percentage of our overall maintenance and repair service
revenue, demonstrating the effectiveness of our diverse service offerings in meeting evolving
market demands. In addition, the increase in maintenance and repair service plan business line
can be attributed to a growing number of customers adopting for our scheduled inspections and
maintenance services to ensure the smooth operation of their equipment, driven by increased
customer loyalty and trust in our brand.
Sales of Equipment and Parts
Revenue generated from sales of equipment and parts increased by 3.5% from RMB304.5
million in 2021 to RMB315.2 million in 2022, primarily due to our business expansion. Despite
the slowdown in the overall industry growth due to the impact of the COVID-19 pandemic on
global supply chains and domestic business expansion, our business still expanded slightly. In
particular, our revenue from sales of related parts increased from RMB142.0 million to
RMB158.6 million as a result of our diverse sale offerings to customers.
FINANCIAL INFORMATION
– 328 –


--- page 339 ---
Cost of Sales
Our cost of sales increased from RMB798.0 million in 2021 to RMB832.5 million in
2022, primarily due to (i) an increase in depreciation charges and rental expenses due to the
expansion of our intralogistics equipment fleet, which increased from 36,257 units as of
December 31, 2021 to 39,145 units as of December 31, 2022; (ii) an increase in staff costs as
a result of increases in salary and employee headcount in line with service network expansion;
and (iii) an increase in costs of machinery and parts due to the growing market demand,
specifically in the business expansion of maintenance and repair services and sales of
equipment and parts.
Gross Profit and Gross Profit Margin
Our gross profit decreased from RMB374.2 million in 2021 to RMB361.7 million in
2022. In addition, our gross profit margin decreased from 31.9% in 2021 to 30.3% in 2022. The
decreases in our overall gross profit primarily reflect the decrease in our revenue due to the
negative impact of the COVID-19 recurrence in 2022, which temporarily closed service outlets
in several cities such as Beijing, Shanghai, Guangzhou, and Shenzhen. Our overall gross profit
margin decreased in 2022 primarily due to the facts that we closed relevant service outlets,
while fixed costs (such as staff costs, depreciation charges and other operation related
expenses) continued to incur during the corresponding period.
Intralogistics Equipment Subscription Services
Gross profit from intralogistics equipment subscription services decreased from
RMB250.7 million in 2021 to RMB226.1 million in 2022, with a corresponding decrease in the
gross profit margin from 33.9% in 2021 to 30.6% in 2022. The decline in both gross profit and
gross profit margin was primarily due to the negative impact of the COVID-19 recurrence in
2022, as a result of which, we had to continue incur relevant fixed costs and expenses, despite
experiencing an overall subdued demand for our services and the suspension of operations at
certain affected service outlets. The decrease in both gross profit and gross profit margin was
also attributed to a combination of factors including increased staff costs and depreciation
charges resulting from the rise in the number of equipment we managed and business
expansion, as well as the decrease utilization rates due to negative impact of the COVID-19
pandemic.
Maintenance and Repair Services
The gross profit from maintenance and repair services increased from RMB52.4 million
in 2021 to RMB57.7 million in 2022, primarily due to business expansion. Despite the negative
impact of COVID-19, our maintenance and repair service plans continued to steadily grow in
2022. Gross profit margin of maintenance and repair services remained relatively stable at
40.8% in 2021 and 40.9% in 2022, respectively.
FINANCIAL INFORMATION
– 329 –


--- page 340 ---
Sales of Equipment and Parts
Gross profit from sales of equipment and parts increased from RMB71.1 million in 2021
to RMB77.9 million in 2022; gross profit margin of sales of equipment and parts increased
from 23.4% in 2021 to 24.7% in 2022. The increase in both gross profit and gross profit margin
was mainly due to the expansion of our business scale as well as our effective supply chain
management. Through our centralized procurement strategy and effective supply chain
management, we were able to optimize our procurement costs, which resulted in higher profit
margins.
Selling and Distribution Expenses
Our selling and distribution expenses increased from RMB84.0 million in 2021 to
RMB86.1 million in 2022, mainly due to higher staff costs to support our increasing sales and
marketing activities. This increase was partially offset by lower depreciation charges and rental
expenses achieved through the reorganization and streamlining of our branch and headquarter
operations.
Administrative Expenses
Our administrative expenses increased from RMB143.2 million in 2021 to RMB156.9
million in 2022. The increase was primarily due to (i) additional depreciation charges and
rental expenses associated with the commissioning of our headquarter building since January
2022 and (ii) an increase in research and development expenses. However, this increase was
partially offset by a decrease in staff costs resulting from the impact of the COVID-19
pandemic, which led to lower performance-based salaries for some of our management
personnel.
Other Income and Gains/(Expenses)
Our other income and gains/(expenses) decreased from RMB3.8 million in 2021 to
RMB3.5 million in 2022, primarily due to a net foreign exchange loss resulting from
fluctuations in exchange rates. However, this decrease was partially offset by a gain on disposal
of an associate as well as fair value gain of financial assets at fair value through profit or loss.
Finance Costs
Our finance costs increased from RMB81.8 million in 2021 to RMB83.6 million in 2022,
primarily due to an increase in interests on bank loans.
Income tax Expenses
Our income tax expenses decreased from RMB4.3 million in 2021 to RMB20 thousand
in 2022, mainly due to the preferential tax treatment we received and a decrease in our profit
before income tax resulting from the negative impact of the COVID-19 recurrence in 2022.
FINANCIAL INFORMATION
– 330 –


--- page 341 ---
Profit for the Y ear and Total Comprehensive Income for the Y ear
As a result of the above, our profit for the year and total comprehensive income for the
year decreased from RMB55.2 million in 2021 to RMB35.4 million in 2022.
Y ear Ended December 31, 2021 Compared With Y ear Ended December 31, 2020
Revenue
Our total revenue increased by 19.5% from RMB980.6 million in 2020 to RMB1,172.2
million in 2021 primarily due to our business expansion through all three business segments.
In particular, our KA customer increased from 87 for the year ended December 31, 2020 to 122
for the year ended December 31, 2021.
Intralogistics Equipment Subscription Services
Revenue generated from intralogistics equipment subscription services increased by
15.6% from RMB639.7 million in 2020 to RMB739.2 million in 2021, primarily due to the
growth in our business scale and the increase in the size of the equipment fleet. For instance,
our equipment subscription volume increased from 325,590 for the year ended December 31,
2020 to 347,659 for the year ended December 31, 2021.
Maintenance and Repair Services
Revenue generated from maintenance and repair services increased by 15.3% from
RMB111.5 million in 2020 to RMB128.5 million in 2021, primarily due to the expansion of our
business scale, which led to an increase in the number of customers for our maintenance and
repair services.
Sales of Equipment and Parts
In 2021, revenue generated from sales of equipment and parts increased by 32.7% to
RMB304.5 million, primarily driven by our overall business expansion. In particular, our
equipment and parts procurement solution has better met the diverse needs of our customers,
contributing to this significant growth.
Cost of Sales
Our cost of sales increased from RMB650.5 million in 2020 to RMB798.0 million in
2021. This increase was primarily due to (i) an increase in costs of machinery and parts due
to the rise in the number of intralogistics equipment under our management as well as the
growth of sales of equipment and parts; (ii) an increase in depreciation charges and rental
expenses resulting from the expansion of our equipment fleet; and (iii) an increase in staff costs
resulting from salary increments and an increase in employee headcount for service network
expansion.
FINANCIAL INFORMATION
– 331 –


--- page 342 ---
Gross Profit and Gross Profit Margin
Our overall gross profit increased from RMB330.2 million in 2020 to RMB374.2 million
in 2021, while our overall gross profit margin decreased from 33.7% in 2020 to 31.9% in 2021.
The increase in overall gross profit was primarily due to our expanded business scale.
However, the decrease in overall gross profit margin was primarily due to lower utilization
rates that resulted from the negative impact of COVID-19.
Intralogistics Equipment Subscription Services
Gross profit from intralogistics equipment subscription services increased from
RMB228.2 million in 2020 to RMB250.7 million in 2021, primarily due to business growth.
However, the gross profit margin of intralogistics equipment subscription services decreased
from 35.7% in 2020 to 33.9% in 2021. This decrease can be attributed to (i) lower utilization
rates caused by the negative impact of COVID-19 and (ii) an increase in staff costs due to the
hiring of more employees in line with our business expansion.
Maintenance and Repair Services
Gross profit from maintenance and repair services increased from RMB45.6 million in
2020 to RMB52.4 million in 2021, primarily in line with our business growth. In particular, the
demands for one-off repair services increased steadily during the corresponding period. The
gross profit margin of maintenance and repair services remained relatively stable at 40.9% in
2020 and 40.8% in 2021, respectively.
Sales of Equipment and Parts
Gross profit from sales of equipment and parts increased from RMB56.4 million in 2020
to RMB71.1 million in 2021 primarily in line with our business growth. Gross profit margin
of sales of equipment and parts decreased from 24.6% in 2020 to 23.4% in 2021 primarily due
to fluctuations in export exchange rates.
Selling and Distribution Expenses
Our selling and distribution expenses increased from RMB72.3 million in 2020 to
RMB84.0 million in 2021, primarily due to (i) an increase in staff costs to support our
increasing sales and marketing activities and (ii) an increase in depreciation charges and rental
expenses in line with the expansion our service network as we continued to expand into new
markets.
FINANCIAL INFORMATION
– 332 –


--- page 343 ---
Administrative Expenses
Our administrative expenses increased from RMB120.7 million in 2020 to RMB143.2
million in 2021, primarily due to the increased staff costs and depreciation charges and rental
expenses resulting from the expansion of our administrative employee headcount to support
our business growth. Additionally, our research and development expenses increased from
RMB29.3 million to RMB35.7 million in order to continue our efforts to improve the efficiency
of our business operations.
Other Income and Gains/(Expenses)
Our other income and gains/(expenses) decreased from RMB4.7 million in 2020 to
RMB3.8 million in 2021, primarily due to a decrease in government grants, which were
occasional events and were varied from period to period.
Finance Costs
Our finance costs increased from RMB73.6 million in 2020 to RMB81.8 million in 2021,
primarily due to an increase in interests on bank loans and lease liabilities.
Income tax Expenses
Our income tax expenses decreased from RMB7.0 million in 2020 to RMB4.3 million in
2021, primarily due to the preferential tax treatment we received.
Profit for the Y ear and Total Comprehensive Income for the Y ear
As a result of the above, our profit for the year and total comprehensive income for the
year increased from RMB54.2 million in 2020 to RMB55.2 million in 2021.
FINANCIAL INFORMATION
– 333 –


--- page 344 ---
DISCUSSION OF CERTAIN SELECTED ITEMS FROM THE CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
The table below sets forth selected information from our consolidated statements of
financial position as of the dates indicated:
As of December 31,
As of
April 30,
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Non-current assets
Property, plant and equipment 692,098 808,689 856,533 884,098
Right-of-use assets 876,146 977,324 1,049,320 1,018,886
Intangible assets 3,854 3,862 8,684 8,397
Investment in associates 18,177 8,869 10,561 9,799
Deposits 78,989 86,174 96,507 92,360
Deferred tax assets 5,179 4,306 4,831 5,744
Total non-current assets 1,674,443 1,889,224 2,026,436 2,019,284
Current assets
Inventories 56,619 69,174 84,502 95,190
Trade and bills receivables 239,870 269,610 294,037 321,730
Prepayments, deposits, and
other receivables 89,087 98,201 106,027 118,333
Restricted deposits 31,462 44,762 30,850 54,030
Cash and cash equivalents 83,611 188,162 120,638 133,297
Total current assets 500,649 669,909 636,054 722,580
Current liabilities
Trade and bills payables 193,201 235,451 262,560 308,129
Other payables and accruals 92,387 103,199 112,853 112,849
Interest-bearing bank loans
and other borrowings 511,644 479,187 528,022 525,888
Tax payable 4,687 757 – –
Total current liabilities 801,919 818,594 903,435 946,866
Net current liabilities (301,270) (148,685) (267,381) (224,286)
FINANCIAL INFORMATION
– 334 –


--- page 345 ---
As of December 31,
As of
April 30,
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Total assets less current
liabilities 1,373,173 1,740,539 1,759,055 1,794,998
Non-current liabilities
Interest-bearing bank loans
and other borrowings 662,426 850,607 839,165 872,357
Other payables and accruals 27,186 25,872 19,777 19,170
Deferred tax liabilities – – 652 629
Total non-current liabilities 689,612 876,479 859,594 892,156
Net assets 683,561 864,060 899,461 902,842
EQUITY
Equity attributable to owners
of the Company:
Share capital 80,484 83,972 83,972 83,972
Reserves 603,077 780,088 815,489 818,870
Total equity 683,561 864,060 899,461 902,842
Property, Plant and Equipment
Our property, plant and equipment primarily consist of intralogistics equipment,
construction in progress, office equipment, motor vehicles, and lease improvements. The value
of our property, plant, and equipment increased from RMB692.1 million as of December 31,
2020 to RMB808.7 million as of December 31, 2021, mainly due to the addition of assets
related to the construction of the Hefei factory and headquarter building. The value of our
property, plant, and equipment increased from RMB808.7 million as of December 31, 2021 to
RMB856.5 million as of December 31, 2022, primarily due to the addition of new intralogistics
equipment in line with our business expansion. The value of our property, plant, and equipment
further increased from RMB856.5 million as of December 31, 2022 to RMB884.1 million as
of April 30, 2023, primarily due to addition of new intralogistics equipment in line with our
business expansion.
FINANCIAL INFORMATION
– 335 –


--- page 346 ---
Right-of-Use Assets
Our right-of-use assets represent leases of intralogistics equipment, office premises and
leasehold land. As of the lease commencement date, we recognize right-of-use assets and the
corresponding lease liabilities, except for short-term leases that have a lease term of 12 months
or less. Our right-of-use assets increased from RMB876.1 million as of December 31, 2020, to
RMB977.3 million as of December 31, 2021, and further to RMB1,049.3 million as of
December 31, 2022. This increase was primarily due to the new contracts we entered into with
financial institutions to expand our equipment fleet in line with our business expansion.
However, our right-of-use assets slightly decreased from RMB1,049.3 million as of December
31, 2022 to RMB1,018.9 million as of April 30, 2023, mainly due to depreciation of our
leasehold equipment fleet. Such decrease in right-of-use assets was partially offset by an
addition of new leasehold intralogistics equipment.
Investment in Associates
Investment in associates are stated in the consolidated statement of financial position at
our share of net assets under the equity method of accounting, less any impairment losses.
During the Track Record Period, our investment in associates was driven by our strategy to
diversify our business and expand our offerings within intralogistics equipment solution
industry. By investing in our associates, we were able to expand our product and service
offerings that may effectively complement our core business offerings.
During the Track Record Period, we made investments in four associates: Hefei Kejin
Automation Technology Co., Ltd. (“ Hefei Kejin ”), Ferretto Intelligent Equipment (Shanghai)
Co., Ltd. (“ Ferretto ”), Hefei Langyun IOT Technology Co., Ltd. (“ Hefei Langyun ”), and
Hefei Langxun Intelligent Equipment Co., Ltd. (“ Hefei Langxun ”). Our ownership interests in
these associates were 27.74%, 28.50%, 30.00%, and 27.74% respectively. The following table
sets forth the key financial information of our associates during the Track Record Period:
For the year ended/
As of December 31,
For the
four
months
ended/As
of April 30,
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Hefei Kejin
– Revenue 13,746 3,114 (1) –(1) –(1)
– Net loss (2,492) (6,716) (1) –(1) –(1)
– Total assets 41,545 – (1)* –(1) –(1)
Ferretto
– Revenue 46,638 81,234 58,717 5,779
– Net profit/(loss) 5,270 5,780 4,209 (2,487)
– Total assets 55,997 110,598 121,081 112,869
FINANCIAL INFORMATION
– 336 –


--- page 347 ---
For the year ended/
As of December 31,
For the
four
months
ended/As
of April 30,
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Hefei Langyun
– Revenue 1,253 3,373 3,486 – (2)
– Net profit/(loss) (575) (304) 906 – (2)
– Total assets 743 4,266 – (2)** –(2)
Hefei Langxun
– Revenue – (3) –(3) 1,849 1,528
– Net profit/(loss) – (3) –(3) (438) (191)
– Total assets – (3) –(3) 1,843 1,417
Notes:
(1) In December 2021, we disposed of Hefei Kejin, thus its management accounts ceased to impact our
financial performance, or to provide any relevant information available to us.
(2) In March 2022, we acquired the additional 70% of the equity shares of Hefei Langyun. After the
acquisition, Hefei Langyun then became a wholly-owned subsidiary of our Group.
(3) Hefei Langxun was incorporated in March 2022; consequently, pertinent data preceding this date is
unavailable.
* The total assets of Hefei Kejin is not meaningful as we derecognized such investment upon disposal.
** The total assets of Hefei Langyun is not meaningful as we derecognized such investment upon
acquisition.
*** Our management, conducted an impairment assessment on investments that showed impairment
indicators. We observed no significant or prolonged changes with an adverse effect that might have
taken place in the technological, market, economic or legal environment in which our associates operate,
which may lead to decline in the fair value of these investments below their carrying amounts. As a
result, we did not recognize any impairment loss on our investment in associates in the profit or loss
for the years ended December 31 2020, 2021, and 2022, as well as for the four months ended April 30,
2023.
Our Directors confirm that the consideration for these acquisitions was determined after
arms-length negotiations between the parties. During such negotiations, we primarily
considered the business synergy and the appraised value of these associates. As of December
31, 2020, 2021, 2022, and April 30, 2023, we recorded investments in associates of RMB18.2
million, RMB8.9 million, RMB10.6 million, and RMB9.8 million, respectively. These amounts
primarily reflect the initial investment costs in these associates adjusted by sharing the profit
or loss of the investees after the date of acquisition.
FINANCIAL INFORMATION
– 337 –


--- page 348 ---
Prepayments, Deposits, and Other Receivables
During the track record period, our prepayments, deposits, and other receivables
primarily consisted of (i) current portion of deposits, mainly represented deposits for our
leased properties and intralogistics equipment, and non-current portion of deposits mainly
represented deposits for finance leases of intralogistics equipment; (ii) prepayments, mainly
represented prepayments for listing expenses, rental expenses related to the lease of our branch
office, and procurements of parts and other supplies in relation to our operation. In particular,
our prepayments increased significantly as of April 30, 2023, primarily due to the prepayments
for listing expenses; and (iii) tax recoverable, mainly represented our prepaid value-added tax
and corporate income tax. Our tax recoverable primarily resulted from finance lease
arrangements. Since we had a significant amount of intralogistics equipment under finance
lease, a significant amount of tax recoverable in relation to finance lease was recorded
simultaneously. By taking into account our current backlog contract, such tax recoverable was
able to claim deductions for value-added tax when the subsequent lease payments were
factually made according to the finance lease arrangements. The following table sets forth the
details of our prepayments, deposits, and other receivables as of the dates indicated:
As of December 31,
As of
April 30,
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Current
Prepayments 13,115 10,623 13,261 24,607
Deposits 11,795 7,630 8,500 8,830
Other receivables 1,028 1,885 1,363 2,469
Tax recoverable 63,149 78,063 82,903 82,427
Subtotal 89,087 98,201 106,027 118,333
Non-current
Deposits 78,989 86,174 96,507 92,360
Total 168,076 184,375 202,534 210,693
Our prepayments, deposits, and other receivables increased from RMB168.1 million as of
December 31, 2020, to RMB184.4 million as of December 31, 2021, primarily due to (i) an
increase in non-current deposits resulting from the rise in finance leases of intralogistics
equipment and (ii) an increase in tax recoverable in line with our business expansion.
FINANCIAL INFORMATION
– 338 –


--- page 349 ---
Our prepayments, deposits, and other receivables increased from RMB184.4 million as of
December 31, 2021 to RMB202.5 million as of December 31, 2022 primarily due to (i) an
increase in non-current deposits resulting from the rise in finance leases of intralogistics
equipment and (ii) an increase in both tax recoverable and prepayments in line with our
business expansion.
Our prepayments, deposits, and other receivables further increased from RMB202.5
million as of December 31, 2022 to RMB210.7 million as of April 30, 2023 primarily due to
prepayments for listing expenses. Such increase was partially offset by a decrease in the
non-current portion of deposits, primarily due to the expiration of certain leases during the
corresponding period.
As of August 31, 2023, RMB95.4 million, or 45.3%, of our prepayments, deposits, and
other receivables as of April 30, 2023 had been settled. This includes settlement of RMB81.1
million, or 44.2%, of our tax recoverable and deposits for the same period.
Inventories
Our inventories primarily consist of (i) intralogistics equipment and (ii) parts. During the
Track Record Period, inventories of intralogistics equipment were constituted of two key
components, specifically (i) inventories transferred from property, plant, and equipment and
(ii) directly procured intralogistics equipment inventory. These inventories are typically settled
within one year and are mostly procured or transferred upon receipt of confirmed orders from
customers. In addition, our inventories of parts primarily include durable items such as
hydraulic oil pumps, brake pads, forklift radiators, and engine components. Despite these parts
having a relatively longer settlement period, we deem it necessary under our inventory
management policy, given the diversity in types, brands, specifications, and ages of our fleet
equipment. It allows us to minimize products costs and logistical expenses by making bulk
purchases from relevant intralogistics equipment part suppliers. Our inventories are not
classified as slow-moving or obsolete. Approximately 70% of our inventory has been utilized
or sold within one year. The remaining inventory, aged over one year, has historically been
gradually consumed or sold, leaving an immaterial unused or unsold balance within a period
of two to three years. This trend is also consistent with our historical sale and utilization rates
of inventories as of December 31, 2020, 2021, 2022, and April 30, 2023.
In managing our inventories, we diligently follow a proactive inventory management
policy that helps ensure we maintain an optimal inventory level while minimizing the risk of
overstocking or shortage. This includes regular monitoring of our inventory levels and demand
patterns, enabling us to promptly respond to changes in customer demand and maintain a
smooth supply chain operation. Our practices allow us to ensure the high turnover rate of our
inventory and minimize any potential issues related to slow-moving or obsolete stock.
FINANCIAL INFORMATION
– 339 –


--- page 350 ---
Our inventories increased from RMB56.6 million as of December 31, 2020, to RMB69.2
million as of December 31, 2021, to RMB84.5 million as of December 31, 2022, and further
to RMB95.2 million as of April 30, 2023. The continued increase during the Track Record
Period was primarily due to the expansion of our equipment fleet and the business scale of our
maintenance services in line with our business growth. This expansion resulted in a growing
demand for relevant parts to support daily operations and maintenance needs. In addition, the
increase in inventories in 2022 was also attributable to the fact that we experienced delayed
delivery of certain orders to our overseas customers in 2022. These delays resulted from
disease prevention policy in Guangzhou amid the COVID-19 pandemic.
The following table sets forth the number of our inventory turnover days for the periods
indicated:
Y ear ended December 31,
Four
months
ended
April 30
2020 2021 2022 2023
Inventory turnover days (1) 31.4 28.8 33.7 34.3
Note:
(1) Inventory turnover days was calculated based on the average of opening and closing inventory balance
for the relevant year/period, divided by the cost of sales for the same year/period, and multiplied by 365
days for 2020, 2021 and 2022 and by 120 days for the four months ended April 30, 2023.
Our inventory turnover days decreased from 31.4 days in 2020 to 28.8 days primarily due
to the improvement in inventory management with the assistance from our technologies. Our
inventory turnover days increased from 28.8 days in 2021 to 33.7 days in 2022, primarily due
to less inventory consumption during the COVID-19 recurrence in 2022. In particular, we
experienced delayed delivery of certain orders to our overseas customers in 2022. Our
inventory turnover days remained relatively stable at 33.7 days and 34.3 days as of December
31, 2022 and April 30, 2023, respectively, as we gradually recovered from the negative impact
of COVID-19.
FINANCIAL INFORMATION
– 340 –


--- page 351 ---
The majority of our inventories generally have an aging within six months. The following
table sets forth an aging analysis of our inventories as of the date indicated.
As of December 31,
As of
April 30,
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Within six months 44,707 49,806 61,416 67,749
Six to twelve months 1,375 1,609 2,428 2,817
Over one year 10,537 17,759 20,658 24,624
Total 56,619 69,174 84,502 95,190
As of August 31, 2023, RMB58.4 million, or 61.4%, of our inventories as of April 30,
2023 had been delivered or consumed.
Our Directors believe that there is no recoverability issue for our inventories aged over
one year primarily because (i) our inventories aged over one year did not remain static but
gradually sold or utilized during the Track Record Period. 93.1% and 87.7% of the inventories
aged over one year as of December 31, 2020 and 2021 were subsequently sold and used up until
August 31, 2023, leaving minimal unsold or unused balances as of August 31, 2023. and (ii)
for the unsold or unused inventories aged over one year as of December 31, 2022 and April 30,
2023, the Company regularly monitor their inventory levels, strictly adhering to the relevant
business plan for optimizing inventory level. Given the sustainable high historical sales rates
for inventories aged over one year, bolstered by the Company’s inventory management policy,
our management has a reasonable basis to estimate that these inventories will not become
obsolete or unsellable in the foreseeable future. As of April 30, 2023, no provision was made
for such inventory aged over one year.
Trade and Bills Receivables
Our trade and bills receivables primarily consist of (i) trade receivables, representing to
the amount of money owed by customers for goods or services sold on credit terms and (ii) bills
receivable, representing bank acceptance bills that have been received from our customers. The
following table sets forth our trade and bills receivables as of the date indicated:
As of December 31,
As of
April 30,
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables 242,311 258,830 287,434 323,921
Bills receivable 18,578 26,695 25,645 18,774
Less: Impairment (21,019) (15,915) (19,042) (20,965)
Total 239,870 269,610 294,037 321,730
FINANCIAL INFORMATION
– 341 –


--- page 352 ---
Our trade and bills receivables increased from RMB239.9 million as of December 31,
2020 to RMB269.6 million as of December 31, 2021 primarily due to (i) an increase in trade
receivables in line with the business expansion and (ii) an increase in bills receivable due to
more customers opting to settle their invoices using bills, which have not reached their due
date. As of December 31, 2022, our trade receivables increased to RMB294.0 million from
RMB269.6 million as of December 31, 2021. This was primarily due to our decision to
temporarily extend credit terms to certain customers to ease their financial burden during the
COVID-19. In determining qualified customers, we take into account various factors, including
their previous business track record with us, growth potential, and credit history. Our trade and
bills receivables increased from RMB294.0 million as of December 31, 2022 to RMB321.7
million as of April 30, 2023 primarily due to the increase in trade receivables in line with the
business expansion. Specifically, we successfully developed customer relationships with an
increasing number of new customers, including some state-owned enterprises. This growth was
aligned with the enhancement of our brand recognition and service quality, which motivated
new customers to purchase equipment and parts from us.
We have established a credit control department to minimize our credit risk and maintain
control over our outstanding receivables. Our management regularly review the settlement
situations of customers with relatively long credit periods. The following table sets forth an
aging analysis of our trade and bills receivables as of the dates indicated presented based on
invoice date:
As of December 31,
As of
April 30,
Subsequent
settlement
as of
August 31,
2020 2021 2022 2023 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
One to three months 204,937 232,002 242,481 258,446 210,771
Four to six months 25,425 25,476 36,987 42,928 34,504
Six to twelve months 8,274 6,077 10,788 12,827 6,833
Over one year 1,234 6,055 3,781 7,529 7,529
Total 239,870 269,610 294,037 321,730 259,637
FINANCIAL INFORMATION
– 342 –


--- page 353 ---
The following table sets forth the number of our trade receivables turnover days for the
periods indicated:
Y ear ended December 31,
Four
months
ended
April 30
2020 2021 2022 2023
Trade receivables turnover
days (1) 81.3 72.3 78.1 78.6
Note:
(1) Trade receivables turnover days was calculated based on the average of opening and closing balance of
trade receivables less allowance for impairment for the relevant year/period, divided by the revenue for
the same year/period and multiplied by 365 days for 2020, 2021 and 2022 and by 120 days for the four
months ended April 30, 2023.
Our trade receivables turnover days decreased from 81.3 days in 2020 to 72.3 days in
2021, mainly due to faster repayment from our customers resulting from the improvements in
settlement efficiency. However, our trade receivables turnover days increased from 72.3 days
in 2021 to 78.1 days in 2022, primarily due to the temporary extension of credit terms to certain
customers to help them cope with the negative impact due to COVID-19. Our trade receivables
turnover days remained relatively stable at 78.1 days and 78.6 days as of December 31, 2022
and April 30, 2023, respectively.
As of August 31, 2023, RMB244.5 million, or 80.7%, of our trade receivables as of April
30, 2023 had been settled. Our management believes there have been no issues with the
recoverability of our trade receivables and that adequate provisions have been made. We
consistently conduct both periodic aggregate assessments and individual assessments of the
recoverability of our trade receivables based on historical settlement records and past
experience. During challenging periods, such as the COVID-19 pandemic, we occasionally
extended longer settlement periods to certain customers to alleviate their financial pressures.
Nevertheless, as of August 31, 2023, 80.7% of our trade receivables as of April 30, 2023, were
settled. Our management is of the view that such settlements over the past four months have
remained healthy.
FINANCIAL INFORMATION
– 343 –


--- page 354 ---
Cash and Cash Equivalents
Our cash and cash equivalents primarily consisted of cash and bank balances. As of
December 31, 2020, our cash and cash equivalents were RMB83.6 million. This amount
increased to RMB188.2 million as of December 31, 2021, primarily due to our business
growth, along with the equity financing we received. However, as of December 31, 2022, our
cash and cash equivalents decreased to RMB120.6 million. This decrease was primarily due to
payments made for fixed assets, including construction costs for our Hefei base. Our cash and
cash equivalents increased from RMB120.6 million as of December 31, 2022 to RMB133.3
million as of April 30, 2023 mainly due to cash generated from operating activities, which was
partially offset by cash used in investing activities for acquisition of intralogistics equipment
and repayment of certain interest-bearing bank and other borrowing.
Trade and Bills Payable
During the Track Record Period, our trade payables primarily consisted of (i) trade
payables and (ii) bills payable, representing the amounts owed by us for bills of exchange that
have been accepted but have not yet been paid. The following table sets forth the details of our
trade and bills payable as of the dates indicated:
As of December 31,
As of
April 30,
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade payables 107,210 138,866 159,876 190,504
Bills payable 85,991 96,585 102,684 117,625
Total 193,201 235,451 262,560 308,129
Our trade and bills payables increased from RMB193.2 million as of December 31, 2020
to RMB235.5 million as of December 31, 2021, and further to RMB262.6 million as of
December 31, 2022. These increases were primarily due to certain suppliers granting us longer
credit terms considering our long-term trustworthy business relationship. In addition, our trade
and bill payables increased from RMB262.6 million as of December 31, 2022 to RMB308.1
million as of April 30, 2023, primarily due to the an increase in payables for procurement of
intralogistics equipment to cope with our growing business needs regarding sales of
intralogistics equipment.
FINANCIAL INFORMATION
– 344 –


--- page 355 ---
Our trade payables’ credit terms typically range from 60 to 180 days. The following table
sets forth an aging analysis of our trade and bills payables as of the dates indicated based on
the invoice date:
As of December 31,
As of
April 30,
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Within 3 months 159,441 194,392 212,550 270,270
3 months to 1 year 24,789 35,845 42,644 29,686
Over 1 year 8,971 5,214 7,366 8,173
Total 193,201 235,451 262,560 308,129
The following table sets forth the number of our trade payables turnover days for the
periods indicated:
Y ear ended December 31,
Four
months
ended
April 30
2020 2021 2022 2023
Trade payables turnover
days (1) 55.4 56.3 65.5 66.9
Note:
(1) Trade payables turnover days was calculated based on the average of opening and closing balance of
trade payables for the relevant year/period, divided by the cost of sales for the same year/period, and
multiplied by 365 days for 2020, 2021 and 2022 and by 120 days for the four months ended April 30,
2023.
Our trade payables turnover days increased from 55.4 days in 2020 to 56.3 days in 2021,
to 65.5 days in 2022, and further to 66.9 days for the four months ended April 30, 2023. These
increases were mainly due to our suppliers granting us more favorable credit terms as a result
of our long-standing and trustworthy business relationship with them.
As of August 31, 2023, RMB138.9 million, or 72.9%, of our trade payables as of April
30, 2023 had been settled.
FINANCIAL INFORMATION
– 345 –


--- page 356 ---
Other Payables and Accruals
During the Track Record Period, our other payables and accruals primarily consisted of
(i) other payables, which represent deposits received from our customers for intralogistics
equipment subscription services as well as payables related to the acquisition of intralogistics
equipment. Payment for these payables is typically settled based on an agreed installment
schedule; (ii) accruals, which represent accrued expenses for utilities and other operating
expenses and listing expenses. In particular, our accruals increased significantly as of April 30,
2023, primarily due to the accruals of listing expenses; (iii) salary and welfare payables, which
represent basic salary and year-end bonus; (iv) endorsed bills receivable that have not been
derecognized and not yet due, which represent bills or promissory notes that we have received
and endorsed, but have not yet been paid and have not yet reached their maturity date; (v)
contract liabilities; and (vi) other tax payables for value-added taxes. The following table sets
forth the details of other payables and accruals as of the dates indicated:
As of December 31,
As of
April 30,
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Current
Other payables 47,392 50,237 50,478 49,321
Accruals 3,580 1,743 4,489 18,444
Salary and welfare payables 14,450 14,682 14,845 13,725
Endorsed bills receivable that
have not been derecognized
and not yet due 15,931 21,465 18,921 13,310
Contract liabilities 7,242 8,972 14,559 12,945
Other tax payables 3,792 6,100 9,561 5,104
Subtotal 92,387 103,199 112,853 112,849
Non-current
Other payables 27,186 25,872 19,777 19,170
Total 119,573 129,071 132,630 132,019
Our other payables and accruals increased from RMB119.6 million as of December 31,
2020 to RMB129.1 million as of December 31, 2021, primarily due to (i) an increase in
endorsed bills receivable that have not been derecognized and not yet due; (ii) an increase in
other tax payables, reflecting the increase in property related tax for our factory in Hefei; (iii)
an increase in current other payables in line with business expansion; and (iv) an increase in
contract liabilities due to an increase in sales to customers overseas. Such increase was
partially offset by (i) a decrease in accruals related to rent due to office relocation and (ii) a
decrease in non-current other payables due to consideration payable for the acquisition of
intralogistics equipment, which were gradually settled according to the payment schedule.
FINANCIAL INFORMATION
– 346 –


--- page 357 ---
Our other payables and accruals increased from RMB129.1 million as of December 31,
2021 to RMB132.6 million as of December 31, 2022, primarily due to (i) an increase in
contract liabilities due to delivery delays caused by the recurrence of COVID-19 in 2022 and
(ii) an increase in other tax payables, reflecting the increase in property tax for our headquarter
buildings. Such increase was partially offset by (i) a decrease in non-current other payables due
to the same reason above and (ii) a decease in endorsed bills receivable that have not been
derecognized and not yet due.
Our other payables and accruals decreased from RMB132.6 million as of December 31,
2022 to RMB132.0 million as of April 30, 2023, primarily due to a decrease in endorsed bills
receivable that have not been derecognized and not yet due and other tax payable. These
decreases align with our business patterns that typically record a lower volume of business
transactions in the first quarter than the last quarter of the year. In addition, these decreases
were partially offset by an increase of accrued listing expenses.
As of August 31, 2023, RMB54.8 million, or 48.5%, of our other payables and accruals
as of April 30, 2023 had been settled. This includes settlement of RMB6.6 million, or 51.2%,
of our contract liabilities for the same period.
LIQUIDITY AND CAPITAL RESOURCES
Overview
Our principal use of cash during the Track Record Period was for working capital
purposes. Our main source of liquidity has been generated from cash flow from operation.
Going forward, we believe that our liquidity requirements will be satisfied with a combination
of cash flows generated from our operating activities, bank facilities and net proceeds from the
Global Offering. As of April 30, 2023, we had cash and cash equivalents of RMB133.3 million.
Taking into account the financial resources available to us, including cash flow from operating
activities, unutilized bank facilities, 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.
FINANCIAL INFORMATION
– 347 –


--- page 358 ---
Cash Flows
The following table sets forth our consolidated statements of cash flows for the periods
indicated:
Y ear ended December 31,
Four months
ended April 30,
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Cash generated from
operations before
movements in
working capital 449,806 530,266 540,429 160,799 180,408
Changes in working
capital 8,058 (898) (19,131) (16,981) (25,532)
Cash generated from
operations 457,864 529,368 521,298 143,818 154,876
Interest received 1,443 1,651 1,945 551 410
Income tax paid (7,724) (3,388) (1,051) (758) (18)
Net cash flows
generated from
operating activities 451,583 527,631 522,192 143,611 155,268
Net cash flows used
in investing
activities (157,637) (285,358) (226,168) (75,263) (103,710)
Net cash flows used
in financing
activities (328,375) (137,722) (363,548) (85,538) (38,899)
Net
increase/(decrease)
in cash and cash
equivalents (34,429) 104,551 (67,524) (17,190) 12,659
Cash and cash
equivalents at
beginning of the
year/period 118,040 83,611 188,162 188,162 120,638
Cash and cash
equivalents at end
of the year/period 83,611 188,162 120,638 170,972 133,297
FINANCIAL INFORMATION
– 348 –


--- page 359 ---
Net Cash Generated From Operating Activities
For the four months ended April 30, 2023, we generated RMB155.3 million in cash from
operating activities. This was primarily due to a profit before tax of RMB2.5 million, adjusted
for (i) finance costs of RMB27.3 million; and (ii) non-cash items, including (a) property, plant,
and equipment depreciation of RMB79.3 million and (b) right-of-use asset depreciation of
RMB68.4 million. Changes in working capital mainly included (i) a decrease in trade and bills
payables of RMB45.6 million; (ii) an increase in trade and bill receivables of RMB29.8 million
in line with the business expansion, in particular due to the new customers we developed for
sales of equipment and parts; (iii) an increase in prepayments, deposits and other receivables
of RMB12.6 million; and (iv) an increase in inventories of RMB10.7 million due to the
expansion of our equipment fleet and business scale of our maintenance services in line with
our business growth.
In 2022, we generated RMB522.2 million in cash from operating activities. This was
primarily due to a profit before tax of RMB35.4 million, adjusted for (i) finance costs of
RMB83.6 million; and (ii) non-cash items, including (a) property, plant, and equipment
depreciation of RMB211.2 million; (b) right-of-use asset depreciation of RMB209.5 million;
and (c) impairment losses of financial assets of RMB4.2 million. Changes in working capital
mainly included (i) an increase in inventories of RMB14.7 million due to delayed delivery of
certain orders to our overseas customers in early 2022, as a result of the COVID-19 related
disease prevention policy in Guangzhou; (ii) an increase in trade and bills receivables of
RMB28.1 million due to our temporary extension of credit terms to some customers to ease
their financial burden; (iii) an increase in prepayments, deposit and other receivables of
RMB18.5 million mainly due to an increase in the deposits for intralogistics equipment
purchased using borrowings from financial institutions, along with our business expansion; (iv)
an increase in trade and bills payables and accruals of RMB27.1 million due to certain
suppliers granting us longer credit terms considering our long-term trustworthy business
relationship; and (v) an increase in other payables and accruals of RMB15.0 million due to
delayed settlement of our contract liabilities due to the negative impact of COVID-19 and
increased deposits received from customers with our enlarged scales of intralogistics
equipment.
In 2021, we generated RMB527.6 million in cash from operating activities, primarily due
to a profit before tax of RMB59.4 million, adjusted for (i) finance costs of RMB81.8 million;
and (ii) non-cash items, including (a) property, plant, and equipment depreciation of
RMB181.4 million; (b) right-of-use asset depreciation of RMB198.8 million; and (c)
impairment losses of financial assets of RMB4.5 million. Changes in working capital mainly
included (i) an increase in inventories of RMB12.6 million due to an increase in inventories to
cope with our enlarged business needs; (ii) an increase in trade and bills receivables of
RMB24.6 million due to our deeper cooperation with our customers; (iii) an increase in
prepayments, deposits, and other receivables of RMB16.3 million mainly due to an increase in
the deposits for intralogistics equipment purchased using borrowings from financial
institutions; (iv) an increase in trade and bills payables of RMB42.3 million due to longer
credit terms granted to us by certain of our suppliers; and (v) an increase in other payables and
accruals of RMB10.3 million due to an increase in deposits received from our customers with
our enlarged scales of intralogistics equipment.
FINANCIAL INFORMATION
– 349 –


--- page 360 ---
In 2020, we generated RMB451.6 million in cash from operating activities, primarily
attributable to profit before tax of RMB61.2 million, adjusted primarily for (i) finance costs of
RMB73.6 million; and (ii) non-cash items, which mainly included (a) depreciation of property,
plant, and equipment of RMB155.6 million: (b) depreciation of right-of-use assets of
RMB153.4 million; and (c) impairment losses of financial assets of RMB6.8 million. Changes
in working capital mainly included (i) an increase in inventories of RMB1.2 million, which was
in line with the increase in our overseas sales of parts; (ii) an increase in trade and bills
receivables of RMB15.7 million along with our business expansion; (iii) an increase in
prepayments, deposits, and other receivables of RMB4.8 million mainly due to an increase in
deposits for intralogistics equipment purchased using borrowings from financial institutions;
(iv) an increase in trade and bills payables of RMB19.3 million for procurement of parts to
cope with future growing business needs; and (v) an increase in other payables and accruals of
RMB10.5 million due to an increase in salary and welfare payable and contract liabilities along
with our business expansion.
Net Cash Used in Investing Activities
For the four months ended April 30, 2023, our net cash used in investing activities was
RMB103.7 million, mainly due to the acquisition of items of property, plant and equipment of
RMB103.5 million.
In 2022, we used net cash of RMB226.2 million in investing activities, primarily due to
(i) the purchase of property, plant, and equipment amounting to RMB220.8 million, including
the purpose for our headquarter office and Heifei factory to meet our growing business
demands; and (ii) a cash consideration payment of RMB4.2 million in connection with the
acquisition of an associate to a subsidiary.
In 2021, our net cash used in investing activities was RMB285.4 million, mainly due to
the purchase of property, plant, and equipment and intangible assets amounting to RMB285.2
million, including the purpose for our headquarter office and Hefei factory, to cope with our
business expansion.
In 2020, we used net cash of RMB157.6 million in investing activities, primarily due to
the purchase of property, plant, and equipment and intangible assets amounting to RMB136.0
million to meet our business needs.
Net Cash Used in Financing Activities
Our net cash used in financing activities was RMB38.9 million for the four months ended
April 30, 2023, primarily due to new bank loans and other borrowings of RMB158.2 million,
offset by (i) principal portion of lease payments of RMB118.0 million and (ii) repayment of
bank loans and other borrowings of RMB50.3 million.
FINANCIAL INFORMATION
– 350 –


--- page 361 ---
Our net cash used in financing activities was RMB363.5 million in 2022, primarily due
to new bank loans and other borrowings of RMB246.1 million, offset by (a) repayment of bank
loans and other borrowings of RMB213.4 million; (b) payments of the principle portion of
lease liabilities of RMB307.2 million; and (c) payments of interests of RMB89.0 million.
In 2021, our net cash used in financing activities was RMB137.7 million, mainly due to
(i) new bank loans and other borrowings of RMB317.8 million and (ii) issue of ordinary shares
of RMB130.0 million, offset by (a) repayment of bank loans and other borrowings of
RMB177.3 million; (b) payments of the principle portion of lease liabilities of RMB319.4
million; and (c) payments of interests of RMB88.8 million.
In 2020, our net cash used in financing activities was RMB328.4 million, primarily due
to new bank loans and other borrowings of RMB188.5 million, offset by (a) repayment of bank
loans and other borrowing of RMB158.4 million; (b) payments of the principle portion of lease
liabilities of RMB281.8 million; and (c) payments of interests of RMB76.7 million.
Net Current Liabilities
As of December 31,
As of
April 30,
As of
August 31,
2020 2021 2022 2023 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current assets
Inventories 56,619 69,174 84,502 95,190 107,896
Trade and bills
receivables 239,870 269,610 294,037 321,730 329,498
Prepayments, deposits,
and other receivables 89,087 98,201 106,027 118,333 139,227
Restricted deposits 31,462 44,762 30,850 54,030 85,413
Cash and cash
equivalents 83,611 188,162 120,638 133,297 92,461
Total current assets 500,649 669,909 636,054 722,580 754,495
Current liabilities
Trade and bills payables 193,201 235,451 262,560 308,129 311,969
Other payables and
accruals 92,387 103,199 112,853 112,849 124,633
Interest-bearing bank
loans and other
borrowings 511,644 479,187 528,022 525,888 601,350
Tax payable 4,687 757 – – 651
Total current liabilities 801,919 818,594 903,435 946,866 1,038,603
Net current liabilities (301,270) (148,685) (267,381) (224,286) (284,108)
FINANCIAL INFORMATION
– 351 –


--- page 362 ---
We recorded net current liabilities and relatively high gearing ratio as of December 31,
2020, 2021, 2022, and April 30, 2023, due to our substantial investments in capital
expenditures, including property, plant, equipment, and right-of-use assets, such as
intralogistics equipment, in line with our business development strategy. These investments,
while critical to our long-term success, were classified as non-current assets, leading to a net
current liability position. Simultaneously, to finance these investments, we relied on external
borrowings, leading to a high gearing ratio. While this situation creates short-term financial
pressures, it stems from our strategy of prioritizing long-term capital investments. 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, taking into account
our financial resources, including internally generated funds, the proceeds from the Global
Offering, and available facilities from bank and other borrowings. In addition, our Directors
are of the view that we are able to match our loans and borrowings to support our long-term
operational needs. We base this confidence on the following factors:
 Cash flow generated from operations : Our net cash generated from operating
activities was RMB451.6 million, RMB527.6 million, RMB522.2 million, and
RMB155.3 million for the years ended December 31, 2020, 2021, 2022, and four
months ended April 30, 2023, respectively. This steady cash flow is a testament to
our technology and execution capabilities, as well as the industry recognition we
have received. This cash flow consistency also underscores our adeptness in
resource allocation and efficiency enhancement. In the future, by expanding into
untapped markets and streamlining our cost structures, we foresee the continuation
of this positive cash flow trend. Furthermore, we are placing a renewed emphasis on
enhancing communication with both our suppliers and customers. This is expected
to expedite the collection of trade receivables while simultaneously negotiating
extended payment terms with our suppliers.
 Bank and other borrowings : As of August 31, 2023, we had unutilized facilities for
bank and other borrowings of RMB1,436.8 million, providing us with additional
financial resources. Historically, we have been able to obtain bank and other
borrowings when needed, and we believe that our long-term and healthy
relationships with banks and financial institutions will continue to support our
borrowing needs in the future. In the upcoming quarters, we are geared to engage in
negotiations to secure more favorable borrowing terms, including reduced interest
rates, aligning with our business growth strategy. We are dedicated to managing our
indebtedness proactively and maintaining a healthy financial position. We believe
that our commitment to financial prudence will enable us to navigate any economic
uncertainties that may arise while seizing growth opportunities.
 Proceeds from the Global Offering : We expect to receive proceeds from the Global
Offering of approximately HK$126.8 million, after deducting underwriting
commissions, fees, and estimated expenses payable by us in connection with the
Global Offering. These proceeds will further strengthen our financial position and
support our business development initiatives.
FINANCIAL INFORMATION
– 352 –


--- page 363 ---
 Stringent cash management : We closely monitor and manage our cash position and
requirements to ensure that we have sufficient working capital for our operations.
We prioritize planned and systematic cash flow management and match short-term
loans with our operational needs to ensure we have sufficient liquidity to cover its
immediate expenses while maintaining flexibility for future investments in
equipment. Our finance department is responsible for managing our working capital
and the collection of our receivables settlement. During the Track Record Period,
our trade receivable turnover days remained relatively stable around 80 days, and as
of August 31, 2023, RMB244.5 million, or 80.7%, of our trade receivables as of
April 30, 2023, had been settled. To further tighten our cash management regimen,
we have instituted a weekly review mechanism. This periodic assessment aids in
making informed decisions about cash allocation, capital structure optimization, and
addressing immediate and future working capital needs.
INDEBTEDNESS
Our indebtedness mainly included interest-bearing bank loans and other borrowings
during the Track Record Period. Except as disclosed in the table below, we did not have any
material mortgages, charges, debentures, loan capital, debt securities, loans, bank overdrafts or
other similar indebtedness, finance lease or hire purchase commitments, liabilities under
acceptances (other than normal trade bills), acceptance credits, which are either guaranteed,
unguaranteed, secured or unsecured, or guarantees or other contingent liabilities as of August
31, 2023. After due and careful consideration, our Directors confirm that there had been no
material adverse change in our indebtedness since August 31, 2023 and up to the Latest
Practicable Date. The following table sets forth a breakdown of our indebtedness as of the dates
indicated:
As of December 31,
As of
April 30,
As of
August 31,
2020 2021 2022 2023 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current
Bank loans and other
borrowings 168,121 157,408 174,114 223,735 233,694
Lease liabilities 343,523 321,779 353,908 302,153 367,656
Subtotal 511,644 479,187 528,022 525,888 601,350
Non-current
Bank loans and other
borrowings 239,810 391,006 406,971 465,243 474,783
Lease liabilities 422,616 459,601 432,194 407,114 414,807
Subtotal 662,426 850,607 839,165 872,357 889,590
Total 1,174,070 1,329,794 1,367,187 1,398,245 1,490,940
FINANCIAL INFORMATION
– 353 –


--- page 364 ---
Our bank loans and other borrowings during the Track Record Period were primarily used
for business operations. Our bank loans and other borrowings bore interest at rate equivalents
ranging from approximately 3.7% to 9.9% per year. For more details of these borrowings, see
Note 23 to the Accountant’s Report in Appendix I to this prospectus. Furthermore, our lease
liabilities represent the obligations related to the leasing of intralogistics equipment and office
premises, specifically for lease terms exceeding one year. The growth in the aforementioned
balances during the Track Record Period primarily stemmed from increased working capital
and capital expenditure requirements due to our business expansion.
Our Directors confirm that we have not defaulted in the repayment of the bank loans and
other borrowings during the Track Record Period. Our Directors have confirmed that, as of the
Latest Practicable Date, there was no material covenant on any of our outstanding debt and
there was no breach of any covenants during the Track Record Period and up to the Latest
Practicable Date. During the Track Record Period and up to the Latest Practicable Date, to the
best knowledge of our Directors, we did not experience any difficulty in obtaining bank loans.
CAPITAL EXPENDITURES
We regularly incur capital expenditures to expand our equipment fleet, upgrade our
service network, and increase our operating efficiency. Our capital expenditures represented
payments for acquisition of items of property, plant and equipment and right-of-use assets
during the Track Record Period. In 2020, 2021, 2022, and four months ended April 30, 2023,
we incurred capital expenditure of RMB156.7 million, RMB284.2 million, RMB220.8 million,
and RMB103.5 million, respectively.
CAPITAL COMMITMENTS
As of December 31, 2020, 2021, 2022, and April 30, 2023, we had capital commitments
of RMB6.4 million, RMB49.5 million, RMB37.7 million, and RMB38.5 million, respectively,
primarily in connection with the construction of Hefei Factory and our headquarter building.
CONTINGENT LIABILITIES
As of December 31, 2020, 2021, 2022, and April 30, 2023, we did not have any material
contingent liabilities. We confirm that as of the Latest Practicable Date, there had been no
material changes or arrangements to our contingent liabilities.
OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS
As of the Latest Practicable Date, we had not entered into any off-balance sheet
transactions.
FINANCIAL INFORMATION
– 354 –


--- page 365 ---
KEY FINANCIAL RATIOS
The table below sets forth the key financial ratios as of the dates indicated:
As of December 31,
As of
April 30,
2020 2021 2022 2023
Current ratio (1) 0.6 0.8 0.7 0.8
Gearing ratio (2) 171.8% 153.9% 152.0% 154.9%
Notes:
(1) Equals current assets divided by current liabilities as of the same date.
(2) Equals bank loans and other borrowings divided by total equity as of the same date.
Our current ratio remained relatively stable during the Track Record Period. In 2021, our
current ratio increased to 0.8 primarily due to an increase in cash and cash equivalents resulting
from our business operations.
Our gearing ratio decreased from 171.8% as of December 31, 2020 to 153.9% as of
December 31, 2021, and further decreased to 152.0% as of December 31, 2022. This was
primarily due to an increase in equity, partially offset by an increase in bank loans and other
borrowings. However, our gearing ratio increased slightly from 152.0% as of December 31,
2022 to 154.9% as of April 30, 2023, primarily due to an increase in bank loans and other
borrowings to support our business operation.
RELATED PARTY TRANSACTIONS
During the Track Record Period, we engaged in certain related party transactions. For
details, please see Note 31 to the Accountant’s Report in Appendix I to this prospectus. These
transactions mainly involved (i) selling products to Guangdong Santouliubi Information
Technology Co., Ltd. and (ii) purchasing products from and selling products to our associates,
with total amounts of RMB2.2 million, RMB4.5 million, RMB2.3 million, and RMB0.9 million
in 2020, 2021, 2022 and four months ended April 30, 2023, respectively. The outstanding
balances with related parties amounted to RMB0.4 million, RMB0.8 million, RMB0.2 million,
and RMB0.4 million as of December 31, 2020, 2021, 2022 and April 30, 2023, respectively,
and were all trade in nature for sales of intralogistics equipment and parts and provision of
intralogistics equipment subscription services.
Our Directors confirm that all material related party transactions during the Track Record
Period were conducted at arm’s length and would not distort our results of operations or make
our historical results over the Track Record Period not reflective of our expectations for future
performance. Additionally, our Directors confirm that as of the date of this prospectus, we have
no outstanding balances with related parties that are non-trade in nature.
FINANCIAL INFORMATION
– 355 –


--- page 366 ---
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
We are exposed to a variety of financial risks, including interest rate risks, credit risks and
liquidity risks. Our overall risk management program focuses on the unpredictability of
financial markets and seeks to minimize potential adverse effects on our financial performance.
For more details, see Note 34 to the Accountant’s Report in Appendix I to this prospectus.
Interest Rate Risks
Our exposure to the risk of changes in market interest rates primarily relates to our bank
borrowings with a floating interest rate, and any changes in interest rates may affect our profits.
Credit Risks
We conduct business only with reputable and financially stable third-party entities. Our
policy mandates that all customers seeking to transact on credit terms undergo credit
verification procedures. Moreover, we continuously monitor our receivable balances to ensure
our exposure to bad debts remains insignificant.
Liquidity Risks
We aim to maintain sufficient cash and credit lines to meet our liquidity requirements. We
finance our working capital requirements through a combination of funds generated from
operations and alternative funding resources from equity and debt.
DIVIDENDS
No dividend has been paid or declared by us during the Track Record Period. After
completion of the Global Offering, our shareholders will be entitled to receive dividends
declared by us. Any future declarations and payments of dividends may or may not reflect the
historical declarations and payments of dividends.
As confirmed by our PRC Legal Adviser, according to the PRC law, any future net profit
that we make will have to be first applied to make up for our historically accumulated losses,
if any, after which we will be obliged to allocate 10% of our net profit to our statutory common
reserve fund until such fund has reached more than 50% of our registered capital. We will
therefore only be able to declare dividends after (i) all our historically accumulated losses have
been made up for; and (ii) we have allocated sufficient net profit to our statutory common
reserve fund as described above.
The determination of whether to pay a dividend and in which amount is based on our
results of operations, cash flow, financial condition, capital requirements and other factors the
Board may deem relevant. Any dividend distribution will also be subject to the approval of the
Shareholders in the Shareholder’s meeting.
FINANCIAL INFORMATION
– 356 –


--- page 367 ---
DISTRIBUTABLE RESERVES
As of April 30, 2023, we had distributable reserves of RMB236.3 million.
LISTING EXPENSES
Our listing expenses mainly include sponsor’s fee, underwriting commissions,
professional fees paid to legal advisers, the reporting accountants and other professional
advisers 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 RMB52.7 million (HK$57.4 million), representing 31.2% of the
gross proceeds (based on the mid-point of our indicative price range for the Global Offering
and assuming that the Over-allotment Option is not exercised) of the Global Offering. Our
listing expenses are categorized into underwriting-related expenses of approximately RMB12.1
million (HK$13.2 million) and non-underwriting-related expenses of approximately RMB40.6
million (equivalent to HK$44.2 million), representing 7.2% and 24.0%, respectively, of the
gross proceeds (based on the mid-point of our indicative price range for the Global Offering
and assuming that the Over-allotment Option is not exercised) of the Global Offering. The
non-underwriting-related expenses can be further classified into fees and expenses of legal
advisors and accountants of approximately RMB26.5 million (HK$28.9 million) and other fees
and expenses of approximately RMB14.1 million (HK$15.3 million), representing 15.7% and
8.3%, respectively, of the gross proceeds (based on the mid-point of our indicative price range
for the Global Offering and assuming that the Over-allotment Option is not exercised) of the
Global Offering. During the Track Record Period, we incurred listing expenses in aggregate of
RMB19.6 million (equivalent to HK$21.4 million), of which RMB12.4 million (equivalent to
HK$13.6 million) was charged to the consolidated statements of profit or loss and RMB7.2
million (equivalent to HK$7.8 million) was deducted from equity as of April 30, 2023. We
expect to incur additional listing expenses of approximately RMB33.1 million (equivalent to
HK$36.0 million), of which approximately RMB30.3 million (equivalent to HK$33.0 million)
is expected to be charged to the consolidated statements of profit or loss and approximately
RMB2.8 million (equivalent to HK$3.0 million) is expected to be recognized as a deduction in
equity directly upon Listing. The listing expenses above are the latest practicable estimate for
reference only, and the actual amount may differ from this estimate.
FINANCIAL INFORMATION
– 357 –


--- page 368 ---
UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS
The following unaudited pro forma adjusted consolidated net tangible assets prepared in
accordance with Rule 4.29 of the Rules Governing the Listing of Securities on the Stock
Exchange of Hong Kong Limited is for illustration purposes only, and is set out here to
illustrate the effect of the Global Offering on the consolidated net tangible assets of our Group
attributable to the owners of our Company as of April 30, 2023 as if the Global Offering had
taken place on April 30, 2023. The unaudited pro forma statement of adjusted consolidated net
tangible assets has been prepared for illustrative purpose only and, because of its hypothetical
nature, it may not give a true picture of our consolidated net tangible assets of our Group had
the Global Offering been completed as of April 30, 2023 or as of any future dates.
Consolidated net
tangible assets
attributable to
owners of our
Company as of
April 30, 2023
Estimated net
Proceeds from
the Global
Offering
Unaudited pro forma
adjusted consolidated
net tangible assets
attributable
to owners of our
Company as of
April 30, 2023
Unaudited pro forma
adjusted consolidated
net tangible assets
attributable to owners
of the Company per
Share as of
April 30, 2023
RMB’000 RMB’000 RMB’000 RMB HK$
(Note 1) (Note 2 and 4) (Note 3) (Note 4)
Based on an Offer Price of
HK$14.18 per Share 894,445 105,621 1,000,066 2.87 3.13
Based on an Offer Price of
HK$15.18 per Share 894,445 116,309 1,010,754 2.90 3.16
Based on an Offer Price of
HK$16.18 per Share 894,445 126,996 1,021,441 2.93 3.19
Notes:
(1) The consolidated net tangible assets of the Group attributable to owners of the Company as of
April 30, 2023 was equal to the audited net assets attributable to owners of our Company as of April 30,
2023 of RMB902,842,000 after deducting of intangible assets of RMB8,397,000 as of April 30, 2023
set out in the Accountants’ Report in Appendix I to this prospectus.
(2) The estimated net proceeds from the Global Offering are based on the Offer Price of HK$14.18,
HK$15.18 or HK$16.18 per Share, after deduction of the underwriting fees and other related expenses
payable by the Company 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 per Share is arrived at after adjustments referred to in the preceding paragraphs and on the
basis that 348,022,816 Shares are in issue assuming the Subdivision and Global Offering has been
completed as of April 30, 2023.
FINANCIAL INFORMATION
– 358 –


--- page 369 ---
(4) For the purpose of this unaudited pro forma adjusted consolidated net tangible assets, the estimated net
proceeds from the Global Offering are converted from Hong Kong dollars into RMB at an exchange rate
of HK$1.00 to RMB0.9174 and the unaudited pro forma adjusted consolidated net tangible assets
attributable to owners of our Company per Share is converted from RMB into Hong Kong dollars at the
same exchange rate. No representation is made that RMB amounts have been, could have been or may
be converted to Hong Kong dollars, or vice versa, at that rate.
(5) No adjustment has been made to reflect any trading result or other transactions of our Group entered into
subsequent to April 30, 2023.
NO MATERIAL ADVERSE CHANGE
Our Directors confirm that up to the date of this prospectus, other than as disclosed under
the “Recent Developments – No Material Adverse Change” in the “Summary” section in this
prospectus, there had been no material adverse change in our financial, operational or prospects
since April 30, 2023, being the latest balance sheet date of our consolidated financial
statements as set out in the Accountant’s Report in Appendix I to this prospectus.
DISCLOSURE UNDER RULES 13.13 TO 13.19 OF THE LISTING RULES
Our Directors have confirmed that, as of the Latest Practicable Date, there was no
circumstance that would give rise to a disclosure requirement under Rules 13.13 to 13.19 of the
Listing Rule.
FINANCIAL INFORMATION
– 359 –


--- page 370 ---
FUTURE PLANS AND PROSPECTS
See “Business – Our Strategies” in this prospectus for a detailed description of our future
plans.
USE OF PROCEEDS
We estimate that we will receive net proceeds from the Global Offering of approximately
HK$126.8 million, after deducting underwriting commissions, fees and estimated expenses
payable by us in connection with the Global Offering, and assuming the Over-Allotment
Option being not exercised and an Offer Price of HK$15.18 per Share, which is the mid-point
of the indicative Offer Price range stated in this prospectus. If the Offer Price is set at
HK$16.18 per Share, which is the high end of the indicative Offer Price range, the net proceeds
from the Global Offering will increase by approximately HK$11.6 million. If the Offer Price
is set at HK$14.18 per Share, which is the low end of the indicative Offer Price range, the net
proceeds from the Global Offering will decrease by approximately HK$11.6 million.
Assuming an Offer Price at the mid-point of the Offer Price range, we currently intend
to apply these net proceeds for the following purposes:
 45.0%, or approximately HK$57.0 million, will be used to enhance our service
capabilities, improve customer coverage, and expand categories of intralogistics
equipment. Specifically:
 5.0%, or approximately HK$6.3 million, will be used to strengthen our
marketing capabilities. We plan to expand our sales team and improve sales
and marketing methods.
We plan to recruit 8 sales personnel in our sales team each year during the next
three years to enhance our capability in acquiring more customers.
Approximately HK$3.3 million will be used to pay their salaries and
approximately HK$1.6 million will be used to pay the sales and marketing
expenses of the sales team such as vehicle expenses and other traveling
expenses.
The remaining balance of the allocated net proceeds of approximately HK$1.4
million will be used to expand our marketing methods, including participating
exhibitions and conducting online and offline advertising activities to increase
brand awareness and attract additional customers from the manufacturing,
logistics, and other targeted industries.
FUTURE PLANS AND USE OF PROCEEDS
– 360 –


--- page 371 ---
 15.0%, or approximately HK$19.0 million, will be used to expand our service
outlets, further enhancing our service efficiency and customer outreach. As of
April 30, 2023, we established a nationwide service network with 67 service
outlets covering 47 cities in China. In the upcoming years, we plan to increase
the number of service outlets located in key manufacturing and logistics hubs
across China.
In particular, we plan to build 13 new service outlets each year during the next
three years, which will be mainly located in Y angtze River Delta Region, Pearl
River Delta and Bohai Economic Rim, to further improve our service coverage,
reach more customers, and provide timely services to meet their various needs.
 25.0%, or approximately HK$31.7 million, will be used to expand the scale
and categories of our intralogistics equipment fleet. We plan to continuously
invest in acquiring intralogistics equipment, expanding our categories of
intralogistics equipment, and providing corresponding lifecycle solutions to
increase our market shares and demonstrate our scale advantages.
To expand the scale and categories of our equipment fleet, we plan to use net
proceeds from the Global Offering of HK$10.6 million, HK$10.6 million and
HK$10.5 million, in each of the three years from 2024 to 2026, respectively,
to purchase approximately 100 units of intralogistics equipment, including
counterbalanced forklifts, reach trucks, walkie trucks and other intralogistics
equipment, covering storage, sorting and conveying equipment.
 20.0%, or approximately HK$25.4 million, will be used to expand and upgrade our
supply chain infrastructure. This includes both improving our existing supply chain
facilities and constructing new supply chain bases according to our strategies.
Specifically:
 10.0%, or approximately HK$12.7 million, will be used to expand and upgrade
our existing supply chain facilities, specifically for our main supply chain
bases, equipment part warehouses at our headquarter and automated
warehouses in local bases. Approximately HK$7.7 million will be used to
expand and enhance our current main supply chain bases in Foshan,
Guangdong and in Langfang, Hebei and approximately HK$5.0 million will be
used to renovate and upgrade our equipment part warehouses at our
headquarter and automated warehouses in local bases to further improve
efficiency during the next three years. We plan to perform maintenance on our
manufacturing processes and upgrade equipment and service capacities. Our
aim is to streamline our supply chain by automating the storage and retrieval
of parts, resulting in reduced manual labor and increased accuracy.
FUTURE PLANS AND USE OF PROCEEDS
– 361 –


--- page 372 ---
 10.0%, or approximately HK$12.7 million, will be used to build new supply
chain bases in strategic locations across China to better synergize our
resources. We plan to improve our connectivity with both upstream and
downstream industry sectors with high transportation efficiency and
accessibility.
In particular, approximately HK$3.8 million will be used to build a new supply
chain base in Kunshan, Jiangsu and approximately HK$3.5 million will be used
to build a new supply chain base in Wuhan, Hubei from 2024 to 2025.
Approximately HK$2.7 million will be used to build a new supply chain base
in Shenyang, Liaoning and approximately HK$2.7 million will be used to build
a new supply chain base in Chengdu, Sichuan from 2025 to 2026.
 15.0%, or approximately HK$19.0 million, will be used to strengthen our
technology capabilities and infrastructure. Specifically:
 10.0%, or approximately HK$12.7 million, will be used to enhance our core
technology capabilities. Approximately HK$6.6 million will be used to
upgrade our IoT infrastructure, among which, approximately HK$4.8 million
will be used to upgrade the host engine rooms, and the remaining will be used
to recruit 6 relevant technicians from 2024 to 2026. The upgrade of IoT
infrastructure will enable efficient tracking and recording of intralogistics
equipment. Approximately HK$6.1 million will be used to collaborate with
research institutions and leading companies across China to establish a
cooperative platform for IoT intelligent management.
 5.0%, or approximately HK$6.3 million, will be used to enhance our overall
digital technology capabilities. We plan to enhance our data analysis by
investing in big data, cloud computing, and other new software technologies.
Approximately HK$3.3 million will be used to construct and upgrade the
machine rooms and purchase relevant equipment and approximately HK$3.0
million will be used to recruit relevant technicians from 2024 to 2026.
 10.0%, or approximately HK$12.7 million, will be used to conduct strategic mergers
and acquisitions that align with our regional coverage, industry focus, and business
priorities. We will particularly focus on participants that have strengths in terms of
asset quality, service capacities, customer resources, market influence and talent
pool that complement our business and strategy.
Our strategic merger and acquisition plan involves expanding into specific regional
markets and deepening our presence within target industries. One of our primary
objectives is to expand our presence in key regional markets, including the
Southwest, Northwest, Northeast, and Central China. To achieve this goal, we will
prioritize target companies that predominantly operate within these specific regional
markets, which will allow us to supplement and strengthen our existing regional
FUTURE PLANS AND USE OF PROCEEDS
– 362 –


--- page 373 ---
market coverage. In addition, we aim to deepen our penetration within the
manufacturing industry, focusing on industries such as automotive, ceramics, paper
manufacturing, and electrical appliances. Our merger and acquisition strategy will
involve identifying and acquiring companies whose primary customer base consists
of customers engaging in the manufacturing industry, which will enable us to
enhance our presence and service offerings within such industry.
As of the Latest Practicable Date, we had no specific acquisition plans nor identified
any specific targets. We will seek collaboration opportunities in a sustainable and
prudent manner after the Listing.
 10.0%, or approximately HK$12.7 million, will be used for our general working
capital and general corporate purposes.
The above allocation of the net proceeds from the Global Offering will be adjusted on a
pro rata basis in the event that the Offer Price is fixed at a higher or lower level compared to
the mid-point of the indicative Offer Price range stated in this prospectus.
If the Over-allotment Option is exercised in full, the net proceeds that we will receive will
be approximately HK$153.3 million, assuming an Offer Price of HK$15.18 per Share (being
the mid-point of the indicative Offer Price range). In the event that the Over-allotment Option
is exercised in full, we intent to apply the additional net proceeds to the above purposes in the
proportions stated above.
To the extent that the net proceeds from the Global Offering are not immediately applied
to the above purposes, we will only deposit such funds in short-term demand with licensed
banks or authorized financial institutions as defined under the Securities and Futures Ordinance
in Hong Kong. We will issue an appropriate announcement if there is any material change to
the above use of proceeds.
FUTURE PLANS AND USE OF PROCEEDS
– 363 –


--- page 374 ---
HONG KONG UNDERWRITERS
Haitong International Securities Company Limited
GF Securities (Hong Kong) Brokerage Limited
Huatai Financial Holdings (Hong Kong) Limited
UNDERWRITING
This prospectus is published solely in connection with the Hong Kong Public Offering.
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters on a
conditional basis on the terms and conditions set out in the prospectus, the GREEN
Application Form relating thereto and the Hong Kong Underwriting Agreement. The
International Offering is expected to be fully underwritten by the International Underwriters
subject to the terms and conditions of the International Underwriting Agreement. If, for any
reason, the Offer Price is not agreed between the Sole Overall Coordinator (for itself and on
behalf of the Hong Kong Underwriters) and our Company, the Global Offering will not proceed
and will lapse.
The Global Offering comprises the Hong Kong Public Offering of initially 1,213,600
Hong Kong Offer Shares and the International Offering of initially 10,922,400 International
Offer Shares, subject, in each case, to reallocation on the basis as described in the section
headed “Structure of the Global Offering” as well as to the Over-allotment Option in the case
of the International Offering.
UNDERWRITING ARRANGEMENTS AND EXPENSES
Hong Kong Public Offering
Hong Kong Underwriting Agreement
Pursuant to the Hong Kong Underwriting Agreement, we are offering the Hong Kong
Offer Shares for subscription by the public in Hong Kong on the terms and conditions set out
in this prospectus, the GREEN Application Form and the Hong Kong Underwriting Agreement
at the Offer Price.
Subject to (i) the Listing Committee granting approval for the listing of, and permission
to deal in, the H Shares to be offered as mentioned in this prospectus pursuant to the Global
Offering (including any additional H Shares that may be issued pursuant to the exercise of the
Over-allotment Option) and the 194,458,736 H Shares to be converted from Unlisted Shares on
the Main Board of the Stock Exchange and such approval not having been withdrawn and (ii)
certain other conditions set out in the Hong Kong Underwriting Agreement, the Hong Kong
Underwriters have agreed to severally (and not jointly or jointly and severally) subscribe or
procure subscribers for their respective applicable proportions of the Hong Kong Offer Shares
being offered which are not taken up under the Hong Kong Public Offering on the terms and
conditions set out in this prospectus, the GREEN Application Form and the Hong Kong
Underwriting Agreement.
UNDERWRITING
– 364 –


--- page 375 ---
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 with immediate effect by written notice from the Sole Overall Coordinator (for
itself and on behalf of the Hong Kong Underwriters) and the Sole Sponsor if at any time prior
to 8:00 a.m. on the Listing Date:
(a) there develops, occurs, exists or comes into effect:
(i) any new law or any change or development involving or likely to result in a
prospective change in any existing law or in the interpretation or application
thereof by any court or other competent authority in or affecting Hong Kong,
the PRC, the United States, the United Kingdom, the European Union (or any
member thereof), Australia or any other jurisdiction in which our Group
operates (collectively, the “ Relevant Jurisdictions ,” and each, a “ Relevant
Jurisdiction ”); or
(ii) any change, or any development involving or likely to result in a prospective
change or development (whether or not permanent) in any local, national,
regional or international financial, political, military, industrial, legal, fiscal,
economic, regulatory, credit, market or currency matters or conditions or
exchange management or any monetary or trading settlement system
(including, but not limited to, a change in the stock and bond markets, money
and foreign exchange markets, the interbank markets and credit markets or a
change in the system under which the value of the Hong Kong dollar is linked
to the U.S. dollar or revaluation of the Hong Kong dollar or Renminbi against
any foreign currencies or a change in any other currency exchange rates) in or
affecting any of the Relevant Jurisdictions; or
(iii) 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
London Stock Exchange, the Shanghai Stock Exchange, the Shenzhen Stock
Exchange, the New Y ork Stock Exchange, or in the NASDAQ Global Market;
or
(iv) any general moratorium on commercial banking activities in Hong Kong
(imposed by the Financial Secretary or the Hong Kong Monetary Authority or
other competent government authority), New Y ork (imposed at Federal or New
Y ork State level or other competent government authority), London or any
UNDERWRITING
– 365 –


--- page 376 ---
other Relevant Jurisdictions (declared by the relevant authorities) or any
disruption in commercial banking or foreign exchange trading or securities
settlement or clearance services, procedures or matters in or affecting any of
the Relevant Jurisdiction; or
(v) any change or development involving a prospective change in or affecting
taxation or exchange management, currency exchange rates or foreign
investment regulations (including, without limitation, a change in the system
under which the value of the Hong Kong currency is linked to the U.S. dollar,
or a material devaluation of the U.S. dollar, Hong Kong dollar or the Renminbi
against any foreign currencies), or the implementation of any exchange
management, in any of the Relevant Jurisdictions or affecting an investment in
the Offer Shares; or
(vi) any imposition of sanctions or economic sanctions, or the withdrawal of
trading privileges, in whatever form, directly or indirectly, by, or for the United
Nations or any Relevant Jurisdiction on the Company or any member of our
Group; or
(vii) any valid 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
(viii) any event or circumstance, or series of events or circumstances (either national
or international), in the nature of force majeure in or affecting directly or
indirectly any of the Relevant Jurisdictions including, without limiting the
generality thereof, any act of God, act of government, declaration of a national
or international emergency or war, act of war, outbreak or escalation of
hostilities (whether or not war is declared), calamity, economic sanction,
strike, labour dispute, crisis, riot, civil commotion, public disorder, labour
dispute, epidemic (including, without limitation, Severe Acute Respiratory
Syndrome (SARS), swine or avian flu, Influenza A (H5N1), H1N1, swine or
avian influenza (H7N9), COVID-19 or such related/mutated forms), pandemic,
outbreak of infectious disease, lockdown, lockout or severe or extended
interruption in transport, earthquake, act of terrorism (whether or not
responsibility has been claimed), flooding, explosion, volcanic eruption,
ice-storm, tsunami or fire; or
(ix) the issue or requirement to issue by our Company of any supplement or
amendment to this prospectus, the GREEN Application Form or final offering
memorandum (or to any other document used in connection with the
contemplated offer, subscription and sale of the Offer Shares) or the CSRC
filings pursuant to the Companies (Winding up and Miscellaneous Provisions)
Ordinance, the Listing Rules or the CSRC rules or any requirement or request
of the Stock Exchange, the SFC and/or the CSRC without the prior written
consent of the Sole Sponsor and the Sole Overall Coordinator; or
UNDERWRITING
– 366 –


--- page 377 ---
(x) that any matter has arisen or has been discovered which would, had it arisen
or been discovered immediately before the date of this prospectus, constitute
a material misstatement in any of the this prospectus, the GREEN Application
Form and the formal notice to be issued in connection with the Hong Kong
Public Offering pursuant to the Listing Rules (collectively, the “ Hong Kong
Public Offering Documents ”) or the CSRC filings; or
(xi) any change, development or event involving a prospective change in, or actual
materialisation of, any of the risks set out in the section headed “Risk Factors”
in this prospectus; or
(xii) an order or a petition is presented for the winding up or liquidation of any
member of our Group or any member of our Group makes any composition or
arrangement with its creditors or enters into a scheme of arrangement or any
resolution is passed for the winding-up of any member of our Group or a
provisional liquidator, receiver or manager is appointed over all or part of the
assets or undertaking of any member of our Group or anything analogous
thereto occurs in respect of any member of our Group; or
(xiii) any contravention or breach by any member of the Group or any Director of the
Listing Rules, the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, the Companies Ordinance, the CSRC rules, the PRC Company Law
or other applicable laws; or
(xiv) a prohibition on our Company for whatever reason from offering, allotting,
issuing or selling any of the Offer Shares (including any additional H Shares
that may be issued pursuant to the exercise of the Over-allotment Option)
pursuant to the terms of the Global Offering; or
(xv) any non-compliance of this prospectus (or any other document used in
connection with the contemplated offer, subscription and sale of the Offer
Shares) or any aspect of the Global Offering with the Listing Rules, the
Companies (Winding Up and Miscellaneous Provisions) Ordinance, the CSRC
rules or any other applicable laws; or
(xvi) any litigation, claim or other legal or regulatory proceeding being threatened
or instigated against (i) any member of our Group; (ii) any of our Controlling
Shareholders; or (iii) any Director; or
UNDERWRITING
– 367 –


--- page 378 ---
(xvii) any public, administrative, governmental or regulatory commission, board,
body, authority or agency, or any stock exchange, self-regulatory organisation
or other non-governmental regulatory authority (including but not limited to
the Stock Exchange, the SFC and the CSRC), or any court, tribunal or
arbitrator, in each case whether national, central, federal, provincial, state,
regional, municipal, local, domestic, foreign or supranational and of any
jurisdiction commencing any investigation or other action, or announcing an
intention to investigate or take other action, against any member of our Group
or any Director or any of our Controlling Shareholders; or
(xviii) any of the chairman of our Board, the chief executive officer of our Company,
the general manager of our Company or any executive Director vacating his or
her office; or
(xix) any material loss or damage sustained by any member of our Group
(howsoever caused and whether or not subject of any insurance or claim
against any person); or
(xx) any of the chairman of our Board, the chief executive officer of our Company,
the general manager of our Company or any Director being charged with an
indictable offence or prohibited by operation of law or otherwise disqualified
from taking part in the management of a company;
which, individually or in the aggregate, in the sole and absolute opinion of the Sole
Overall Coordinator (for itself and on behalf of the Hong Kong Underwriters) and
the Sole Sponsor:
(A) has or will or may have a material adverse effect on the assets, liabilities,
business, general affairs, management, prospects, shareholders’ equity, profits,
losses, properties, results of operations, position, condition or performance,
financial, operational, trading or otherwise, of our Group as a whole; or
(B) has or will or may have a material adverse effect on the success of the Global
Offering or the level of applications under the Hong Kong Public Offering or
the level of interest under the International Offering; or
(C) makes or will or may make it inadvisable or inexpedient or impracticable for
any part of the Hong Kong Public Offering or the International Offering to
proceed as envisaged or to market the Global Offering or to deliver the Offer
Shares on the terms and in the manner as contemplated by this prospectus, the
GREEN Application Form, the formal notice to be issued in connection with
the Hong Kong Public Offering pursuant to the Listing Rules or the final
offering memorandum; or
UNDERWRITING
– 368 –


--- page 379 ---
(D) has or will or may have the effect of (i) making any part of the Hong Kong
Underwriting Agreement (including underwriting) incapable or impracticable
of performance in accordance with its terms or (ii) preventing or delaying the
processing of applications and/or payments pursuant to the Global Offering or
pursuant to the underwriting thereof; or
(b) there has come to the notice of the Sole Sponsor and the Sole Overall Coordinator
(for itself and on behalf of the Hong Kong Underwriters):
(i) that any statement contained in any of, among others, the Hong Kong Public
Offering documents, the application proof prospectus of our Company, the
post-hearing information pack of our Company, the CSRC filings, the price
determination agreement, the final offering circular and/or in any notices,
announcements, advertisements, communications, marketing or other
documents issued or used by or on behalf of our Company in connection with
the Hong Kong Public Offering (including any supplement or amendment
thereto) (collectively, the “ Offering Related Documents ”) (but excluding
information relating to the Underwriters) was, when it was issued, or has
become, untrue, incorrect or inaccurate in any material respect or misleading,
or that any forecast, estimate, expression of opinion, intention or expectation
expressed or contained in any of the Offering Related Documents is not fair
and honest and not made on reasonable grounds or, where appropriate, not
based on reasonable assumptions with reference to the facts and circumstances
then subsisting, when taken as a whole; or
(ii) that any matter has arisen or has been discovered which would or might, had
it arisen or been discovered immediately before the date of this prospectus,
constitute a material omission from, or material misstatement in, any of the
Offering Related Documents; or
(iii) any material contravention or breach by any member of our Group or any
Director of any applicable laws, the Listing Rules or the CSRC rules; or
(iv) that there is a breach of, or any matter, event or circumstance rendering or
which may render, any of the representations, warranties, agreements and
undertakings given by any of our Company or our Controlling Shareholders in
the Hong Kong Underwriting Agreement or the International Underwriting
Agreement, as applicable, untrue, incorrect, incomplete in any respect or
misleading; or
(v) that there is a breach of any provision of, or any obligation imposed upon any
party to, the Hong Kong Underwriting Agreement or the International
Underwriting Agreement (other than obligations imposed upon any of the Sole
Sponsor, the Sole Overall Coordinator, the Sole Global Coordinator, the Joint
Bookrunners, the Joint Lead Managers, the Capital Market Intermediaries, the
Hong Kong Underwriters or the International Underwriters); or
UNDERWRITING
– 369 –


--- page 380 ---
(vi) there is an event, act or omission which gives or is likely to give rise to any
liability of any of our Company or our Controlling Shareholders pursuant to
the indemnities given by any of our Company or our Controlling Shareholders
under the Hong Kong Underwriting Agreement or the International
Underwriting Agreement, as applicable; or
(vii) that there is any material adverse change, or any development involving a
prospective material adverse change or development, in the assets, liabilities,
business, general affairs, management, prospects, shareholders’ equity, profits,
losses, properties, results of operations, position, condition or performance,
financial, operational, trading or otherwise, of our Group, taken as a whole; or
(viii) that a significant portion of the orders in the bookbuilding process at the time
when the International Underwriting Agreement is entered into have been
withdrawn, terminated, cancelled or otherwise not fulfilled; or
(ix) that the investment commitments by any cornerstone investor after signing of
the cornerstone investment agreement(s) with such cornerstone investor have
been withdrawn, terminated, cancelled or otherwise not fulfilled; or
(x) any of the experts specified in this prospectus or other person whose consent
is required for the issue of this prospectus or any of the Hong Kong Public
Offering documents 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 has withdrawn its consent to being
named in, or to the issue of, this prospectus or any of the Hong Kong Public
Offering documents; or
(xi) that the approval by the Listing Committee of the listing of, and permission to
deal in, the H Shares in issue and to be issued pursuant to the Global Offering
(including any additional H Shares that may be issued pursuant to the exercise
of the Over-allotment Option) is refused, not granted or qualified (other than
by 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
(xii) that our Company withdraws this prospectus, the GREEN Application Form
and/or any other document issued or used in connection with the Global
Offering, or the Global Offering.
UNDERWRITING
– 370 –


--- page 381 ---
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 our Company will not, at any time within six months from the Listing Date,
issue further Shares or securities convertible into our equity securities (whether or not of a
class already listed) or enter into any agreement or form the subject of any arrangement to such
an issue (whether or not such issue of Shares or securities of our Company will be completed
within six months from the Listing Date), except for the Offer Shares to be issued pursuant to
the Global Offering (including pursuant to the Over-allotment Option (as defined in the
Prospectus)) or under any of the circumstances provided under Rule 10.08 of the Listing Rules.
(B) Undertakings by our Controlling Shareholders
Pursuant to Rule 10.07 of the Listing Rules, our Controlling Shareholders have
undertaken to the Stock Exchange and our Company that, except pursuant to the Global
Offering (including the exercise of the Over-allotment Option), they will not (and will procure
that any other registered holder (if any) of the 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 Listing Rules:
(i) in the period of six months from the Listing Date, dispose of, or enter into any
agreement to dispose of or otherwise create any options, rights, interests or
encumbrances in respect of, any of the Shares in respect of which any of them is
shown by this prospectus to be the beneficial owner (the “ Relevant Shares ”); and
(ii) in the period of six months commencing on the date on which the period referred to
in paragraph (i) above expires, dispose of, or enter into any agreement to dispose of
or otherwise create any options, rights, interests or encumbrances in respect 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
would cease to be a group of controlling shareholders of our Company for the
purpose of the Listing Rules.
Pursuant to Note 3 to Rule 10.07(2) of the Listing Rules, our Controlling Shareholders
have further undertaken to each of the Stock Exchange and our Company that, within the
period commencing on the Listing Date and ending on the date which is 12 months from the
Listing Date, they will:
(a) when they pledge or charge any Shares legally and/or beneficially owned by them
in favor of an authorized institution relying on Note (2) to Rule 10.07(2) of the
Listing Rules, immediately inform our Company of such pledge or charge together
with the number of securities so pledged or charged; and
UNDERWRITING
– 371 –


--- page 382 ---
(b) when they receive indications, either verbal or written, from the pledgee or chargee
that any of the pledged or charged Shares will be disposed of, immediately inform
our Company of such indications.
Our Company will inform the Stock Exchange as soon as we have been informed of the
matters referred to in paragraph (a) and (b) above (if any) by our Controlling Shareholders and
subject to the then applicable requirements of the Listing Rules disclose such matters by way
of an announcement.
Undertakings to the Hong Kong Underwriters Pursuant to the Hong Kong Underwriting
Agreement
Undertakings by our Company
Pursuant to the Hong Kong Underwriting Agreement, we have undertaken to each of the
Sole Sponsor, the Sole Overall Coordinator, the Sole Global Coordinator, the Joint
Bookrunners, the Joint Lead Managers, the CMIs and the Hong Kong Underwriters that, except
for the issue, offer or sale of the Offer Shares by our Company pursuant to the Global Offering
(including pursuant to the exercise of the Over-allotment Option), 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 Hong Kong Underwriters) and
unless in compliance with the Listing Rules, at any time during the period commencing on the
date of the Hong Kong Underwriting Agreement and ending on, and including, the date falling
six months after the Listing Date (the “ First Six-Month Period ”):
(i) allot, issue, sell, accept subscription for, offer to allot, issue or sell, contract or agree
to allot, issue or sell, mortgage, charge, pledge, hypothecate, lend, grant or sell any
option, warrant, contract or right to subscribe for or purchase, grant or purchase any
option, warrant, contract or right to allot, issue or sell, or otherwise transfer or
dispose of or create an encumbrance over, or agree to transfer or dispose of or create
an encumbrance over, either directly or indirectly, conditionally or unconditionally,
any Shares or any other securities of any member of our Group, as applicable, or any
interest in any of the foregoing (including, without limitation, any securities
convertible into or exchangeable or exercisable for or that represent the right to
receive, or any warrants or other rights to purchase, any Shares or other securities
of any member of our Group, as applicable, or any interest in any of the foregoing)
or deposit any Shares or other securities of any member of our Group, as applicable,
with a depositary in connection with the issue of depositary receipts; or
(ii) enter into any swap, derivative or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of subscription or ownership of
any Shares or any other securities of any member of our Group or any interest in any
of the foregoing (including, without limitation, any securities convertible into or
exchangeable or exercisable for, or that represent the right to receive, or any
warrants or other rights to purchase, any Shares or any other securities of any
member of our Group, as applicable, or any interest in any of the foregoing); or
UNDERWRITING
– 372 –


--- page 383 ---
(iii) enter into any transaction with the same economic effect as any transaction set out
in paragraph (i) or (ii) above; or
(iv) offer or agree or contract to effect any transaction set out in paragraphs (i), (ii) or
(iii) above or publicly announce any intention to do so,
in each case, whether any of the transactions set out in paragraphs (i), (ii) or (iii) above is to
be settled by delivery of Shares or other securities of any member of our Group, as applicable,
in cash or otherwise (whether or not the issue of such Shares or other securities will be
completed within the First Six-Month Period). In the event that, during the six-month period
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 set out in paragraphs (i), (ii) or (iii)
above or offers or agrees or contracts to, or publicly announces an intention to, enter into any
such transactions, our Company will take all reasonable steps to ensure compliance with
applicable legal and regulatory requirements relating to the avoidance of creating a disorderly
or false market in the Shares or other securities of any member of our Group.
Undertakings by our Controlling Shareholders
Each of our Controlling Shareholders undertakes to each of the Sole Sponsor, the Sole
Overall Coordinator, the Sole Global Coordinator, the Joint Bookrunners, the Joint Lead
Managers, the Capital Market Intermediaries and the Hong Kong Underwriters that, without
the prior written consent of the Sole Sponsor and the Sole Overall Coordinator (for itself and
on behalf of the Hong Kong Underwriters) and unless in compliance with the Listing Rules:
(a) save for any pledge or charge of Shares or other securities of our Company (in
respect of which it is shown in this prospectus as the beneficial owner or as having
any deemed or other interest) or any interest in any of the foregoing (including
without limitation, any securities convertible into or exchangeable or exercisable for
or that represent the right to receive, or any warrants or other rights to purchase, any
Shares or any other securities of our Company) by him or it as security 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, during the First Six-Month
Period, he or it will not and will procure that none of his or its affiliates will:
(i) offer, pledge, charge, sell, offer, contract or agree to sell, pledge, assign,
mortgage, charge, hypothecate, lend, grant or sell (or agree to grant or sell) any
option, warrant, contract or right to subscribe for or purchase, grant or
purchase (or agree to grant or purchase) any option, warrant, contract or right
to sell, lend or otherwise transfer or dispose of, make any short sale, 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 therein (including but not limited to any securities
UNDERWRITING
– 373 –


--- page 384 ---
convertible into or exchangeable for, or that represent the right to receive, or
any warrants or other rights to purchase, any Shares or other securities of our
Company), directly or indirectly held by him or it as of the date hereof;
(ii) enter into any swap, derivative or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership of any
Shares or other securities of our Company or any interest therein (including,
without limitation, any securities convertible into or exchangeable or
exercisable for, or that represent the right to receive, or any warrants or other
rights to purchase, any Shares or other securities of our Company) directly or
indirectly held by him or it as of the date hereof;
(iii) enter into any transaction with the same economic effect as any transaction set
out in paragraphs (i) or (ii); or
(iv) publicly disclose that it will or may enter into any transaction set out in
paragraphs (i), (ii) or (iii),
whether any of the transaction set out in paragraphs (i), (ii) or (iii) is to be settled
by delivery of such capital or 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);
(b) during the Second Six-Month Period, he or it will not enter into any transaction
described in paragraphs (a)(i), (ii) or (iii) above or offer, agree or contract to or
publicly announce any intention to enter into any such transaction if, immediately
following such transaction, he or it will cease to be a Controlling Shareholder;
(c) until the expiry of the Second Six-Month Period, in the event that he or it enters into
any such transactions specified in paragraphs (a)(i), (ii) or (iii) above or offers,
agrees or contracts to, or publicly announces an intention to enter into any such
transaction, he or it will take all reasonable steps to ensure that he or it will not
create a disorderly or false market in the securities of our Company; and
(d) at any time after the date hereof up to and including the date falling 12 months after
the Listing Date, he or it shall:
(i) if and when he or it pledges or charges any Shares or other securities of our
Company (or any interests therein) beneficially owned by him 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 interests therein) so pledged or charged; and
UNDERWRITING
– 374 –


--- page 385 ---
(ii) if and when he 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 interests 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.
Hong Kong Underwriters’ Interests in our Company
Except for their respective obligations under the Hong Kong Underwriting Agreement
and/or the International Underwriting Agreement, as of the Latest Practicable Date, none of the
Hong Kong Underwriters has any shareholding interest in the Company or had any right or
option (whether legally enforceable or not) to subscribe for or purchase, or to nominate persons
to subscribe for or purchase, any securities of our Company.
Following the completion of the Global Offering, the Hong Kong Underwriters and their
affiliated companies may hold a certain portion of the H Shares as a result of fulfilling their
respective obligations under the Hong Kong Underwriting Agreement and/or the International
Underwriting Agreement.
Commissions and Expenses
According to the Hong Kong Underwriting Agreement, the Capital Market Intermediaries
will receive an underwriting commission of 3.0% of the aggregate Offer Price payable for the
Hong Kong Offer Shares offered under the Hong Kong Public Offering (excluding any
International Offer Shares reallocated to and from the Hong Kong Public Offering). For
unsubscribed Hong Kong Offer Shares reallocated to the International Offering and
International Offer Shares reallocated to the Hong Kong Public Offering, if any, our Company
will pay an underwriting commission to the International Underwriters at the rate applicable
to the International Offering as set out in the International Underwriting Agreement, and no
underwriting commission will be paid to the Hong Kong Underwriters for such reallocated
Offer Shares. In addition, our Company may, at its sole and absolute discretion, also pay to the
Capital Market Intermediaries (in such proportions as our Company may solely determine) an
incentive fee of up to 1.0% of the aggregate Offer Price in respect of the Hong Kong Offer
Shares.
Assuming discretionary fees will be fully paid, the aggregate amount of fees payable by
us to all syndicate members will be 4.0% of the gross proceeds from the Global Offering, of
which 75.0% will be fixed and 25.0% will be discretionary.
Indemnity
We have agreed to indemnify, among others, the Sole Sponsor, the Sole Overall
Coordinator, the Sole Global Coordinator, the Joint Bookrunners, the Joint Lead Managers and
the Hong Kong Underwriters for certain losses which they may suffer or incur, including losses
arising from their performance of their obligations under the Hong Kong Underwriting
Agreement and any breach or alleged breach by us of the Hong Kong Underwriting Agreement.
UNDERWRITING
– 375 –


--- page 386 ---
International Offering
International Underwriting Agreement
In connection with the International Offering, our Company expects to enter into the
International Underwriting Agreement on the Price Determination Date with the International
Underwriters. Under the International Underwriting Agreement and subject to the Over-
allotment Option, the International Underwriters would, subject to certain conditions set out
therein, agree severally but not jointly to procure subscribers for, or themselves to subscribe
for, their respective applicable proportions of the International Offer Shares initially being
offered pursuant to the International Offering. It is expected that the International Underwriting
Agreement may be terminated on similar grounds as the Hong Kong Underwriting Agreement.
See “Structure of the Global Offering – The International Offering” in this prospectus.
Over-Allotment Option
Our Company is expected to grant to the International Underwriters the Over-allotment
Option, exercisable by the Sole Overall Coordinator (for itself and on behalf of the
International Underwriters) from the Listing Date until 30 days after the last day for the
lodging of applications under the Hong Kong Public Offering, pursuant to which the Company
may be required to issue up to an aggregate of 1,820,400 H Shares, representing not more than
15.00% of the number of Offer Shares initially available under the Global Offering, at the Offer
Price, to cover over-allocations in the International Offering, if any. See “Structure of the
Global Offering – The International Offering – Over-Allotment Option” in this prospectus.
INDEPENDENCE OF THE SOLE SPONSOR
The Sole Sponsor satisfies the independence criteria applicable to sponsors set out in Rule
3A.07 of the Listing Rules.
ACTIVITIES BY SYNDICATE MEMBERS
The underwriters of the Hong Kong Public Offering and the International Offering
(together, the “ Syndicate Members ”) and their affiliates may each individually undertake a
variety of activities (as further described below) which do not form part of the underwriting or
stabilizing process.
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 relation
to the H Shares, those activities could include acting as agents for buyers and sellers of the H
Shares, entering into transactions with those buyers and sellers in a principal capacity,
proprietary trading in the H Shares, and entering into over-the-counter or listed derivative
transactions or listed and unlisted securities transactions (including issuing securities such as
UNDERWRITING
– 376 –


--- page 387 ---
derivative warrants listed on a stock exchange) which have as their underlying assets, assets
including the H Shares. Those activities may require hedging activity by those entities
involving, directly or indirectly, the buying and selling of the H Shares. All such activity could
occur in Hong Kong and elsewhere in the world and may result in the Syndicate Members and
their affiliates holding long and/or short positions in the H Shares, in baskets of securities or
indices including the H Shares, in units of funds that may purchase the H Shares, or in
derivatives related to any of the foregoing.
In relation to the H Shares, the activities of the Syndicate Members and their affiliates
could include acting as agent for buyers and sellers of the H Shares, entering into transactions
with those buyers and sellers in a principal capacity, including as a lender to initial purchasers
of the H Shares (which financing may be secured by the H Shares) in the Global Offering,
proprietary trading in the H Shares, and entering into over the counter or listed derivative
transactions or listed or unlisted securities transactions (including issuing securities such as
derivative warrants listed on a stock exchange) which have as their underlying assets, assets
including the H Shares. Such transactions may be carried out as bilateral agreements or trades
with selected counterparties. Those activities may require hedging activity by those entities
involving, directly or indirectly, the buying and selling of the H Shares, which may have a
negative impact on the trading price of the H Shares. All such activities could occur in Hong
Kong and elsewhere in the world and may result in the Syndicate Members and their affiliates
holding long and/or short positions in the H Shares, in baskets of securities or indices including
the H Shares, in units of funds that may purchase the H Shares, or in derivatives related to any
of the foregoing.
In relation to issues by Syndicate Members or their affiliates of any listed securities
having H Shares as their underlying securities, whether on the Stock Exchange or on any other
stock exchange, the rules of the stock 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.
All such activities may occur both during and after the end of the stabilizing period
described in “Structure of the Global Offering” in this prospectus. Such activities may affect
the market price or value of the H Shares, the liquidity or trading volume in the H Shares and
the volatility of the price of the 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 (other than the Stabilizing Manager or any person acting for
it) 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
UNDERWRITING
– 377 –


--- page 388 ---
(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 us and
our affiliates for which such Syndicate Members or their respective affiliates have received or
will receive customary fees and commissions.
In addition, the Syndicate Members or their respective affiliates may provide financing to
investors to finance their subscriptions of Offer Shares in the Global Offering.
UNDERWRITING
– 378 –


--- page 389 ---
THE GLOBAL OFFERING
This prospectus is published in connection with the Hong Kong Public Offering as part
of the Global Offering. The Global Offering comprises:
(i) the Hong Kong Public Offering of initially 1,213,600 Hong Kong Offer Shares
(subject to reallocation) in Hong Kong as described in the paragraph headed “The
Hong Kong Public Offering” below; and
(ii) the International Offering of an aggregate of initially 10,922,400 International Offer
Shares (subject to reallocation and the Over-allotment Option) outside the United
States in offshore transactions in accordance with Regulation S as described in the
paragraph headed “The International Offering” below. At any time from the Listing
Date until 30 days after the last day for the lodging of applications in the Hong Kong
Public Offering, the Sole Overall Coordinator (on behalf of the International
Underwriters), has an option to require the Company to issue and allot up to an
aggregate of 1,820,400 additional H Shares, representing 15.00% of the initial
number of Offer Shares to be offered in the Global Offering, at the Offer Price to,
among other things, cover over-allocations in the International Offering, if any.
Investors may apply for Hong Kong Offer Shares under the Hong Kong Public Offering
or apply for or indicate an interest for International Offer Shares under the International
Offering, but may not do both.
The Offer Shares will represent approximately 3.49% of the enlarged registered share
capital of the Company immediately after completion of the Global Offering without taking
into account the exercise of the Over-allotment Option. If the Over-allotment Option is
exercised in full, the Offer Shares will represent approximately 3.99% of the enlarged
registered share capital immediately after completion of the Global Offering and the exercise
of the Over-allotment Option as set out in the section headed “Structure of the Global Offering
– The International Offering – Over-allotment Option” below.
The number of Offer Shares to be offered under the Hong Kong Public Offering and the
International Offering may be subject to reallocation as described in the paragraph headed “The
Hong Kong Public Offering – Reallocation and Clawback” below.
THE HONG KONG PUBLIC OFFERING
Number of Offer Shares Initially Offered
The Company is initially offering 1,213,600 Offer Shares for subscription by the public
in Hong Kong at the Offer Price, representing 10.00% of the total number of Offer Shares
initially available under the Global Offering. The Hong Kong Offer Shares will represent
approximately 0.35% of the Company’s enlarged registered share capital immediately after
completion of the Global Offering, assuming that the Over-allotment Option is not exercised.
STRUCTURE OF THE GLOBAL OFFERING
– 379 –


--- page 390 ---
The Hong Kong Public Offering is open to members of the public in Hong Kong as well
as to institutional and professional investors. Professional investors generally include brokers,
dealers, companies (including fund managers) whose ordinary business involves dealing in
shares and other securities and corporate entities which regularly invest in shares and other
securities.
Completion of the Hong Kong Public Offering is subject to the conditions as set out in
the paragraph headed “Conditions of the Global Offering” below.
Allocation
Allocation of the Hong Kong 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.
The total number of the Hong Kong Offer Shares initially available under the Hong Kong
Public Offering (after taking account of any reallocation referred to below) is to be divided into
two pools for allocation purposes (with any odd board lots being allocated to pool A): pool A
and pool B. The Hong Kong Offer Shares in pool A will be allocated on an equitable basis to
applicants who have applied for the Hong Kong Offer Shares with an aggregate price of HK$5
million (excluding the brokerage, SFC transaction levy, Stock Exchange trading fee and AFRC
transaction levy payable) or less. The Hong Kong Offer Shares in pool B will be allocated on
an equitable basis to applicants who have applied for the Hong Kong Offer Shares with an
aggregate price of more than HK$5 million (excluding the brokerage, SFC transaction levy,
Stock Exchange trading fee and AFRC transaction levy payable) and up to the total value in
pool B.
Investors should be aware that applications in pool A and applications in pool B may
receive different allocation ratios. If the Hong Kong Offer Shares in one (but not both) of the
pools are undersubscribed, the surplus Hong Kong Offer Shares will be transferred to the other
pool to satisfy demand in this other pool and be allocated accordingly.
For the purpose of the immediate preceding paragraph only, the “price” for the Offer
Shares means the price payable on application therefor (without regard to the Offer Price as
finally determined). Applicants can only receive an allocation of the 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 606,800 Hong Kong Offer Shares (being 50.00% of the 1,213,600
Offer Shares initially available under the Hong Kong Public Offering) are liable to be rejected.
STRUCTURE OF THE GLOBAL OFFERING
– 380 –


--- page 391 ---
Reallocation and Clawback
The allocation of the Offer Shares between the Hong Kong Public Offering and the
International Offering is subject to reallocation. Paragraph 4.2 of Practice Note 18 of the
Listing Rules requires a clawback mechanism to be put in place which would have the effect
of increasing the number of Offer Shares under the Hong Kong Public Offering to a certain
percentage of the total number of Offer Shares offered under the Global Offering if the
International Offering is fully subscribed or oversubscribed and certain prescribed total
demand levels are reached under the Hong Kong Public Offering.
If the number of Offer Shares validly applied for under the Hong Kong Public Offering
represents (a) 15 times or more but less than 50 times, (b) 50 times or more but less than 100
times and (c) 100 times or more of the total number of Offer Shares initially available under
the Hong Kong Public Offering, then Offer Shares will be reallocated to the Hong Kong Public
Offering from the International Offering. As a result of such reallocation, the total number of
Offer Shares available under the Hong Kong Public Offering will be increased to 3,640,800
Offer Shares (in the case of (a)), 4,854,400 Offer Shares (in the case of (b)) and 6,068,000
Offer Shares (in the case of (c)), representing 30.00%, 40.00% and 50.00% of the total number
of Offer Shares initially available under the Global Offering, respectively (before any exercise
of the Over-allotment Option). In each case, the additional Offer Shares reallocated to the Hong
Kong Public Offering will be allocated between pool A and pool B and the number of Offer
Shares allocated to the International Offering will be correspondingly reduced in such manner
as the Sole Overall Coordinator deems appropriate.
In addition, the Sole Overall Coordinator may reallocate Offer Shares from the
International Offering to the Hong Kong Public Offering to satisfy valid applications under the
Hong Kong Public Offering under the condition that (1) the International Offering is not fully
subscribed and the Hong Kong Public Offering is fully subscribed or oversubscribed
(irrespective of the number of times); or (2) the International Offering is fully subscribed or
oversubscribed and the Hong Kong Public Offering is fully subscribed or oversubscribed with
the number of Offer Shares validly applied for in the Hong Kong Public Offering representing
less than 15 times of the number of Offer Shares initially available for subscription under the
Hong Kong Public Offering. In such event, the Sole Overall Coordinator has the authority to
re-allocate International Offer Shares originally allocated in the International Offering to the
Hong Kong Public Offering in such number as it deems appropriate, provided that in
accordance with Guidance Letter HKEX-GL91-18 issued by the Stock Exchange, the total
number of Offer Shares available under the Hong Kong Public Offering following such
reallocation shall be not more than 2,427,200 Offer Shares (representing 20.00% of the total
number of Offer Shares initially available under the Global Offering), and the final Offer Price
shall be fixed at the low-end of the indicative Offer Price Range (i.e., HK$14.18 per Offer
Share) stated in this prospectus.
If the Hong Kong Public Offering is not fully subscribed, the Sole Overall Coordinator
may reallocate all or any unsubscribed Hong Kong Offer Shares to the International Offering,
in such proportions as the Sole Overall Coordinator deems appropriate.
STRUCTURE OF THE GLOBAL OFFERING
– 381 –


--- page 392 ---
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.
Applications
Each applicant under the Hong Kong Public Offering will be required to give an
undertaking and confirmation in the application submitted by him that he and any person(s) for
whose benefit he is making the application has not applied for or taken up, or indicated an
interest for, and will not apply for or take up, or indicate an interest for, any International Offer
Shares under the International Offering. Such applicant’s application is liable to be rejected if
such undertaking and/or confirmation is/are breached and/or untrue (as the case may be) or if
he has been or will be placed or allocated international Offer Shares under the International
Offering.
The Listing is sponsored by the Sole Sponsor. Applicants under the Hong Kong Public
Offering are required to pay, on application, the maximum Offer Price of HK$16.18 per Offer
Share in addition to the brokerage, the SFC transaction levy, the 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 the paragraph headed “Pricing of the Global Offering”
below, is less than the maximum Offer Price of HK$16.18 per Offer Share, appropriate refund
payments (including the brokerage, the SFC transaction levy, the Stock Exchange trading fee
and AFRC transaction levy attributable to the surplus application monies) will be made to
successful applicants, without interest. Further details are set out in the section headed “How
to Apply for Hong Kong Offer Shares” in this prospectus.
References in this prospectus to applications, the GREEN Application Form, 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 reallocation as described above, the International Offering will consist of an
initial offering of 10,922,400 International Offer Shares representing 90.00% of the Offer
Shares under the Global Offering, assuming that the Over-allotment Option is not exercised,
and approximately 3.14% of the Company’s enlarged registered share capital immediately after
the completion of the Global Offering, assuming that the Over-allotment Option is not
exercised.
Allocation
The International Offering will include selective marketing of the International Offer
Shares to institutional and professional investors and other investors anticipated to have a
sizeable demand for such International Offer Shares in Hong Kong and other jurisdictions
STRUCTURE OF THE GLOBAL OFFERING
– 382 –


--- page 393 ---
outside the United States only 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. Allocation of the International Offer Shares pursuant to the
International Offering will be effected in accordance with the “book-building” process
described in the paragraph headed “Pricing of the Global Offering” below and based on a
number of factors, including the level and timing of demand, the total size of the relevant
investor’s invested assets or equity assets in the relevant sector and whether or not it is
expected that the relevant investor is likely to buy further Offer Shares, and/or hold or sell its
Offer Shares, after the listing of the Offer Shares on the Stock Exchange. Such allocation is
intended to result in a distribution of the Offer Shares on a basis which would lead to the
establishment of a solid professional and institutional shareholder base to the benefit of the
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 the International 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 so as to allow them to identify the
relevant application under the Hong Kong Public Offering and to ensure that it is excluded
from any application of the Hong Kong Offer Shares under the Hong Kong Public Offering.
Reallocation
The total number of the Offer Shares to be issued or sold pursuant to the International
Offering may change as a result of the clawback mechanism described in the paragraph headed
“The Hong Kong Public Offering – Reallocation and Clawback” above or the Over-allotment
Option in whole or in part and/or 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 an Over-
allotment Option to the International Underwriters exercisable by the Sole Overall Coordinator
on behalf of the International Underwriters.
Pursuant to the Over-allotment Option, the Sole Overall Coordinator has the right,
exercisable at any time from the Listing Date until 30 days after the last day for the lodging
of applications under the Hong Kong Public Offering, to require the Company to issue and allot
up to an aggregate of 1,820,400 additional Offer Shares, representing 15.00% of the initial
number of Offer Shares to be offered in the Global Offering, at the same price per Offer Share
under the International Offering to cover over-allocation in the International Offering, if any.
If the Over-allotment Option is exercised in full, the additional Offer Shares will represent
approximately 0.52% of the Company’s enlarged registered share capital immediately
following the completion of the Global Offering. In the event that the Over-allotment Option
is exercised, an announcement will be made.
STRUCTURE OF THE GLOBAL OFFERING
– 383 –


--- page 394 ---
STABILIZATION
Stabilization is a usual 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, to retard and, if possible, prevent,
any decline in the market price of the securities below the offer price. In Hong Kong and
certain other jurisdictions, 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
them, on behalf of the International 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
H 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
International 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 H Shares or purchasing H Shares in the open market. In
determining the source of the H Shares to close out the covered short position, the Stabilizing
Manager will consider, among others, the price of the H Shares in the open market as compared
to the price at which they may purchase additional H Shares pursuant to the Over-allotment
Option. Stabilizing transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the H Shares while the Global Offering
is in progress. Any market purchases of the H Shares may be effected on any stock exchange,
including the Stock Exchange, any over-the-counter market or otherwise, provided that they
are made in compliance with all applicable laws and regulatory requirements. However, there
is no obligation on the Stabilizing Manager or any person acting for it to conduct any such
stabilizing activity, which 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 H Shares that may be over-allocated will not exceed the number of the
H Shares that may be sold under the Over-allotment Option, namely 1,820,400 H Shares, which
is 15.00% of the number of Offer Shares initially available under the Global Offering assuming
that the Over-allotment Option is not exercised, in the event that the whole or part of the
Over-allotment Option is exercised.
In Hong Kong, stabilizing activities must be carried out in accordance with the Securities
and Futures (Price Stabilizing) Rules. Stabilizing actions permitted pursuant to the Securities
and Futures (Price Stabilizing) Rules include:
(a) over-allocation for the purpose of preventing or minimizing any reduction in the
market price of the H Shares;
STRUCTURE OF THE GLOBAL OFFERING
– 384 –


--- page 395 ---
(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 deduction in the market price;
(c) subscribing, or agreeing to subscribe, for the H Shares pursuant to the Over-
allotment Option in order to close out any position established under (a) or (b)
above;
(d) purchasing, or agreeing to purchase, the H Shares for the sole purpose of preventing
or minimizing any reduction in the market price;
(e) selling the H Shares to liquidate a long position held as a result of those purchases;
and
(f) offering or attempting to do anything described in (b), (c), (d) and (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.
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. 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. In the event that the Stabilizing Manager liquidates this long
position by making sales in the open market, this may lead to a decline in the market price of
the H Shares.
Stabilizing action by the Stabilizing Manager, or any person acting for it, is not permitted
to support the price of the H Shares for longer than the stabilizing period, which begins on the
day on which trading of the H Shares commences on the Stock Exchange and ends on the 30th
day after the last day for the lodging of applications under the Hong Kong Public Offering. The
stabilizing period is expected to end on Sunday, December 3, 2023. As a result, demand for the
H Shares and their market price may 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. 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. Bids for or market purchases of the
H Shares by the Stabilizing Manager, or any person acting for it, may be made at a price at or
below the Offer Price and therefore at or below the price paid for the H Shares by applicants.
In order to effect stabilization actions, the Stabilizing Manager may arrange cover of up
to an aggregate of 1,820,400 H Shares, representing up to 15.00% 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 to by an
investor) relate only to the delay in the delivery of the Offer Shares to such investor and the
STRUCTURE OF THE GLOBAL OFFERING
– 385 –


--- page 396 ---
Offer Price for the Offer Shares allocated to such investor will be fully paid prior to Listing,
accordingly there will be no delayed settlement of payment of the Offer Shares. 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.
A public announcement in compliance with the Securities and Futures (Price Stabilizing)
Rules will be made within seven days of the expiration of the stabilizing period.
PRICING OF THE GLOBAL OFFERING
The International Underwriters will be soliciting from prospective investors’ indications
of interest in acquiring the International Offer Shares in the International Offering. Prospective
professional and institutional investors will be required to specify the number of the
International Offer Shares under the International Offering they would be prepared to acquire
either at different prices or at a particular price. This process, known as “book-building,” is
expected to continue up to, and to cease on or around, the last day for lodging applications
under the Hong Kong Public Offering.
Pricing for the Offer Shares for the purpose of the various offerings under the Global
Offering will be fixed on the Price Determination Date, which is expected to be on or around
Friday, November 3, 2023, and in any event on or before Thursday, November 9, 2023, by
agreement between the Sole Overall Coordinator (for itself and on behalf of the Hong Kong
Underwriters) and the Company and the number of Offer Shares to be allocated under various
offerings will be determined shortly thereafter.
The Offer Price will be not more than HK$16.18 per Offer Share and is expected to be
not less than HK$14.18 per Offer Share unless otherwise announced, as further explained
below, not later than the morning of the last day for lodging applications under the Hong Kong
Public Offering. Applicants under the Hong Kong Public Offering must pay, on application, the
maximum Offer Price of HK$16.18 per Offer Share plus 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 on each Offer Share. 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 the prospectus.
REDUCTION IN OFFER PRICE RANGE AND/OR NUMBER OF OFFER SHARES
The Sole Overall Coordinator (for itself and on behalf of the 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 the
Company, reduce the number of Offer Shares offered in the Global Offering and/or the Offer
Price below that stated in this prospectus at any time on or prior to the morning of the last day
STRUCTURE OF THE GLOBAL OFFERING
– 386 –


--- page 397 ---
for lodging applications under the Hong Kong Public Offering. In such a case, the Company
will, as soon as practicable following the decision to make such reduction, and in any event not
later than the morning of the day which is the last day for lodging applications under the Hong
Kong Public Offering, cause there to be posted on the websites of the Stock Exchange
(www.hkexnews.hk ) and of the Company ( www.fls123.com ) notices of the reduction. As soon
as practicable after such reduction of the number of Offer Shares and/or the Offer Price, the
Company will also issue a supplemental prospectus updating investors of such reduction
together with (a) an update of all financial and other information in connection with such
change, among other things, the changes to the Global Offering, change in the Offer Price,
offer period and the impact of such change on the sufficiency of working capital and use of
proceeds; and (b) where appropriate, the period under which the Hong Kong Public Offering
is open for acceptance, and give potential investors who have applied for the Offer Shares to
confirm their applications. In the event that the Company has not obtain a confirmation from
the potential investors confirming their desire to proceed with their applications, their
applications will be rejected. In the absence of the publication of any such notice and
supplemental prospectus so published, the Offer Price shall under no circumstances be set
outside the Offer Price range indicated in this prospectus.
Irrespective of whether the number of Offer Shares and/or the Offer Price range is
reduced, the level of indications of interest in the Global Offering, the results of applications
and the basis of allotment of the Hong Kong Offer Shares available under the Hong Kong
Public Offering, are expected to be posted on the websites of the Stock Exchange
(www.hkexnews.hk ) and of the Company ( www.fls123.com ).
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 conditional upon the
International Underwriting Agreement being signed and becoming unconditional.
The Company expects to enter into the International Underwriting Agreement relating to
the International Offering on or around the Price Determination Date.
These underwriting arrangements and the respective Underwriting Agreements are
summarized in the section headed “Underwriting” in this prospectus.
CONDITIONS OF THE GLOBAL OFFERING
Acceptance of all applications for Offer Shares will be conditional on:
(a) the Listing Committee of the Stock Exchange granting approval for the listing of,
and permission to deal in, our H Shares to be issued pursuant to the Global Offering
(including the additional H Shares which may be issued pursuant to the exercise of
the Over-allotment Option); and 194,458,736 H Shares to be converted from
Unlisted Shares pursuant to the Conversion of Unlisted Shares into H Shares;
STRUCTURE OF THE GLOBAL OFFERING
– 387 –


--- page 398 ---
(b) the Offer Price having been fixed on or around 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 Hong Kong Underwriters under the Hong Kong Underwriting
Agreement and the obligations of the International Underwriters under the
International Underwriting Agreement becoming and remaining unconditional and
not having been terminated in accordance with the terms of the respective
agreements.
The consummation of each of the Hong Kong Public Offering and the International
Offering is conditional upon, among other things, the other offering becoming unconditional
and not having been terminated in accordance with its terms.
If the above conditions are not fulfilled or waived prior to the dates and times 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 the Company on the websites
of the Stock Exchange at www.hkexnews.hk and of the Company at www.fls123.com ,
respectively, on the next day following such lapse. In such a situation, all application monies
will be returned, without interest, on the terms set out in the section headed “How to Apply for
Hong Kong Offer Shares – 13. Refund of Application Monies” in this prospectus. In the
meantime, all application monies will be held in separate bank account(s) with the receiving
bank or other bank(s) in Hong Kong licensed under the Banking Ordinance (Chapter 155 of the
Laws of Hong Kong).
H Share certificates will only become valid at 8:00 a.m. on Friday, November 10, 2023
provided that the Global Offering has become unconditional in all respects 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.
ADMISSION OF THE H SHARES INTO CCASS
All necessary arrangements have been made enabling the H Shares to be admitted into
CCASS.
If the Stock Exchange grants the listing of, and permission to deal in, the H Shares and
the Company complies with the stock admission requirements of HKSCC, the H Shares will be
accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with
effect from the date of commencement of dealings in the H Shares on the Stock Exchange or
any other date HKSCC chooses. Settlement of transactions between participants of the Stock
Exchange is required to take place in CCASS on the second settlement day after any trading
day.
STRUCTURE OF THE GLOBAL OFFERING
– 388 –


--- page 399 ---
All activities under CCASS are subject to the General Rules of CCASS and CCASS
Operational Procedures in effect from time to time.
DEALING ARRANGEMENTS
Assuming that the Hong Kong Public Offering becomes unconditional at or before 8:00
a.m. in Hong Kong on Friday, November 10, 2023, it is expected that dealings in the H Shares
on the Stock Exchange will commence at 9:00 a.m. on Friday, November 10, 2023. The H
Shares will be traded in board lots of 200 H Shares each and the stock code of the H Shares
will be 2499.
STRUCTURE OF THE GLOBAL OFFERING
– 389 –


--- page 400 ---
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 or printed
copies of any application forms to the public 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.fls123.com . If you require a printed copy of this
prospectus, you may download and print from the website addresses above.
The contents of the electronic version of the 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.
Set out below are the procedures through which you can apply for the Hong Kong
Offer Shares electronically. We will not provide any physical channels to accept any
application for the Hong Kong Offer Shares by the public.
If you are an intermediary, broker or agent, please remind your customers, clients
or principals, as applicable, that this prospectus is available online at the website
addresses above.
1. HOW TO APPLY
We will not provide any printed application forms for use by the public.
If you apply for Hong Kong Offer Shares, then you may not apply for or indicate an
interest for International Offer Shares.
To apply for Hong Kong Offer Shares, you may:
(1) apply online via the HK eIPO White Form service in the IPO App (which can be
downloaded by searching “ IPO App ” in App Store or Google Play or downloaded
at www.hkeipo.hk/IPOApp or www.tricorglobal.com/IPOApp )o ra t
www.hkeipo.hk ;o r
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 390 –


--- page 401 ---
(2) apply through the CCASS EIPO service to electronically cause HKSCC Nominees
to apply on your behalf, including by:
(i) instructing your broker or custodian who is a CCASS Clearing Participant or
a CCASS Custodian Participant to give electronic application instructions
via CCASS terminals to apply for the Hong Kong Offer Shares on your behalf;
or
(ii) (if you are an existing CCASS Investor Participant ) giving electronic
application instructions through the CCASS Internet System
(https://ip.ccass.com ) or through the CCASS Phone System by calling +852
2979 7888 (using the procedures in HKSCC’s “An Operating Guide for
Investor Participants” in effect from time to time). HKSCC can also input
electronic application instructions for CCASS Investor Participants through
HKSCC’s Customer Service Centre at 1/F, One & Two Exchange Square, 8
Connaught Place, Central, Hong Kong by completing an input request.
If you apply through channel (1) above, the Hong Kong Offer Shares successfully applied
for will be issued in your own name.
If you apply through channels (2)(i) or (2)(ii) above, the Hong Kong Offer Shares
successfully applied for will be issued in the name of HKSCC Nominees and deposited directly
into CCASS to be credited to your or a designated CCASS Participant’s stock account.
None of you or your joint applicant(s) may make more than one application, except where
you are a nominee and provide the required information in your application.
Our Company, the Sole Overall Coordinator, the HK eIPO White Form Service Provider
and their respective agents may reject or accept any application in full or in part for any reason
at their discretion.
2. WHO CAN APPLY
Eligibility for the Application
Y ou can apply for the Hong Kong Offer Shares if you or the person(s) for whose benefit
you are applying:
 are 18 years of age or older;
 are outside the United States, and are not a United States Person (as defined in
Regulation S under the U.S. Securities Act); and
 are not a legal or natural person of the PRC (except qualified domestic institutional
investors).
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 391 –


--- page 402 ---
If you are a firm, the application must be in the individual members’ names.
The number of joint applicants may not exceed four.
Unless permitted by the Listing Rules, you cannot apply for any Hong Kong Offer Shares
if you are:
 an existing beneficial owner of Shares in the Company and/or any of its subsidiaries;
 a Director, supervisor or chief executive officer of the Company and/or any of its
subsidiaries;
 a close associate (as defined in the Listing Rules) of any of the above;
 a core connected person (as defined in the Listing Rules) of the Company or will
become a core connected person of the Company immediately upon completion of
the Global Offering; or
 have been allocated or have applied for any International Offer Shares or otherwise
participate in the International Offering.
Items Required for the Application
If you apply for the Hong Kong Offer Shares online through the HK eIPO White Form
service, you must:
(a) have a valid Hong Kong identity card number/passport number (for individual
applicant) or Hong Kong business registration number/certificate of incorporation
number (for body corporate applicant);
(b) have a Hong Kong address; and
(c) provide a valid e-mail address and a contact telephone number.
If you are applying for the Hong Kong Offer Shares online by instructing your broker or
custodian who is a CCASS Clearing Participant or a CCASS Custodian Participant to give
electronic application instructions via CCASS terminals, please contact them for the items
required for the application.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 392 –


--- page 403 ---
3. TERMS AND CONDITIONS OF AN APPLICATION
By applying through the application channels specified in this prospectus, you:
(i) undertake to execute all relevant documents and instruct and authorize the Company
and/or the Sole Overall Coordinator (or their agents or nominees), as agents of the
Company, 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;
(ii) agree to comply with the Companies Ordinance, the Companies (Winding up and
Miscellaneous Provisions) Ordinance, the PRC Company Law, the Special
Regulations and the Articles of Association;
(iii) confirm that you have read the terms and conditions and application procedures set
out in this prospectus and agree to be bound by them;
(iv) confirm that you have received and read this prospectus and have only relied on the
information and representations contained in this prospectus in making your
application and will not rely on any other information or representations except
those in any supplement to this prospectus;
(v) confirm that you are aware of the restrictions on the Global Offering in this
prospectus;
(vi) agree that none of the Company, the Sole Sponsor, the Sole Overall Coordinator, the
Sole Global Coordinator, the Joint Bookrunners, the Joint Lead Managers, the
Capital Market Intermediaries, the Underwriters, their respective directors, officers,
employees, partners, agents, affiliates and advisors, and any other persons or parties
involved in the Global Offering and the HK eIPO White Form Service Provider, is
or will be liable for any information and representations not in this prospectus (and
any supplement to it);
(vii) undertake and confirm that you or the person(s) for whose benefit you have made
the application have not applied for or taken up, or indicated an interest for, and will
not apply for or take up, or indicate an interest for, any International Offer Shares
under the International Offering nor participated in the International Offering;
(viii) agree to disclose to our Company, our H Share Registrar, receiving bank(s), the Sole
Sponsor, the Sole Overall Coordinator, the Sole Global Coordinator, the Joint
Bookrunners, the Joint Lead Managers, the Capital Market Intermediaries, the
Underwriters and/or their respective directors, officers, employees, partners, agents,
affiliates and advisors, and any other persons or parties involved in the Global
Offering, any personal data which they may require about you and the person(s) for
whose benefit you have made the application;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 393 –


--- page 404 ---
(ix) if the laws of any place outside Hong Kong apply to your application, agree and
warrant that you have complied with all such laws and none of the Company, the
Sole Sponsor, the Sole Overall Coordinator, the Sole Global Coordinator, the Joint
Bookrunners, the Joint Lead Managers, the Capital Market Intermediaries and the
Underwriters nor any of their respective directors, officers, employees, partners,
agents, affiliates and advisors, and any other persons or parties involved in the
Global Offering, will breach any law 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 and the
GREEN Application Form;
(x) agree that once your application has been accepted, you may not rescind it because
of an innocent misrepresentation;
(xi) agree that your application will be governed by the laws of Hong Kong;
(xii) represent, warrant and undertake that (i) you understand that the Hong Kong Offer
Shares have not been and will not be registered under the U.S. Securities Act; and
(ii) you and any person for whose benefit you are applying for the Hong Kong Offer
Shares are outside the United States (as defined in Regulation S) or are a person
described in paragraph (h)(3) of Rule 902 of Regulation S, and are not a U.S. person
(as defined in Regulation S);
(xiii) warrant that the information you have provided is true and accurate;
(xiv) agree to accept the Hong Kong Offer Shares applied for, or any lesser number
allocated to you under the application;
(xv) authorize our Company to place your name(s) or the name of the HKSCC Nominees,
on the Company’s register of members as the holder(s) of any Hong Kong Offer
Shares allocated to you, and our Company and/or its agents to send any H Share
certificate(s) and/or any e-Auto Refund payment instructions and/or any refund
cheque(s) to you or the first-named applicant for joint application by ordinary post
at your own risk to the address stated on the application, unless you are eligible to
collect the H Share certificate(s) and/or refund cheque(s) in person;
(xvi) 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;
(xvii) understand that our Company, the Sole Sponsor, the Sole Overall Coordinator and
the Sole Global Coordinator will rely on your declarations and representations in
deciding whether or not to make any allotment of any of the Hong Kong Offer
Shares to you and that you may be prosecuted for making a false declaration;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 394 –


--- page 405 ---
(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 or to the HK eIPO White Form Service Provider by you
or by any one as your agent or by any other person; and
(xix) (if you are making the application as an agent for the benefit of another person)
warrant that (i) 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 or to the
HK eIPO White Form Service Provider; and (ii) you have due authority to give
electronic application instructions on behalf of that other person as their agent.
For the avoidance of doubt, we and all other parties involved in the preparation of this
prospectus acknowledge that each applicant and CCASS Participant who gives or causes to
give electronic application instructions is a person who may be entitled to compensation
under Section 40 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (as
applied by Section 342E of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance).
4. MINIMUM APPLICATION AMOUNT AND PERMITTED NUMBERS
Y our application through the HK eIPO White Form service or the CCASS EIPO service
must be for a minimum of 200 Hong Kong Offer Shares and in one of the numbers set out in
the table below. Y ou are required to pay the amount next to the number you select.
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
HK$ HK$ HK$ HK$
200 3,268.63 4,000 65,372.71 60,000 980,590.52 300,000 4,902,952.59
400 6,537.27 5,000 81,715.87 70,000 1,144,022.27 350,000 5,720,111.35
600 9,805.90 6,000 98,059.06 80,000 1,307,454.02 400,000 6,537,270.12
800 13,074.54 7,000 114,402.23 90,000 1,470,885.78 450,000 7,354,428.89
1,000 16,343.17 8,000 130,745.39 100,000 1,634,317.54 500,000 8,171,587.66
1,200 19,611.81 9,000 147,088.58 120,000 1,961,181.03 606,800
(1) 9,917,038.78
1,400 22,880.44 10,000 163,431.75 140,000 2,288,044.54
1,600 26,149.08 20,000 326,863.51 160,000 2,614,908.05
1,800 29,417.72 30,000 490,295.27 180,000 2,941,771.55
2,000 32,686.35 40,000 653,727.01 200,000 3,268,635.05
3,000 49,029.52 50,000 817,158.76 250,000 4,085,793.83
(1) Maximum number of Hong Kong Offer Shares you may apply for.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 395 –


--- page 406 ---
No application for any other number of the Hong Kong Offer Shares will be considered
and any such application is liable to be rejected.
5. APPLYING THROUGH THE HK eIPO WHITE FORM SERVICE
General
Applicants who meet the criteria in “2. Who can apply” in this section, may apply through
the HK eIPO White Form service for the Offer Shares to be allotted and registered in their
own names through the IPO App or the designated website at www.hkeipo.hk .
Detailed instructions for application through the HK eIPO White Form service are in the
IPO App or on the designated website. If you do not follow the instructions, your application
may be rejected and may not be submitted to the Company. If you apply through the IPO App
or the designated website, you authorize 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.
Time for Submitting Applications Under the HK eIPO White Form Service
Y ou may submit your application to the HK eIPO White Form Service Provider in the
IPO App or at www.hkeipo.hk (24 hours daily, except on the last application day) from
9:00 a.m. on Tuesday, October 31, 2023 until 11:30 a.m. on Friday, November 3, 2023 and the
latest time for completing full payment of application monies in respect of such applications
will be 12:00 noon on Friday, November 3, 2023 or such later time under “10. Effect of Bad
Weather and/or Extreme Conditions on the Opening of the Application Lists” in this section.
No Multiple Applications
If you apply by means of the HK eIPO White Form service, once you complete payment
in respect of any electronic application instruction 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. For the avoidance of doubt, giving an
electronic application instruction under the HK eIPO White Form service more than once
and obtaining different application reference numbers without effecting full payment in respect
of a particular reference number will not constitute an actual application.
If you are suspected of submitting more than one application through the HK eIPO White
Form service or by any other means, all of your applications are liable to be rejected.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 396 –


--- page 407 ---
6. APPLYING THROUGH THE CCASS EIPO SERVICE
General
CCASS Participants may give electronic application instructions to apply for the Hong
Kong Offer Shares and to arrange payment of the money due on application and payment of
refunds under their participant agreements with HKSCC and the General Rules of CCASS and
the CCASS Operational Procedures.
If you are a CCASS Investor Participant, you may give these electronic application
instructions through the CCASS Internet System ( https://ip.ccass.com ) or through the
CCASS Phone System by calling +852 2979 7888 (using the procedures in HKSCC’s “An
Operating Guide for Investor Participants” in effect from time to time). HKSCC can also input
electronic application instructions for CCASS Investor Participants through HKSCC’s
Customer Service Centre at 1/F, One & Two Exchange Square, 8 Connaught Place, Central,
Hong Kong by completing an input request.
If you are not a CCASS Investor Participant, you may instruct your broker or custodian
who is a CCASS Clearing Participant or a CCASS Custodian Participant to give electronic
application instructions via CCASS terminals to apply for the Hong Kong Offer Shares on
your behalf.
Y ou will be deemed to have authorized HKSCC and/or HKSCC Nominees to transfer the
details of your application to our Company, the Sole Sponsor, the Sole Overall Coordinator, the
Sole Global Coordinator and the H Share Registrar.
Applying Through the CCASS EIPO Service
Where you have applied through the CCASS EIPO service (either indirectly through a
broker or custodian or directly) and an application is made by HKSCC Nominees on your
behalf:
(i) HKSCC Nominees will only be acting as a nominee for you and is not liable for any
breach of the terms and conditions of this prospectus; and
(ii) HKSCC Nominees will do the following things on your behalf:
 agree that the Hong Kong Offer Shares to be allotted shall be issued in the
name of HKSCC Nominees and deposited directly into CCASS for the credit
of the CCASS Participant’s stock account on your behalf or your CCASS
Investor Participant’s stock account;
 agree to accept the Hong Kong Offer Shares applied for or any lesser number
allocated;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 397 –


--- page 408 ---
 undertake and confirm that you have not applied for or taken up, will not
apply for or take up, or indicate an interest for, any International Offer Shares
under the International Offering;
 (if the electronic application instructions are given for your benefit) declare
that only one set of electronic application instructions has been given for
your benefit;
 (if you are an agent for another person) declare that you have only given one
set of electronic application instructions for the other person’s benefit and
are duly authorized to give those instructions as their agent;
 confirm that you understand that our Company, the Directors, the Sole Overall
Coordinator and the Sole Global Coordinator will rely on your declarations and
representations in deciding whether or not to make any allotment of any of the
Hong Kong Offer Shares to you and that you may be prosecuted if you make
a false declaration;
 authorize our Company to place HKSCC Nominees’ name on the Company’s
register of members as the holder of the Hong Kong Offer Shares allocated to
you and to send H Share certificate(s) and/or refund monies under the
arrangements separately agreed between us and HKSCC;
 confirm that you have read the terms and conditions and application
procedures set out in this prospectus and agree to be bound by them;
 confirm that you have received and/or read a copy of this prospectus and have
relied only on the information and representations in this prospectus in causing
the application to be made, save as set out in any supplement to this
prospectus;
 agree that none of the Company, the Sole Sponsor, the Sole Overall
Coordinator, the Sole Global Coordinator, the Joint Bookrunners, the Joint
Lead Managers, the Capital Market Intermediaries, the Underwriters, their
respective directors, officers, employees, partners, agents, affiliates and
advisors, and any other persons or parties involved in the Global Offering, is
or will be liable for any information and representations not contained in this
prospectus (and any supplement to it);
 agree to disclose your personal data to our Company, our H Share Registrar,
receiving bank(s), the Sole Sponsor, the Sole Overall Coordinator, the Sole
Global Coordinator, the Joint Bookrunners, the Joint Lead Managers, the
Capital Market Intermediaries, the Underwriters and/or its respective directors,
officers, employees, partners, agents, affiliates and advisors, and any other
persons or parties involved in the Global Offering;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 398 –


--- page 409 ---
 agree (without prejudice to any other rights which you may have) that once
HKSCC Nominees’ application has been accepted, it cannot be rescinded for
innocent misrepresentation;
 agree that any application made by HKSCC Nominees on your behalf is
irrevocable before the fifth day after the time of the opening of the application
lists (excluding any day which is Saturday, Sunday or public holiday in Hong
Kong), such agreement to take effect as a collateral contract with us and to
become binding when you give the instructions and such collateral contract to
be in consideration of our Company agreeing that it will not offer any Hong
Kong Offer Shares to any person before the fifth day after the time of the
opening of the application lists (excluding any day which is Saturday, Sunday
or public holiday in Hong Kong), except by means of one of the procedures
referred to in this prospectus. However, HKSCC Nominees may revoke the
application before the fifth day after the time of the opening of the application
lists (excluding for this purpose any day which is a Saturday, Sunday or public
holiday in Hong Kong) if a person responsible for this prospectus under
Section 40 of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance gives a public notice under that section which excludes or limits that
person’s responsibility for this prospectus;
 agree that once HKSCC Nominees’ application is accepted, neither that
application nor your electronic application instructions can be revoked, and
that acceptance of that application will be evidenced by the Company’s
announcement of the Hong Kong Public Offering results;
 agree to the arrangements, undertakings and warranties under the participant
agreement between you and HKSCC, read with the General Rules of CCASS
and the CCASS Operational Procedures, for the giving electronic application
instructions to apply for the Hong Kong Offer Shares;
 agree with the Company, for itself and for the benefit of each Shareholder (and
so that our Company will be deemed by its acceptance in whole or in part of
the application by HKSCC Nominees to have agreed, for itself and on behalf
of each of the Shareholders, with each CCASS Participant giving electronic
application instructions ) to observe and comply with the PRC Company Law,
the Companies Ordinance, the Companies (Winding Up and Miscellaneous
Provisions) Ordinance, the Special Regulations and the Articles of Association;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 399 –


--- page 410 ---
 agree with the Company, for itself and for the benefit of each of the
Shareholders and each Director, supervisor, manager and other senior officer of
the Company (and so that the Company will be deemed by its acceptance in
whole or in part of this application to have agreed, for itself and on behalf of
each of the Shareholders and each Director, supervisor, manager and other
senior officer of the Company, with each CCASS Participant giving electronic
application instructions ):
(a) to refer all differences and claims arising from the Articles of Association
or any rights or obligations conferred or imposed by the PRC Company
Law or any other relevant laws and administrative regulations concerning
the affairs of the Company to arbitration in accordance with the Articles
of Association;
(b) that any award made in such arbitration shall be final and conclusive; and
(c) that the arbitration tribunal may conduct hearings in open sessions and
publish its award;
 agree with the Company (for the Company itself and for the benefit of each
Shareholder of the Company) that the H Shares are freely transferable by their
holders;
 authorize the Company to enter into a contract on its behalf with each director
and officer of the Company whereby each such director and officer undertakes
to observe and comply with his obligations to shareholders stipulated in the
Articles of Association; and
 agree that your application, any acceptance of it and the resulting contract will
be governed by the laws of Hong Kong.
Effect of Applying Through the CCASS EIPO Service
By applying through the CCASS EIPO service, you (and, if you are joint applicants, each
of you jointly and severally) are deemed to have done the following things. Neither HKSCC
nor HKSCC Nominees shall be liable to the Company or any other person in respect of the
things mentioned below:
 instructed and authorized HKSCC to cause HKSCC Nominees (acting as nominee
for the relevant CCASS Participants) to apply for the Hong Kong Offer Shares on
your behalf;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 400 –


--- page 411 ---
 instructed and authorized HKSCC to arrange payment of the maximum Offer Price,
brokerage, SFC transaction levy, the Stock Exchange trading fee and AFRC
transaction levy by debiting your designated bank account and, in the case of a
wholly or partially unsuccessful application and/or if the Offer Price is less than the
maximum Offer Price per Offer Share initially paid on application, refund of the
application monies (including brokerage, SFC transaction levy, the Stock Exchange
trading fee and AFRC transaction levy) by crediting your designated bank account;
and
 instructed and authorized HKSCC to cause HKSCC Nominees to do on your behalf
all the things stated in this prospectus.
Time for Inputting Electronic Application Instructions
(Note)
CCASS Clearing/Custodian Participants can input electronic application instructions at
the following times on the following dates:
 Tuesday, October 31, 2023 – 9:00 a.m. to 8:30 p.m.
 Wednesday, November 1, 2023 – 8:00 a.m. to 8:30 p.m.
 Thursday, November 2, 2023 – 8:00 a.m. to 8:30 p.m.
 Friday, November 3, 2023 – 8:00 a.m. to 12:00 noon
CCASS Investor Participants can input electronic application instructions from 9:00
a.m. on Tuesday, October 31, 2023 until 12:00 noon on Friday, November 3, 2023 (24 hours
daily, except on Friday, November 3, 2023, the last application day).
The latest time for inputting your electronic application instructions will be 12:00 noon
on Friday, November 3, 2023, the last application day or such later time as described in “10.
Effect of Bad Weather and/or Extreme Conditions on the Opening of the Application Lists” in
this section.
Note: These times in this sub-section are subject to change as HKSCC may determine from time to time with prior
notification to CCASS Clearing/Custodian Participants and/or CCASS Investor Participants.
If you are instructing your broker or custodian who is a CCASS Clearing Participant or
a CCASS Custodian Participant to give electronic application instructions via CCASS
terminals to apply for the Hong Kong Offer Shares on your behalf, you are advised to contact
your broker or custodian for the latest time for giving such instructions which may be different
from the latest time as stated above.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 401 –


--- page 412 ---
No Multiple Applications
If you are suspected of having made multiple applications or if more than one application
is made for your benefit, the number of Hong Kong Offer Shares applied for by HKSCC
Nominees will be automatically reduced by the number of Hong Kong Offer Shares for which
you have given such instructions and/or for which such instructions have been given for your
benefit. Any electronic application instructions to make an application for the Hong Kong
Offer Shares given by you or for your benefit to HKSCC will be deemed to be an actual
application for the purposes of considering whether multiple applications have been made.
Personal Data
The following Personal Information Collection Statement applies to any personal data
held by us, the H Share Registrar, the receiving bank, the Sole Sponsor, the Sole Overall
Coordinator, the Sole Global Coordinator, the Joint Bookrunners, the Joint Lead Managers, the
Capital Market Intermediaries, the Underwriters, their respective directors, officers,
employees, partners, agents, affiliates and advisors, and any other persons or parties involved
in the Global Offering about you in the same way as it applies to personal data about applicants
other than HKSCC Nominees. By applying through the CCASS EIPO service, you agree to all
of the terms of the Personal Information Collection Statement below.
Personal Information Collection Statement
This Personal Information Collection Statement informs applicant for, and holder of, the
Hong Kong Offer Shares, of the policies and practices of us and our H Share Registrar in
relation to personal data and the Personal Data (Privacy) Ordinance (Chapter 486 of the Laws
of Hong Kong).
Reasons for the Collection of your Personal Data
It is necessary for applicants and registered holders of the Hong Kong Offer Shares to
supply correct personal data to us or our agents and the H Share Registrar when applying for
the Hong Kong Offer Shares or transferring the Hong Kong Offer Shares into or out of their
names or in procuring the services of the H Share Registrar.
Failure to supply the requested data may result in your application for the Hong Kong
Offer Shares being rejected, or in delay or the inability of us or our H Share Registrar to effect
transfers or otherwise render their services. It may also prevent or delay registration or
transfers of the Hong Kong Offer Shares which you have successfully applied for and/or the
despatch of H Share certificate(s) to which you are entitled.
It is important that the holders of the Hong Kong Offer Shares inform us and the H Share
Registrar immediately of any inaccuracies in the personal data supplied.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 402 –


--- page 413 ---
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 check, where applicable, verification of
compliance with the terms and application procedures set out in this prospectus and
announcing results of allocation of the 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 our
Shares including, where applicable, HKSCC Nominees;
 maintaining or updating our register of members;
 verifying identities of the holders of our Shares;
 establishing benefit entitlements of holders of our Shares, such as dividends, rights
issues, bonus issues, etc.;
 distributing communications from us and our subsidiaries;
 compiling statistical information and profiles of the holder of our Shares;
 disclosing relevant information to facilitate claims on entitlements; and
 any other incidental or associated purposes relating to the above and/or to enable us
and the H Share Registrar to discharge our or their obligations to holders of our
Shares and/or regulators and/or any other purposes to which the securities’ holders
may from time to time agree.
Transfer of Personal Data
Personal data held by us and our H Share Registrar relating to the holders of the Hong
Kong Offer Shares will be kept confidential but we and our 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 appointed agents such as financial advisors, receiving bank and overseas
principal share registrar;
 where applicants for the Hong Kong Offer Shares request a deposit into CCASS,
HKSCC or HKSCC Nominees, who will use the personal data for the purposes of
operating CCASS;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 403 –


--- page 414 ---
 any agents, contractors or third-party service providers who offer administrative,
telecommunications, computer, payment or other services to us 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; and
 any persons or institutions with which the holders of the Hong Kong Offer Shares
have or propose to have dealings, such as their bankers, solicitors, accountants or
stockbrokers etc.
Retention of Personal Data
We and our H Share Registrar will keep the personal data of the applicants and holders
of the Hong Kong Offer Shares for as long as necessary to fulfil the purposes for which the
personal data were collected. Personal data which is no longer required will be destroyed or
dealt with in accordance with the Personal Data (Privacy) Ordinance.
Access to and Correction of Personal Data
Holders of the Hong Kong Offer Shares have the right to ascertain whether we or the H
Share Registrar hold their personal data, to obtain a copy of that data, and to correct any data
that is inaccurate. We 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 us, at our registered address disclosed in the section headed “Corporate
Information” in this prospectus or as notified from time to time, for the attention of the
secretary, or our H Share Registrar for the attention of the privacy compliance officer.
7. W ARNING FOR ELECTRONIC APPLICATIONS
The application for the Hong Kong Offer Shares by the CCASS EIPO service (directly
or indirectly through your broker or custodian) is only a facility provided to CCASS
Participants. Similarly, the application for Hong Kong Offer Shares through the HK eIPO
White Form service is also only a facility provided by the HK eIPO White Form Service
Provider to public investors. Such facilities are subject to capacity limitations and potential
service interruptions and you are advised not to wait until the last application day in making
your electronic applications. Our Company, our Directors, the Sole Sponsor, the Sole Overall
Coordinator, the Sole Global Coordinator, the Joint Bookrunners, the Joint Lead Managers, the
Capital Market Intermediaries, the Underwriters and the HK eIPO White Form Service
Provider take no responsibility for such applications and provide no assurance that any CCASS
Participant or person applying through the CCASS EIPO service or person applying through
the HK eIPO White Form service will be allocated any Hong Kong Offer Shares.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 404 –


--- page 415 ---
To ensure that CCASS Investor Participants can give their electronic application
instructions , they are advised not to wait until the last minute to input their instructions to the
systems.
In the event that CCASS Investor Participants have problems in the connection to CCASS
Phone System/CCASS Internet System for submission of electronic application instructions ,
they should go to HKSCC’s Customer Service Centre to complete an input request form for
electronic application instructions before 12:00 noon on Friday, November 3, 2023.
8. HOW MANY APPLICATIONS CAN YOU MAKE
Multiple applications for the Hong Kong Offer Shares are not allowed except by
nominees. If you are a nominee and apply through the HK eIPO White Form service, in the
box marked “For Nominees,” you must include an account number or some other identification
code for each beneficial owner or, in the case of joint beneficial owners, for each joint
beneficial owner when you fill in the application details. If you do not include this information,
the application will be treated as being made for your own benefit.
All of your applications will be rejected if more than one application through the CCASS
EIPO service (directly or indirectly through your broker or custodian) or through the HK eIPO
White Form service is made for your benefit (including the part of the application made by
HKSCC Nominees acting on electronic application instructions ), and the number of Hong
Kong Offer Shares applied by HKSCC Nominees will be automatically reduced by the number
of Hong Kong Offer Shares for which you have given such instructions and/or for which such
instructions have been given for your behalf.
For the avoidance of doubt, giving an electronic application instruction under the HK
eIPO White Form service more than once and obtaining different application reference
numbers without effecting full payment in respect of a particular reference number will not
constitute an actual application. However, any electronic application instructions to make an
application for the Hong Kong Offer Shares given by you or for your behalf to HKSCC will
be deemed to be an actual application for the purposes of considering whether multiple
applications have been made.
The H Share Registrar would record all applications into its system and identify suspected
multiple applications with identical names, identification document numbers and reference
numbers according to the Best Practice Note on Treatment of Multiple/Suspected Multiple
Applications issued by the Federation of Share Registrars Limited.
With regard to the announcement of results of allocations under the section headed
“Results of Applications Made by Giving Electronic Application Instructions to HKSCC via
CCASS,” the list of identification document number(s) may not be a complete list of successful
applicants, only successful applicants whose identification document numbers are provided to
HKSCC by CCASS Participants are disclosed. Applicants who applied for the Offer Shares
through their brokers or nominees can consult their brokers or nominees to enquire about their
application results.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 405 –


--- page 416 ---
Since applications are subject to personal information collection statements, beneficial
owner identification codes displayed are redacted. Applicants with beneficial names only but
not identification document numbers are not disclosed due to personal privacy issue.
If an unlisted company makes an application and:
 the principal business of that company is dealing in securities; and
 you exercise statutory control over that company,
then the application will be treated as being for your benefit.
“Unlisted company ” means a company with no equity securities listed on the 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 registered 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).
9. HOW MUCH ARE THE HONG KONG OFFER SHARES
The maximum Offer Price is HK$16.18 per Offer Share. Y ou must also pay brokerage of
1.0%, SFC transaction levy of 0.0027%, Stock Exchange trading fee of 0.00565% and AFRC
levy of 0.00015%. This means that for one board lot of 200 Hong Kong Offer Shares, you will
pay HK$3,268.63.
Y ou must pay the maximum Offer Price, brokerage, SFC transaction levy, the Stock
Exchange trading fee and AFRC transaction levy in full upon application for the Hong Kong
Offer Shares.
Y ou may submit an application through the HK eIPO White Form service or the CCASS
EIPO service in respect of a minimum of 200 Hong Kong Offer Shares. If you make an
electronic application instruction for more than 200 Hong Kong Offer Shares, the number of
Hong Kong Offer Shares you apply for must be in one of the specified numbers set out in the
section headed “4. Minimum Application Amount and Permitted Numbers,” or as otherwise
specified in the IPO App or on the designated website at www.hkeipo.hk .
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 406 –


--- page 417 ---
If your application is successful, brokerage will be paid to the Exchange Participants, the
SFC transaction levy and the Stock Exchange trading fee are paid to the Stock Exchange (in
the case of the SFC transaction levy, collected by the Stock Exchange on behalf of the SFC),
and AFRC transaction levy will be paid to Hong Kong Exchanges and Clearing Limited who
shall collect such levy on behalf of the AFRC.
For further details on the Offer Price, see the section headed “Structure of the Global
Offering – Pricing of the Global Offering” in this prospectus.
10. EFFECT OF BAD WEATHER AND/OR EXTREME CONDITIONS ON THE
OPENING OF THE APPLICATION LISTS
The application lists will not open if there is/are:
 a tropical cyclone warning signal number 8 or above; or
 a “black” rainstorm warning; and/or
 Extreme Conditions,
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Friday, November 3,
2023. Instead they will open between 11:45 a.m. and 12:00 noon on the next business day
which does not have either of those warnings and/or Extreme Conditions in Hong Kong in
force at any time between 9:00 a.m. and 12:00 noon.
If the application lists do not open and close on Friday, November 3, 2023 or if there is
a tropical cyclone warning signal number 8 or above or a “black” rainstorm warning signal
and/or Extreme Conditions in force in Hong Kong that may affect the dates mentioned in the
section headed “Expected Timetable,” an announcement will be made in such event on our
website at www.fls123.com and the website of the Stock Exchange at www.hkexnews.hk .
11. PUBLICATION OF RESULTS
The Company expects to announce the final Offer Price, the level of indication of interest
in the International Offering, the level of applications in the Hong Kong Public Offering and
the basis of allocation of the Hong Kong Offer Shares on Thursday, November 9, 2023 on the
websites of the Company ( www.fls123.com ) and of the Stock Exchange ( www.hkexnews.hk ).
The results of allocations and the Hong Kong identity card/passport/Hong Kong business
registration/certificate of incorporation numbers of successful applicants under the Hong Kong
Public Offering will be available at the times and date and in the manner specified below:
 in the announcement to be posted on the websites of the Company at
www.fls123.com and of the Stock Exchange at www.hkexnews.hk by no later than
8:00 a.m. on Thursday, November 9, 2023;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 407 –


--- page 418 ---
 from “IPO Results” function in the IPO App or the designated results of allocations
website at www.tricor.com.hk/ipo/result or www.hkeipo.hk/IPOResult with a
“search by ID” function on a 24-hour basis from 8:00 a.m. on Thursday, November
9, 2023 to 12:00 midnight on Wednesday, November 15, 2023; or
 from the results allocation telephone enquiry line by calling +852 3691 8488
between 9:00 a.m. and 6:00 p.m. from Thursday, November 9, 2023 to Tuesday,
November 14, 2023 (excluding Saturday, Sunday and public holiday in Hong Kong).
If the Company accepts your offer to purchase (in whole or in part), which it may do by
announcing the basis of allocations and/or making available the results of allocations publicly,
there will be a binding contract under which you will be required to purchase the Hong Kong
Offer Shares if the conditions of the Global Offering are satisfied and the Global Offering is
not otherwise terminated. Further details are contained in the section headed “Structure of the
Global Offering.”
Y ou will not be entitled to exercise any remedy of rescission for innocent
misrepresentation at any time after acceptance of your application. This does not affect any
other right you may have.
12. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOTTED THE OFFER
SHARES
Y ou should note the following situations in which the Hong Kong Offer Shares will not
be allotted to you:
If your application is revoked:
By applying through the CCASS EIPO service or through the HK eIPO White Form
service, you agree that your application or the application made by HKSCC Nominees on your
behalf cannot be revoked on or before the fifth day after the time of the opening of the
application lists (excluding for this purpose any day which is a Saturday, Sunday or public
holiday in Hong Kong). This agreement will take effect as a collateral contract with the
Company.
Y our application or the application made by HKSCC Nominees on your behalf may only
be revoked on or before the fifth day after the time of opening of the application lists
(excluding any days which is Saturday, Sunday or public holiday in Hong Kong) in the
following circumstances:
 if a person responsible for this prospectus under Section 40 of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance (as applied by Section 342E
of the Companies (Winding Up and Miscellaneous Provisions) Ordinance) gives a
public notice under that section on or before the fifth day after the time of the
opening of the application lists (excluding any day which is a Saturday, Sunday or
public holiday in Hong Kong) which excludes or limits that person’s responsibility
for this prospectus; or
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 408 –


--- page 419 ---
 if any supplement to this prospectus is issued, in which case we will notify
applicants who have already submitted an application that they are required to
confirm their applications. If applicants have been so notified but have not
confirmed their applications in accordance with the procedure to be notified, all
unconfirmed applications will be deemed revoked.
If your application or the application made by HKSCC Nominees on your behalf has been
accepted, it cannot be revoked. For this purpose, acceptance of applications which are not
rejected will be constituted by notification in the press of the results of allocation, and where
such basis of allocation is subject to certain conditions or provides for allocation by ballot,
such acceptance will be subject to the satisfaction of such conditions or results of the ballot
respectively.
If our Company or its agents exercise their discretion to reject your application:
The Company, the Sole Overall Coordinator, the Sole Global Coordinator, the HK eIPO
White Form Service Provider and our and their respective agents or nominees have full
discretion to reject or accept any application, or to accept only part of any application, without
giving any reasons.
If the allotment of Hong Kong Offer Shares is void:
The allotment of Hong Kong Offer Shares will be void if the Listing Committee of the
Stock Exchange does not grant permission to list the Shares either:
 within three weeks from the closing date of the application lists; or
 within a longer period of up to six weeks if the Listing Committee notifies the
Company of that longer period within three weeks of the closing date of the
application lists.
If:
 you make multiple applications or are suspected of making multiple applications;
 you or the person for whose benefit you are applying have applied for or taken up,
or indicated an interest for, or have been or will be placed or allocated (including
conditionally and/or provisionally) Hong Kong Offer Shares and International Offer
Shares;
 your electronic application instructions through the HK eIPO White Form
service are not completed in accordance with the instructions, terms and conditions
in the IPO App or on the designated website at www.hkeipo.hk ;
 your payment is not made correctly;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 409 –


--- page 420 ---
 the Underwriting Agreements do not become unconditional or are terminated;
 the Company, the Sole Overall Coordinator or the Sole Global Coordinator believes
or believe that by accepting your application, it or they would violate applicable
securities or other laws, rules or regulations; or
 your application is for more than 50% of the Hong Kong Offer Shares initially
offered under the Hong Kong Public Offering.
13. REFUND OF APPLICATION MONIES
If an application is rejected, not accepted or accepted in part only, or if the Offer Price
as finally determined is less than the maximum Offer Price of HK$16.18 per Offer Share
(excluding brokerage, SFC transaction levy, the Stock Exchange trading fee and AFRC
transaction levy thereon), or if the conditions of the Hong Kong Public Offering are not
fulfilled in accordance with the section headed “Structure of the Global Offering – Conditions
of the Global Offering” in this prospectus, or if any application is revoked, the application
monies, or the appropriate portion thereof, together with the related brokerage, SFC transaction
levy, the Stock Exchange trading fee and AFRC transaction levy, will be refunded, without
interest.
Any refund of your application monies will be made on or before Thursday, November 9,
2023.
14. DESPATCH/COLLECTION OF H SHARE CERTIFICATES/e-AUTO REFUND
PAYMENT INSTRUCTIONS/REFUND CHEQUE(S)
Y ou will receive one H Share certificate for all the Hong Kong Offer Shares allotted to
you under the Hong Kong Public Offering (except pursuant to applications made via the
CCASS EIPO service where the H Share certificates will be deposited into CCASS as
described below).
The Company will not issue temporary document of title in respect of the Offer Shares.
The Company will not issue receipt for sums paid on application.
Subject to arrangement on despatch/collection of H Share certificates and refund
cheque(s) as mentioned below, any refund cheque(s) and H Share certificate(s) are expected to
be posted on or before Thursday, November 9, 2023. The right is reserved to retain any H Share
certificate(s) and any surplus application monies pending clearance of cheque(s) or banker’s
cashier order(s).
H Share certificates will only become valid at 8:00 a.m. on Friday, November 10, 2023,
provided that the Global Offering has become unconditional in all respects at or before that
time.
Investors who trade H Shares on the basis of publicly available allocation details or prior
to the receipt of the H Share certificates or prior to the H Share certificates becoming valid do
so entirely at their own risk.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 410 –


--- page 421 ---
Personal Collection
(i) If Y ou Apply Through the HK eIPO White Form Service
If you apply for 500,000 or more Hong Kong Offer Shares through the HK eIPO White
Form service, and your application is wholly or partially successful, you may collect refund
cheque(s) (where applicable) and/or your H Share certificate(s) from the H Share Registrar,
Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong
Kong from 9:00 a.m. to 1:00 p.m. on Thursday, November 9, 2023, or such other place or date
as notified by the Company.
If you are an individual who is eligible for personal collection, you must not authorise any
other person to collect for you. If you are a corporate applicant which is eligible for personal
collection, your authorized representative must bear a letter of authorization from your
corporation stamped with your corporation’s chop. Both individuals and authorized
representatives must produce, at the time of collection, evidence of identity acceptable to the
H Share Registrar.
If you do not collect your H Share certificate(s) personally within the time specified for
collection, they will be sent to the address specified in your application instructions by
ordinary post at your own risk.
If you apply for 500,000 or less Hong Kong Offer Shares through the HK eIPO White
Form service, your H Share certificate(s) (where applicable) will be sent to the address
specified in your application instructions on or before Thursday, November 9, 2023 by ordinary
post at your own risk.
If you apply and pay the application monies from a single bank account, any refund
monies will be despatched to that bank account in the form of e-Auto Refund payment
instructions. If you apply and pay the application monies from multiple bank accounts, any
refund monies will be despatched to the address as specified in your application instructions
in the form of refund cheque(s) in favour of the applicant (or, in the case of joint applications,
the first-named applicant) by ordinary post at your own risk.
(ii) If Y ou Apply Through The CCASS EIPO Service
Allocation of the Hong Kong Offer Shares
For the purposes of allocating the Hong Kong Offer Shares, HKSCC Nominees will
not be treated as an applicant. Instead, each CCASS Participant who gives electronic
application instructions or each person for whose benefit instructions are given will be
treated as an applicant.
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 1 1–


--- page 422 ---
Deposit of H Share Certificates Into CCASS and Refund of Application Monies
 If your application is wholly or partially successful, your H Share certificate(s) will
be issued in the name of HKSCC Nominees and deposited into CCASS for the credit
of your designated CCASS Participant’s stock account or your CCASS Investor
Participant stock account on Thursday, November 9, 2023, or, on any other date
determined by HKSCC or HKSCC Nominees.
 The Company expects to publish the application results of CCASS Participants (and
where the CCASS Participant is a broker or custodian, the Company will include
information relating to the relevant beneficial owner), your Hong Kong identity card
number/passport number or other identification code (Hong Kong business
registration number for corporations) and the basis of allotment of the Hong Kong
Public Offering in the manner specified in “11. Publication of Results” above on
Thursday, November 9, 2023. Y ou should check the announcement published by the
Company and report any discrepancies to HKSCC before 5:00 p.m. on Thursday,
November 9, 2023 or such other date as determined by HKSCC or HKSCC
Nominees.
 If you have instructed your broker or custodian who is a CCASS Clearing
Participant or a CCASS Custodian Participant to give electronic application
instructions via CCASS terminals to apply for the Hong Kong Offer Shares on your
behalf, you can also check the number of the Hong Kong Offer Shares allocated to
you and the amount of refund monies (if any) payable to you with that broker or
custodian.
 If you have applied as a CCASS Investor Participant, you can also check the number
of the Hong Kong Offer Shares allotted to you and the amount of refund monies (if
any) payable to you via the CCASS Phone System and the CCASS Internet System
(under the procedures contained in HKSCC’s “An Operating Guide for Investor
Participants” in effect from time to time) on Thursday, November 9, 2023.
Immediately following the credit of the Hong Kong Offer Shares to your stock
account and the credit of refund monies to your bank account, HKSCC will also
make available to you an activity statement showing the number of the Hong Kong
Offer Shares credited to your CCASS Investor Participant stock account and the
amount of refund monies (if any) credited to your designated bank account.
 Refund of your application monies (if any) in respect of wholly and partially
unsuccessful applications and/or the difference between the Offer Price and the
maximum Offer Price per Offer Share paid on application in the event that the Offer
Price is less than the maximum Offer Price (including brokerage, SFC transaction
levy, the Stock Exchange trading fee and AFRC transaction levy without interest)
will be credited to your designated bank account or the designated bank account of
your broker or custodian on Thursday, November 9, 2023.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 412 –


--- page 423 ---
15. ADMISSION OF THE H SHARES INTO CCASS
If the Stock Exchange grants the listing of, and permission to deal in, our H Shares and
we comply with the stock admission requirements of HKSCC, our 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 our H Shares or any other date HKSCC chooses.
Settlement of transactions between Exchange Participants (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 CCASS and CCASS
Operational Procedures in effect from time to time.
Investors should seek the advice of their stockbroker or other professional advisor for
details of the settlement arrangement as such arrangements may affect their rights and interests.
All necessary arrangements have been made enabling the H Shares to be admitted into
CCASS.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 413 –


--- page 424 ---
The following is the text of a report, prepared for inclusion in this document received from
the independent reporting accountants of the Company, Ernst & Young, Certified Public
Accountants, Hong Kong. As described in Appendix VII headed “Documents Delivered to the
Registrar of Companies and Available on Display” to this document, a copy of the
accountants’ report is available for inspection.
⭰㰟㛪姯⸒Ṳ⋀㈧
榀㸖毩歁㵳勘䙮怺 979噆
⤑⏋✱ᷧ⺎27㧺
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
ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF FOLANGSI CO., LTD AND HAITONG INTERNATIONAL CAPITAL
LIMITED
Introduction
We report on the historical financial information of FOLANGSI CO., LTD (the
“Company”) and its subsidiaries (together, the “Group”) set out on pages I-4 to I-96, which
comprises the consolidated statements of profit or loss and other comprehensive income,
consolidated statements of changes in equity and consolidated statements of cash flows of the
Group for each of the years ended 31 December 2020, 2021 and 2022 and the four months
ended 30 April 2023 (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 2020, 2021 and 2022 and 30 April 2023 and material accounting policy information
and other explanatory information (together, the “Historical Financial Information”). The
Historical Financial Information set out on pages I-4 to I-96 forms an integral part of this
report, which has been prepared for inclusion in the prospectus of the Company dated 31
October 2023 (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
presentation and the basis of preparation set out in notes 2.1 and 2.2 to the Historical Financial
Information, respectively, 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 425 ---
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 presentation and the basis of preparation set out in notes 2.1 and 2.2 to the
Historical Financial Information, respectively, 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 2020, 2021 and 2022 and 30 April 2023 and of the financial performance
and cash flows of the Group for each of the Relevant Periods in accordance with the basis of
presentation and the basis of preparation set out in notes 2.1 and 2.2 to the Historical Financial
Information, respectively.
Review of interim comparative financial information
We have reviewed the interim comparative financial information of the Group which
comprises the consolidated statement of profit or loss and other comprehensive income,
statement of changes in equity and statement of cash flows for the four months ended 30 April
2022 and other explanatory information (the “Interim Comparative Financial Information”).
The directors of the Company are responsible for the preparation and presentation of the
Interim Comparative Financial Information in accordance with the basis of presentation and the
basis of preparation set out in notes 2.1 and 2.2 to the Historical Financial Information,
respectively. Our responsibility is to express a conclusion on the Interim Comparative
Financial Information based on our review. We conducted our review in accordance with Hong
Kong Standard on Review Engagements 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the HKICPA. A review consists
of making inquiries, primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially less in scope than
an audit conducted in accordance with Hong Kong Standards on Auditing and consequently
does not enable us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on
our review, nothing has come to our attention that causes us to believe that the Interim
Comparative Financial Information, for the purposes of the accountants’ report, is not
prepared, in all material respects, in accordance with the basis of presentation and the basis of
preparation set out in notes 2.1 and 2.2 to the Historical Financial Information, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
– I-2 –


--- page 426 ---
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-4 have been made.
Dividends
We refer to note 11 to the Historical Financial Information which states that no dividends
have been paid by the Company in respect of the Relevant Periods.
No historical financial statements for the Company
As at the date of this report, no statutory financial statements have been prepared for the
Company since its date of incorporation.
Ernst & Y oung
Certified Public Accountants
Hong Kong
31 October 2023
APPENDIX I ACCOUNTANTS’ REPORT
– I-3 –


--- page 427 ---
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-4 –


--- page 428 ---
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Y ear ended 31 December
Four months
ended 30 April
Notes 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
REVENUE 5 980,643 1,172,182 1,194,209 346,809 436,291
Cost of sales (650,463) (798,015) (832,545) (245,910) (314,077)
Gross profit 330,180 374,167 361,664 100,899 122,214
Other income and gains 5 4,853 4,022 6,276 2,693 1,753
Selling and distribution expenses (72,270) (84,018) (86,072) (27,873) (26,431)
Administrative expenses (120,746) (143,199) (156,858) (50,625) (52,213)
Impairment loss on financial
assets (6,808) (4,498) (4,178) (884) (2,106)
Other expenses (197) (262) (2,750) (719) (12,684)
Finance costs 6 (73,604) (81,838) (83,609) (27,398) (27,308)
Share of profits/(losses) of
associates 16 (228) (4,929) 948 (1,041) (762)
PROFIT/(LOSS) BEFORE TAX 7 61,180 59,445 35,421 (4,948) 2,463
Income tax credit/(expense) 10 (6,970) (4,267) (20) 2,396 918
PROFIT/(LOSS) AND TOTAL
COMPREHENSIVE
INCOME/(LOSS) FOR THE
YEAR/PERIOD 54,210 55,178 35,401 (2,552) 3,381
Attributable to:
Owners of the Company 54,210 55,178 35,401 (2,552) 3,381
EARNINGS/(LOSS) PER SHARE
A TTRIBUTABLE TO
ORDINARY EQUITY
HOLDERS OF THE COMPANY
Basic and diluted 12 RMB0.67 RMB0.67 RMB0.42 RMB(0.03) RMB0.04
APPENDIX I ACCOUNTANTS’ REPORT
– I-5 –


--- page 429 ---
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
At 31 December
At
30 April
Notes 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
NON-CURRENT ASSETS
Property, plant and equipment 13 692,098 808,689 856,533 884,098
Right-of-use assets 14(a) 876,146 977,324 1,049,320 1,018,886
Intangible assets 15 3,854 3,862 8,684 8,397
Investments in associates 16 18,177 8,869 10,561 9,799
Deposits 19 78,989 86,174 96,507 92,360
Deferred tax assets 24 5,179 4,306 4,831 5,744
Total non-current assets 1,674,443 1,889,224 2,026,436 2,019,284
CURRENT ASSETS
Inventories 17 56,619 69,174 84,502 95,190
Trade and bills receivables 18 239,870 269,610 294,037 321,730
Prepayments, deposits and
other receivables 19 89,087 98,201 106,027 118,333
Restricted deposits 20 31,462 44,762 30,850 54,030
Cash and cash equivalents 20 83,611 188,162 120,638 133,297
Total current assets 500,649 669,909 636,054 722,580
CURRENT LIABILITIES
Trade and bills payables 21 193,201 235,451 262,560 308,129
Other payables and accruals 22 92,387 103,199 112,853 112,849
Interest-bearing bank loans and
other borrowings 23 511,644 479,187 528,022 525,888
Tax payable 4,687 757 – –
Total current liabilities 801,919 818,594 903,435 946,866
NET CURRENT LIABILITIES (301,270) (148,685) (267,381) (224,286)
TOTAL ASSETS LESS
CURRENT LIABILITIES 1,373,173 1,740,539 1,759,055 1,794,998
APPENDIX I ACCOUNTANTS’ REPORT
– I-6 –


--- page 430 ---
As at 31 December
At
30 April
Notes 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
NON-CURRENT LIABILITIES
Interest-bearing bank loans and
other borrowings 23 662,426 850,607 839,165 872,357
Other payables and accruals 22 27,186 25,872 19,777 19,170
Deferred tax liabilities 24 – – 652 629
Total non-current liabilities 689,612 876,479 859,594 892,156
NET ASSETS 683,561 864,060 899,461 902,842
EQUITY
Equity attributable to owners
of the Company
Share capital 25 80,484 83,972 83,972 83,972
Reserves 26 603,077 780,088 815,489 818,870
Total equity 683,561 864,060 899,461 902,842
APPENDIX I ACCOUNTANTS’ REPORT
– I-7 –


--- page 431 ---
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share
capital
Share
premium
Capital
reserve
Statutory
surplus
reserve
Retained
profits
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(note 25) (note 26) (note 26) (note 26)
At 1 January 2020 80,484 418,762 5,191 12,448 112,466 629,351
Profit and total comprehensive income for
the year –––– 54,210 54,210
Transfer to statutory surplus reserve – – – 6,097 (6,097) –
At 31 December 2020 80,484 418,762* 5,191* 18,545* 160,579* 683,561
At 1 January 2021 80,484 418,762 5,191 18,545 160,579 683,561
Profit and total comprehensive income for
the year –––– 55,178 55,178
Transfer to statutory surplus reserve – – – 4,835 (4,835) –
Issue of ordinary shares (note 25) 3,488 126,512 – – – 130,000
Share of an equity movement arising on
a equity transaction of an associate – – 511 – – 511
Disposal of an associate – – (5,190) – – (5,190)
At 31 December 2021 83,972 545,274* 512* 23,380* 210,922* 864,060
At 1 January 2022 83,972 545,274 512 23,380 210,922 864,060
Profit and total comprehensive income for
the year –––– 35,401 35,401
Transfer to statutory surplus reserve – – – 2,400 (2,400) –
At 31 December 2022 83,972 545,274* 512* 25,780* 243,923* 899,461
At 1 January 2023 83,972 545,274 512 25,780 243,923 899,461
Profit and total comprehensive income for
the period –––– 3,381 3,381
Transfer to statutory surplus reserve – – – 906 (906) –
At 30 April 2023 83,972 545,274* 512* 26,686* 246,398* 902,842
At 1 January 2022 83,972 545,274 512 23,380 210,922 864,060
Loss and total comprehensive loss for
the period –––– (2,552) (2,552)
At 30 April 2022 (Unaudited) 83,972 545,274 512 23,380 208,370 861,508
* These reserve accounts comprise the consolidated reserves of RMB603,077,000, RMB780,088,000,
RMB815,489,000 and RMB818,870,000 in the consolidated statements of financial position as at 31 December
2020, 2021 and 2022 and 30 April 2023, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
– I-8 –


--- page 432 ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
Y ear ended 31 December
Four months
ended 30 April
Notes 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
CASH FLOWS FROM
OPERA TING ACTIVITIES
Profit/(Loss) before tax 61,180 59,445 35,421 (4,948) 2,463
Adjustments for:
Finance costs 6 73,604 81,838 83,609 27,398 27,308
Interest income 5 (1,443) (1,651) (1,945) (551) (410)
Share of losses/(profits) from
associates 16 228 4,929 (948) 1,041 762
Fair value gain of financial assets
at fair value through profit or
loss 5 – – (892) (178) (93)
Gain on disposal of property,
plant and equipment 7 (44) (16) (118) (76) (27)
Amortisation of intangible assets 7 539 1,001 1,888 400 601
Depreciation of property, plant
and equipment 7 155,570 181,375 211,155 73,917 79,296
Depreciation of right-of-use assets 7 153,364 198,847 209,516 64,347 68,402
Impairment of trade receivables 7 6,808 4,498 4,178 884 2,106
Gain on remeasurement of an
associate to acquisition-date
fair value 5 – – (1,435) (1,435) –
449,806 530,266 540,429 160,799 180,408
Increase in inventories (1,189) (12,555) (14,676) (12,756) (10,688)
Increase in trade and bills
receivables (15,676) (24,636) (28,083) (1,383) (29,799)
Increase in prepayments, deposits
and other receivables (4,825) (16,299) (18,472) (1,359) (12,641)
Increase/(decrease) in trade and bills
payables 19,289 42,250 27,109 (9,489) 45,569
Increase in other payables and
accruals 10,459 10,342 14,991 8,006 725
Increase in restricted deposits –––– (18,698)
Cash generated from operations 457,864 529,368 521,298 143,818 154,876
Interest received 1,443 1,651 1,945 551 410
Income tax paid (7,724) (3,388) (1,051) (758) (18)
Net cash flows from operating
activities 451,583 527,631 522,192 143,611 155,268
APPENDIX I ACCOUNTANTS’ REPORT
– I-9 –


--- page 433 ---
Y ear ended 31 December
Four months
ended 30 April
Notes 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
CASH FLOWS FROM INVESTING
ACTIVITIES
Acquisition of items of property, plant
and equipment (134,797) (284,230) (220,767) (70,342) (103,543)
Additions to right-of-use assets (21,899) ––––
Proceeds from disposal of items of
property, plant and equipment 262 181 320 152 54
Additions to intangible assets (1,203) (1,009) (1,304) (452) (314)
Purchase of financial assets at fair value
through profit or loss – – (650,000) (220,000) (40,000)
Proceeds of disposal of financial assets at
fair value through profit
or loss – – 650,892 220,178 40,093
Capital injection in associates – – (1,109) (4,200) –
Acquisition of a subsidiary 27 – – (4,200) (599) –
Purchase of additional interests in an
associate from an independent
third party – (300) – – –
Net cash flows used in investing
activities (157,637) (285,358) (226,168) (75,263) (103,710)
CASH FLOWS FROM FINANCING
ACTIVITIES
Issue of ordinary shares 25 – 130,00 0–––
New bank loans and other borrowings 188,516 317,817 246,101 98,321 158,226
Repayment of bank loans and other
borrowings (158,413) (177,334) (213,430) (42,961) (50,333)
Principal portion of lease payments (281,784) (319,415) (307,245) (111,833) (118,047)
Interest paid (76,694) (88,790) (88,974) (29,065) (28,745)
Net cash flows used in financing
activities (328,375) (137,722) (363,548) (85,538) (38,899)
NET INCREASE/(DECREASE) IN
CASH AND CASH EQUIV ALENTS (34,429) 104,551 (67,524) (17,190) 12,659
Cash and cash equivalents at beginning
of the year/period 118,040 83,611 188,162 188,162 120,638
CASH AND CASH EQUIV ALENTS A T
END OF THE YEAR/PERIOD 20 83,611 188,162 120,638 170,972 133,297
Analysis into:
Cash and bank balances as stated in the
consolidated statements of financial
position and the consolidated
statements of
cash flows 83,611 188,162 120,638 170,972 133,297
APPENDIX I ACCOUNTANTS’ REPORT
– I-10 –


--- page 434 ---
STATEMENTS OF FINANCIAL POSITION OF THE COMPANY
At 31 December
At
30 April
Notes 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
NON-CURRENT ASSETS
Property, plant and equipment 13 671,374 730,763 701,759 722,602
Right-of-use assets 14(a) 854,503 955,917 1,027,876 997,821
Intangible assets 15 3,854 3,862 3,683 3,576
Investments in subsidiaries 1 9,920 67,420 71,985 71,985
Investments in associates 16 18,177 8,869 10,561 9,799
Deposits 19 78,899 86,174 96,507 92,360
Deferred tax assets 24 2,896 2,102 2,627 3,180
Total non-current assets 1,639,623 1,855,107 1,914,998 1,901,323
CURRENT ASSETS
Inventories 17 55,933 61,548 75,737 84,481
Trade and bills receivables 18 277,496 257,338 266,573 308,141
Prepayments, deposits and
other receivables 19 82,911 82,284 89,847 102,235
Restricted deposits 20 31,462 44,762 30,850 35,332
Cash and cash equivalents 20 81,183 129,167 106,541 84,211
Total current assets 528,985 575,099 569,548 614,400
CURRENT LIABILITIES
Trade and bills payables 21 207,764 251,116 250,460 268,029
Other payables and accruals 22 74,501 82,427 86,310 96,169
Interest-bearing bank loans
and other borrowings 23 511,556 458,983 497,138 494,655
Tax payable 4,384 519 – –
Total current liabilities 798,205 793,045 833,908 858,853
NET CURRENT
LIABILITIES (269,220) (217,946) (264,360) (244,453)
TOTAL ASSETS LESS
CURRENT LIABILITIES 1,370,403 1,637,161 1,650,638 1,656,870
NON-CURRENT
LIABILITIES
Interest-bearing bank loans
and other borrowings 23 656,204 750,608 745,268 745,155
Other payables and accruals 22 27,186 25,872 19,777 19,170
Total non-current liabilities 683,390 776,480 765,045 764,325
NET ASSETS 687,013 860,681 885,593 892,545
EQUITY
Share capital 25 80,484 83,972 83,972 83,972
Reserves 26 606,529 776,709 801,621 808,573
Total equity 687,013 860,681 885,593 892,545
APPENDIX I ACCOUNTANTS’ REPORT
– I-11 –


--- page 435 ---
II. NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1. CORPORATE INFORMATION
FOLANGSI CO., LTD (the “Company”) is a company established in the People’s Republic of China (“PRC”)
with limited liability. The registered office of the Company is located at No. 999, Y ayun Avenue, Shiqi Town, Panyu
District, Guangzhou City, Guangdong Province, PRC.
During the Relevant Periods, the Company and its subsidiaries (collectively referred to as the “Group”) are
mainly engaged in the provision of intralogistics equipment subscription services (including leases of equipment),
provision of maintenance and repair services and sales of intralogistics equipment and parts.
At the end of the Relevant Periods, the Company had direct or indirect interests in its subsidiaries, all of which
are private limited liability companies, the particulars of which are set out below:
Company name
Place and date of
registration and
place of operation
Nominal
value of
issued
ordinary/
registered
share capital
Percentage of
equity
attributable to
the Company
Principal activitiesDirect Indirect
Zhongshan TCM Forklift
Sales Co., Ltd. (“ ʕʆ
֍ɸԓቖਯϞ
ʮ̡”)
PRC/Mainland China,
19 March 2003
RMB500,000 100% – Provision of
intralogistics
equipment
subscription
services and
maintenance and
repair service, as
well as sale of
intralogistics
equipment and parts
Zhuhai TCM Forklift
Co., Ltd. (“ मऎ૒Г
ʮ̡”)
PRC/Mainland China,
12 October 2004
RMB2,000,000 100% – Provision of
intralogistics
equipment
subscription
services and
maintenance and
repair service, as
well as sale of
intralogistics
equipment and parts
Foshan Folangsi Forklift
Co., Ltd. (“ Нʆ̹Н
ʮ̡”)
PRC/Mainland China,
3 August 2006
RMB520,000 100% – Provision of
intralogistics
equipment
subscription
services and
maintenance and
repair service, as
well as sale of
intralogistics
equipment and parts
APPENDIX I ACCOUNTANTS’ REPORT
– I-12 –


--- page 436 ---
Company name
Place and date of
registration and
place of operation
Nominal
value of
issued
ordinary/
registered
share capital
Percentage of
equity
attributable to
the Company
Principal activitiesDirect Indirect
Guangzhou Folangsi
Forklift Co., Ltd. (“ ᄿ
ʮ
̡”)
PRC/Mainland China,
9 May 2007
RMB500,000 100% – Provision of
intralogistics
equipment
subscription
services and
maintenance and
repair service, as
well as sale of
intralogistics
equipment and parts
Dongguan Folangsi
Machinery Co., Ltd.
(“౶ʈ೻ዚ૛
ʮ̡”)
PRC/Mainland China,
17 July 2007
RMB500,000 100% – Provision of
intralogistics
equipment
subscription
services and
maintenance and
repair service, as
well as sale of
intralogistics
equipment and parts
Guangzhou Xinze
Forklift Leasing Co.,
Ltd. (“ ᄿψอዣɸԓ
ʮ̡”)
PRC/Mainland China,
7 June 2010
RMB2,000,000 100% – Provision of
intralogistics
equipment
subscription
services and
maintenance and
repair service, as
well as sale of
intralogistics
equipment and parts
Guangzhou Pengze
Machinery Equipment
Co., Ltd. (“ ᄿψᘄዣ
ʮ̡”)
PRC/Mainland China,
19 March 2010
RMB500,000 100% – Overseas trading of
parts of
intralogistics
equipment
Anhui Folangsi
Machinery Co., Ltd.
(“Anhui Folangsi”,
“ࠢ
ʮ̡”)
PRC/Mainland China,
17 August 2018
RMB60,000,000 100% – Installation,
transformation and
repair of special
equipment
Hefei Langyun IOT
Technology Co., Ltd.
(“ҦϞ
ʮ̡”)
PRC/Mainland China,
19 February 2019
RMB10,000,000 100% – Software development
and internet of
things (“IOT”)
technical services
APPENDIX I ACCOUNTANTS’ REPORT
– I-13 –


--- page 437 ---
Company name
Place and date of
registration and
place of operation
Nominal
value of
issued
ordinary/
registered
share capital
Percentage of
equity
attributable to
the Company
Principal activitiesDirect Indirect
Hefei Langhui New
Energy Technology
Co., Ltd. (“ᅆ
ʮ̡”)
PRC/Mainland China,
27 July 2022
RMB20,000,000 100% – Research and
development of
emerging energy
technologies and
manufacture and
sale of battery and
parts
Shenyang Tianshun
Toyota Forklift Sales
Co., Ltd. (“ ᓨජ˂න
ʮ
̡”)
PRC/Mainland China,
26 November 2010
RMB5,000,000 – 100% Provision of
intralogistics
equipment
subscription
services and
maintenance and
repair service, as
well as sale of
intralogistics
equipment and parts
Shanghai Yingji Forklift
Co., Ltd. (“Λ
ʮ̡”)
PRC/Mainland China,
6 June 2001
RMB1,000,000 – 100% Provision of
intralogistics
equipment
subscription
services and
maintenance and
repair service, as
well as sale of
intralogistics
equipment and parts
Qingdao Taizhengxin
Trading Co., Ltd.
(“ࠢ
ʮ̡”)
PRC/Mainland China,
1 June 2001
RMB1,000,000 – 100% Provision of
intralogistics
equipment
subscription
services and
maintenance and
repair service, as
well as sale of
intralogistics
equipment and parts
Notes:
(a) No statutory financial statements have been prepared for all subsidiaries for the years ended 31 December
2020, 2021 and 2022.
(b) The English names of the above subsidiaries represent the best efforts made by the directors of the Company
to translate the Chinese names of these companies as they have not been registered with any official English
names.
APPENDIX I ACCOUNTANTS’ REPORT
– I-14 –


--- page 438 ---
The Company
The carrying amounts of the Company’s investments in subsidiaries:
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Investments, at cost 9,920 67,420 71,985 71,985
2.1 BASIS OF PRESENTATION
Going concern basis
As at 30 April 2023, the Group had net current liabilities of approximately RMB224.3 million. The directors
of the Company (the “Directors”) consider that the Group will have sufficient working capital to finance its operation
and meets its financial obligations as and when they all due in the foreseeable future after taking into account, inter
alia, the historical operating performance and the unutilised borrowing facilities of the Group for the next twelve
months from the date of this report amounting to RMB1,082.4 million.
Accordingly, the Directors are of the opinion that it is appropriate to prepare the Historical Financial
Information of the Group for the Relevant Periods on a going concern basis.
2.2 BASIS OF PREPARATION
The Historical Financial Information has been prepared in accordance with HKFRSs (which include all Hong
Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations) issued by
the HKICPA and accounting principles generally accepted in Hong Kong. All HKFRSs effective for the accounting
period commencing from 1 January 2023, together with the relevant transitional provisions, have been early adopted
by the Group in the preparation of the Historical Financial Information throughout the Relevant Periods.
The Historical Financial Information has been prepared under the historical cost convention except for
financial assets at fair value through profit or loss.
Basis of consolidation
The Historical Financial Information includes the financial information of the Company and its subsidiaries
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).
Generally, there is a presumption that a majority of voting rights results in control. When the Company has,
directly or indirectly, 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 reporting period 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.
APPENDIX I ACCOUNTANTS’ REPORT
– I-15 –


--- page 439 ---
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 (i) the assets (including goodwill) and liabilities
of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation
differences recorded in equity; and recognises (i) the fair value of the consideration received, (ii) the fair value of
any investment retained and (iii) 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.
2.3 ISSUED BUT NOT YET EFFECTIVE HKFRSS
The Group has not applied the following revised HKFRSs, that have been issued but are not yet effective, in
the Historical Financial Information.
Amendments to HKFRS 10 and
HKAS 28
Sale or Contribution of Assets between an Investor and
its Associate or Joint V enture
2
Amendments to HKFRS 16 Lease Liability in a Sale and Leaseback 1
Amendments to HKAS 1 Classification of Liabilities as Current or Non-current
(the “2020 Amendments”) 1, 3
Amendments to HKAS 1 Non-current Liabilities with Covenants (the “2022
Amendments”) 1
Amendments to HKAS 7 and HKFRS 7 Supplier Finance Arrangements 1
1 Effective for annual periods beginning on or after 1 January 2024
2 No mandatory effective date yet determined but available for adoption
3 As a consequence of 2022 Amendments, the effective date of the 2020 Amendments was deferred to
annual periods beginning on or after 1 January 2024. In addition, as a consequence of the 2020
Amendments and 2022 Amendments, Hong Kong Interpretation 5 Presentation of Financial Statements
– Classification by the Borrower of a Term Loan that Contains a Repayment on Demand Clause was
revised to align the corresponding wording with no change in conclusion
The Group is in the process of making a detailed assessment of the impact of these revised HKFRSs upon
initial application. So far, the Group considers that these revised HKFRSs may result in changes in certain accounting
policies and are unlikely to have a significant impact on the Group’s financial performance and financial position in
the period of initial application.
2.4 MATERIAL ACCOUNTING POLICY INFORMATION
Investments in subsidiaries
The results of subsidiaries are included in the Company’s statement of profit or loss to the extent of dividends
received and receivable. The Company’s investments in subsidiaries that are not classified as held for sale in
accordance with HKFRS 5 Non-current Assets Held for Sale and Discontinued Operations are stated at cost less any
impairment losses.
Investments in associates
An associate is an entity in which the Group has a long term interest of generally not less than 20% of the
equity voting rights and over which it is in a position to exercise significant influence. Significant influence is the
power to participate in the financial and operating policy decisions of the investee, but is not control or joint control
over those policies.
The investments in associates are stated in both the consolidated statements of financial position and separate
statements of financial position of the Company at the Group’s and the Company’s share of net assets under the equity
method of accounting, less any impairment losses. Adjustments are made to bring into line any dissimilar accounting
policies that may exist.
APPENDIX I ACCOUNTANTS’ REPORT
– I-16 –


--- page 440 ---
The Group’s and the Company’s share of the post-acquisition results and other comprehensive income of
associates is included in the respective statements of profit or loss and other comprehensive income, respectively. In
addition, when there has been a change recognised directly in the equity of the associates, the Group/Company
recognises its share of any changes, when applicable, in the statements of changes in equity. Unrealised gains and
losses resulting from transactions between the Group/Company and its associates are eliminated to the extent of the
Group’s/Company’s investments in associates, except where unrealised losses provide evidence of an impairment of
the assets transferred. Goodwill arising from the acquisition of associates is included as part of the
Group’s/Company’s investments in associates. Dividend from associates is recognised as a reduction from the
carrying amount of the investments.
Upon loss of significant influence over associates, the Group/Company measures and recognises any retained
investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant
influence and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.
When an investment in an associate is classified as held for sale, it is accounted for in accordance with
HKFRS 5.
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. 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.
APPENDIX I ACCOUNTANTS’ REPORT
– I-17 –


--- page 441 ---
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
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
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 Historical Financial Information
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 Historical Financial Information 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 headquarter 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 profit or loss in the period in which it arises in those expense categories consistent with
the function of the impaired asset.
APPENDIX I ACCOUNTANTS’ REPORT
– I-18 –


--- page 442 ---
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;
(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 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.
APPENDIX I ACCOUNTANTS’ REPORT
– I-19 –


--- page 443 ---
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:
Buildings 3.1%
Intralogistics equipment 11.3% to 22.5%
Leasehold improvements Over the shorter of the lease term and 33
1/3%
Motor vehicles 19.0%
Furniture, fixtures and
equipment
33
1/3%
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/period 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/period the asset is derecognised is the difference between the
net sales proceeds and the carrying amount of the relevant asset.
Construction in progress represents buildings and intralogistics equipment under construction, which is stated
at cost less any impairment losses, and is not depreciated. Cost comprises the direct costs of construction and
capitalised borrowing costs on related borrowed funds during the period of construction. Construction in progress is
reclassified to the appropriate category of property, plant and equipment when completed and ready for use.
Intralogistics equipment included in the property, plant and equipment is transferred to inventories at its
carrying amount when it ceases to be rented and becomes held for sale in ordinary activities.
Intangible assets (other than goodwill)
Technical know-how
Purchased technology know-how is stated at cost less any impairment losses and is amortised on the
straight-line basis over its estimated useful life of 10 years, which is determined by the expected usage period after
considering the technical obsolescence and estimates of useful lives of similar assets.
Software
Purchased software is stated at cost less any impairment losses and is amortised on the straight-line basis over
its estimated useful life of 3 years, which is determined by the expected usage period after considering the technical
obsolescence and estimates of useful lives of similar assets.
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.
APPENDIX I ACCOUNTANTS’ REPORT
– I-20 –


--- page 444 ---
Group/Company as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term leases.
The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use
the underlying assets.
(a) Right-of-use assets
Right-of-use assets are recognised at the commencement date of the lease (that is the date of the
underlying assets is available for use). Right-of-use assets are measured at cost, less 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 in which the Group
is reasonably certain to obtain ownership of the underlying leased assets at the end of the lease term are
depreciated from commencement date to the end of the estimated useful life. Otherwise, the 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:
Office premises 1.5 to 7 years
Intralogistics equipment 3 to 8 years
Leasehold land 50 years
When the Group obtains ownership of the underlying leased assets at the end of the lease term, upon
exercising purchase options, the carrying amount of the relevant right-of-use assets are transferred to property,
plant and equipment.
(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
terminating 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 the incremental borrowing rate at the
lease commencement date if 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 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.
The Group’s lease liabilities are included in interest-bearing bank loans and other borrowings.
(c) Short-term leases
The Group applies the short-term lease recognition exemption to its short-term leases of office premises
and intralogistics 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).
Lease payments on short-term leases are recognised as an expense on a straight-line basis over the lease
term.
APPENDIX I ACCOUNTANTS’ REPORT
– I-21 –


--- page 445 ---
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 stand-alone selling price basis. Revenue from
operating leases 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 revenue from
operating leases. Contingent rents or variable lease payments are recognised as revenue in the period in which they
are earned.
Leases that transfer substantially all the risks and rewards incidental to ownership of an underlying asset to
the lessee are accounted for as finance leases.
When the Group is an intermediate lessor, a sublease is classified as a finance lease or operating lease with
reference to the right-of-use asset arising from the head lease. If the head lease is a short-term lease to which the
Group applies the on-balance sheet recognition exemption, the Group classifies the sublease as an operating lease.
Investments and other financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost and fair value
through profit or loss.
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 fair value through profit or loss, 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 HKFRS 15 in accordance with the policies set out for “Revenue
recognition” below.
In order for a financial asset (debt instrument) 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 fair value through profit or loss, 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 fair value through profit or loss.
All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that
the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial
assets that require delivery of assets within the period generally established by regulation or convention in the
marketplace.
APPENDIX I ACCOUNTANTS’ REPORT
– I-22 –


--- page 446 ---
Subsequent measurement of financial assets
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 fair value through profit or loss
Financial assets at fair value through profit or loss 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 equity
investments classified as financial assets at fair value through profit or loss are also recognised as other income
in profit or loss when the right of payment has been established, it is probable that the economic benefits
associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.
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 fair
value through profit or loss. 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).
APPENDIX I ACCOUNTANTS’ REPORT
– I-23 –


--- page 447 ---
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 generally considers a financial asset in default when contractual payments are one year past due.
The Group has rebutted the 90 days past due presumption of default based on reasonable and supportable information,
including the Group’s credit risk control practices and the historical recovery rate of financial assets over 90 days
past due. However, 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.
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.
The provision rates are based on days past due for groupings of various customer segments with similar loss
patterns (i.e., customer type). The Group/Company classifies its customers into categories A, B, C and D based on
their accounts management models and calculates the ECLs of the categories of trade receivable. The accounts
management model mainly considers the likelihood of credit loss, customer behavior, and payment patterns, all of
which determine the loss patterns. The categories of trade receivable are as follows:
Category A Key account customers in the PRC, who (i) subscribed 50 units or more in an accounting
year/period, or (ii) subscribed 50 units or more in the preceding year and continued to
subscribed intralogistics equipment (one unit or more) from the Group in an accounting
year/period under the intralogistics equipment subscription service business
Category B Customers in the PRC, excluding Categories A
Category C Oversea customers
Category D Subsidiaries of the Company
APPENDIX I ACCOUNTANTS’ REPORT
– I-24 –


--- page 448 ---
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at amortised cost, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of financial liabilities at amortised
cost, net of directly attributable transaction costs.
The Group’s financial liabilities include trade payables, financial liabilities included in other payables and
accruals, and interest-bearing bank loans and other borrowings.
Subsequent measurement
Financial liabilities at amortised cost
After initial recognition, financial liabilities 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 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.
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 weighted average
basis. Net realisable value is based on the estimated selling prices less any estimated costs to be incurred to
completion and disposal.
Cash and cash equivalents
For the purpose of the consolidated statements of cash flows, cash and cash equivalents comprise cash on hand
and demand deposits, and short term highly liquid investments that are readily convertible into known amounts of
cash, are subject to an insignificant risk of changes in value, and have a short maturity of generally within three
months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group’s
cash management.
For the purpose of the consolidated statements of financial position, cash and cash equivalents comprise cash
on hand and at banks, including term deposits, and assets similar in nature to cash, which are not restricted as to use.
APPENDIX I ACCOUNTANTS’ REPORT
– I-25 –


--- page 449 ---
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 for the current and prior periods 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 reporting periods, taking into consideration interpretations and practices
prevailing in the country in which the Group operates.
Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting
period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes with
certain exceptions (e.g. initial recognition exceptions).
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, with certain exceptions.
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 each reporting period.
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.
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 consideration in a contract includes a variable amount, the amount of consideration is estimated to
which the Group will be entitled in exchange for transferring the goods or services to the customer. The variable
consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue
reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the
variable consideration is subsequently resolved.
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 HKFRS 15.
APPENDIX I ACCOUNTANTS’ REPORT
– I-26 –


--- page 450 ---
(a) Intralogistics equipment subscription services
Intralogistics equipment subscription services represented one-stop services for a full-cycle
management on intralogistics equipment, covering the entire life-cycle of equipment from procurement,
utilisation, maintenance and repair.
The Group provides one-stop services bundled together with the lease of intralogistics equipment to the
customers. The intralogistics equipment subscription services are comprised of two performance obligations:
1) the operating lease of intralogistics equipment, which is accounted for in accordance with the policies set
out for “Leases” above under HKFRS 16; and 2) the stand-ready comprehensive services package (the
“Comprehensive Service”), including equipment management, vehicle route planning, quick vehicle dispatch,
maintenance arrangement, as well as real-time equipment status supervision. The stand-alone selling price of
operating lease and the Comprehensive Service underlying, which are capable of being distinct and separately
identifiable, is determined at contract inception. The Group estimates the stand-alone selling price regarding
Comprehensive Service using adjusted market assessment approach. In the absence of the directly-observable
market data for stand-alone selling price regarding the operating lease, hence, the Group estimates the
stand-alone selling price of operating lease as the difference between the total transaction price and the
stand-alone selling prices of the Comprehensive Service.
The nature of the Group’s Comprehensive Service is a single performance obligation under the service
contract to stand-ready to provide an unspecified quantity of services each day throughout the contract period.
Revenue from Comprehensive Service is recognised evenly over the contract period.
(b) Maintenance and repair services
Maintenance and repair services mainly include one-off repair services and a service plan for a fixed
service period. The Group issue invoices either on project basis for one-off repair services, or on monthly basis
for service plans with valid contract periods covering equipment specified in relevant agreements.
Revenue from stand ready maintenance and repair services is recognised evenly over the contract
period.
Except for revenue from stand maintenance and repair services, the Group recognises revenue from
maintenance and repair services over time, using an input method to measure progress towards complete
satisfaction of the service, because the Group creates and enhances an asset that the customer controls as the
Group performs. The Directors have assessed the stage of completion based on the proportion of the costs
incurred for the maintenance and repair services (i.e., direct labour costs incurred, cost of materials and other
miscellaneous costs directly attributable to these services) performed to date relative to the estimated total
costs to complete the satisfaction of these services.
(c) Sales of intralogistics equipment and parts
Revenue from the sale of intralogistics equipment and parts is recognised at the point in time when
control of the asset is transferred to the customers, generally on receipt of the industrial products by customers.
Revenue from other sources
Revenue from operating leases 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 revenue from operating lease. Contingent rents or variable lease payments are recognised as revenue in the
period in which they are earned.
Other income
Interest income is recognised, on an accrual basis using the effective interest method by applying the rate that
discounts the estimated future cash receipts over the expected life of the financial instrument to the net carrying
amount of the financial asset.
APPENDIX I ACCOUNTANTS’ REPORT
– I-27 –


--- page 451 ---
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.
Contract liabilities
A contract liability is recognised when a payment is received or a payment is due (whichever is earlier) from
a customer before the Group transfers the related goods or services. Contract liabilities are recognised as revenue
when the Group performs under the contract (i.e., transfers control of the related goods or services to the customer).
Employee retirement benefits
As stipulated by the rules and regulations of the PRC, the Group are required to contribute to a state-sponsored
retirement plan for all its PRC employees at certain percentages of the basic salaries predetermined by the local
governments. The Group has no further obligations for the actual retirement benefit payments or other post-retirement
benefits beyond the annual contributions. The contributions made by the Group are charged to profit or loss as they
became payable in accordance with the rule of the retirement plan.
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.
Foreign currencies
This Historical Financial Information is presented in RMB, which is the Company’s functional currency. Each
entity in the Group determines its own functional currency and items included in the financial statements of each
entity are measured using that functional currency. Foreign currency transactions recorded by the entities in the
Group are initially recorded using their respective functional currency rates prevailing at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rates of
exchange ruling at the end of the reporting period. Differences arising on settlement or translation of monetary items
are recognised in profit or loss.
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.
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
Historical Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
– I-28 –


--- page 452 ---
Allocation of the transaction price to operating lease and the Comprehensive Service for intralogistics equipment
subscription services
The Group has entered contracts with customers for intralogistics equipment subscription services that contain
operating lease and Comprehensive Services. For such contracts, significant assessments and interpretations are
required to determine the appropriate method to allocate the transaction prices among the operating lease and the
Comprehensive Services. The Group estimates the stand-alone selling price regarding Comprehensive Service using
adjusted market assessment approach. In the absence of the directly-observable market data for stand-alone selling
price regarding the operating lease, hence, the Group estimates the stand-alone selling price of operating lease as the
difference between the total transaction price and the stand-alone selling prices of the Comprehensive Service. The
Group applies significant judgement to determine the appropriateness of such method given the specific
circumstances, based on, inter alia, the availability of information and historical transaction/pricing history and
observable market data.
Estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the
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.
Estimated useful life and residual value of property, plant and equipment
The Group’s management determines the estimated useful lives and residual value for its property, plant and
equipment. This estimate is based on the historical experience of the actual useful lives and also consider technical
or commercial obsolescence of property, plant and equipment of similar nature and functions. The management will
increase the depreciation charge where useful lives are expected to be shorter than previously estimated, or it will
write off or write down obsolete or non-strategic assets that have been abandoned. Changes in these estimations may
have a material impact on the results of the Group.
Provision for expected credit losses on trade receivables
The Group uses a provision matrix, or other applicable approaches, to calculate ECLs for trade receivables.
The provision rates are based on days past due for groupings of various customer segments that have similar loss
patterns (i.e., by customer type) and initially based on the Group’s historical observed default rates, supplemented
by relevant external information as appropriate. For instance, if forecast economic conditions (i.e., gross domestic
product) are expected to deteriorate over the next year which can lead to an increased number of defaults in the
specific group of customers, the corresponding historical default rates are adjusted. At each reporting date, the
historical observed default rates are updated and changes in the forward-looking estimates are analysed.
The assessment of the correlation among historical observed default rates, forecast economic conditions and
ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and forecast economic
conditions. The Group’s historical credit loss experience and forecast of economic conditions may also not be
representative of a customer’s actual default in the future. The information about the ECLs on the Group’s trade
receivables is disclosed in note 18 to the Historical Financial Information.
Impairment of long term non-financial assets (other than goodwill)
The Group assesses whether there are any indicators of impairment for long term non-financial assets
(including the right-of-use assets) at the end of each reporting period. These non-financial assets are tested for
impairment when there are indications 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.
APPENDIX I ACCOUNTANTS’ REPORT
– I-29 –


--- page 453 ---
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).
4. OPERATING SEGMENT INFORMATION
For management purposes, the Group is not organised into business units based on their service and products
and only has one reportable operating segment.
The information reported to the Directors, who are the chief operating decision-makers, for the purpose of
resource allocation and assessment of performance does not contain discrete operating segment financial information
and the Directors reviewed the financial results of the Group as a whole. Therefore, no further information about the
operating segment is presented.
Geographical information
(a) Revenue from external customers
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
China 886,216 1,061,670 1,061,721 314,318 378,828
Overseas* 94,427 110,512 132,488 32,491 57,463
980,643 1,172,182 1,194,209 346,809 436,291
The revenue information above is based on the locations of the customers.
* The Group exported its products to approximately 95 overseas countries in Asia, Europe, North and
South America and Australia.
(b) Non-current assets
All non-current assets of the Group are located in China (other than Hong Kong) as at the end of each of the
Relevant Periods.
Information about major customers
No revenue from sales to a single customer or a group of customers under common control accounted for 10%
or more of the Group’s revenue for each of the Relevant Periods and the four months ended 30 April 2022.
APPENDIX I ACCOUNTANTS’ REPORT
– I-30 –


--- page 454 ---
5. REVENUE, OTHER INCOME AND GAINS
Revenue
An analysis of the Group’s revenue is as follows:
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Intralogistics equipment
subscription services 639,701 739,176 738,001 236,373 243,944
Maintenance and repair services 111,463 128,484 140,987 35,172 54,539
Sales of intralogistics equipment
and parts 229,479 304,522 315,221 75,264 137,808
Total 980,643 1,172,182 1,194,209 346,809 436,291
Analysis into:
Revenue from contracts with
customers 457,775 588,116 619,482 157,907 246,575
Revenue from operating leases
(included in intralogistics
equipment subscription
services) 522,868 584,066 574,727 188,902 189,716
980,643 1,172,182 1,194,209 346,809 436,291
Revenue from contracts with customers
(i) Disaggregated revenue information
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Types of goods or services
Intralogistics equipment
subscription services (excluding
operating lease) 116,833 155,110 163,274 47,471 54,228
Maintenance and repair services 111,463 128,484 140,987 35,172 54,539
Sales of intralogistics equipment
and parts 229,479 304,522 315,221 75,264 137,808
Total revenue from contracts with
customers 457,775 588,116 619,482 157,907 246,575
APPENDIX I ACCOUNTANTS’ REPORT
– I-31 –


--- page 455 ---
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Geographical markets
China 363,348 477,604 486,994 125,416 189,112
Overseas* 94,427 110,512 132,488 32,491 57,463
Total revenue from contracts with
customers 457,775 588,116 619,482 157,907 246,575
* The Group exported its products to approximately 95 overseas countries in Asia, Europe, North and
South America and Australia.
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Timing of revenue recognition
Services transferred over time 228,296 283,594 304,261 82,643 108,767
Goods transferred at a point in
time 229,479 304,522 315,221 75,264 137,808
Total 457,775 588,116 619,482 157,907 246,575
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
Four months
ended 30 April
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Sales of intralogistics equipment
and parts 7,287 7,242 8,972 7,897 10,021
(ii) Performance obligations
Information about the Group’s performance obligations is summarised below:
Intralogistics equipment subscription services
The Group has entered contracts with customers for intralogistics equipment subscription services that contain
operating lease and comprehensive services. The performance obligation is satisfied over time as services are
rendered and short-term advances are normally required before rendering the services. The services under
intralogistics equipment subscription services are mainly for periods of one to four years, and were billed
periodically. The Group’s trading terms with its customers are mainly on credit, except for new customers, where
payment in advance is normally required. The credit period is generally one to three months.
APPENDIX I ACCOUNTANTS’ REPORT
– I-32 –


--- page 456 ---
Except for relevant transaction price for operating lease, disclosed in note 14 to Historical Financial
Information, the amounts of the transaction prices allocated to remaining obligations (unsatisfied or partially
satisfied), net of surplus taxes for value-added tax, are as follows:
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Amounts expected to be recognised
as revenue:
Within one year 81,638 99,320 97,698 101,371
One to two years 34,766 40,412 35,982 37,009
Two to three years 11,702 12,196 13,497 13,723
Three to four years 2,753 3,408 4,859 5,134
130,859 155,336 152,036 157,237
Maintenance and repair services
The performance obligation is satisfied over time as services are rendered and payment is generally due within
one to three months upon the completion of services.
Sales of intralogistics equipment and parts
The performance obligation is satisfied upon the receipts of the intralogistics equipment and parts and payment
is generally due with one months, extending up to three months for key customers, after the receipts of the
intralogistics equipment and parts.
Other income and gains
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Interest income 1,443 1,651 1,945 551 410
Gain on remeasurement of
an associate to
acquisition-date fair
value (note 16) – – 1,435 1,435 –
Fair value gain of financial
assets at fair value
through profit or loss – – 892 178 93
Government grants* 2,751 1,481 1,547 260 1,049
Foreign exchange
differences, net 587 57 7–––
Others 72 313 457 269 201
4,853 4,022 6,276 2,693 1,753
* There are no unfulfilled conditions or contingencies related to these government grants.
APPENDIX I ACCOUNTANTS’ REPORT
– I-33 –


--- page 457 ---
6. FINANCE COSTS
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
Note RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Interest on bank
loans 6,612 12,278 16,309 5,332 4,853
Interest on other
borrowings 18,237 14,355 10,738 3,644 4,072
Interest on lease
liabilities 14(c) 51,845 62,157 61,927 20,089 19,820
76,694 88,790 88,974 29,065 28,745
Less: Interest
capitalised (3,090) (6,952) (5,365) (1,667) (1,437)
73,604 81,838 83,609 27,398 27,308
7. PROFIT/(LOSS) BEFORE TAX
The Group’s profit/(loss) before tax is arrived at after charging/(crediting):
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
Notes RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Cost of inventories sold 265,270 343,300 348,919 84,327 147,261
Depreciation of property, plant
and equipment* 13 155,570 181,375 211,155 73,917 79,296
Depreciation of right-of-use
assets* 14(a) 153,364 198,847 209,516 64,347 68,402
Lease payments not included in
the measurement of lease
liabilities 14(c) 49,211 27,321 7,707 2,742 2,235
Amortisation of intangible assets 15 539 1,001 1,888 400 601
Research and development
costs** 29,296 35,668 39,652 11,273 11,818
Listing expenses***** – – – – 12,442
Employee benefit expenses
(excluding directors’ and
supervisors’ remunerations in
note 8):
Wages and salaries 141,562 179,441 193,156 65,413 63,336
Pension scheme contributions
(defined contribution
schemes) 8,046 18,112 21,990 7,152 7,658
149,608 197,553 215,146 72,565 70,994
APPENDIX I ACCOUNTANTS’ REPORT
– I-34 –


--- page 458 ---
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
Notes RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Foreign exchange differences,
net*** (587) (577) 2,377 657 186
Impairment of trade receivables 18 6,808 4,498 4,178 884 2,106
Gains on disposal of property,
plant and equipment**** (44) (16) (118) (76) (27)
* The depreciation of property, plant and equipment and right-of-use assets is included in “Cost of sales”,
“Selling and distribution expenses” and “Administrative expenses” in profit or loss, respectively.
** The amounts are included in “Administrative expenses” in profit or loss.
*** The net foreign exchange gain and foreign exchange loss are included in “other income” and “other
expense” in profit or loss, respectively.
**** The amounts are included in “Other income” in profit or loss.
***** The amounts are included in “Other expenses” in profit or loss.
8. DIRECTORS’, CHIEF EXECUTIVE’S AND SUPERVISORS’ REMUNERATION
The remuneration of each of these directors and supervisors as recorded in the financial statements of the
subsidiaries and the Company is set out below:
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Fees –––––
Salaries, allowances and
benefits in kind 3,060 4,243 3,577 1,120 1,297
Pension scheme
contributions 90 152 184 58 62
3,150 4,395 3,761 1,178 1,359
(a) Non-executive directors and independent non-executive directors
There were no emoluments payable to the non-executive directors and independent non-executive directors
during each of the Relevant Periods and the four months ended 30 April 2022.
Ms. Zhang Jie and Mr. Song Xiaoning have retired as independent non-executive directors on 3 April 2023.
Meanwhile, Mr. Chiang Edward and Mr. Wang Chuanbang were appointed as independent non-executive
directors of the Company on 3 April 2023.
APPENDIX I ACCOUNTANTS’ REPORT
– I-35 –


--- page 459 ---
(b) Executive directors
Salaries,
allowances and
benefits in
kind
Pension
scheme
contributions
Total
remuneration
RMB’000 RMB’000 RMB’000
Y ear ended 31 December 2020
Executive directors:
Mr. Hou Zekuan 680 12 692
Mr. Hou Zebing (Chief executive) 655 12 667
Mr. Qian Xiaoxuan 611 18 629
Ms. Ma Li 342 16 358
2,288 58 2,346
Y ear ended 31 December 2021
Executive directors:
Mr. Hou Zekuan 1,094 31 1,125
Mr. Hou Zebing (Chief executive) 1,048 31 1,079
Mr. Qian Xiaoxuan 873 26 899
Ms. Ma Li 488 26 514
3,503 114 3,617
Y ear ended 31 December 2022
Executive directors:
Mr. Hou Zekuan 900 34 934
Mr. Hou Zebing (Chief executive) 876 34 910
Mr. Qian Xiaoxuan 646 34 680
Ms. Ma Li 459 34 493
2,881 136 3,017
Four months ended 30 April 2023
Executive directors:
Mr. Hou Zekuan 344 11 355
Mr. Hou Zebing (Chief executive) 336 11 347
Mr. Qian Xiaoxuan 250 11 261
Ms. Ma Li 158 11 169
1,088 44 1,132
Four months ended 30 April 2022 (Unaudited)
Executive directors:
Mr. Hou Zekuan 278 11 289
Mr. Hou Zebing (Chief executive) 270 11 281
Mr. Qian Xiaoxuan 215 11 226
Ms. Ma Li 154 11 165
917 44 961
APPENDIX I ACCOUNTANTS’ REPORT
– I-36 –


--- page 460 ---
(c) Supervisors
Salaries,
allowances and
benefits in
kind
Pension
scheme
contributions
Total
remuneration
RMB’000 RMB’000 RMB’000
Y ear ended 31 December 2020
Ms. Li Xiaolan 299 16 315
Mr. He Xiaocheng 473 16 489
772 32 804
Y ear ended 31 December 2021
Ms. Li Xiaolan 329 19 348
Mr. He Xiaocheng 411 19 430
740 38 778
Y ear ended 31 December 2022
Ms. Li Xiaolan 307 24 331
Mr. He Xiaocheng 389 24 413
696 48 744
Four months ended 30 April 2023
Ms. Li Xiaolan 105 9 114
Mr. He Xiaocheng 104 9 113
209 18 227
Four months ended 30 April 2022 (Unaudited)
Ms. Li Xiaolan 104 7 111
Mr. He Xiaocheng 99 7 106
203 14 217
During the Relevant Periods and the four months ended 30 April 2022, no remuneration was paid or payable
by the Group to the executive directors, a chief executive and supervisors as an inducement to join or upon joining
the Group or as compensation for loss of office.
There was no arrangement under which a director, a chief executive or a supervisor waived or agreed to waive
any remuneration during each of the Relevant Periods and the four months ended 30 April 2022.
APPENDIX I ACCOUNTANTS’ REPORT
– I-37 –


--- page 461 ---
9. FIVE HIGHEST PAID EMPLOYEES
The five highest paid employees during each of the Relevant Periods and the four months ended 30 April 2022
included one, two, two, two and two directors, respectively, details of whose remuneration are set out in note 8 above.
Details of the remuneration for the Relevant Periods of the remaining highest paid employees, who are neither
a director, a chief executive nor a supervisor of the Company for each of the Relevant Periods and the four months
ended 30 April 2022, are as follows:
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Salaries, allowances and
benefits in kind 5,404 4,792 5,295 1,336 1,679
Pension scheme
contributions 57 137 172 52 63
5,461 4,929 5,467 1,388 1,742
The number of non-director, non-chief executive and non-supervisor highest paid employees whose
remuneration fell within the following bands is as follows:
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
(Unaudited)
Nil to HK$1,000,000 1––33
HK$1,000,001 to
HK$1,500,000 222––
HK$3,000,001 to
HK$3,500,000 11–––
HK$3,500,001 to
HK$4,000,000 ––1––
43333
During each of the Relevant Periods and the four months ended 30 April 2022, no highest paid employees
waived or agreed to waive any remuneration.
10. INCOME TAX EXPENSE/(CREDIT)
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.
Pursuant to the Corporate Income Tax Law of the PRC and the respective regulations (the “CIT Law”), the
Company and the subsidiaries which operates in Mainland China is subject to corporate income tax at a rate of 25%
on the taxable income unless those are subject to tax exemption set out below.
The Company is qualified as an “High and New Technology Enterprise” and therefore was entitled to a
preferential income tax rate of 15% for the Relevant Periods.
APPENDIX I ACCOUNTANTS’ REPORT
– I-38 –


--- page 462 ---
Except for Anhui Folangsi, other subsidiaries of the Group in the PRC are qualified as “Small and Micro
Enterprises” and therefore was entitled to a preferential income tax rate of 5% to 10% for the Relevant Periods.
The income tax expense/(credit) for the Relevant Periods and the four months ended 30 April 2022 are as
follows:
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Current 7,724 3,394 598 457 18
Deferred (note 24) (754) 873 (578) (2,853) (936)
6,970 4,267 20 (2,396) (918)
A reconciliation of the income tax expense applicable to profit/(loss) before tax using the statutory rate for the
jurisdiction in which the Company and the majority of its subsidiaries are domiciled to the tax expense at the effective
tax rate is as follows:
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Profit/(loss) before tax 61,180 59,445 35,421 (4,948) 2,463
Tax at the statutory tax
rate 15,295 14,861 8,855 (1,237) 616
Lower tax rate for specific
provinces or enacted by
local authority (5,153) (6,933) (3,846) 107 (132)
Additional tax deduction
for qualified research
and development
expenses (3,296) (4,013) (4,833) (1,268) (1,773)
Income not subject to tax – – (357) (59) –
Expenses not deductible
for tax 275 352 367 61 371
Tax losses utilised from
previous periods (151) – (166) – –
Tax charge at the Group’s
effective rate 6,970 4,267 20 (2,396) (918)
11. DIVIDENDS
No dividends have been paid or declared by the Company during the Relevant Periods and the four months
ended 30 April 2022.
APPENDIX I ACCOUNTANTS’ REPORT
– I-39 –


--- page 463 ---
12. EARNINGS/(LOSSES) PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE
COMPANY
The calculation of the basic earnings/(loss) per share amounts is based on the profit/(loss) for the each of the
Relevant Periods and the four months ended 30 April 2022 attributable to ordinary equity holders of the Company,
and the weighted average number of ordinary shares of 80,484,000, 81,937,000, 83,972,000, 83,972,000 and
83,972,000 in issue during each of the Relevant Periods and the four months ended 30 April 2022, respectively.
No adjustment has been made to the basic earnings/loss per share amounts presented for each of the Relevant
Periods and the four months ended 30 April 2022 for a dilution as the Group had no potentially dilutive ordinary
shares in issue during the Relevant Periods and the four months ended 30 April 2022.
The calculation of basic and diluted earnings/(loss) per share is based on:
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Earnings:
Profit/(loss) attributable to
ordinary equity holders
of the Company 54,210 55,178 35,401 (2,552) 3,381
Number of shares
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
’000 ’000 ’000 ’000 ’000
(Unaudited)
Shares:
Weighted average number
of ordinary shares in
issue during the
year/period 80,484 81,937 83,972 83,972 83,972
APPENDIX I ACCOUNTANTS’ REPORT
– I-40 –


--- page 464 ---
13. PROPERTY, PLANT AND EQUIPMENT
Group
Buildings
Intralogistics
equipment
Leasehold
improvements
Motor
vehicles
Furniture,
fixtures and
equipment
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December 2020
At 1 January 2020:
Cost – 905,344 7,433 17,448 10,933 58,404 999,562
Accumulated
depreciation – (309,484) (2,804) (11,156) (6,776) – (330,220)
Net carrying amount – 595,860 4,629 6,292 4,157 58,404 669,342
At 1 January 2020, net
of accumulated
depreciation – 595,860 4,629 6,292 4,157 58,404 669,342
Additions – 92,606 1,580 2,584 2,624 44,766 144,160
Disposal – – – (149) (69) – (218)
Exercise of purchase
options of leased
intralogistics
equipment
(note 14(a)) – 52,603 – – – – 52,603
Transfer to inventories – (18,219) – – – – (18,219)
Depreciation provided
during the year – (149,714) (2,436) (1,871) (1,549) – (155,570)
At 31 December 2020,
net of accumulated
depreciation – 573,136 3,773 6,856 5,163 103,170 692,098
At 31 December 2020
Cost – 998,063 9,013 19,186 13,417 103,170 1,142,849
Accumulated
depreciation – (424,927) (5,240) (12,330) (8,254) – (450,751)
Net carrying amount – 573,136 3,773 6,856 5,163 103,170 692,098
APPENDIX I ACCOUNTANTS’ REPORT
– I-41 –


--- page 465 ---
Buildings
Intralogistics
equipment
Leasehold
improvements
Motor
vehicles
Furniture,
fixtures and
equipment
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December 2021
At 1 January 2021:
Cost – 998,063 9,013 19,186 13,417 103,170 1,142,849
Accumulated
depreciation – (424,927) (5,240) (12,330) (8,254) – (450,751)
Net carrying amount – 573,136 3,773 6,856 5,163 103,170 692,098
At 1 January 2021, net
of accumulated
depreciation – 573,136 3,773 6,856 5,163 103,170 692,098
Additions – 181,371 2,792 4,549 3,054 97,794 289,560
Disposal – – – (103) (62) – (165)
Exercise of purchase
options of leased
intralogistics
equipment
(notes 14(a)) – 34,631 – – – – 34,631
Transfer to inventories – (26,060) – – – – (26,060)
Transfer to construction
in progress – (3,293) – – – 3,293 –
Transfer from
construction in
progress 130,766 2,470 – – – (133,236) –
Depreciation provided
during the year – (174,883) (2,696) (2,140) (1,656) – (181,375)
At 31 December 2021,
net of accumulated
depreciation 130,766 587,372 3,869 9,162 6,499 71,021 808,689
At 31 December 2021
Cost 130,766 1,142,532 11,805 21,906 15,898 71,021 1,393,928
Accumulated
depreciation – (555,160) (7,936) (12,744) (9,399) – (585,239)
Net carrying amount 130,766 587,372 3,869 9,162 6,499 71,021 808,689
APPENDIX I ACCOUNTANTS’ REPORT
– I-42 –


--- page 466 ---
Buildings
Intralogistics
equipment
Leasehold
improvements
Motor
vehicles
Furniture,
fixtures and
equipment
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December 2022
At 1 January 2022:
Cost 130,766 1,142,532 11,805 21,906 15,898 71,021 1,393,928
Accumulated
depreciation – (555,160) (7,936) (12,744) (9,399) – (585,239)
Net carrying amount 130,766 587,372 3,869 9,162 6,499 71,021 808,689
At 1 January 2022, net
of accumulated
depreciation 130,766 587,372 3,869 9,162 6,499 71,021 808,689
Additions 4,369 177,085 2,365 3,584 7,818 73,623 268,844
Acquisition of a
subsidiary (note 27) –– – – 4 4– 4 4
Disposal – – – (170) (32) – (202)
Exercise of purchase
options of leased
intralogistics
equipment
(notes 14(a)) – 30,455 – – – – 30,455
Transfer to inventories – (40,142) – – – – (40,142)
Transfer to construction
in progress – (10,113) – – – 10,113 –
Transfer from
construction in
progress 105,904 8,911 – – – (114,815) –
Depreciation provided
during the year (4,569) (198,582) (2,747) (2,608) (2,649) – (211,155)
At 31 December 2022,
net of accumulated
depreciation 236,470 554,986 3,487 9,968 11,680 39,942 856,533
At 31 December 2022
Cost 241,039 1,220,494 14,170 23,177 23,445 39,942 1,562,267
Accumulated
depreciation (4,569) (665,508) (10,683) (13,209) (11,765) – (705,734)
Net carrying amount 236,470 554,986 3,487 9,968 11,680 39,942 856,533
APPENDIX I ACCOUNTANTS’ REPORT
– I-43 –


--- page 467 ---
Buildings
Intralogistics
equipment
Leasehold
improvements
Motor
vehicles
Furniture,
fixtures and
equipment
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
30 April 2023
At 1 January 2023:
Cost 241,039 1,220,494 14,170 23,177 23,445 39,942 1,562,267
Accumulated
depreciation (4,569) (665,508) (10,683) (13,209) (11,765) – (705,734)
Net carrying amount 236,470 554,986 3,487 9,968 11,680 39,942 856,533
At 1 January 2023, net
of accumulated
depreciation 236,470 554,986 3,487 9,968 11,680 39,942 856,533
Additions – 107,629 1,024 544 556 11,775 121,528
Disposal – – – (26) (3) – (29)
Exercise of purchase
options of leased
intralogistics
equipment
(note 14(a)) – 3,244 – – – – 3,244
Transfer to inventories – (17,882) – – – – (17,882)
Transfer to construction
in progress – (6,045) – – – 6,045 –
Transfer from
construction in
progress – 5,216 – – – (5,216) –
Depreciation provided
during the period (4,242) (71,985) (1,011) (873) (1,185) – (79,296)
At 30 April 2023, net of
accumulated
depreciation 232,228 575,163 3,500 9,613 11,048 52,546 884,098
At 30 April 2023
Cost 241,039 1,265,565 15,194 23,201 23,946 52,546 1,621,491
Accumulated
depreciation (8,811) (690,402) (11,694) (13,588) (12,898) – (737,393)
Net carrying amount 232,228 575,163 3,500 9,613 11,048 52,546 884,098
APPENDIX I ACCOUNTANTS’ REPORT
– I-44 –


--- page 468 ---
Company
Buildings
Intralogistics
equipment
Leasehold
improvements
Motor
vehicles
Furniture,
fixtures and
equipment
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December 2020
At 1 January 2020:
Cost – 879,158 5,696 14,276 9,084 58,196 966,410
Accumulated
depreciation – (290,834) (2,330) (9,378) (5,956) – (308,498)
Net carrying amount – 588,324 3,366 4,898 3,128 58,196 657,912
At 1 January 2020, net
of accumulated
depreciation – 588,324 3,366 4,898 3,128 58,196 657,912
Additions – 86,189 1,420 2,150 1,984 36,023 127,766
Disposal – – – (148) (62) – (210)
Exercise of purchase
options of leased
intralogistics
equipment
(notes 14(a)) – 52,603 – – – – 52,603
Transfer to inventories – (17,269) – – – – (17,269)
Depreciation provided
during the year – (144,552) (1,903) (1,644) (1,329) – (149,428)
At 31 December 2020,
net of accumulated
depreciation – 565,295 2,883 5,256 3,721 94,219 671,374
At 31 December 2020
Cost – 969,833 7,116 15,788 10,948 94,219 1,097,904
Accumulated
depreciation – (404,538) (4,233) (10,532) (7,227) – (426,530)
Net carrying amount – 565,295 2,883 5,256 3,721 94,219 671,374
APPENDIX I ACCOUNTANTS’ REPORT
– I-45 –


--- page 469 ---
Buildings
Intralogistics
equipment
Leasehold
improvements
Motor
vehicles
Furniture,
fixtures and
equipment
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December 2021
At 1 January 2021:
Cost – 969,833 7,116 15,788 10,948 94,219 1,097,904
Accumulated
depreciation – (404,538) (4,233) (10,532) (7,227) – (426,530)
Net carrying amount – 565,295 2,883 5,256 3,721 94,219 671,374
At 1 January 2021, net
of accumulated
depreciation – 565,295 2,883 5,256 3,721 94,219 671,374
Additions – 180,262 2,530 4,071 1,234 36,547 224,644
Disposal – – – (70) (51) – (121)
Exercise of purchase
options of leased
intralogistics
equipment
(notes 14(a)) – 34,631 – – – – 34,631
Transfer to inventories – (20,316) – – – – (20,316)
Transfer to construction
in progress – (3,293) – – – 3,293 –
Transfer from
construction in
progress 130,766 2,470 – – – (133,236) –
Depreciation provided
during the year – (174,146) (2,031) (1,885) (1,387) – (179,449)
At 31 December 2021,
net of accumulated
depreciation 130,766 584,903 3,382 7,372 3,517 823 730,763
At 31 December 2021
Cost 130,766 1,115,262 9,646 18,644 11,828 823 1,286,969
Accumulated
depreciation – (530,359) (6,264) (11,272) (8,311) – (556,206)
Net carrying amount 130,766 584,903 3,382 7,372 3,517 823 730,763
APPENDIX I ACCOUNTANTS’ REPORT
– I-46 –


--- page 470 ---
Buildings
Intralogistics
equipment
Leasehold
improvements
Motor
vehicles
Furniture,
fixtures and
equipment
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December 2022
At 1 January 2022:
Cost 130,766 1,115,262 9,646 18,644 11,828 823 1,286,969
Accumulated
depreciation – (530,359) (6,264) (11,272) (8,311) – (556,206)
Net carrying amount 130,766 584,903 3,382 7,372 3,517 823 730,763
At 1 January 2022, net
of accumulated
depreciation 130,766 584,903 3,382 7,372 3,517 823 730,763
Additions 4,369 173,857 2,333 3,445 4,477 – 188,481
Disposal – – – (153) (30) – (183)
Exercise of purchase
options of leased
intralogistics
equipment
(notes 14(a)) – 30,455 – – – – 30,455
Transfer to inventories – (39,892) – – – – (39,892)
Transfer to construction
in progress – (10,113) – – – 10,113 –
Transfer from
construction in
progress – 8,911 – – – (8,911) –
Depreciation provided
during the year (2,905) (198,074) (2,470) (2,336) (2,080) – (207,865)
At 31 December 2022,
net of accumulated
depreciation 132,230 550,047 3,245 8,328 5,884 2,025 701,759
At 31 December 2022
Cost 135,135 1,184,889 11,979 20,124 16,020 2,025 1,370,172
Accumulated
depreciation (2,905) (634,842) (8,734) (11,796) (10,136) – (668,413)
Net carrying amount 132,230 550,047 3,245 8,328 5,884 2,025 701,759
APPENDIX I ACCOUNTANTS’ REPORT
– I-47 –


--- page 471 ---
Buildings
Intralogistics
equipment
Leasehold
improvements
Motor
vehicles
Furniture,
fixtures and
equipment
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
30 April 2023
At 1 January 2023:
Cost 135,135 1,184,889 11,979 20,124 16,020 2,025 1,370,172
Accumulated
depreciation (2,905) (634,842) (8,734) (11,796) (10,136) – (668,413)
Net carrying amount 132,230 550,047 3,245 8,328 5,884 2,025 701,759
At 1 January 2023, net
of accumulated
depreciation 132,230 550,047 3,245 8,328 5,884 2,025 701,759
Additions – 99,785 854 543 279 – 101,461
Disposal – – – (24) (2) – (26)
Exercise of purchase
options of leased
intralogistics
equipment (note 14(a)) – 3,244 – – – – 3,244
Transfer to inventories – (16,821) – – – – (16,821)
Transfer to construction
in progress – (6,045) – – – 6,045 –
Transfer from
construction in
progress – 5,216 – – – (5,216) –
Depreciation provided
during the period (3,089) (61,364) (935) (794) (833) – (67,015)
At 30 April 2023, net of
accumulated
depreciation 129,141 574,062 3,164 8,053 5,328 2,854 722,602
At 30 April 2023
Cost 135,135 1,242,242 12,834 20,189 16,249 2,854 1,429,503
Accumulated
depreciation (5,994) (668,180) (9,670) (12,136) (10,921) – (706,901)
Net carrying amount 129,141 574,062 3,164 8,053 5,328 2,854 722,602
Notes:
(a) As at 31 December 2020, 2021 and 2022 and 30 April 2023, certain of the Group’s and the Company’s
intralogistics equipment with net carrying amounts of approximately RMB160,108,000, RMB253,408,000,
RMB281,782,000 and RMB299,891,000 were pledged to secure bank loans and other borrowings granted to
the Group (note 23 (ii)).
(b) As at 31 December 2020, 2021 and 2022 and 30 April 2023, the fully-depreciated property, plant and
equipment with the gross carrying amount of RMB4,191,000, RMB16,777,000, RMB27,712,000 and
RMB32,577,000 were still in use.
(c) As at 31 December 2020, 2021 and 2022 and 30 April 2023, the Group had not obtained ownership certificates
of certain buildings with net carrying amounts of nil, RMB130,766,000, RMB104,240,000 and
RMB103,087,000, respectively.
As at 31 December 2020, 2021 and 2022 and 30 April 2023, the Company had not obtained ownership
certificates of certain buildings with net carrying amounts of nil, RMB130,766,000, nil and nil, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
– I-48 –


--- page 472 ---
14. LEASES
The Group/Company as a lessee
The Group has lease contracts for various office premises and intralogistics equipment used in its operations.
Lump sum payments were made upfront to acquire the leasehold land with lease periods of 50 years, and no ongoing
payments will be made under the terms of these land leases. Leases of office premises generally have lease terms
between 1.5 and 7 years. Generally, the Group is restricted from assigning and subleasing the leased office premises
outside the Group.
(a) Right-of-use assets
The carrying amounts of the Group’s and the Company’s right-of-use assets and the movements during
the Relevant Periods are as follows:
Group
Office
premises
Intralogistics
equipment
Leasehold
land Total
RMB’000 RMB’000 RMB’000 RMB’000
As at 1 January 2020 4,778 612,091 15,144 632,013
Additions 8,090 420,111 21,899 450,100
Transfer to property, plant
and equipment (note 13) – (52,603) – (52,603)
Depreciation charge (2,696) (150,099) (569) (153,364)
As at 31 December 2020
and 1 January 2021 10,172 829,500 36,474 876,146
Additions 11,460 323,196 – 334,656
Transfer to property, plant
and equipment (note 13) – (34,631) – (34,631)
Depreciation charge (6,321) (191,775) (751) (198,847)
As at 31 December 2021
and 1 January 2022 15,311 926,290 35,723 977,324
Additions 30,519 281,448 – 311,967
Transfer to property, plant
and equipment (note 13) – (30,455) – (30,455)
Depreciation charge (13,002) (195,763) (751) (209,516)
As at 31 December 2022 and
1 January 2023 32,828 981,520 34,972 1,049,320
Additions 1,512 39,700 – 41,212
Transfer to property, plant and
equipment (note 13) – (3,244) – (3,244)
Depreciation charge (4,317) (63,835) (250) (68,402)
As at 30 April 2023 30,023 954,141 34,722 1,018,886
APPENDIX I ACCOUNTANTS’ REPORT
– I-49 –


--- page 473 ---
Company
Office
premises
Intralogistics
equipment
Leasehold
land Total
RMB’000 RMB’000 RMB’000 RMB’000
As at 1 January 2020 4,778 612,091 15,144 632,013
Additions 8,090 420,111 – 428,201
Transfer to property, plant
and equipment (note 13) – (52,603) – (52,603)
Depreciation charge (2,696) (150,099) (313) (153,108)
As at 31 December 2020
and 1 January 2021 10,172 829,500 14,831 854,503
Additions 10,856 323,196 – 334,052
Transfer to property, plant
and equipment (note 13) – (34,631) – (34,631)
Depreciation charge (5,919) (191,775) (313) (198,007)
As at 31 December 2021
and 1 January 2022 15,109 926,290 14,518 955,917
Additions 29,774 281,448 – 311,222
Transfer to property, plant
and equipment (note 13) – (30,455) – (30,455)
Depreciation charge (12,732) (195,763) (313) (208,808)
As at 31 December 2022 and
1 January 2023 32,151 981,520 14,205 1,027,876
Additions 1,512 39,700 – 41,212
Transfer to property, plant and
equipment (note 13) – (3,244) – (3,244)
Depreciation charge (4,083) (63,835) (105) (68,023)
As at 30 April 2023 29,580 954,141 14,100 997,821
Note:
As at 31 December 2020, 2021 and 2022 and 30 April 2023, all of the leasehold land of the Group and
the Company were pledged to secure bank loans and other borrowings granted to the Group and the
Company (note 23(ii)).
APPENDIX I ACCOUNTANTS’ REPORT
– I-50 –


--- page 474 ---
(b) Lease liabilities
The carrying amount of the Group’s and the Company’s lease liabilities (included under interest-bearing
bank loans and other borrowings) and the movements during the Relevant Periods are as follows:
Group
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Carrying amount at beginning
of the year/period 619,722 766,139 781,380 786,102
New leases 428,201 334,656 311,967 41,212
Accretion of interest
recognised
during the year/period 51,845 62,157 61,927 19,820
Payments (333,629) (381,572) (369,172) (137,867)
Carrying amount at end of the
year/period 766,139 781,380 786,102 709,267
Analysed into:
Current portion 343,523 321,779 353,908 302,153
Non-current portion 422,616 459,601 432,194 407,114
766,139 781,380 786,102 709,267
Company
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Carrying amount at beginning
of the year/period 619,722 766,139 781,177 785,384
New leases 428,201 334,052 308,659 41,212
Accretion of interest
recognised during
the year/period 51,845 62,140 61,902 19,810
Payments (333,629) (381,154) (366,354) (137,574)
Carrying amount at end of the
year/period 766,139 781,177 785,384 708,832
Analysed into:
Current portion 343,523 321,576 353,426 301,890
Non-current portion 422,616 459,601 431,958 406,942
766,139 781,177 785,384 708,832
The maturity analysis of lease liabilities is disclosed in note 34 to the Historical Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
– I-51 –


--- page 475 ---
(c) The amounts recognised in profit or loss in relation to leases are as follows:
Group
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Interest on lease
liabilities 51,845 62,157 61,927 20,089 19,819
Depreciation charge
of right-of-use
assets 153,364 198,847 209,516 64,347 68,402
Expense relating to
short-term leases 49,211 27,321 7,707 2,742 2,235
Total amount
recognised in
profit or loss 254,420 288,325 279,150 87,178 90,457
The Group/Company as a lessor
All intralogistics equipment included in property, plant and equipment are available for lease. The Group
leases represented the operating lease in its service contracts under intralogistics equipment subscription services,
which is allocated based on the residual method to estimate the stand-alone selling price for the operating lease after
deducting the total revenue derived from the intralogistics equipment subscription services by the allocated revenue
in Comprehensive Service, details of which are disclosed in note 2.4 to Historical Financial Information. Revenue
from the operating lease of intralogistics equipment, which was recognised by the Group evenly over the lease period
during each of the Relevant Periods and the four months ended 30 April 2022, were as follows:
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue from the
operating lease 522,868 584,066 574,727 188,902 189,716
APPENDIX I ACCOUNTANTS’ REPORT
– I-52 –


--- page 476 ---
At the end of each of the Relevant Periods, the undiscounted lease payments receivable, net of surplus taxes
for value-added tax, by the Group and the Company in future periods under non-cancellable operating leases with
its tenants are as follows:
Group
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Within one year 365,359 374,049 343,899 350,869
After one year but within two years 155,592 152,173 126,658 136,339
After two years but within three
years 52,372 45,923 47,508 54,135
After three years but within four
years 12,321 12,835 17,102 39,843
585,644 584,980 535,167 581,186
Company
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Within one year 362,984 371,931 342,642 350,146
After one year but within two years 154,745 151,348 126,456 136,245
After two years but within three
years 51,801 45,757 47,503 54,135
After three years but within four
years 12,298 12,834 17,102 39,843
581,828 581,870 533,703 580,369
APPENDIX I ACCOUNTANTS’ REPORT
– I-53 –


--- page 477 ---
15. INTANGIBLE ASSETS
Group and Company
Software
RMB’000
31 December 2020
At 1 January 2020:
Cost 4,404
Accumulated amortisation (1,214)
Net carrying amount 3,190
At 1 January 2020, net of accumulated amortisation 3,190
Additions 1,203
Amortisation provided during the year (539)
At 31 December 2020, net of accumulated amortisation 3,854
At 31 December 2020:
Cost 5,607
Accumulated amortisation (1,753)
Net carrying amount 3,854
31 December 2021
At 1 January 2021:
Cost 5,607
Accumulated amortisation (1,753)
Net carrying amount 3,854
At 1 January 2021, net of accumulated amortisation 3,854
Additions 1,009
Amortisation provided during the year (1,001)
At 31 December 2021, net of accumulated amortisation 3,862
At 31 December 2021
Cost 6,616
Accumulated amortisation (2,754)
Net carrying amount 3,862
APPENDIX I ACCOUNTANTS’ REPORT
– I-54 –


--- page 478 ---
Software
Technical
know-how Total
RMB’000 RMB’000 RMB’000
Group
31 December 2022
At 1 January 2022
Cost 6,616 – 6,616
Accumulated amortisation (2,754) – (2,754)
Net carrying amount 3,862 – 3,862
At 1 January 2022, net of accumulated amortisation 3,862 – 3,862
Acquisition of a subsidiary (note 27) – 5,406 5,406
Additions 1,304 – 1,304
Amortisation provided during the year (1,483) (405) (1,888)
At 31 December 2022, net of accumulated amortisation 3,683 5,001 8,684
At 31 December 2022
Cost 7,920 5,406 13,326
Accumulated amortisation (4,237) (405) (4,642)
Net carrying amount 3,683 5,001 8,684
Group
30 April 2023
At 1 January 2023
Cost 7,920 5,406 13,326
Accumulated amortisation (4,237) (405) (4,642)
Net carrying amount 3,683 5,001 8,684
At 1 January 2023, net of accumulated amortisation 3,683 5,001 8,684
Additions 314 – 314
Amortisation provided during the period (421) (180) (601)
At 30 April 2023, net of accumulated amortisation 3,576 4,821 8,397
At 30 April 2023
Cost 8,234 5,406 13,640
Accumulated amortisation (4,658) (585) (5,243)
Net carrying amount 3,576 4,821 8,397
APPENDIX I ACCOUNTANTS’ REPORT
– I-55 –


--- page 479 ---
Software
Technical
know-how Total
RMB’000 RMB’000 RMB’000
Company
31 December 2022
At 1 January 2022
Cost 6,616 – 6,616
Accumulated amortisation (2,754) – (2,754)
Net carrying amount 3,862 – 3,862
At 1 January 2022, net of accumulated amortisation 3,862 – 3,862
Additions 1,304 – 1,304
Amortisation provided during the year (1,483) – (1,483)
At 31 December 2022, net of accumulated amortisation 3,683 – 3,683
At 31 December 2022
Cost 7,920 – 7,920
Accumulated amortisation (4,237) – (4,237)
Net carrying amount 3,683 – 3,683
Software
Technical
know-how Total
RMB’000 RMB’000 RMB’000
Company
30 April 2023
At 1 January 2023
Cost 7,920 – 7,920
Accumulated amortisation (4,237) – (4,237)
Net carrying amount 3,683 – 3,683
At 1 January 2023, net of accumulated amortisation 3,683 – 3,683
Additions 314 – 314
Amortisation provided during the period (421) – (421)
At 30 April 2023, net of accumulated amortisation 3,576 – 3,576
At 30 April 2023
Cost 8,234 – 8,234
Accumulated amortisation (4,658) – (4,658)
Net carrying amount 3,576 – 3,576
APPENDIX I ACCOUNTANTS’ REPORT
– I-56 –


--- page 480 ---
16. INVESTMENTS IN ASSOCIATES
Group and Company
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Share of net assets 18,177 8,869 10,561 9,799
Particulars of the associates are as follows:
Name
Particulars of
issued shares held
Place of
registration and
business
Percentage of
ownership interest
to the Group Principal activity
Hefei Kejin Automation Technology
Co., Ltd. (“Hefei Kejin”, “ݚ٭
ʮ̡”)
(note (a))
Ordinary shares Hefei, PRC 27.74% Manufacture and
sale of
intralogistics
equipment
Ferretto Intelligent Equipment
(Shanghai) Co., Ltd.
(“౽ঐண௪(ɪऎ)ʮ
̡”)
Ordinary shares Shanghai, PRC 28.50% Manufacture and
sale of
intralogistics
equipment
Hefei Langyun IOT Technology Co.,
Ltd. (“Hefei Langyun”, “ථ
ʮ̡”) (note (b))
Ordinary shares Hefei, PRC 30.00% Development,
manufacture and
sale of IOT
devices
Hefei Langxun Intelligent Equipment
Co., Ltd. (“Hefei Langxun”, “٭
ʮ̡”) (note (c))
Ordinary shares Hefei, PRC 27.74% Manufacture and
sale of intelligent
equipment
The associates are all directly held by the Company.
Notes:
(a) During the year ended 31 December 2021, the Company disposed of all shares of Hefei Kejin at nil
consideration.
(b) During the year ended 31 December 2022, the Company acquired additional 70% of the equity shares
of Hefei Langyun, at a cash consideration of RMB4,200,000 from an independent third party. After the
acquisition, Hefei Langyun then became a wholly-owned subsidiary of the Group. The Group recognised
a gain of RMB1,435,000 related to the remeasurement of the pre-existing 30% equity interest to the fair
value on the acquisition date in profit or loss. The details of the acquisition are disclosed in note 27 to
the Historical Financial Information.
(c) During the year ended 31 December 2022, the Group invested RMB1,100,000 in Hefei Langxun
approximately 28% equity interest in Hefei Langxun, with a significant influence over it. As at 31
December 2022, the Group has paid all considerations.
In the opinion of the Directors, the Group’s associates were not individually material at end of each of the
Relevant Periods.
APPENDIX I ACCOUNTANTS’ REPORT
– I-57 –


--- page 481 ---
The following table illustrates the aggregate financial information of the Group’s associates:
Y ear ended 31 December
Four months
ended 30 April
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Share of the associates’
total comprehensive
income/(loss) for the
year/period (228) (4,929) 948 (1,041) (762)
17. INVENTORIES
Group
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Finished goods 56,619 69,174 84,502 95,190
Company
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Finished goods 55,933 61,548 75,737 84,481
18. TRADE AND BILLS RECEIV ABLES
Group
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables 242,311 258,830 287,434 323,921
Bills receivable 18,578 26,695 25,645 18,774
260,889 285,525 313,079 342,695
Less: Impairment (21,019) (15,915) (19,042) (20,965)
239,870 269,610 294,037 321,730
APPENDIX I ACCOUNTANTS’ REPORT
– I-58 –


--- page 482 ---
Company
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables 211,136 228,025 263,120 283,590
Bills receivable 18,270 24,146 20,965 17,585
Amounts due from subsidiaries 67,398 19,182 – 26,592
296,804 271,353 284,085 327,767
Less: Impairment (19,308) (14,015) (17,512) (19,626)
277,496 257,338 266,573 308,141
The Group’s trading terms with its customers are mainly on credit, except for new customers, where payment
in advance is normally required. The credit period is generally one to three months. Each customer has a maximum
credit limit. The Group seeks to maintain strict control over its outstanding receivables and has a credit control
department to minimise credit risk. Overdue balances are reviewed regularly by senior management. The Group’s
trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk.
The Group does not hold any collateral or other credit enhancements over its trade receivable balances. Trade
receivables are non-interest-bearing. The trade balances due from subsidiaries are unsecured, interest-free and are to
be settled semi-annually.
Included in the trade and bills receivables were balances due from associates of the Company of RMB107,000,
RMB32,000 and nil, as well as the balances due from companies significantly influenced by key management of
RMB266,000, RMB26,000 and nil, as at 31 December 2020, 2021 and 2022, respectively.
The fair values of trade and bills receivables as at the end of each of the Relevant Periods approximated to their
corresponding carrying amounts due to their relatively short maturity terms.
An ageing analysis of the trade and bills receivables as at the end of each of the Relevant Periods, based on
the invoice date and net of loss allowance, is as follows:
Group
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
One to three months 204,937 232,002 242,481 258,446
Four to six months 25,425 25,476 36,987 42,928
Six to twelve months 8,274 6,077 10,788 12,827
Over one year 1,234 6,055 3,781 7,529
239,870 269,610 294,037 321,730
APPENDIX I ACCOUNTANTS’ REPORT
– I-59 –


--- page 483 ---
Company
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
One to three months 247,316 223,076 219,681 245,174
Four to six months 23,066 22,922 33,527 41,788
Six to twelve months 6,618 5,410 10,486 13,653
Over one year 496 5,930 2,879 7,526
277,496 257,338 266,573 308,141
The movements in the loss allowance for impairment of trade receivables are as follows:
Group
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
At beginning of the year/period 15,160 21,019 15,915 19,042
Impairment losses 6,808 4,498 4,178 2,106
Amount written off as uncollectible (949) (9,602) (1,051) (183)
At end of the year/period 21,019 15,915 19,042 20,965
Company
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
At beginning of the year/period 13,410 19,308 14,015 17,512
Impairment losses 6,583 2,228 3,497 2,114
Amount written off as uncollectible (685) (7,521) – –
At end of the year/period 19,308 14,015 17,512 19,626
Group and Company
An impairment analysis is performed at each reporting date using a provision matrix to measure ECLs. The
provision rates are based on days past due for groupings of various customer segments with similar loss patterns (i.e.,
customer type). The Group/Company classifies its customers into categories A, B, C and D based on their accounts
management models. The calculation reflects the probability-weighted outcome, the time value of money and
reasonable and supportable information that is available at the reporting date about past events, current conditions
and forecasts of future economic conditions. Generally, trade receivables are written off if past due for more than
three years and are not subject to enforcement activity.
Impairment on bills receivable is measured as 12-month expected credit losses. The expected credit losses for
bills receivable are minimal since the settlement are made from creditworthy banks with no recent history of default
as at 31 December 2020, 2021 and 2022 and 30 April 2023.
APPENDIX I ACCOUNTANTS’ REPORT
– I-60 –


--- page 484 ---
Group
Set out below is the information about the credit risk exposure on the Group’s trade receivables using
provision matrices:
At 31 December 2020
Category A
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 0.5 2.1 100.0 0.5
Gross carrying amount (RMB’000) 57,238 242 – 57,480
Expected credit losses (RMB’000) 280 5 – 285
Category B
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 3.2 12.7 100.0 12.0
Gross carrying amount (RMB’000) 141,313 10,641 14,067 166,021
Expected credit losses (RMB’000) 4,488 1,349 14,067 19,904
Category C
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 0.9 3.7 100.0 4.4
Gross carrying amount (RMB’000) 15,231 2,995 584 18,810
Expected credit losses (RMB’000) 136 110 584 830
Total
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 2.3 10.5 100.0 8.7
Gross carrying amount (RMB’000) 213,782 13,878 14,651 242,311
Expected credit losses (RMB’000) 4,904 1,464 14,651 21,019
APPENDIX I ACCOUNTANTS’ REPORT
– I-61 –


--- page 485 ---
At 31 December 2021
Category A
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 0.5 2.1 100.0 0.5
Gross carrying amount (RMB’000) 63,189 284 – 63,473
Expected credit losses (RMB’000) 311 6 – 317
Category B
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 3.6 12.2 100.0 8.6
Gross carrying amount (RMB’000) 155,125 15,594 7,818 178,537
Expected credit losses (RMB’000) 5,598 1,910 7,818 15,326
Category C
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 0.1 4.0 100.0 1.6
Gross carrying amount (RMB’000) 14,913 1,717 190 16,820
Expected credit losses (RMB’000) 14 68 190 272
Total
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 2.5 11.3 100.0 6.1
Gross carrying amount (RMB’000) 233,227 17,595 8,008 258,830
Expected credit losses (RMB’000) 5,923 1,984 8,008 15,915
APPENDIX I ACCOUNTANTS’ REPORT
– I-62 –


--- page 486 ---
At 31 December 2022
Category A
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 0.6 2.5 100.0 0.6
Gross carrying amount (RMB’000) 63,438 610 – 64,048
Expected credit losses (RMB’000) 401 15 – 416
Category B
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 3.5 12.4 100.0 8.6
Gross carrying amount (RMB’000) 183,605 21,732 9,138 214,475
Expected credit losses (RMB’000) 6,516 2,689 9,138 18,343
Category C
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 0.2 3.0 100.0 3.2
Gross carrying amount (RMB’000) 7,675 1,001 235 8,911
Expected credit losses (RMB’000) 18 30 235 283
Total
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 2.7 11.7 100.0 6.6
Gross carrying amount (RMB’000) 254,718 23,343 9,373 287,434
Expected credit losses (RMB’000) 6,935 2,734 9,373 19,042
APPENDIX I ACCOUNTANTS’ REPORT
– I-63 –


--- page 487 ---
At 30 April 2023
Category A
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 0.6 2.6 100.0 0.6
Gross carrying amount (RMB’000) 67,718 457 – 68,175
Expected credit losses (RMB’000) 380 12 – 392
Category B
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 3.5 12.4 100.0 8.2
Gross carrying amount (RMB’000) 209,298 29,056 9,483 247,837
Expected credit losses (RMB’000) 7,238 3,594 9,483 20,315
Category C
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 0.2 3.1 100.0 3.3
Gross carrying amount (RMB’000) 7,291 386 232 7,909
Expected credit losses (RMB’000) 14 12 232 258
Total
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 2.7 12.1 100.0 6.5
Gross carrying amount (RMB’000) 284,307 29,899 9,715 323,921
Expected credit losses (RMB’000) 7,632 3,618 9,715 20,965
APPENDIX I ACCOUNTANTS’ REPORT
– I-64 –


--- page 488 ---
Company
Set out below is the information about the credit risk exposure on the Company’s trade receivables using
provision matrices:
At 31 December 2020
Category A
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 0.5 2.1 100.0 0.5
Gross carrying amount (RMB’000) 57,238 242 – 57,480
Expected credit losses (RMB’000) 267 5 – 272
Category B
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 3.2 12.2 100.0 12.7
Gross carrying amount (RMB’000) 124,891 10,110 13,678 148,679
Expected credit losses (RMB’000) 3,982 1,238 13,678 18,898
Category C
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 1.3 3.5 100.0 2.8
Gross carrying amount (RMB’000) 3,704 1,225 48 4,977
Expected credit losses (RMB’000) 47 43 48 138
Category D
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) – – 100.0 –
Gross carrying amount (RMB’000) 67,398 – – 67,398
Expected credit losses (RMB’000) – – – –
Total
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 1.7 11.1 100.0 6.9
Gross carrying amount (RMB’000) 253,231 11,577 13,726 278,534
Expected credit losses (RMB’000) 4,296 1,286 13,726 19,308
APPENDIX I ACCOUNTANTS’ REPORT
– I-65 –


--- page 489 ---
At 31 December 2021
Category A
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 0.5 2.1 100.0 0.6
Gross carrying amount (RMB’000) 62,122 284 – 62,406
Expected credit losses (RMB’000) 341 6 – 347
Category B
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 3.3 12.2 100.0 8.5
Gross carrying amount (RMB’000) 136,071 15,495 7,255 158,821
Expected credit losses (RMB’000) 4,424 1,894 7,255 13,573
Category C
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 0.2 2.6 100.0 1.4
Gross carrying amount (RMB’000) 6,569 151 78 6,798
Expected credit losses (RMB’000) 13 4 78 95
Category D
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) – – 100.0 –
Gross carrying amount (RMB’000) 19,182 – – 19,182
Expected credit losses (RMB’000) – – – –
Total
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 2.1 12.0 100.0 5.7
Gross carrying amount (RMB’000) 223,944 15,930 7,333 247,207
Expected credit losses (RMB’000) 4,778 1,904 7,333 14,015
APPENDIX I ACCOUNTANTS’ REPORT
– I-66 –


--- page 490 ---
At 31 December 2022
Category A
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 0.6 2.5 100.0 0.6
Gross carrying amount (RMB’000) 63,438 610 – 64,048
Expected credit losses (RMB’000) 401 15 – 416
Category B
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 3.2 12.5 100.0 8.7
Gross carrying amount (RMB’000) 166,026 20,091 9,135 195,252
Expected credit losses (RMB’000) 5,350 2,512 9,135 16,997
Category C
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 0.1 3.5 100.0 2.6
Gross carrying amount (RMB’000) 3,258 483 79 3,820
Expected credit losses (RMB’000) 3 17 79 99
Total
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 2.5 12.0 100.0 6.7
Gross carrying amount (RMB’000) 232,722 21,184 9,214 263,120
Expected credit losses (RMB’000) 5,754 2,544 9,214 17,512
APPENDIX I ACCOUNTANTS’ REPORT
– I-67 –


--- page 491 ---
At 30 April 2023
Category A
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 0.5 2.6 100.0 0.6
Gross carrying amount (RMB’000) 66,991 306 – 67,297
Expected credit losses (RMB’000) 364 8 – 372
Category B
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 3.7 12.2 100.0 8.9
Gross carrying amount (RMB’000) 177,819 28,301 9,095 215,215
Expected credit losses (RMB’000) 6,506 3,463 9,095 19,064
Category C
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 0.4 3.7 100.0 17.6
Gross carrying amount (RMB’000) 710 188 180 1,078
Expected credit losses (RMB’000) 3 7 180 190
Category D
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) – – 100.0 –
Gross carrying amount (RMB’000) 26,592 – – 26,592
Expected credit losses (RMB’000) – – – –
Total
Past due
Current Less than 1 year Over 1 year Total
Expected credit loss rate (%) 2.5 12.1 100.0 6.3
Gross carrying amount (RMB’000) 272,112 28,795 9,275 310,182
Expected credit losses (RMB’000) 6,873 3,478 9,275 19,626
APPENDIX I ACCOUNTANTS’ REPORT
– I-68 –


--- page 492 ---
The Group and the Company endorsed certain notes receivable accepted by certain banks in the PRC (the
“Endorsed Notes”) to certain of its suppliers in order to settle the trade and other payables due to such suppliers with
carrying amounts in aggregate of RMB30,408,000, RMB35,581,000, RMB40,700,000 and RMB25,503,000 as at 31
December 2020, 2021 and 2022 and 30 April 2023, respectively (the “Endorsement”). The Endorsed Notes had a
maturity from one to six months as at the end of each of the Relevant Periods. In accordance with the Negotiable
Instruments Law of the People’s Republic of China (“جand relevant discounting
arrangements with certain banks in the PRC, the holders of the Endorsed Notes have a right of recourse against the
Group and the Company if the PRC banks default (the “Continuing Involvement”).
In the opinion of the Directors, the Group and the Company has transferred substantially all risks and rewards
relating to certain Endorsed Notes with amounts of RMB14,477,000, RMB14,116,000, RMB21,779,000 and
RMB12,193,000 as at 31 December 2020, 2021 and 2022 and 30 April 2023, respectively. Accordingly, the Company
has derecognised the full carrying amounts of the derecognised notes receivable. The maximum exposure to loss from
the Group’s and the Company’s Continuing Involvement in the derecognised notes is equal to their carrying amounts.
In the opinion of the Directors, the fair values of the Group’s and the Company’s Continuing Involvement in the
derecognised notes are not significant.
For the rest of the Endorsed Notes, the Directors believe that the Group has retained the substantial risks and
rewards, which include default risks relating to such Endorsed Notes, and accordingly, the Group continued to
recognise the full carrying amounts of the Endorsed Notes. Subsequent to the Endorsement, the Group and the
Company did not retain any rights on the use of the Endorsed Notes, including the sale, transfer or pledge of the
Endorsed Notes to any other third parties. As at 31 December 2020, 2021 and 2022 and 30 April 2023, the aggregate
carrying amounts of the trade payables settled by such Endorsed Notes to which the suppliers have recourse were
RMB15,931,000, RMB21,465,000, RMB18,921,000 and RMB13,310,000, respectively.
The breakdown for the Group’s and the Company’s Endorsed Notes are summarised as below during the
Relevant Period:
Group
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Amounts of Endorsed Notes 30,408 38,076 40,700 25,503
Less: the amount of derecognition
upon the Endorsement (14,477) (16,611) (21,779) (12,193)
Endorsed bills receivables that have
not been derecognised and not yet
due (note 22) 15,931 21,465 18,921 13,310
Company
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Amounts of Endorsed Notes 28,015 34,484 30,432 21,518
Less: the amount of derecognition
upon the Endorsement (12,256) (15,567) (16,063) (8,395)
Endorsed bills receivables that have
not been derecognised and not yet
due (note 22) 15,759 18,917 14,369 13,123
APPENDIX I ACCOUNTANTS’ REPORT
– I-69 –


--- page 493 ---
19. PREPAYMENTS, DEPOSITS AND OTHER RECEIV ABLES
Group
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Prepayments 13,115 10,623 13,261 24,607
Deposits 90,784 93,804 105,007 101,190
Other receivables 1,028 1,885 1,363 2,469
Tax recoverable 63,149 78,063 82,903 82,427
168,076 184,375 202,534 210,693
Less: Current portion (89,087) (98,201) (106,027) (118,333)
Non-current portion 78,989 86,174 96,507 92,360
Company
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Prepayments 12,229 8,898 12,312 23,752
Deposits 90,050 93,672 104,464 100,653
Other receivables 927 1,632 1,268 2,331
Tax recoverable 58,604 64,256 68,310 67,859
161,810 168,458 186,354 194,595
Less: Current portion (82,911) (82,284) (89,847) (102,235)
Non-current portion 78,899 86,174 96,507 92,360
The financial assets included in the above balances relate to receivables for which there was no recent history
of default and past due amounts. As at the end of each of the Relevant Periods, the loss allowance of the Group was
assessed to be minimal.
APPENDIX I ACCOUNTANTS’ REPORT
– I-70 –


--- page 494 ---
20. CASH AND CASH EQUIV ALENTS AND RESTRICTED DEPOSITS
Group
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Cash and bank balances 115,073 232,924 151,488 187,327
Less: Restricted deposits (31,462) (44,762) (30,850) (54,030)
Cash and cash equivalents 83,611 188,162 120,638 133,297
Company
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Cash and bank balances 112,645 173,929 137,391 119,543
Less: Restricted deposits (31,462) (44,762) (30,850) (35,332)
Cash and cash equivalents 81,183 129,167 106,541 84,211
At the end of each Relevant Periods, all cash and bank balances of the Group and of the Company are
denominated in RMB. The RMB is not freely convertible into other currencies, however, under Mainland China’s
Foreign Exchange Administration 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 floating rates based on daily bank deposit rates. Short term time deposits are
made for varying periods of between one day and six months depending on the immediate cash requirements of the
Group, and earn interest at the respective short term time deposit rates. The bank balances and pledged deposits are
deposited with creditworthy banks with no recent history of default.
APPENDIX I ACCOUNTANTS’ REPORT
– I-71 –


--- page 495 ---
21. TRADE AND BILLS PAYABLES
Group
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade payables 107,210 138,866 159,876 190,504
Bills payable 85,991 96,585 102,684 117,625
193,201 235,451 262,560 308,129
Company
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade creditors 99,892 130,594 135,422 140,063
Bills payable 85,991 96,585 102,684 117,625
Amounts due to subsidiaries 21,881 23,937 12,354 10,341
207,764 251,116 250,460 268,029
An ageing analysis of the trade and bills payables as at the end of each of the Relevant Periods, based on the
invoice date, is as follows:
Group
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Within three months 159,441 194,392 212,550 270,270
Three months to one year 24,789 35,845 42,644 29,686
Over one year 8,971 5,214 7,366 8,173
193,201 235,451 262,560 308,129
Company
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Within three months 174,133 210,178 200,582 230,679
Three months to one year 24,660 35,724 42,512 29,295
Over one year 8,971 5,214 7,366 8,055
207,764 251,116 250,460 268,029
APPENDIX I ACCOUNTANTS’ REPORT
– I-72 –


--- page 496 ---
Trade payables to both third parties and subsidiaries of the Company are non-interest-bearing. The trade
payables to third parties are normally settled on the credit terms of one to three months after the invoice date.
Amounts due to subsidiaries of the Company are normally settled on demand.
The fair values of trade and bills payables as at the end of each of the Relevant Periods approximated to their
corresponding carrying amounts due to their relatively short maturity terms.
22. OTHER PAYABLES AND ACCRUALS
Group
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Contract liabilities (note (i)) 7,242 8,972 14,559 12,945
Other payables (note (ii)) 74,578 76,109 70,255 68,491
Endorsed bills receivable that have not
been derecognised and not yet due
(note 18) 15,931 21,465 18,921 13,310
Accruals 3,580 1,743 4,489 18,444
Salary and welfare payable 14,450 14,682 14,845 13,725
Other tax payable 3,792 6,100 9,561 5,104
119,573 129,071 132,630 132,019
Less: Current portion (92,387) (103,199) (112,853) (112,849)
Non-current portion 27,186 25,872 19,777 19,170
Company
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Contract liabilities (note (i)) 2,528 3,660 3,532 6,002
Other payables (note (ii)) 68,908 69,352 63,403 62,513
Endorsed bills receivable that have not
been derecognised and not yet due
(note 18) 15,759 18,917 14,369 13,123
Accruals 3,120 1,156 4,363 18,265
Salary and welfare payable 9,689 10,178 12,312 11,230
Other tax payable 1,683 5,036 8,108 4,206
101,687 108,299 106,087 115,339
Less: Current portion (74,501) (82,427) (86,310) (96,169)
Non-current portion 27,186 25,872 19,777 19,170
Notes:
(i) The balance of contract liabilities of the Group and the Company as at 1 January 2020 were RMB7,287,000
and RMB2,762,000, respectively. The balances of contract liabilities as at the end of each of the Relevant
Periods represented the advance received from customers for sale of parts of intralogistics equipment.
Other payables are non-interest-bearing and would be settled in a period ranging from three months to five
years.
APPENDIX I ACCOUNTANTS’ REPORT
– I-73 –


--- page 497 ---
23. INTEREST-BEARING BANK LOANS AND OTHER BORROWINGS
Group
At 31 December At 30 April
2020 2021 2022 2023
Effective
interest rate Maturity
Effective
interest rate Maturity
Effective
interest rate Maturity
Effective
interest rate Maturity
(%) RMB’000 (%) RMB’000 (%) RMB’000 (%) RMB’000
Current
Bank loans – secured 4.35 2021 2,401 – – – – – – – – –
Current portion of long term bank
loans – secured 4.65-6.18 2021 27,717 4.65-6.18 2022 47,338 4.00-6.18 2023 60,003 3.70-6.18 2023-2024 67,235
Other borrowings – secured 4.90-9.93 2021 138,003 6.89-9.93 2022 110,070 6.82-8.21 2023 114,111 6.82-8.80 2023-2024 156,500
Lease liabilities (note 14(b)) 5.23-9.93 2021 343,523 4.37-9.93 2022 321,779 4.37-9.43 2023 353,908 4.37-9.43 2023-2024 302,153
511,644 479,187 528,022 525,888
Non-current
Bank loans – secured 4.65-6.18 2022-2029 120,473 4.65-6.18 2023-2029 292,849 4.00-6.18 2024-2029 278,054 3.70-6.18 2024-2029 311,537
Other borrowings – secured 4.90-9.93 2022-2024 119,337 6.89-9.93 2023-2024 98,157 6.82-8.21 2024-2025 128,917 6.82-8.80 2024-2026 153,706
Lease liabilities (note 14(b)) 5.23-9.93 2022-2025 422,616 4.37-9.93 2023-2026 459,601 4.37-9.43 2024-2029 432,194 4.37-9.43 2024-2029 407,114
662,426 850,607 839,165 872,357
1,174,070 1,329,794 1,367,187 1,398,245
Analysed into:
Bank loans repayable:
Within one year or
on demand 30,118 47,338 60,003 67,235
In the second year 25,428 55,793 60,387 59,453
In the third year to fifth
years, inclusive 58,001 152,180 165,667 200,084
Beyond five years 37,044 84,876 52,000 52,000
150,591 340,187 338,057 378,772
APPENDIX I ACCOUNTANTS’ REPORT
– I-74 –


--- page 498 ---
At 31 December At 30 April
2020 2021 2022 2023
Effective
interest rate Maturity
Effective
interest rate Maturity
Effective
interest rate Maturity
Effective
interest rate Maturity
(%) RMB’000 (%) RMB’000 (%) RMB’000 (%) RMB’000
Other borrowings repayable:
Within one year or
on demand 138,003 110,070 114,111 156,500
In the second year 55,213 60,950 86,022 104,394
In the third year to fifth
years, inclusive 64,124 37,207 42,895 49,312
257,340 208,227 243,028 310,206
Lease liabilities repayable:
Within one year or
on demand 343,523 321,779 353,908 302,153
In the second year 238,753 236,231 241,657 235,046
In the third year to fifth
years, inclusive 183,863 223,370 190,121 171,722
Beyond five years – – 416 346
766,139 781,380 786,102 709,267
1,174,070 1,329,794 1,367,187 1,398,245
APPENDIX I ACCOUNTANTS’ REPORT
– I-75 –


--- page 499 ---
Company
At 31 December At 30 April
2020 2021 2022 2023
Effective
interest rate Maturity
Effective
interest rate Maturity
Effective
interest rate Maturity
Effective
interest rate Maturity
(%) RMB’000 (%) RMB’000 (%) RMB’000 (%) RMB’000
Current
Bank loans – secured 4.35 2021 2,401 – – – – – – – – –
Current portion of long term bank
loans – secured 4.90-6.18 2021 27,717 4.40-6.18 2022 27,337 4.00-6.18 2023 29,601 3.70-6.18 2023-2024 36,265
Other borrowings – secured 4.90-9.93 2021 137,915 6.89-9.93 2022 110,070 6.82-8.21 2023 114,111 6.82-8.80 2023-2024 156,500
Lease liabilities (note 14(b)) 5.23-9.93 2021 343,523 4.37-9.93 2022 321,576 4.37-9.43 2023 353,426 4.37-9.43 2023-2024 301,890
511,556 458,983 497,138 494,655
Non-current
Bank loans – secured 4.65-6.18 2022-2029 114,251 4.40-6.18 2023-2029 192,850 4.00-6.18 2024-2029 184,393 3.70-6.18 2024-2029 184,507
Other borrowings – secured 4.90-9.93 2022-2024 119,337 6.89-9.93 2023-2024 98,157 6.82-8.21 2024-2025 128,917 6.82-8.80 2024-2026 153,706
Lease liabilities (note 14(b)) 5.23-9.93 2022-2025 422,616 4.37-9.93 2023-2026 459,601 4.37-9.43 2024-2029 431,958 4.37-9.43 2024-2029 406,942
656,204 750,608 745,268 745,155
1,167,760 1,209,591 1,242,406 1,239,810
Analysed into:
Bank loans repayable:
Within one year or
on demand 30,118 27,338 29,601 36,265
In the second year 24,390 25,792 26,375 19,783
In the third year to fifth
years, inclusive 52,817 82,181 106,018 112,724
Beyond five years 37,044 84,876 52,000 52,000
144,369 220,187 213,994 220,772
APPENDIX I ACCOUNTANTS’ REPORT
– I-76 –


--- page 500 ---
At 31 December At 30 April
2020 2021 2022 2023
Effective
interest rate Maturity
Effective
interest rate Maturity
Effective
interest rate Maturity
Effective
interest rate Maturity
(%) RMB’000 (%) RMB’000 (%) RMB’000 (%) RMB’000
Other borrowings repayable:
Within one year or
on demand 137,915 110,070 114,111 156,500
In the second year 55,213 60,950 86,022 104,394
In the third year to fifth
years, inclusive 64,124 37,207 42,895 49,312
257,252 208,227 243,028 310,206
Lease liabilities repayable:
Within one year or
on demand 343,523 321,576 353,426 301,890
In the second year 238,753 236,231 241,421 234,874
In the third year to fifth
years, inclusive 183,863 223,370 190,121 171,722
Beyond five years – – 416 346
766,139 781,177 785,384 708,832
1,167,760 1,209,591 1,242,406 1,239,810
APPENDIX I ACCOUNTANTS’ REPORT
– I-77 –


--- page 501 ---
Notes:
(i) All interest-bearing bank loans and other borrowings are denominated in RMB.
(ii) The following assets were pledged as securities for interest-bearing bank loans and other borrowings:
Group
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Leasehold land 36,474 35,723 34,972 34,722
Property, plant and equipment 160,108 253,408 281,782 299,891
196,582 289,131 316,754 334,613
Company
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Leasehold land 14,831 14,518 14,205 14,100
Property, plant and equipment 160,108 253,408 281,782 299,891
174,939 267,926 295,987 313,991
(iii) The Group’s total facilities for bank and other borrowings amounted to RMB1,998,649,000,
RMB2,173,068,000, RMB2,235,911,000 and RMB2,480,680,000 of which RMB1,174,070,000,
RMB1,329,794,000, RMB1,367,187,000 and RMB1,398,245,000 had been utilised as at 31 December 2020,
2021 and 2022 and 30 April 2023, respectively.
(iv) All interest-bearing bank loans and other borrowings bear interest at the floating interest rate of Loan Prime
Rate (“LPR”) plus margin.
APPENDIX I ACCOUNTANTS’ REPORT
– I-78 –


--- page 502 ---
24. DEFERRED TAX
The movements in deferred tax assets and liabilities during the Relevant Periods are as follows:
Deferred tax assets
Impairment
provision
Tax losses
available for
offsetting
against future
taxable profits Total
RMB’000 RMB’000 RMB’000
Group
At 1 January 2020 4,425 – 4,425
Deferred tax credited to profit or loss during
the year (note 10) 754 – 754
At 31 December 2020 and 1 January 2021 5,179 – 5,179
Deferred tax charged to profit or loss during
the year (note 10) (873) – (873)
At 31 December 2021 and 1 January 2022 4,306 – 4,306
Deferred tax credited to profit or loss during
the year (note 10) 525 – 525
At 31 December 2022 and 1 January 2023 4,831 – 4,831
Deferred tax credited to profit or loss during
the period (note 10) 306 607 913
At 30 April 2023 5,137 607 5,744
Company
At 1 January 2020 2,011 – 2,011
Deferred tax credited to profit or loss during
the year (note 10) 885 – 885
At 31 December 2020 and 1 January 2021 2,896 – 2,896
Deferred tax charged to profit or loss during
the year (note 10) (794) – (794)
At 31 December 2021 and 1 January 2022 2,102 – 2,102
Deferred tax credited to profit or loss during
the year (note 10) 525 – 525
At 31 December 2022 and 1 January 2023 2,627 – 2,627
Deferred tax credited to profit or loss during
the period (note 10) 317 236 553
At 30 April 2023 2,944 236 3,180
APPENDIX I ACCOUNTANTS’ REPORT
– I-79 –


--- page 503 ---
Deferred tax liabilities
Fair value adjustments
arising from acquisition
of the subsidiary
RMB’000
Group
At 1 January 2020, 31 December 2020, 1 January 2021, 31 December 2021,
and 1 January 2022 –
Acquisition of a subsidiary (note 27) 705
Deferred tax credited to profit or loss during the year (note 10) (53)
At 31 December 2022 and 1 January 2023 652
Deferred tax credited to profit or loss during the period (note 10) (23)
At 30 April 2023 629
At Group level, deferred tax assets have not been recognised in respect of the losses of RMB664,000,
RMB664,000, nil, and nil in the consolidated statement of financial position as at 31 December 2020, 2021 and 2022
and 30 April 2023, respectively, 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.
25. SHARE CAPITAL
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Authorised and issued and fully
paid:
Ordinary shares with par value of
RMB1.00 each 80,484 83,972 83,972 83,972
A summary of movements in the Company’s share capital is as follows:
Number of
shares in issue
Share
capital
Share
premium Total
RMB’000 RMB’000 RMB’000
At 1 January 2020,
31 December 2020
and 1 January 2021 80,484,062 80,484 418,762 499,246
Issue of ordinary shares
(note (a)) 3,487,642 3,488 126,512 130,000
At 31 December 2021,
31 December 2022, and
30 April 2023 83,971,704 83,972 545,274 629,246
Note:
(a) On 8 November 2021, 3,487,642 ordinary shares were issued and allotted by the Company to
institutional investors at a subscription price of RMB37.27 per share, for a total consideration of
RMB130,000,000.
APPENDIX I ACCOUNTANTS’ REPORT
– I-80 –


--- page 504 ---
26. RESERVES
Group
The amounts of the Group’s reserves and the movements therein for the Relevant Periods and the four months
ended 30 April 2022 are presented in the consolidated statements of changes in equity.
Share premium
The share premium account represents the amount paid by shareholders for capital injection in excess of the
par value of the shares issued.
Capital reserve
The capital reserve of the Group represents the share of capital contributions of the Group’s associates.
Statutory surplus reserve
In accordance with the PRC Company Law and the articles of association of the subsidiaries established in the
PRC, the Group is required to appropriate 10% of its net profits after tax, as determined under the Chinese
Accounting Standards, to the statutory surplus reserve until the reserve balance reaches 50% of its registered capital.
Subject to certain restrictions set out in the relevant PRC regulations and in the articles of association of the Group,
the statutory surplus reserve may be used either to offset losses, or to be converted to increase the share capital of
the Company and subsidiaries provided that the reserve balance after such conversion is not less than 25% of the
registered capital of the Company and subsidiaries. The reserve cannot be used for purposes other than those for
which it is created and is not distributable as cash dividends.
Company
Share
premium
Capital
reserve
Statutory
surplus
reserve
Retained
profits Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2020 418,762 5,191 12,448 109,202 545,603
Profit and total
comprehensive income
for the year – – – 60,926 60,926
Transfer to statutory
surplus reserve – – 6,097 (6,097) –
At 31 December 2020 418,762 5,191 18,545 164,031 606,529
At 1 January 2021 418,762 5,191 18,545 164,031 606,529
Profit and total
comprehensive income
for the year – – – 48,347 48,347
Transfer to statutory
surplus reserve – – 4,835 (4,835) –
Share of an equity
movement arising on an
equity transaction of an
associate – 511 – – 511
Disposal of an associate – (5,190) – – (5,190)
Issue of ordinary shares
(note 25) 126,51 2––– 126,512
At 31 December 2021 545,274 512 23,380 207,543 776,709
APPENDIX I ACCOUNTANTS’ REPORT
– I-81 –


--- page 505 ---
Share
premium
Capital
reserve
Statutory
surplus
reserve
Retained
profits Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2022 545,274 512 23,380 207,543 776,709
Profit and total
comprehensive income
for the year – – – 24,912 24,912
Transfer to statutory
surplus reserve – – 2,400 (2,400) –
At 31 December 2022 545,274 512 25,780 230,055 801,621
Share
premium
Capital
reserve
Statutory
surplus
reserve
Retained
profits Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2023 545,274 512 25,780 230,055 801,621
Profit and total
comprehensive income
for the period – – – 6,952 6,952
Transfer to statutory
surplus reserve – – 695 (695) –
At 30 April 2023 545,274 512 26,475 236,312 808,573
27. BUSINESS COMBINATION
In March 2022, the Group acquired 70% of the equity interest in Hefei Langyun at a consideration of
RMB4,200,000 from an independent third party. After the aforesaid acquisition, Hefei Langyun, which was an
associate company of the Group, became a wholly-owned subsidiary of the Group. Hefei Langyun is a software and
information services company established in the PRC with limited liability. The fair values of the identifiable assets
and liabilities of the subsidiary acquired as at the date of acquisition were as follows:
Fair value
recognised on
acquisition
Notes RMB’000
Property, plant and equipment 13 44
Technical know-how 15 5,406
Inventories 652
Trade receivables 529
Prepayments, deposits and other receivables 314
Other payables and accruals (240)
Deferred tax liabilities 24 (705)
Total identifiable net assets at acquisition date 6,000
Fair value of consideration which is satisfied by:
Cash 4,200
Fair value of 30% equity interest in Hefei Langyun 1,800
Total consideration 6,000
APPENDIX I ACCOUNTANTS’ REPORT
– I-82 –


--- page 506 ---
An analysis of the cash flows in respect of the acquisition of the subsidiary is as follows:
RMB’000
Net outflow of cash and cash equivalents included in cash flows used in
investing activities 4,200
Since the acquisition, Hefei Langyun contributed RMB1,433,000 to the Group’s revenue and a net profit of
RMB505,000 to the consolidated profit or loss for the year ended 31 December 2022. Had the combination taken
place at 1 January 2022, the revenue and profit of the Group would have been RMB1,196,079,000 and
RMB36,080,000, respectively.
28. NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS
(a) Major non-cash transactions
During the years ended 31 December 2020, 2021 and 2022 and the four months ended 30 April 2022 and 2023,
the Group had non-cash additions to right-of-use assets of RMB428,201,000, RMB334,656,000, RMB311,967,000,
RMB58,491,000 (unaudited) and RMB41,212,000, respectively, with the responding same amounts of lease
liabilities, respectively, in respect of lease arrangements for office premises and intralogistics equipment.
(b) Changes in liabilities arising from financing activities
Interest-bearing
bank loans and
other borrowing
RMB’000
At 1 January 2020 997,550
Changes from financing cash flows (328,375)
Interest expenses 76,694
New leases 428,201
At 31 December 2020 and 1 January 2021 1,174,070
Changes from financing cash flows (267,722)
Interest expenses 88,790
New leases 334,656
At 31 December 2021 and 1 January 2022 1,329,794
Changes from financing cash flows (363,548)
Interest expenses 88,974
New leases 311,967
At 31 December 2022 and 1 January 2023 1,367,187
Changes from financing cash flows (38,899)
Interest expenses 28,745
New leases 41,212
At 30 April 2023 1,398,245
APPENDIX I ACCOUNTANTS’ REPORT
– I-83 –


--- page 507 ---
(c) Total cash outflows for leases
The total cash outflows for leases included in the consolidated statements of cash flows is as follows:
Y ear ended 31 December
Four months ended
30 April
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
With operating activities 49,211 27,321 7,707 2,742 2,235
With financing activities 333,629 381,572 369,172 131,922 137,867
382,840 408,893 376,879 134,664 140,102
29. CONTINGENT LIABILITIES
As at the end of each of the Relevant Periods, there was not any material contingent liabilities.
30. PLEDGE OF ASSETS
Details of the Group’s interest-bearing bank loans and other borrowings, which are secured by the assets of
the Group, are included in note 23 to the Historical Financial Information.
31. COMMITMENTS
The Group had the following capital commitments at the end of each of the Relevant Periods:
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Contracted, but not provided
for construction in progress 6,367 49,465 37,697 38,509
32. RELATED PARTY TRANSACTIONS AND BALANCES
The directors of the Company are of the view that the following parties/companies are related parties that had
material transactions or balances with the Group during the Relevant Periods.
(a) Name and relationship of related parties
Name Relationship
Mr. Hou Zekuan An executive director of the Company
Mr. Hou Zebing An executive director of the Company
Mr. Qian Xiaoxuan An executive director of the Company
Ms. Ma Li An executive director of the Company
Mr. Zhu Yingchun A non-executive director of the Company
Mr. Shu Xiaowu A non-executive director of the Company
Mr. Zhou Limin Key management personnel of the Group
Mr. Y ang Qingyuan Key management personnel of the Group
Mr. Pan Fei Key management personnel of the Group
Guangdong Santouliubi Information
Technology Co., Ltd.
Company significantly influenced by
Mr. Zhu Yingchun, a non-executive director
of the Company
Hefei Kejin Associate of the Company*
Ferretto Intelligent Associate of the Company
Hefei Langyun Associate of the Company**
Hefei Langxun Associate of the Company
APPENDIX I ACCOUNTANTS’ REPORT
– I-84 –


--- page 508 ---
* The Group disposed of all shares of Hefei Kejin during the year ended 31 December 2021.
** Hefei Langyun became a wholly-owned subsidiary after the Group’s acquisition of 70% of its equity
shares in March 2022, the details of which are disclosed in note 27 to the Historical Financial
Information.
(b) Significant related party transactions during the Relevant Periods were as follows:
Y ear ended 31 December
Four months ended
30 April
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Associates:
Sales of intralogistics
equipment and parts 86 491 16 – 178
Purchases of intralogistics
equipment and parts – 1,187 72 – –
86 1,678 88 – 178
Companies significantly
influenced by key
management:
Provision of intralogistics
equipment subscription
services 2,106 2,823 2,225 789 767
2,106 2,823 2,225 789 767
The Directors consider that the purchases and sales of intralogistics equipment and parts and provision of
intralogistics equipment subscription services with related parties were made according to the prices and conditions
similar to those offered to the other customers or those offered by the other suppliers of the Group.
(c) Outstanding balances with related parties
The outstanding balances with related parties as at the end of each of the Relevant Periods only included the
trade receivables and payables with the Group’s associates and companies significantly influenced by key
management and are trade in nature, details of which are disclosed in notes 18 and 21 to the Historical Financial
Information.
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Associates:
Trade receivables 107 32 – 77
Contract liabilities
* ––– 4 9
Trade payables – 709 134 134
107 741 134 260
APPENDIX I ACCOUNTANTS’ REPORT
– I-85 –


--- page 509 ---
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Companies significantly influenced
by key management:
Trade receivables 266 26 27 102
Trade payable – 50 – –
266 76 27 102
* Contract liabilities included in other payables and accruals.
The balances with related parties were unsecured, interest-free and settled on terms of one to two months.
(d) Compensation of key management personnel of the Group
Details of the compensation of key management personnel of the Group are disclosed as follows:
Y ear ended 31 December
Four months ended
30 April
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Salaries, allowances and
benefits in kind 3,876 5,288 4,511 1,463 1,661
Pension scheme
contributions 106 168 205 64 72
3,982 5,456 4,716 1,527 1,733
33. FINANCIAL INSTRUMENTS BY CATEGORY
Both the financial assets and liabilities of the Group as at the end of each Relevant Periods were measured at
amortised cost and their carrying amounts are as follows:
Financial assets
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Group
Financial assets at amortised cost
Trade and bills receivables 239,870 269,610 294,037 321,730
Financial assets included in
prepayments, deposits and other
receivables 91,812 95,689 106,370 103,659
Restricted deposits 31,462 44,762 30,850 35,332
Cash and cash equivalents 83,611 188,162 120,638 151,995
446,755 598,223 551,895 612,716
APPENDIX I ACCOUNTANTS’ REPORT
– I-86 –


--- page 510 ---
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Company
Financial assets at amortised cost
Trade and bills receivables 277,496 257,338 266,573 308,141
Financial assets included in
prepayments, deposits and other
receivables 90,977 95,304 105,732 102,984
Restricted deposits 31,462 44,762 30,850 35,332
Cash and cash equivalents 81,183 129,167 106,541 84,211
481,118 526,571 509,696 530,668
Financial liabilities
At 31 December At 30 April
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Group
Financial liabilities at amortised
cost
Trade and bills payables 193,201 235,451 262,560 308,129
Financial liabilities included in other
payables and accruals 94,089 99,317 93,665 100,245
Interest-bearing bank loans and
other borrowings 1,174,070 1,329,794 1,367,187 1,398,245
1,461,360 1,664,562 1,723,412 1,806,619
Company
Financial liabilities at amortised
cost
Trade and bills payables 207,764 251,116 250,460 268,029
Financial liabilities included in other
payables and accruals 87,787 89,425 82,135 93,901
Interest-bearing bank loans and
other borrowings 1,167,760 1,209,591 1,242,406 1,239,810
1,463,311 1,550,132 1,575,001 1,601,740
APPENDIX I ACCOUNTANTS’ REPORT
– I-87 –


--- page 511 ---
34. FAIR V ALUE AND FAIR V ALUE HIERARCHY OF FINANCIAL INSTRUMENTS
The carrying amounts and fair values of the Group/Company’s financial instruments, other than those with
carrying amounts that reasonably approximate to fair values, are as follows:
Group
Carrying amounts Fair value
At 31 December
At
30 April At 31 December
At
30 April
2020 2021 2022 2023 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Financial assets
Deposits (non-current) 78,989 86,174 96,507 92,360 67,473 73,442 83,566 79,331
Financial liabilities
Interest-bearing bank
loans and other
borrowing (other than
lease liabilities)
(non-current) 239,810 391,006 406,971 465,243 239,810 391,006 406,971 465,243
Other payable and
accruals (non-current) 27,186 25,872 19,777 19,170 23,191 21,061 15,857 15,333
266,996 416,878 426,748 484,413 263,001 412,067 422,828 480,576
Company
Carrying amounts Fair value
At 31 December
At
30 April At 31 December
At
30 April
2020 2021 2022 2023 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Financial assets
Deposits (non-current) 78,899 86,174 96,507 92,360 67,393 73,442 83,566 79,331
Financial liabilities
Interest-bearing bank
loans and other
borrowing (other than
lease liabilities)
(non-current) 233,588 291,005 313,310 338,213 233,588 291,005 313,310 338,213
Other payable and
accruals (non-current) 27,186 25,872 19,777 19,170 23,191 21,061 15,857 15,333
260,774 316,877 333,087 357,383 256,779 312,066 329,167 353,546
Management has assessed that the fair values of cash and cash equivalents, restricted deposits, trade
receivables, financial assets included in prepayments, deposits and other receivables (current), trade payables,
financial liabilities included in other payables and accruals (current), interest-bearing bank loans and other
borrowings (current), approximate to their carrying amounts largely due to the short term maturities of these
instruments.
APPENDIX I ACCOUNTANTS’ REPORT
– I-88 –


--- page 512 ---
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 fair values of financial assets included in prepayments, deposits and other receivables (non-current),
financial liabilities included in other payables and accruals (non-current) and the interest-bearing bank loans and
other borrowings (non-current) 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 prepayments, deposits and other
receivables (non-current), and interest-bearing bank loans and other borrowings (non-current) as at 31 December
2020, 2021 and 2022 and 30 April 2023 were assessed to be insignificant.
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 chief
financial officer and the board of directors of the Company. At each reporting date, 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 chief financial officer.
35. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise interest-bearing bank loans and other borrowings,
restricted deposits and cash and cash equivalents. 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 and other
receivables and trade and other payables, which arise directly from its operations.
The main risks arising from the Group’s financial instruments are interest rate risk, credit risk and liquidity
risk. The board of directors of the Company reviews and agrees policies for managing each of these risks and they
are summarised below.
Interest rate risk
The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s bank
borrowings with a floating interest rate.
The following table demonstrates the sensitivity to a reasonably possible change in RMB interest rate, with
all other variables held constant, of the Group and the Company’s profit before tax for a period of 12 months (through
the impact on floating rate borrowings).
Increase/(decrease)
in basis point
(Decrease)/increase
in the Group’s
profit before tax
(Decrease)/increase
in the Company’s
profit before tax
RMB’000 RMB’000
Y ear ended 31 December 2020
RMB 100 (11,741) (11,678)
RMB (100) 11,741 11,678
Y ear ended 31 December 2021
RMB 100 (13,298) (12,096)
RMB (100) 13,298 12,096
APPENDIX I ACCOUNTANTS’ REPORT
– I-89 –


--- page 513 ---
Increase/(decrease)
in basis point
(Decrease)/increase
in the Group’s
profit before tax
(Decrease)/increase
in the Company’s
profit before tax
RMB’000 RMB’000
Y ear ended 31 December 2022
RMB 100 (13,672) (12,424)
RMB (100) 13,672 12,424
Four months ended 30 April 2023
RMB 100 (13,982) (12,398)
RMB (100) 13,982 12,398
Credit risk
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 addition, receivable
balances are monitored on an ongoing basis and the Group’s exposure to bad debts is not significant.
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 the end of each of the Relevant Periods.
The amounts presented are gross carrying amounts for financial assets.
12-month ECLs Lifetime ECLs
Stage 1 Simplified approach Total
RMB’000 RMB’000 RMB’000
At 31 December 2020
Group
Trade receivables* – 242,311 242,311
Bills receivable 18,578 – 18,578
Financial assets included in prepayments,
deposits and other receivables
– Normal** 91,812 – 91,812
Restricted deposits
– Not yet past due 31,462 – 31,462
Cash and cash equivalents
– Not yet past due 83,611 – 83,611
225,463 242,311 467,774
APPENDIX I ACCOUNTANTS’ REPORT
– I-90 –


--- page 514 ---
12-month ECLs Lifetime ECLs
Stage 1 Simplified approach Total
RMB’000 RMB’000 RMB’000
Company
Trade receivables* – 278,534 278,534
Bills receivable 18,270 – 18,270
Financial assets included in prepayments,
deposits and other receivables
– Normal** 90,977 – 90,977
Restricted deposits
– Not yet past due 31,462 – 31,462
Cash and cash equivalents
– Not yet past due 81,183 – 81,183
221,892 278,534 500,426
12-month ECLs Lifetime ECLs
Stage 1 Simplified approach Total
RMB’000 RMB’000 RMB’000
At 31 December 2021
Group
Trade receivables* – 258,830 258,830
Bills receivable 26,695 – 26,695
Financial assets included in prepayments,
deposits and other receivables
– Normal** 95,689 – 95,689
Restricted deposits
– Not yet past due 44,762 – 44,762
Cash and cash equivalents
– Not yet past due 188,162 – 188,162
355,308 258,830 614,138
Company
Trade receivables* – 247,207 247,207
Bills receivable 24,146 – 24,146
Financial assets included in prepayments,
deposits and other receivables
– Normal** 95,304 – 95,304
Restricted deposits
– Not yet past due 44,762 – 44,762
Cash and cash equivalents
– Not yet past due 129,167 – 129,167
293,379 247,207 540,586
APPENDIX I ACCOUNTANTS’ REPORT
– I-91 –


--- page 515 ---
12-month ECLs Lifetime ECLs
Stage 1 Simplified approach Total
RMB’000 RMB’000 RMB’000
At 31 December 2022
Group
Trade receivables* – 287,434 287,434
Bills receivable 25,645 – 25,645
Financial assets included in prepayments,
deposits and other receivables
– Normal** 106,370 – 106,370
Restricted deposits
– Not yet past due 30,850 – 30,850
Cash and cash equivalents
– Not yet past due 120,638 – 120,638
283,503 287,434 570,937
Company
Trade receivables* – 263,120 263,120
Bills receivable 20,965 – 20,965
Financial assets included in prepayments,
deposits and other receivables
– Normal** 105,732 – 105,732
Restricted deposits
– Not yet past due 30,850 – 30,850
Cash and cash equivalents
– Not yet past due 106,541 – 106,541
264,088 263,120 527,208
12-month ECLs Lifetime ECLs
Stage 1 Simplified approach Total
RMB’000 RMB’000 RMB’000
At 30 April 2023
Group
Trade receivables* – 323,921 323,921
Bills receivable 18,774 – 18,774
Financial assets included in prepayments,
deposits and other receivables
– Normal** 103,659 – 103,659
Restricted deposits
– Not yet past due 35,332 – 35,332
Cash and cash equivalents
– Not yet past due 151,995 – 151,995
309,760 323,921 633,681
APPENDIX I ACCOUNTANTS’ REPORT
– I-92 –


--- page 516 ---
12-month ECLs Lifetime ECLs
Stage 1 Simplified approach Total
RMB’000 RMB’000 RMB’000
Company
Trade receivables* – 310,182 310,182
Bills receivable 17,585 – 17,585
Financial assets included in prepayments,
deposits and other receivables
– Normal** 102,984 – 102,984
Restricted deposits
– Not yet past due 35,332 – 35,332
Cash and cash equivalents
– Not yet past due 84,211 – 84,211
240,112 310,182 550,294
* For trade receivables to which the Group applies the simplified approach for impairment, information
based on the provision matrix and exposure to credit risk are disclosed in note 18 to the Historical
Financial Information.
** The credit quality of the financial assets included in prepayments, deposits and other receivables 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 aims to maintain sufficient cash and credit lines to meet its liquidity requirements. The Group
finances its working capital requirements through a combination of funds generated from operations and alternative
funding resources from equity and debt.
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:
31 December 2020
On
demand
Within
one year
One to
two years
Two to
three years
Three to
five years
Over
five years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Group
Trade and bills payables 14,312 178,889 – – – – 193,201
Financial liabilities
included in other
payables and accruals – 66,903 14,566 8,360 4,260 – 94,089
Lease liabilities – 425,540 294,311 178,302 48,063 – 946,216
Interest-bearing bank
loans and other
borrowings (excluding
lease liabilities) – 190,885 93,785 61,769 72,048 39,955 458,442
14,312 862,217 402,662 248,431 124,371 39,955 1,691,948
APPENDIX I ACCOUNTANTS’ REPORT
– I-93 –


--- page 517 ---
On
demand
Within
one year
One to
two years
Two to
three years
Three to
five years
Over
five years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Company
Trade and bills payables 36,193 171,571 – – – – 207,764
Financial liabilities
included in other
payables and accruals – 60,601 14,566 8,360 4,260 – 87,787
Lease liabilities – 425,540 294,311 178,302 48,063 – 946,216
Interest-bearing bank
loans and other
borrowings (excluding
lease liabilities) – 190,502 92,466 59,984 68,191 39,955 451,098
36,193 848,214 401,343 246,646 120,514 39,955 1,692,865
31 December 2021
On
demand
Within
one year
One to
two years
Two to
three years
Three to
five years
Over
five years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Group
Trade and bills payables 13,211 222,240 – – – – 235,451
Financial liabilities
included in other
payables and accruals – 73,445 6,749 5,587 13,536 – 99,317
Lease liabilities – 411,351 296,114 181,898 86,741 – 976,104
Interest-bearing bank
loans and other
borrowings (excluding
lease liabilities) – 184,424 135,437 92,806 128,347 89,656 630,670
13,211 891,460 438,300 280,291 228,624 89,656 1,941,542
Company
Trade and bills payables 37,148 213,968 – – – – 251,116
Financial liabilities
included in other
payables and accruals – 63,553 6,749 5,587 13,536 – 89,425
Lease liabilities – 411,351 295,910 181,898 86,741 – 975,900
Interest-bearing bank
loans and other
borrowings (excluding
lease liabilities) – 159,469 100,482 57,837 84,016 89,656 491,460
37,148 848,341 403,141 245,322 184,293 89,656 1,807,901
APPENDIX I ACCOUNTANTS’ REPORT
– I-94 –


--- page 518 ---
31 December 2022
On
demand
Within
one year
One to
two years
Two to
three years
Three to
five years
Over
five years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Group
Trade and bills payables 23,080 239,480 – – – – 262,560
Financial liabilities
included in other
payables and accruals – 73,888 5,963 3,650 10,164 – 93,665
Lease liabilities – 440,766 297,507 165,206 61,395 434 965,308
Interest-bearing bank
loans and other
borrowings (excluding
lease liabilities) – 204,968 166,989 122,507 107,950 53,904 656,318
23,080 959,102 470,459 291,363 179,509 54,338 1,977,851
Company
Trade and bills payables 35,434 215,026 – – – – 250,460
Financial liabilities
included in other
payables and accruals – 62,358 5,963 3,650 10,164 – 82,135
Lease liabilities – 440,267 297,239 165,206 61,395 434 964,541
Interest-bearing bank
loans and other
borrowings (excluding
lease liabilities) – 169,254 129,143 74,499 93,620 53,904 520,420
35,434 886,905 432,345 243,355 165,179 54,338 1,817,556
At 30 April 2023
On
demand
Within
one year
One to
two years
Two to
three years
Three to
five years
Over five
years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Group
Trade and bills payables 15,111 293,018 – – – – 308,129
Financial liabilities
included in other
payables and accruals – 81,075 5,465 3,650 10,055 – 100,245
Lease liabilities – 417,920 285,799 151,713 52,707 358 908,497
Interest-bearing bank
loans and other
borrowings (excluding
lease liabilities) – 224,721 185,995 135,609 134,500 53,005 733,830
15,111 1,016,734 477,259 290,972 197,262 53,363 2,050,701
APPENDIX I ACCOUNTANTS’ REPORT
– I-95 –


--- page 519 ---
On
demand
Within
one year
One to
two years
Two to
three years
Three to
five years
Over five
years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Company
Trade and bills payables 25,294 242,735 – – – – 268,029
Financial liabilities
included in other
payables and accruals – 74,731 5,465 3,650 10,055 – 93,901
Lease liabilities – 417,640 285,627 151,713 52,783 358 908,121
Interest-bearing bank
loans and other
borrowings (excluding
lease liabilities) – 187,626 141,933 78,972 100,532 53,005 562,068
25,294 922,732 433,025 234,335 163,370 53,363 1,832,119
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. In the opinion of the Directors, the Group had operation profits and
unutilised facilities of approximately RMB1,082.4 million as at 30 April 2023. Capital risk is not significant for the
Group and measurement of capital management is not a tool currently used in the internal management reporting
procedures of Group.
36. EVENTS AFTER THE RELEV ANT PERIODS
There were no significant events subsequent to the end of the Relevant Periods.
37. 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 30 April 2023.
APPENDIX I ACCOUNTANTS’ REPORT
– I-96 –


--- page 520 ---
The following information does not form part of the Accountants’ Report from Ernst &
Young, Certified Public Accountants, Hong Kong, the Company’ s reporting accountants, as set
out in Appendix I to this prospectus, and is included herein for information purposes only. The
unaudited pro forma financial information should be read in conjunction with the “Financial
Information” section in this prospectus and the Accountants’ Report set out in Appendix I to
this prospectus.
A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS
The following unaudited pro forma statement of adjusted consolidated net tangible assets
of the Group prepared in accordance with Rule 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 is to illustrate
the effect of the Global Offering on the consolidated net tangible assets of the Group
attributable to owners of the Company as at 30 April 2023 as if the Global Offering had taken
place on that date.
The unaudited pro forma statement of adjusted consolidated net tangible assets of the
Group has been prepared for illustrative purposes only and because of its hypothetical nature,
it may not provide a true picture of the consolidated net tangible assets of the Group had the
Global Offering been completed as at 30 April 2023 or at any future date.
Consolidated net
tangible assets
attributable to
owners of the
Company as at
30 April 2023
Estimated net
proceeds from
the Global
Offering
Unaudited pro forma
adjusted consolidated
net tangible assets
attributable to
owners of the
Company as at
30 April 2023
Unaudited pro forma
adjusted consolidated
net tangible assets
attributable to owners
of the Company per
Share as at
30 April 2023
RMB’000 RMB’000 RMB’000 RMB HK$
(Note 1) (Note 2, 4) (Note 3) (Note 4)
Based on an Offer Price of
HK$14.18 per Share 894,445 105,621 1,000,066 2.87 3.13
Based on an Offer Price of
HK$15.18 per Share 894,445 116,309 1,010,754 2.90 3.16
Based on an Offer Price of
HK$16.18 per Share 894,445 126,996 1,021,441 2.93 3.19
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-1 –


--- page 521 ---
Notes:
(1) The consolidated net tangible assets of the Group attributable to owners of the Company as at 30 April
2023 was equal to the audited net assets attributable to owners of the Company as at 30 April 2023 of
RMB902,842,000 after deducting of intangible assets of RMB8,397,000 as of 30 April 2023 set out in
the Accountants’ Report in Appendix I to this prospectus.
(2) The estimated net proceeds from the Global Offering are based on the Offer Price of HK$14.18,
HK$15.18 or HK$16.18 per Share, after deduction of the underwriting fees and other related expenses
payable by the Company 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 per Share is arrived at after adjustments referred to in the preceding paragraphs and on the
basis that 348,022,816 Shares are in issue assuming the Subdivision and Global Offering has been
completed on 30 April 2023.
(4) For the purpose of this unaudited pro forma adjusted consolidated net tangible assets, the estimated net
proceeds from the Global Offering are converted from Hong Kong dollars into RMB at an exchange rate
of HK$1.00 to RMB0.9174 and the unaudited pro forma adjusted consolidated net tangible assets
attributable to owners of the Company per Share is converted from RMB into Hong Kong dollars at the
same exchange rate. No representation is made that RMB amounts have been, could have been or may
be converted to Hong Kong dollars, or vice versa, at that rate.
(5) No adjustment has been made to reflect any trading result or other transactions of the Group entered into
subsequent to 30 April 2023.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-2 –


--- page 522 ---
B. INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE
COMPILATION OF PRO FORMA FINANCIAL INFORMATION
The following is the text of a report received from our reporting accountants, Ernst &
Young, Certified Public Accountants, Hong Kong, prepared for the purpose of incorporation in
this prospectus, in respect of the pro forma financial information of the Group.
⭰㰟㛪姯⸒Ṳ⋀㈧
榀㸖毩歁㵳勘䙮怺 979噆
⤑⏋✱ᷧ⺎27㧺
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
To the Directors of FOLANGSI CO., LTD
We have completed our assurance engagement to report on the compilation of pro forma
financial information of FOLANGSI 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 30 April 2023, and related notes as set out on
pages II-1 of the prospectus dated 31 October 2023 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 Appendix II(A) 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
30 April 2023 as if the transaction had taken place at 30 April 2023. 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 four months ended 30 April 2023, 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 management
We have complied with the independence and other ethical requirements of the Code of
Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental
principles of integrity, objectivity, professional competence and due care, confidentiality and
professional behavior.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-3 –


--- page 523 ---
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 524 ---
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
31 October 2023
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-5 –


--- page 525 ---
TAXATION ON HOLDERS OF SECURITIES
The following is a summary of certain PRC taxation consequences of the ownership of H
Shares by an investor who purchases such H Shares in connection with the Global Offering and
holds the H Shares as capital assets. This summary does not purport to address all potential
taxation consequences of investment in the H Shares, and does not take into account the
specific circumstances of any particular investor, some of which may be subject to special
rules. This summary is based on the tax laws of the PRC in effect as of the date of this
prospectus, and these laws, regulations and practices are subject to change.
This section does not address any aspect of PRC or Hong Kong taxation other than
income tax, capital gains tax, stamp duty and estate duty. Prospective investors are urged to
consult their respective tax advisors regarding the PRC, Hong Kong and other taxation
consequences arising from the ownership and disposal of H Shares.
Dividend Tax
Individual Investors
According to the Individual Income Tax Law of the PRC (ج)
the “ IIT Law ”) which was adopted and implemented by the National People’s Congress (the
“NPC”) on September 10, 1980, and latest amended on August 31, 2018, and the Regulations
for the Implementation of the Individual Income Tax Law of the PRC (ה
ૢԷ) which was promulgated by the State Council on January 28, 1994, and latest
amended on December 18, 2018, dividends paid by PRC companies to individual shareholders
are generally subject to individual income tax at a uniform rate of 20%.
According to the Notice on Certain Policies Regarding Individual Income Tax (Cai Shui
Zi [1994] No. 020) (ٝ(ৌ೼ο[1994]020 ໮)) issued on May
13, 1994 by the MOF and the SA T, overseas individuals are, as an interim measure, exempted
from the individual income tax for the dividends and bonuses received from foreign-invested
enterprises.
According to the Notice on Issues Concerning the Administration of Individual Income
Tax Collection Following the Annulment of Document Guo Shui Fa [1993] No. 045 (Guo Shui
Han [2011] No. 348) (਷೼೯[1993]045ٝ(਷
೼Ռ[2011]348 ໮)) issued on June 28, 2011 by the SA T, as for the income from dividends and
bonuses obtained by foreign resident individual shareholders from the shares issued in Hong
Kong by domestic non-foreign invested enterprises, the individual income tax shall be withheld
by withholding agents according to the item of “income from interest, dividends and bonuses”.
Where a domestic non-foreign invested enterprise issues shares in Hong Kong, its foreign
resident individual shareholders can enjoy relevant tax incentives in accordance with tax
treaties signed between their countries of residence and China as well as the provisions of tax
arrangements between Mainland and Hong Kong (Macau). A domestic non-foreign invested
enterprise that issues shares in Hong Kong may, for the purpose of distributing dividends and
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-1 –


--- page 526 ---
bonuses, withhold individual income tax at the rate of 10% in general, and the application
procedure is not required. For situations where the tax rate for dividend is not 10%, the
following regulations shall apply: where an individual who has earned the dividends is the
resident of a country with which the conventional tax rate is lower than 10%, such individual
can apply for refund according to the Announcement of the SA T on Issuing the Measures for
Non-resident Taxpayers’ Enjoyment of Treaty Benefits (Announcement No. 35, 2019 of the
SA T) (ʮѓ); where an
individual who has earned the dividends is the resident of a country with which the
conventional tax rate is higher than 10% and lower than 20%, the withholding agent shall
withhold the individual income tax in accordance with the actual conventional tax rate when
distributing dividends and bonuses, and the application procedure is not required; where an
individual who has earned the dividends is the resident of a country which has not signed a tax
treaty with China or is under other situations, the withholding agent shall withhold the
individual income tax at the rate of 20% when distributing dividends and bonuses.
According to the Arrangement between the Mainland and the Hong Kong Special
Administrative Region on the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with Respect to Taxes on Income (ᅄ೼ձ
τર), which was signed on August 21, 2006, the Chinese Government may levy
taxes on the dividends paid by a Chinese company to Hong Kong residents (including natural
persons and legal entities) in an amount not exceeding 10% of the total dividends payable by
the Chinese company. If a Hong Kong resident directly holds 25% or more of the equity
interest in a Chinese company, then such tax shall not exceed 5% of the total dividends payable
by the Chinese company if the Hong Kong resident is the beneficial owner of the equity and
certain other conditions are met.
Enterprise Investors
According to the Enterprise Income Tax Law of the PRC (ج)
the “ EIT Law ”) which was adopted by the NPC on March 16, 2007, implemented on January
1, 2008, and latest amended on December 29, 2018, and the Regulation on the Implementation
of the Enterprise Income Tax Law of the PRC (ૢԷ) which
was promulgated by the State Council on December 6, 2007, implemented on January 1, 2008,
and amended on April 23, 2019, a non-resident enterprise is generally subject to a 10%
enterprise income tax on PRC-sourced income (including dividends and bonuses received from
a PRC resident enterprise), if it does not have an establishment or premise in the PRC or has
an establishment or premise in the PRC but its PRC-sourced income has no real connection
with such establishment or premise. The aforesaid income tax payable for non-resident
enterprises are deducted at source, where the payer of the income are required to withhold the
income tax from the amount to be paid to the non-resident enterprise when such payment is
made or due.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-2 –


--- page 527 ---
According to the Circular of the State Taxation Administration on the Withholding and
Remitting of Enterprise Income Tax on the Dividend Distributed by Chinese Resident
Enterprise to Overseas H-Share Non-resident Enterprise (Guo Shui Han [2008] No. 897) ( ਷
͏ΆุΣྤ̮ H੻೼Ϟᗫ
ٝ(਷೼Ռ[2008]897 ໮)) issued by the SA T and taking effect on November 6, 2008,
where a Chinese resident enterprise distributes dividends for the year of 2008 or any year
thereafter to its H-share holders which are overseas non-resident enterprises, it shall withhold
the enterprise income tax thereon at the uniform rate of 10%. After receiving the dividends, a
non-resident enterprise shareholder may, by itself or through an authorized agent or
withholding agent, submit an application to the competent tax authority for enjoying any
treatment under a relevant tax agreement (arrangement), and provide proof that it is an actual
beneficial owner satisfying the requirements of the tax agreement (arrangement). If the
application is justified upon verification, the competent tax authority shall refund the
difference between the tax paid and the tax payable calculated at the tax rate under the tax
agreement (arrangement).
According to the Arrangement between the Mainland and the Hong Kong Special
Administrative Region on the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with Respect to Taxes on Income (ᅄ೼ձ
τર), the Chinese Government may levy taxes on the dividends paid by a
Chinese company to Hong Kong residents (including natural persons and legal entities) in an
amount not exceeding 10% of the total dividends payable by the Chinese company. If a Hong
Kong resident directly holds 25% or more of the equity interest in a Chinese company, then
such tax shall not exceed 5% of the total dividends payable by the Chinese company if the
Hong Kong resident is the beneficial owner of the equity and certain other conditions are met.
Taxation Treaty
Non-resident investors residing in jurisdictions which have entered into treaties or
arrangements for the avoidance of double taxation with the PRC are entitled to a reduction of
the Chinese enterprise income tax imposed on the dividends received from PRC companies.
The PRC currently has entered into Avoidance of Double Taxation Treaties or Arrangements
with a number of countries and regions including Hong Kong Special Administrative Region,
Macau Special Administrative Region, Australia, Canada, France, Germany, Japan, Malaysia,
the Netherlands, Singapore, the United Kingdom and the United States.
Capital Gains Tax
Income Tax
Individual Investors
According to the IIT Law, gains from the transfer of personal property are subject to the
income tax at a rate of 20%. Pursuant to the Circular on Declaring that Individual Income Tax
Continues to be Exempted over Income of Individuals from the Transfer of Shares (Cai Shui
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-3 –


--- page 528 ---
Zi [1998] No. 61) (ٝjointly issued by
the MOF and the SA T on March 30, 1998, from January 1, 1997, income of individuals from
transfer of the shares of listed enterprises continues to be exempted from individual income
tax. The SA T has not expressly stated whether it will continue to exempt tax on income of
individuals from transfer of the shares of listed enterprises in the IIT Law, which latest
amended and implemented on January 1, 2019 and its implementation provisions.
However, According to the Circular on Related Issues on Levying Individual Income Tax
over the Income Received by Individuals from the Transfer of Listed Shares Subject to Sales
Limitation (Cai Shui [2009] No. 167) (੻೼Ϟᗫ
ٝjointly issued by the MOF, the SA T and CSRC on December 31, 2009, and taking
effect on January 1, 2010, 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 individual income tax,
except for the relevant shares which are subject to sales restriction as defined in the
Supplementary Notice on Issues Concerning the Levy of Individual Income Tax on Individuals’
Income from the Transfer of Restricted Stocks of Listed Companies (Cai Shui [2010] No. 70)
(ٝjointly issued and
implemented by such departments on November 10, 2010.
As of the Latest Practicable Date, no provisions have expressly provided that individual
income tax shall be levied from non-Chinese resident individuals on the transfer of shares in
PRC resident enterprises listed on overseas stock exchanges.
Enterprise Investors
In accordance with the EIT Law and its implementation provisions, a non-resident
enterprise is generally subject to a 10% corporate income tax on PRC-sourced income,
including gains derived from the disposal of equity interests in a PRC resident enterprise, if it
does not have an establishment or place in the PRC or has an establishment or premises in the
PRC but the PRC-sourced income is not connected with such establishment or premise. Such
income tax for non-resident enterprises are deducted at source, where the payer of the income
are required to withhold the income tax from the amount to be paid to the non-resident
enterprise when such payment is made or due. The withholding tax may be reduced pursuant
to special arrangements or relevant agreements signed between the PRC and the jurisdictions
where the non-resident enterprises are located.
Stamp Duty
Pursuant to the Stamp Duty Law of the PRC on (جwhich was
issued by the Standing Committee of the NPC on June 10, 2021 and implemented on July 1,
2022, PRC stamp duty applies to taxable document executed or used within the PRC, thus the
requirements of the stamp duty imposed on the transfer of shares of PRC listed companies shall
not apply to the acquisition and disposal of H Shares by non-PRC investors outside of the PRC.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-4 –


--- page 529 ---
Estate Duty
As of the date of this prospectus, no estate duty has been levied in the PRC under the PRC
laws.
Taxation Policy of Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock
Connect
On October 31, 2014 and November 5, 2016, the MOF, the SA T and the CSRC jointly
issued the Notice on Taxation Policies concerning the Pilot Program of an Interconnection
Mechanism for Transaction in the Shanghai and Hong Kong Stock Markets (Cai Shui [2014]
No. 81) (ٝand the Notice on the
Relevant Taxation Policies for the Pilot Program of the Interconnection Mechanism for
Transactions in the Shenzhen and Hong Kong Stock Markets (Cai Shui [2016] No. 127) (׵
ٝAccording to such Notices,
Mainland enterprise investors’ income from transfer price difference, dividends and bonuses of
investment in stocks listed on the HKEx through the Shanghai-Hong Kong Stock Connect or
Shenzhen-Hong Kong Stock Connect shall be included into the total income and shall be
subject to the enterprise income tax. Income of mainland resident enterprises obtained from
dividends and bonuses by holding H shares for over twelve months consecutively shall be
exempted from enterprise income tax according to the law. Enterprises of H shares shall not
withhold income tax of dividends and bonuses for mainland enterprise investors. The taxes
payable shall be declared and paid by enterprises on their own.
For dividends and bonuses obtained by individual mainland investors from investment in
H shares listed on the HKEx through the Shanghai-Hong Kong Stock Connect and
Shenzhen-Hong Kong Stock Connect, enterprises of H shares shall submit applications to
China Securities Depository and Clearing Corporation Limited (“ CSDC ”) so as to get the
register of individual mainland investors and withhold the individual income tax at the tax rate
of 20%. For taxes withheld abroad, individual investors may apply to competent taxation
authorities of the CSDC for tax credit upon the strength of valid tax withholding vouchers. For
dividends and bonuses obtained by mainland securities investment funds from investment in
stocks listed on the HKEx through the Shanghai-Hong Kong Stock Connect and Shenzhen-
Hong Kong Stock Connect, individual income tax shall be calculated and levied in accordance
with the above provisions.
On December 4, 2019, the MOF, the SA T and the CSRC jointly issued the Announcement
on the Continued Implementation of the Individual Income Tax Policies on the Interconnection
Mechanisms for Transactions in the Shanghai and Hong Kong Stock Markets and for
Transactions in the Shenzhen and Hong Kong Stock Markets (Announcement 93, 2019 of the
MOF) (ɛ
ʮѓ), which stipulates that from December 5, 2019 to December 31, 2022, the
transfer price difference income that an individual investor from mainland China obtains by
investing in stocks listed on the Stock Exchange of Hong Kong through the Shanghai-Hong
Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect and by trading in Hong
Kong fund shares through mutual recognition of funds will continue to be temporarily
exempted from individual income tax.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-5 –


--- page 530 ---
MAIN PRC TAXES OF THE COMPANY
Please refer to “Regulatory Overview” of the prospectus.
FOREIGN EXCHANGE
The lawful currency of the PRC is the Renminbi. The SAFE, under the authority of the
PBOC, is empowered with the functions of administering all matters relating to foreign
exchange.
The Regulations of the PRC on Foreign Exchange Administration ( ʕശɛ͏΍ձ਷̮ි
၍ଣૢԷ) (the “Forex Regulations”), which was issued by the State Council on January 29,
1996 and implemented on April 1, 1996, classifies all international payments and transfers into
current items and capital items. Most of the current items are not subject to the approval of
foreign exchange administration agencies, while capital items are subject to such approval.
Pursuant to the Forex Regulations amended on January 14, 1997 and August 5, 2008, the PRC
will not impose restriction on international current payments and transfers.
According to the Regulations for the Administration of Settlement, Sale and Payment of
Foreign Exchange (֛which was promulgated by the PBOC on
June 20, 1996, it removes other restrictions on convertibility of foreign exchange under current
items, while retaining existing restrictions on foreign exchange transactions under capital
account items.
According to the Announcement on Improving the Reform of the Renminbi Exchange
Rate Formation Mechanism (ʮѓ), which was issued by
the PBOC and implemented on July 21, 2005, the PRC has started to implement a managed
floating exchange rate system in which the exchange rate would be determined based on market
supply and demand and adjusted with reference to a basket of currencies since July 21, 2005.
Therefore, the Renminbi exchange rate was no longer pegged to the U.S. dollar. PBOC would
publish the closing price of the exchange rate of the Renminbi against trading currencies such
as the U.S. dollar in the interbank foreign exchange market after the closing of the market on
each working day, as the central parity of the currency against Renminbi transactions on the
following working day.
On August 5, 2008, the State Council promulgated the revised Forex Regulations, which
have made substantial changes to the foreign exchange supervision system of the PRC. First,
it has 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 foreign exchange settlement funds under the capital account are required to be
used only for purposes as approved by the competent authorities and foreign exchange
administrative authorities; second, it has improved the RMB exchange rate formation
mechanism based on market supply and demand; third, in the event that international revenues
and expenditure occur or may occur a material imbalance, or the national economy encounters
or may encounter a severe crisis, the State may adopt necessary safeguard measures on
international revenues and expenditure; fourth, it has enhanced the supervision and
administration of foreign exchange transactions and grant extensive authorities to the SAFE to
enhance its supervisory and administrative powers.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-6 –


--- page 531 ---
PRC enterprises (including foreign investment enterprises) which need foreign exchange
for current item transactions may, without the approval of the foreign exchange administrative
authorities, effect payment through foreign exchange accounts opened at the designated foreign
exchange bank, on the strength of valid transaction receipts and proof. Foreign investment
enterprises which need foreign exchange for the distribution of profits to their shareholders and
PRC enterprises which, in accordance with regulations, are required to pay dividends to their
shareholders in foreign exchange may, on the strength of resolutions of the board of directors
or the shareholders’ meeting on the distribution of profits, effect payment from foreign
exchange accounts at the designated foreign exchange bank, or effect exchange and payment
at the designated foreign exchange bank.
According to the Decisions on Matters including Canceling and Adjusting a Batch of
Administrative Approval Items (Guo Fa [2014] No. 50) (ᄲҭ
֛which was promulgated by the State Council on October 23, 2014, it
decided to cancel the approval requirement of the SAFE and its branches for the remittance and
settlement of the proceeds raised from the overseas listing of the foreign shares into RMB
domestic accounts.
According to the Notice of the State Administration of Foreign Exchange on Issues
Concerning the Foreign Exchange Administration of Overseas Listing (Hui Fa [2014] No. 54)
(ٝissued by the SAFE and
implemented on December 26, 2014, a domestic company shall, within 15 business days from
the date of the end of its overseas listing issuance, register the overseas listing with the local
branch office of State Administration of Foreign Exchange at the place of its establishment; the
proceeds from an overseas listing of a domestic company may be remitted to the domestic
account or deposited in an overseas account, but the use of the proceeds shall be consistent with
the content of the prospectus and other disclosure documents.
According to the Notice of the State Administration of Foreign Exchange on Further
Simplifying and Improving Policies for the Foreign Exchange Administration of Direct
Investment (Hui Fa [2015] No. 13) (ટҳ༟̮ි၍ଣ
ٝwhich was issued by the SAFE on February 13, 2015 and came into effect on June
1, 2015, it has canceled two of the administrative examination and approval items, being the
confirmation of foreign exchange registration under domestic direct investment and the
confirmation of foreign exchange registration under overseas direct investment, instead, banks
shall directly examine and handle foreign exchange registration under domestic direct
investment and foreign exchange registration under overseas direct investment, and the SAFE
and its branch offices shall indirectly regulate the foreign exchange registration of direct
investment through banks.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-7 –


--- page 532 ---
According to the Notice of the State Administration of Foreign Exchange of the PRC on
Revolutionizing and Regulating Capital Account Settlement Management Policies (Hui Fa
[2016] No. 16) (ٝwhich was
promulgated by the SAFE and implemented on June 9, 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 the SAFE in
due time in accordance with international revenue and expenditure situations.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-8 –


--- page 533 ---
This appendix sets forth summaries of certain aspects of PRC laws and regulations which
are relevant to the operations and business of the Company. Laws and regulations relating to
taxation in the PRC are discussed separately in “Appendix IV – Taxation and Foreign
Exchange” to this prospectus. For discussion of laws and regulations which are relevant to
business of the Company, please refer to “Regulatory Overview” in this prospectus.
THE PRC LEGAL SYSTEM
The PRC legal system is based on the PRC Constitution (جthe
“Constitution”) and 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 the signatory and other regulatory
documents. Court judgments do not constitute legally binding precedents, although they are
used for the purposes of judicial reference and guidance.
According to the Constitution and the Legislation Law of the PRC (ج
جthe NPC and its Standing Committee are empowered to exercise the legislative power of
the State. The NPC shall develop and amend the basic laws on state authorities, civil matters,
criminal matters, and others matters. The Standing Committee of the NPC shall develop and
amend laws other than those developed by the NPC; and when the NPC is not in session,
partially supplement and amend laws developed by the NPC, provided that the basic principles
in such laws are not violated.
The State Council is the highest organ of state administration and has the power to
formulate administrative regulations based on the Constitution and laws.
The people’s congress and its standing committee of a province, autonomous region, and
municipality directly under the Central Government may, according to the specific
circumstances and actual needs of the administrative region, develop local regulations,
provided that such regulations do not contravene the Constitution, laws, and administrative
regulations.
The people’s congress and its standing committee of a districted city may, according to
the city’s specific circumstances and actual needs, develop local regulations on urban and rural
development and administration, environmental protection, and historical culture protection,
among others, provided that they do not contravene the Constitution, laws, administrative
regulations, and the local regulations of the province or autonomous region where the city is
located, unless a law provides otherwise for the development of local regulations by a
districted city.
The people’s congress of an ethnic autonomous area shall have the power to develop
autonomous regulations and separate regulations based on the political, economic, and cultural
characteristics of the local ethnicities.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
–I V - 1–


--- page 534 ---
The ministries and commissions of the State Council, the People’s Bank of China, the
National Audit Office, and other divisions with administrative functions directly under the
State Council may, in accordance with the laws and the administrative regulations, decisions,
and orders of the State Council, develop rules within their respective power. The matters
prescribed in State Council departmental rules shall be matters for the enforcement of laws or
the administrative regulations, decisions, and orders of the State Council. The people’s
government of a province, an autonomous region, a municipality directly under the Central
Government, a districted city, and an autonomous prefecture may develop rules in accordance
with laws, administrative regulations, and the local regulations of the province, autonomous
region, and municipality directly under the Central Government.
Pursuant to the Resolution of the Standing Committee of the NPC Providing an Improved
Interpretation of the Law (Ӕᙄ)
passed on June 10, 1981. In cases where the limits of articles of laws and decrees need to be
further defined or additional stipulations need to be made, the Standing Committee of the NPC
shall provide interpretations or make stipulations by means of decrees. Interpretation of
questions involving the specific application of laws and decrees in court trials shall be provided
by the Supreme People’s Court. Interpretation of questions involving the specific application
of laws and decrees in the procuratorial work of the procuratorates shall be provided by the
Supreme People’s Procuratorate. Interpretation of questions involving the specific application
of laws and decrees in areas unrelated to judicial and procuratorial work shall be provided by
the State Council and the competent departments. In cases where the limits of locally enacted
rules and regulations need to be further defined or additional stipulations need to be made, the
standing committees of the people’s congresses of the provinces, autonomous regions, and
municipalities directly under the Central Government which have formulated these rules and
regulations shall provide the interpretations or make the stipulations. Interpretation of
questions involving the specific application of local rules and regulations shall be provided by
the competent departments under the people’s governments of the provinces, autonomous
regions, and municipalities directly under the Central Government.
THE PRC JUDICIAL SYSTEM
Under the Constitution, the Organic Law of the People’s Courts of the PRC ( ʕശɛ͏΍
جand the Organic Law of the People’s Procuratorates of the PRC ( ʕശɛ
جthe people’s courts of the PRC are classified into the Supreme
People’s Court, the local people’s courts at all levels, and special people’s courts. The local
people’s courts at all 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
may set up certain people’s tribunals based on the status of the region, population and cases.
The Supreme People’s Court is the highest judicial organ and shall supervise the judicial work
of the local people’s courts at all levels and special people’s courts, and people’s courts at
higher levels shall supervise the judicial work of people’s courts at lower levels. The people’s
procuratorates of the PRC are classified into the Supreme People’s Procuratorate, local
people’s procuratorates at all levels, and special people’s procuratorates such as the military
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
–I V - 2–


--- page 535 ---
procuratorates. The Supreme People’s Procuratorate is the highest organ of legal supervision.
The Supreme People’s Procuratorate shall direct the work of the local people’s procuratorates
at all levels and special people’s procuratorates, and people’s procuratorates at higher levels
shall direct the work of people’s procuratorates at lower levels.
The people’s courts employ a two-tier appellate system, i.e., judgments or rulings of the
second instance at the people’s courts are final. A party may appeal against the judgment or
ruling of the first instance of a local people’s courts. The people’s procuratorate may present
a protest to the people’s courts at the next higher level in accordance with the procedures
stipulated by the laws. In the absence of any appeal by the parties and any protest by the
people’s procuratorate within the stipulated period, the judgments or rulings of the people’s
courts are final. Judgments or rulings of the second instance of the intermediate people’s
courts, the higher people’s courts and the Supreme People’s Court and those of the first
instance of the Supreme People’s Court are final. However, if the Supreme People’s Court or
the people’s courts at the next higher level finds any definite errors in a legally effective final
judgment or ruling of the people’s court at a lower level, or if the chief judge of a people’s court
at any level finds any definite errors in a legally effective final judgment or ruling of such
court, the case can be retried according to judicial supervision procedures.
The Civil Procedure Law of the PRC (جthe “PRC Civil
Procedure Law”) prescribes the conditions for instituting a civil action, the jurisdiction of the
people’s court, the procedures for conducting a civil action, and the procedures for enforcement
of a civil judgment or ruling. All parties to a civil action conducted within the PRC must abide
by the PRC Civil Procedure Law. A civil case is generally heard by the court located in the
defendant’s place of domicile, and Parties to a contract may, by a written agreement, choose
the people’s court at the place of domicile of the defendant, at the place where the contract is
performed or signed, at the place of domicile of the plaintiff, at the place where the subject
matter is located or at any other place actually connected to the dispute to have jurisdiction
over the dispute, but the provisions of this Law regarding hierarchical jurisdiction and
exclusive jurisdiction shall not be violated.
A foreign individual, a person without nationality, a foreign enterprise and a foreign
organization is given the same litigation rights and obligations as a citizen, a legal person or
other organizations of the PRC when initiating actions or defending against litigations at a
people’s court. Should a foreign court limit the litigation rights of PRC citizens, the legal
person and other organizations, the PRC court may apply the same limitations to the citizens,
enterprises and organizations of such foreign country. A foreign individual, a person without
nationality, a foreign enterprise or a foreign organization must engage a PRC lawyer in case
he or it needs to engage a lawyer for the purpose of initiating actions or defending against
litigations at a people’s court. In accordance with the international treaties to which the PRC
is a signatory or participant or according to the principle of reciprocity, a people’s court and
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
–I V - 3–


--- page 536 ---
a foreign court may request each other to serve documents, conduct investigation and collect
evidence and conduct other actions on its behalf. A people’s 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 the legally effective judgments and rulings. If
any party to a civil action refuses to abide by a judgment or ruling made by a people’s court
or an award made by an arbitration tribunal in the PRC, the other party may apply to the
people’s court for the enforcement of the same within two years subject to application for
postponed enforcement or revocation. If a party fails to satisfy within the stipulated period a
judgment which the court has granted an enforcement approval, the court may, upon the
application of the other party, mandatorily enforce the judgment against such party.
Where a party requests for enforcement of an effective judgment or ruling made by a
people’s court, but the opposite party or his property is not within the territory of the PRC, the
party may directly apply to the foreign court with jurisdiction for recognition and enforcement
of the judgment or ruling, or the people’s court may, in accordance with the provisions of
international treaties to which the PRC is a signatory or in which the PRC is a participant or
according to the principle of reciprocity, request for recognition and enforcement by the
foreign court. Similarly, for an effective judgment or ruling made by a foreign court that
requires recognition and enforcement by a people’s court of the PRC, a party may directly
apply to an intermediate people’s court of the PRC with jurisdiction for recognition and
enforcement of the judgment or ruling, or the foreign court may, in accordance with the
provisions of international treaties to which its country and the PRC are signatories or in which
its country is a participant or according to the principle of reciprocity, request for recognition
and enforcement by the people’s court. If the judgment or ruling violates the basic principles
of the laws of the PRC or the sovereignty, security or public interest of the PRC, the people’s
court shall not grant recognition and enforcement.
THE PRC COMPANY LA W AND THE TRIAL ADMINISTRATIVE MEASURES
The Company Law of the People’s Republic of China (the “PRC Company Law”) was
adopted by the Standing Committee of the Eighth NPC at its Fifth Session on December 29,
1993 and came into effect on July 1, 1994. It was successively amended on December 25, 1999,
August 28, 2004, October 27, 2005, December 28, 2013 and October 26, 2018. The newly
revised PRC Company Law has been implemented since October 26, 2018.
On February 17, 2023, CSRC promulgated the Trial Administrative Measures of Overseas
Securities Offering and Listing by Domestic Companies (the “Trial Administrative Measures”),
which came into effect on March 31, 2023. The Trial Administrative Measures are designated
in accordance with the Securities Law and other laws and are applicable to domestic enterprises
that issue securities overseas or list their securities overseas for trading. On February 17, 2023,
CSRC promulgated the Guidelines for the Application of Regulatory Rules – Overseas
Issuance and Listing Category No. 1, stipulating that direct issuance and listing by domestic
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
–I V - 4–


--- page 537 ---
companies shall abide by the relevant provisions of the Trial Administrative Measures and refer
to the Guidelines for Articles of Association of Listed Companies and other relevant provisions
of CSRC on corporate governance to formulate its articles of association and standardize
corporate governance.
Set out below is a summary of the major provisions of the PRC Company Law and the
Trial Administrative Measures.
General
A “joint stock limited company” refers to a corporate legal person incorporated in PRC
under the Company Law with independent legal person properties and entitlements to such
legal person properties. The liability of the company for its own debts is limited to all the
properties it owns and the liability of its shareholders for the company is limited to the extent
of the shares they subscribe for.
Incorporation
A company may be established by promotion or subscription. A company shall have a
minimum of two but no more than 200 people as its promoters, and over half of the promoters
must be resident within the PRC. For companies established by promotion, the registered
capital is the total share capital subscribed for by all the promoters registered with the
company’s registration authorities. No share offering shall be made before the shares
subscribed for by the promoters are fully paid up. For companies established by subscription,
the registered capital is the total paid-up share capital as registered with the company’s
registration authorities. If laws, administrative regulations and State Council decisions provide
otherwise on paid-in registered capital and the minimum registered capital, the company
should follow such provisions.
For companies incorporated by 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’ agreement. After the
promoters have subscribed for the capital contribution under the articles of association, a board
of directors and a supervisory board shall be elected and the board of directors shall apply for
registration of establishment by filing the articles of association with relevant company
registration authorities, and other documents as required by the law or administrative
regulations.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
–I V - 5–


--- page 538 ---
For companies incorporated by subscription, not less than 35% of their total number of
shares must be subscribed for by the promoters, unless otherwise provided by the laws or
administrative regulations. A promoter offering shares to the public must publish a prospectus
and prepare a subscription letter. Such promoter shall be underwritten by security companies
established under PRC law and underwriting agreements shall be entered into. Such promoter
shall also enter into agreements with banks in relation to the receipt of subscription monies.
After the subscription monies for the share issue have been paid in full, a capital verification
institution established under PRC law must be engaged to conduct a capital verification and
furnish a certificate thereof. The promoters shall preside over and convene an inauguration
meeting within 30 days from the date of the full payment of subscription monies. The
inauguration meeting shall be formed by the promoters and subscribers. Where the shares
issued remain undersubscribed by the deadline stipulated in the prospectus, or where the
promoter fails to convene an inauguration meeting within 30 days of the subscription monies
for the shares issued being fully paid up, the subscribers may demand that the promoters refund
the subscription monies so paid together with the interest at bank rates of a deposit for the same
period. Within 30 days after the conclusion of the inauguration meeting, the board of directors
shall apply to the company registration authority for registration of the establishment of the
company.
A company’s promoter shall assume the following liabilities: (1) the debts and expenses
incurred in the incorporation process jointly and severally if the company cannot be
incorporated; (2) the subscription monies paid by the subscribers together with interest at bank
rates of deposit for the same period jointly and severally if the company cannot be
incorporated; and (3) the compensation of any damages suffered by the company in the course
of its establishment as a result of the promoters’ fault.
Share Capital
Shareholders may make a capital contribution in currencies, or non-monetary assets such
as in kind or intellectual property rights or land use rights which can be appraised with
monetary value and transferred lawfully, except for assets which are prohibited from being
contributed as capital by the laws or administrative regulations. If a capital contribution is
made in non-monetary assets, a valuation on the value of the assets should be carried out; the
assets should be verified; and the value shall not be overestimated or underestimated.
The issuance of shares shall be conducted in a fair and equitable manner. The same class
of shares shall carry equal rights. For shares issued at the same time and within the same class,
the conditions and price per share must be the same; for the shares subscribed by an entity or
an individual, the price per share paid must be the same. The share offering price may be equal
to or greater than the nominal value of the share, but may not be less than the nominal value.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
–I V - 6–


--- page 539 ---
A company that seek to offer and list securities in overseas markets, are required to fulfill
the filing procedure with the CSRC and report relevant information. Where an issuer submits
an application for initial public offering to competent overseas regulators, filing application
with the CSRC shall be submitted within three business days thereafter. Subsequent securities
offering 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. Subsequent securities offering and listing of an issuer in other overseas markets
shall be filed as initial public offering.
Pursuant to the requirements under the Company Law, a company issuing registered
shares shall prepare a register of shareholders which sets forth the following matters: (1) the
name and domicile of each shareholder; (2) the number of shares held by each shareholder; (3)
the serial numbers of shares held by each shareholder; and (4) the date on which each
shareholder acquired the shares.
Increase in Share Capital
Where a company is issuing new shares, resolutions shall be passed at shareholder’s
general meeting 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 the class and
amount of the new shares proposed to be issued to existing shareholders.
When a company launches a public issue of new shares to the public upon the approval
by the CSRC, a new prospectus and a financial accounting report must be published and a
subscription form must be prepared. After the new share issued by the company has been paid
up, the change must be registered with the company registration authorities and a public
announcement must be made accordingly. Where an increase in registered capital of a company
is made by means of an issue of new shares, the subscription of new shares by shareholders
shall be made in accordance with the relevant provisions on the payment of subscription
monies for the establishment of a company.
Reduction of Share Capital
A company may reduce share capital in accordance with the following procedures
prescribed by the Company Law: (1) the company shall prepare balance sheet and inventory
of assets; (2) the reduction of registered capital must be approved by shareholders in general
meeting; (3) the company shall inform its creditors of the reduction in registered capital within
10 days and publish an announcement of the reduction in the newspaper within 30 days after
the resolution approving the reduction has been passed; (4) the creditors of the company shall,
within 30 days from the date they receive the written notice, or within 45 days from the date
the announcement is made in the case of those who have not received such written notice, have
the right to claim full repayment of their debts or provision of a corresponding guarantee from
the company; and (5) the company must register with the company registration authority for
such alteration.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
–I V - 7–


--- page 540 ---
Repurchase of Shares
According to the Company Law, a company shall not repurchase its own shares except
under any of the following circumstances: (1) reducing the registered capital of the company;
(2) merging with another company holding shares of this company; (3) using for employee
stock ownership plan or equity incentives; (4) purchasing the company’s own shares upon
request of its shareholders who vote against the resolution regarding the merger or division of
the company in a general meeting; (5) utilizing the shares for conversion of listed corporate
bonds which are convertible into shares; and (6) where it is necessary for the listed company
to safeguard the value of the company and the interests of its shareholders. The acquisition by
a company of its own shares in circumstances as set out in items (1) and (2) above shall be
subject to a resolution of the general meeting; the acquisition by a company of its own shares
in circumstances as set out in items (3), (5) and (6) above may be approved by way of a
resolution at a board meeting with two-third or more of the directors present in accordance with
the provisions of the company’s articles of association or the authorization of the shareholders’
general meeting.
After acquiring its own shares pursuant to the provisions above, a company shall, under
the circumstance set forth in item (1), cancel them within 10 days after the purchase; while
under the circumstance set forth in either item (2) or (4), transfer or cancel them within six
months; and while under the circumstance set forth in item (3), (5) or (6), aggregately hold not
more than 10% of the total shares that have been issued by the company, and transfer or cancel
them within three years.
A listed company acquiring its own shares shall perform the obligation of information
disclosure in accordance with the Securities Law of the PRC (“ the Securities Law ”). A listed
company purchasing its own shares under any of the circumstances set forth in items (3), (5)
and (6) shall carry out trading in a public and centralized manner.
A company shall not accept its own shares as the subject of pledge.
Transfer of Shares
Shares held by shareholders may be transferred legally. 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 other
manner specified by laws and 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 20 days
prior to convening a shareholders’ general meeting or 5 days prior to the record date for the
purpose of determining entitlements to dividend distributions, unless otherwise stipulated by
laws on the registration of changes in the share register of listed companies. The transfer of
bearer share certificates shall become effective upon the delivery of the certificates to the
transferee by the shareholder.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
–I V - 8–


--- page 541 ---
Pursuant to the PRC Company Law, shares held by promoters may not be transferred
within one year of the establishment of the company. Shares of the company issued prior to the
public issue 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 it and changes in such shareholdings. The
shares transferable by them during each year of their term of office shall not exceed 25 percent
of their total shareholdings in the company. They shall not transfer the shares they hold within
one year from the date of the company’s listing on a stock exchange, nor within six months
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.
Shareholders
Under the Company Law, the rights of a shareholder include: (1) to receive a return on
assets, participate in significant decision-making and select management personnel; (2) to
request the people’s court to revoke any resolution passed on a shareholders’ general meeting
or a meeting of the board of directors that has been convened or whose voting has been
conducted in violation of the laws, regulations or the articles of association, or any resolution
the contents of which is in violation of the articles of association, provided that such petition
shall be submitted within 60 days of the passing of such resolution; (3) to transfer the shares
of the shareholders in accordance with the law; (4) to attend or appoint a proxy to attend
shareholders’ general meetings and exercise the voting rights thereat; (5) 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; (6) to receive dividends in respect of the number of shares held; (7) to participate
in distribution of residual properties of the company in proportion to their shareholdings upon
the liquidation of the company; and (8) 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 monies in respect of the shares subscribed for, to be
liable for the company’s debts and liabilities to the extent of the amount of subscription monies
agreed to be paid in respect of the shares taken up by them and any other shareholder obligation
specified in the articles of association.
Shareholders’ General Meetings
The shareholders’ general meeting is the organ of authority of a company, which exercises
the following powers: (1) to decide on the company’s operational policies and investment
plans; (2) to elect or replace the directors, supervisors who are not representatives of the
employees and decide on matters relating to the remuneration of directors and supervisors; (3)
to consider and approve reports of the board of directors; (4) to consider and approve reports
of the board of supervisors; (5) to consider and approve the company’s proposed annual
financial budget and final accounts; (6) to consider and approve the company’s proposals for
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
–I V - 9–


--- page 542 ---
profit distribution and for recovery of losses; (7) to decide on any increase or reduction in the
company’s registered capital; (8) to decide on the issue of bonds by the company; (9) to decide
on issues regarding to merger, division, dissolution, liquidation or change of the form of the
company and other matters; (10) to amend the articles of association of the company; and (11)
other powers specified in the articles of association of the company.
The shareholders’ general meeting shall be held once a year within six months after the
end of the previous financial year. An extraordinary shareholders’ general meeting shall be held
within two months after the occurrence of any of the following circumstances: (1) when the
number of directors is less than the number provided for in the Company Law or less than
two-thirds of the number specified in the company’s articles of association; (2) when the losses
of the company which are not made up reach one-third of the company’s total paid up share
capital; (3) when shareholders individually or in aggregate holding 10% or more of the
company’s shares request to convene an extraordinary general meeting; (4) when deemed
necessary by the board of directors; (5) when the board of supervisors proposes convening it;
or (6) other matters as required by the company’s articles of association.
A shareholders’ general meeting shall be convened by the board of directors, and presided
over by the chairman of the board of directors. If the chairman is incapable of performing or
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 not performing his duties, a director
nominated by half or more than half of directors shall preside over the meeting. Where the
board of directors is incapable of performing or not performing its duties to convene the
general meeting, the supervisory board shall convene and preside over shareholders’ general
meeting in a timely manner. If the supervisory board fails to convene and preside over
shareholders’ general meeting, shareholders individually or in aggregate holding 10% or more
of the company’s shares for 90 days or more consecutively may unilaterally convene and
preside over shareholders’ general meeting.
In accordance with the 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 20 days prior to the meeting. A notice of extraordinary general meeting shall be
given to all shareholders 15 days prior to the meeting. For the issuance of bearer share
certificates, the time and venue of and matters to be considered at the meeting shall be
announced 30 days prior to the meeting. A single shareholder who holds, or several
shareholders who jointly hold, more than three percent of the shares of the company may
submit an interim proposal in writing to the board of directors within 10 days before the
general meeting. The board of directors shall notify other shareholders within two days upon
receipt of the proposal, and submit the interim proposal to the general meeting for deliberation.
The contents of the interim proposal shall fall within the scope of powers of the general
meeting, and the proposal shall provide clear agenda and specific matters for a resolution is to
be made. A general meeting shall not make any resolution in respect of any matter not set out
in the notices. Holders of bearer share certificates who intend to attend a general meeting shall
deposit their share certificates with the company during the time from five days before the
meeting to the conclusion of the meeting.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-10 –


--- page 543 ---
Under the Company Law, shareholders present at a shareholders’ general meeting have
one vote for each share they hold, save that the company’s shares held by the company are not
entitled to any voting rights.
An accumulative voting system may be adopted for the election of directors and
supervisors at the 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 shareholder’s general meeting, and shareholders may consolidate their votes
when casting a vote.
Under the 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
matters relating to merger, division or dissolution of a 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 more than two-thirds of the voting rights held by the
shareholders present at the meeting. Where the Company Law and the articles of association
provide that the transfer or acquisition of significant assets or the provision of external
guarantees by a company and the other matters must be approved by way of resolution of the
shareholder’s general meeting, the board of directors shall convene a shareholder’s general
meeting promptly to vote on such matters by the shareholder’s general meeting.
Minutes shall be prepared in respect of matters considered at the shareholder’s general
meeting and the chairperson and directors attending the meeting shall endorse such minutes by
signature. The minutes shall be kept together with the shareholders’ attendance register and the
proxy forms.
Board of Directors
A company shall have a board of directors, which shall consist of 5 to 19 members.
Members of the board of directors may include staff representatives, who shall be
democratically elected by a company’s staff at a staff representative assembly, general staff
meeting or otherwise. 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 after his expiration of term. 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 Company Law, the board of directors shall be responsible for the shareholders’
general meeting and exercises the following powers: (1) to convene the shareholders’ general
meeting and report on its work to the shareholders’ general meetings; (2) to implement the
resolution of the shareholders’ general meeting; (3) to decide on a company’s operational plans
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
–I V - 1 1–


--- page 544 ---
and investment proposals; (4) to formulate the company’s proposed annual financial budget
and final accounts; (5) to formulate the company’s proposals for profit distribution and for
recovery of losses; (6) to formulate proposals for the increase or reduction of the company’s
registered capital and the issue of corporate bonds; (7) to prepare plans for the merger, division,
dissolution or change of the form of a company; (8) to decide on the company’s internal
management structure; (9) to decide to appoint or dismiss the company’s manager, and based
on the manager’s recommendation, to decide to appoint or dismiss deputy manager and
financial officers of a company and to decide on their remuneration; (10) to formulate a
company’s basic management system; and (11) any other power given under the articles of
association.
Meetings of the board of directors shall be convened at least twice each year, and the
notice of each meeting shall be given to all directors and supervisors at least 10 days before
the meeting. Interim board meetings may be proposed to be convened by shareholders
representing more than 10% of the voting rights, more than one-third of the directors or the
board of supervisors. The chairman shall convene the meeting within 10 days of receiving such
proposal, and preside over the board 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 require the approval of more than half of all
directors. Each director shall have one vote for a resolution to be approved by the board.
Directors shall attend board meetings in person. If a director is unable to attend a board
meeting, he may appoint another director to attend the meeting on his behalf by a written power
of attorney specifying the scope of the authorization.
The board of directors shall keep minutes of resolutions passed at board meetings. The
minutes shall be signed by the directors present at the meeting. The directors shall be
responsible for the resolutions of the board of directors. If a resolution of the board of directors
violates the laws, administrative regulations, the company’s articles of association or
resolutions of the general meeting 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 proven that a director expressly objected to the resolution when the resolution was voted
on, and that such objections were recorded in the minutes of the meeting, such director may
be relieved of that liability.
According to the provisions of the Company Law, the following persons shall not serve
as a director of a company: (1) persons without civil capacity or with restricted civil capacity;
(2) persons who have committed the offense of corruption, bribery, taking of property,
misappropriation of property or destruction of the socialist market economic order, and have
been sentenced to criminal punishment, where less than five years have elapsed since the date
of completion of the sentence; or persons who have been deprived of their political rights due
to criminal offense, where less than five years have elapsed since the date of the completion
of implementation; (3) persons who are former directors, factory managers or managers of a
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-12 –


--- page 545 ---
company or enterprise which has become bankrupt and been liquidated and who are personally
liable for the bankruptcy of such company or enterprise, where less than three years have
elapsed since the date of the completion of the bankruptcy and liquidation of the company or
enterprise; (4) persons who were legal representatives of a company or enterprise which had
its business license revoked or business operation shut down due to violation of the law and
who are personally liable, where less than three years have elapsed since the date of the
revocation of the business license; and (5) persons who have a relatively large amount of debt
due and outstanding. 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 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.
Supervisory Board
A company shall have a supervisory board composed of not less than three members. The
supervisory board shall consist of representatives of the shareholders and an appropriate
proportion of representatives of the company’s staff, of which the proportion of representatives
of the company’s staff shall not be less than one-third, and the actual proportion shall be
determined in the articles of association. Representatives of the company’s staff at the
supervisory board shall be democratically elected by the company’s staff at the staff
representative assembly, general staff meeting or otherwise.
The supervisory board shall appoint a chairman and may appoint a vice chairman. The
chairman and the vice chairman of the supervisory board shall be elected by more than half of
all the supervisors. Directors and senior management members shall not act concurrently as
supervisors.
The chairman of the supervisory board shall convene and preside over supervisory board
meetings; where the chairman of the supervisory board is unable or fails to perform his/her
duties, the vice chairman of the supervisory board shall convene and preside over supervisory
board meetings; where the vice chairman of the supervisory board is unable or fails to perform
his/her duties, a supervisor elected by more than half of the supervisors shall convene and
preside over the meetings of the supervisory board.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-13 –


--- page 546 ---
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 supervisor results in the number of supervisors
being less than the quorum.
The supervisory board shall exercise the following powers: (1) to examine the company’s
financial affairs; (2) to supervise the directors and senior management in their performance of
duties and to propose the removal of any director or senior management who violates the laws,
administrative regulations, articles of association or the resolutions of the shareholders’ general
meeting; (3) to require any director or senior management whose act is detrimental to the
company’s interests to rectify such act; (4) to propose the convening of extraordinary
shareholders’ general meetings and, in the event that the board of directors fails to perform the
duties of convening and presiding general meetings, to convene and preside over general
meetings; (5) to propose any bills to shareholders’ general meetings; (6) to bring proceedings
against any directors or senior management personnel in accordance with the relevant
provisions of the Company Law; and (7) other powers specified 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 supervisory board 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.
Managers and Other Senior Management
Pursuant to the relevant provisions of the Company Law, a company shall have a manager
who shall be appointed or removed by the board of directors. Meanwhile, pursuant to the
relevant provisions of the Guidelines for Articles of Association of Listed Companies, the
manager shall be accountable to the Board of Directors and exercise the following powers: (1)
taking charge of the management of the production and business operations of the company,
organizing the implementation of resolutions of the board of directors; (2) organizing the
implementation of the company’s annual business and investment plans; (3) drafting plans for
the establishment of the company’s internal management structure; (4) drafting the basic
administration system of the company; (5) formulating the company’s basic regulations and
rules; (6) proposing to hire or dismiss the company’s vice manager(s) and the person in charge
of finance; (7) deciding on the hiring or dismissal of the persons-in-charge other than those
who shall be decided by the board of directors; and (8) other powers conferred by the articles
of association and the board of directors.
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.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-14 –


--- page 547 ---
According to the Company Law, senior management refers to the manager, deputy
manager, financial officer, secretary to the board of a listed company and other personnel as
stipulated in the articles of association.
Duties of Directors, Supervisors and Senior Management
Directors, supervisors and senior management are required under the Company Law to
comply with the relevant laws, administrative regulations and the articles of association, and
carry out their duties of loyalty and diligence. Directors, supervisors and senior management
are prohibited from abusing their power in accepting bribes or other unlawful income and from
misappropriating the company’s property.
Meanwhile, directors and senior management are prohibited from: (1) misappropriation
of company funds; (2) deposit of company funds into accounts under their own name or the
name of other individuals; (3) loaning company funds to others or providing guarantees in
favor of others supported by the company properties in violation of the articles of association
or without prior approval of the shareholders’ general meeting or board of directors; (4)
entering into contracts or deals with the company in violation of the articles of association or
without prior approval of the shareholders’ general meeting; (5) using their position to procure
business opportunities for themselves or others that should have otherwise been available to the
company or operating for their own benefit or managing on behalf of others businesses similar
to that of the company without prior approval of the shareholders’ general meeting; (6)
accepting for their own benefit commissions from other parties dealing with the company; (7)
unauthorized divulgence of confidential information of the company; or (8) other acts in
violation of their duty of loyalty to the company. Income generated by directors or senior
management in violation of aforementioned regulations shall be returned to the company.
A director, supervisor or senior management who contravenes law, administrative
regulation or articles of association in the performance of his/her duties resulting in any loss
to the company shall be personally liable to the company.
Where the attendance of a director, supervisor, or senior management is requested by the
shareholders’ general meeting, such director, supervisor, or other senior management shall
attend the meeting as requested and answer enquiries of shareholders. Directors and senior
management shall furnish with all truthfulness facts and information to the supervisory board
without obstructing the discharge of duties by the supervisory board.
Where a director or senior management contravenes law, administrative regulation or
articles of association in the performance of his/her duties resulting in any loss to the company,
shareholder(s) holding individually or in aggregate no less than 1% of the company’s shares
consecutively for at least 180 days may request in writing that the supervisory board institute
litigation at a people’s court on its behalf. Where the supervisor violates the laws or
administrative regulations or the articles of association in the discharge of its duties resulting
in any loss to the company, such shareholder(s) may request in writing that the board of
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-15 –


--- page 548 ---
directors institute litigation at a people’s court on its behalf. If the supervisory board or the
board of directors refuses to institute litigation after receiving the abovementioned written
request from the shareholder(s), or fails to institute litigation within 30 days of the date of
receiving the request, or in case of emergency where failure to institute litigation immediately
will result in irrecoverable damage to the company’s interests, such shareholder(s) shall have
the power to institute litigation directly at a people’s court in its own name for the company’s
benefit. For other parties who infringe the lawful interests of the company resulting in loss to
the company, such shareholder(s) may institute litigation at a people’s court in accordance with
the procedure described above. Where a director or senior management contravenes any laws,
administrative regulations or the articles of association in infringement of shareholders’
interests, a shareholder may also institute litigation at a people’s court.
Pursuant to the Guidelines for the Articles of Association of Listed Companies, senior
management personnel of a company shall faithfully perform their duties and safeguard the
best interests of the company and all its shareholders. Senior management of a company shall
be liable for compensation in accordance with the law if they fail to faithfully perform their
duties or breach their duty of good faith and cause damage to the interests of the company and
holders of public shares.
Finance and Accounting
According to the Company Law, a company shall establish its own financial and
accounting systems in accordance with laws, administrative regulations and the provisions of
the financial department in charge under 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 company’s financial reports shall be made available for
shareholders’ inspection at the company 20 days before the convening of an annual
shareholders’ general meeting. A company incorporated by public subscription must publish its
financial statements.
When distributing current year’s after-tax profits, the company shall set aside 10% of its
profits for the company’s statutory common reserve, except where the reserve has reached 50%
of the company’s registered capital. When the company’s statutory common reserve is not
sufficient to make up for the company’s losses of the previous years, current year profits shall
be used to make up for the losses before allocations are set aside for the statutory surplus
reserve. After a company has made an allocation to its statutory common reserve from its
after-tax profits, subject to a resolution of the shareholders’ meeting or shareholders’ general
meeting, the company may make an allocation to a discretionary common reserve from its
after-tax profits. After the company has made up for its losses and make allocations to its
statutory common reserve, the remaining profits could be available for distribution to
shareholder in proportion to the number of shares held by the shareholders except as otherwise
provided in the articles of association of such company limited by shares.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-16 –


--- page 549 ---
Profits distributed to shareholders by a resolution of a shareholders’ general meeting or
the board of directors before losses have been made good and allocations have been made to
the statutory common reserve fund 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 of a company from the issuance of stocks at a price above the par value of
the stocks, and other incomes listed in the capital reserve under provisions of the treasury
department of the State Council shall be listed as the company’s capital reserve. The company’s
common reserves shall be used for making up losses, expanding the production and business
scale or increasing the capital of the company, but the capital common reserve shall not be used
for making up the company’s losses. When the statutory common reserve is changed to capital,
the remainder of the common reserve shall not be less than 25% of the registered capital prior
to the increase.
The company shall have no accounting books other than the statutory accounting books.
The company’s assets shall not be deposited in any accounts opened in the name of an
individual.
Appointment and Retirement of Accounting Firm
Pursuant to the Company Law, the engagement or dismissal of an accounting firm
responsible for the company’s auditing shall be determined by shareholders’ meeting or
shareholders’ general meeting or the board of directors 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 conducts 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 or withholding or falsification of data.
Pursuant to the Guidelines for the Articles of Association of Listed Companies, the
company engages an accounting firm that complies with the provisions of the Securities Law
to carry out audit of accounting statements, verification of net assets and other related advisory
services for a period of one year, which is renewable.
Profit Distribution
According to the Company Law, a company shall not distribute profits before losses are
covered and the statutory common reserve fund is provided.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-17 –


--- page 550 ---
Amendments to the Articles of Association
Pursuant to PRC Company Law, the resolution of a shareholders’ general meeting
regarding any amendment to a company’s articles of association requires affirmative votes by
more than two-thirds of the votes held by shareholders attending the meeting. According to the
Guidelines for the Articles of Association of Listed Companies, if the amendments to the
articles of association approved by the resolution of the general meeting of shareholders are
subject to approval by the competent authority, they must be reported to the competent
authority for approval; if they involve company registration matters, the modification
registration shall be handled according to law. Where the amendments to the articles of
association belong to information required to be disclosed by laws and regulations, such
amendments shall be announced in accordance with the regulations.
Dissolution and Liquidation
According to the Company Law, a company shall be dissolved in any of the following
events: (1) the term of its operation set down in its articles of association has expired or events
of dissolution specified in its articles of association have occurred; (2) the shareholders have
resolved at a shareholders’ general meeting to dissolve the company; (3) the company is
dissolved by reason of its merger or division; (4) the business license of the company is
revoked or the company is ordered to close down or to be dissolved in accordance with the
laws; or (5) the company is dissolved by a people’s court in response to the request of
shareholders holding shares that represent more than 10% 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.
In the event of paragraph (1) above, the company may carry on its existence by amending
its articles of association. The amendments to the articles of association in accordance with the
provisions described above shall require the approval of more than two-thirds of voting rights
of shareholders attending a shareholders’ general meeting. Where the company is dissolved
under the circumstances set forth in paragraph (1), (2), (4) or (5) above, it should establish a
liquidation committee within 15 days of the date on which the dissolution matter occurs. The
liquidation committee shall be composed of directors or any other person determined by a
shareholders’ general meeting. If a liquidation committee is not established within the
prescribed period, the company’s creditors may file an application with a people’s court to
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.
The liquidation committee may exercise the following powers during the liquidation
period: (1) to handle the company’s assets and to prepare the balance sheet and inventory of
assets; (2) to notify creditors through notice or issue public announcement; (3) to deal with the
outstanding business related to the liquidation; (4) to pay any tax overdue as well as tax
expenses arising from the liquidation process; (5) to settle the company’s claims and liabilities;
(6) to handle the company’s remaining assets after its debts have been paid off; and (7) to
represent the company in civil lawsuits.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-18 –


--- page 551 ---
The liquidation committee shall notify the creditors within 10 days of its establishment
and publish an announcement on newspapers within 60 days. A creditor shall lodge his claim
with the liquidation committee within 30 days of receipt of the notification or within 45 days
of the date of the announcement if he has not received any notification. A creditor shall report
all matters relevant to his claimed creditor’s rights and furnish relevant evidence. The
liquidation committee shall register such creditor’s rights. The liquidation committee shall not
make any settlement to creditors during the period of the claim.
Upon disposal of the company’s property and preparation of the 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 part
of the company’s assets, after payment of liquidation expenses, employee wages, social
insurance expenses and statutory compensation, outstanding taxes and the company’s debts,
shall be distributed to shareholders in proportion to shares held by them. The company shall
continue to exist during the liquidation period, although it cannot conduct operating activities
that are not related to the liquidation. The company’s property shall not be distributed to
shareholders before repayments are made in accordance with the requirements described
above.
Upon liquidation of the company’s property and preparation of the required balance sheet
and inventory of assets, if the liquidation committee becomes aware that the company does not
have sufficient assets to meet 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 of the liquidation to 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 the people’s court for verification,
and to the company registration authority for the cancellation of company registration, and an
announcement of its termination shall be published. Members of the liquidation committee
shall be faithful in the discharge of their duties and shall perform their liquidation duties in
compliance with 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 who have caused the company or
its creditors to suffer from any loss due to intentional fault or gross negligence, should be liable
for making compensations to the company or its creditors.
In addition, liquidation of a company declared bankrupt according to laws shall be
processed in accordance with the laws on corporate bankruptcy.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-19 –


--- page 552 ---
Overseas Listing
According to the Trial Administrative Measures, overseas listing of a company shall be
filed with CSRC. Where an issuer conducts an overseas initial public offering or listing, it shall
file with CSRC within 3 working days after submitting the issuance and listing application
documents overseas. The remittance and cross-border flow of funds related to overseas
issuance and listing of domestic enterprises shall comply with national regulations on
cross-border investment and financing, foreign exchange management and cross-border RMB
management.
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 the people’s court declares that such certificate(s) will no longer be valid, the shareholder
may apply to the company for the issue of a replacement certificate(s).
Merger and Division
According to the Company Law, in the event of merger, the parties to the merger shall
enter into a merger agreement and prepare balance sheet and inventory of assets. The
companies shall, within ten days as of making the decision of merger, notify the creditors, and
shall make a public announcement in a newspaper within thirty days. The creditors may, within
thirty days as of the receipt of the notice or within forty-five days as of the issuance of the
public announcement if it fails to receive a notice, require the company to clear off its debts
or to provide corresponding guarantees. In the case of a merger, the credits and debts of the
parties involved shall be succeeded by the company that survives the merger or by the newly
established company.
In a division, the asset of the company shall be split in an appropriate manner. The
liabilities of the company which have accrued prior to the division shall be jointly borne by the
separated companies, unless it is otherwise prescribed by the company and the creditors before
the division with regard to the clearance of debts in written agreement.
Where the merger or division of the company involves changes in its registered
particulars, such changes shall be filed with competent company registration authorities
pursuant to the law. Where the company is dissolved, the company shall apply for cancellation
of its registration in accordance with the laws. Where a new company is established, the
company shall apply for registration of incorporation in accordance with the laws.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-20 –


--- page 553 ---
THE SECURITY LA WS AND 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 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 CSRC. 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 CSRC and reformed CSRC.
On April 22, 1993, the State Council promulgated the Provisional Regulations
Concerning the Issue and Trading of Shares (၍ଣᅲБૢԷ) governing the
application and approval procedures for public offerings of shares, issuing of and trading of
shares, takeovers by listed companies, deposit, clearing and transfer of shares, the disclosure
of information, investigation, penalties and dispute resolutions with respect to a listed
company.
On December 25, 1995, the State Council promulgated the Provisions of the State Council
Concerning Domestic Listed Foreign Shares of Joint Stock Limited Companies (ٰ׵
֛These regulations principally govern the issue,
subscription, trading and declaration of dividends and other distributions of domestic listed
foreign shares and disclosure of information of joint stock limited companies having domestic
listed foreign shares.
The PRC Securities Law (جthe “Securities Law”) took effect on
July 1, 1999 and was revised as of August 28, 2004, October 27, 2005, June 29, 2013, August
31, 2014 and December 28, 2019, respectively. The latest Securities Law came into force on
March 1, 2020. It was the first national securities law in the PRC, and is divided into 14
chapters and 226 articles comprehensively regulating activities in the PRC securities market,
including the issue and trading of securities, takeovers by listed companies and the duties and
responsibilities of the securities exchanges, securities companies, securities clearing
institutions and securities regulatory authorities. Article 224 of the PRC Securities Law
provides that domestic enterprises shall satisfy the relevant requirements of the State Council
when it issues shares or lists shares outside the PRC directly or indirectly. Currently, the issue
and trading of foreign issued securities (including shares) are principally governed by the
regulations and rules promulgated by the State Council and CSRC.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-21 –


--- page 554 ---
ARBITRATION AND ENFORCEMENT OF ARBITRAL A W ARDS
The Arbitration Law of the PRC (2017 Revised) (ج2017͍)) (the
“PRC Arbitration Law”) was enacted by the Standing Committee of the NPC on August 31,
1994, which became effective on September 1, 1995 and the latest version was amended on
September 1, 2017. It is applicable to contract disputes and other property disputes where the
parties have entered into a written agreement to refer the matter to arbitrate before an
arbitration committee constituted in accordance with the PRC Arbitration Law. An arbitration
committee may, before the promulgation of arbitration rules by the PRC Arbitration
Association, formulate interim arbitration rules in accordance with the Arbitration Law and the
PRC Civil Procedure Law. Where the parties have reached the arbitration agreement, 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.
The Hong Kong Listing Rules requires an arbitration clause to be included in the articles
of association of a company listed in Hong Kong and, in the case of the Hong Kong Listing
Rules, also in contracts between the company and each of the director and supervisor, to the
effect that whenever any disputes or claims arises from any right or obligation provided in the
articles of association, the Company Law or other relevant laws and administrative regulations
concerning the affairs of the Company between (1) holders of H Shares and the Company; (2)
holders of H Shares and holders of domestic shares; or (3) holders of H Shares and the
Company’s directors, supervisors or other management personnel, such disputes or claims shall
be referred to arbitration.
Each of the relevant parties may elect to refer such dispute or claim to arbitration at either
the China International Economic and Trade Arbitration Commission or the Hong Kong
International Arbitration Centre. Disputes in respect of the definition of shareholder and
disputes in relation to the company’s shareholder registry need not be resolved by arbitration.
If the party seeking arbitration elects to arbitrate the dispute or claim at the Hong Kong
International Arbitration Centre, then either party may apply to have such arbitration conducted
in Shenzhen in accordance with the securities arbitration rules of the Hong Kong International
Arbitration Centre.
Pursuant to the Arbitration Law and the PRC Civil Procedure Law, a system of a single
and final award shall be practiced for arbitration. The arbitration commission shall not accept
any application for arbitration, nor shall a people’s court accept any action submitted by the
party in respect of the same dispute after an arbitral award has already been given in relation
to that matter. If any party fails to comply with the arbitral awards, the other party to the award
may apply to a people’s court for its enforcement. However, a people’s court may refuse to
enforce an arbitral award made by an arbitration commission if there is any procedural
irregularity (including but not limited to irregularity in the composition of the arbitration
tribunal, the jurisdiction of the arbitration commission, or the making of an award on matters
beyond the scope of the arbitration agreement).
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-22 –


--- page 555 ---
If a party applies for enforcement of a legally effective arbitration award made by a
foreign-related arbitration commission and if the party against whom the enforcement is sought
or such party’s property is not within the territory of the PRC, he shall directly apply to a
competent foreign court for recognition and enforcement of the award. Likewise, an arbitral
award made by a foreign arbitral body may be recognized 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 passed by the Standing Committee of the NPC 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 recognized and enforced by other parties
to the New Y ork Convention, subject to their rights to refuse recognition and enforcement
under certain circumstances, including where the enforcement of the arbitral award is against
the public policy of the state to which the application for enforcement is made. It was declared
by the Standing Committee of the NPC simultaneously with the accession of the PRC that (1)
the PRC will only recognize and enforce foreign arbitral awards on the principle of reciprocity;
and (2) the PRC will only apply the New Y ork Convention in disputes considered under PRC
laws to arise from contractual and non-contractual mercantile legal relations.
In June 1999, an arrangement for mutual enforcement of arbitral awards between Hong
Kong and the Supreme People’s Court of the PRC was reached. This new arrangement was
approved by the Supreme People’s Court of the PRC and the Hong Kong Legislative Council,
and became effective on February 1, 2000. This arrangement is made in accordance with the
spirit of the New Y ork Convention. Under the arrangement, the awards made by PRC arbitral
bodies pursuant to the Arbitration Law can be enforced in Hong Kong and the Hong Kong
arbitral awards made pursuant to the Hong Kong Arbitration Ordinance can also be enforced
in the Mainland. Where a court of Mainland court finds that the enforcement of awards made
by the Hong Kong arbitral bodies in the Mainland will be against social public interests of the
Mainland, the awards may not be enforced.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-23 –


--- page 556 ---
This appendix contains a summary of the principal provisions of the Articles of
Association adopted by the Company on April 21, 2023, which will become effective on the date
on which the H Shares are listed 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, and therefore it may not contain all the information that is important for potential
investors.
SHARES AND REGISTERED CAPITAL
Shares of the Company shall take the form of share certificates. The shares issued by the
Company shall be denominated in RMB. The par value per share is RMB0.25.
The Company shall issue shares in an open, fair and just manner, and each share of the
same class shall have the same rights.
Shares of the same class issued at the same time shall be issued on the same conditions
and at the same price. Any entity or individual shall pay the same price for each of the shares
for which it or he or she subscribes for.
Increase/Decrease of Shares
Subject to the provisions of laws, regulations, listing rules of the place where the
Company’s shares are listed, the Company may, upon resolution by a shareholders’ general
meeting, increase its capital on the basis of its business and development needs and pursuant
to the Articles of Association. The Company may increase its registered capital in the following
ways:
1. offering new shares to non-specific investors;
2. placing new shares to existing shareholders;
3. distributing bonus shares to existing shareholders;
4. issuing new shares to certain investors;
5. converting the reserved funds into share capital;
6. other ways as approved by laws and regulations and the regulatory authorities.
After having been approved in accordance with the provisions of the Articles of
Association, the increase of the company’s capital by issuing new shares shall be handled in
accordance with the procedures provided for in relevant State laws and administrative
regulations and listing rules of the stock exchange where the Company’s shares are listed.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
–V - 1–


--- page 557 ---
The Company may reduce its registered capital. When the Company needs to reduce its
registered capital, it must prepare a balance sheet and an inventory of assets.
The Company shall reduce its registered capital in accordance with the procedures
stipulated in the Company Law, the Hong Kong Listing Rules and other relevant regulations
and the Articles of Association.
Repurchase of Shares
The Company shall not buy back its shares, except in one of the following circumstances:
1. reducing the registered capital of the Company;
2. merging with another company that holds shares in the Company;
3. using shares for employee stock ownership plan or equity incentives;
4. shareholders who object to resolutions of the general meeting on merger or division
of the Company requesting the Company to buy back their shares;
5. to use the shares for conversion of corporate bonds issued by the Company which
are convertible into shares;
6. where it is necessary for the Company to preserve its value and shareholders’
interest.
The Company may repurchase its shares through public centralised trading or other
methods recognised by laws, administrative regulations, the CSRC and the stock exchange
where the Company’s shares are listed, and shall comply with applicable laws, administrative
regulations, departmental rules and the securities regulatory rules of the place where the
Company’s shares are listed.
Where the Company repurchases its shares under the circumstances set out in items 1 and
2 above, a resolution shall be passed at the general meeting of the Company. Where the
Company repurchases its shares under the circumstances set out in items 3, 5 and 6 above, a
resolution may be passed at a Board meeting attended by more than two-thirds of the directors
in accordance with the provisions of the Articles of Association or as authorised by the general
meeting. Where the securities regulatory rules of the place where the shares of the Company
are listed provide otherwise, such provisions shall prevail, provided that such provisions are
not in violation of the Company Law, the Securities Law, the Administrative Measures and the
Guidelines for the Articles of Association of Listed Companies.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
–V - 2–


--- page 558 ---
Where the Company repurchases its shares under the circumstances set out in item 1
above, such shares shall be cancelled within 10 days from the date of repurchase; where the
Company repurchases its shares under the circumstances set out in items 2 and 4, such shares
shall be transferred or cancelled within 6 months; where the Company repurchases its shares
under the circumstances set out in items 3, 5 and 6, the total number of shares held by the
Company shall not exceed 10% of the total issued shares of the Company, and such shares shall
be transferred or cancelled within 3 years.
Transfer of Shares
Shares of the Company held by the promoters shall not be transferred within one year
from the date of establishment of the Company. Shares issued by the Company prior to the
public offering of shares shall not be transferred within one year from the date on which the
Company’s shares are listed and traded on the Hong Kong Stock Exchange.
Directors, supervisors and senior management of the Company shall declare to the
Company their shareholdings in the Company and any changes thereof, and shall not transfer
more than 25% of the total number of shares of the Company held by them each year during
their terms of office; the shares of the Company held by them shall not be transferred within
one year from the date on which the shares of the Company are listed and traded. The above
personnel shall not transfer the shares of the Company held by them within half a year after
they leave the Company.
If the Company’s shareholders holding 5% (excluding the recognized clearing houses or
their agents as defined in the relevant ordinances in force under the laws of Hong Kong from
time to time) or above shares of the Company, Directors, Supervisors, senior management
officers sell shares or other securities with an equity nature within six months after buying the
same or buy shares or securities within six months after selling the same, the earnings arising
therefrom shall belong to the Company and the Board shall recover such earnings. However,
the restriction shall not be applicable to any sale of shares by a securities company holding 5%
or above of the Company’s shares as a result of its purchase and underwriting of the untaken
shares after offering and other circumstances stipulated by CSRC.
The shares or other securities with an equity nature held by Directors, Supervisors, senior
management officers and natural person shareholders referred to in the preceding paragraph
include the shares or other securities with an equity nature held by their spouses, parents,
children, and any of the above which is held by using others’ accounts.
If the Company’s Board does not comply with the provision of the first paragraph, the
shareholders can request the Board to do so within 30 days. If the Board does not enforce such
right within the aforesaid period, the shareholders are entitled to commence litigations in the
people’s court in their own names for the interests of the Company.
If the Company’s Board does not enforce the provision of the first paragraph of this
Article, the responsible Directors shall assume joint and severally liable in accordance with the
laws.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
–V - 3–


--- page 559 ---
SHAREHOLDERS AND SHAREHOLDERS’ GENERAL MEETING
Register of members
The Company shall establish a register of shareholders in accordance with the evidence
provided by the securities registration authority. The register of shareholders shall be sufficient
evidence of the shareholders’ shareholdings in the Company, except where there is evidence to
the contrary.
When the Company convenes a general meeting, distributes dividends, conducts
liquidation or engages in other activities that require the confirmation of the identity of
shareholders, the Board or the convener of the general meeting shall determine the record date
in accordance with the provisions of the securities regulatory rules of the place where the
Company’s shares are listed. Shareholders whose names appear on the register of shareholders
after the close of trading on the record date shall be the shareholders entitled to relevant
interests.
Rights and Obligations of Shareholders
Shareholders of the Company shall enjoy the following rights:
1. to receive dividends and other distributions in proportion to the number of shares
held;
2. to request, summon, preside over, attend or appoint a proxy to attend shareholders’
general meetings and speak at the shareholders’ general meetings in accordance with
the laws, and to exercise the corresponding voting rights (except where a
shareholder is required by the securities regulatory rules of the place where the
Company’s shares are listed to abstain from voting on a particular matter);
3. to supervise the operation of the Company, making suggestions or enquiries;
4. to transfer, give or pledge the shares held by them in accordance with the laws,
administrative regulations and the Articles of Association;
5. to review the Articles of Association, the register of members (including the register
of holders of H Shares), counterfoils of corporate bonds, minutes of general
meetings, resolutions of the Board meetings, resolutions of the Board of Supervisors
meetings and financial and accounting reports;
6. in the event of the termination or liquidation of the Company, to participate in the
distribution of remaining assets of the Company in proportion to the number of
shares held;
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
–V - 4–


--- page 560 ---
7. to request the Company to buy back the shares of shareholders objecting to
resolutions of the general meeting concerning merger or division of the Company;
8. other rights stipulated by laws, administrative regulations, departmental rules,
securities regulatory rules of the place where the Company’s shares are listed or the
Articles of Association.
Shareholders of the Company shall assume the following obligations:
1. to abide by laws, administrative regulations and the Articles of Association;
2. to pay subscription monies according to the number of shares subscribed and the
method of subscription;
3. not to make divestment unless in the circumstances stipulated by laws and
regulations;
4. not to abuse the rights of shareholders to damage the interests of the Company or
that of other shareholders; not to abuse the independent status of the Company as a
legal person and the limited liability of shareholders to damage the interests of the
creditors of the Company;
5. other obligations imposed by laws, administrative regulations, securities regulatory
rules of the place where the Company’s shares 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.
Shareholders of the Company who abuse the independent status of the Company as a legal
person and the limited liability of shareholders to evade debts and seriously damage the
interests of the creditors of the Company shall bear joint and several liabilities for the debts
of the Company.
Restrictions on Rights of the Controlling Shareholders
The controlling shareholders and de facto controllers of the Company shall not use their
connected relations to damage the interests of the Company. If the violation causes losses to
the Company, it shall be liable for compensation.
The controlling shareholders and de facto controllers of the Company shall have fiduciary
duties towards the Company and its public shareholders. The controlling shareholder shall
exercise its rights as a capital contributor in strict compliance with the laws. The controlling
shareholder shall not damage the legitimate rights and interests of the Company and public
shareholders by means of profit distribution, asset restructuring, external investment, fund
appropriation, loan guarantee, etc., and shall not use its controlling status to damage the
interests of the Company and public shareholders.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
–V - 5–


--- page 561 ---
General Provisions of the Shareholders’ General Meeting
The shareholders’ general meeting is the organ of authority of the Company and shall
exercise the following functions and powers:
1. to decide on the Company’s business policies and investment plans;
2. to elect and replace directors and supervisors who are not employee representatives
and to decide on matters relating to the remuneration of directors and supervisors;
3. to consider and approve the reports of the Board;
4. to consider and approve the report of the Board of Supervisors;
5. to consider and approve the annual financial budgets and final accounts of the
Company;
6. to consider and approve the Company’s profit distribution plans and loss recovery
plans;
7. to resolve on the increase or reduction of the registered capital of the Company;
8. to resolve on the issue of corporate bonds;
9. to resolve on the merger, division, dissolution, liquidation or change of corporate
form of the Company;
10. amendments to the Articles of Association;
11. to resolve on the appointment and dismissal of the accounting firm of the Company;
12. to consider and approve the guarantee matters that require approval by the
shareholders’ meeting in accordance with the provisions of this Articles of
Association;
13. to consider the purchase or disposal of material assets within one year with an
amount exceeding 30% of the latest audited total assets of the Company;
14. to consider and approve the change in use of proceeds;
15. to consider share incentive schemes and employee share ownership schemes;
16. to consider other matters required by laws, administrative regulations, departmental
rules, the securities regulatory rules of the place where the Company’s shares are
listed or the Articles of Association to be decided by the general meeting.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
–V - 6–


--- page 562 ---
The above-mentioned powers of general meeting shall not be exercised by the Board or
other institutions or individuals by way of authorization. In addition to the above matters, the
general meeting may authorise or entrust the Board and/or its authorised persons to handle the
matters authorised or entrusted by it without violating the laws and regulations. The general
meetings are divided into annual general meetings and extraordinary general meetings. The
annual general meeting shall be convened 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 from
the date of occurrence of any of the following circumstances:
1. the number of directors is less than the number stipulated in the Company Law or
less than two-thirds of the number specified in the Articles of Association;
2. when the unrecovered losses of the Company amount to one-third of the total
amount of its paid-up share capital;
3. when shareholders individually or jointly holding 10% or more of the Company’s
shares so request;
4. when deemed necessary by the Board, laws, regulations and regulatory rules of the
place where the Company’s shares are listed;
5. when proposed by the Board of Supervisors;
6. other circumstances stipulated by laws, administrative regulations, departmental
rules, securities regulatory rules of the place where the Company’s shares are listed
or the Articles of Association.
If the extraordinary general meeting is convened in accordance with the securities
regulatory rules of the place where the Company’s shares are listed, the actual date of the
extraordinary general meeting may be adjusted according to the approval progress of the stock
exchange where the Company’s shares are listed (if applicable).
Summoning of General Meetings
General meetings shall be summoned by the Board. The publication of the notice of the
general meeting (including the supplemental notice) shall comply with the relevant laws and
regulations and the securities regulatory rules of the place where the Company’s shares are
listed.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
–V - 7–


--- page 563 ---
The independent non-executive Directors are entitled to propose to the Board to convene
an extraordinary general meeting. The Board shall, in accordance with the laws, administrative
regulations, the securities regulatory rules of the place where the Company’s shares are listed
and the Articles of Association, give a written reply on whether or not to convene the
extraordinary general meeting within 10 days after receiving the proposal from the independent
non-executive Directors.
If the Board agrees to convene the extraordinary general meeting, a notice of such
meeting shall be issued within five days after the resolution of the Board is passed. If the Board
does not agree to convene the extraordinary general meeting, it shall explain the reasons and
make an announcement.
The Board of Supervisors shall have the right to propose to the Board to convene an
extraordinary general meeting in writing. The Board shall, in accordance with the laws,
administrative regulations, the securities regulatory rules of the place where the Company’s
shares are listed and the Articles of Association, give a written reply on whether to convene the
extraordinary general meeting or not within 10 days after receipt of the proposal.
If the Board agrees to convene the extraordinary general meeting, a notice of such
meeting shall be issued within 5 days after the resolution of the Board is passed. Any changes
to the original proposal made in the notice shall be approved by the Board of Supervisors.
If the Board does not agree to convene the extraordinary general meeting or fails to give
a reply within 10 days after receiving the proposal, the Board shall be deemed to be unable or
fail to perform the duty of convening the general meeting, and the Board of Supervisors may
summon and preside over the meeting on its own.
Shareholders individually or jointly holding 10% or more of the Company’s shares shall
have the right to request the Board of Directors in writing to convene an extraordinary general
meeting. The Board shall, in accordance with the laws, administrative regulations, the
securities regulatory rules of the place where the shares of the Company are listed and the
Articles of Association, give a written reply on whether to convene the extraordinary general
meeting or not within 10 days after receipt of the proposal.
If the Board agrees to convene the extraordinary general meeting, a notice of such
meeting shall be issued within five days after the resolution of the Board is passed. Any change
to the original request made in the notice shall be subject to the consent of the relevant
shareholders.
If the Board does not agree to convene an extraordinary general meeting or does not reply
within 10 days upon receipt of the proposal, the shareholders individually or jointly holding
more than 10% of the Company’s shares shall have the right to propose to the Board of
Supervisors to convene an extraordinary general meeting, and such proposal shall be made in
writing.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
–V - 8–


--- page 564 ---
If the Board of Supervisors agrees to convene the extraordinary general meeting, it shall
issue a notice of general meeting within 5 days upon receipt of the request. Any changes to the
original request in the notice shall be approved by the relevant shareholders.
If the Board of Supervisors fails to issue the notice of the general meeting within the
prescribed period, it shall be deemed that the Board of Supervisors will not convene and
preside over the general meeting, and shareholders individually or jointly holding 10% or more
of the Company’s shares for more than 90 consecutive days may summon and preside over the
meeting by themselves.
Proposals at General Meetings
When the Company convenes a general meeting, the Board, the Board of Supervisors and
shareholders individually or jointly holding more than 3% of the Company’s shares shall have
the right to submit proposals to the Company.
Shareholders individually or jointly holding 3% or more of the Company’s shares may
submit ad hoc proposals in writing to the convener 10 days before a general meeting is
convened. The convener shall issue a supplementary notice of the general meeting within two
days upon receipt of the proposal to announce the contents of the provisional proposal. For the
publication of the supplementary notice of the general meeting, if there are special provisions
in the securities regulatory rules of the place where the shares of the Company are listed, such
provisions shall prevail, provided that such provisions are not in violation of the Company
Law, the Securities Law, the Administrative Measures and the Guidelines for the Articles of
Association of Listed Companies. If the general meeting is postponed due to the issuance of
a supplementary notice of the general meeting pursuant to the securities regulatory rules of the
place where the Company’s shares are listed, the general meeting shall be postponed pursuant
to the securities regulatory rules of the place where the Company’s shares are listed.
Except as provided in the preceding paragraph or the securities regulatory rules of the
place where the Company’s shares are listed, the convener shall not amend the proposals set
out in the notice of the general meeting or add any new proposals after issuing the notice of
the general meeting
Notice of General Meeting
The convener shall notify all shareholders by way of announcement 21 days before the
annual general meeting and shall notify all shareholders by way of announcement 15 days
before the extraordinary general meeting.
A notice of the Company shall be given in the following manner:
1. by hand;
2. by mail;
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
–V - 9–


--- page 565 ---
3. by fax or e-mail;
4. by publishing on the websites designated by the Company and the Hong Kong Stock
Exchange, subject to the laws, administrative regulations and the listing rules of the
stock exchange where the Company’s shares are listed;
5. other means agreed upon by the company or notified person in advance or
recognized by the notified person after receiving the notice;
6. other means stipulated by laws, administrative regulations, rules, securities
regulatory rules of the place where the Company’s shares are listed or the Articles
of Association.
Convening of General Meetings
All shareholders registered on the record date or their proxies are entitled to attend the
general meeting. They shall exercise their voting rights in accordance with the relevant laws,
regulations and the Articles of Association.
Individual shareholders who attend the meeting in person shall produce their identity
cards or other effective document or proof of identity and stock account cards. Proxies of
individual shareholders shall produce their valid identity cards and the power of attorney of the
shareholder.
Shareholder that is a legal person may be represented at the meeting by its legal
representative or a proxy appointed by it (which will be regarded as if the legal person
shareholder was present in person) to exercise its rights (including the right to vote). If a legal
representative attends the meeting, he/she should produce his/her identity card and valid proof
that he/she is a legal representative; if a proxy attends the meeting, the proxy should produce
his/her identity card and documents proving that he/she has been appointed by such legal
person.
The proxy form shall contain a statement that in the absence of instructions from the
shareholder the proxy may vote as he/she thinks fit.
If the proxy form is signed by a person authorised by the principal, the power of attorney
or other authorization documents shall be notarized. The instrument appointing a proxy, the
notarized power of attorney or other authorization documents shall be placed at the domicile
of the Company or at such other place as specified in the notice convening the meeting.
If the principal is a legal person, its legal representative or such person as is authorised
by resolution of its board of directors or other governing body to act as its representative may
attend the general meeting of the Company and exercise the shareholder’s rights.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-10 –


--- page 566 ---
Resolutions of General Meetings
Resolutions of the general meeting are divided into ordinary resolutions and special
resolutions.
Ordinary resolutions shall be passed by votes representing more than half of the voting
rights represented by the shareholders (including proxies) present at the meeting.
A special resolution shall be passed by votes representing more than two-thirds of the
voting rights represented by the shareholders (including proxies) present at the meeting.
The following matters shall be approved by ordinary resolutions at a general meeting:
1. work reports of the Board and the Board of Supervisors;
2. profit distribution plans and loss recovery plans formulated by the Board;
3. appointment and removal of members of the Board and the Board of Supervisors,
their remuneration and method of payment;
4. Annual budget and final accounts of the Company;
5. annual reports of the Company;
6. matters other than those required by the laws, administrative regulations, the
securities regulatory rules of the place where the shares of the Company are listed
or the Articles of Association to be adopted by special resolution.
The following matters shall be approved by special resolutions at a general meeting:
1. increase or reduction of the registered capital of the Company;
2. division, spin-off, merger, dissolution and liquidation of the Company;
3. amendments to the Articles of Association;
4. purchase or disposal of material assets or provision of guarantee by the Company
within 12 consecutive months with an amount exceeding 30% of the latest audited
total assets of the Company;
5. share incentive scheme;
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
–V - 1 1–


--- page 567 ---
6. other matters stipulated by laws, administrative regulations, the securities regulatory
rules of the place where the Company’s shares are listed or the Articles of
Association, the Rules of Procedure of the General Meeting, and other matters
considered by the general meeting, by way of ordinary resolution, to have a material
impact on the Company and need to be approved by special resolution.
DIRECTORS AND BOARD OF DIRECTORS
Directors
Directors shall be elected or replaced by the shareholders’ general meeting, and may be
removed by the shareholders’ general meeting before the expiry of their terms of office. The
term of office of the Directors shall be 3 years, and they may be re-elected and re-appointed
in accordance with the provisions of the securities regulatory rules of the place where the
Company’s shares are listed.
The term of office of the Directors shall commence from the date of their appointment
until the expiry of the term of the current session of the Board. If the term of office of a director
expires but re-election is not made responsively, the said director shall continue fulfilling the
duties as director pursuant to laws, administrative regulations, departmental rules and the
Articles of Association until a new director is elected.
The Board
The Company shall have a board of directors which shall be accountable to the general
meeting. The Board shall consist of 9 directors, including one chairman and 3 non-executive
Directors.
The Board shall exercise the following powers:
1. to summon general meetings and report its work to the general meetings;
2. to implement the resolutions of the general meeting;
3. to decide on the Company’s business plans and investment plans;
4. to formulate the Company’s annual financial budgets and final accounts;
5. to formulate the Company’s profit distribution plans and loss recovery plans;
6. to formulate proposals for the increase or reduction of the Company’s registered
capital, the issue of bonds or other securities and listing plans;
7. to formulate plans for material acquisitions, purchase of shares of the Company or
merger, division, dissolution and change of corporate form of the Company;
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-12 –


--- page 568 ---
8. to decide on the Company’s external investment, acquisition and disposal of assets,
pledge of assets, external guarantees, entrusted wealth management, connected
transactions, external donations and other matters within the scope authorised by the
general meeting;
9. to decide on the establishment of the Company’s internal management structure;
10. to decide on the appointment or dismissal of the Company’s general manager,
secretary to the Board and other senior management, and decide on their
remuneration, rewards and punishments; to decide on the appointment or dismissal
of the Company’s deputy general manager, chief financial officer and other senior
management based on the nomination of the general manager, and decide on their
remuneration, rewards and punishments;
11. to formulate the basic management system of the Company;
12. to formulate proposals for any amendment to the Articles of Association;
13. to manage the information disclosure of the Company;
14. to propose to the general meeting the appointment or replacement of the accounting
firm that audits the Company;
15. to listen to the work report of the general manager of the Company and inspect the
work of the general manager;
16. other functions and powers conferred by laws, administrative regulations,
departmental rules, securities regulatory rules of the place where the Company’s
shares are listed or the Articles of Association.
Matters beyond the scope of authorization of the general meeting shall be submitted to the
general meeting for consideration.
General Manager
The general manager shall be accountable to the Board and exercise the following
powers:
1. to be in charge of the production, operation and management of the Company,
organise the implementation of the resolutions of the Board and report to the Board;
2. to organise the implementation of the Company’s annual business plan and
investment plan;
3. to draft plans for the establishment of the Company’s internal management structure;
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-13 –


--- page 569 ---
4. to draft the basic management system of the Company;
5. to formulate the specific rules and regulations of the Company;
6. to propose to the Board to appoint or dismiss deputy general managers and financial
controller of the Company;
7. to appoint or dismiss management personnel other than those required to be
appointed or dismissed by the Board;
8. to exercise other powers conferred by the Articles of Association or the Board.
The general manager is to attend board meetings.
Secretary to the Board
The Company shall have a secretary to the Board, who shall be responsible for the
preparation of the general meetings and Board meetings of the Company, keeping of
documents, management of shareholders’ information of the Company and handling matters
such as information disclosure.
The secretary to the Board shall comply with the relevant provisions of laws,
administrative regulations, departmental rules and the Articles of Association.
BOARD OF SUPERVISORS
The Company shall have a Board of Supervisors. The Board of Supervisors shall consist
of three Supervisors and shall have one chairman. The chairman of the Board of Supervisors
shall be elected by more than half of all Supervisors.
The board of supervisors shall comprise shareholder representatives and an appropriate
proportion of the company’s staff representatives, of which the proportion of staff
representatives shall not be less than one-third. The employee representatives of the Board of
Supervisors shall be democratically elected by the Company’s employees at the employee
representative assembly, employee meeting or otherwise.
The Board of Supervisors exercises the following powers:
1. it shall review the regular reports of the Company prepared by the Board and to
provide written review opinions;
2. to examine the financial affairs of the Company;
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-14 –


--- page 570 ---
3. 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, administrative regulations, the Articles of Association or the
resolutions of the shareholders’ general meetings;
4. to demand rectification from a Director or senior management when the acts of such
persons are detrimental to the interests of the Company;
5. to propose the convening of extraordinary general meetings and to summon and
preside over general meetings when the Board fails to perform the duty of
summoning and presiding over general meetings under the Company Law;
6. to submit proposals to the general meeting;
7. to initiate proceedings against directors and senior management in accordance with
Article 151 of the Company Law;
8. to investigate any irregularities identified in the operation of the Company; if
necessary, to engage professional institutions such as accounting firms and law firms
to assist its work at the expense of the Company.
Resolutions of the Board of Supervisors shall be passed by more than half of the
supervisors.
FINANCIAL AND ACCOUNTING SYSTEM
The Company shall establish its financial and accounting system in accordance with the
laws, administrative regulations and the requirements of the relevant state authorities.
The annual reports and interim reports of the Company are prepared in accordance with
the relevant laws, administrative regulations, the requirements of the CSRC and the stock
exchanges where the Company’s shares are listed.
NOTICES
A notice of the Company shall be given in the following manner:
1. by hand;
2. by mail;
3. by fax or e-mail;
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-15 –


--- page 571 ---
4. by publishing on the websites designated by the Company and the Hong Kong Stock
Exchange, subject to the laws, administrative regulations and the listing rules of the
stock exchange where the Company’s shares are listed;
5. Other means agreed upon by the company or notified person in advance or
recognized by the notified person after receiving the notice;
6. other means stipulated by laws, administrative regulations, rules, securities
regulatory rules of the place where the Company’s shares are listed or the Articles
of Association.
DISSOLUTION AND LIQUIDATION OF THE COMPANY
The Company shall be dissolved for the following reasons:
1. the term of its operations as is stipulated in the Articles of Association has expired
or events of dissolution specified in the Articles of Association have occurred;
2. the shareholders’ general meeting resolves to dissolve the Company;
3. dissolution is necessary due to merger or division of the Company;
4. the Company’s business licence is revoked, the Company is ordered to close down
or be revoked in accordance with the law;
5. Where the Company encounters serious difficulties in its operation and management
and its continuous existence will cause significant losses to the interests of
shareholders, and such difficulties cannot be resolved through other means,
shareholders holding more than 10% of the voting rights of all shareholders of the
Company may request the People’s Court to dissolve the Company.
Where the Company is dissolved pursuant to items 1, 2, 4 and 5 above, a liquidation
committee shall be established and the liquidation shall commence within 15 days after the
occurrence of the cause of dissolution. The liquidation committee shall be composed of
directors or persons determined by the shareholders’ general meeting. If a liquidation
committee is not established within the time limit, the creditors may apply to the people’s court
to designate relevant personnel to form a liquidation committee to carry out liquidation.
The liquidation committee shall notify creditors within 10 days from the date of its
establishment, and publish an announcement in a newspaper recognised by the stock exchange
where the Company’s shares are listed within 60 days.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-16 –


--- page 572 ---
If the liquidation committee discovers that the Company’s assets are insufficient to repay
its debts after cleaning up the Company’s assets and preparing a balance sheet and an inventory
of assets, it shall apply to the People’s Court for a declaration of insolvency in accordance with
the law.
Upon completion of the liquidation, the liquidation committee shall prepare a liquidation
report which shall be submitted to the shareholders’ general meeting or the people’s court for
confirmation, and shall submit the same to the company registration authority, apply for
cancellation of the company’s registration, and publish an announcement on the termination of
the company.
AMENDMENTS TO THE ARTICLES
The Company shall amend the Articles of Association in any of the following
circumstances:
1. After the amendments are made to the Company Law or relevant laws,
administrative regulations, departmental rules and securities regulatory rules of the
place where the shares of the Company are listed, the provisions of the Articles of
Association are in conflict with the amended laws, administrative regulations,
departmental rules and securities regulatory rules of the place where the shares of
the Company are listed;
2. there is a change in the Company’s situation, which is inconsistent with the matters
recorded in the Articles of Association;
3. the shareholders’ general meeting decides to amend the Articles of Association.
The amendments to the Articles of Association adopted by the shareholders’ general
meeting shall be submitted to the competent authorities for approval if they are subject to
approval by the competent authorities. If there is any change relating to the registered
particulars of the Company, application shall be made for registration of the changes in
accordance with the laws.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-17 –


--- page 573 ---
FURTHER INFORMATION ABOUT OUR COMPANY
1. Incorporation of Our Company
Our Company was established as a limited liability company in the PRC on December 5,
2007 and was converted into a joint stock company with limited liability on November 25,
2016 under the laws of the PRC. As of the Latest Practicable Date, the registered share capital
of our Company was RMB83,971,704.
Our Company has established a place of business in Hong Kong at 5/F, Manulife Place,
348 Kwun Tong Road, Kowloon, Hong Kong and has registered as a non-Hong Kong company
in Hong Kong under Part 16 of the Companies Ordinance on May 16, 2023. Ms. Tang Ka Y an
has been appointed as our authorized representative for the acceptance of service of process in
Hong Kong whose correspondence address is the same as our place of business in Hong Kong.
2. Changes in Share Capital of Our Company
On December 5, 2007, our Company was established as a limited liability company with
a registered capital of RMB500,000. On November 24, 2016, our Company was converted into
a joint stock company with limited liability and renamed as FOLANGSI CO., LTD (ࣦ
ʮ̡). The following sets out changes in the share capital of our Company within
the two years immediately preceding the date of this prospectus:
 On November 9, 2021, the registered capital of our Company increased from
RMB80,484,062 to RMB83,971,704 with additional registered capital of
RMB3,487,642 subscribed by certain Pre-IPO Investors under Nov-2021 Capital
Increase;
3. Changes in the Share Capital of Our Subsidiaries
As of the Latest Practicable Date, there has been no alteration in the share capital of our
subsidiaries within two years immediately preceding the date of this prospectus.
4. Resolutions of the Shareholders
Pursuant to a general meeting of our Shareholders held on April 21, 2023, the following
resolutions, among others, were passed by our Shareholders:
(a) the issue by our Company of H Shares of nominal value of RMB0.25 each and such
H Shares be listed on the Hong Kong Stock Exchange be issued;
(b) the number of H Shares to be issued shall not be more than 25% of the total issued
share capital of our Company as enlarged by the Global Offering, and the grant to
the underwriters (or their representatives) of the Over-allotment Option of not more
than 15% of the number of H Shares issued pursuant to the Global Offering;
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-1 –


--- page 574 ---
(c) subject to the completion of the Global Offering, the adoption of the Articles of
Association which shall become effective on the Listing Date, and the authorization
to the Board to amend the Articles of Association in accordance with the
requirements of the relevant laws and regulations and the Listing Rules; and
(d) authorization of our Board to handle all relevant matters relating to, among other
things, the issue and listing of the H Shares.
FURTHER INFORMATION ABOUT THE BUSINESS OF OUR COMPANY
1. Summary of Material Contracts
We have entered into the following contracts (not being contracts entered into in the
ordinary course of business) within the two years immediately preceding the date of this
prospectus that are or may be material:
(a) a cornerstone investment agreement dated October 26, 2023 entered into among our
Company, LIUGONG MACHINERY HONGKONG CO., LIMITED (ಥ
ʮ̡)( “ Liugong Machinery ”), the Sole Sponsor and the Sole Overall
Coordinator, pursuant to which Liugong Machinery has agreed to subscribe for
Offer Shares at the Offer Price in the amount of Hong Kong dollar equivalent to
RMB100 million;
(b) the Hong Kong Underwriting Agreement.
2. Intellectual Property Rights
Trademarks
As of the Latest Practicable Date, we have registered the following trademarks in the
PRC, which we considered to be material to our business:
No. Owner
Registration
No.
Place of
Registration Trademark Class Validity Period
1. Our Company 24486543 PRC
 35 September 21, 2018 –
September 20, 2028
2. Our Company 18228778 PRC
 35 December 14, 2016 –
December 13, 2026
3. Our Company 11818763 PRC
 7 May 14, 2014 –
May 13, 2024
4. Our Company 10768549 PRC
 12 June 21, 2013 –
June 20, 2033
5. Our Company 10747362 PRC
 4 June 21, 2013 –
June 20, 2033
6. Our Company 9693465 PRC
 12 August 21, 2012 –
August 20, 2032
7. Our Company 9693464 PRC
 12 August 21, 2012 –
August 20, 2032
8. Our Company 8608277 PRC
 12 September 14, 2011 –
September 13, 2031
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-2 –


--- page 575 ---
No. Owner
Registration
No.
Place of
Registration Trademark Class Validity Period
9. Our Company 6078528 PRC
 12 December 7, 2009 –
December 6, 2029
10. Our Company 62736974 PRC
 38 August 14, 2022 –
August 13, 2032
11. Our Company 62741418 PRC
 9 August 14, 2022 –
August 13, 2032
12. Our Company 62745514 PRC
 42 August 14, 2022 –
August 13, 2032
13. Our Company 01557086 PRC
 12 January 1, 2013 –
December 31, 2032
14. Our Company 18250051 PRC
 35 February 21, 2017 –
February 20, 2027
As of the Latest Practicable Date, we have applied for registration of the following
trademarks, which we considered to be material to our business:
No. Owner
Application
No.
Place of
Registration Trademark Class
Application
Date
1. Our Company 306185098 Hong Kong
 12, 39 March 7, 2023
2. Our Company 306185106 Hong Kong
 37 March 7, 2023
Patents
As of the Latest Practicable Date, we have registered the following patents, which
we consider to be material to the business of our Group:
No. Patent Category Patentee(s) Patent Number
Place of
Registration Expiry date
1. A forklift anti-loss
positioning device ( ɓ
Зༀ
ໄ)
Utility model Our Company ZL201620107389.4 PRC February 1, 2026
2. A forklift intelligent
card consumption and
identification system
(ɓ၇ɸԓ౽ঐՏ̔ऊ
൬ʿᗆйӻ୕)
Utility model Our Company ZL201620107390.7 PRC February 1, 2026
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-3 –


--- page 576 ---
No. Patent Category Patentee(s) Patent Number
Place of
Registration Expiry date
3. An intelligent vehicle
networking security
management system
(ɓ၇౽ঐԓᑌၣτΌ
၍ଣӻ୕)
Utility model Our Company ZL201620107611.0 PRC February 1, 2026
4. A GPS driving
navigation device
based on wireless
sensor networks ( ɓ၇
ٙ
GPSБԓኬঘༀໄ)
Utility model Our Company ZL202120201699.3 PRC January 24, 2031
5. An embedded GPS
navigation and
positioning receiver
(ɓ၇లɝόGPS֛
Зટϗዚ)
Utility model Our Company ZL202120200022.8 PRC January 24, 2031
6. A battery monitoring
device ( ɓ၇ཥϫ္છ
ண௪)
Utility model Our Company ZL202221751787.1 PRC July 7, 2032
7. ( ɓ၇ɸԓ၍ଣ္છӻ
୕)
Utility model Our Company ZL202222319309.X PRC August 31, 2032
8. Intelligent onboard
vehicle controller
(LS1.0) ( ౽ঐԓ༱છՓ
ᄃ(LS1.0))
Exterior design Our Company ZL202030434118.1 PRC August 2, 2030
9. Intelligent onboard
vehicle locator ( ౽ঐԓ
Зኜ)
Exterior design Our Company ZL202030433455.9 PRC August 2, 2030
10. A visual presentation
method for object
force and strain
detection results ( ɓ၇
؈
ج)
Invention
patent
Our Company ZL202110698476.7 PRC June 22, 2041
11. (ᘱཥኜ
ཥ༩)
Invention
patent
Our Company ZL202110098666.5 PRC September 7,
2043
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-4 –


--- page 577 ---
Copyrights
As of the Latest Practicable Date, our Group had registered the following copyrights
which we consider to be material to our Group’s business:
No. Name of Copyright Registration Number Registered Owner Registration Date
1. Dynamic monitoring and early
warning system for leasing
schemes (ਗ࿒္಻ཫᙆ
ӻ୕)
2021SR1421801 Our Company September 24, 2021
2. Intelligent and autonomous asset
allocation system ( ༟ପ౽ঐІп
ଡ଼ৣӻ୕)
2021SR1424863 Our Company September 24, 2021
3. LE1.0 intelligent terminal
electronic fence and area speed
limit system (LE1.0 ౽ঐ୞၌ཥ
஺ӻ୕)
2022SR0608365 Our Company May 20, 2022
4. LS1.0 seat belt detection
intelligent terminal system
(LS1.0 τΌ੭Ꮸ಻౽ঐ୞၌ӻ୕)
2022SR0608362 Our Company May 20, 2022
5. A real-time/offline analysis
software based on OpenCV
image noise, grayscale
histogram, interpolation bias,
and speckle accuracy analysis
(׵opencv˙
ྼ
ࣛ/ழ΁)
2022SR0608356 Our Company May 20, 2022
6. A speckle calculation software
based on image and calibration
(ၑழ
΁)
2022SR0608355 Our Company May 20, 2022
7. A marker tracking software
based on image and calibration
(ᅺাᓃ༧ᔳழ
΁)
2022SR0608354 Our Company May 20, 2022
8. A programmable image
acquisition software for
industrial camera (ዚ̙ᇜ
೻ྡ྅મණழ΁)
2022SR0608367 Our Company May 20, 2022
9. An online public security alarm
management platform software
(ʮτᑌၣజᙆ၍ଣ̨̻ழ΁)
2022SR0608353 Our Company May 20, 2022
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-5 –


--- page 578 ---
No. Name of Copyright Registration Number Registered Owner Registration Date
10. A smart community management
platform software (ਜ၍
ଣ̨̻ழ΁)
2022SR0608352 Our Company May 20, 2022
11. A real-time/offline image
calibration software based on
OpenCV dot calibration and
checkerboard calibration (׵
opencvྡ
ࣛ/ழ΁)
2022SR0608351 Our Company May 20, 2022
12. A software of social video
access management platform (ٟ
ึൖ᎖ટɝ၍ଣ̨̻ழ΁)
2022SR0608350 Our Company May 20, 2022
13. A software for fracture
toughness testing of hydraulic
concrete three-point bending
beam based on DIC technology
(׵DIC˥ʈ૿ኑɺɧᓃ
ᛃϜᆃᓙ൓಻༊ழ΁)
2022SR0678723 Our Company May 31, 2022
14. A 3D imaging software based on
point cloud data (ᓃථᅰኽ
ɧၪϓ྅ழ΁)
2022SR0608348 Our Company May 20, 2022
15. A multi-stage point cloud data
frequency analysis software
based on Fourier Transform ( ਿ
ᓃථᅰኽ
ழ΁)
2022SR0608347 Our Company May 20, 2022
16. A real-time data acquisition and
offline data import software
based on FLIR single/dual
camera (׵FLIR ఊ/ྼ
મණձᕎᇞኬɝழ΁)
2022SR0608345 Our Company May 20, 2022
17. A spatial sequencing data
analysis software based on
single-stage point cloud data ( ਿ
ҏᅰኽʱ
ழ΁)
2022SR0608344 Our Company May 20, 2022
18. A time series data analysis
software based on multi-stage
point cloud data (ᓃ
ழ΁)
2022SR0608343 Our Company May 20, 2022
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-6 –


--- page 579 ---
No. Name of Copyright Registration Number Registered Owner Registration Date
19. A software for wedge -splitting
tests for tensile strength and
fracture toughness of hydraulic
concrete based on DIC
technology (׵DIC˥ʈ
ᓙ൓಻༊ழ΁)
2022SR0608349 Our Company May 20, 2022
20. A extensometer calculation
software based on image and
calibration (ˏ
ၑழ΁)
2022SR0608366 Our Company May 20, 2022
21. Packaging graphic design of
Folangsi’s forklifts and related
parts (̍ༀ̻
ࠇ)
ຽЪ೮ο-2017-F-00021311 Our Company August 24, 2017
22. Polybags graphic design of
Folangsi’s forklifts and related
parts (౶ɸԓৣ΁̍ༀᇭ஛
ࠇ)
ຽЪ೮ο-2017-F-0021312 Our Company August 24, 2017
Domain Names
As of the Latest Practicable Date, we have registered the following domain names
which we consider to be material to our business:
No. Owner Domain Name
Registration
Date Expiry Date
1. Our Company fls123.com March 26,
2009
March 26,
2024
2. Our Company folangsiforklift.com December 21,
2007
December 21,
2030
FURTHER INFORMATION ABOUT OUR DIRECTORS, SUPERVISORS AND
SUBSTANTIAL SHAREHOLDERS
1. Disclosure of Interests
Save as disclosed below, immediately following completion of the Subdivision and the
Global Offering (without taking into account the H Shares which may be allotted and issued
pursuant to the exercise of the Over-allotment Option), so far as our Directors are aware, none
of our Directors, Supervisors and chief executive has any interest or short positions in our
Shares, underlying Shares or debentures of our Company or any associated corporations
(within the meaning of Part XV of the SFO) which will have to be notified to our Company
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-7 –


--- page 580 ---
and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO
(including interests and short positions which they are taken or deemed to have under such
provisions of the SFO), or which will be required, pursuant to section 352 of the SFO, to be
entered in the register referred to therein, or which will be required to be notified to our
Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities
Transactions by Directors of Listed Issuers contained in the Listing Rules.
Name Position Nature of Interest
Number and class
of Shares held
Approximate
percentage of
shareholding in
the relevant type
of Shares after
the Subdivision
and the Global
Offering (1)
Approximate
percentage of
shareholding in
the total share
capital of our
Company after
the Subdivision
and the Global
Offering (1)
(%) (%)
Mr. Hou (2) Executive Director
and chairman of
the Board
Beneficial owner 15,876,204
H Shares
37,044,480
Unlisted Shares
7.68
26.19
38.74%
Interest held
jointly with
another person
46,669,696
H Shares
22.59
88,162,484
Unlisted Shares
62.34
Mr. Hou Zebing
(ዣж)
(2)
Executive Director
and general
manager
Beneficial owner 15,243,384
H Shares
35,567,896
Unlisted Shares
7.38
25.15
38.74%
Interest in
controlled
corporations
15,550,108
H Shares
15,550,108
Unlisted Shares
7.53
11.00
Interest held
jointly with
another person
46,669,696
H Shares
22.59
88,162,484
Unlisted Shares
62.34
Notes:
(1) The calculation is based on the total number of 141,428,080 Unlisted Shares in issue and 206,594,736
H Shares (assuming the Over-allotment Option is not exercised) in issue upon Listing.
(2) Mr. Hou Zebing is the general partner of Guangzhou Daze. As such, Mr. Hou Zebing is deemed to be
interested in the 31,100,216 Shares held by Guangzhou Daze under SFO. Mr. Hou and Mr. Hou Zebing
entered into an acting-in-concert agreement on May 18, 2020 with a supplemental agreement dated
March 24, 2023 to acknowledge and confirm their acting-in-concert relationship in our Company,
pursuant to which Mr. Hou and Mr. Hou Zebing have agreed to continue to act in concert and reach
consensus on any matter considered at board meetings and general meetings of our Company.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-8 –


--- page 581 ---
2. Substantial Shareholders
For the information on the persons who will, immediately following the completion of the
Global Offering, have interests or short positions in our Shares or underlying Shares which
would be required to be disclosed to our Company and the Hong Kong Stock Exchange under
the provisions of Divisions 2 and 3 of Part XV of the SFO, please refer to the section headed
“Substantial Shareholders” in this Prospectus.
Save as set out above, our Directors are not aware of any other person (other than our
Directors, Supervisors or chief executive) will, immediately following completion of the
Global Offering, directly or indirectly, be interested in 10% or more of the nominal value of
any class of share capital carrying rights to vote in all circumstances at general meetings of any
other member of our Group.
3. Service Contracts
We have entered into a contract with each of our Directors and Supervisors in respect of,
among other things, compliance with relevant laws and regulations, the Articles of Association
and applicable provisions on arbitration.
Each of our Directors has entered into a service contract with our Company. The principal
particulars of these service contracts comprise (a) a term of three years commencing from the
date of appointment; and (b) termination provisions in accordance with their respective terms.
Our Directors may be re-appointed subject to Shareholders’ approval.
Each of our Supervisors has entered into a service contract with our Company. Each
contract contains provisions relating to compliance with relevant laws and regulations,
observation of our Articles of Association and resolution of disputes by means of arbitration.
Save as disclosed above, none of our Directors and Supervisors has or is proposed to have
entered into any service contract with any member of our Group (excluding contracts expiring
or determinable by any member of our Group within one year without payment of
compensation other than statutory compensation).
4. Remuneration of Directors and Supervisors
Save as disclosed in the section headed “Directors, Supervisors and Senior Management”
and “Appendix I – Accountants’ Report – II. Notes to The Historical Financial Information –
8. Directors’, Chief Executive’s and Supervisors’ Remuneration” for the three financial years
ended December 31, 2020, 2021 and 2022 and the four months ended April 30, 2023, none of
our Directors or Supervisors received other remunerations or benefits in kind from us.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-9 –


--- page 582 ---
5. Disclaimers
Save as disclosed in this prospectus:
(a) save as disclosed in this prospectus, none of our Directors, Supervisors or any of the
parties listed in “Qualifications of Experts” of this Appendix is:
(i) interested in our promotion, or in any assets which have been, within two years
immediately preceding the date of this prospectus, acquired or disposed of by
or leased to us, or are proposed to be acquired or disposed of by or leased to
any member of our Company; or
(ii) materially interested in any contract or arrangement subsisting at the date of
this prospectus which is significant in relation to our business;
(b) save in connection with the Hong Kong Underwriting Agreement and the
International Underwriting Agreement, none of the parties listed in “Qualification of
Experts” of this Appendix:
(i) is interested legally or beneficially in any shares in any member of our Group;
or
(ii) has any right (whether legally enforceable or not) to subscribe for or to
nominate persons to subscribe for any securities in any member of our Group;
(c) none of our Directors or Supervisors is a director or employee of a company that has
an interest in the share capital of our Company which, once the H Shares are listed
on the Hong Kong Stock Exchange, would have to be disclosed pursuant to
Divisions 2 and 3 of Part XV of the SFO; and
(d) so far as is known to our Directors, none of our Directors or Supervisors or their
respective close associates (as defined under the Listing Rules) or Shareholders who
owns more than 5% of the issued shares of our Company has any interests in the five
largest customers or the five largest suppliers of our Group.
OTHER INFORMATION
1. Estate duty
Our Directors have been advised that no material liability for estate duty is likely to
impose on our Company or any of our subsidiaries under the laws of the PRC.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-10 –


--- page 583 ---
2. Litigation
As of the Latest Practicable Date, no member of our Group was involved in any litigation,
arbitration or claim of material importance, and, so far as we are aware, no litigation,
arbitration or claim of material importance is pending or threatened against any member of our
Group, which would have a material adverse effect on our financial condition or results of
operations, taken as a whole.
3. Sole Sponsor
The Sole Sponsor has made an application on behalf of our Company to the Hong Kong
Stock Exchange for the listing of, and permission to deal in, our H Shares. All necessary
arrangements have been made to enable the securities to be admitted into CCASS.
Sole Sponsor satisfies the independence criteria applicable to sponsor set out in Rule
3A.07 of the Listing Rules. And Sole Sponsor will receive a fee of US$750,000 to act as a
sponsor to our Company in connection with the Global Offering.
4. Preliminary expenses
As of the Latest Practicable Date, our Company has not incurred material preliminary
expenses.
5. Qualifications of Experts
The qualifications of the experts (as defined under the Listing Rules and the Companies
(Winding Up and Miscellaneous Provisions) Ordinance) who have given opinions and/or
advice in this prospectus are as follows:
Name Qualifications
Haitong International Capital
Limited
Licensed corporation under the SFO to conduct
type 6 (advising on corporate finance) regulated
activities for the purpose of SFO
Ernst & Y oung Certified Public Accountants and Registered Public
Interest Entity Auditor
Jingtian & Gongcheng PRC Legal Adviser
DLA Piper Singapore Pte. Ltd. International Sanctions Legal Adviser
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-11 –


--- page 584 ---
Name Qualifications
China Insights Industry
Consultancy Limited
Independent industry consultant
AllBright Law Firm (Shenzhen) PRC litigation laws legal adviser
Shandong Hanhui Law Firm PRC litigation laws legal adviser
6. Consents
Each of the experts as referred to in the paragraph headed “5. Qualifications of Experts”
of this Appendix has given and has not withdrawn its respective written consents to the issue
of this prospectus with the inclusion of certificates, letters, opinions or reports and the
references to its name included herein in the form and context in which it respectively
included.
7. Taxation of Holders of H Shares
(1) Hong Kong
The sale, purchase and transfer of H Shares are subject to Hong Kong stamp duty. The
current rate charged on each of the purchaser and seller is 0.13% of the consideration or, if
higher, the fair value of the H Shares being sold or transferred. For further details in relation
to taxation, please refer to the section headed “Appendix III – Taxation and Foreign Exchange”
to this prospectus.
(2) Consultation with professional advisers
Potential investors in the Global Offering are urged to consult their professional tax
advisers if they are in any doubt as to the taxation implications of subscribing for, purchasing,
holding or disposing of or dealing in our H Shares (or exercising rights attached to them). None
of our Company, our Directors, the Sole Sponsor, the Sole Overall Coordinator, the Sole Global
Coordinator, the Joint Bookrunners, the Joint Lead Managers, the CMIs, the Underwriters, or
any other person or party involved in the Global Offering accept responsibility for any tax
effects on, or liabilities of, any person, resulting from the subscription, purchase, holding or
disposal of, dealing in or the exercise of any rights in relation to our H Shares.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-12 –


--- page 585 ---
8. No Material Adverse Change
Our Directors confirm that, as of the date of this prospectus, there has been no material
adverse change in the financial or trading position of our Company since April 30, 2023 (being
the date to which the latest audited consolidated financial statements of our Company were
prepared).
9. Promoters
Save as disclosed in this prospectus, within the two years preceding the date of this
prospectus, no cash, securities or other benefit has been paid, allotted or given or is proposed
to be paid, allotted or given to any promoter in connection with the Global Offering and the
related transactions described in this prospectus.
10. Restrictions on Repurchase
For details, please refer to the section headed “Appendix IV – Summary of Principal
Legal and Regulatory Provisions” and “Appendix V – Summary of Articles of Association” to
this prospectus.
11. Binding Effect
This prospectus shall have the effect, if an application is made in pursuance of it, 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. Bilingual Prospectus
The English and Chinese language versions of this prospectus are being published
separately, in reliance upon the exemption provided under section 4 of the Companies
(Exemption of Companies and Prospectuses from Compliance with Provisions) Notice
(Chapter 32L of the Laws of Hong Kong).
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-13 –


--- page 586 ---
13. Miscellaneous
Save as otherwise disclosed in this prospectus:
(a) within the two years preceding the date of this prospectus, (i) our Company has not
issued nor agreed to issue any share or loan capital fully or partly paid either for
cash or for a consideration other than cash; and (ii) no commission, discount,
brokerage or other special term has been granted in connection with the issue or sale
of any shares of our Company;
(b) no Share or loan capital of our Company, if any, is under option or is agreed
conditionally or unconditionally to be put under option;
(c) our Company has not issued nor agreed to issue any founder shares, management
shares or deferred shares;
(d) our Company has no outstanding convertible debt securities or debentures;
(e) there is no arrangement under which future dividends are waived or agreed to be
waived;
(f) there has been no interruption in our business which may have or have had a
significant effect on the financial position in the last 12 months;
(g) our Company is not presently listed on any stock exchange or traded on any trading
system; and
(h) our Company is a joint stock limited company and is subject to the PRC Company
Law.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-14 –


--- page 587 ---
DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG KONG
The documents attached to a copy of this prospectus and delivered to the Registrar of
Companies in Hong Kong for registration were:
(i) a copy of the GREEN Application Form;
(ii) a copy of each of the material contracts referred to in the paragraph headed
“Appendix VI – Statutory and General Information – Further Information about the
Business of Our Company – 1. Summary of Material Contracts” in this prospectus;
and
(iii) the written consents referred to in the paragraph headed “Appendix VI – Statutory
and General Information – Other Information – 6. Consents” in this prospectus.
DOCUMENTS A V AILABLE ON DISPLAY
Copies of the following documents will be available on display on the website of our
Company at www.fls123.com and on the website of the Stock Exchange at www.hkexnews.hk
up to and including the date which is 14 days from the date of this prospectus:
(a) the Articles of Association;
(b) the accountants’ report prepared by Ernst & Y oung, the text of which is set out in
Appendix I to this prospectus;
(c) the audited consolidated financial statements of our Group for the three years ended
December 31, 2020, 2021 and 2022 and four months ended April 30, 2023;
(d) the report prepared by Ernst & Y oung on the unaudited pro forma financial
information of our Group, the text of which is set out in Appendix II to this
prospectus;
(e) the market research report issued by CIC referred to in the section headed “Industry
Overview” in this prospectus;
(f) the PRC legal opinions issued by Jingtian & Gongcheng, our PRC Legal Adviser, in
respect of, among other things, the general matters and property interests of our
Group under the PRC laws;
(g) the memorandum opinion issued by DLA Piper, our International Sanctions Legal
Adviser, in respect of, among other things, the risk of exposure and potential
penalties imposed under the International Sanctions laws and regulations;
APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND A V AILABLE ON DISPLAY
– VII-1 –


--- page 588 ---
(h) the confirmation letter issued by AllBright Law Firm (Shenzhen) (۬(ଉ
έ)הthe PRC litigation laws legal adviser of the Company, with respect
to the fire incident dispute;
(i) the confirmation letter issued by Shandong Hanhui Law Firm, the PRC litigation
laws legal adviser of the Company, with respect to the trademark right infringement
dispute;
(j) the material contracts referred to in the paragraph headed “Appendix VI – Statutory
and General Information – Further Information about the Business of our Company
– 1. Summary of Material Contracts” in this prospectus;
(k) the service contracts referred to in the paragraph headed “Appendix VI – Statutory
and General Information – Further Information about Our Directors, Supervisors
and Substantial Shareholders – 3. Service Contracts” in this prospectus;
(l) the written consents referred to in the paragraph headed “Appendix VI – Statutory
and General Information – Other Information – 6. Consents” in this prospectus; and
(m) the PRC Company Law and Overseas Listing Trial Measures together with
unofficial English translations thereof.
APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND A V AILABLE ON DISPLAY
– VII-2 –


--- page 589 ---
廣州佛朗斯股份有限公司
FOLANGSI CO., LTD
